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Conservatives Need to Compete

1/16/2021

 
Turning to the Government Is Not the Answer
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​Dennis Prager is an intellectual giant of the conservative movement. He’s long been one of my heroes. But I have to answer a serious question that he’s posited this week regarding the freedom of private corporations. I don’t like where he seems to be going with it, and it’s an idea that seems to be catching on in conservative circles. It’s the idea that we need to discuss the end of freedom for private corporations when it infringes upon free speech. I’ll tell you now, letting the government in the front door to police the traffic of the internet will not end well.
​First, I agree with Dennis on one major point. Every group has its share of fools. The Trump supporters who stormed the capital on January 6th was a group of fools. But as he said, you don’t judge a group by the fools, you judge a group by how they tolerate their fools. 
 
He points out that within an hour, just about every conservative leader condemned what happened at the capital and decried violence as a means of protest. Contrast that with how the liberal left has tolerated their violent rioters all summer long. And the very definition of the word riot means the inclusion of violence. The left’s response ranged from tepid to outright condoning the violence. In one incident, Antifa barricaded the doors to a police station full of officers and set the building on fire. 
 
In response to the violence, just about every social media company has swiftly taken action against the President and many of his supporters. It was a bad and short-sighted move, but I’m surprised they waited this long. These are all companies run by liberal democrats who hate Trump. If they don’t want to help a group with whom they are ideologically opposed, then so be it. Dennis Prager would never allow videos on his PragerU website which evangelize for socialism. It’s his website, and he can do as he pleases. 
 
And yet, Dennis would not extend this same freedom to Delta Airlines? He makes his point about censorship by putting forth this question: Why can’t Delta Airlines refuse service to anyone who is carrying a Wall Street Journal newspaper? The answer is simple. There is no reason why Delta Airlines shouldn’t be allowed to discriminate against people based on their newspaper.
 
They already discriminate against people who they feel are dressed inappropriately. Neither will they serve you if you refuse to wear a face mask. I even saw a story last year about a man who was forced off an airplane for excessive flatulence. The moral of the story is that business owners deserve the right to discriminate against who they feel a moral urgency to do so. And you can’t force your morality upon someone else’s business. Conservatives believed this once upon a time when they sided with bakers against making wedding cakes for a homosexual couple.
 
Delta and every other corporation will always weigh the cost/benefit ratio of discriminating against customers vs lost revenue. If Delta starts to ban business travelers who carry the Wall Street Journal, you know what would happen? American Airlines would launch a promotional campaign that if you carry a Wall Street Journal, you get a 5% discount. American Airlines would pounce upon an unforced error by a competitor to steal market share. Freedom is the check that keeps the balance. Not government regulation.
 
The answer to this fiasco is one that conservatives have been touting for decades.  Competition. Why does Fox News exist? It’s because the other networks had an overwhelming liberal slant. It allowed a competitor to come in and steal market share. What needs to happen is the equivalent of Fox News in social media.
 
Saying that the current crop of social media companies is too big to compete against is an excuse for laziness. Especially when a small company called Tik Tok came out of nowhere and took the world by storm and with some pretty significant handicaps. They were a Chinese company which Trump tried to exterminate. But a year ago, I don’t think I’d ever heard of Tik Tok. They sucker punched Twitter, Instagram, and Facebook and took valuable mindshare seemingly overnight. 
 
Plus, the ideological totalitarianism of Twitter and Facebook will be their downfall. It’s the first major opening to allow competitors to steal their market. Twitter and Facebook are succumbing to what happens to almost all corporations when they get to a certain size. They make major mistakes rooted in hubris. When this happens to a large company, either they learn from their mistakes or they start to implode. If they continue their course towards destruction, it will be because they believe that they are too big to fail. Which is never the case. 
 
Conservatives have been saying that the answer to high health care costs lies in the private sector and not more government regulation. Why? Because when a few companies charge exorbitantly high prices to a very large market, other entrepreneurs start salivating at stealing profitable market share. A similar dynamic exists with social media.
 
A few social media companies are making a great deal of money off of a very large market. But until now, the risk of a huge capital outlay to compete against these companies has been too great. There is no guarantee that you can steal customers, and you could lose your investment. See Quibi. But now with millions of people angry at the large incumbents, the risk to reward ratio has shifted significantly. For would-be entrepreneurs of startup social media companies, this could be the equivalent of the great Oklahoma land rush. Millions of people are looking for an alternative. If Parler doesn’t raise the money to continue their operations, they are snatching defeat from the jaws of victory. And someone else will take their place. ​
 
And you know what would kill this land rush? Government regulation. More regulation would simply preserve the current system of a few large companies that aren’t making anyone happy. It sounds like the Soviet Union. And yet, conservatives are openly advocating for this kind of entanglement? Startup companies finally have their chance at taking on the big guys, and you would kill their chances in the name of a short-term win? That’s disgraceful. It’s what I would expect of the Left, not the Right. 
 
The thing I found the most disturbing from the past week was not Apple or Google kicking Parler off of their AppStore. I thought it was a dumb decision full of hypocrisy. But I would defend their right to do it. The most striking event to happen was Amazon blocking Parler from using their servers.
 
But Amazon is like Walmart. It’s the biggest store in town with the best prices. It is hard to compete against Amazon unless they start to make unforced errors. Which they just did. Amazon has no proprietary items of value with which they attract customers. They rely on large volume and low prices. If they start to arbitrarily peel away their volume, their costs go up, and they become more easy to compete against.
 
Anyone with money can go out and buy servers and do what Amazon does. No one can claim that they are denied freedom of speech just because Amazon won’t carry their website. That’s like having your lawn service refuse you service because you put up a Trump sign. So what? You hire a different service, or if worse comes to worst, you go buy your own lawn mower and cut your grass yourself. But don’t use that as an excuse not to mow your lawn. If your old lawn service wants to earn less money, it’s his prerogative,
 
If Amazon wants to shoot themselves in the foot and endanger their high-volume/low-cost business model, let them. It opens up the web-services field to more competition. 
 
There is always a natural counter force to hegemony. Most of the world buys into the Android ecosystem, but a sizable minority are willing to pay more for the greater quality and cohesiveness of Apple’s iOS. Liberal media is everywhere, but it has given rise to Fox News and NewsMax. Most people like traditional cars, but a few people like the zany craziness of Tesla. 
 
The counter-culture alternatives have yet to happen in the social media world. If Parler doesn’t come back on independent servers, something else will take it’s place. But I think the censorship events that started around January 7 may have ignited a fire. A fire that won’t be extinguished until there is an equivalent to Fox News in the social media world for the various platforms. And it won’t happen unless the government stays out of the way. 

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    Robert Perez

    Manufacturing and distribution analysis since 1993.

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