The Agenda

More on How Internet Innovations They Shape the Economy

I don’t disagree with anything Ryan Avent has to say in his post on the revenue-producing aspects of internet innovation:

 

Online content isn’t simply a substitute for real consumption; it’s also a complement to real consumption. Before Amazon, people purchased books by leaving their home, going to a bookstore, walking around the bookstore, finding the book, purchasing it, and going back home. This took a lot of time, and time is costly. When you’re traveling and browsing, you’re not consuming. It is now dramatically faster and easier to comparison shop and browse thanks to the internet. It’s dramatically easier to choose from a range of service providers—from plumbers to therapists—and to get feedback on provider quality from other customers. It’s easier to physically navigate one’s way around, thanks to a variety of online innovations, all of which make one less likely to get lost en route to this restaurant or that museum. It’s easier to book plane tickets and hotel rooms. It’s easier to find used cars. It’s easier to order pizzas. And so on.

The digital divide ensures that there’s still a regressive tinge to these advancements, but you don’t have to be a wonk to appreciate how easy it is to stream old seasons of “Futurama” or have a pepperoni pizza delivered without ever being put on hold by the cashier. Time savings aren’t simply related to consumption, either. It’s easier to keep tabs on my finances and pay my bills, because of the internet. It’s easier to do my taxes. Those who don’t read blogs still have to pay bills and taxes.

And once these factors are taken into account, it’s not clear that the internet is reducing spending on net. Yes, I can now spend hours watching free YouTube clips where before I might have used that time to go see a movie in person. But the huge time savings associated with the growth of the internet create new consumption opportunities. Some of these will be spent on free stuff. Some will be devoted to non-free stuff. [Emphasis added]

And I strongly embrace his conclusion:

Time is consumption, and wasted time is foregone consumption. It seems premature to me to conclude that the internet’s role in expanding consumption of free content is more important to the measurable economy than the internet’s role in creating new opportunities for consumption of non-free goods.

With that said, I fear that Ryan may have taken my earlier post a bit too literally. When I wrote the following

I actually believe that attention-saving technologies have made us much, much better off, which is why I’m an ardent techno-optimist — but again, attention-saving technologies don’t benefit everyone equally. Rather, they benefit the kind of people who like and need to pay attention to lots of different things, e.g., the kind of people who enjoy reading blog posts and tweets, freelancers who manage a variety of different clients, etc.

I should have placed heavier emphasis on that last part. Is everyone equally dextrous when it comes to using personal finance tools? One way to think about advanced market economies is that they place a very high premium on the ability to multitask and to maintain extensive networks. This can translate into managerial effectiveness, the learning by analogy that facilitates entrepreneurship, and also into the ability to navigate the stresses associated with keeping important personal relationships intact. At the same time that making our way in the domain of market production places heavier emphasis on these skills, the same is true in the domain of household production. And of course these two domains feed into each other, i.e., the hedonic benefits associated with fulfilling relationships can make one more productive in the market, while a large number of weak ties can facilitate the identification and pursuit of various economic opportunities. If marriages have become consumption rather than production partnerships, well, one has to be more attuned to subtle shifts in the relationship, and adjusting to and embracing novelty becomes important to sustaining mutual interest. 

If you’re not good at multitasking and maintaining an extensive network — you were never trained for it, you grew up in an insular culture and haven’t led a very geographically mobile life, etc. — you are relatively disadvantaged, and this relative disadvantage may well be growing over time. 

I’m pretty darn sure internet innovations aren’t reducing spending on net. Yet do internet innovations encourage some slice of the population to devote more time and attention to the cultivation of the imagination over more humdrum aspects of life? I’m guessing the answer is yes. Does this mean we should rue this innovation? Of course not, partly because, as Ryan explains, there are many hard material ways in which internet innovations make us much better off. (I have written enthusiastically about ephemeralization in the past, and I’ll keep doing so). 

But are there interesting ways in which internet innovations are exacerbating existing inequalities? I’d say the answer is also yes. Is there a potential for internet innovations to alleviate other inequalities? I think it’s already clear that the answer is yes there as well, and not just in democratizing access to certain consumption opportunities that were once limited to people in the densest cities. There is also the promising example of Khan Academy, ACCESS, and the Florida Virtual Schools, which anticipate a world in which we more easily bring high-quality instruction to scale. 

All in all, I’d say this is a really interesting and exciting landscape, particularly for us novelty-seekers. 

Reihan Salam — Reihan Salam is executive editor of National Review and a National Review Institute policy fellow.

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