Monday, 7 March 2016

The accountability of markets and governments - lessons from a Keighley cafe


In positioning themselves in opposition to states, tech giants have taken on certain state-like characteristics. “If you look at Google and Microsoft, they don’t just have the power of states, they even organise themselves like states,” says Brown. “Microsoft has a foreign service that negotiates with foreign governments.” Facebook has its own internal counter-terrorism unit.

It seems that some people are getting hot and bothered about the way in which big tech firms are behaving. This is prompted, in part, by popular decisions such as Apple's refusal to crack an iPhone at the behest of the FBI. Now while some people - mostly from the populist left (the sorts who applaud at the wholesale theft of private property) - are agitated about big business taking on the sort of hegemonic role normally reserved for governments, I'm rather more interested in the extent to which this approach challenges our model of representative democracy by presenting accountability via customers and markets rather than via elections.

Democratic systems evolved because people demanded a say over the decisions affecting them - "no taxation without representation" absolutely captures the principle of democracy. But in accepting this model for government, we also accept its limits - limits beautifully captured by this little piece about a cafe in Keighley:

A STRUGGLING Keighley cafe owner has been threatened with prison if she does not hand over cash for the town’s new Business Improvement District.

BID bosses have demanded Janet Croden, who runs wartime-themed Forteas in North Street, pay £97 to a special fund for town centre promotion and improvements.

The BID, which is run by local businesses, also has the power to make Mrs Croden bankrupt or seize her property if she fails to pay up.

Mrs Croden said that last autumn when Keighley businesses were asked to vote for or against setting up the BID, she could not see how Forteas would benefit.

I'm not here arguing for or against the imposition of this additional tax on Ms Croden's cafe merely pointing out that it shows us the limitations of democracy as a system. Having voted for the additional tax, Keighley's businesses (or rather the local council on their behalf) are able to insist that all businesses pay up regardless of whether they supported the proposal.

I'm guessing that our tech progressives who believe Apple et al are too over-powerful are quite happy with Keighley's little business democracy. But what they're not asking is whether a system founded on decisions freely made in an open market makes authority (and for the sake of argument we'll say Facebook, Google and Apple are, in this context, authority) more or less accountable than is the case with a system based on representative democracy. This isn't a question about ownership but rather a question about market power and whether that is exercised by us as consumers or by the big businesses as big businesses. And, as the tech progressives make clear, the loser in all this is the state:

However, tech giants have something new: millions of loyal customers, many of whom choose to side with companies over their government. This is especially true in the dispute about privacy and encryption. In this light, Apple is protecting its citizens.

It's also true that these progressives are now likely to work with the state in attacking these large consumer-based powers - for example by scuppering free (or pretty near free) internet access for millions of poor people in India. The apparatus of government is used to prevent one of these new powers from acting positively essentially for reasons of protectionism (which is all so-called 'net neutrality' is really):

While it acknowledged some “positive effects” of differential pricing, TRAI said that “differential tariffs arguably disadvantage small content providers who may not be able to participate in such schemes.

“This may thus, create entry barriers and non-level playing field for these players, stifling innovation. In addition, TSPs may start promoting their own web sites/apps/services platforms by giving lower rates for accessing them.”

The beneficiaries here aren't India's consumers but a small group of Indians with the capability of offering ISP services. And, while the core context is the myth of net neutrality, the wider issue takes us back to government and it's capture by producer interests. What saddens me most in all of this is that those producer interests have persuaded a group of activists - I've dubbed them tech progressives - that a more expensive, industry-dominated web is better than a cheaper, consumer-focused web.

Returning to the theme we started with - is Apple more or less accountable than the US government - we can see an emerging discussion that places the exercise of consumer preference and power in direct competition to government and to a group in society who have historically seen themselves as champions of 'people power', the progressive left. It's pretty safe to say that neither the FBI nor Apple are especially accountable but Apple has one advantage - you and I don't have to be one of its customers. If you live and work in the USA, you've no choice as to whether you're the 'customer' of the US government and its agencies.

It's the difference between the Keighley cafe owner freely agreeing to pay into a marketing agreement to promote the town and her being coerced into paying because she was outvoted in a referendum.


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