How to put guardrails on Twitter, how to stop inflation without a recession, and how to win a war.

Guardrails against dangerous lies on Twitter?

Now that Elon has total control over one of the major ways Americans find out what’s happening (I know, I know -- Twitter is vapid and filled with smears and jeers, but it has a hugely important role in shaping the news), what can be done to establish guardrails against dangerous lies? It seems likely that Musk will take down the few guardrails that remain on Twitter — but some guardrails are surely needed to prevent malicious harassment or dangerous instigation of violence. Twitter (like Zuckerberg’s Facebook and Instagram) is more like a public utility than a private company. It has public functions and no direct competitors.

What to do?

Much of the answer boils down to making Twitter (and Facebook and Instagram) more responsible for what users say on its platform – just as any other publisher is responsible. In every other dimension of public life, tort laws allow people who are defamed, harassed, or otherwise injured by malicious or hateful speech to sue. There’s a high bar: plaintiffs must establish that the publisher knew or had reason to know that the published material was false and injurious. But the mere possibility of being sued causes publishers to take at least a modicum of responsibility.

In 1996, Congress enacted Section 230 of the Communications Decency Act — shielding website owners from liability by decreeing that they shouldn’t be treated as a “publisher.” But back then Congress could not possibly have foreseen what would happen over the next quarter century: giant firms like Twitter and Facebook making huge amounts of money by posting incendiary content that attracts lots of eyeballs and gives them mountains of user data that they then monetize — even if the content encourages political violence, riots, or gang shootings.

I’ve been talking for some time about the various ways the rich and powerful in our society shield themselves from accountability. I’m well aware of arguments on the other side of this issue (and will share them with you), but I’ve come to the conclusion that Congress should repeal Section 230. Doing so would be one step toward restoring accountability.

**

How to stop inflation without a recession?

The mainstream media, meanwhile, continues to mislead the American public about inflation. (Ideological blinders are not — and should never be — subject to liable laws. But they need to be called out.)

A lead article in this week’s New York Times, by Jeanna Smialek and Ben Casselman, is a case in point. It attributes inflation largely to a “red-hot labor market.” The authors write that “America’s heady pay gains could mean that the Fed has to react more aggressively to slow down the economy,” and quote Mary C. Daly, president of the Federal Reserve Bank of San Francisco, as saying that higher wages can be a “feeder for inflation,” and Fed Chair Jerome Powell, that the job market is “unsustainably hot” and that it’s the Fed’s job “to get to a better place where supply and demand are closer together.”  

Rubbish. Labor costs aren’t pushing inflation. Corporate profits are. If the Fed keeps raising interest rates to prevent labor costs from rising, we’ll be in a recession before you know it.

According to a new report by Josh Bivens at the Economic Policy Institute, over half of price inflation since March 2020 (he estimates 53.9 percent) is attributable to fatter profit margins, while labor costs account for less than 8 percent. As the chart below shows, from 1979 to 2019, profits contributed only a bit over 11 percent to price growth, and labor costs over 60 percent. Corporate power has built up over the last forty years, and the pandemic-driven demand surge has given firms even more pricing power vis-à-vis their customers. Powerful firms have also been free to pass on cost increases to their customers because they don’t face strong competition, and have been using the cover of “inflation” to add even more to their profit margins.

Bivens suggests that a temporary excess profits tax could provide some countervailing weight to the pricing power firms currently have vis-à-vis their customers. I agree. (Pity that the Times doesn’t report any of this.)

***

How to win a war?

Notwithstanding Putin’s efforts to persuade the Russian people that his war is going well (and Putin’s generals’ efforts to convince Putin that it’s going well), all available evidence suggests it’s going terribly badly for Putin. I’m in awe of Ukraine’s ability to take on the Russian Goliath and push it back.

When the history of this horror is written, NATO and Joe Biden will get enormous credit as well. Their steady hands and steadfast strategy appear to be working. Patience, tenacity, and careful use of every tool available to them — short of putting NATO or American troops into Ukraine — is turning the tide. We have no way of knowing how this will turn out (and I continue to fear what a cornered Putin may resort to), but the courage and intelligence of Ukraine, NATO, and Biden deserve our commendation and thanks.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit robertreich.substack.com/subscribe