Is Blog Traffic Inequality Evidence of Unfairness?

Tim Lee continues to preach it over at TPMCafe

For reasons that aren't clear to me, a lot of people seem to have a very different intuition when we're talking about the distribution of dollars rather than eyeballs or Wikipedia edits. The mere existence of growing income inequality is treated as a prima facie evidence of serious flaws in the American economic system. People seem to assume that such a distribution cannot arise absent systematic distortions redistributing income upwards. Therefore, even if we can't identify the specific mechanism that's robbing from the poor and giving to the rich, we can infer its operation from the skewed distribution of income.
But in fact, the processes that give rise to income inequality are roughly the same as the processes that give rise to inequality online. We should expect that even in a perfectly just economic system, some people would earn a lot more money than others, and that the gap would grow over time as technological progress increases the size of the market and the potential for division of labor.

It's not obvious to me that the mechanism that drives inequality in Wikipedia edits is the same as the one driving blog traffic inequality, but Tim's right that both these mechanisms are in work in the broader economy. In Wikipedia, I think you see a sort of regular 80/20 effect; a minority does most of the work. But what do they get for that? Blogs seem like a pretty typical superstar market. The small minority dominating traffic don't necessarily have a large productivity advantage. The highest traffic blogs are all high-volume, but lots of high-volume, high-quality blogs get very little traffic. People want to read what other people are reading, so the blogs that win the competition to become a focal point for attention reap most of the traffic.

One Reply to “Is Blog Traffic Inequality Evidence of Unfairness?”

  1. “In 1980, Ronald Reagan promised that, if elected, he would cut taxes, raise military spending AND balance the budget—all at the same time. His opponent, George H.W. Bush called it “voodoo economics”. But Reagan won the election and kept his promise. He cut the marginal tax rate on the highest income earners from 75% to 38%. What happened?
    In 1982, the first full year for Reagan’s policies, the economy shrank by 2%, the worst performance since the Great Depression. Investment — the magic transmission belt through which all other Supply Side benefits were supposed to flow — actually declined as a percent of GDP over the 1980s. Worse, Reagan’s Supply Side policies created the biggest budget deficits in history. The numbers tell the story.
    Jimmy Carter’s last budget produced a deficit of $77 billion. At the time, it seemed huge. But Reagan’s first budget swelled the deficit to $128 billion. By the next year, 1983, it had exploded to $208 billion and was creating severe problems for the economy. By 1992, at the end of the “Reagan Revolution,” (under Reagan’s Vice President and successor, Bush, Sr.) the deficit was approaching $300 billion a year.
    Annual deficits, of course, accumulate to the national debt. In 1980, the national debt amounted to less than $1 trillion. By the end of 1992, it had reached $4.35 trillion. In other words, the debt, which had taken over 200 years to reach $1 trillion, quadrupled in the 12 years of Supply Side Economics. A more complete, definitive repudiation of Supply Side’s claims could not be imagined. What went wrong?
    According to Supply Side “theory,” tax cuts should go to the wealthy for only they can afford to use the extra income to invest in the economy — to increase its capacity to “supply” goods. But there is nothing to make sure they actually invest, especially in the U.S. economy. ” by Robert Freeman
    If you give a dollar to a low income family, they will spend the dollar at a US supermarket; if you give the dollar to a rich person, they will invest it, some domestic but a lot of it in other countries. They may short the dollar, treasuries, or put it in a Swiss account or gold.
    Save the tax cut for the rich BS for someone who didn’t study economics, ok?

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