Competition for Information and Conspiracy Theories

A few days ago I responded to a post from a family member about a disagreement over the effectiveness and safety of the Covid 19 vaccines. I took the stance that despite imperfect knowledge, the evidence of the effectiveness was overwhelming while reported side effects are minimal compared to the benefits. I spent a few hours writing the comment beginning in my church parking lot while my two oldest attended morning religion classes. I tried to be civil in my explanations, but as I am prone to do, I was probably a bit blunt and condescending at times as I am regrettably prone to be, especially when I do not have time for editing. Knowing that I had a lot of work to do that day, I told myself I would not go back into Facebook that day. I believe I saw at least one notification that someone had responded, but I resisted the temptation to view it at the time so as to be able to complete my other responsibilities. This afternoon I went back to his page to find the original post, and I am unable to find the post or the comments. I am wondering if Facebook’s “police” have removed the post in the interest of protecting the public from the spread of false information. I am still a novice user of Facebook my inability to find the post could be to due to my own incompetence, but I know that there has been significant policing by Facebook and other social platforms on these issues, and this made me wonder why removing the post on this topic would be better than allowing discussions to advance. Perhaps he blocked me which would certainly be his prerogative.

Since my comment to his post was likely the result of pent up thoughts from recent months that I’ve been meaning to post, it probably would have been better for me to bring my thoughts to light by making a post to my own page. I do not claim to understand much of the science behind Covid 19 and the vaccines in question, nor about most things for that matter. But I do feel like I have better understanding than most people on how information is generated. In an economy where information decisions are highly decentralized with significant freedom to share this information, the less successful any large scale effort to benefit off of private information will become (see, Hayek, 1945, “The Use of Knowledge in Society.”). There is no more effective mechanism for decentralizing and transmitting information than a free market economy. I thought a lot about this during the Reddit GameStop Revolt. While some saw this as a successful way to stick it to the hedge fund managers, which is certainly did do, the reality is that most individuals that participated lost a lot of money. Why is the case? The more successful the collusive efforts of this large group of investors at maximizing joint gains, the more profitable it became for any one individual to break away from said collusion for personal gain. Similarly, the more competitive the market for information, the less credible any claims of large-scale conspiratorial efforts become.

With this in mind, I have no desire to limit anyone’s freedom to share their ideas, and think that such efforts by those with the power to do so will be counterproductive. There are two main points that I wish to make. First, because the ability to share information, and if necessary profit off this information is relatively high, in the United States, the likelihood that a large-scale conspiracy could be executed is extremely low. Second, because the decentralized nature of the economy and information is necessary to prevent profitable large-scale collusion from taking place, it is essential that the ability to share this information be preserved. In other words, the more that the government, Facebook, and other social media outlets seek to limit the free expression of ideas, the more credible that conspiratorial claims will become over time. Although there may be some concerns from what many may claim to be false information, efforts to limit this expression is a much more serious concern in the long.

Despite recent trends, people in the United States still enjoy higher levels of freedom to share information than most other countries. There are certainly consequences for saying things that are unpopular, but it is very rare where such statements will lead to imprisonment. The study of market structure tells us that the ability for firms to effectively collude decreases as the number of firms increases. Cartelization, meaning the an agreement for a number of firms to agree to limit production in order to raise the market price, is technically illegal in the United States even though in practice there are cartels exist in actuality for many reasons that are mostly irrelevant for the point I am trying to make here. When attempted, they are very difficult to maintain, given the significant financial benefit from undercutting other cartel members. They are impossible to carry out in more competitive industries such as agriculture where the number of parties necessary to keep the cartel in place is not tenable. Any effort to collude on production and pricing in, say, a market with 1,000 sellers would be futile as it only takes one seller to significantly undercut the rest of the market, and in response all other sellers will respond in kind. Similarly, the more individuals and entities that are able to provide information as well as the number required to have access to that information, the less likely that any collusive agreement could maintained.

Just as cartels are unlikely to be maintained as market competition increases, large-scale conspiracy theories are not viable given the significant level of coordination necessary to carry these out effectively The idea that there is a large group of individuals in government, business, the media, labor market, etc., who are all in cahoots to undermine the economy by withholding the transmission of knowledge, with one shared, singular purpose, relies on many untenable conditions. First, it relies on a rather cynical assumption of widespread deviant human behavior. Second, it assumes that the group will be able to effectively deter individuals from releasing the information. Third, it requires a level of central planning, i.e., Soviet style economic engineering, that is quite difficult to carry out in any circumstances, let alone a functional market economy.

As do most economists, I believe Adam Smith to be correct when he said that individuals are led by their “own interest.” Own interest does not mean we are all a bunch of sociopaths, although some of us certainly are. Own interest can mean feeding and clothing your family, saving the whales, saving souls, or spending all your free time in riotous living. Do not misunderstand me. I am not claiming there are not sufficient deviant persons to form a group large enough to pull something like this off. I am merely claiming that the ability to hold together such a large group of deviants while effectively screening non-deviants from membership is quite difficulty to achieve. 

There are plenty examples of smaller groups of deviants such as the drug cartels in Mexico that are unable to maintain collusive agreements. The irony behind these organizations is that the violent behavior with which these are associated actually demonstrate their lack of effective cartelization. If the cartels actually were effective at working together to maximize joint profitability, violence would be limited and we would probably hear very little about them. The impetus behind all the murders is the need of one group to make an example of another group violating previous arrangements or to punish an individual who leaked information to the police, media, or other organizations. The fact that cartelization of a relatively small scale proves to be next to impossible to maintain, demonstrates how much more difficult it would be to pull of significantly larger conspiracies. Think about all of the individuals that would be necessary to maintain a conspiracy of the magnitude that many are claiming, say about Covid 19. Think of the bureaucrats, politicians, scientists, the major news editors that would all have to work together to keep this information from coming to light. Whether individuals agree with them or not, the best trained journalists work for the major media outlets where the payoffs and notoriety are the highest such as The Wall Street Journal, The New York Times, etc. There are many ambitious young journalists, who would love to break a story that would win them a Pulitzer prize. So, yes, I am skeptical of outlets, bloggers, etc., building a livelihood on narrow niches where individuals have nothing to lose by reporting on stories without vetting or verifying the claims made by their sources. In many cases these individuals may be well meaning. The idea that none of the editors at the top media outlets are willing to break away from an explicit or implicit collusion agreement, when the potential gain is so large, does not hold up to muster. Neither will they risk their careers in order to put forward something with little corroboration. Certainly, all news organizations have their own biases and put their own biases which may make it difficult to discern the full truth from their articles. But the idea that each of them would hold back on reporting on a story, if verifiable, that would set them apart from all other outlets for years to come, does not make economic sense. The more logical alternative is that there are suspicious inconsistencies in the information being brought forward by these sources or they are unable to find sufficient support for these claims, despite the fact that the financial gains to coming forward with such information would likely dwarf any benefit from cooperating with the conspiracy.

The second condition, the ability to deter participants from sharing private information, was discussed somewhat in the previous paragraph. This is much more likely to occur in countries that place little emphasis on basic rights or where legal systems enforcing these rights are weak. Where freedom of speech, press, etc., are limited, and government leaders are able to execute or throw people in prison with impunity, it is not only more likely, but almost certain that many of the conspiratorial claims are true. In fact, I do believe that similar claims in countries with less market decentralization and freedom are predominant in many countries like in Cuba, Venezuela, and North Korea, and many countries where what we know as our First Amendment Rights, have no claim. These countries basically only have one legal new outlet, and to the extent that other outlets exist, these can only exist to the extent they cooperate with the government. Sharing sensitive information often leads to death or a lifetime of imprisonment. Shaming, cancellation, and other trends in this country are concerning as I will discuss further below, but these costs are still quite small compared to a lifetime of imprisonment or even execution suffered by those in other countries.

Finally, to demonstrate the point I will focus on the Covid 19 conspiracies. The idea that a relatively small group of individuals were able to perfectly manipulate the world economy in order to manipulate the demand for vaccines for profitable purposes, suggests a level of economic planning that is beyond any level that has been implemented successfully in the past. Efforts by socialist and communist governments have failed miserably despite thousands of highly intelligent individuals trying to plan every detail of the economy. I am not saying that there is no truth behind any of these claims that are made. On the contrary, there are many facts which should be quite concerning and should be looked into. To claim that many suspicious facts gathered over decades were perfectly orchestrated as if by some grand puppet master goes well beyond logical reasoning. Again, I refer to the example of the GameStop revolt. Many individuals made millions through this effort, but despite the best organized, widespread effort to manipulate the market for private gain we have ever seen, the reality is that most individuals lost out big. If trying to maintain an arrangement worth tens of billions of dollars is difficult to maintain, what is the likelihood that a much larger collusive efforts could be maintained where trillions of dollars are possibly at stake?

Although most of my efforts in this post have been to explain why large-scale conspiracies claimed by many are highly unlikely, both theoretically and empirically, I will end with my second point, which I believe is the more important of the two. The corollary to my first claim is that any effort to limit individuals from sharing this information through increased regulation by government, Facebook and other social media outlets will only increase the plausibility and the likelihood of success of future large-scale conspiratorial efforts. Despite my arguments above, I am adamant that the rights of individuals to share their beliefs on these issues. The idea that intimidating, deleting, and shaming individuals into silence will lead to a safer country with less polarization over time, that people’s ideas will disappear if we just choose to ignore them, is just not tenable. There are certainly all types of speech that are highly offensive to many people, but pushing groups to communicate in alternative platforms or even the dark web will only increase divisions in this country as individuals become less exposed to alternative ideas. As Steve Levitt and Stephen Dubner point out in Freakonomics, the Klu Klux Klan thrived on secrecy.

Although conversations in social media can be uncomfortable, trying to work out our disagreements through words, in a civil manner if possible, is much better than the alternative. If my harsh, and often blunt response to individuals makings these claims, serves to diminish the courage of individuals speaking up on their sincere beliefs, I regret the manner in which my message was delivered and will strive to do better in the future. I hope that my long essay will help individuals to understand my skepticism about claims should I comment in the future rather than be interpreted as an effort to silence them. The future of this country and the freedoms we wish to preserve depend on all of us learning to discuss ideas civilly. If we can bring others closer to our point of view through logical reasoning, so be it. Just as important is trying our best to disagree agreeably whenever possible. I am cognizant of many ideas that I have expressed which would be pretty easy to push back on, and I welcome any comments or critiques.