“Amazon is doing the world a favor by crushing book publishers”

I have read many lamentations about the evils of Amazon but have yet to see anyone effectively rebut Matt Yglesias’s points in “Amazon is doing the world a favor by crushing book publishers.” The section about marketing is particularly interesting, since seemingly everyone agrees:

When I was a kid, my father was a novelist as were both of my grandparents. So I heard a lot of stories about how useless publishers are at marketing books. Then I got to know other people who wrote books and they had the same complaints. Then I wrote a book, and their complaints became my complaints. But it’s easy to whine that other people aren’t marketing your product effectively. It took the Amazon/Hachette dispute to conclusively prove that the whiners are correct. [. . .]

The real risk for publishers is that major authors might discover that they do have the ability to market books.

Publishers also appear to be bad at identifying which books readers want to read and which books readers don’t want to read; we’re now going to find that out by writers writing and then releasing their books into the wild.

Incidentally, though, it’s hard for me to find good books that are either self-published or conventionally published; if you have any suggestions please email me.

See also “Tyler Cowen on Paul Krugman on Amazon on the buzz.”

George Packer’s Silicon Valley myopia

It’s ironic that George Packer’s New Yorker article about the tech industry’s supposed political insularity is itself hidden behind a paywall (if this were a New Yorker article, I would cite statistics demonstrating the wealthy demographic served by the magazine and mention a telling detail about the luxury watches advertised within, perhaps with with the cost of the watches as a percentage of median household income used as a comparison). Packer makes a lot of noises about concern for the poor, but genuinely poor people might not be able to afford the magazine and now can’t even read the article about how San Francisco is alluringly pricing them out San Francisco for free.

Perhaps the weakest part of the article comes from references to housing prices, like “the past two years have seen a twenty-per-cent rise in homelessness, largely because of the soaring cost of housing.” But he doesn’t explain how limited supply in the face of increasing demand raises prices, as Matt Yglesias does in The Rent is Too Damn High or Edward Glaeser does in The Triumph of the City. There is a simple solution deploying century-old technology that can ameliorate San Francisco’s housing crisis.

Both Glaeser and Yglesias correctly observe that many urban jurisdictions prevent housing from being built; as a result, prices rise. But it’s not primarily tech companies or their employees who have driven housing prices in Silicon Valley: it’s residents themselves, and the courts that have given residents and politicians extraordinary powers to block development. That’s why “San Francisco is becoming a city without a middle class,” as Packer says in the article.

My own family was part of that exodus: my parents moved us from northern California to suburban Seattle in 1994 because housing prices were unreasonable and because California was becoming an increasingly bad place for middle-class people. Since then, housing prices have continued to drive most population growth towards places like Seattle, Phoenix, Las Vegas, and many of Texas’s cities, especially because urban development is easier in Sun Belt cities. Seattle, unfortunately, appears to be following in California’s footsteps by restricting the growth of housing stock and thus causing prices to rise.

The housing-price thing is one of my own pet peeves, since so few people connect supply restrictions, demand, and pricing; even Steven Berlin Johnson’s otherwise interesting rebuttal buys into Packer’s economic illiteracy. Beyond the housing issues, Packer writes:

Joshua Cohen, a Stanford political philosopher who also edits Boston Review, described a conversation he had with John Hennessy, the president of Stanford, who has extensive financial and professional tides to Silicon Valley. “He was talking about the incompetent people who are in government,” Cohen recalled. “I said, ‘If you think they’re so incompetent, why don’t you include in a speech you’re making some urging of Stanford students to go into government?’ He thought this was a ridiculous idea.”

Hennessy is more right than Cohen: if the system itself doesn’t work, why would anyone want to join it? Few highly competent people want to be ruled by incompetent people, and in government seniority rules. There’s often no way to make important changes from the bottom and no way to reach the top without going through the intermediate layers. That’s presumably why Hennessy doesn’t urge “Stanford students to go into government.”

In tech startups, if you think your company is doing something stupid and everyone ignores you, or ignores an obvious opportunity, you can leave and start your own startup. If you start your own version of government within the U.S., men with guns will show up to stop you.

Although Hennessy might not put it the way I have in the above paragraphs, such thinking is probably behind his statement (assuming, as I do, that Cohen is expressing it reasonably well). I’m writing this as someone whose business is to deal with various sections of federal and state government. It’s hard to imagine that Packer has this kind of experience; if he did, I doubt he’d have the worldview he does.

Packer does note that government investment in technology and research is partially responsible for the Silicon Valley of today (“The Valley’s libertarianism—which ignores the federal government’s crucial role in in providing research money—is less doctrinal than instinctive”), and that’s an important government contribution. But today, spending on science and medical research occupies about 2% of the federal budget; by contrast, spending on old people in the form of Social Security and Medicare occupies about 30%. Warfare, formally known as “Defense and International Security Assistance,” occupies 19%, and some of that goes to R&D of various kinds.

If federal R&D spending were higher as a proportion of the federal budget, Silicon Valley types would probably be much more pro-government. Note that this is a positive statement more than a normative one—that is, I’m not trying to argue that more money should be allocated to R&D and less to old people, but I do think we’d see a more positive view of government among Silicon Valley-types if we did.

There is this comment, which is somewhat myopic and somewhat accurate:

Technology can be an answer to incompetence and inefficiency. But it has little to say about larger issues of justice and fairness, unless you think that political problems are bugs that can be fixed by engineering rather than fundamental conflicts of interest and value

Regarding “larger issues of justice and fairness,” 300 years ago people who couldn’t work starved to death, median life expectancy was low, and numerous infants died of now-preventable diseases. Until the Industrial Revolution, starvation was a reasonably common and regular occurrence. Today, no industrialized countries have mass starvation, and that’s largely because of the technological and scientific progress that enables the social and monetary surpluses to provide important safety nets that Packer now takes for granted. “Political problems” are still real and still important, but so is a sense of progress that has enabled society, collectively, to worry much more “about issues of justice and fairness,” instead of working continually on farms. Technology actually has a lot “to say about large issues of justice and fairness,” because technology has given us the leisure to think about those issues and the wealth with which to address them.

In addition, Packer is mixing up questions about “fairness,” but, as as Roy Baumeister writes:

Fairness is important in all human social relations, whether large or small. But there are two different kinds of fairness. Experts call these equity and equality. Equality means treating everyone the same (obviously). Equity means giving out rewards in proportion to what each person contributed. Under equity, the person who contributes more or better work gets a proportionately bigger share of the reward (97).

Packer is focusing on equality, as he does throughout the article, but equity is important too, and New Yorker and New York Times articles almost always ignore this in discussions of “justice and fairness.” Fairness has to balance how rewards accrue to those who have made outsized contributions versus those who haven’t. That Packer doesn’t even acknowledge this distinction tells us a lot about the political glasses that color his world outlook but very little about how to think about the trade-offs involved with equality versus equity. There is a reasonable argument to be made about how governments should take more from major economic winners and give that to those who aren’t producing much of economic value, but Packer doesn’t even acknowledge these issues.

The future of the city: the L.A. and New York models

Matt Yglesias wrote an implausible-sounding story about “How Los Angeles—Yes, Los Angeles—Is Becoming America’s Next Great Mass-Transit City.” It sounds like L.A. is (slowly) becoming a more palatable place to live, and the city’s mass-transit strategy makes sense to me because driving pretty much anywhere in L.A. right now is a hellacious, grinding experience, and that experience is only getting worse over time. Which means L.A. and its residents only really have two choices: accept the hellacious driving experience and accept that it’s going to get continually worse, or attempt to build some kind of alternative system, presumably modeled on New York.

At the moment, we only really have two “models” of cities: the New York-style, walking and public transit version, or the L.A. style of car-based transport. Most cities over the last 75 years have followed the L.A. model, but L.A. is now demonstrating the limits of that very model.* When Southern California first began growing in earnest in the 1920s, cars were just getting started, and for each marginal driver getting behind the wheel made a lot of sense. But we’re now at the point where each marginal driver makes the situation that much worse, and the net effect of all that driving is an awful lot of misery. The only real alternative is allowing much denser construction patterns and building mass-transit around those very dense developments. I just didn’t expect that L.A.’s politicians and bureaucrats—and, by extension, its voters—would actually embrace, or at least tolerate, this solution.


* I’ve written a little bit about this topic before, most notably in Cars and generational shift.

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