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Frictionless politics

by henrycopeland
Wednesday, December 17th, 2003

Economist Robert Coase argued in 1937 that the cost of gathering information determines the size of a corporation, notes economist Everett Ehrlich, who then riffs on implications of Coase’s theory implications for modern political parties in the Internet age.

To an economist, the ‘trick’ of the Internet is that it drives the cost of information down to virtually zero. So according to Coase’s theory, smaller information-gathering costs mean smaller organizations. And that’s why the Internet has made it easier for small folks, whether small firms or dark-horse candidates such as Howard Dean, to take on the big ones.

Here are some predictions. First, if Dean loses the nomination, he will preserve his organizational advantage and reemerge as a third-party force four years from now. He has done with technology what Ross Perot could not do with money alone. Second, the evangelical right will become a separate political party in the near future, and will hold its own conventions and primaries. Like the Conservative Party in New York state, it will usually endorse Republican candidates. But evangelicals will use their inherent party-ness to make the Republican candidate stand in front of them and give a separate acceptance speech. And finally, in the next six or eight presidential elections, a third-party candidate will win the presidency. Issues — most likely the coming fiscal debacle and the inescapable abrogation of promises made on Social Security and Medicare — will give the third-party candidate an opening. But technology will give him, or her, the means.

(Since he’s writing in the Washington Post, Ehrlich graciously demurs from deconstructing the news business with the same logic.)

Funnily enough, I ran across this June 6 post earlier today, “Mark my words: blogs are going to drive the next presidential election.”

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