Enough Crony Capitalism! — Transcript

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1. 0:00Facebook CEO Mark Zuckerberg is calling for
2. 0:02stricter regulation of the web.
3. 0:04“Facebook wants new regulations!”
4. 0:07Mark Zuckerberg wrote an op-ed that said
5. 0:09"Lawmakers often tell me we have too much
6. 0:12power over speech, and frankly I agree.
7. 0:16We shouldn’t make so many
8. 0:17important decisions on our own."
9. 0:20Wow.
10. 0:21It sounds so... self-sacrificing.
11. 0:23But give me a break.
12. 0:26Big companies tend to like regulation, because
13. 0:28it gives them an advantage over smaller competitors.
14. 0:32After all, start-ups can’t afford the squads of lawyers
15. 0:36and “compliance officers” that Facebook employs.
16. 0:39In France, they embedded officials inside the company.
17. 0:44My position is not that there should be no regulation
18. 0:46Zuckerberg issued his call for regulation after spending
19. 0:49hours being grilled by members of Congress.
20. 0:52I think the internet is increasing...
21. 0:54You embrace regulation?
22. 0:56I think the real question as the internet
23. 0:58becomes more important in people’s lives
24. 1:00is what is the right regulation
25. 1:02not whether there should be or not.
26. 1:03But you as a company welcome regulation?
27. 1:06I think if it’s the right regulation then yes.
28. 1:08Zuckerberg’s no dope.
29. 1:09He sees which way the wind is blowing.
30. 1:11So would you work with us in terms of what regulations
31. 1:14you think are necessary in your industry?
32. 1:17Absolutely.
33. 1:18So Facebook will work with politicians
34. 1:20to shape regulation.
35. 1:22What’s sad is that if anyone should
36. 1:24fight for permissionless innovation,
37. 1:27it should be people like Mark Zuckerberg.
38. 1:29It’s no accident that the amazing wealth creation
39. 1:32that brought us Facebook, Google, Instagram, Apple,
40. 1:35Microsoft, Amazon, smartphones, computers
41. 1:39all happened in the two big
42. 1:41metropolitan areas farthest from Washington DC.
43. 1:45Microsoft in the early 1990s was
44. 1:48the largest company in the world.
45. 1:50Incredibly successful and they spent exactly
46. 1:53zero dollars on lobbying, on cronyism, on lawyers.
47. 1:57They had no presence in Washington DC.
48. 1:59Not a single lawyer.
49. 2:01Instead of spending money on lawyers and lobbyists,
50. 2:04they spent it on technology.
51. 2:06But once politicians noticed their success.
52. 2:09They were literally brought in front of Congress
53. 2:11They were yelled at by a Republican,
54. 2:14Oren Hatch from Utah, he said,
55. 2:16"You guys need to get involved here in Washington DC.
56. 2:18You need to build a building here.
57. 2:20You need to hire lawyers here."
58. 2:21In other words, the unspoken text,
59. 2:23"You need to bribe me,"
60. 2:25and Microsoft walked out of the meeting and said,
61. 2:28"You know what? You leave us alone.
62. 2:30We will leave you alone. We're busy.
63. 2:32We're running the biggest company in the world.
64. 2:33There's a lot to do."
65. 2:34The Justice Department has charged Microsoft
66. 2:37Six months later knock on the door at Microsoft,
67. 2:40We're from the Justice Department and we're here
68. 2:43to prosecute you because you're offering
69. 2:45the American public,
70. 2:46you're offering your customers a product for free.
71. 2:50This is Internet Explorer at a time when
72. 2:52we were buying Netscape and paying money for it
73. 2:55they offered it for free
74. 2:57and that was deemed bad business practices.
75. 2:59A monopoly.
76. 3:00A monopoly, trying to dominate the market.
77. 3:04For 10 years they had to fight that lawsuit.
78. 3:05They lost, they got regulated, they got controlled.
79. 3:08Guess how much Microsoft spends today
80. 3:09in Washington DC?
81. 3:11How much?
82. 3:1210s of millions of dollars.
83. 3:13They have a beautiful building about equal distance
84. 3:16from the White House and from Congress.
85. 3:19They have lawyers, they have lobbyists,
86. 3:22they spend a lot of money and indeed a lot of the
87. 3:24other tech companies like Google learnt the lesson
88. 3:27The lesson is if you don’t want politicians
89. 3:29destroying your business, practice self-defense:
90. 3:32Go to Washington to give them money
91. 3:35and kiss their rings.
92. 3:36Making sure to keep politicians at bay,
93. 3:39so a lot of the lobbying,
94. 3:40a lot of the so-called cronyism is self-defense.
95. 3:43Yes, and Zuckerberg’s acting in self-defense.
96. 3:47But it’s still ugly.
97. 3:49And Silicon Valley’s crony capitalism is
98. 3:52a threat to future innovation.
99. 3:54But in fairness to Zuckerberg, he didn’t start it.
100. 3:57Let's remember where cronyism comes from.
101. 3:59Cronyism occurs when government starts interfering
102. 4:02in business and then business has to defend itself
103. 4:06and as soon as it hires the lawyers
104. 4:08and the lobbyist to defend itself,
105. 4:10it quickly slips in to now gaining favors
106. 4:15from the government who has all this power.
107. 4:16​If we really want to end cronyism,
108. 4:18what we need to do is reduce the power of politicians
109. 4:21over our lives.
110. 4:22Actually separate economics from state.