Glitches in the Capitalist System

I do hate it when the invisible hand doesn’t work quickly or possibly at all. By now we’ve all heard that Google has (1) fought the US Justice Dept. in connection with information about pornography and access by kiddos and (2) acceded to the Chinese government’s demand that certain types of information be screened from Chinese customers.

From Linda Chavez today (courtesy JWR) on the Google story at home and in China:

And when it comes to profits, there is no bigger potential market than China —— which explains why Google is willing to play censor in the Middle Kingdom. Google wants users, period. And if gaining access to an enormous potential market means engaging in a little censorship, the company is more than willing to do it. What makes Google's behavior so hard to swallow is its sanctimony when the subject of censorship in the United States comes up.

If the company had been honest in fighting the Justice Department subpoena, it would have admitted that it doesn't want to turn over data because it has no interest in keeping kids away from hard-core sites. Google will happily provide porn to American kids and deny civil liberties to Chinese adults, all in the name of profit.

I love the innovative Google, but the company’s activities have bugged me a bit of late. For whatever reason, the China aspect of this bugs me more than the porn aspect. It probably shouldn’t; I suppose I rely on parents to protect their kids, perhaps too much.

It will be interesting to see how this plays out. I’d love to see in five years that Google somehow put one over on the PRC and secretly gave Chinese customers some kind of secret decoder ring allowing access to Tiananmen Square information but fear that is too much to hope for. How can the market help in this situation? I’m not sure. Will US customers rise up against the industry leader? This one won’t. Will investors divest? This one won’t; at least not yet.

Is this a situation similar to that faced by the energy and manufacturing industries for the last forty years regarding air and water pollution? What first appeared a bad choice for such industries’ bottom lines, i.e., increased costs associated with less pollution, turned out to be costs that their customers (and therefore investors) really were, if grudgingly, prepared to bear.

Not that Google’s choice here really is about increasing costs, it is about decreasing the size of its customer base. I have no idea how to counter that to its investors’ satisfaction. I just hope it doesn’t take the market forty years to correct.