Decision Making as Output and Bounded Rationality

  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra

Government Twitter Battles and the Market Right

 

In India, it seems set for showdown between the government and Twitter over its policy of moderation and refusal to ban accounts responsible for violence in the national capital on the Republic Day. The government seems in no mood to let Twitter off the hook. On the other hand the platform seems to be vouching for the right of free speech or dissent and seems to argue the government orders are in violation of Indian laws. Twitter obviously cannot sit in judgment of Indian laws. It can however challenge the government orders in the judicial forum for a remedy. Yet Twitter is hardly in a mood for the same. To Twitter riding on a high of left liberal euphoric support on its action post Capitol Hill riots seems to sense this as a move which will fetch rewards from the left liberal elite circuit as it takes on PM Modi who is the object of hate for the leftists. On the other hand, the right wing support base of PM Modi is in a mood for a bloodshed and seemingly wants Modi to crackdown.

 

Interestingly, the Modi coalition, if one might term his support base coalesced on Twitter in the run up to the 2014 elections, something replicated by Donald Trump two years later. PM Modi himself has been using Twitter for his policy announcements and diplomatic initiatives, thus it being central to his communication strategy. While there are alternatives, given the investment in Twitter as communication there would be lock-in effects. The government meanwhile is moving slowly to the domestic platform Koo yet it would be long way before Koo would offer itself as an alternative to Twitter. The government would have an option of posting its announcements on platforms like Facebook or Instagram, but their positioning as social platforms would create a sort of issue that would not come on a politically positioned platform like Twitter. Twitter’s popularity itself was an outcome of its extensive use in the colored revolutions that shook North Africa and Middle East around 2010 onwards. In some ways, Twitter was a product of political dissent against an established order and thus would perhaps reinforce its credentials in the left liberal circuit which prides itself on post-globalist or a platform against nationalism.

 

In the US, Twitter was an outcome of the Obama years and given the resurgence of Democrats under Biden, it might be Twitter expects a lot of support from the US administration. There is a strong anti-Modi Lutyens lobby which might be electorally weak but vocal in its assertions and commands an audience in the Western world. This would be expected to back Twitter in all glory if it suits the anti-Modi agenda. It is immaterial whether Twitter acts in India’s interests or goes against the national interests.

 

Aside of this, there is a strong right wing economic tendencies in the groups that support PM Modi. They swear on the market incentives driving the economy and urge PM Modi to do more on this front. In fact, their main grudge has been too less of market reforms. In a market driven economy, it goes without saying the firms have a strong say and the governments are expected to keep themselves out of the economy. In this context, Twitter has to be challenged purely through market forces and the government should avoid interference with Twitter. Under market and economic-right models, the minimum government paradigm would preclude governments from pressuring the social media platforms to ban inconvenient accounts if one might term it so. The only option would be an alternative emerging to Twitter that would force Twitter to adopt to Indian laws. Rather if Twitter loses its base for its policy, to retain business, it will change its world view at least in India is concerned. Yet if this were to be followed, it would show PM Modi in a rather poor light to his supporters who want a ban on the platform. Yet, any alternatives including a ban would at heart go against the philosophy which places the private ownership and functioning in the economy along with economic freedom at a high pedestal.

 

The law mandates that the intermediaries are bound to follow the government orders. In case of refusal, the key employees or those in management of the intermediary platform in question can be imprisoned and put to trial. Furthermore, the firm in question can be imposed a heavy fine. The government might be mulling to exercise this option. This will create some drama for sure given the opposition would be up in arms but would definitely put pressure on the platform to heed to the government orders. The popularity of this order would be magnifying given its ostensible work against India’s interests. Moreover, the alleged interference in India’s internal affairs would not get traction. The government could ban the platform unless it sells its India’s operations to a local player something analogous to US policy on Tik Tok some months back. There is of course glamorous alternative of nationalizing Twitter. In fact, it would be a good option though not something in alignment with the right wing economic discourse.

 

Yet what Twitter’s attitude demonstrates, is the intended or unintended effects of capitalism in action. When one talks of free markets, there is a cost benefit analysis. What does get overlooked in the cost aspect of the same? There is an inherent danger of the firms exercising their power, especially monopolies to dictate to national governments. This is not something unusual and has been observed for years. There is no shortcut for the same. The belief in unbridled capitalism would invite such instances with little options for the governments. In such a context, there needs to be non-market alternatives available as nuclear options to rein in the firms that put themselves on a pedestal. Firms are subject to laws irrespective of their size. While they seek regulatory capture directly or indirectly, it must be resisted. The current instance is certainly on wherein the market principles are simply not going to work. The government must act. The action in all probability might be backroom arm twisting with some symbolic actions on the front. The possibility of arrest or a ban might be a last resort. It further seems that there would be some threat of nationalization as well. Yet, these are unlikely to emerge as overnight solutions. There would be some negotiations before the government chooses to exercise the nuclear option. For the moment however, the showdown is not about if but about when. It is all about timing the climax.

 

 

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