Wednesday, January 23, 2013

The Uses and Abuses of Social Media

Guest post by Jeffrey Tucker from Laissez Faire Books 

That headline above probably seems strange coming from me. I've been a champion of social media, and my book A Beautiful Anarchy has a chapter on each of the most popular social media outlets: Facebook, Twitter, LinkedIn, Skype, Google+, and so on.

These tools have connected people as never before, and given people the power to manage their own lives and careers in ways that were not possible in the past. These sites have made us less dependent on institutions like government and workplace bosses and liberated millions to be in a better position to build their own private civilizations.

Yet this article has one message: Shut them down. Not entirely down. Everything I've written still applies. But there are uses and there are abuses. The trick is to tell the difference and act on it.

The point came to me this weekend when I was speaking at Duquesne University in Pittsburgh. Antony Davies of the economics department worked with the Institute for Humane Studies to set up this lecture. It was gratifying that on a freezing cold Friday night, in the science building in the middle of campus, 150 or so people came to hear about the relationship between ethics and the market economy. I spoke for fully 90 minutes and there was more to say.
Mostly, I was happy to have the chance to visit with so many young students and professionals about trends in the market today. Many of them wanted detailed reading lists and specific references to the books about which I spoke, most of which we've made available in the Laissez Faire Book Club.

Again and again, they complained of a problem. They don't have time to read. They don't know what to read to give them the best information given their limited time. There is no shortage of material, but what should they be reading that is going to give them the fastest track to wisdom that will truly improve their lives.

This is a gigantic problem in our time. In the Middle Ages, books were only for the tiny few. They took years and whole teams of scribes to make. When they were finished, they were the most valuable possession a person could have. Actually, very few individuals owned them at all. They were the possessions of large institutions that could create and guard them, institutions like governments and monasteries. They were more valuable than buildings and even people.

imageThe world craved more books. When Gutenberg created the first copy machine for books, the company couldn't keep up with the demand. It was total frenzy on the streets, and the dawn of a new age of learning.
Today it's all different. We are flooded with information, most of it available at zero unit price. But the time and attention it requires of us carries a high opportunity cost. After talking with so many people about this problem -- a nice problem to have -- I'm struck by the real possibility that despite the access and the information flood, people are actually reading less than they ever have. A main problem is the flood and the confusion about what to read.

This is a major reason we established the Laissez Faire Book Club in the first place. Our job is to carefully curate resources and provide every possible tool to help you make the decision about whether investing your time in a particular book is worth it for you. We've put together a growing package of only the best gems from the best body of work that stand the chance of making the biggest possible difference in your life.

As time has gone on, I've come to realize that this is the most valuable service we offer. The comment I receive more than any other: "The Club has inspired me to do what I should have been doing for years."

As I spoke to these students and professionals, I would inquire further on how they tend to spend their time. The same answer kept coming back at me. They spend their time on Facebook, Pinterest, and Twitter. They try to direct their attention to longer-run pursuits, but these venues keep pulling them back in.

  • "Oh, someone just commented on something I said"
  • "Someone just retweeted my tweet!"
  • "Someone is liking my meme that I just liked"
  • "Someone just commented on a post that I commented on."

This is a bottomless pit. Add it all up and what you have is endless hours of wheeling, spinning, and largely pointless blather. All these interruptions and comments and quick reads take a serious toll on the overall quality of your life. This habit takes something that is truly wonderful and turns in into a massive time suck that, over the long run, contributes very little to your life compared with the things you are being prevented from doing.

Am I saying that what I used to say was valuable is actually not valuable? Not in any way. And let me explain this by reference to an amazing book that I happened to be reading over the last four days. The book is The Common Sense of Political Economy by Philip Wicksteed. It is a mighty economic treatise, and the Laissez Faire Club releases the first-ever e-book edition this Friday. It is the longest, most elaborate, and most interesting book on the theory of marginal utility ever written.

The core point of marginal utility is that there is a strong and decisive difference between the total value of a good or service and the marginal value of a good or service. To look at marginal value means to look at the value of the individual unit that you are in a position to consume. This is the relevant value for understanding economics.
Something can be hugely valuable for life (water, clothing, food) yet have a very small marginal value at the point of decision making. Also, the marginal value of anything falls the more it is consumed. When you are dying of thirst, the first drink is priceless. When you are bloating from drinking gallons, someone might have to pay you to drink more. This is because we all make decisions not on the total, but based on the marginal, unit.

Reading The Common Sense of Political Economy brings the point home. It explains why I am willing to pay $3 for a cup of coffee when I could be paying 10 cents by brewing my own. It explains why plumbers make more than baby sitters even though the job of the baby sitter is seemingly more important. It explains why rap stars make more than professors even though professors are dealing in big ideas whereas rap stars are only entertaining us. It explains why banks close on holidays and restaurants stay open.

Wicksteed's book opens up a new way of looking at the world, which is why it has been chosen to be part of the Laissez Faire Club's e-book library.

Here is how social media is affected by marginal utility. Getting on there and getting your name out is gigantically valuable. Assembling a network of contacts is crucial. Having this network be portable, attached to your person, can make the difference between success and failure.

The problem is that the marginal value of each additional contact and interaction falls over time. After the 1,000th status update or comment or interruption, the value becomes zero or negative. Of course, what we call "value" is ultimately subjective, but the enterprises behind these tools are very anxious to find ways to affect your subjective sense of the value of their service. They want to convince you that the marginal value of each interaction is higher than you might otherwise think. If you go along with it, you could turn around and see your whole life sucked into a pointless endeavor.

The point of learning about the theory of marginal utility is to become more aware of the opportunity costs you are paying for all of your choices. To be sucked into the social-media vortex could ruin your ability to be productive in other ways. In particular, it takes valuable time away from serious thinking and serious reading.

In general, you will notice that young people are far more involved in social media than professionals of an older age. The usual explanation is that younger people are more hip to the digital scene and know how to navigate it better than old people. Actually, there's a better explanation that comes from the theory of marginal utility. The opportunity costs for young people's time on social media is far lower than those of older people who are actually being compensated for their time. As the young get older, if they are smart, they will spend much less time on these platforms.

So my advice to those who want to get smart, become wise, become erudite: Sign up for social media, cultivate the network, and then discipline yourself and limit your level of engagement. Think seriously about how it is affecting your life. You might find that shutting it down and allowing only limited contact is the best choice you have ever made.

A friend of mine who is an economist who truly understands marginal utility has his wife change his Facebook password every few weeks, just to help him become more disciplined and remind him of the high cost of spending his day doing seemingly interesting things that are actually completely worthless on the margin. He is thinking in terms of the marginal unit of his time and mental energy. He knows that the platforms have huge total utility but very small utility on the incremental unit. He knows this because he is an economist.

A book like Wicksteed's helps everyone think the same way. In this way, economic theory can help you use your time better, stop being buffeted about by the latest digital frenzy, and live a smarter life.


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