Censoring and destroying information in the information age.

• Author: Clark, J.R.

Almost everyone knows the importance of information and communication to economic progress. The more information we have the more productive we can be, both individually and collectively. The easier it is for us to communicate our information to others and to receive their information, the more likely we will make production and consumption choices that serve the interests of all. No wonder people are so impressed with the recent breakthroughs in information and communication technology that have moved us into what has become known as the "information age." Who could possibly condone, much less recommend, policies that destroy and distort valuable information by censoring its communication? Far more than you might think!

Large amounts of information or knowledge, (1) which could be used to improve the lives of billions of people by improving economic decisions, are being systematically suppressed and destroyed by government censorship that is supported enthusiastically by many who claim to be outraged by government censorship of any type. One reason for this enthusiasm is that censorship can be used to concentrate benefits on politically organized groups by imposing far greater, but highly dispersed, costs on the general public. This standard public choice argument of concentrated benefits trumping dispersed costs, as useful as it is at explaining the success of many perverse policies, cannot adequately explain the pervasive censorship we discuss in this article. Much of this censorship harms not only the general public but also many well-organized interest groups. The problem is that few people recognize some of the most harmful forms of government censorship as being censorship. And since they don't recognize it for what it is, many erroneously see censorship as the most effective and least costly way for government to achieve social objectives that almost everyone claims to support, such as protecting the environment, reducing waste, ensuring an adequate food supply, reducing our dependence on foreign oil, improving education, creating better jobs, and expanding the availability of high-quality health care.

The Real Information Age Began Long Ago

People commonly think of the information from scholarly research and scientific discovery as far more important than the seemingly mundane information that each of us has on our particular situations, preferences, skills, and aspirations. But, F. A. Hayek (1945) pointed out that scholarly and scientific information alone are not enough to inform economic decision-makers on the best use of their scarce resources. No economic system can function properly without utilizing what Hayek calls the "knowledge of the particular circumstances of time and place," which is unique to each of us, constantly changing, and impossible for any group of authorities to know in its entirety. Without some means of communicating all this widely dispersed information from those who have it to those best able to use it, and communicate it in a way that motivates those receiving it to respond in the most appropriate ways, the level of prosperity largely taken for granted in market economies would be impossible. Making use of highly specialized physical and human capital, which greatly increases our productivity, would be extremely limited if we could not communicate information to others on the value of their specialized efforts to us and receive in return information on the value of our specialized efforts to them. As Hayek made clear, countless numbers of people can communicate this information simultaneously to countless others in a clear and compelling way, and immediately update it in response to constant changes in the information of time and place, through market prices which emerge from the voluntary exchange of private property.

People can communicate much of the information most important to their well-being far more effectively through market prices than they can through cell phones, land-line phones, faxes, e-mail, text messaging, and other technological marvels associated with the "information economy." For example, if people in Iceland desire to consume more bananas, they need the cooperation of millions of banana consumers and producers scattered all over the globe. Banana consumers outside Iceland would have to reduce their consumption of bananas immediately to allow more bananas to be made available in Iceland. The Icelanders could try to contact all these banana consumers with email, or text messages, etc., but this is clearly impossible. Moreover, these messages would provide no information on how much non-Icelanders should reduce their consumption, and no motivation to do so even if the information was somehow communicated. By simply increasing their demand for bananas, however, Icelanders ask other consumers through slightly higher banana prices to reduce their banana consumption. And each of these consumers will respond appropriately to this request. While we cannot know how much any one non-Icelandic consumer will reduce banana consumption, we can be confident that aggregate consumption will decline by just enough to allow Icelanders to consume the additional bananas they desire at the higher banana price. And, the higher banana price will immediately inform and motivate responses from those in the best position to expand banana production. This response will cause prices of productive resources, including labor, to change in ways that communicate information on the desirability of shifting resources out of other employments and into banana production.

It is impossible to detail all the adjustments required to best accommodate the Icelandic banana consumers, but they will be made in response to the information communicated through market prices. No other form of communication could come remotely close to informing and motivating such a pattern of cooperative adjustments, and we are talking about the adjustments to one tiny change in the information of time and place in a small and remote country. Imagine how much more difficult it is for people all over the world to coordinate their decisions with each other in response to thousands of simultaneous changes, both large and small, in their individual conditions and desires. There is no way the information necessary to accomplish this coordination could ever be constantly updated and communicated with any foreseeable improvements in information-age technology. Yet this communication takes place every day through market prices, and takes place so effectively and unintentionally that almost no one has the slightest awareness of, or appreciation for, what an amazing feat it is or the enormous benefits derived from it. (2) Without the communication that takes place through market prices we would return to a world of a few impoverished people, even if all the electronic marvels of the information age were fully available. Of course, these marvels would have never been developed without the widespread dissemination of information made possible by market communication.

We do not intend to belittle the benefits from the technological improvements that have supposedly moved us into the information age. But once we...