Tuesday, June 9, 2009


When I was in college, I had to take a macroeconomics class. I can't remember if it was the prerequisite to a journalism degree or simply a degree, but I remember it was by turns excruiciatingly boring and intensely interesting. The dapper asst. professor told our class that economics was the science of satisfying unlimited wants with limited resources. For this effort, the free market was touted as the best system to fairly satisfy the most "wanters" reasonably. He drew a chart on the chalkboard (remember those?) where one line represented increasing price and another line represented decreasing demand. Invariably this chart formed and "X" and this nexus was where supply met demand. This was the solution to the problem of limited supply. But what he never explained is what happens when there is unlimited supply, or at least relatively unlimited supply.
This is the conundrum facing journalists today. The Internet represents a potential limitless source of news, and when that happens, people are willing to pay what some people are always willing to sell that info for: nothing.
And it seems that the Internet isn't the only place where relative ubiquity defeats the free market model. Remember all those "can you believe this?" stories about Farm Bills that paid farmers NOT to plant corn or bought milk from dairy farmers to pour it down the drain?
The fact is that in certain segments of agriculture, technology reached the point that, in many years, supply exceeds demand. Just ask any farmer and they can tell you a bumper crop is bad news.
That's what we have, a bumper crop of information. And just like agricultural goods, it varies in quality, but most people are just as satified with information of questionable value as they are with food of questionable nutritional content.
As technology progresses, this will expand to other commodities: If green technology succeeds this will happen with energy. It seems to have already happened in housing.
The odd outcome of ubiquity is that sometimes it leads to enforced shortage to prop up the free market paradigm. There are too many houses. Prices are falling. We must kick people out of their houses.
There is too much food. Prices are falling. We must dispose of perfectly good food and let some go hungry.
There is too much access to news. Profit is falling. We must wall off and charge for content.
Please don't call me a Communist, but when supply overwhelms demand, the free market doesn't work.
Just ask my Economics professor.