The social function of the economics profession is to explain, over and over again, that your boss is actually right and that you don't really want the things you want, and you're secretly happy to be abused by the system.
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If you'd like an essay-formatted version of this thread to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
https://pluralistic.net/2025/01/11/socialism-for-the-wealthy/#rugged-individualism-for-the-poor
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If that wasn't true, why would your "choose" commercial surveillance, abusive workplaces and other depredations?
In other words, economics is the "look what you made me do" stick that capitalism uses to beat us with. We wouldn't spy on you, rip you off or steal your wages if you didn't choose to use the internet, shop with monopolists, or work for a shitty giant company. The technical name for this ideology is "public choice theory":
https://pluralistic.net/2022/06/05/regulatory-capture/
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Of all the terrible things that economists say we all secretly love, one of the worst is "price discrimination." This is the idea that different customers get charged different amounts based on the merchant's estimation of their ability to pay. Economists insist that this is "efficient" and makes us all better off.
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After all, the marginal cost of filling the last empty seat on the plane is negligible, so why not sell that seat for peanuts to a flier who doesn't mind the uncertainty of knowing whether they'll get a seat at all? That way, the airline gets extra profits, and they split those profits with their customers by lowering prices for everyone. What's not to like?
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Plenty, as it turns out. With only four giant airlines who've carved up the country so they rarely compete on most routes, why would an airline use their extra profits to lower prices, rather than, say, increasing their dividends and executive bonuses?
For decades, the airline industry was the standard-bearer for price discrimination. It was basically impossible to know how much a plane ticket would cost before booking it.
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But even so, airlines were stuck with comparatively crude heuristics to adjust their prices, like raising the price of a ticket that didn't include a Saturday stay, on the assumption that this was a business flyer whose employer was footing the bill:
https://pluralistic.net/2024/06/07/drip-drip-drip/#drip-off
With digitization and mass commercial surveillance, we've gone from pricing based on context (e.g. are you buying your ticket well in advance, or at the last minute?) to pricing based on spying.
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Digital back-ends allow vendors to ingest massive troves of commercial surveillance data from the unregulated data-broker industry to calculate how desperate you are, and how much money you have. Then, digital front-ends - like websites and apps - allow vendors to adjust prices in realtime based on that data, repricing goods for every buyer.
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As digital front-ends move into the real world (say, with digital e-ink shelf-tags in grocery stores), vendors can use surveillance data to reprice goods for ever-larger groups of customers and types of merchandise. Grocers with e-ink shelf tags reprice their goods thousands of times, every day:
https://pluralistic.net/2024/03/26/glitchbread/#electronic-shelf-tags
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Here's where an economist will tell you that actually, your boss is right. Many groceries are perishable, and e-ink shelf tags allow grocers to reprice their goods every minute or two, so yesterday's lettuce can be discounted every fifteen minutes through the day. Some customers will happily accept a lettuce that's a little gross and liztruss if it means a discount. Those customers get a discount, the lettuce isn't thrown out at the end of the day, and everyone wins, right?
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Well, sure, if. If the grocer isn't part of a heavily consolidated industry where competition is a distant memory and where grocers routinely collude to fix prices. If the grocer doesn't have to worry about competitors, why would they use e-ink tags to lower prices, rather than to gouge on prices when demand surges, or based on time of day (e.g. making frozen pizzas 10% more expensive from 6-8PM)?
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Unfortunately, groceries are among the most consolidated sectors in the world. Worse: grocers keep getting busted for colluding to hike prices and rip off shoppers:
https://www.cbc.ca/news/business/loblaw-bread-price-settlement-1.7274820
Surveillance pricing is especially pernicious when on apps, which allow vendors to reprice goods based not just on commercially available data, but also on data collected by your pocket distraction rectangle, which you carry everywhere, do everything with, and make privy to your secrets.
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Worse, since apps are a closed platform, app makers can invoke IP law to criminalize anyone who reverse-engineers them to figure out how they're ripping you off. Removing the encryption from an app is a potential felony punishable by a five-year prison sentence and a $500k fine (an app is just a web-page skinned in enough IP to make it a crime to install a privacy blocker on it):
https://pluralistic.net/2024/08/15/private-law/#thirty-percent-vig
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Large vendors love to sell you shit via their apps. With an app, a merchant can undetectably change its prices every few seconds, based on its estimation of your desperation. Uber pioneered this when they tweaked the app to raise the price of a taxi journey for customers whose batteries were almost dead. Today, everyone's getting in on the act.
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McDonald's has invested in a company called Plexure that pitches merchants on the use case of raising the cost of your normal breakfast burrito by a dollar on the day you get paid:
https://pluralistic.net/2024/06/05/your-price-named/#privacy-first-again
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Surveillance pricing isn't just a matter of ripping off customers, it's also a way to rip off workers. Gig work platforms use surveillance pricing to titrate their wage offers based on data they buy from data brokers and scoop up with their apps. Veena Dubal calls this "algorithmic wage discrimination":
https://pluralistic.net/2023/04/12/algorithmic-wage-discrimination/#fishers-of-men
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Take nurses: increasingly, US hospitals are firing their waged nurses, replacing them with gig nurses who are booked via an app. There's plenty of ways that these apps abuse nurses, but the most ghastly is in how they price nurses' wages. These apps buy nurses' financial data from data-brokers so they can offer lower wages to nurses with lots of credit card debt, on the grounds that crushing debt makes nurses desperate enough to accept a lower wage:
https://pluralistic.net/2024/12/18/loose-flapping-ends/#luigi-has-a-point
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This week, the excellent Lately podcast has an episode on price discrimination, in which cohost Vass Bednar valiantly tries to give economists their due by presenting the strongest possible case for charging different prices to different customers:
https://www.theglobeandmail.com/podcasts/lately/article-the-end-of-the-fixed-price/
Bednar really tries, but - as she later agrees - this just isn't a very good argument.
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In fact, the only way charging different prices to different customers - or offering different wages to different workers - makes sense is if you're living in a socialist utopia.
After all, a core tenet of Marxism is "from each according to his ability, to each according to his needs." In a just society, people who need more get more, and people who have less, pay less:
https://en.wikipedia.org/wiki/From_each_according_to_his_ability,_to_each_according_to_his_needs
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Price discrimination is a Bizarro-world flavor of cod-Marxism. Rather than having a democratically accountable state that sets wages and prices based on need and ability, price discrimination gives this authority to large firms with pricing power, no regulatory constraints, and unlimited access to surveillance data. You couldn't ask for a neater example of the maxim that "What matters isn't what technology does. What matters is who it does it for; and who it does it to."
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Neoclassical economists say that all of this can be taken of by the self-correcting nature of markets. Just give consumers and workers "perfect information" about all the offers being made for their labor or their business, and things will sort themselves out. In the idealized models of perfectly spherical cows of uniform density moving about on a frictionless surface, this does work out very well:
https://pluralistic.net/2023/04/03/all-models-are-wrong/#some-are-useful
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But while large companies can buy the most intimate information imaginable about your life and finances, IP law lets them capture the state and use it to shut down any attempts you make to discover how they operate.
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When an app called Para offered Doordash workers the ability to preview the total wage offered for a job before they accepted it, Doordash threatened them with eye-watering legal penalties, then threw dozens of full-time engineers at them, changing the app several times per day to shut out Para:
https://pluralistic.net/2021/08/07/hr-4193/#boss-app
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When Mario Zechner, an Austrian hacker, built a tool to scrape grocery store prices - discovering clear evidence of price-fixing conspiracies in the process - he was attacked by the grocery cartel for violating their "IP rights":
https://pluralistic.net/2023/09/17/how-to-think-about-scraping/
This is Wilhoit's Law in action:
Conservatism consists of exactly one proposition, to wit: There must be in-groups whom the law protects but does not bind, alongside out-groups whom the law binds but does not protect.
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Of course, there wouldn't be any surveillance pricing without surveillance. When it comes to consumer privacy, America is a no-man's land. The last time Congress passed a new consumer privacy law was in 1988, when they enacted the Video Privacy Protection Act, which bans video-store clerks from revealing which VHS cassettes you take home. Congress has not addressed a single consumer privacy threat since Die Hard was still playing in theaters.
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Corporate bullies adore a regulatory vacuum. The sleazy data-broker industry that has festered and thrived in the absence of a modern federal consumer privacy law is absolutely shameless. For example, every time an app shows you an ad, your location is revealed to dozens of data-brokers who pretend to be bidding for the right to show you an ad.
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They store these location data-points and combine them with other data about you, which they sell to anyone with a credit card, including stalkers, corporate spies, foreign governments, and anyone hoping to reprice their offerings on the basis of your desperation:
https://www.404media.co/candy-crush-tinder-myfitnesspal-see-the-thousands-of-apps-hijacked-to-spy-on-your-location/
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Under Biden, the outgoing FTC did incredible work to fill this gap, using its authority under Section 5 of the Federal Trade Commission Act (which outlaws "unfair and deceptive" practices) to plug some of the worst gaps in consumer privacy law:
https://pluralistic.net/2024/07/24/gouging-the-all-seeing-eye/#i-spy
And Biden's CFPB promulgated a rule that basically bans data brokers:
https://pluralistic.net/2024/06/10/getting-things-done/#deliverism
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But now the burden of enforcing these rules falls to Trump's FTC, whose new chairman has vowed to end the former FTC's "war on business." What America desperately needs is a new privacy law, one that has a private right of action (so that individuals and activist groups can sue without waiting for a public enforcer to take up their causes) and no "pre-emption" (so that states can pass even stronger privacy laws):
https://www.eff.org/deeplinks/2022/07/federal-preemption-state-privacy-law-hurts-everyone
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How will we get that law? Through a coalition. After all, surveillance pricing is just one of the many horrors that Americans have to put up with thanks to America's privacy law gap. The "privacy first" theory goes like this: if you're worried about social media's impact on teens, or women, or old people, you should start by demanding a privacy law. If you're worried about deepfake porn, you should start by demanding a privacy law.
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If you're worried about algorithmic discrimination in hiring, lending, or housing, you should start by demanding a privacy law. If you're worried about surveillance pricing, you should start by demanding a privacy law. Privacy law won't entirely solve all these problems, but none of them would be nearly as bad if Congress would just get off its ass and catch up with the privacy threats of the 21st century.
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What's more, the coalition of everyone who's worried about all the harms that arise from commercial surveillance is so large and powerful that we can get Congress to act:
https://pluralistic.net/2023/12/06/privacy-first/#but-not-just-privacy
Economists, meanwhile, will line up to say that this is all unnecessary. After all, you "sold" your privacy when you clicked "I agree" or walked under a sign warning you that facial recognition was in use in this store.
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The market has figured out what you value privacy at, and it turns out, that value is nothing. Any kind of privacy law is just a paternalistic incursion on your "freedom to contract" and decide to sell your personal information. It is "market distorting."
In other words, your boss is right.
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http://martinhench.com
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Image:
Cryteria (modified)
https://commons.wikimedia.org/wiki/File:HAL9000.svg
CC BY 3.0
https://creativecommons.org/licenses/by/3.0/deed.en
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Ser Amantio di Nicolao (modified)
https://commons.wikimedia.org/wiki/File:Safeway_supermarket_interior,_Fairfax_County,_Virginia.jpg
CC BY-SA 3.0
https://creativecommons.org/licenses/by-sa/3.0/deed.en
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@pluralistic The trouble, of course, being those in the government who don't want us to have privacy. All this surveillance that's so useful for economic abuse is also useful for governmental abuse. Even those who claim they want us to have privacy can't be trusted, since many of them want an exception carved out for themselves, and refuse to accept that this is less like giving them a master key and more like making a wall that only they can phase through.
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text/gemini
