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The Institutional Risk Analyst

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Interview: Joe Costello on the Risk to Democracy from Social Media

March 22, 2021 | In this issue of The Institutional Risk Analyst, we feature a discussion with political analyst and historian Joe Costello about the state of the American political economy in the age of the internet and social media. He's had long experience working in and following American politics. Along the way he's also worked for political campaigns in Nigeria and Tanzania. Joe has written two books: Of By For and The Politics of Technology.


The IRA: Thank you for taking the time to speak to us Joe. How are you holding up in the age of COVID? We’ve been renovating a house over the past month and literally planned the whole job online. And for the record, the wholesale price of a clear pine 2x4 is now $10 in Westchester County New York, whether you buy lumber online or in person.

Costello: One of the trends we’ve seen with this crisis, for better but also sometimes for worse, is that the push to go to the screen is massive. It is problematic for society in many ways.

The IRA: As one of our favorite mortgage CEOs said to us the other day, you can maintain relationships on Zoom but you cannot build new relationships online. I am not sure that we agree. What is your take on democracy in the age of anti-social media?

Costello: I agree with the observation about building relationships online. But the other, more important point is that the screen – television, computer, or smartphone – has never been democratically controlled. And it still isn’t. That is the real problem of pushing people online to conduct many personal and public tasks. When the internet first emerged three decades ago, I thought it had some potential to improve society, particularly politics, but it has not lived up to that promise.

The IRA: We learned many years ago that the only free press or media is the one you own. If you don’t have your own soapbox like a Jeff Bezos or Rupert Murdoch, then you are a subordinate. Going back to the earliest days of the republic, Americans of power and wealth have always owned their own propaganda organs. But as we’ve seen with Jack Ma and Alibaba Group in China, Xi Jinping and the Chinese Communist Party will not tolerate competition when it comes to control over the media. How do we give Americans more freedom online without ending up with an oppressive authoritarian model a la communist China? Is the old common carrier concept for regulating the legacy media even a useful point of departure in the wake of Donald Trump and the 2020 election?

Costello: Right. In the US, for centuries really, if you were going to start anything political, the first thing you did was start a newspaper. In a Connecticut Yankee, Mark Twain has his character start a newspaper as his first political action. The real question is how you deal with concentrated power, historically that's been politically problematic, industrialization created new ways to centralize. Common carrier started with the notion you'd allow massive centralized power to control a given medium.

The IRA: Rush Limbaugh started on cable TV in 1992. He led the vanguard of conservative broadcast media that outflanked the old consensus media channels all Americans depended upon after WWII. American media was government controlled during the great war, which was won by big companies and big banks singing a government approved song. You changed that equation radically in the 1990s.

Costello: Tried anyway. In 1992, when I ran communications for Jerry Brown’s presidential campaign, we went around all of the established media. We used cable news, which was a new medium, and also an old but underestimated media called talk radio. We went around the lock that both political parties had on the established broadcast media and they hated it. That’s when I got introduced to the internet. I started speaking to some of the early adopters of the internet and started to look at how it was structured. To answer your question about structure, we need to look at a whole new way of understand and managing distributed networks. We need to better understand how distributed networks function, both technically and politically. When the internet first arrived, everyone thought that the new internet technology would break up existing monopolies in the media, but instead new big players came in and today we have Facebook (NYSE:FB) and the Google unit of Alphabet (NYSE:GOOG).

The IRA: Over a century ago, a Republican progressive named Theodore Roosevelt was able to engage publicly on the question of monopoly power and the big trusts, which of course were controlled by big banks. We rarely hear the use of antitrust laws discussed today. In those days, it was J.P. Morgan’s control of industrial, transformative industries and the railroads that mattered. Today we have broad information monopolies that turn Americans into prey, effectively economic serfs in their own land. How do we take the data away from the data monopolies and return control of data back to the individual?

Costello: Looking back at my discussions with some of the early pioneers on the web, they did know that there was a lack of understanding regarding the impact of electronic media on the world, but they all had a terrible lack of political understanding. Thirty years on, we still don’t have a good understanding of this political aspect of technology and particularly how private media and public discourse come together. We get on Twitter or whatever and think that we have a voice. But Twitter is disappearing people and censoring people all the time, yet nobody seems to care. I can’t understand how people are not completely enraged by Twitter CEO Jack Dorsey’s decisions. People think that they have their own platform on the social media channels, but if you are on somebody else’s platform, you don’t have anything. They can disappear you or censor you instantly.

The IRA: Dorsey is essentially playing the role of censor just as the CCP in Xi Jinping’s Chinese prison does for over a billion people. In China, all live beneath the state and the party. So, what is the solution? Do we go back to the common carrier model and net neutrality?

Costello: No, the common carrier model is a legacy term that lacks a way to address the larger political issues raised by technology. We should have a better understanding of this, but so far, the model has been developed to suit the economic interests of large, publicly owned and financed media conglomerates. We could, for example, do a truly open distributed network for all Americans to use free of the whim and caprice of the owners of private networks. But we did not follow that path. What would that look like? How would that work?

The IRA: It is ironic that the original conception of the internet going all the way back to DARPA was a pure pee-to-peer structure. The original goal of the internet was creating a peer-to-peer communications network that could survive a nuclear war.

Costello: How the internet was developed and structured has never been well understood, but today we have a private network that is controlled by some very large and very powerful forces. I am not sure, given the economic power of the private networks, how we even get that conversation started. In the end these are all political questions, but our politics at this point are completely broken.

The IRA: In the 1950s, there was a national web of smaller publications and radio stations, local papers and broadcasters whose economic power was also local. They belonged to national news networks. The consumer credit bureaus were also local. Fast forward to present day and the tech that rolled up small newspapers and radio stations and credit bureaus simply rolled up into national media and data conglomerates. Humans tend to aggregate. We always seek to maximize profits by eliminating competition. The new technology enables and accelerates corporate concentration of economic power. Are we wrong to expect freedom of expression on private networks?

Costello: These are some of the basic political issues that they had at the founding of the American republic, like the questions of free speech and copyrights. The freedom of information is fundamental to any kind of democratic structure. In any free society, you must have freedom of information. For example, Thomas Jefferson was hostile to the idea of copyrights and patents. Jefferson was the most small “d” democrat of the founders. Remember, power is like gravity; it attracts. More and more power gravitates to the large media and data owners. Democracy is decentralized. You cannot have democracy if there is central control, as in the case of China or Twitter. Democracy is decentralized, always was and always will be.

The IRA: People vote, so democracy starts with the individual. So to summarize, democracy requires a truly distributed network while concentrated and centralized networks are authoritarian. Seems simply enough. Why don’t people recognize this simple truth?

Costello: We are so busy making money in the new internet age that we never take time to think about what we are doing and why. Take an example that most people remember: Napster. Napster was a way to download music, but it had the potential to be so much more because of the distributed nature of the software. Napster was that platform and you could build all sorts of functionality. Napster was killed in the name of protecting artists, but it was about keeping control over the medium.

The IRA: What about bitcoin? Isn’t crypto supposed to be decentralized money?

Costello: No, bitcoin is an attempt to create money by people who don’t understand money. Money is a political construct. You cannot remove the politics from money as bitcoin pretends because money is inherently political, since the Sumerians. We could certainly see a more distributed payment system in the future, but I don’t think bitcoin fills that role. It’s foolish to think that we can take politics out of money. We need to focus on the political problems posed by the concentration of economic power instead of thinking that we can run away from the problem via bitcoin.

The IRA: But back to Jefferson. He said famously that we need a little revolution now and then. Jefferson also said that “commerce between master and slave is barbarism.” Do we have to elevate anti-trust back to the top of the political discussion? How do we restore and protect democracy given that money and politics are inseparable?

Costello: That is the least we can do, but anti-trust in a historical sense is not the answer. The anti-trust laws of the early 20th Century are limited by the fact that the lawyers and the economists redefined it based upon whether consumers are harmed. Going back to the old progressive Republican position, the analysis was different and said that democracy cannot tolerate concentrations of economic power. That was the measure, not harm to consumers. We have to create laws, new political structures, and a broader national discussion that says we cannot allow power to be so concentrated. This should be the most important part of our political discussion today. Yet there is no discussion about the concentration of economic power in America today. How do we prevent the Facebooks and Googles from dominating our political life? That is the question we must answer.

The IRA: Thanks Joe.


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