Corporations such as Google, Amazon, and Live Nation are allegedly taking advantage of chokepoints in the economy, earning excessive profits. That’s the thesis of a new book, Chokepoint Capitalism: how big tech and big content captured creative labour markets, and how we’ll win them back. The authors are Uni. of Melbourne Law Professor Rebecca Giblin and writer and activist Cory Doctorow. Show host Gene Tunny speaks with Prof. Giblin about Chokepoint Capitalism in this episode.
Rebecca Giblin is an ARC Future Fellow and Professor at Melbourne Law School, and the Director of the Intellectual Property Research Institute of Australia. Her work sits at the intersection of law and culture, focusing on creators’ rights, access to knowledge and culture, technology regulation and copyright. Using quantitative, qualitative, doctrinal and comparative methods, she leads interdisciplinary teams with expertise across data science, cultural economics, literary sociology, information research and law to better understand how law impacts the creation and dissemination of creative works.
N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.
Gene Tunny 00:00
Coming up on Economics Explored.
Rebecca Giblin 00:03
We’re sharing less and less in the value that’s that’s created by our work. And that’s happening because we’ve got these increasingly powerful corporations, creating choke points that allow them to extract more than their fair share.
Gene Tunny 00:18
Welcome to the Economics Explored podcast, a frank and fearless exploration of important economic issues. I’m your host Gene Tunny broadcasting from Brisbane Australia. This is episode 169 on choke point capitalism. That’s the name of the new book from University of Melbourne law professor Rebecca Giblin and from writer and activist Cory Doctorow. Professor Giblin joins me this episode to discuss the book. Please check out the show notes, relevant links and information and for details where you can get in touch with any questions or comments. Let me know what you think about what either Rebecca I have to say in this episode. I’d love to hear from you. Right now. It’s my conversation with Rebecca Giblin on a new book with Cory Doctorow chokepoint capitalism, thanks to the publisher scribe for sending me a copy of the book. And finally, thanks to my audio engineer Josh Crotts for his assistance in producing this episode. I hope you enjoy it. Rebecca Gibson, welcome to the programme.
Rebecca Giblin 01:00
Hi, Gene.
Gene Tunny 01:01
Yes, good to have you on Rebecca keen to chat with you about your new book, Choke Point Capitalism: how big tech and big content captured creative labour markets and how we’ll win them back. So to begin with, Rebecca, could you explain what’s the meaning of a choke point? And why do you think capitalism can be labelled in this way? Or there’s a form of capitalism that is chokepoint capitalism?
Rebecca Giblin 01:40
Well, competition is supposed to be fundamental to capitalism. It is supposedly about the free exchange of goods and services. But you have this new orthodoxy that’s come out in the last 30 or 40 years. When you have Peter Thiel say competition is for losers. You have Warren Buffett salivating over companies that have what he calls wide, sustainable moats, which are barriers to competition that stop that, you know, lock in customers and lock in suppliers, and stop that free exchange. And once and this is now the orthodoxy that’s been taught in business schools, people are told that if you want to make a fortune, you don’t make something, don’t provide a service, but find a way to scrape off the value of other people’s labour. And these are the choke points. So it’s where you manage to lock people in. So you lock in customers, you lock in suppliers, you use, the power you get from that. And those increased margins you get from that to do a scorched earth approach where anybody in your kill zone gets eliminated so that there are fewer and fewer choices for those locked in customers and suppliers. And then ultimately, you shake everybody down for more than your fair share. And we see these choke pointed markets in throughout the culture industries in particular, that’s what we talk about in the book to demonstrate this problem. But they’re everywhere. We’ve started seeing the term getting used in the context of all different kinds of businesses. We’ve had people talking about on social media emailing us to tell us about it. One of the more interesting ones and somebody saying this is exactly what’s happening in the global ornamental plant industry is a big plant is a problem as well.
Gene Tunny 03:28
Ornamental what? Sorry?
Rebecca Giblin 03:30
Plants, Yes. Yeah, it’s a big problem in the plant market, we discovered. And, and what we’re really trying to demonstrate here is the danger of this. And the reason why so many of us are feeling squeezed right now. It’s not our imaginations, it’s that we are being and that we need to become really aware of it if we want to change the material conditions in which we live and work.
Gene Tunny 03:54
Okay, so by many of us, are you talking about creative professionals?
Rebecca Giblin 03:59
But it goes much beyond that as well. If you’re working, or if you’re a supplier to Coles and Woollies, for example, you are dealing with a similar kind of buyer power as what we talked about in the book. And so let me mention this. This book, we talk about monopoly a bit, which is, you know, we’re all familiar with that concept, because we got a board game for that one. It’s where you’ve got a seller, that’s really powerful. So Amazon, for example, is a really powerful seller. And its relationship with consumers because it controls so many consumer markets, including the market for books, but it’s also an incredibly powerful buyer. So if you’re a publisher or an author, you you you need to go through Amazon to reach those customers. And so it’s, it’s it’s got monopsony power as well, which is where you’ve got a powerful buyer. So if you’re a supplier to Coles and Woollies, you’re dealing with people. I have to say this word monopsony, it does turn a lot of people off. It did appear a lot more often in the book in the first draft and people begged us to take it out, but we do think we can make it sexy. Technically what we’re talking about here is oligopoly, which is probably even worse, which is where you’ve got a couple of very powerful buyers. But I’m going to use monopsony just for simplicity. But that’s what you’re dealing with if you’re a supplier to Coles and Woollies, in Australia or so many other companies that have increasingly come to control their markets. And the reason why we’ve got this increased corporate concentration throughout the world is largely due to the emergence of what we call Chicago School of Economics reasoning, this, it gets a little bit wonky at this point, but this consumer welfare theory, that suggests that we should only be concerned about corporate concentration, not just because it exists, but where it has the effect of, of harming consumer welfare, which is often treated as just looking at the prices people pay. There’s many problems with that standard. And we’ve seen them the consequences of that really starting to play out now. But one of the consequences is that it really ignores the fact that when you’ve got a powerful buyer, right, it may be that the prices that the consumer pays are not affected. But that buyer has its hand in the pockets of its workers and its suppliers. And you’re it’s a little bit of a stage magic, sleight of hand misdirection where you’re looking over there at the Consumer Price, and not noticing that you’ve got somebody picking your pocket on the other. And we think I mean, it’s exactly the same end result. If you’re if you’re having downward pressure on your wages, the salary that you bring, bring in the what you get paid for your goods and your services, it has the exact same end result as higher prices at the checkout, which is that you’ve got less and less capacity to pay for what you need. And what we’re really seeing now in the current environment. And a lot of these prices, we are seeing big price increases at the checkout. And partly those are inflationary pressures. But we are seeing as well, there’s a lot of evidence of companies, these powerful concentrated industries, hiking up their profit margins and using inflation as an excuse for that. So we’re seeing higher prices at one end, and also these companies having their hands in our pockets at the other. And so it’s no wonder that everybody’s feeling squeezed.
Gene Tunny 07:30
Right. Okay, so you mentioned a few things there. You talked about antitrust, and I’ve chatted with Danielle Wood from Gratton about this, this issue of you know, there was this consumer welfare standard. And that meant that there may be, there wasn’t as much antitrust enforcement. But now there’s been a change, you’ve mentioned, is it Lina Khan in the States? So there’s more of a, a willingness to look at antitrust as a tool. And can we, Rebecca can ask about what mean, what companies you’re talking about? I mean, are you talking, you mentioned. Well, it’s could, though, there could be companies in the sort of more traditional economy, but it’s, is it mainly big tech? Are they these are the companies that are exhibiting the characteristics of being a choke point, capitalist, what are some of these companies?
Rebecca Giblin 08:23
Okay, so the ones that we talk about in the context of the creative industries, they go all the way through the chain. So if we think about just music to begin with, musician has to deal with the big three record labels, who control almost 70% of global recorded music rights. They own the big three records, the big three music publishers, which control almost 60% of global song rights, they structure the deals in ways that benefit their executives and shareholders, and work to the detriment of these creative workers. Then the streaming industry, which is where most of the increasingly most of the money from recorded music is generated, the streaming we lots of people know that music streaming really doesn’t pay very well. But fewer people are aware that the reason that works, the way that it does is because this is the way those big three record labels, arranged things, the streaming platforms had to have to go through those records, those record companies in order to get permission to play the songs. And in order to clear those rights, they have to enter into these deals that again, favour those record labels, again, to the detriment of the artists, and that give those those those major labels who should be far less relevant and indeed are far less relevant today than they were 30 or 40 years ago because they no longer control all of the avenues to distribution, but because they’ve got these huge reservoirs of copyrights that they’ve acquired often through buying up distressed companies very, very cheaply, that’s given them outsized power to control the future of music. And so you can see that those, the copyrights themselves create a choke point, at one point, the incredible complexity of the licencing systems that we have in music, create other choke points, because it is only Spotify and the big tech music offerings that can afford to go through the, you know, these hoops to pay that what’s demanded by the record labels and also to comply with these complex regulatory rules and that keeps lots of other companies that that could be started by people who love music and want to support artists and passionately believe in alternative ways of getting music out there. It stops them from being able to start up any kind of meaningful competition. And then if you look, and you say, Well, that’s all right, people don’t really need to make money from recorded music. No one’s really made money from recorded music except a few outliers. People make money from touring. Well, then we start looking at Live Nation, which is the behemoth in that space. It controls nearly all of the world’s largest and most prestigious music venues. It also has a music management and promotion business. And it bought Ticketmaster a few years ago to, you know, in the face of many, many warnings that what has happened would happen, the Department of Justice in the United States still permitted this merger to go ahead. Now, just think about this for a moment. Imagine you are a company. So you’re a music venue, right? And you want to book acts, you will have Live Nation tell you well, if you don’t use us for your ticketing, you won’t be able to book our biggest acts that we control through our management, business and promotion business, or, or any other kind of incredible threat that they’ve made. In the book, we talk about this we are in, we looked in an incredible range of creative industries in our research for this book. And we always gave people the opportunity to be synonymous or anonymous if they wanted to. And I think nobody took us up on that. Even when they were talking about these other really big, really scary giants like Amazon, who’s also known for not playing fair, except the people we spoke to about Live Nation. Almost all of those said that they could not be named. And they were really genuinely terrified about what kind of retribution could come if it got out that they’d spoken to us about this company. But it has a voyeurs, voyeurs view at the businesses of all of its competitors, right? If you’ve got to use Ticketmaster or if you’re a venue, or you face all of these other consequences, all of these other things that you miss out on. But that gives Ticketmaster the ability to see, well, okay, so which other acts that you are hosting are doing well, who are the artists that look like based on the ticket sales, they’re about to break out, and maybe Ticketmaster, Live Nation can jump in with its promotion and management business and snag up those acts. Now, even though they didn’t do the early investment, they can just sneak in and grab them now that they’re about to start making lots of money. And, you know, all kinds of other, you know, extraordinary advantages this gives them and we’re really seeing this play out at the moment with anyone who’s listening. Is there is there much crossover? Do you think Gene in the economics explained audience and the people who are big fans of Taylor Swift, and been waiting in a queue for days in order to get tickets to her concert? You have
Gene Tunny 13:47
Look, I have no idea. I mean, I quite like Taylor Swift. I wouldn’t line up for days to get tickets. But yeah, who knows? Tell me more.
Rebecca Giblin 13:55
Look, the Department of Justice is investigating again, they did do an investigation a couple of years ago that we talked about in the book, where a bunch of venues who all had to be assured of anonymity in order to speak, we’re talking about Live Nation’s mob tactics and ways in which it was using its power to crush other people’s businesses. It got a fine that was just really a slap on the wrist and told really sternly not to do it again. But in this kind of context of fine is a price. The Live Nation is quite happy to pay that kind of fine in, you know, in order to get to continue its predatory behaviour. It will only be stopped if there is sort of meaningful enforcement. And the DOJ hadn’t done anything since until this Taylor Swift controversy came up. And and and we are seeing now there’s going to be another investigation. So hopefully, there’ll be some kind of more meaningful enforcement here and what we really need to see is Ticket Master broken up. That’s one of the main domain remedies were there. antitrust breaches. You can have structural remedies, which is where you break a company up or conduct remedies, which is where you sort of get them to pinky swear they won’t do anything bad. Now, unfortunately, those remedies are not particularly easy to enforce. Right. It took literally decades to break up AT&T In the United States. I was it was a Bell. I think it was Bell before it became AT&T. So there’s so many, the Bell System we concentrated. Yeah, concentrated firms the sometimes I get mixed up. And it can be incredibly expensive and lasts for decades to take these actions and we don’t have decades. And the other problem with those antitrust remedies or competition law remedies is that they work even less well when you’re dealing with monopsony rather than monopoly for various reasons. And so what we argue for in the book is remedies that we know do work in response to monopsony power. And that’s things like encouraging new entrants into the market, directly regulating excessive buyer power by limiting what they can do and by taking measures to build countervailing power in workers and suppliers.
Gene Tunny 16:21
Okay, well, I want to come back to that that point about the monopsony you said, it’s harder for antitrust act on monopsony if you meant I think you said that I’d be interested in that if you can explain why or, and also the, I guess, I’d like to ask about, I mean, is this really so bad? I mean, you mentioned that it’s, it’s captured creative labour markets. I mean, okay, I’m, I’m against a lot of the surveillance capitalism. And I think you know, where to the extent there are choke points, and they’re really bad business practices, or they’re they are, they’re relying on some. Yeah, I guess it’s IP, they’re relying on these relationships they have and they’re, they’re preventing competition from, from coming into the market. Yeah, I can see the problem with Ticketmaster. At the same time, I mean, I think a lot of these platforms have enabled a lot of people to make a living out of content creation, haven’t they? I mean, if you look at YouTube, and you look at all the podcasting platforms, I mean, there are many more people that are able to, you know, quit their jobs and become full time content creators, aren’t there. So, I mean, is there a risk that we, we, we undermine this system that has actually created a lot of benefits? I mean, how do you see it, Rebecca?
Rebecca Giblin 17:48
Let me answer that second part. The second part first, I think we are constantly being sold the idea that we can’t have the good things without the bad things, right. So Amazon is constantly telling us that we can’t have a good search engine without surveillance. But we can have a great search engine without surveillance. Google didn’t surveil us for the first several years of its existence, right. And it was a terrific search engine. We, with the access to digital technologies and the Internet, we absolutely can have global virtually instantaneous gloop at virtually costless, like zero marginal cost of distribution, supply of many kinds of creative work. So we’ve got this potential for the good things anyway, what we don’t have to have is the bad parts, the lock ins, right, these strategies that are used to create these hourglass shaped markets, so that you’ve got audiences at one end, and creators, the other and these predatory companies squatting at the NEC, were they using that power that they’ve artificially created by locking everybody in to extract more than their fair share? So that’s what I say in response to that. And getting, I’m so glad you asked me more about monopsony. Most people run away screaming from that pot. So some of the reasons suddenly tell you a couple of things about it. One reason why monopsony is so dangerous is that it accrues at far lower market concentrations than monopoly power does. So you know, when monopsony when when when a buyer controls even eight or 10% of the market, that already gives it quite outsized power over its suppliers. And that says that’s assuming that there’s no alternative buyer for that. And we saw that when Amazon started out one of its one of its as soon as it got power over the physical book market. It started exerting that to try and squeeze margin out of everybody else. And, you know, this is a famous Bezos aphorism. Your margin is my opportunity. He’s very clear about what he’s trying to do. But sometimes when you look at how the sausage gets made, it can be a little bit frightening. They created something called the gazelle project, which is exactly what it sounds like the way that a cheetah cuts out the weakest Gazelle from the herd, they went after the smaller and more vulnerable publishers to squeeze margin from them. One of them was Melville House, who lots of people have read books from. And the publisher they resisted, he said, look, if you I cannot, we cannot afford to give you what you’re asking for our business won’t be sustainable on that basis, we just won’t do it. And Amazon instantly retaliated by removing the buy buttons for all the Melville House books on its platform. Okay and now at that, at that time, I think Amazon only controlled about 8% of the market for those books. But nonetheless, Melville House was forced to instantly get virtually instantly given because without that, that eight or 10% of sales, it was just no longer sustainable. And so if you look at how much power Amazon had, when it had such a small market share relative to what it has got now, you can see how dangerous that’s become. And then if we look at other industries, in so many of them, you’ve only got, you know, one or two or three buyers that are available. And coincidentally, they often seem to have very, very similar policies and very, very similar abuses. And this is what this is what puts them in that position where they can extract so much from the people that they’re dealing with. Yeah, the other. The other thing about monopsony that I think is relevant here to why the remedies are not particularly effective, is that there’s real concern that when you regulate a powerful buyer, that maybe the reason why it’s so powerful is because it’s very efficient. And this is what Amazon argues it argues that it has this highly efficient structure, that it has these lower costs, which leads to attracts customers, which then attracts suppliers. And then there’s a better customer experience, which brings more in and sort of feeds this loop which Amazon calls its virtuous cycle, right. But what we see when we look at Amazon, and my co author, Cory Doctorow just did a terrific thread, or blog post on his pluralistic website about this a day or two ago, is Amazon increasingly is a shitty place to buy from, because most of it has been taken up by advertising. People, people know that Google and Facebook have big online advertising businesses, but not many people know that Amazon is a close third now. It shakes down the people that sell on it. For placement fees, and for the right to be shown first and for the right to be earlier in the search listings. And that means that you know, rather than getting the best search experience, the best customer experience, you’re just being inundated with ads all the time. They’re making billions upon billions of dollars from this. So the evidence is that in practice, it’s probably not from efficiency, but regulators are concerned that they might not be able to tell the difference. And that makes them hesitant, even more hesitant to intervene in cases of monopsony than monopoly.
Gene Tunny 23:24
And Rebecca, how do you respond to the argument that these companies are simply being rewarded for the innovation, they’re being compensated for the innovation, that they’ve undertaken to deliver new services to consumers, because a lot of these platforms are delivering value or consumer surplus to a lot of consumers. And, you know, providing opportunities for content creators. I’m just wondering how you respond to that argument, because as economists, I mean, we’re very much a lot of economists are sympathetic to that Schumpeterian idea of creative destruction, that wherever there are these, you know, the opportunities for profits that encourages innovation. And I mean, who knows? I mean, will these companies survive? Or will there be new innovative innovators who take over?
Rebecca Giblin 24:10
Let’s see, that’s the thing. This is another thing that we’re constantly being sold this idea, but look at Google, how much innovation does it actually manage? Alright, it made a great search engine, and a pretty good Hotmail clone, right? And nearly everything else that it’s ever provided that’s had any kind of success. It’s bought from other people who did actually innovate with its monopoly profits that it’s making on from these choke points. Right. And so, you know, Google tried really hard, and we talked about it in the book to create a Google video service, right? Absolutely failed with all of its resources and all of its smart people it could not, it’s almost ludicrous, how hard and how many ways it failed on that. And so it had to buy YouTube, right, which scrappy people above a pizza shop where they were actually doing innovation. And we see this time and time and time again, you know Facebook came to control the messaging market, and to control the way you communicate with your community and your family and your friends, not by innovating and creating the products that we want. But by buying up what’s happened Instagram for billions of dollars each when they had, you know, virtually no employees, because these tiny companies were the ones who actually doing the innovation, okay, so we don’t need not only do we not need these, these massive companies in their massive war chest to be innovating, they’re actually getting in the way of other people innovating. Because everybody knows what happens if you get in the kill zone, right? So it’s a risk, you either get bought up. And that’s like, that’s what many, many people are aiming to do. If they’re trying to innovate in this area, they know that the only exit is to get acquired by these companies, or crushed by them. And so it’s called the kill zone. And if you and venture capitalists know, we know that there is less VC investment in territories that are controlled by big tech and other powerful corporations, because of these kill zones. So Amazon, for example, burned, I think it was 200 million US dollars in a single month, undercutting and going directly up against diapers.com, in order to control the nappy market in the US. And that’s an extraordinary amount of money drove this innovative competitor absolutely under because it had access to these, these war chests from its monopoly profits and access to capital markets that this scrappy little innovator didn’t have. Now $200 million in a month to control the diaper market might sound like a lot of money. But it’s actually incredible value, because it didn’t just get rid of diapers.com it sent an incredibly clear signal to anyone else that was thinking of entering any space that Amazon has marked that you will be absolutely burnt out if you even attempt it.
Gene Tunny 27:04
Yeah, it’s a real gangster move, as they’d say, isn’t it? I mean, really?
Rebecca Giblin 27:08
Yeah, they would say no, no, it’s just it’s just it’s good, hard. It’s good fair competition. But it’s not is it? Right. And all of that. There’s extensive research on this, we see that there’s less investment, less innovation in areas where you’ve got choke points.
Gene Tunny 27:26
Okay. Rebecca, I think I should have booked you for longer. There’s been fascinating, and I’m enjoying the conversation. But yes, if, if there’s anything else? Yeah, I’d love to if you had any final points, you know, feel free to make them otherwise. We might have to, we can wrap up. And yeah, I’ll, I’ll try and connect with you sometime in the future. Because I’m sure there’ll be a lot of discussion about your book and this debate will continue on into the future.
Rebecca Giblin 27:55
Yeah, I guess the final thing I would say just to sort of sum up the ultimate message is that you know, creators, but also the rest of us are getting choked, that we’re sharing less and less than the value that’s that’s created by our work. And that’s happening because we’ve got these increasingly powerful corporations, creating choke points that allow them to extract more than their fair share. But we don’t have to put up with it. There’s lots of things that we can do to widen these choke points out once we see them for what they are.
Gene Tunny 28:25
Okay. Rebecca Giblin. Thanks so much for your time. I really enjoyed the conversation. Thank you so much.
Female speaker 28:33
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Gene Tunny 29:03
Okay, I hope you enjoyed that conversation I had with Rebecca. Overall, I think Choke Point Capitalism is a book worth reading, although I disagree with some of its assertions. Regrettably, I didn’t book Rebecca Long enough to ask her all the questions that occurred to me from reading the book, so I’ll aim to get her back on the show next year for another conversation. The book includes many compelling examples of dubious business practices by big companies. So I must admit I am somewhat sympathetic to the choke point capitalism thesis. And if you’re a regular listener, you will know that I’ve covered surveillance capitalism and problems with big tech in the past. There does appear to be scope for some antitrust action against some of the badly behaved big tech companies for sure. That said, one reservation that I have about the book is that it appears to have a wider ambition than simply acting against the market abuses of big tech. In parts, it reads like a polemic against capitalism in general. For instance, the book concludes, we’ve organised our societies to make rich people richer at everyone else’s expense. I think that sweeping statement goes too far. Like some other popular economics books I’ve read in recent years, choke point capitalism adopts to negative view of our economic system. Capitalism, after all, has lifted hundreds of millions of people out of extreme poverty in recent decades. And it has fostered a bewildering array of innovative new services that have benefited billions of people. And we still have progressive tax systems in which the wealthy generally pay much more tax than the less wealthy. Of course, many wealthy people avoid paying tax I know. But I think it’s broadly true that we still have a highly progressive tax system, at least in Australia and European countries, possibly less so in the US. Okay. Despite some reservations, I’d still recommend the book for its vivid examples of so called choke point capitalism. The book makes a useful and stimulating contribution to the important debate over the regulation of big tech. So I’ve included a link to the Amazon page for the book in the show notes, so please consider buying a copy. Thank you. Okay, that’s the end of this episode of Economics Explored. I hope you enjoyed it. If so, please tell your family and friends and leave a comment or give us a rating on your podcast app. If you have any comments, questions, suggestions, you can feel free to send them to contact@economicsexplored.com And we’ll aim to address them in a future episode. Thanks for listening. Until next week, goodbye.
Thanks to Josh Crotts for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au.
What does economics have to say about the huge amount of advertising directed at us everyday, much of it specifically targeted in this age of surveillance capitalism? Is it informative, manipulative, or something else? Should governments do anything about it and regulate advertisers and surveillance capitalists such as Google, Facebook, and other big tech companies? EP144 of Economics Explored features a frank and fearless conversation on advertising touching on surveillance capitalism with John August, Treasurer of the Pirate Party Australia.
John August is the Treasurer of the Pirate Party Australia. John does computer support work in retail and shareholder communication. He is passionate about justice and ethics in our world, particularly as it plays out in law generally and intellectual property in particular. He has stood on behalf of the Pirate Party in the Federal seat of Bennelong and also as a Councillor for Ryde City Council.
Along with technology and law John is also interested in spoken word and poetry. He broadcasts on community radio and hosts the program “Roving Spotlight” on Tuesdays from noon-2pm on Radio Skid Row Marrickville Sydney, and writes about his ideas on the website www.johnaugust.com.au. You can keep up to date with what John is up to via his Facebook page.
Links relevant to the conversation
Kyle Bagwell’s superb monograph on the economics of advertising:
Hotelling’s law – Wikipedia “Hotelling’s law is an observation in economics that in many markets it is rational for producers to make their products as similar as possible. This is also referred to as the principle of minimum differentiation as well as Hotelling’s linear city model.”
Transcript of EP144: Advertising and surveillance capitalism w/ John August
N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.
Gene Tunny 00:01
Coming up on Economics Explored…
John August 00:04
I’m thinking your Facebook running around saying, oh, you know, we want our customers to be happy and I’m thinking, no, we just cannot take their word for it. They have form; you just cannot take their word for it.
Gene Tunny 00:17
Welcome to the Economics Explored podcast, a frank and fearless exploration of important economic issues. I’m your host, Gene Tunny. I’m a professional economist based in Brisbane, Australia, and I’m a former Australian Treasury official. This is episode 144, on Advertising and Surveillance Capitalism.
My guest this episode is John August, Treasurer of the Pirate Party Australia. This is John’s second appearance on the show. And you may recall he was on last month. I wouldn’t normally have someone on the show again so soon. But John was passing through Brisbane, and we both thought it would be great to catch up for a conversation.
In this episode, you’ll learn what Economics has to say about advertising. Alas, we can’t say that all advertising is informative. Some of it is informative for sure, and it is good for consumers. Some of it is complimentary, in that it augments products that we consume with social prestige, which is fair enough if you’re after that sort of thing. But some advertising is purely persuasive or manipulative, and arguably wasteful or have dubious social value.
What does this all mean for public policy? John and I discussed this in this episode. In the show notes, you can find relevant links, any clarifications, and you’ll also find details of how you can get in touch with any comments or suggestions. If there are topics you’d like me to cover on the show, then please get in touch and let me know. I’d really love to hear from you.
One clarification I need to make relates to the Chicago School view of Advertising. Chicago school economists historically were associated with the informative view, as I noted in the episode, but there were some Chicago economists, such as Gary Becker, who could be considered to have had the complimentary view. There’s a large economic literature on advertising. And in the show notes, you’ll find a link to a monograph by Stanford professor, Carl Bagwell, which brilliantly summarizes all of that literature. So, please check that out.
Right oh! Now for my conversation with John August on Advertising and Surveillance Capitalism. Thanks to my audio engineer, Josh Crotts, for his assistance in producing this episode. I hope you enjoy it.
John August, welcome back on to the programme.
John August 02:31
Yes, thank you, Gene. I’m actually live, rather than on the phone or zoom or whatever this time. So, there you go. I was passing through Brisbane and thought I would say hello. And here I am.
Gene Tunny 02:43
Yes, of course. It’s good to have you in my ad hoc studio here in Spring Hill, in Brisbane. I’m keen to chat about some of the issues that we’ve chatted about after and in before; various conversations.
I spoke with you on this show several weeks ago about the Pirate party’s economic policy platform. And then, we had a conversation on your radio show, Skid Row radio; Skid Row?
John August
That’s correct.
Gene Tunny
At Merryville in Sydney. One of the things you mentioned was that you’ve got some views on advertising. I thought this would be a good conversation to have, because I’m reasonably well; I have been familiar with the literature on advertising in the past, and it was good for the economic literature. And I was good to sort of, look back over that because there’s a big debate in Economics about just whether advertising is useful, or is it wasteful? To what extent is it? Is it socially beneficial? So, I’d like to have that conversation with you.
Would you be able to begin please, John. Just going through what your thoughts are on advertising? I mean, what’s your perspective on this? You appear to have some strong views on advertising?
John August 04:08
First off, I will say, there are some parts of advertising might be labelled as good, but I guess, in the world in which we live, it’s sort of dominated by, I guess, the bad end of advertising. And also, there’s some promises of advertising, which I guess don’t make sense when you look at it more carefully in terms of advertising being more emotionally manipulative, rather than it being informational.
But you know, with the Pirate Party, we celebrate the sovereignty of the individual. And you know, worry about people who are violating that sovereignty. So, the Pirate Party is also socially progressive in its way. I don’t think we’re like you know, the guy sitting on the veranda with a shotgun and the alligators in the moat, you know, that sort of thing. But we certainly sort of say, what is interfering with our ability to live out our everyday lives?
Now, there was a US gentleman, I think, who gave a talk, called the Age of Distraction; it was broadcasted on ABC Radio, national. I think was the Royal Society for the arts. And he was talking about just how many parts of our lives, there are now signs, you know, they’re signs that you go to the airport, there’re signs on your shopping trolley. Even in the US, there are schools that have report cards, and they’re putting advertising on the report cards.
Gene Tunny
Seriously?
John August
Yeah. This is a sort of thing that happens; obviously, let’s just say in the US, we all imagine, and it’s perhaps true that there are some excesses that happened in the US that wouldn’t happen elsewhere. But, you know, the comment this guy was making is that there used to be, the two classes; the wealthy who had a lot of freedom, and the less wealthy who didn’t. And now you have a situation where us plebs will go to the airport, and we’ll have all this advertising. But if you’re wealthy, you go to the Executive Lounge, where the luxury of the executive lounge is, you can sit there, you can make your choices, and not be advertised to.
And, you know, one of my fellows in the Pirate Party, he says that, compared to previous generations, we are one of the generations that have been shouted at the most, of any generation. And there’s a; I guess, the thing about the enclosures enclosing the land in the UK, and saying that the commons are being basically grabbed away from us, and claimed by corporations, because there’s the public square and certain, I guess, social understandings about us going out in the public square and being respectful, and that advertisers are not being respectful.
Now, I suppose I’m sort of thinking that there are; I will talk about what you might call the good advertising, which is actually a tiny part of the total advertising that we are subjected to. And people might say, oh, you know, this is exotic aberrant stuff. But I think, you know, your junk mail, your spam. I mean, that is the world in which we live in, it’s very artificial to partition that often say, Oh, well, that’s not the real economy, that’s people doing stupid things.
So, that is part of it. The fact that people are yelling at us, the fact that so much of our space has been taken over. Now, when I talk about the good end of advertising, classifieds, in the ideal, they are close to information, not manipulation. And that’s what you might call the good end of advertising. And the thing about what you might call good advertising is, it’s initiated by the consumer.
Now, let’s say, who knows? maybe there’s a local rag that’s pushed into your letterbox without your permission. So, there’s a very first step where something is pushed at you. But after that, if you engage with this material, you as a consumer are taking the initiative, and checking these things out as a personal choice. Now, 90% of advertising, I think of what we might loosely call the advertising is someone trying to get into your space, get in your face without your permission, right?
I agree that at one end, you do have advertising as the ideal of information, information that helps us make our choices. Classified, sort of, do that, to some degree when we go out on the internet. And I won’t mention any names. But let’s say websites by which you can sell stuff and you have made that choice, I want to buy something, I’m going to go to a website where you can buy stuff. You know, again, that’s the element of personal choice.
Now, some of these websites, do have relative monopoly power, right? So, they’re perhaps, abusing this situation in terms of being a monopoly. But they’re not abusing their situation in terms of getting into your face without your permission, or endorsement. So, there’s something going on there. But then, at the other end of the scale with advertising, it’s very emotionally manipulative.
The thing is, Mark Givens, one of my colleagues in the Pirate Party, he talks about, that a lot of advertising is trying to say that you are deficient in some way. And this thing that we’re selling will help you.
Now notice, if you are engaging with advertising, I mean, if you’re engaging with classifieds, you think I need this thing for my own reasons. I’m going to go out and find out how I might realize that, that’s cool. But, you know, Mark is saying, that we go out in the outside world, and it’s like, everyone’s taking a cheap shot at you. They’re trying to say how you are deficient and this product will help you.
There’s also in marketing, the idea that that’s the fear of missing out, they don’t say, look, maybe you have a problem, here’s what we have, maybe this will help. It’s a lot more doggedly, emotionally manipulative than that. And it’s trying to say, you know, if you don’t do these bad things will happen; you know, the fear of missing out. That’s more of the emotional leverage that is applied. Or maybe they’re saying that you’re deficient in some way, not sufficiently attractive, but, you know, consume this product and you will be attractive, you will be popular, you will be this.
You know, even some of the things that are a little bit less narky, like, go on, you deserve it. You know, at least, that’s not trying to say that you’re negative or whatever. But you know, one of the amazing things is like, you can go through advertising and be sold messages that you’re in control. And yet, you’re not in control of the fact that you’re being exposed to the advertising that is being pressed on you.
But then, I think it was Galbraith, who was saying there are some fundamental contradictions with advertising and that the ideal of advertising is that, we have our desires, we go out into the marketplace, we’re exposed to advertising which informs us of our options for realizing our desires. But in fact, he says that a lot of advertising is actually about shaping our desires, not informing us of our possibilities for our desires.
Encapsulating the world in which we live, people are shouting as we never were before. Now, certainly, there’s some abuse of monopoly power, there’s weird stuff going on in the internet, attention becoming a contested commodity. And those are sort, of turning into perverse outcomes, because, okay, this is going one step removed from advertising as such, but people talk about clickbait. Okay, clickbait it’s a thing, but turn back the clock, two or three decades, and they were the page one headlines on the tabloids. And in a sense, what we’re experienced now with clickbait, it really has a precursor going back a few decades with the page one tabloid headlines to try to draw you in.
So, what we’re experiencing now with a technological version of the page, one tabloid headlines. So, also, I suppose, that’s advertising broadly speaking, there’s spam, there’s junk mail. And I think in Victoria, I think you can actually put up a ‘No Junk Mail’ sign in the letterbox and actually mean something in New South Wales that doesn’t have any legal teeth. And I do think a lot of government policy is a result of lobbying by vested interests. But yeah, my understanding is in Victoria, those signs mean something in New South Wales, they do not; I don’t know if this situation is in Queensland, but having control of yourself.
So, what I guess I’m trying to say is, there’s a little bit of advertising that might be legitimately said to be positive, but it is overwhelmed by the stuff that is outright dodgy, junk mail and spam, or emotionally manipulative, or basically getting in your face and yelling at you, where, you know, we’re being denied, I guess, that the public space is no longer a place where you can walk along and think and contemplate and reflect on life. It’s being polluted and tainted by all these impacts.
And, you know, the economy, in its regular under things, doesn’t respect these things, doesn’t value these things, doesn’t value sovereignty. Hopefully, eventually I’ll finish my sort of sentiment, but there are things where like, the bus shelters where I’m at; the council has made a contract with someone to maintain the bus shelters so that the bus shelters are advertising. And I personally would rather pay higher rates and have a better-quality environment around me. But again, one might say the councils are under financial pressure, and there’s all this crazy stuff going on.
Some people even say that your state governments push responsibility on the councils; people get used to it, then they withdraw the funding and the councils are left in a difficult situation. So, there’s all this whirlpool of things going on there. But also, the Bureau of Meteorology website; I mean, there’s all these tertiary websites, but I believe in going right to the Bureau of Meteorology and saying what do they think the weather is going to be? And strange to say for me, that is almost a spiritual experience. It is consulting an oracle, what is the future going to be? And I do actually say our Bureau of Meteorology, they get it right there; they’re not doing too badly. You know, I suppose politically, for one or two days, they’re not doing too badly. And it’s a spiritual experience, but they have advertising on their website. And again, I would rather pay more taxes and have my relationship with official government entities like the Bureau of Meteorology have that untainted.
Gene Tunny
It doesn’t have advertising, does it?
John August
The Bureau of Meteorology website with weather does actually have advertising. I believe it certainly did a few years ago. I wonder if they got rid of it. But yeah, it got the Bureau of Meteorology; goodness me, now that I think about it. All right. I may be corrected there. I know, they did have advertising a few years ago. That, I can say without reservation. Maybe they’ve sort of, reformed themselves in the meantime because of public pressure. But certainly, they used to have.
Gene Tunny 15:39
That’s okay, yeah. But I generally agree with you. I mean, yeah, it’s probably good to go to the BLM website. And it’s good to be undistracted by that advertising. I just want to pick up on a few of those things that you talked about; the bus shelters, I don’t have a problem with advertising at bus shelters, I can tune that out.
The point about advertising being emotionally manipulative, yes, there is a large amount of advertising like that. And we’ve had that for decades, we’ve had that all along. I remember when I was in high school, Clearasil was a big advertiser. And the message there was, well, if you don’t use Clearasil, you’ll get acne and you’ll never get a girlfriend. There’ll be a loser. So that seems to that’s very emotionally manipulative advertising addressed at teenagers. So, you won’t get a girlfriend, you won’t get a boyfriend or whatever. You’re very emotionally manipulated.
What I think is, what’s really very concerning in the last decade or so is the rise of surveillance capitalism. Do you have any thoughts on that, John? Because they’re just following us all around the web, and they know what we’re looking at. And then they can direct targeted ads. And it’s really disconcerting to many people like that poor woman, who didn’t she get marketed some baby products, they guess that she was pregnant before, or target sent her a letter, and then a dad read the letter and thought, What’s going on here? Are you pregnant? Target guess she was pregnant based on the search history.
John August 17:15
Now, yes, I do remember some stories of people who are pregnant, and the web managed to figure that out before they were able to, based on the changes in their behavior. So certainly, that is something that is disconcerting. And one might argue that targeted advertising is more stuff that you might be interested in. So, I guess the advertisers will try to say, look, this is the positive aspect of it is that you’re being presented with stuff you might be interested in. But equally remember the thing I was saying about choice, if you want something and you go out there, that’s; I guess, maybe it’s not even advertising, but it’s a positive mode of interaction, I guess you would say.
And yes, you’re talking about, surveillance capitalism, about people knowing stuff about us. And sometimes we’re disconcerted by it, you know, when you’ve been doing some search history here and there, and then suddenly, there’s advertisements pop up for this and you say, Hang on, you know, you have been watching what I’ve been up to, haven’t you. And you know, it is disconcerting, and the fact that people are sort of tracking us. And invariably, you go to a website, and it says, you know, click on OK to get X Y, Z. And I guess you sort of feel obliged to click on that, but you’re leaving a digital footprint, people are sort of figuring out your identity. And I mean, there are creepy things like, you know, shades of Philip K Dick and, and those sorts of weird science fiction stories where they say, if they have 400, Facebook likes, they can predict your behavior better than you can. And, that’s getting really creepy when you contemplate those sorts of things. Because look, this is getting into weird shit psychology. But maybe we are just a bundle of drives that sort of, lurch in certain directions. And maybe that is the reality, but for advertisers to I guess, grab ahold of that and do something with it. That’s even worse than that being true, you know. So, that’s certainly bad surveillance capitalism.
The thing is, this has grown without us realizing it. I guess there are some people who are saying, look, people can gather data without cost. And you know, the permission is very low. And I suppose in a sense, yes, if we were more concerned about this, and pushed back against all this internet stuff that is monitoring us, that would be a better outcome. At least, you know, I can talk about it, you can talk about it, we can try to draw attention to it. But I think it’s the old cliche of the boiled frog phenomenon. And even I think some scientists have actually said that it’s a myth that the whole boiled frog thing, but certainly things have happened. So gradually, I think the thing is, corporations have got, let’s say, a lot more intellectual, willpower, or whatever you might say, more willpower than us to like coordinate a situation and sort of figure out how can we actually prompt people to do stuff to surrender their information so that we can do something with it. While we’re just individuals as it were wandering through life almost with our eyes shut sort of thing. And, you know, we’re facing these corporations that are incredibly well resourced compared to us as individuals. And there’s a very strong power disparity there in terms of being able to process and make use of information.
Anyway, to try to answer your question, it is a concern. If only more people were more concerned about it, that will be better. At some level, governments do occasionally push back against this sort of thing. Now, advertising, surveillance capitalism is part of it. But you know, the thing that I guess has been more controversial is, are the social media companies, basically damaging people psychologically, in pursuit of more eyeball’s hours? That’s been more of a concern at government level rather than surveillance capitalism and advertising. And that sort of, related thing to what we’re talking about here.
Gene Tunny 21:22
Well, some of the companies are doing this to get advertising out, though. So, Facebook, for example, I mean, Facebook earns, what is it? I mean, $115 Billion US in advertising each year. And it’s attracting people or it’s getting the eyeballs through emotional manipulation. Because it does better when people are, are agro or they’re emotionally; what was the word, aroused.
John August 21:50
There is an old maxim angry people click more?
Gene Tunny 21:54
Yeah, I can believe it.
John August 21:56
Or you might say, emotionally aroused, people click more. And I mean, it’s sad to say it’s become a blur. But I do remember seeing these interviews with high people in social media saying, yes, our algorithms were designed to basically increase emotional response so that people would be more engaged with the site and would be there more. And you know, it’s one of those things like, I guess, social media, Facebook communication can be a useful thing. But it’s easy to become addicted to it and become lost in it to the point where rather than you engaging with it on your own terms, it has started to control you and it is sort of basically, you know, you’re the puppet and they’re the puppeteer sort of thing.
Gene Tunny 22:41
Yeah. Right. So, I want to go back to some of the other points you raised. You raised quite a lot of things to pick up on. But now might be a good time to ask about whether there’s any regulatory response that’s required, you referred to the government, how it’s looking at whether there are impacts on mental health of social media, which I think is an important thing to investigate.
Would you propose any regulations for advertising given? You mentioned, you’re concerned about individual sovereignty, you’re thinking some of this advertising is compromising that. Is there a need for regulation in your view of advertising?
John August 23:28
Well, I suppose as far as; I will try to answer that. That’s sort of, a bit of a long-winded answer. But my ideal answer would be a citizenry that is more engaged with this. Not so much regulation of advertising, but an obligation for social media firms to be transparent in terms of the algorithms, how they work, and to provide obligatory access to academics who are researching these sorts of phenomena, and basically have a decent amount of energy in scrutinizing these social media firms and having some outputs that are tractable, transparent and can be found.
Now, let’s say one of the things with Brexit; I suppose this is part of the whole advertising thing, is that there were targeted advertising, going to people, you know, with Maxim’s like, immigration without assimilation is invasion; or these sorts of things. Those were some of the things that were posted to people on Facebook, funded by the pro Brexit groups, and it wasn’t transparent. Nobody knew about it, because if at least, there’s an offensive advertising in the newspaper, the newspapers probably ended up in the archive at the National Library or something. In a sense, yes, you can put out offensive advertising. And there’s, you know, advertising standards and whether you can get away with it, but assuming it goes out there, at least it’s on public record. And a lot of this social media manipulation that can actually be paid for is like, can go fly totally under the radar.
I suppose my first gut reaction is, let’s have things transparent, and hope that the citizenry react to that information. And the ability of social media to manipulate undermine mental health, at least is on the table, and is clear, because I’m thinking of Facebook running around saying, oh, you know, we want our customers to be happy. And I’m thinking, no, we just cannot take their word for it, they have form, you just cannot take their word for it.
As far as regulation of advertising goes, I’m not sure we should regulate advertising. Now put it this way, everybody loves to overload the school curriculum. And I suppose my own thing is, we shouldn’t regulate advertising. But maybe there would be a point to some government department, you know, making it known that there are problems and say, whether it’s ASIC or the ACCC, they do run around sort of saying, look, there’s a bubble here, investors beware.
Now, they don’t regulate things to the point where people can’t buy and sell things. But they will run an active PR campaign saying, look, X Y, Z is unhealthy, watch out, right? And so if you had something along the same lines coming out of government, not so much a hard regulation, but more a commentary on what’s going on, that is considered well resourced, by government, and he’s coming out there to sort of like compensate for the dodgy stuff going on in advertising. I guess that would be my ideal.
And also, I suppose it is a thing of having the information to encourage the public to be more aware and more concerned about these things, and it is interesting. I mean, here’s just one of the contradictions of advertising and manipulation, is that if somebody says, look, these people are saying falsehoods, in advertising, or the internet, or whatever, and it’s affecting us, and it’s horrible. And you sort of say, well, what about all the other lies being told about other people on the internet, but you’re only worried about the lies being told about you? You know, there’s a certain narrowness in that, you’re only offended by lies talked about you, you couldn’t give a toss about lies talked about other people. And there’s a perverse narrowness going on there.
I suppose I’m meandering a bit. There was a time I remember when the government was talking about consumer loyalty programs, at shopping centers and stuff like that. And saying, oh, you know, well, maybe you should actually look at prices all around. And who knows, maybe these are not the deal that you think they are. And the corporations by golly, they were pushing back against Ron, then the Consumer Affairs people were just making a casual observation.
But that is a strange thing; I do know, some people say, oh, whenever government makes a pronouncement, oh, you’ve got to be paranoid about them. Oh, they’ve got a vested interest. Oh, there’s so there’s this. But the other side of things is sometimes when government makes a pronouncement, it has authority to it. And people go oh, if they said that, Oh, that’s interesting. And how things play through is a complicated thing, which I haven’t understood yet.
But yeah, government pronouncements can be seized upon as being manipulative, or they can be endorsed. I mean, let’s say in Australia, I think it took the government decades, but, you know, they got people to wear seatbelts. They got people to put on a hat and put on sunscreen.
I do seem to remember there has been statistics done saying, we have actually reduced the amount of skin cancer in Australia as a result of those campaigns from decades ago. So, you can see some positives coming out of government information, I guess.
I think I’ve meandered quite a lot there. I’m not sure if I really answered your question.
Gene Tunny 29:31
I was just interested in whether you were proposing any regulation of advertising. I just don’t know how it would work. I mean, I’m generally a free market sort of guy. So, I wouldn’t be proposing anything. heavy handed. I was just interested if you at the Pirate Party had a position on it?
John August 29:51
I think sort of sentiments about truth in advertising. Maybe that would be a helpful thing to give some more energy to that; I’m willing to put some more energy to that. But notice, that’s not my first line of defense. It’s more a supplement to the other things I am talking about.
Gene Tunny 30:08
So, our Competition and Consumer Commission will go after companies if they are misleading the public, which is a good thing.
Okay, we’ll take a short break here for a word from our sponsor.
Female speaker 30:24
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Gene Tunny 30:53
Now back to the show.
Okay, so I want to go back to what you said about Galbraith and then just so I’ll remember, then I want to get on to what Economics has discovered or what the view of academic economists who are expert in this area is.
I might go to Galbraith, first. You mentioned Galbraith, so John Kenneth Galbraith, who was a very famous American economist; actually might have been Canadian. Yes, Canadian American economist, in the 20th century. He worked for FDR, he ran an agency on price administration during the war. He was a professor at Harvard. He was John Kennedy’s Ambassador to India, you know, did so many amazing things and had an incredible career. And he wrote a very influential and popular and well written, highly readable books. One of the few economists who could write for a popular audience; wrote that affluent society, 1958 or 59, basically contrasting how people were driving these impressive, beautiful Cadillacs on potholed roads.
John August 32:12
Yes, that’s private affluence, public squalor gated communities. You know, there was a whole thing?
Gene Tunny 32:19
Now, it was a very influential book. Galbraith, of course, is a liberal, he was an unashamed liberal and he was very closely associated with the Democratic Party. He wrote speeches for Jack Kennedy and also Lyndon Johnson, I think,
John August 32:39
Liberal by that US usage of the term anyway.
Gene Tunny 32:43
He wrote Lyndon Johnson’s Great Society speech, if I remember correctly.
Where am I going with that? Oh, Galbraith’s other book; that was, he considered his major work was the New Industrial state. Galbraith had this view that the era of what economists called perfect competition or traditional market competition, that was over and now you had the economy dominated by these giant corporations, and they were managing demand through advertising. So, just by buying ads on the TV, on the latest sitcom, or whatever it was, they could create demand for their products. So, he was arguing that the era of tooth and claw capitalism, that was over and we’re in this new industrial state, and companies were taken over by their managers.
The age of the entrepreneur and the capitalist of the past, the Vanderbilts, the Rockefellers, the Carnegie’s; that was over in his view. We’re in this new industrial state and advertising was part of managing demand.
He saw advertising in that role. Now, at the time, in Galbraith’s theories, I think he was perhaps writing about a particular period in history. I don’t think his views are very; they’re a good characterization of what’s going on today. To some extent, you can shape demand, and certainly companies are trying to do that. One of the categories of advertising that we’ll talk about later is, its persuasive. It is trying to manipulate demand, by trying to not necessarily informative but essentially, prey on your emotions. There’s no doubt about that.
I remember the time that there was a; well, I’ve read the debate later. Friedman was very critical of Galbraith’s views. He had that Chicago school that view that advertising is largely informative and that what Galbraith was saying wasn’t correct. In terms of the facts, because there were products that were launched, which were very heavily advertised, which failed.
The Edsel car from Ford being an example of that. So that’s what I remember about Galbraith’s view of advertising. Is that the same as what you remember, John?
John August 35:22
Well, I would, broadly speaking, agree with what you’re saying there. The qualifiers I will make is that neither of those two gentlemen were distinguishing between the classified mode of interaction as compared to stuff that’s getting into your face without permission. And, you know, the fact that there’s signs everywhere today in a way that was not the case decades ago. You know, I think that’s a sort of change. And I suppose, goodness me, I think you were saying Friedman, is that correct? Yes. For him to say that most of advertising is informative. I just shake my head at that.
I would certainly agree. Yes, some advertising is informative. But the pushback I will say is when we talk about the way, I guess, attention on the internet is contested. Now, look, the internet advertising is not the only game in town. And if I go down to the greengrocer and look at an apple and I buy it, well, there’s a lot of our guest consumer life that is totally separate to advertising. I’m not buying that Apple because I’ve been advertised to. There are so many things I purchase that I’ve not been advertised to and it really is an internal thing where I’m making this choice. Now when I’m at the supermarket, I might be scanning through the shelves, my mind is neutral. And I’ll be susceptible to you know, sign saying X Y Z is on special or this is this or this is this or this is that. So okay, so there’s elements where I’m susceptible to manipulation
The thing about advertising on the Internet, when I say it’s contested, there’s a lot of money. There’s a lot of smart people applying themselves to this. There are high paid jobs managing internet-based advertising. So yes, you know, there’s the local green grocer, and that part of the economy just rolls along. But what I’m trying to say is, there’s parts of the economy, which have a lot of money going through them, a lot of smart people applying their brains very actively. And that’s an indication there’s something going on here. Attention is becoming a contested commodity in some fields, and people spend a lot of money, time and energy, trying to attract that attention, trying to manage that attention. And so for me, that’s a more recent change that we have. But you know, yeah, sure, some advertising is informative. But, for Friedman to say most of it is informative, I just shake my head at that.
Yeah, that just seems so totally wrong to me. But look, you can probably tell some stories about certain advertising in certain contexts that is informative, I will agree. It’s not to say that there’s no informative advertising out there, it’s just saying that where a lot of the energy and action is, is in the manipulative advertising.
Gene Tunny 38:32
Oh, exactly. And I think it’s difficult to divide it up, to say, this percentage of advertising is manipulative, or what economic literature is called persuasive.
John August 38:44
Okay, sorry. Whatever on the persuasive, informative dichotomy, but there is spam and junk mail and so on, which obviously sits in its own category, it’s not so much manipulative is invasive, I guess you would say.
Gene Tunny 38:59
Oh, yeah. There’s quite a bit of that. The way economists have divided it up; I was looking at a monograph from Carl Bagwell, who’s a professor of Economics at Stanford, I think he was at Columbia, when he wrote this monograph on the Economics of Advertising. It’s very good, I’ll put a link in the show notes.
He talks about three different views of advertising that have distinct, positive versus normative implications. So, they have different implications for what actually goes on and what’s socially desirable, whether it’s socially desirable or not.
The first category is persuasive. And he writes; that was the dominant view in the first half of the 20th century. So advertising is creating spurious product differentiation is trying to create brand loyalty to alter people’s tastes. And so that’s one category and we might think of that as that manipulative category.
John August
That Galbraith was perhaps talking about, yeah?
Gene Tunny
Yeah, that’s right. So, let’s create a new consumer product and advertise it on the Brady Bunch or whatever. And we’ll just get in millions of American households to go and buy it, they’ll just automatically buy it because it’s been advertised. Even, you know, regardless of what the merits of the product, I want to come back to that in a minute, because I’ve got some thoughts on this concept because I think that that model of mass marketing advertising, I don’t think that’s as effective as it once was. And this is the point Seth Godin makes in his work. So, I want to come back to that.
The second category was informative, that’s the Chicago School view, I think Friedman held that view. I remember reading years ago, a monograph that Friedman wrote for the Institute of Economic Affairs, the Thatcherite, think tank in Britain on advertising; it was Friedman who wrote that.
I’ll see if I can find something that I can put in the show notes. But certainly, that that was the Chicago School view that advertising is pro-competitive. And, you know, it’s good for consumers.
There is a third category of; a third type of view of advertising, which is some advertising is complimentary. Now, with advertising, what you’re doing, it’s helping you purchase social prestige with your product, so some advertising is there so that not just you but everyone else in the world knows that. Okay, if you buy a Jaguar car or something, or if you buy a Cartier watch, then you have social prestige and so you’re buying those positional goods; I think yeah. That’s one way of thinking about it. I think that was Hirsh. I’m trying to remember who; There was also Veblen too. Oh, Veblen of course. Yes, I have to refresh my understanding of that.
John August 42:06
Nobody talked about vicarious consumption. And anyway, the Veblen; yeah, he had some really cute ideas.
Gene Tunny 42:11
That’s right; Theory of the Leisure Class.
John August 42:13
That’s right, yes. Theory of the Leisure Class. That’s a book that I’ve read. So, it’s quite a convoluted, tortured piece of work anyway.
Gene Tunny 42:20
I’ll try and put some links in the show notes to useful resources on Veblen and positional goods. I’m just struggling to remember the name of the economist to define those goods. Yes. So that’s complementary goods. And what Bagwell; what he writes, is that the evidence is strongly suggested no single view of advertising is valid in all settings. So, we’ve got this mixture of advertising.
John August 42:48
Notice, I’ve already said classified mode of information, initiated by the consumer good, and varying degrees of dubiousness sliding away from that. That is the duality that I’ve sort of identified.
Gene Tunny 43:04
But you know, what can we do really? I mean, we sort of have to accept that this is going to occur, because we’ve got a free market economy. And the alternative is worse if we don’t allow firms to innovate and to produce products and to try to sell them off. And, you know, advertising the best way they choose. I mean, there’s that old saying; I forget who it was. It was a CEO of some major corporation in the US that I know that 50% of my advertising doesn’t work. I just don’t know which 50%.
John August 43:38
Okay, all right. Now, you’ve actually got me thinking. I think, Sir Apolo, they actually banned billboards for some period of time. Where I would regulate advertising is to say, let’s keep it out of certain public domains. You can’t have signs in, let’s say, airports, you can’t have signs in train terminals or bus terminals. But you can have advertising in the internet, you can have advertising in newspapers, you can advertise in radio and TV. So, we’re not saying there’s no advertising, but we’re making sure there is a public space that is not susceptible to sensory overcrowding.
So, maybe that would be the regulation that I would endorse. We at least, see some spaces are advertising free. Not that there is no advertising, all the advertising that does exist is controlled and regulated. So, that would be a regulation I would be willing to do. In other words, to regulate to maintain the integrity of the public square.
Gene Tunny 44:52
Right.
John August 44:53
I think I’d be willing to endorse that sort of regulation.
Gene Tunny 44:57
So, you just have to make sure that you are able to make up the lost revenue somehow. Because I mean, a lot of these little train stations, I mean, the rail businesses, the government owned rail businesses, say Queensland Rail here in Brisbane, it will be using that advertising revenue to help deliver its services; to help pay for the rail services.
John August 45:20
Notice, I’ve actually said I would much rather pay higher rates and not have the advertising on the bus shelters. Admittedly, on the one hand, you might say this is a matter of personal taste, but it’s sort of like saying, we’ve got to start somewhere. And we’ve got to draw the line and say, look, this is where it stops.
But, you know, you guys can play in the sandpit over there, that’s not a problem, just not here. That’s the sort of delineation working. But equally, when you’re saying, look, the train stations need this revenue to get by on, maybe that’s telling us that there’s something out of balance with the economy that they need to do that. And I just look at just how much waste goes on in our economy that is just endemic. And its sort of like, people are very selective when they point out waste, I suppose.
Okay, going off on a bit of a tangent, we were talking about Georgism; the last discussion we had, and who knows, maybe we’ll build up on that. But let me tell you a little story. And I may have actually told you this the last time it was on the podcast, I’m not sure. But if the government does something that affects your property values, people will queue up to the government say, oh, how dare you? You’re damaging my property values. But if the government sets up a railway station moderately close to where you are, your property value skyrockets. I’ve yet to see a queue of guilt-ridden people at the tax office saying; ah, you’ve boosted my property values so much. Gosh, I feel so guilty. Here’s some of that. Right? So, somehow, that reminds me of that story.
Gene Tunny 47:12
Yeah. And that’s what motivates the Georgia’s to argue for greater use of land taxation. Exactly.
John August 47:20
And again, they call it user rent, because they think that tax is a dirty word. And oh my gosh, you know, some of these words just get so twisted and abused, but I call it land value taxation, and just say stuff it call it that.
Gene Tunny 47:35
Yeah. Okay. What I was talking about before, was just that, obviously, companies and, well, individuals or small businesses that are advertising, find value and if they’re spending the money, I know that Facebook advertising, or Google ads; that is really, super beneficial for people who are running some small businesses or bigger businesses.
I know, people in eCommerce who rely upon running huge amounts of Facebook ads for their eCommerce business, and you can work out, like, what’s your cost per click and what’s your cost per acquisition and work out the Economics of it. And if you’re making enough of a margin on your product, to pay for their Facebook ad, you just buy as many Facebook ads as you can. So, it can be very beneficial for many businesses.
John August 48:34
Paradoxically, notice; I want the public square to be pristine. I have less issue with Facebook doing advertising, as long as things are transparent, and they’re being held to account for any incidental psychological harm they do along the way. But notice, I don’t have any principle objection to Facebook or Google doing advertising. The other vague concern I have is maybe these guys are abusing monopoly power. Right? Now, the thing is, that’s, you might say, an accidental monopoly. It’s not that they’ve done anything dodgy along the way, they just got into the ground floor, and it’s just sort of, being an avalanche from that point.
So, they’ve got a relative monopoly not from being dodgy, but from just from getting in on the ground floor. And I’m a bit anxious about the fact that these guys have gotten monopoly power. Now, if there were some way just like you have land value taxation, some way of living in Google or Facebook, a special tax decreases your monopoly where you would identify the monopoly privilege and say, we’re going to charge you guys because you got the monopoly privilege. That might go a little bit of the way towards that.
As long as Facebook are being held to account for site incidental psychological harm, they can advertise as they like. The concern is there abuse of monopoly power; maybe there are things you can do about that. But notice, I’ve actually endorsed that advertising in that context because Facebook are providing that platform. It’s fair enough that they do that.
Gene Tunny 50:13
Yeah. Well, okay, so I’m unsure how governments will be able to hold Facebook accountable for the psychological harm. I don’t think they’re doing that. At the moment. I mean, I’ve got big concerns about well, Instagram in particular, and what that means for teenage girls. Now, with the monopoly power, you could liken it or compare it to a natural monopoly, so a public utility. Now, these companies, Google and Facebook, they’ve got; they will argue that competition is just a click away. But they’ve got all of these users who, well, they’re just so familiar with the platform. And Google’s got relationships with the browser’s; it’s got its own browser, Chrome. And if you go into the search bar, it’s automatic to Google search.
John August 51:00
I will just shake my head and say, that’s a totally nebulous claim that Facebook and Google are subject to competition. I just shake
Gene Tunny 51:07
Oh, yeah. But that’s what they will argue. And this is a point that was made on the latest episode of Econ talk. Ross Roberts show; he had SRIDHAR RAMASWAMY, who was a former Google Exec. He’s on Roberts latest episode, and he set up his own search engine, which is, is it Nera or Neva? I’ve written it down, but I can’t read my own writing in the notes. I’ll put the correct title in the show notes. But that’s supposed to be a search engine you can use without them tracking you.
John August
I think DuckDuckGo is also in that category.
Gene Tunny
It’s a search engine where they don’t track you or serve up targeted ads. But the problem that he said, that he’s got, and if you’re listening in the audience, and you’re interested in these issues, and absolutely, please check out the latest episode at Econ talk, I listened to it this morning. It’s really good. He was saying that the problem is that if you go into your browser and you open up a new tab, you will automatically do a Google search. You can’t program that browser, or at least Chrome or Safari. I think he was saying to have it automatically do a DuckDuckGo or, or on his search engine. So, he said there’s that barrier. And you know, there’s the fact that if you’re on Facebook, or your friends are on Facebook, or you’re signed up to all of these community groups on Facebook; how are you going to leave? Right, you almost locked in?
John August 52:40
Well, I’ve noticed, be it Facebook or particularly Twitter; you know, Facebook is forever saying, you know, don’t you want to be a member of this group, or have this friend or whatever. And I guess Twitter is doing the same thing. And I look at these suggestions saying, How do I remember have enough groups already? I can barely deal with a number I have, and you’re trying to get me to join more?
And the same goes with Twitter. Of course, Twitter’s getting quite obnoxious in that, you might have these people you’re following. And then Twitter hits you with all this stuff from people you’re not following.
Gene Tunny 53:17
I was just trying to make the point about these companies that if you think of them as almost as natural monopolies; I think this is where the hipster antitrust people are going. I had a chat with Danielle Wood from Grattan Institute, about this whole idea of hipster antitrust, a couple of years ago now, I’ll put a link in the show notes. But you could think about economic regulation of these companies.
I mean, I’m not necessarily advocating for that now, but I think it’s worth investigating and think thinking about that you could regulate the rate of return that they can earn. Now, Google and Facebook are just earning huge amounts of advertising revenue.
John August
My suggestion would be okay, they have the regular tax on their profits, which is just like any other corporation, but they also have a special levy because they’re a monopoly and how we actually figure out how large that monopoly levy would be, I wouldn’t know but you’re kind of a smart man to figure it out. But you understand the conception of saying we accept these guys, we accept them monopoly. I don’t think you can meaningfully break it up or regulate with a forced fist as it were, but you could at least, identify the nature of that monopoly and what its consequences are and have an additional levy based on that.,
Gene Tunny 54:53
Yeah. So, in utility regulation, what typically gets done is that, they’re allowed to recover their costs that are prudent; their prudent costs, and they’re then allowed to earn a return on their capital invested. So a weighted average cost of capital. I don’t know how you do that with Google or Facebook. But, look, I mean, I think given that the market power that they have, there is certainly legitimate debate about, what should be done with regards to these big companies that are involved in surveillance capitalism.
I’ve had a chat with Darren Nelson, a frequent guest on this podcast about that in the past. I’ll put a link in the show notes.
I’ll probably have to start wrapping up, just a couple more things.
On the benefits or the purported benefits of advertising. I mentioned that big companies and smaller companies, smaller businesses are spending huge amounts of money on advertising. So presumably, some of it is effective. There’s that question of effectiveness to them versus, how valuable it is for the wider community. Of course, we’ve talked about that. Some advertising can be wasteful or manipulative.
But Deloitte Access Economics, which is an Australian economic consulting firm; it did some work for the advertising industry body, back in 2016. Advertising Pays was the report, I’ll put a link in the show notes. They only published the executive summary; you can only get that online. I haven’t been able to interrogate their methodology just to get a sense of how robust these numbers are. But they claimed that they estimated $40 billion of benefits from advertising. So, there was $13 billion of total spending, 2014 on advertising in Australia, they argue that it promotes competition and lower prices for consumers. That’s a Chicago School view really, that it increases innovation and market efficiency, it supports jobs, it employs 56,000 people directly; this is in the in Australia. You’d probably 10x that or more, for the US. And then for every person directly employed, you’ve got another person indirectly employed in the supply chain. And that’s upstream of advertising.
But then you’ve got downstream in the industries that advertising is advertising for. You’ve got another 100,000. So, Deloitte did this piece, where they’re saying how wonderful advertising is, I think it should have had that broader analysis because when I read the literature, my reading of the economic literature is I’d be a bit more careful in describing the benefits of it.
John August 57:47
Okay, well. Have you heard of Hoteling’s Paradox? There’s also a story that, in the US; first off, I don’t particularly endorse tobacco smoking or whatever, apart from it being I guess, an element of personal freedom, if you’re not affecting anybody else and have private health insurance, yeah. But park that to one side.
The story is in the US, when the US government said there will be no cigarette advertising. The actual profits of the cigarette companies went up, because they were advertising. And they were basically vigorously competing over market share. They were not either informing the consumers or to some degree, getting new smokers on board. Clearly, if they have no new smokers on board, you might have downstream effects as fewer people are smoking sort of thing. But in the short term, the profitability and revenue; I guess revenue wouldn’t have gone up. But certainly, the profitability of those cigarette companies went up because a lot of their advertising was just squabbling over market share, rather than doing any of the things that are normally attributed to advertising.
And we can also say the same perhaps of advertising around electricity, utilities, or mobile phone plans, or whatever. But a certain amount of that advertising is basically squabbling over market share. I could do some game theory calculations and figure out what the equilibrium is, I’d like to think I keep my head around that mathematics. But the thing is, that particular study didn’t identify what you might call the wasteful advertising, which is just related to squabbling over market share, right? Look, some advertising may well give us information, may inform our choices and so on. But I still say, why can’t we rely on the consumer to act off on their own initiative and initiate the certs themselves and figure out what’s going on? How much of advertising is like basically, pushing stuff on to the consumer, or, as it were the consumer presses about, and they get the advertising coming at them. And I know you’re talking about Seth; what’s his last name? Seth Godin, who was talking about permission marketing in the sense that, you only pursue the person if they have reciprocated. And then you give them more information.
So, in its own way, you might say that slightly more ethical, but the initial contact may well be someone getting into your face without your permission. Still, I guess, in its own way, a slightly more ethical way of relating to the concept.
Gene Tunny 1:00:35
Yeah, I think Seth Godin’s main point is that you want them coming to you, you need to ask for permission. You need to earn their trust, and then, that people will receive your messages.
The approach he takes is a good example, because he has his blog; he’s got his daily blog, and I’ve been reading it for years. And so, you’re getting all this quality information from him; quality content, he’s got a podcast. And then, every now and then he will say, well, if you’re interested in learning more about marketing or about podcasting, do my course on his akimbo platform. And that’s actually how I got into podcasting, because I did Seth Godin’s, podcasting course.
Seth was only a small part of that; I think he recorded a few lessons, and then he’d occasionally be on the chat. And he’d respond to some people’s messages. But it was run by one of his colleagues, Alex DiPalma really great course.
I think he is a great example of how that permission marketing works. It’s, it’s earning trust, it’s enrolling people as he describes it.
John August 1:01:53
Well, I guess I wouldn’t, broadly speaking, I’d endorse that sentiment. I worry about how the initial contact is made. It’s sort of like saying, if someone gets in touch with you have their own accord, how do you deal with that strategically? That’s legitimate, okay?
I guess yes, I’d endorse that element of marketing. But I guess that’s a few steps removed from the issues that we’re debating here.
Gene Tunny 1:02:22
Yeah, okay. So, final point, you made the point about the competition for market share, which is a very good point. And the empirical evidence supports that. So, Kyle Bagwell, in his monograph on advertising that I’ll link to in the show notes, he talks about a major study in the 70s in the US, which essentially show that look, advertising does increase sales and market share. But it does for particular businesses and advertise, but it doesn’t appear to increase title sales for that product group or so, it just reallocates.
John August 1:03:07
Well, in that case, you can say that if all you’re doing is increasing market share, that’s not a social good to the economy as a whole. It’s just shuffling deck chairs on the Titanic as it were.
Gene Tunny 1:03:18
Yeah. So, to the extent that that was persuasive advertising rather than informative advertising. If it was informative, and you were informing consumers that, our product is subtly different, or it has this feature that that other product doesn’t. And that’s why market share shifts, and that could be socially beneficial, because people do get a better product.
John August 1:03:41
Except that if they’re, let’s say, significant, real points of difference that you’re drawing attention to. All right, fair enough. I’ll go along with that.
Gene Tunny 1:03:50
Yeah. And so the conclusion was from that study, I think this is how Bagwell described it is that advertising is combative. So yeah, I think there’s a lot of truth to that idea that much of advertising is just about companies competing over market share. And to the extent that they get the market share for spurious reasons, then that could be wasteful.
John August 1:04:13
Oh yes. Well, the other thing is, this is a few steps removed from advertising. But, you know, with customer plans around utilities, it’s possible that rather than competing over service, they’re competing over their ability to befuddle customers and make them think that they’ve got a good deal when the plan is just so complicated, that they’d never make sense of it, unless they, you know, did a very detailed spreadsheet and work things through bit by bit. So yeah, I think there’s also competition to the befuddle the consumer rather than actually deliver something useful.
There’re many things that are rattling around in my head. I only just want;
Gene Tunny 1:04:51
That’s okay. I might conclude with what Kyle Bagwell concluded in his study, essentially saying, we can categorize different types of advertising. So, we know some of its wasteful, we know some of its useful. But beyond that, it’s hard to say, you know, how much is, is useful, how much is wasteful. He concluded that; well, much has been learned, the economic implications of advertising are subtle and controversial. And many of the most important questions remain unresolved. So that was in 2005, he wrote that and I think it’s still the case. And yeah, we still got all the manipulative advertising, we’ve now got surveillance capitalism, and we’ve got Google and Facebook earning a huge chunk of the total advertising spend just because of their near or, well, I wouldn’t say that the I mean, potentially, there could be a competitor that comes along and challenges them. But I think they’re close enough. They’re very close to being a monopoly in in their areas at the moment. And they’re just earning a huge amount of that revenue. And that’s something that arguably should be addressed.
John August, any final thoughts?
John August 1:06:17
Okay, well, the final thought, I guess, that I have been boiling away and inside of me that I guess has been hinted at a lot of what I’ve said is that, if we’re talking about respecting our integrity, the sovereignty of the human being, that’s something that I think does sit outside of our calculations of costs and benefits and so on, you know, fundamentally, we want to respect the sovereignty of the human being, once we’ve ticked that box, then we worry about where to go from there. And we may have good advertising or bad advertising or whatever. But I think respect for the individual sits to some degree outside of all this economic argument.
Gene Tunny 1:06:59
Yes, I think that’s right. That’s a normative issue. So, yes. I should point out that; this is a different concept. There is a concept in Economics, called consumer sovereignty. I don’t know if you’re aware of that concept. The idea is that consumers are sovereign, and they’re rational, and they choose what’s in their best interest. And in a way, the power of advertising, the manipulative power of advertising, the fact that we all ended up being persuaded to buy a product that we ended up having buyer’s remorse, we made border for the wrong reason. And you could argue that whole assumption of consumer sovereignty, isn’t that solid.
John August 1:07:47
Okay, well, hopefully this doesn’t take us down another rabbit hole. But do we say that someone becomes addicted to heroin through their informed engagement with the market? I think the answer is no. What if we’re struggling to lose weight, and we want to lose weight, but we’re advertised all the sweets and things where we succumb to them on a day-by-day basis.
So, my endorsement of the sovereignty of the individual is a little bit complicated. I acknowledge our faults and our failings, but emphasize that if advertisers are strategically taking advantage of our psychological thoughts, that’s even worse than us having them in the first place.
Gene Tunny 1:08:32
Yeah, okay. I think that’s a fair point to end on. John August, thanks so much for dropping by my ad-hoc podcasting studio on your road trip. It’s been a great pleasure. I really value your insights and having a frank and fearless conversation about these important economic and social issues. So, thanks so much.
John August 1:09:00
Oh, thank you. It’s developed my own thinking too. So, I wonder if we should put the energy into making policy changes here when there’s so many other fish to fry, but hey, it’s interesting to think about.
Gene Tunny 1:09:12
Very good. Okay. Thank you, John. Okay, thanks, Gene.
Okay, that’s the end of this episode of Economics Explored. I hope you enjoyed it. If so, please tell your family and friends and leave a comment or give us a rating on your podcast app. If you have any comments, questions, suggestions, you can feel free to send them to contact@economicsexplored.com and we’ll aim to address them in a future episode. Thanks for listening, till next week, goodbye.
Credits
Big thanks to EP144 guest John August and to the show’s audio engineer Josh Crotts for his assistance in producing the episode.
With US inflation at a 40-year high, who wins and who loses? Are greedy corporations to blame as some pundits are suggesting? Episode 127 of Economics Explored features a wide-ranging conversation with Darren Brady Nelson, Chief Economist of LibertyWorks, an Australian libertarian think tank, which also considers so-called Woke Capitalism and what’s going on with China. Here’s a video clip from the episode featuring Darren chatting with show host Gene Tunny about the 40-year high US inflation rate.
In the second part of the show, the Grattan Institute’s Economic Policy Program Director Brendan Coates explains the franking credits controversy, related to some peculiar Australian tax rules, to show host Gene Tunny.
Darren Brady Nelson is an Austrian School economist and liberty evangelion as well as a C.S. Lewis and G.K. Chesterton style Christian. He is currently the Chief Economist at LibertyWorks of Brisbane Australia and a long-time policy advisor to The Heartland Institute of Chicago USA. He is also a regular commentator in traditional and online Australian and American media. Check out his full profile at Regular guests – Economics Explored.
Brendan Coates is the Economic Policy Program Director at Grattan Institute, where he leads Grattan’s work on tax and transfer system reform, retirement incomes and superannuation, housing, macroeconomics, and migration. He is a former macro-financial economist with the World Bank in Indonesia and consulted to the Bank in Latin America. Prior to that, he worked in the Australian Treasury in areas such as tax-transfer system reform and macro-economic forecasting, with a strong focus on the Chinese economy.
Thanks to Darren and Brendan for great insights and conversation, and to the show’s audio engineer Josh Crotts for his assistance in producing the episode.
