Should internet companies spread democracy, privacy, and free speech? Sure, why not? All things being equal, I like democracy, privacy, and free speech as much as the next person. Unfortunately, all things are never equal, except in that imaginary world of Econ 1 where transactions can’t help but be Pareto superior. In short, for Google to resist deploying in China rather than sacrifice free speech costs money. And contrary to appearances, that money isn’t cut from some tree they keep hidden in Sunnyvale, it’s extracted from its owners—the shareholders.
So here’s how to frame the issue for Google’s recent naysayers: I believe in democracy, in fact, I believe in it so much that I’m willing to volunteer someone else to pay for it (Google shareholders to be precise). Granted, these folks aren’t the most sympathetic bunch. They’ve made their money, they should share the love. Fine. I agree with that. But under our system, when we coerce sharing, we do it through the government. Even so, not all charitable pursuits require government coercion (thankfully). I’m fine with that too. Google shareholders may vote to sacrifice a few dollars from their share price in order to promote democracy. We can, and should, praise the companies that make such a sacrifice. We can even criticize the one’s that don’t…to a point, that is. After all, the stirring critique of corporate capitulation in the face of the Chinese government only costs me, and my Congressional representative for that matter, a few choice words and a minute out of our day—a real bargain all around.
A similar pattern of rhetoric emerges within the context of pharmaceutical companies and their unwillingness to provide drugs to developing counties. At least here, the government intervenes (through the patent system) to help secure profits in the first place. So to force sales in developing countries seems less problematic: sorry Merck, the State giveth and the State taketh away. Again, however, the problem of hidden costs lingers. We could tax all Americans a hundred extra bucks to pay for the provision of drugs in developing countries, or we could just make those rich pharmaceutical companies do it. Any doubt which one we would choose? No doubts for me, except whether it’s a good idea.
You might think the patent system is providing too much profit in the first place (and I might agree), but that’s a bad rationalization. Think about the distortionary effect of this proposed system where we over-incentivize drugs through the patent system and then, to compensate, force sales in developing countries. Talk about a sure way to exacerbate our pharmaceutical system’s devotion to erectile dysfunction and Botox, and concomitantly, its general disregard of anything related to the real maladies that developing countries face. Instead, we should fix the patent system and, rather than Google and Merck, make us put our money where our mouth is, whether through charitable giving, tax revenue, or even lost income—we might actually be surprised by our generosity and others might see more substance behind the ideals to which we ascribe.