January 6th and the Ideological “Market for Lemons”: Examining the Political Consequences of Online Free Speech in the US

Alex Z
13 min readMar 3, 2023

Note: This article was first written and published in Chinese on January 6th, 2021. It was translated to English and published on Vanguard Think Tank on January 6th, 2022.

Abstract

The Storming of the US Congress a year ago, on January 6, 2021, resembled a Pearl Harbor Attack on the American political institution. The incident was unprecedented and sent shock waves around the world. January 6, 2021 has been and will continue to be marked as a “day of infamy” in American history. In American history, the term “day of infamy” has been exclusively used to mobilize the public after a sudden attack by an external enemy, such as the attack on Pearl Harbor in 1941 and the 9/11 attacks in 2001. However, the attack on the US’ national authority on January 6 was not caused by Japanese imperialism or radical Islamic terrorists, but angry, dissatisfied American citizens themselves who were united under populist ideologies.

It is thereby crucial to discuss and analyze the impact of online free speech, which became increasingly controversial as major social media platforms banned Donald Trump after January 6th, on the functioning of American democracy and the current global political zeitgeist.

Tags: USA; Politics; Trump; Freedom of Speech; Social Media; Internet; Economics

Police firing tear gas at protesters on Capitol Hill (Credit: Leah Millis/Reuters).
  1. Dissemination of Information in the Era of New Media

Among the Trump supporters who stormed the Capitol, some claimed that they were for “freedom”, some were to “take back their country”, and some were demonstrating to “defend American democracy.” In short, most Trump supporters who participated in the demonstration believed that the 2020 presidential election was “unfair”, rigged, and full of “election fraud.”.

According to a poll released by Reuters on November 18, 2020, 45% of adult respondents did not believe that the 2020 election was fair and without fraud. Knowing that Trump received 47% of the votes, we can roughly deduce that almost half of the people in the US accept or actively support the conspiracy theory that “there was rampant election fraud in the 2020 election.”

From a political perspective, this was a dangerous phenomenon for US political stability. In an electoral democracy like the United States, the massive distrust of the electoral system will delegitimize the winning candidate, or the new regime. Since in the eyes of nearly half of the voters the new administration’s ascendance to power was by illegitimate means, or without the consent of the governed, the new administration had no political mandate to govern. Generally speaking, when half of the people on a team do not recognize the authority of team leader, the leader will have trouble leading the team.

In the 1860s, the dissenting half of “Team America” were in the South, so they could separate themselves from the other half of the “team” quickly. But nowadays, the main conflict in America is no longer geographically, econmically, or industrially homogeneous (e.g., northern industrial capitalism vs. southern plantation slavery), but rather geographically heterogeneous conflicts that include class struggles, identity politics, urban-rural divide, etc.. In this dichotomy, it is difficult for the dissenting half of the “team” to secede. Generally, homogeneous geographical conflicts result in separatism, while geographically heterogeneous conflicts act like a broken pressure cooker, whose pressure can only be released through either a revolution or a civil war (implosion), or through large-scale migration to form de facto geographically homogeneous, opposing sovereign entities.

this becomes a completely different story on the Internet. The Internet has made it possible for people from different regions to unite and assemble ideologically, which would render social divisions more apparent. The driving force behind conspiracy theories, which lack substantive evidence, such as “there is election fraud in the 2020 presidential election!” “COVID-19 was created by Bill Gates and released from a Chinese laboratory!” “Climate change is a hoax!” and “QAnon”, has ironically been the same Internet which was supposed to connect the world. In fact, rather than connecting different people across the world, the Internet connects people with the same values that are scattered in different places, which then intensifies geographically heterogenous conflicts.

Before the birth of social media platforms, in the era of traditional media, the dissemination of information was slow and difficult, and most of it was screened or censored by certain authorities. Back then, if one’s ideas could only be transmitted to a distant place via letters, while in the modern era they are transmitted instantaneously, whether by text, phone call, or blog post. Also, in the past, one’s own ideas could only be conveyed to another single recipient, unless the source chooses to transmit the information through a newspaper and broadcast so that multiple people would receive the information. (It was like this: the source / content provider provides information → media selects information → the reader receives information).

Traditional media (newspapers, radio stations, TV stations, cinemas, etc.) are “semipermeable membranes” of information. In the dissemination of information, traditional media could strictly filter and screen information according to their own needs as well as governmental regulations to prevent the spread of misinformation, harmful content, or illegal information from being widely disseminated among the public. they can also manipulate public opinion and mobilize the public for certain causes such as war. In the US, specifically, mass media was mostly monopolized by several private media companies such as Disney, Time Warner, and News Corporation, which constituted a concentration of media ownership. Back then, the basic information received by most Americans was relatively homogeneous, although they may have conveyed different opinions

If we regard mass media as a highly competitive market, then in the era of traditional media, for a certain group of readers receiving information, the direction of the selection pressure on the mass media would be higher accuracy of reports, and more in line with the values ​​of this particular group. In other words, in the era of traditional media, the media was the object of market competition, not information. Since the information presented by different media is almost the same, it’s just that some information may be deliberately deleted through one-sided reports or during the filtering process. It is worth noting that in most other countries, traditional media were generally controlled by the public power to a certain extent, so market competition between different media would be less, and there would be greater autonomy (or economically speaking, “market power”) for each media company. For media companies, there was no need to filter information and format opinions based on the values or preferences of specific groups of readers (their “market share”). While in places where the degree of free market competition among media was higher, the media reports would tend to match the audience’s preferences by twisting truth, spreading rumours, writing clickbaits, or anything else to attract readers’ attention.

However, new media (Facebook, Twitter, Reddit, YouTube, etc.) are “completely permeable membranes” of information. In the United States, due to the high degree of free speech guaranteed by the First Amendment, and in order to increase user traffic, social media platforms generally maximize the source’s freedom of speech within the scope permitted by law. In addition, “Section 230” of the Communications Decency Act in 1996 states that network service providers and their users are exempted from the legal responsibility for carrying or deleting third-party information. In the US, because of the great freedom and immunity guaranteed by law, social media platforms themselves tend to not censor their users , which would be harmful to their own economic interests. This, in turn, has bred countless conspiracy theories, rumors, slanders, and online violence that were nonexistent in traditional media.

With this new type of information dissemination, the content provider and the social media platforms (“interactive computer service”) have a win-win relationship. The sources can minimize their own costs for their information to reach more and more people through the Internet, without being filtered; while social media platforms can attract more and more people through this almost unlimited freedom of speech, creating traffic and economic revenues for the platform. At the same time, since there are a large number of sources, the public themselves can obtain more diverse information faster. However, this kind of relationship has caused a great negative externality to society as a whole, because the reader of information (i.e., the public) are more exposed to the wrong information and are more prone to being deceived, defrauded, or instigated).

In addition, unlike traditional media, social media platforms generally attract users to stay on the platform by offering real-time feedback and the possibility of interaction. For instance, if one likes a certain post, they can like it, forward it, and follow the source of the information. Real-time feedback is a formidable feature. First, its real-time nature, given the context of the coexistence of a large number of sources, greatly increases the competitive pressure (and even anxiety) that each source of information bears, making the content providers more likely to take risks and use rumors, exaggerations, and clickbaits which would result in negative externality for the readers to attract their attention. For contact providers, the “Like” button can quantify the readers’ love for them and give them instant psychological pleasure (being “popular” or “famous”), thus making the content provider more impetuous and more willing to use “morally wrong” methods to gain attention. The accuracy or quality of content produced with such a state of mind is thus questionable. (On the other hand, artistic creations that do not reflect serious facts, e.g., dance videos, not news reports, have low externalities and thus are not considered here).

Second, instant feedback renders one’s personal preferences transparent to social media platforms. Platforms can then deliver targeted ads or content based on their reading or like history. This constitutes a positive feedback loop: at the beginning, an individual can be exposed to a variety of information, but as they happen to like some eye-catching content the platform would then consistently deliver this type of content to the person, and over time they may become obsessed with the same type of information and can no longer access other types of information and opinions.

Third, to sum up, due to the sharp increase in the competition pressure between the sources of information, as well as the transparency of the readers’ personal preferences to the social media platform, the platforms have gained great autonomy in the market competition by transferring the market pressure to content providers. This is because for readers, it is no longer the platform that provides information to them, but the individual content providers. In a social media platform with a high market share, it is no longer the media itself that is selected under competitive pressure, but the original sources of information and opinions they provide.

2. Ideological Market for Lemons

“First, if any opinion is compelled to silence, that opinion may, for aught we can certainly know, be true. To deny this is to assume our own infallibility.

Secondly, though the silenced opinion be an error, it may, and very commonly does, contain a portion of truth; and since the general or prevailing opinion on any subject is rarely or never the whole truth, it is only by the collision of adverse opinions that the remainder of the truth has any chance of being supplied.”

— — John Stuart Mill, On Liberty

In Western societies, classical liberals like John Stuart Mill believe that free speech is a necessary condition for obtaining the truth, and the truth may become clearer and clearer as we debate: only by allowing for different speeches and opinions, regardless of whether they are “politically correct” or not, can we unearth the truth through debates. Oliver Holmes Jr., a progressive Justice of the US Supreme Court, invented an influential concept in his 1919 opinion on the Abrams v. United States case, that is, “the best test of truth is the power of the thought to get itself accepted in the competition of the market”.

However, the applicability of this concept in the 21st century, where the Internet and new media govern the way in which we transmit ideas, should be questionable. In fact, the online discussion platforms have become markets for lemons where “bad money drives out good”.

What is a Market for Lemons? American economist George Akerlov pointed out in a 1970 paper that, in the “lemon market” where information asymmetry is common (that is, the seller has a much greater understanding of the real situation of the goods than the buyer), as the buyer does not know the actual value of the goods, nor are they able to distinguish between good and bad goods, so they are only willing to pay the average price of the goods in the market or even lower prices for the goods. Therefore, sellers who provide high-quality goods at a higher cost will naturally suffer losses and those who provide defective products (called “lemon” in American slang) will benefit. As a result, high-quality products will gradually be eliminated, and the market will be occupied by inferior products, resulting in an adverse selection.

Ernie Kovacs in a comedic used car skit.

If we analyze with Justice Holmes’ framework, we can classify factually correct information as high-quality products, and classify the wrong, untrue, and harmful content as low-quality products. Then we can further make a reasonable assumption: on the Internet, the average buyer (the reader) needs to spend a cost (i.e. price) for acquiring high-quality information than low-quality information, because most high-quality information requires a lot of reading, independent thinking, and self-reflection, which consume time and brainpower, even if one is capable of doing so.

Therefore, gradually, there will be nothing left in the market of ideas but clickbaits, gossip news, pornography, violent conent, or other things that meet people’s instinctive needs. These contents can bring immediate pleasure to the buyer, while the buyer does not need to spend too much time or brainpower to process and summarize the information. In the short term, this market relationship may be a win-win one for both the platform and certain buyers. While the reader has obtained information that makes them happy (who at the beginning do not have the will to read high-quality information), the content providers receive positive feedback such as likes from the public, and the platform has also obtained traffic and data generated by the users.

However, according to the analysis above, under the magnification of the social media platforms’ feedback feature, over time, the Internet, an ideological market with a great extent of free speech, will be occupied by rumors, negative sentiments, conspiracy theories, clickbaits, etc. At the same time, powerful algorithms and feedback loops have greatly increased the readers’ “consumer loyalty” for certain types of content providers, imprisoning the readers in echo chambers in separate corners of the Internet, and thereby nullifying “the market competition of ideas.”

Therefore, from a long-term perspective, the “ideological market for lemons” will produce detrimental negative externalities to society as a whole, and this process may be irreversible after a certain critical point, because some alternate “facts” have become completely entrenched in people’s minds. This will eventually lead to the big split of the society, not only on opinions, but also on basic facts.

In fact, the “ideological market for lemons” has existed since ancient times, especially in those societies with conservative ideas, or those that were closed to the outside world, or had poor communication. The Internet is just a powerful “accelerator” or “catalyst” for the formation of such an ideological market for lemons. However, the formation of such a trans-regional and transboundary super-large market of ideas is unprecedented. It makes the “Butterfly Effect” a possibility: rumors originating from somewhere in the world may cause large-scale social unrest or even a regime change in the opposite corner of the globe.

Therefore, restricting the power of multinational giant social media platforms and redefining the boundaries of online freedom of speech are the things that the public powers around the world need to consider. Otherwise, the “market competition of ideas” originally conceived by Justice Holmes is likely to turn into a huge market failure that will be detrimental to society and individuals within it The failure of a commodity market can still cause a huge social and economic loss, and thereby the failure of a market of ideas may cause a complete social, political and cultural disintegration.

3. Conclusion

In comparison with the attack on Pearl Harbor, the problems that American society is facing are only getting more serious and complicated to deal with. The ideological market for lemons cannot be solved through violence, and can only be mitigated by the effort of a united society and the wit of its leaders.

Also, the attack on Pearl Harbor directly led to the American participation in WWII, which in turn united the entire country and boosted its industrial demands and exports, helping the US recover from the Great Depression since 1929, and become the biggest winner of the war. It can be said that the attack on Pearl Harbor is an inflicting incident where the US emerged from a regional power to be a global superpower; however, if the current challenges of American society, including the divisions of political values and facts, were not to be properly addressed, then in future history textbooks January 6th, 2021 would be marked as a turning point of pax americana, where the US started to become a nation in decline.

In the era of the Internet, almost everyone is connected; geographical barriers can no longer prevent people from receiving information from other places and engaging in debates. However, as we cross the walls standing between national boundaries, it is also crucial to tear down the barriers within each others’ hearts in order for the market competition of ideas to return to its functioning state, where freedom and truth prevail. This not only requires the re-demarcation of the boundaries between private rights and public power, but also the further integration of the world’s culture, economy, and ideas.

The end of history has not come. The debate for truth has not ceased. A more exciting new era has just started.

Special Thanks to Larkin Gallup, who helped edit this article.

Works Cited:

Kahn, Chris. “Half of Republicans Say Biden Won Because of a ‘Rigged’ Election: Reuters/Ipsos Poll,” November 18, 2020. https://www.reuters.com/article/us-usa-election-poll/half-of-republicans-say-biden-won-because-of-a-rigged-election-reuters-ipsos-poll-idUSKBN27Y1AJ.

“2020 United States Presidential Election.” Wikipedia. Wikimedia Foundation, January 8, 2021. https://en.wikipedia.org/wiki/2020_United_States_presidential_election

Urofsky, Melvin I., and Paul Finkelman, “Abrams v. United States (1919).” Documents of American Constitutional and Legal History, third ed. New York: Oxford University Press, 2008, pp. 666–667.

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Alex Z

Undergrad student at Sciences Po Paris and Columbia University. Sapere aude!