Having the opposite effect


In 2015, Travis Kalanick, then-CEO of Uber, said, “we envision a world where there’s no more traffic in Boston in five years.” It hasn’t been five years yet, admittedly, but the odds of Kalanick’s prediction coming true seem close to nil. The headline of one article on the subject reads, “Ride-Hailing Services Aimed at Cutting Traffic Are Having the Opposite Effect”

A report published by the UCDavis Institute of Transportation Studies in October 2017, which surveyed over 4,000 adults in seven U.S. cities, found that after rolling out one of the two services public transport usage dropped by six percent. More worryingly, the study found that between 49 and 61 percent of journeys made using the likes of Uber and Lyft would have been made on foot, on a bike, on public transport, or not made at all, if those services weren’t available.

It’s not just Uber and Lyft. Lots of tech innovations seem to be having the opposite effect (at least, if you take their proponents at their word). Spotify, according to its CEO, Daniel Ek, aspires to be the primary source of income for 1 million artists around the world, promoting a world in which the arts are more financially viable than now. In reality, it seems to be exacerbating income inequality in the music industry:

As with most streaming services, Spotify’s royalty system pays big money to the biggest pop stars, leaving scraps for older and more cultish artists. The company pays roughly $7 for every 1,000 streams, which means Ed Sheeran, who led all artists with 6.3 billion Spotify streams, pocketed more than $44 million last year; meanwhile, jazz trio The Bad Plus makes fewer than $100 every three months in streaming and pointedly withheld its latest album from the service.

Mark Zuckerberg claimed that Facebook and other social media would ameliorate the problem of the “filter bubble”, where people would see only news that confirmed their pre-existing beliefs.

He compared the current media landscape to 20 years ago when people only had access to a few major TV networks and newspapers. “You got all your news filtered through that.”

With Facebook, he said, most users have friends who have different political views to their own. “Even if 90% of your friends are Democrats, probably 10% are Republicans. Even if you live in some state or country you will know some people in another state, another country.”

“That means that the information you are getting through the social system is going to be inherently more diverse than you would have gotten through news stations.”

There was a remarkable article in the Washington Post today about a Facebook page called “America’s Last Line of Defense”. It occupies the (increasingly populated) niche in the right-wing media ecosystem of clickbait stories that are patently fake, where the headline is so emotionally charged that the content and facts of the story become almost irrelevant. (In a strange way, it reminds me of articles from The Onion.). America’s Last Line of Defense “made up stories about California instituting sharia, former president Bill Clinton becoming a serial killer, undocumented immigrants defacing Mount Rushmore, and former president Barack Obama dodging the Vietnam draft when he was 9…[it became] one of the most popular on Facebook among Trump-supporting conservatives over 55.”

The twist is that America’s Last Line of Defense is “political satire”, and was set up as a “practical joke” by Christopher Blair, a liberal blogger, and a few of his (also liberal) friends. It also makes no effort to hide that fact.

“Nothing on this page is real,” read one of the 14 disclaimers on Blair’s site, and yet in the America of 2018 his stories had become real, reinforcing people’s biases, spreading onto Macedonian and Russian fake news sites, amassing an audience of as many 6 million visitors each month who thought his posts were factual. What Blair had first conceived of as an elaborate joke was beginning to reveal something darker. “No matter how racist, how bigoted, how offensive, how obviously fake we get, people keep coming back,” Blair once wrote, on his own personal Facebook page. “Where is the edge? Is there ever a point where people realize they’re being fed garbage and decide to return to reality?”

The article profiles one Facebook user, Shirley Chapian, who lives alone and consumes most of her information through Facebook. “Most items came directly from political groups Chapian had chosen to follow: “Free Speech Patriots,” “Taking Back America,” “Ban Islam,” “Trump 2020” and “Rebel Life.” Each political page published several posts each day directly into Chapian’s feed, many of which claimed to be “BREAKING NEWS.” The article describes the deeply disturbing way in which Chapian’s appetite for conservative disinformation was whetted by Facebook’s targeted advertising, how the algorithm hastened her journey to the increasingly dark and bizarre corners of the right-wing political internet, from Alex Jones to America’s Last Line of Defense. In one very depressing interaction, Blair and other moderators try to fact check his own bullshit story in the comments section. Chapian thinks these comments are from “nasty liberals” and continues believing it.

In total, Chapian ended up following 2500 (!) conservative political pages on Facebook, in what the article describes as an “ideological echo chamber”. Remember Mark Zuckerberg’s proclamation that “the social system” provides news that is “inherently more diverse” than your local television station? That anyone took him at his word is pathetic.

Conservatives delight in pointing out situations in which liberal do-gooders enact well-intentioned policies that end up being counterproductive. One well-known example is the Peltzman effect, named after Sam Peltzman, UChicago economist. Peltzman claimed that automobile safety regulation in the 1970s, like mandatory seat belt laws, didn’t save any lives. Why? Because individuals respond to incentives, seat belts reduce the incentives for driving safely, yadda yadda: it’s the standard Econ 101 formulation, which carries with it the apparent gravity of a mathematical law.

Peltzman, of course, was mostly wrong, like many UChicago economists. Per Wikipedia,

A reanalysis of his original data found numerous errors and his model failed to predict fatality rates before regulation (Robertson 1977). According to Peltzman, regulation was at best useless, at worst counterproductive. Peltzman found that the level of risk compensation in response to highway safety regulations was complete in original study. But “Peltzman’s theory does not predict the magnitude of risk compensatory behaviour.” Substantial further empirical work has found that the effect exists in many contexts but generally offsets less than half of the direct effect. In the U.S., motor vehicle fatalities per population declined by more than half from the beginning of regulation in the 1960s through 2012. Vehicle safety standards accounted for most of the reduction augmented by seat belt use laws, changes in the minimum drinking age, and reductions in teen driving (Robertson 2015).

I think we need to coin a new effect (one that’s real!) to describe the disconnect between the stated goals of technological innovation and its actual effects, and how techno-optimism has yet to reckon with the toxic and perverse interactions between technology and capitalism. I don’t believe that tech leaders are do-gooders or well-intentioned, like the liberals that Peltzman were criticizing; as I’ve written before, I don’t think that Zuckerberg truly cares about diversity of news or that Kalanick wants to see the end of gridlock. These are statements intended for public relations, for the reply guys on Twitter, the stenographers at Axios, and the futurists at New America.

As in Peltzman’s analysis, the disconnect stems from the problem of incentives. (Where Peltzman went awry is in assuming that people would be much more willing to get into a car accident with a seat belt than without, not in assuming that incentives are important.)

In the case of Uber, what are its incentives to reduce traffic? What are those of its drivers? And its customers? Traffic is a classic “tragedy of the commons” problem where the incentives of various actors do not align in a way that the optimal social outcome is produced. As an example, it’s worth noting that Uber tries to maximize driver idle time in order to minimize customer wait time, which means that “For a typical passenger trip of 5.2 miles, a…driver travels three miles waiting to get pinged and then going to pick up the fare”. How could such a policy not increase traffic?

The same, of course, goes for Spotify and Facebook. Spotify wants artist content, and to the extent that artists provide that content without demanding a livable wage, the unfortunate market equilibrium of 0.7 cents per stream, or lower, will continue to exist. And Facebook wants user engagement, and because that engagement burgeons when users are fed content that coheres with their ideology and that triggers their (only human) emotions of outrage and fear and hatred, their algorithm will continue to promote the filter bubble and clickbait at the expense of factually sound, “diverse” news.

All of this brings me to the topic I’ve been thinking about in the last week or so: the expansion of Amazon to Long Island City in Queens. Here’s what Mayor de Blasio had to say about it:

This is a giant step on our path to building an economy in New York City that leaves no one behind. We are thrilled that Amazon has selected New York City for its new headquarters. New Yorkers will get tens of thousands of new, good-paying jobs, and Amazon will get the best talent in the world. We’re going to use this opportunity to open up good careers in tech to thousands of people looking for their foothold in the new economy, including those in City colleges and public housing. The City and State are working closely together to make sure Amazon’s expansion is planned smartly, and to ensure this fast growing neighborhood has the transportation, schools and infrastructure it needs.

Through a narrow, New York-focused lens, this perspective makes some amount of sense. (Whether the country as a whole should allow its wealthiest sections to be further enriched is a separate question.) HQ2 workers will pay gobs of taxes, and I would not be surprised to see a positive return on investment, exceeding the billions in subsidies flowing out of city coffers. But whether Amazon’s HQ2 will make New York a better city, which is the implication of de Blasio’s gauzy rhetoric, is much more unclear. Will these jobs go to people in the city who need them (“those in City colleges and public housing”) or to outsiders (like me) who see a financial opportunity and end up gentrifying and making the city more expensive as a result? Will the promised investments in “transportation, schools and infrastructure” actually materialize?

One way to answer these questions is to return to the subject of incentives: namely, Amazon’s. If New York is made more unlivable — higher rents, a more dysfunctional and inequitable transportation system, more segregated schools, and an increasingly homogenous and uninteresting selection of stores, restaurants, and nightlife — Jeff Bezos won’t give a shit. And, at the point that those consequences start to impact his bottom line, he will do what any capitalist would do, and abandon New York for any of the other dozens of cities willing to debase themselves for him. In the meantime, he will lobby against policies like the congestion tax (which affects Amazon delivery) and higher taxes for schools and infrastructure, just like he has done in Seattle. Already, there are reports that Amazon’s new offices will come at the expense of 1500 affordable housing units in Long Island City.

To put it more succinctly, de Blasio is making a Faustian bargain: that concentrating more power in the hands of a company actively opposed to higher taxes, public infrastructure, and equitable living will, ultimately, further those goals; that we can ride the scorpion but not get stung. By the time we see the effects of that bargain, likely through a story reading “…Having the Opposite Effect”, he and “Amazon Cuomo” will be long gone.


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