Social media have found that the most addictive way of grabbing the attention of viewers is to shower them with hate and sensational falsehoods, not carefully filtered truths. Human nature being what it is, hate and falsehoods attract far more viewers than mundane truths. Crazy, polarising conspiracy theories capture millions, while factcheckers are given short shrift.
India has major social and economic problems. Hate speech and falsehoods have spread through social media to an extent once unthinkable. At the same time, the combination of Covid, the Ukraine war and high inflation have created a huge financial squeeze on governments across the world, widening fiscal deficits and driving many countries to the International Monetary Fund (IMF) for rescue.
There is no silver bullet for these problems. But one measure could simultaneously alleviate both problems – stiff taxation of advertisements on social media. This has been proposed by Paul Romer, a Nobel laureate in economics and former chief economist of the World Bank. It could be highly relevant for India.
Hailing from Chicago University, the home of free market economics, Romer has, for most of his life, been a strong advocate of free markets, warning about the harm done by government intervention to innovation and efficiency. His Nobel Prize citation highlighted, among other things, the role of knowledge in spreading innovation and efficiency, and the need for maximum freedom to spread ideas. Silicon Valley loved him for this. But he has now turned against his beloved ‘maximum freedom’.
Romer now emphasises the harm being done by what was once hailed as the democratisation of speech and thought through the internet. A few mega-corporations have cornered sales, profits and eyeballs, because network effects convert winners to mega-winners, wiping out competition and creating monopoly power. Many corporations generate such enormous profits that they simply give these back to shareholders through buybacks, since profits greatly exceed investment needs.
The recent crash in share prices of social media giants suggests that the monopoly argument is overdone. Their earlier high share prices owed more to easy monetary policy and ultra-low interest rates than monopoly profits. Indeed, their share prices bore no relation to profits.
But without question, social media have captured the time-space of the public. Viewers gaze at their phones and computers for hours non-stop. This has happened at the expense of reading or listening to traditional media like books, print, TV and theatre.
If this audience capture were achieved through excellence, it would be a good outcome. In fact, the capture is driven by malign behavioural trends. Social media have found that the most addictive way of grabbing the attention of viewers is to shower them with hate and sensational falsehoods, not carefully filtered truths. Human nature being what it is, hate and falsehoods attract far more viewers than mundane truths. Crazy, polarising conspiracy theories capture millions, while fact-checkers are given short shrift.
The social media giants originally had the great aim of democratising speech and access to viewers. Anybody can post a video on TikTok or Facebook and access millions of viewers. But the unanticipated social consequences have been terrible.
The algorithms driving content to viewers focus evermore on hate and falsehoods to the exclusion of truth and sanity. This helps viewership to explode and attracts advertisers. Algorithm-based viewing helps advertisers to target their advertisements to precisely the audiences they seek, and this is far more cost-effective than advertising in traditional media. Hence, traditional media – which are far more responsible – are dying.
The social media giants claim they are doing their best to curb the damage. But their profits and share values require maximising viewership, which translates into maximising hate and falsehood. This is checked up to a point by official regulation and self-regulation. Social media do weed out some fraction of hate and falsehoods. But there is a fundamental contradiction between their desire for profit and commitment to healthy messaging. Self-regulation cannot work well when incentives are so perverse.
We live with other problems by levying ‘sin taxes’ to discourage their use. Liquor and tobacco are addictive and can ruin lives. Prohibition has failed across the world, so governments resort, instead, to heavy taxation. This has the added advantage of producing high revenues to finance social spending.
The same approach could work for social media. Taxing all users of social media is neither practical nor desirable. But a sin tax can be levied on social media. This can be very heavy, as with tobacco and liquor, and fetch high revenues.
Will this really check hate and falsehoods? I am not sure at all. Taxing individual hate messages would be a great disincentive. But taxing accompanying advertisements will not discourage the hate. It will, however, have two positive effects:
- It will help shift advertising back from social media to traditional media, which are more responsible and accountable (despite many black sheep).
- The tax will raise substantial sums for social spending – and for dealing with the social consequences of undesirable messaging – without hurting consumers.
Ideally, taxation should be targeted at hate, falsehood and conspiracy, while sparing other messages. This will not be easy. Maybe artificial intelligence (AI) can help. Multiple experiments may be needed to discover what works. But even if progress on this is slow, the tax is still justified by the two other gains mentioned earlier.
This article was originally published by The Economic Times on Jan 10, 2023