Mgalese Thought Paper

Wikipedia and Fairy Tale Torts

This is fairy tale story of tort as a legal mechanism to internalize negative externalities. A engages in an activity X which costs A $20 and which generates $25 dollars for A. Naively, A “should” engage in this activity, because society is now $5 richer. Of course, A gets all of that benefit, but this fairy tale has princess and prince who don't care at all about distributional concerns. But should A really do X? B isn't very happy with A, because X turns out to cost B $4. X makes A richer, B poorer, but society still wins—by $1. But if X also costs C $2, or anything over $1, we now have a different outcome. Now X, when we tally gains and losses, is a net loss to society. A should not do X. At least in fairy tales, tort law helps B and C—for certain kinds of B's, C's and losses—turn to A with their $4 and $2 losses and force A to transfer those amounts, externalities of X, from A's new wealth from X. As a result, A will either be able to do so from the profits of X, or will find X to be a losing proposition and will stop doing the socially undesirable X.

A's private, profit-driven nature, gives us a nexus to connect up streams of profit, loss, and various externalities and A's incentives insure that decentralized decisions about the impact of actions on net social welfare are made, if even suboptimally.

Wikipedia generates mostly externalities. When Wikipedia spends $20 to generate the Wikipedia, Wikipedia has no way of capturing the benefits. The $20 was a donation, and the benefits of Wikipedia are intended positive externalities spread among all the users of Wikipedia. But we cannot ignore the fact that Wikipedia generates negative externalities, in the form of defamation or other forms of misinformation. Unfortunately, W is not like A—and we cannot use the profit motivation of A to decide whether Wikipedia is a net “win.” CDA § 230 shields Wikipedia from many of the B's and C's of the world who would force A to internalize negative externalities. But since Wikipedia cannot easily internalize the positive externalities, § 230 might be the only way for Wikipedia, or other nonmonetized generative systems, to flourish. 

Generative, nonmonetized, systems do not provide us with a nexus to tie societal gains and losses together with dollars. We fall back to obviously-true, anecdotal evidence of incalculable value—but we also deny remedies to parties injured by externalities. For Wikipedia, this works, but I think we should question whether this loss of distributed information and decision making will force more central actors, such as policymakers and courts, to make inefficient and less informed judgments that either allow socially net loss "Wikipedias" or ignore unrealized externalities from seemingly damaging or controversial projects.

484 Words --Mgalese 13:00, 28 March 2008 (EDT)

Responses

Your fairy-tale presupposes that Wikipedia is the only actor B and C can recoup their losses from. 230 only exempts Wikipedia from liability for content provided by someone else; B and C get their redress from User instead. What's more, Wikipedia and other 230-protected entities are platforms, not speakers, and as such the cost/benefit calculus is different if you include in your fairy-tale the value of promoting access to technologies that facilitate speech. --erin 13:14, 28 March 2008 (EDT)

That's true about redress about the User. I'm simplifying a bit here. But it's not going to change much. We've already talked about how we might join Users together into some sort of Wikipedia entity, and redress against hard-to-ID, asset free User contributors won't change much. As far as platforms, I think you're right--but that's just another kind of positive externality. We can talk about those values, but we have no revealed valuations for them and no systemic way that distributed actors can decide whether a given platform, including every possible drop of social gain, still represents a net social gain. We think they do--we pass laws that reflect that belief, but we resort to regulation modes that look more like central command-and-control to "achieve" efficiency than they look like free market bottom-up regulation. If you think that a defect of centralized control is less information, as I do, you might think that means worse decisions. But you're definitely right that there are diffuse externalities generated in a way we might call "platform"-like--Mgalese 13:26, 28 March 2008 (EDT)