About Me 0096: Making Money Ideas

Ross Douthat is right to say that worrying about what would happen if Ron Paul seized ultimate power and decreed America a minarchy probably isn't a good use of anyone's time. But where Douthat thinks that minarchy is used as a way to dismiss libertarians, in practice, I've tended to find it their first line of defense -- the right's version of "well, Marxism has never really been tried."

To some degree, you see it in Douthat's post, when he quotes Conor Friedersdorf lamenting "that libertarians hold very little power in this country." The reality is that the sort of incremental libertarianism that aligns with the interests of rich individuals and corporations has quite a lot of sway in Washington, but it routinely manages to escape the consequences of its ideas because, libertarians argue, the world we live in isn't the world they would've built, and so how can they be asked to answer for it? It's the "don't blame me. I voted for minarchy" defense.

But if the argument is that incremental libertarianism deserves more respect, then it also deserves more accountability. Desperate storytelling about Fannie Mae and Freddie Mac aside, the financial crisis was, in large part, the product of the idea that massive financial markets that we didn't understand would effectively regulate themselves. Alan Greenspan, perhaps the only man in America with the unilateral power to have prevented the blowup, has been quite clear on the flaw in his thinking: "Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity — myself especially — are in a state of shocked disbelief."

To a first approximation, that was a failure of not just a crucial pillar of libertarian economic thought, but of libertarian practice: We spent the '90s not just deregulating, but much more dangerously, refusing to enact new regulations even as the financial system changed dramatically. One of the key players there was Sen. Phil Gramm, who certainly has his fans at the Cato Institute. His was the sort of libertarianism that is politically potent because it is backed by lots of money and lots of elites who combine to push it into the public discourse.

Taxes are another example. Plenty of libertarians have lined up for repeated tax cuts under the theory that they would stoke enough growth, and force enough compensatory budget cutting, to put the country on a more sustainable fiscal path. Plenty of wealthy individuals and firms have pumped a lot of money into propagating that theory and rewarding politicians who vote they way it asks them to. That theory, however, has been a disaster as a policy matter, even as the individuals and firms have made a lot of money.

And there's a lot of power, of course, lined up against anything that gets us close to single-payer health care. Most of the arguments made in that debate are fundamentally libertarian ones: that it will reduce freedom, or that government programs are inevitably bloated and wasteful ("Like going to the DMV? You'll love government health care!"). Cato's policy wonks spent much of 2009 on television arguing against reforms that would mean more government intrusion into the marketplace. Politicians and political organizations, meanwhile, received a lot of money and support in exchange for making those arguments. But it's of course true that America, being the developed country with the least nationalized health-care system, also spends the most and has the highest rate of uninsurance.

So when Douthat says that "a more-empowered libertarianism could have a salutary impact on debates over, say, the future of the entitlement system," it's worth asking what impact semi-empowered libertarianism has already had on debates over the entitlement system. That libertarian dreams of a privatized (or completely dismantled) Medicare system haven't come to pass is no more relevant than dreams of minarchy. What has come to pass is an aggressive and successful effort to stop America from following other countries' paths to national health-care systems. And the result can be seen here: If our costs had followed their costs, we'd have no budget deficit to speak of. Libertarians shouldn't have to answer for minarchy. But they do have to answer for that.

What to make of Bill Cohan’s big Vanity Fair piece on a slightly skeevy lawsuit where a pair of Democratic party operatives are trying to pull a Winklevoss on Arianna Huffington? Arianna’s flack, Mario Ruiz, is clearly enjoying being asked to comment on it:

It’s a great story — if you read it backwards. At the end of the article, the writer takes apart Boyce and Daou’s case piece by piece, leaving it in tatters — and rendering everything that has come before it pointless.

Meanwhile, the plaintiffs’ attorney seems much more well-disposed towards the story, despite the fact that — as Ruiz says — it’s almost impossible to read the whole thing and think that they have any case at all.

The question of who’s got the stronger moral and legal case is pretty clear, from Cohan’s reporting: it’s Arianna. As Jay Yarow says about the Winklevii, “ideas are a dime-a-dozen. It’s execution that counts. Mark Zuckerberg executed. The Winklevosses didn’t.” Similarly here: Peter Daou and James Boyce had an idea for a “liberal Drudge Report” in late 2004, at much the same time as about a million other people had exactly the same idea. (Even Gawker launched one such site, Sploid, in April 2005; it closed in August 2006.)

The idea was, as Larry David says in the piece, “terrible”: the site was to be called fourteensixty.com, after the number of days between presidential elections. It had hypocrisy baked in to its business plan:

www.fourteensixty.com will be a Democratic-leaning site with enough non-partisan news so as to appear more mainstream than it truly is; this is critical for credibility and for advertising revenue.

And rather than build one big site, the idea was to build lots of little ones, including (I’m not making this up) mamadonkey.com, “a blog aimed at Democratic supporters over the age of forty”.

On top of that, the site was envisaged as a way to sell the services of political operatives:

1460’s staff technical and web-communication strengths will enable 1460 to offer candidates a full range of strategic and technological tools…

1460 will also help shape a candidate’s overall communication strategy, develop television and radio communications and coordinate that strategy through the Internet. Utilizing Peter’s extensive knowledge of online political communication, 1460 will develop and manage a candidate’s web site, email acquisition and communication strategy, blog communication strategy, volunteer acquisition and deployment, and more.

The plan goes on to detail all the different ways this would make money for the site, including taking “a percentage of monies raised, online and off”, as well as a percentage of all media buys.

No wonder that, when he saw the plan, Kenny Lerer told Arianna that “this doesn’t work for me on many levels”; the two of them went on to do something much smarter, much more innovative and, as befits a news site, much less beholden to party-political interests. And, I daresay, much less likely to ever dream of writing the words “blog communication strategy”.

But what of Cohan’s story? Given that this entire lawsuit seems to be a nonevent, is it reasonable for the Huffington Post to criticize Vanity Fair for printing it in the first place?

There are certainly good reasons why VF might have spiked the story, or buried it on VF.com somewhere. Rich and successful people get sued opportunistically all the time. There’s little new news in the piece. And the conflicts are enormous: not only has VF’s editor hosted Arianna’s book party, one of the plaintiffs has actually worked as a consultant for the magazine.

On top of that, Cohan overstretches in his attempt to demonstrate that there even might be a real story in the lawsuit:

The questions raised are profound: Did Huffington and Huffington Post co-founder Kenneth Lerer take ideas from Daou and Boyce—ideas the two men call “groundbreaking”—without properly compensating or acknowledging them? Or is this just a case of sour grapes, with Daou and Boyce looking to cash in on the hard work of Huffington and Lerer now that the site is successful and valuable?

Er, no, those aren’t profound questions at all. Even if Arianna and Lerer did take an idea or two, it’s hard to see that the plaintiffs would have any claim to compensation — and indeed neither of them asked for compensation or even the opportunity to invest in Huffington Post for six years, before they suddenly decided that they had been so egregiously wronged that they had no choice but to sue.

But the fact is that Vanity Fair loves nothing more than a gossipy tale of celebrity entanglements and the name-dropping in this piece is truly something to behold: Larry David, David Geffen, Brian Grazer, Aaron Sorkin, Meg Ryan, Tom Freston. Graydon Carter simply isn’t capable of passing up a story which includes a sentence like this one:

On Election Day 2004, after attending a Bruce Springsteen concert for Kerry the night before, he, the Davids, and Kristen Breitweiser, a 9/11 widow and political activist, were visiting polling places in Ohio before boarding a private jet to fly to Boston.

The biggest celebrity of all in this piece, is Arianna herself, a blow-dried visionary in a glamorous large-format portrait by Robyn Twomey. The picture speaks much more loudly than the words: she’s clearly the winner, not the men wearing suits lent to them for the duration of the photoshoot by VF staffer Peter Holleran.

This story isn’t bad publicity for Arianna then — the vast majority of VF readers will look at her picture but not read the article. And most of the ones who do read the article will come to the obvious conclusion. My guess is that when Arianna next bumps into Graydon, it’ll be kisses all round, like nothing happened. Especially if he agrees to write something for her website.

(Cross-posted at CJR)

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Thursday, January 6, 2011

Making Money Ideas

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