The economics of froth and falsehood

Will voters cast ballots for truth, or will they accept less wholesome options in the marketplace?

Oct 15, 2022

It’s not nourishing, but if frosty and sweet is your preference, here’s your product. (Photo by Rex Smith)

How is Donald Trump like a Starbucks Unicorn Frappuccino? If you quickly answered, “Artificial coloring,” you are only partly right. For the purpose of our discussion here, however, what they have in common is a concept in economics, which we will get around to explaining in just a moment.

First, though, we need to summon a bit of beverage retailing history to clarify how the world’s largest coffeehouse chain fits into the ongoing threat to America posed by our 45th president.

Unicorn Frappuccino was introduced in 2017 with an announcement on the Starbucks website presenting an image like nothing that consumers of ordinary coffee had seen before: a bright pink froth with bits of green and yellow and blue mixed in. The recipe that the chain sent to baristas called for a frosty blend of ice cream, mango syrup and a mysterious pink powder, with a sour blue drizzle. Along with the photo, Starbucks offered a warning: Get your Unicorn Frappuccino now, because it will be available only for a few days.1

If you missed it back then, good for you — because there’s a big reason to avoid the Unicorn Frappuccino: A single serving contains 76 grams of sugar, which is triple what the American Heart Association recommends as the maximum that an adult woman should consume in a whole day, and more than double what’s safe for a man.2 No wonder more than 37 million Americans have diabetes, and 96 million people over age 18 — that’s 38 percent of the adult population — have prediabetes.3 No, it’s not all Starbucks’ fault, of course, but a Unicorn Frappuccino here, a Dunkin strawberry cheese fried donut there, and pretty soon you’re flunking the blood glucose test at your next annual physical.

Still, if your answer about how the drink and Donald Trump are alike was, “Both are bad for you,” you’re right again, but that’s also not what this column is about. At least, not just yet. Patience, please.

What we are talking about here is economics, remember, and specifically a concept known as the scarcity principle of persuasion. What Starbucks was practicing in telling us that the new drink wouldn’t be available for very long was, in fact, the clever gimmick of marketing by scarcity.4 It’s the same concept used by online flight reservation services, like Kayak, in posting, “Only three seats left at this price!” Hotel discount sites use it, too.

Fundamental economics tells us that limiting supply for a product is likely to boost its price — which is why Joe Biden is so ticked off at Saudi Arabia these days, for agreeing to curtail oil production and thus worsen global inflation. The psychologist Robert Cialdini extended that supply-and-demand notion in his 1984 bestseller, Influence: The Psychology of Persuasion, and came up with the name of the scarcity principle. Cialdini argued that price influence aside, scarcity also makes it more likely that we will buy a product, apparently because we’re more eager to get something — which could be almost anything — if we’re worried that it might become unavailable to us.5

You may think that the last commodity we could consider to be in short supply in the United States of America these days is Trumpism. But there’s one place where demand for Trump exceeds its supply: on social media platforms. He was banned from Twitter, Facebook, Instagram and YouTube in January, 2021, after content under his name led to the Capitol insurrection. As Twitter’s announcement put it, he was kicked off “due to the risk of further incitement of violence.”6

For the kind of incitement that is uniquely Trump’s, that ban leaves a lot of missed eyeballs. Facebook is used by 37 percent of the human race. YouTube users watch a billion hours of video on that site every day. Twitter has 436 million monthly active users, which sounds small by comparison, but Twitter has clout that comes from being the real-time backbone of the information industry — so that if something isn’t posted to Twitter, most of us figure it probably didn’t happen.7

After getting the cold shoulder from the big sites, Trump created Truth Social, claiming it would be a competitor to Twitter, but it’s a bust, with perhaps only two million monthly users. He had 89 million followers on Twitter when he was banned, and 34 million on Facebook, so to reach people the way he used to, Trump needs to get reinstated on the major social media platforms.

And that may happen, especially if he becomes an announced presidential candidate once again. Elon Musk’s on-again-off-again-on-again bid to take over Twitter is promising for Trump; Musk says he doesn’t like having sites restrict content. Nick Clegg, the former British politician who is now president for Global Affairs at Meta, recently promised a review of the Trump suspension next year, because “you shouldn’t throw your weight around.”8

That’s where the digital economics enters the picture. The moment that Trump reappears on the big platforms, the pent-up demand for his posts will be unleashed. People will watch Trump’s posts like rubberneckers at a roadside crash. His backers will eagerly amplify whatever he offers, and everybody will want to see how far he can push his reliably false and dangerously inciteful messages before he is yanked again.

There’s a huge risk before that point, though, because of players who haven’t drawn the penalty that finally dislodged Trump from the big platforms — including a lot of people who are just as active as Trump was at disinformation aimed at delegitimizing the election process. That puts the exercise of democracy on Election Day at risk, even without the online touting of Trump.

With more than half the Republican candidates in key races nationwide backing Trump’s Big Lie that he actually won in 2020, the stage is set for Republicans to claim that any results on Nov. 6 that displease them are fraudulent. Many Republican candidates are clearly unafraid of sowing chaos that could provoke violence, and we saw on Jan. 6 what can happen if angry and misled voters, egged on by irresponsible politicians, demand that election results comport with their preferences. More Americans now get news from digital sources than television, which means that the big sites are likely to be the ground on which the next insurrection is planted.

Which is why we need social media sites and their users to do exactly what Clegg says he worries about doing — that business of throwing your weight around. The companies that own the social sites have argued for years that they’re just technology companies, not publishers, and so they shouldn’t be expected to exercise discretion over their content, except in the most extreme circumstances — like after the Jan. 6 insurrection. That’s an argument for inaction that we cannot let stand.

Thoughtful publishers have always considered it their responsibility to make judgments about content — about what’s true and what’s false, what’s responsible to publish, about fairness and transparency. Even the smallest weekly newspaper owner tries hard to publish only what he or she believes to be true; even the hedge funds that are gutting newsrooms at the daily papers they now own around the country recognize that they’re responsible for what they publish. If we take at face value Meta’s argument that, essentially, it’s too big to take responsibility for its influence, and that it’s so big that whatever it does puts everybody else at risk, then we might have to conclude that society would be better served if we bust up the bumbling big boys.

In recent days, the big sites have laid out some limited new policies to fight election denialism, but they are meanwhile working behind the scenes to stop any talk in Washington of legislation that might force them to get more serious about content moderation. They’re worried that America might follow the lead of Europe, where the era of not regulating tech platforms, which began in the 1990s, is about to come to an end.

The European Union’s Digital Services Act (DSA) is beginning to take effect this year, and when it’s fully implemented it could lead to sharp curbs on disinformation. It will require online platforms to be transparent about the algorithms that guide what is published, and it will give users a way to interact when they aren’t satisfied with content moderation decisions; importantly, too, it will require the platforms to assess the risks posed by the content their circulate. Penalties for violation of the law could include multibillion-dollar fines.

“With the DSA, we are taking back control and making rules for the tech industry,” Danish parliamentarian Christel Schaldemose, a key architect of the new law, told an audience at Columbia University recently.9 Naturally, the industry doesn’t want those rules to take root in this country.

Rules are also anathema to the anti-democratic forces of the far right. It was, after all, the rule of law established by the Constitution that Donald Trump demanded that our republic abandon on Jan. 6, and 147 Republican members of Congress voted to go along with him, to their everlasting shame.

As those votes and the current campaigns of the election deniers reveal, there is no scarcity of cynical opportunism in the political marketplace these days. Twenty-two months after the insurrection, on the first Tuesday of November, there will be an opportunity for a market response to the events of that day. Voters, after all, are the ultimate consumers in a democracy. Will we choose a wholesome product, or something merely frothy and colorful that puts us at risk of a dangerous sickness?

NEWSCLIPS FROM THE UPSTATES

Dispatches from our common ground *

Wherein each week we look around what we call the nation’s Upstates — those places just a bit removed from the center of things — to find illuminating news and intriguing viewpoints, which you might not otherwise see.

This week, we share reporting published here:

Salinas, Cal. (The Salinas Californian, thecalifornian.com)
Cape Cod, Mass. (Cape Cod Times, capecodtimes.com)
Springfield, Mo. (Springfield News-Leader, news-leader.com)
Killeen, Tex. (Abilene Reporter News, reporternews.com)

NOTE: The complete “Newsclips from the Upstates” section is available only to paid subscribers. Thanks for your support!

CALIFORNIA

Veto leaves working families stressed about child care

With no dissenting votes, California state legislators passed a bill this year to extend the waiver of payments for taxpayer-subsidized child care for working and poor families in the state. The waiver had been put in place during the height of the pandemic, as many families lost income due to the shutdown. But Gov. Gavin Newsome vetoed the legislation, saying that as the state faces declining revenues, the $136 million pricetag was unaffordable. Reporter Elizabeth Aguilera of CalMatters, a nonprofit newsroom, reports in The Salinas Californian that the loss of the subsidy puts many working families at risk of financial ruin. “The governor could have been more graceful in what he could provide for us,” said one disappointed mom, who will lose the subsidy.

MASSACHUSETTS

Ferries want a second look at speed restrictions

North Atlantic right whales, which migrate from Maine to Florida and weigh up to 100 tons, are an endangered species, with perhaps only 336 individuals left, according to reporting in the Cape Cod Times by Heather McCarron. To protect the species, the federal government has proposed to extend vessel speed restrictions year-around — since strikes by ships and boats are the second-leading cause of the whales’ deaths (entanglement in fishing nets is first). But the Woods Hole, Martha’s Vineyard and Nantucket Steamship Authority and Port Council, which operates ferries off the Massachusetts coast that carry three million passengers a year, has asked for a review of the plan to extend the speed limit beyond the Jan. 1 - May 15 period in which it now applies. The council notes that a speed reduction would limit the number of trips the ferries could take, and it claims that no whales are present in the waters when the ferries operate.

MISSOURI

Trying to breed a better pawpaw

You may know the children’s song that describes, “Pickin’ up pawpaws, put ’em in your pocket,” but most Americans have never eaten a pawpaw. That’s because they’re delicate, with an average shelf life of three to five days — meaning they can’t be shipped from where they’re grown, which is mainly in the Ozarks, to where they might be purchased. In Missouri, where pawpaw is the state fruit, there’s now an effort to improve the plant to make it commercially viable. Greta Cross reports in the Springfield News-Leader that efforts are underway to make the fruit both tastier and more resilient so they might someday appear on grocery store shelves. With the growing locavore movement, Cross notes, researchers believe this may be the pawpaw’s moment.

TEXAS

Largest military installation has a new name pending

The Pentagon has announced that it is moving forward with a renaming of Fort Hood, the largest active-duty military installation in the United States. According to a report by Hogan Gore of the Austin American-Statesman, the base will be renamed Fort Cavazos — honoring Texas native Richard E. Cavazos, the first Hispanic four-star general in the United States. The fort had been named for John Bell Hood, a high-ranking officer of the confederacy during the Civil War. Other suggestions for the new name, Gore reports, included Fort Courage and Fort Central Texas. Cavazos, who served in the Korean and Vietnam wars and eventually as head of the Armed Forces Command, retired in 1984.

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ENDNOTE 10.15.22

For much of my life, I told anybody who would listen that I considered autumn depressing: It foreshadowed the incipient cold of winter and, besides, my birthday is in October, so the fall reminded me that I wasn’t getting any younger.

Somehow age has brought me around to appreciating this season. It’s gorgeous, after all, and it’s surely better to seize the opportunity to enjoy each day than to use that day to worry about those that will follow. And get this: I’ve even come to appreciate winter — which is a good thing for a guy who lives in Upstate New York, right?

In our neighborhood, the autumn colors are about two-thirds of the way to peak, I’d say. But we live in microclimates, as we discovered one day last week while making our way to an art opening in Columbia County. We stopped to pick up a friend who lives along the Hudson River and discovered that most of the leaves there remained green. The small elevation difference, and the proximity to the river, delays the season by a couple of weeks just a few miles from where we are. Yet another wonder of nature that we note.

Wherever you are, I hope you’re enjoying the season, too. We’ve recently added a lot of new subscribers, and I’m glad to welcome you. Thanks to you all for reading, and for joining me on *our common ground, this America.

-Rex Smith

@rexwsmith

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THE UPSTATE AMERICAN