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Today’s Blindingly Stupid Economic Suggestion

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In the comments over at Crooked Timber we get this:

….nationalisation of services that tend to quasi-monopolistic by their nature anyway (e.g. there is no reason why the internet needs more than one search engine that is run as a public service), etc.

In this context it might also be mentioned that enormous profits that create billionaires are never just rewards anyway. They are evidence for market failure. If there was a functioning, free market, profits would come down to near-zero through competition. Again, problem of some activities tending by their nature to favour non-market-shaped solutions.

The first mistake is to think that perfect free markets abolish profit.

Nope.

They abolish economic profit, not profit.

The difference is that those perfectly free markets in the model suggest that no one should be able – consistently and over time at least – be able to gain revenues above their costs. OK. But gaining the capital you need to be running the business is a cost – there is a cost of capital. The return to that capital is called “profit”. The claim about – models recall – free markets is that everyone, on average, just makes normal profits, covers that cost of capital. What they don’t get to do is make super, excess or economic profits (all three meaning the same thing).

Free markets still have capitalists, returns to capital and profits.

Then there’s this idea that the internet only needs the one search engine. Hmm. Which one? Seznam is still the majority – maybe only just – of the Czech market. Yandex is of Russia. Is China to be free to insist upon a home grown one?

OK, let us limit ourselves to the one country and market then. Google sucks your information well dry. DuckDuckGo does not. As it happens it looks like the vast majority don’t give a damn about the information and run with Google. Some do care, some 1% or so of the market, they go to Duck.

OK.

So, our one size fits all public search engine is to insist upon the diminution of consumer choice is it? The 1% are going to get screwed by the absence of the non-info sucking version? Or the 99% denied the greater accuracy – or whatever – provided by such gorging?

Then we’ve the interesting idea of how we get to here. Search engines are, roughly enough, a quarter century old. Yes, we’ve a dominant player but that wasn’t true over this time period at all. At which point should we have frozen development into that one public version?

We should all still be Asking Jeeves? Using AltaVista? Yahoo’s where it’s at?

And then, of course, the biggie. No one does make money by running a search engine. People make money by selling advertising. Some of which appears on the search engine, sure, but it’s the being the nexus of the advertising market which is the cash cow, not the engine.

Finally, we did actually try this. Who uses Quaero these days?

It’s just amazing what people will believe….

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4 COMMENTS

  1. If only we’d had the wisdom to do this years ago we’d all still be using dial-up. I do miss the screech of a modem cranking up.

  2. have you seen how many women’s magazines there are? In my supermarket I counted 36 – THIRTY SIX! There is no reason why the reading public needs more than one women’s magazine that can be run as a public service.

    Even worse, there’s dozens of local papers in the country. Such a waste! There is no reason why the reading public needs more than one local newspaper, there should be a single newspaper that is run as a public service.

    And all the hobbyist magazines! Woodwork, modelling, fishing, electronics. Such a waste. There is no reason the hobbyist public needs more than one hobbyist magazine, there should be a single hobbyist magazine run as a public service.

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