Three Games That Tech CEOs Play With Protectionism

Silicon Valley executives speak truth to power when they tell President Donald Trump to tear down the barriers he is building in the realms of trade and immigration. Unfortunately, the same CEOs have their own walls under construction in the realms of speech and thought.

They are like the people playing games in Stevie Wonder’s 1985 hit song, “Part-Time Lover.” They claim to value liberty, but they reveal themselves as part-time lovers of the cause when they defend freedom by day but switch sides at night.

The most recent example comes from Facebook on Sunday. After the son of Israeli Prime Minister Benjamin Netanyahu criticized the social media channel as “thought police” and shared previously blocked content, the company responded with a 24-hour ban.

Trump shows the same duplicity, but in reverse. He supports free speech — at least when it favors himself — but not free trade. He condemns content filters and biased search algorithms in the marketplace of ideas, but he uses tariffs and visa restrictions in the marketplace of goods and services.

Neutral observers keeping score at home might see two separate debates. But the same underlying principle applies in both cases: Walls hurt trade, regardless if the exchange involves opinions or commercial goods and services.

Progress in either realm depends on open channels between buyers and sellers, so consumers can make informed and voluntary decisions about the transactions they choose to accept.

Tech CEOs and their rivals in Washington are quick to point out each other's hypocrisy. But as the song suggests, “two can play that game,” which takes at least three forms in Washington.

Game Of Misdirection

The first game involves misdirection, done well by Twitter CEO Jack Dorsey and Google CEO Sundar Pichai. Both came to Capitol Hill in recent weeks and denied any political bias by their companies.

That’s how they talk in public. But undercover videos tell a different story. Hidden cameras from Project Veritas show Twitter employees admitting anti-Trump bias. And a leaked video from Google shows Pichai lamenting 2016 election results in front of staff.

The political bias may or may not spill over to the actual products that these companies produce. But the appearance of bias gives room for critics to make allegations.

Dorsey and Pichai don’t want that. So they talk a good game in Washington, changing their message to fit the situation.

Two can play that game. Despite evidence to the contrary, Trump calls himself a “free trader” in pursuit of zero tariffs. He says he plays hardball with other countries only to drive them toward that goal. “No tariffs, no barriers. That’s the way it should be,” he said during one news conference.

His assertions lack credibility, especially for U.S. companies that suffered when aluminum and steel tariffs took effect in March 2018. Trump’s words do not match his actions, but the same can be said for Google and Twitter.

Game Of Moral Imperative

The second game is to claim a moral imperative to build trade barriers. This was Facebook CEO Mark Zuckerberg’s approach when he visited Capitol Hill. Rather than pretending to be a free speech champion, he talked openly about reining in rogue content.

Apple CEO Tim Cook went even further during an award ceremony in New York on Dec. 3, 2018. He called it a sin not to curate tech platforms.

“We only have one message for those who seek to push hate, division, and violence: You have no place on our platforms,” he said. “You have no home here.”

In other words, he argues, using market strength to regulate speech is righteous as long as you only block the bad stuff according to your best judgment.

Two can play that game. In the economic realm, Trump claims he wants a border wall and tougher enforcement only to stop rapists, murderers and drug traffickers. Like Facebook and Apple, he only wants to block the bad stuff.

His insincerity comes through, however, with his “Buy American and Hire American” executive order. Rather than targeting criminals, the policy triggered an immediate slowdown in H1B visas for educated, high-skilled immigrants.

Promises to block only the bad stuff sound good on the surface, but the target inevitably shifts. Martin Niemöller describes the slippery slope in his lecture that starts: “First they came for the socialists.”

Game Of Executive Privilege

The final game involves claims of executive privilege.

Tech platforms break no laws when they favor one viewpoint over another. They can be as biased as they want. But they can’t escape the consequences when users lose trust in the brand.

Regardless of actual bias, the appearance is all that matters when companies sell “credence goods.” The term typically applies to providers of expert services like financial advice. But tech platforms depend just as much on credence.

Consumers must believe their platform providers play it straight with them or they will flee, giving room for upstarts with more credence to enter the market and fill the void.

The Cambridge Analytica scandal shows what happens when users feel betrayed. Facebook posted the largest one-day loss in market value by any company in U.S. history after a weak second-quarter report in July 2018.

Ignoring market principles to serve commercial or political interests is a dangerous strategy.

But two can play that game. Trump won an election in 2016, which gives him authority to set U.S. trade and immigration priorities for the remainder of his term. That’s his prerogative. But just like his tech counterparts, he cannot escape the backlash when his credence dries up.

New candidates will emerge, giving voters a choice.

Tech CEOs and their Washington rivals play many of the same games. But if freedom is a core value, as both sides claim, then they should stop picking and choosing when they support the principle.

Those who refuse will end up conflicted like part-time lovers of protectionism: “Strangers by day, lovers by night / Knowing it’s so wrong, but feeling so right."

 

 

This article was originally posted in Forbes.com and is reprinted with the author’s permission.

About The Author:

Author: Rajshree Agarwal
Rajshree Agarwal is the director of the Ed Snider Center for Enterprise and Markets at the University of Maryland’s Robert H. Smith School of Business and a Cato adjunct scholar.

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