Monday, September 29, 2008

The "Blame Scoble" meme reaches new lows (Nicole Ferraro and the "stir the panic pot" allegation)

I ranted about this on FriendFeed today, but perhaps I should expand on my thoughts a little bit more.

In an Internet Evolution post, Nicole Ferraro talked about, in her words, the "detrimental role" played by the Internet in the stock market downturn today.

Ferraro cited two examples:

According to Chris Poley, professional stock trader and a contributor to the ThinkerNet, the Dow's initial drop happened before the bill was officially rejected and can at least be partially attributed to the fast-flying, minute-by-minute updates on the Internet. "From my perspective, I had the vote up on As soon as the vote wasn't getting passed the market tanked 402 points in under four minutes," he says.

In that sense, it appears that the availability of this information on the Internet led to a significant amount of panic and, in turn, caused a quicker drop in stock.

Oh, and wasn't the only place that was sharing this information.

Aside from the information provided on CSPAN, speculation and updates have been rampant across the Internet all day today, with some high-profile tech bloggers, like Robert Scoble, doing their part to keep users informed, as well as stir the panic pot on Twitter with updates like: @Scobleizer Dow down about 500 thanks to Republicans like @johnculberson who blocked bailout. More economic crap coming.

So, in essence, unmanaged information is bad.

I don't think so.

When I shared this item via Google Reader to FriendFeed, I received a number of comments, but the one that really resonated with me was the one from Eric @ CS Techcast, which read in part:

Someone should also understand transparent perfect or near-perfect markets, meaning we all get the information at the same time. It's how it's supposed to be.

Yes, folks, we're going back to Economics 101 and the classical assumptions of a free market. Back when I was taking first-year Econ in the early 1980s, the idea of a completely free market, in which all participants had perfect and equal access to information, was known to be a fantasy in the real world. It's still a fantasy today, but improvements in technology and technology design have made a "perfect information" economy slightly less of a fantasyland.

It's important to distinguish between two types of information:

  • Information that is legally obtainable. In this case, there was no restriction on sharing the progress of the House vote. Anyone with either a television or access to the website could obtain information on the vote. (I don't know if the website information was up-to-the-second, but the TV information was at or near that level.) Now if this information is available to some people, shouldn't it be obtainable to all? Or is there a danger of providing unfiltered information to the stupid masses who wouldn't know any better unless the soothing voice of a white person (I'd say "white man," but Katie Couric is employed) provides "analysis" and "perspective"? Heck, if my TV says that a bunch of people from both parties aren't voting for the bill, that's important enough to share.

  • Information that is not legally obtainable. The reason that we're never going to have the classical perfect economy is because there are things that will never be revealed, such as trade secrets. I'm not going to tell you what I learned while drinking coffee one morning last week, or what I said to someone one afternoon last week. As long as that situation persists, we aren't going to have the classical perfect free competition. Which is a good thing, because when you have perfect have no profit.
Oh, and one more thing - I don't consider Scoble's tweet to be stirring "the panic pot." The phrase "more economic crap coming" is no more pot-stirring than things said by George W. Bush, Barack Obama, John McCain, Nancy Pelosi, or any of a number of people over the past few days. And especially when the tweet also documented a 500 point drop in the Dow...are we to conclude that everything is puppies and ice cream?

And yes, someone could write a tweet in five seconds that could be completely irresponsible. Yet, by the same token, someone could spend two years working on a magazine article that could be completely irresponsible. The speed of modern Internet communications is not, in and of itself, a bad thing.

Sphere: Related Content
blog comments powered by Disqus