Capitalisn’t: The Power of Access in Journalism and Academia

Luigi: Hello, Capitalisn’t listeners. With this episode you are listening to, we will have reached a million downloads of the podcast. I just wanted to take a quick moment to thank all of you for listening to our show. We wouldn’t still be here without your support. I also wanted to thank Kate Waldock, my first cohost and cofounder of this project. And thank you, Bethany McLean, who’s managed to carry on that vision. Here’s to the next million downloads. Thanks for listening, and enjoy this episode.

Kara Swisher: They do have the best data, don’t they? They do have the best information, and they’ll use it to their advantage every single time and twice on Sunday.

Bethany: I’m Bethany McLean.

Phil Donahue: Did you ever have a moment of doubt about capitalism and whether greed’s a good idea?

Luigi: And I’m Luigi Zingales.

Bernie Sanders: We have socialism for the very rich, rugged individualism for the poor.

Bethany: And this is Capitalisn’t, a podcast about what is working in capitalism.

Milton Friedman: First of all, tell me, is there some society you know that doesn’t run on greed?

Luigi: And, most importantly, what isn’t.

Warren Buffett: We ought to do better by the people that get left behind. I don’t think we should kill the capitalist system in the process.

Bethany: As listeners of this podcast know, Luigi and I are obsessed with Big Tech. We’re also obsessed with questions about how those who should be shining light on things that are going wrong with capitalism can be corrupted by their need for access. So, who better to talk to than Kara Swisher? She’s been covering tech in fearless fashion since the 1990s. She an opinion writer for The New York Times, a contributing editor at New York, the host of the podcast Sway, and the cohost of the podcast Pivot. She’s also currently a fellow at the University of Chicago’s Institute of Politics.

I was thinking back on your career, and you started in journalism when I did, the early 1990s. It would have been so easy for you to become a believer, to write about all the wonderful things happening in technology. Why didn’t you? What made you say, “I need to ask tougher questions?”

Kara Swisher: I actually am a believer. That’s the thing. That’s the reason I ask tough questions, because I actually do believe in the changing powers of technology and how . . . There are pluses and minuses to every technology that exists that has happened, going way back, aqueducts in Rome. But I am of the school of . . . There’s a big debate on Twitter today about Adam Smith. Adam Smith wasn’t just the invisible hand. He was also, help public institutions. Help workers. Have a bigger sense of capitalism. So, I’m a huge believer that these are world-changing and possibly democracy-improving forces, but they could be used for exactly the opposite. That’s why.

I started to get worried with Facebook, I think, when I saw a lot of misinformation and nothing happening. I remember one time, it was a thing about Hillary Clinton being a lizard person. They said she was a lizard. I saw it on another person’s page, a relative’s page. I was like, “She’s not a lizard. I’ve met her. I’m sure she’s not a lizard.” And I think I wrote one of the executives. It must have been Sheryl or Mark, and I said, “What is going on here with this? Why is this continuing to come over your system?” And, “Oh, well, that’s what people . . .”

And I was like, “Oh, well?” This will not lead to good things.

Bethany: How much of the issue was the way the companies were oriented naturally, and how much of it was the rules of engagement with the press in Silicon Valley for at least those early years?

Kara Swisher: Yeah. You had to have access to these people. Right, yeah. There was a bit of fanboy-ism going on, and I’m not a boy, and I’m not a fan. So, it was easy not to be a fanboy. When I got there, I was more interested in the sociological aspects, the historical aspects, and then the business aspects. And a lot of them were the gadget aspects, “Ooh, look what you can do. If you only put this giant helmet on, you can do 3D.” I was sort of the normal person. I’m like, “Who’s going to put the helmet on, precisely, and how are they going to pay for it and this and that?”

Luigi: But the problem of access exists both in Wall Street and in Silicon Valley. But somehow, until recently, the treatment by journalists of Silicon Valley was much kinder than the treatment of Wall Street. How can you explain that difference?

Kara Swisher: I don’t know. I think it shifted. I was considered really mean for a long time. I think I wrote one piece where I called them sheeple, and everyone was like, “That’s so mean.” And I’m like, why? Why? I’m just saying, they’re not saying anything about Muslim issues that Trump has and immigration issues and attacking the immigrant. I was like, Silicon Valley was built on immigration.

I’m not sure why that was. A lot of people who are coming in honestly wanted to be them, and I didn’t want to be them. I had been offered jobs at every single one of these companies in the early days. For some reason, I just didn’t want to join their merry little bands. I think a lot of reporters honestly did, not everybody.

Bethany: That’s really interesting. If you covered Wall Street back in the day, the chances that some investment bank was going to ask you to come be a highly paid honcho there was pretty de minimis, right?

Kara Swisher: Was it? OK, good to know.

Bethany: And I had never thought about that being a little bit different in Silicon Valley, that the chances of being a reporter there and being asked to join a hot new startup were significantly higher and that maybe—

Kara Swisher: All of them, all of them.

Bethany: —and that maybe that contributed to some of the sycophantic coverage in the early days.

Kara Swisher: Maybe so. I don’t know. It’s just weird. Even Bitcoin stuff. Everyone was like, “Kara, invest with us.” And I was like, I think this is right. It made sense to me, and then I just didn’t do it. I have an anathema to making money, I guess. I do just fine, by the way. So, it doesn’t matter.

Bethany: I was thinking as we were talking. Either traditional media destroyed itself, or the rise of Big Tech destroyed traditional media. I don’t know, some combination of both. But is there any path back? Do you see any path back?

Kara Swisher: It’s just a smaller business. That’s all. What? Who cares? It’s a smaller business. Just like movie theaters, oh, well. It’s a smaller business. It doesn’t meet the needs of consumers at the time. I’m not trying to be mean about people losing their jobs, but that’s not how people are consuming things. So, everything has to be right-sized in terms of economics. It’s just a smaller business, and the same thing like movie theaters. This is going crazy, but I’m like, “Movie theaters are just terrible. It’s expensive. The popcorn’s terrible. The seats suck. You have to park.” And these big-screen TVs have come down in price. They’re half as much, and they’re going to be half as much tomorrow, and they’re a great experience. I can sit at home. I can order takeout. So, it’s just a bad product.

I don’t say media’s a bad product, necessarily. It’s just the business prospects are less good. So, you have to be smaller. You have to be very nimble or have something that nobody else has. You have to either have differentiation, or you have to have a smaller staff and say, “We’re going to make less money.” And then, that’s that.

Bethany: I think I’m going to focus on making really good popcorn. That’s my new recipe for success.

Kara Swisher: Come on. Movie theaters . . . People get so mad at me. I’m like, am I saying something that nobody . . . And, by the way, TV’s never been better than ever before. Do you know how many subscription services I pay for? And I like them all. I feel like I’m making a good investment because I like what they’re offering. At some point, they will not make what I like, and I will cut them off, just like potato chips or anything else. I think what the problem is, is media thinks of itself as not a product on the days they don’t want to be a product and like a product on the days they do want to be like a product. That’s the thing.

Luigi: I want to move you a little bit to what you are dealing with now, because you are visiting the Institute of Politics at the University of Chicago. So, even remotely, you are dealing with more than your fair share of academics. Bethany and I have learned over time, chatting with each other, there are many more points in common between academics and journalists than people recognize. One of the points that is particularly dear to me is the issue of, to some extent, dependency on sources. So, as Bethany was saying, in places—and of course there are exceptions like you are—but in places where sources are very important, journalists tend to cater to the sources.

We, researchers, are very addicted to data. And now the data are in the hands of the Big Tech companies. So, if I want to do research, I need to get permission from Facebook, from Uber. And, surprise, surprise, they only give permission to people who are tech-friendly and whose answers are likely to be tech-friendly. So, for a researcher, you need massive data. For the journalist, you can do the investigation, but for a researcher, you need the data. The only people with the data, it’s them. So, at some point, my fear is that we become part of the propaganda machine because . . .

Kara Swisher: Yes, you do.

Luigi: . . . the only articles we can write are the ones that the Big Tech companies like.

Kara Swisher: Actually, Senator Klobuchar and I did talk about that, the access to data that these companies have. There’s a big push about opening of the datasets at Facebook and other places so researchers can look at them. That’s been a big fight between academics and the companies because, of course, then you suddenly find a company has funded some group of studies and this and that. This happens all the time, and it happens a lot more than you like. It just happened in The New York Times.

That’s the problem, is that these companies have money to spend. And even in advertising, look, Facebook advertises on Sway. You think I like it? No, I wish they would leave. I don’t know what to say. I’ve said it’s a problem for me. I don’t have control over it. If they want to whatever . . . Robinhood advertised on something else of mine. I’ve been so negative about Robinhood. I don’t understand it. I don’t know what to say. So, one of the things that you have to deal with is figuring out how to get research and data that is not linked to them that they have control over. There are some ideas about doing that, and that should happen. On the other hand, you have to do your own studies, figure out how to do your own things. But they do have the best data, don’t they? They do have the best information, and they’ll use it to their advantage every single time and twice on Sunday.

Bethany: I was listening to your interview with Amy Klobuchar recently. You’ve referenced an interview that you’d done with Gene Sperling a while ago, who admitted that the Obama administration should have looked at things differently, should have looked at Facebook’s purchases of WhatsApp and Instagram. You used the word “punted” to describe the Obama administration’s hands-off attitude toward Big Tech. Why do you think that was? And were those turning points, or should something have been done years earlier? Was it already too late by then? Maybe it’s not too late now. Maybe I’m being too pejorative.

Kara Swisher: Yeah. I was thinking about that because Gene was involved with that. I have a lot of respect for Gene and everything, but when Google was trying to, if you remember, buy Yahoo! Search service or run it, I pushed hard on that, like, no, they can’t have 90 . . . whatever the number was. It was a crazy number. Google was actually mad at me because I kept writing stories like, “Why is the government allowing this to happen?” This is a crazy . . . because search mattered so much at that moment.

The Obama administration didn’t do anything about Google, didn’t do anything about . . . They looked into it, and the staff, a lot of reporters reported on wanted action. And they just decided not to do it. They thought they didn’t have enough of a case. That would have, to me, been the moment. And then they punted on everything. They just let things go by or they put in . . . I know the FTC’s an independent organization, but they didn’t have the resources to take on Facebook. So, they levied these . . . After the first consent decree was violated, they just put out a fine that was . . . I think I called it a parking ticket. It was crazy how little the Obama administration did.

So, when I asked Gene, he had to admit what happened. Punted is actually a kind way of putting it. They completely dropped the ball on it. And it was only during the Trump administration, if you want to compliment Donald Trump for anything, and I don’t do that very often, that pushed this through, the latest one. And a lot of the prosecutors didn’t want to move as quickly as Barr did. But in this case, he did, and with some cooperation from state attorney generals and stuff like that.

They’re now 10 times more powerful, have so much more money for lobbying. You’ve seen those figures of their lobbying might. They’re a necessary part of our country. Through the pandemic, we’ve understood how important tech companies are to us and how we’re dependent on them. And they’re more powerful than ever.

What’s happened is it’s gotten so complex because each case . . . The problem I have is that Big Tech is always mushed together, and there’s no such thing. There’s Big Tech companies, and each of them requires a different solution. The solutions are complex and difficult to get to, and you have a political situation where it’s almost impossible to pass legislation. This Amazon thing right now between Senator Sanders and Senator Warren and Amazon News, whoever that is, that troll, they’re just pushing those senators to put up or shut up. It’s a really rude way to do it, but that’s what they’re essentially doing. And they can’t really put up. So, they have to shut up. I think that’s really what they’re trying to get them . . . to get to show there.

Luigi: Can you elaborate on this sparring over Twitter between Senator Warren and—

Kara Swisher: Sure. It’s ridiculous.

Luigi: —I thought it was shocking that Amazon was so brutal in attacking.

Kara Swisher: Yeah. I’ve been thinking about it all week, because I wrote about it, because I was trying to be sort of in the middle. I’m like, “Look, Senator Warren’s always trying to get their goat.” And she gets under their skins in a way that I find enjoyable for myself, personally. But the fact of the matter is she shouldn’t be doing this, either. But that’s OK. Whatever. That’s her thing. She does that all the time. She’s Mark Zuckerberg’s existential crisis. Now she’s bugging Jeff Bezos.

There’s two things I find interesting. Trump does this in spades 10 times worse during the entire administration, and Amazon says nothing over the post office, over the Bezos Washington Post, over the DOD stuff, very little. I just was talking to someone, Chamath Palihapitiya, and he sort of explained it. He’s like, “They didn’t think Trump was effective. So, why go at him?” What they want to do is depower Sanders and Warren by pushing them to, “OK, you want to regulate us?” If you notice, Mark’s testimony last week was, “OK, regulate us. Go regulate us,” knowing full well they can’t really regulate them. And the regulation that will happen will be very watered-down. Therefore, it puts the Left back on its foot. Instead of just yelling at them, they have to do something about it.

Now that I look at those tweets by Dave Clark and others, it really is . . . It’s the asshole way to do it. They could also do it like, “Hey, workers, we give you $15 an hour. We give you health benefits. You have a path into the middle class. You’re just going to have to . . . The unions aren’t going to help you like we have.” That’s their argument. They could make that argument, “You need to trust us,” although I wouldn’t trust them with anything. I also wouldn’t necessarily trust unions, the way they’ve evolved. So, they had a good case to make, but I think they decided to go for the jugular with the Left and just shut down the Left by forcing them into a conflict.

At first . . . And it definitely came from Bezos. The whole thing came from Bezos. If you saw him be aggressive on his sexting, this was like that mood. And I agree with him on the sexting stuff. I was like, “Go for it, Jeff. You shouldn’t have your pictures stolen, and why don’t you say it?” But this seemed a little emotional, but I think they’re doing it strategically. Now that I think about it, because they’re such killers, they’re trying to get them to put up or shut up. That’s what they’re doing.

Bethany: Do you think that’s right? Do you think, effectively, they’re right, that Amazon is right to say, “We dare you,” because nothing will ever get done?

Kara Swisher: I think they’re assholes. I don’t know if it’s right or not. I’m staying with assholes. I think I’m going to write a column saying, “They’re just being assholes.” Look what they did in New York after Alexandria Ocasio-Cortez just questioned them. “How dare she? We’re leaving,” the whole thing. They did it very suddenly. And then, by the way, they have more employees in New York than ever before. So, she kind of was right. Why should we give away stuff to billionaires? I think this is a company owned by one of the richest people in the world that doesn’t feel like being questioned and understands how important it is to the economy. They’re going to be one of the biggest employers in the world soon.

Luigi: I see this as a sign of weakness, actually, the fact that they have to be so aggressive, because, as you said, against Trump, they knew he would bark and do nothing, basically. And they didn’t feel the need to attack him. I think they are afraid that the Left is becoming more and more influential in the Democratic Party. And I think that they want to put it down. I think that’s a concerted effort to do so.

Kara Swisher: What is that? It’s Shakespearean, “Rid me of this.” What is that? I know it was one of the Henrys, one of the kings. I think he probably said that. So, they’re doing it. They aren’t going to question him. I have understood from people at Amazon that there was a lot of questioning of this, like, “No, no, no, no.” And every single tech PR person, every one, called me and said, “This is insane.”

If it works, suddenly you’re going to see a lot of them doing it. I don’t think you’ll see Sundar Pichai doing it because he’s not an asshole. But they might. They might. Mark Zuckerberg certainly could. He’s not an asshole, but you know what I mean? He may say, “Oh, god, aggression worked. Instead of tromping up to Capitol Hill with my little tie, and people make fun of my hair, I’m going to just say, ‘Screw you. Come at me.’”

Bethany: “Who will rid me of this troublesome priest?”

Kara Swisher: Yes, that’s it. What is that? That’s King—

Bethany: I was an English major, but I don’t remember.

Kara Swisher: —Henry VIII, right?

Bethany: I think so.

Kara Swisher: “Who will rid me of this troublesome priest?”

Bethany: I think so. I’m going to have to try to remember that.

Which of the Big Tech companies do you think has to worry the most? They’re all so different, and the solutions required in each case are so different. Is there one that’s more vulnerable than the others?

Kara Swisher: Well, in terms of old monopoly law, Google, for advertising, duopoly with Facebook, setting prices, pull the publishers in, search . . . There’s no search competitors, that kind of stuff. Facebook, I think in terms of people distrusting it and lawmakers angry at it, I guess they’re in the most vulnerable position. People like Apple and like Amazon, and people don’t love Facebook. Legislators are mad at it, and Mark, for some reason, attracts so much distaste even though he’s probably one of the nicer ones of that gang. So, I suspect Facebook, around advertising, there might be some real problems.

I think there’s very little any of the legislators can do around First Amendment stuff, and Section 230, we’ll see what happens. Google seems to sail out of a lot of things around YouTube, though. It’s interesting.

Amazon is much more vulnerable than you think around Marketplace, around sellers and buyers. There’s a lot of angry sellers on the Amazon market. I think Amazon around the workers. I just feel like there’s big change happening with unions, and believe me, I think unions have acquitted themselves badly. But as unions begin to go into 2.0, maybe, these fights with employees, even if they win, they haven’t won. They’re in for a world of pain, I think, over the next few years. I don’t know why they don’t decide to be completely on the cutting edge of new employee relations. That’s what I would do if I were him. I mean, how much money can you have, right?

Luigi: The strongest case I heard you make is that there’s some form of dominance of the market for advertising, which . . . Dominance per se is not an antitrust violation. You need to prove abuse, and you need to prove harm. So, what would be your case for consumer harm?

Kara Swisher: I had a really interesting discussion with a bunch of experts in this. Now, I am not a lawyer. I’m just going to preface this by saying . . . Actually, it’s consumer welfare. It’s, what is the consumer welfare? And then, who are the stakeholders here? I think welfare has been taken to be price for a long time, but it isn’t necessarily that. So, the question is, what is the welfare around social-media companies creating social unrest? What is the price for that?

I think them going in the direction of the Capitol attacks was interesting. Who’s at fault here? And I think the question was stupid because . . . “Are you responsible for this?” was a dumb question. It’s like, “What part were you responsible for this? What is your responsibility here?” Then you could start to attach liability to these things, and you can start to attach taxes to it. It could almost be like a sugar tax. We don’t have any problem when it’s opiates or sugar or anything else. There could be an addiction element to it.

I think there’s a lot of creative ways to get at the fact that tech companies are getting a free ride on a lot of things that the government has to clean up later, including these attacks. Who paid for the cleanup of the Capitol? Well, tech should pay a little bit of that. But a lot of people feel like there is no proof of any consumer harm. But it may not be in the way we thought of consumer harm before, which was often on price gouging and things like that.

Bethany: When you interviewed Amy Klobuchar recently, what did you come away thinking in terms of her determination to get something done?

Kara Swisher: Well, she’s a centrist, so harder because she’s not screaming. She’s not a screamer. Screamers always seem to get attention these days on the Twitter. The problem I have with her is that it might not be enough, because she’s very . . . I wouldn’t say plodding, but she’s slowly crafting legislation, and it will be around . . . I think she’s correctly focusing on the two areas I would focus on. One is liability, which is adding more liabilities to Section 230 and reforming it. I think that’s correct.

Then, secondly, data legislation and privacy legislation, which goes to the heart of their business plans. She’s also adding on an idea I thought was interesting that I haven’t really looked into as much as I should yet, is on taxation around certain things, like adding taxes and then using the money to either go to election integrity or to fund the FTC and things like that. She’s thinking in a much more clearheaded way. I just think the speed at which these companies move is harder . . . You could catch a train company, but these companies are harder to catch.

Luigi: What is your view on 230?

Kara Swisher: It should stay in place.

Luigi: Should we reform it, and how?

Kara Swisher: Reform it, yeah. The screams to get rid of it in that executive order were ridiculous. It really could badly impact small companies and probably help larger companies who have legions of lawyers to deal with these kind of things. I was around, I wrote about it when it first came into being. Most of the bill it was attached to, the law got declared unconstitutional. But it really did help these companies and protect them from a plethora of lawsuits that would have just put them in the ground before they were born. They just would have been stillborn.

Obviously, things have changed. These companies are more powerful. And sometimes I’m like, look, this protects them. But some of it is good protection. So, we have to decide where liability lies and how to reform it. There’s all kinds of ideas of how to do that, but eliminating it immediately seems a real problem. Every single small company knows they can’t do anything. It’ll also create more monitoring of comments, meaning getting rid of it. Why even bother having comments if it’ll get you . . . or why even bother letting people have any kind of ability to post if it’ll get you into trouble? And then you’re sucked up into lawsuits and whether it was malicious or not.

It’s so complex at this point. There’s got to be a level of things they’re responsible for. Zuckerberg brought up something that would help him and not necessarily others, which is there might be a tier of moderation that a company has to do and then has to prove it. Then my question is, who enforces it? How do they prove that they did it right? Now, chemical companies do it. Food companies do it. They sometimes don’t do it well, and sometimes they do it well. That’s the kind of thing I think they’re talking about, is monitoring of their ability to get rid of misinformation on their platforms. And if they fall short, there’s enforcement of that. I just don’t know. Does there need to be a new agency that moderates the moderators? I don’t know.

Bethany: I really thought the labor union stuff was interesting and also the ability that you get as a longtime journalist, which Kara is, to be able to read through official communications and understand what unofficially is going on behind the scenes. I do think that the whole concept of the risks to Big Tech from labor being really interesting because we’re all not looking at that. We’re looking at the rest of Big Tech from government actions on antitrust or new regulation. It is interesting to me, It’s something I don’t understand, why Amazon doesn’t get the issue of labor. Or maybe they know more than we do, and they understand that it doesn’t pose a threat.

Luigi: That’s very interesting. I think that it’s hard for the economists. It’s a cultural issue. But I think that, at some level, it might be a cultural issue at the Bezos level in the sense that he feels that he’s doing so much for workers. What is interesting is the plant, the Bessemer plant in Alabama where they’re voting to unionize, they’re making, like in every other Amazon plant, $15 an hour, where the minimum wage in Alabama is $7.25. So, you are basically making more than twice the minimum wage for the local place.

I listened to a podcast on this issue where they were interviewing many of the union workers. And I think the issue was, more than economic issues, a dignity issue, the fact that they were treated like robots. I think that is the part that insults so many people and why the union’s making an inroad. I’m sorry to say that, all too often, we economists only look at the side of the economic side of the issue, forgetting some very important emotional issues.

At some point, you almost get resentful because, on the one hand, you are making so much money and you don’t have alternatives that you cannot afford to leave. But, on the other hand, you hate where you are. It’s funny, but I think that actually raising the wage has made unionization more likely rather than less likely, because if you are making the same wage as everybody else, then you will leave the next day. But now you cannot afford to leave, because that’s your ticket to have a decent life. Then you are going to fight. If you don’t have the exit option, you’re going to use the voice option, and that’s where the voice comes in.

Bethany: That’s fascinating, and it made me wonder as you were talking if it’s the economists’ point of view that prevails in Amazon headquarters, because I think, from a purely economic point of view, you could make an argument that workers are being paid fairly. But in the end, so much that’s off about capitalism does come down to the question of human dignity. Of course, I’m inclined to think this way as a non-numbers-driven journalist, anyway. But I think you just highlighted exactly what the core issue here is and why this issue of the Amazon workforce is also a microcosm of the bigger issue in our country and even in the world, which is, it is this issue of human dignity. It’s not an issue of, “Am I making enough to get by? And, from an economist’s point of view, is this more money that I might be able to make in a comparable job?” It’s, “How do I feel every day?”

On some level, I don’t like the fact that we’re becoming a feelings-driven culture. But yet, feelings are incredibly important, and if you feel every day like you’re being treated not as a human being and with a lack of dignity, then you’re going to get more and more angry. Maybe Amazon headquarters needs an infusion into it of a noneconomist point of view in order to understand that.

Luigi: I would go even further, if I’m allowed to, and say that I think the progressive area and the Democratic Party needs an infusion of this, because part of the reason why Amazon reacts so negatively is not only because they feel they are paying a lot, but also because they feel that they are a progressive company in every dimension.

I think that that is really the disconnect between Bezos, who feels he’s a very progressive guy, because he probably votes on every civil-rights issue, on every identity issue, on the right side of the equation. Now, even on the pure economic issues, he is on the right side of the issue—or the Left side of the issue, depending on the way it’s described. But I don’t think he really has a very empathic view of the rest of the world. And he feels he belongs to a superior breed and everybody else is a lesser breed.

Bethany: Yeah, two thoughts on that. I think that that is a risk of living on the coasts, something that perhaps in Chicago we’re a little bit more inoculated against than you are if you live on the coasts. In the most progressive cities, there is a certain lack of a basic respect for people, in an odd kind of way. I think it’s because the very wealthy in those cities don’t have to live with ordinary people, and they no longer see it.

But I was thinking as you were talking that maybe this conversation ties into, also, Kara’s, to me, somewhat surprising negativity about the Obama administration, how they punted on Big Tech. Not only did they punt on Big Tech, but they were in love with Big Tech, because it was a way to fasten onto something good that was happening in the economy and ignore all the problems with Rust Belt workers, what used to be the backbone of the Democratic Party, which is real people struggling with real problems and really thorny and difficult and ugly . . . just very hard to solve. Labor-union leaders would talk about going to the White House during the Obama years and having some junior person foisted on them who would sit and be on his or her phone during the entire meeting because the Obama administration just didn’t want to deal with that, which I think laid some of the groundwork for the rise of Donald Trump. But I think that the flip side of that is Kara’s point about the lack of tough actions taken on Big Tech during the Obama administration because this was their shiny new object.

Luigi: Yeah. I think it’s a combination of this and a combination, also, of who are the leaders of the Democratic Party in that moment. I think it’s interesting that President Biden seems to have gone very differently. I was very surprised that, actually, he spoke in favor of . . . basically in favor of unionization of the Amazon Bessemer plant in Alabama. Everybody was shocked. And I think the reason why Jeff Bezos fought so hard is because now, for the first time, he feels insecure. And he wants to create a wedge inside the Democratic Party. He feels that he, the true progressive, has been left behind by a Biden that has moved very much in the direction of Elizabeth Warren and Bernie Sanders and so wants to single out Bernie Sanders and Warren as the extreme Left to do a circle around the wagon and say, we’re all part of the core Democratic Party, and bring Biden on his side. But it’s not obvious that he’s going to succeed.

Bethany: That’s a really interesting point. I was thinking that this could be the breaking point between the modern-era Democratic Party that began with the Clinton administration allied with Big Finance, Big Tech, supportive of free markets. And it could be this Amazon labor-union issue that provides the ultimate wedge that forces people in the Democratic Party to pick. What side are you on? Are you on the side of labor, or are you actually an elitist on the side of big companies? I guess there are lots of issues you could pull out right now that are going to force that, from raising the corporate tax rate to the potential unionization at Amazon. It sure will be interesting.

I thought the conversation, to me, was interesting about journalism and about access. I think that Kara has done a better job than most journalists, in part, because she has accrued so much power that she’s done a better job of being able to be critical of the industry that she covers. But she still has to maintain access, and it is a critical issue in both journalism and academia that when you lose access, you sometimes lose your ability to do your job. And I was thinking that, in some ways, the non-data-driven aspect of journalism does give us an edge over academics, because there’s almost a line in journalism that people think of, an access story and a nonaccess story.

And one of the ways in which we helped seal our own doom is that too much journalism was and still is access-driven. And once corporate America had their own voice through Twitter and through social media, they no longer needed journalists to do the puff pieces. You still see plenty of access-driven puff pieces. The hard reality is that a piece is different, if the company and the person you’re writing about cooperates with you, the piece is different than if they don’t. It just is.

Luigi: I think it’s not only if you have access to that particular person. If you’re part of that milieu, of that environment . . . For many years, I have written about Italy, its economic situation, et cetera, living in the United States. That gave me an enormous advantage with respect to everybody else. One is because I was seeing things from 10,000 feet rather than on the ground. But two is because I wasn’t writing about the next-door neighbor and this and that. And I don’t have to face the retaliation at dinner parties and stuff like that. I think that there is the access to the particular source, but there is the broader access of, certain things are not said because you belong to that environment.

In the old days, journalism was made by a broader variety of people, not necessarily all Ivy Leaguers that were coming to The Washington Post and The New York Times. And that gave a lot more diversity in representation, not in skin color, because most of them are white, but at least as in background. Now, there might be more diversity in skin color, but not necessarily in background, because they are all coming from the Ivy Leagues. They all live in New York. They all go to the same parties, and they all think alike.

Bethany: Yeah. I think there is a great deal of truth to that. There was a fascinating passage in an essay Joan Didion wrote back in the 1970s about the way the journalism game worked. I thought, “Wow, it’s still true today,” that it was white men who went to an Ivy League college—that’s a little different, obviously—but per your point, getting together with their sources who went to the same school, and then deciding what it was that could be passed along to the reader without anybody being offended and actually knowing the real story. But I thought, “Oh, that still reverberates today.”

But, yes, like you, either by psychological makeup or because I’m female or because of where I grew up, I don’t know, but I’ve never cared that much about belonging. That’s been a strength of mine, and I’ve often thought that any desire of journalists to go to parties, get invited to the JP Morgan dinner party, whatever it is, is ultimately problematic, because then you are going to censor what you say so that you don’t lose your access or don’t lose those invites. I guess I appreciate more and more the fact that I simply don’t care.

Luigi: Absolutely. I think being female or sometimes being a minority does help in that direction tremendously because you don’t belong to the old boys’ club. But the interesting factoid is this problem has been with journalists since the beginning but has arrived to academia much more recently. First of all, by and large, for many years, economics was mostly the few data you were paying attention to, macroeconomic data produced by the government, so everybody had access to it, et cetera.

But I’ve seen over my lifetime in economics, private data became more and more important. So, you can very cleverly moderate access to private data for researchers to influence what researchers do. Then the ultimate thing is you use their research to promote your brand, to promote your image, and to promote the conclusion you want. The other side cannot argue because you have the scientific evidence. And the beauty of this is this can take place without any dollar changing hands. So, it’s not that you pay the economist to write a puff piece for you. Of course they are above that. They are doing the best research they can.

But, surprise, surprise, the best research they can requires accessing data, and the one with control of the data only leaves you free to do certain types of research. So, automatically . . . And also, probably they pick what kind of researchers they let in, somebody that they know historically has been more complacent. So, there is a feedback effect that generates an outcome that, if you look outside, you might say it’s a conspiracy theory. It’s kind of a cabal of economists all pushing in one direction. The irony is there is no cabal, but the effect is the same.

Bethany: Yeah, 100 percent. That’s really interesting that that’s the way academia has become. And it is absolutely a way of controlling what’s printed. Companies have done that with the press for a really long time, a version of that, because most newspaper reporters, for instance, needed to maintain access to the company or they can’t do their beat. And companies absolutely know who’s likely to write what, and they control it that way. So, it’s not surprising that, as academic work has become more and more a part of the mainstream discourse, that companies are now applying some of the same pressure points to academics as they always did to the press. It’s the same strategy.

Luigi: Absolutely. The difference is that good journalists get trained in this, even investigative journalists, as you said. If I see a whistleblower coming in with the news, I know that even the whistleblower has an agenda, whether this agenda is to vindicate the fact he has been fired or because he feels that somebody has mistreated him, or, like the famous whistleblower, Deep Throat, because he was passed over for a job. And, as a journalist—my understanding, because I’m not a journalist—but my understanding is that good journalists are trained to use that information without being used. That’s the subtle line of navigating this. And the unfortunate aspect is economists are not trained like this. So, maybe we should hire some journalists to train us how to play this game, that when I get a large company saying, “Come, come, work with my data,” you have to realize that there is an agenda there, don’t think they are doing it for the benefit of humankind, and that you are part of the propaganda machine.

Bethany: Yeah. I think the challenging thing for academics is that the dataset only comes from one place. So, you don’t have a dataset coming from a whistleblower that then you can compare and contrast with the dataset coming from the corporation.

Back to one of the animating conversations of this podcast, the idea that journalists think economists are irrelevant, and economists think journalists are anecdote-driven and don’t understand how to think in a data-driven way. It actually can be a strength of journalism, because we can be anecdote-driven and we can find a narrative outside of the one being given to us.

Luigi: I think that one thing that is underappreciated about the benefits of regulation . . . Regulation can have a lot of costs, but one of the underappreciated benefits of regulation is that it does produce data that are accessible to everybody. So, the moment there is an agency, and this agency collects data and makes them available to researchers, everybody can use the same set of data. So, when the access is diffuse, then competition will deliver, I think, good outcomes also on the research front. When access is restricted, then I think the outcome is incredibly biased. So, one of the proposals that came out from the Stigler report on digital platforms was precisely to have a data digital agency that would facilitate the access to data for a lot of people, because, on the other hand, companies have a point when they say, “We cannot give data to everybody because there are costs, and there’s confidentiality,” blah, blah, blah, all this stuff.

But then they resort to what Facebook did. There is a project they are doing with a bunch of academics. Basically, if you are an academic they like, they explain to you how to access the data. If you are an academic they don’t like, they don’t explain to you how to access the data. The result is that everybody has access, but some can actually write papers. Others cannot. That’s my understanding of the project.

Bethany: Oh, my goodness. That is both extraordinary and yet not surprising at all. It’s interesting. I was thinking that maybe what we need is a more activist SEC that looks at companies and says, “What data do we need you to disclose?” that looks specifically at big, important companies. Maybe it’s not a SIFI designation, the designation of the Systemically Important Financial Institution. Maybe it’s a Nationally Important Company, an NIC designation or something that says if you have a certain amount of influence, we’re going to look at you and say, “What is it that you need to disclose for people to understand what it is you’re doing so that there’s transparency?”

This is a tangent. There has been some progress on this front in a different way through the opioid litigation. One of the aspects of what’s going on is that all of the documents have to be posted so that everyone can get access in order to go through all of these documents. And, to me, that is exactly how litigation should work. There should be this data dump created so that anybody who wants then can go through the data for themselves and see what was done. Too often, corporate settlements are done in the parallel, private, shadow justice system where nobody on the outside ever has any access to what it is that happened. And I think that’s another way in which data could be . . . transparency would be everything.

Luigi: Oh, absolutely. I’m a big supporter of not only transparency but also some form of delayed mandatory transparency in the sense . . . I can see an argument to say, “I don’t want to reveal that now, the information, because it might have competitive effects.” But in today’s world, after three years, most of the competitive effects are gone. And, on the benefit side, after three years, you can see if something strange was happening.

I was once at a meeting, and it was about antitrust issues. And there was a fairly conservative judge who was saying, “Oh, but these companies don’t have any advantage. The advantage lasts for a couple of weeks. After a couple of weeks, the data becomes completely useless.”

So, I said, “Brilliant. So, you are in favor of saying that after two weeks, they should release the data to everybody because they have no advantage.” And I saw him literally blushing because I caught him with his pants down.

Bethany: That is awesome. In fact, back to Facebook, somebody was emailing me recently, pointing out that we really don’t know how it is that Facebook takes user information and translates that into profits. All of that is a black box within Facebook. If they were required to disclose that, if you could see, absolutely, the course of your information as it moves through Facebook and gets sold to an advertiser, we all might make different decisions about what we chose to share. The same is true at all these companies.

Luigi: Yeah, but this is where there is a problem, because they are going to reply, and there is some truth to that, is that that’s the secret sauce, in the same way that you don’t force Coke to disclose how they produce it. It probably would be better for your health if they were to disclose it. But, anyway, at some level, you want to protect the competitive advantage. I appreciate that, but at least show the pattern after two or three years. I think that’s something that is not that dangerous from a competitive point of view and is very useful from a regulatory point of view.

Bethany: Understood, but at the same time, if there were a requirement that once you got to a certain systemic level of importance, you had to disclose, it would actually incentivize companies to stay smaller and less powerful and stay below that disclosure requirement, as well. So, it might almost be as effective a form of regulation as the taxation that we discussed, say, with Paul Romer.

Luigi: I think it’s a brilliant idea. It’s a form of SIFI, Systemically Important Financial Institution. This is a Systemically Important Digital Institution, a SIDI.

Bethany: Yeah, SIDI indeed.