4 ms·

Reading Google's statement perhaps rather too charitably, perhaps this might be what they meant to emphasize? > including through opaque financing offers that

Reading Google's statement perhaps rather too charitably, perhaps this might be what they meant to emphasize? > including through opaque financing offers that can keep people in debt for months or years. This would be a way to make their logic not horrible.

rayiner 8y ago
"Opaque financing offers" is handwaving. If its anything like payday lending, the real complaint is that the bonds "keep people in debt for months or years." But that's not because of opaque financing, but because poor people don't have much free cash flow to service a loan, and are bad credit risks statistically so the interest on that loan has to be relatively high. Removing the ability to advertising makes both problems worse, by reducing competition.
- joshuamorton 8y ago
  Payday lending goes beyond that. Its rent-seeking in the same way that reordering charges to repeatedly overdraft someone is rent-seeking. Sure "don't be poor" is one way to solve that issue, but even a poor and reasonably reliable person can be taken advantage of by payday loans (whose interest rates are always >100% APR, which is 10-20x more than anything else). There's a reason payday loans interest rates are capped [in many jurisdictions]: a 500% APR isn't something that arises normally.
  - rayiner 8y ago
    That’s not what “rent seeking” means.
    - joshuamorton 8y ago
      >Rent-seeking is an individual's or entity's use of company, organizational or individual resources to obtain economic gain without reciprocating any benefits to society through wealth creation. Does reordering charges to overdraft someone more than they should be provide economic benefit to society at large? No. Does it give the bank additional economic gain? Yes. Does charging higher than necessary interest rates to low-income, low-information consumers provide economic benefit to society at large? No.[1] Does it give the lender additional economic gain? Yes. It is rent seeking, quite clearly. [1]: In fact, there's a decent argument to be made that in the long term it lowers the velocity of money and actively harms the economy.
      - rayiner 8y ago
        That can't be the right definition of rent seeking. Consider the decision of what price to sell an iPhone at. Selling it at $600 versus $500 does not create additional wealth, but does result in economic gain for Apple. But by your reasoning, setting the price at anything above cost is "rent seeking." Wikipedia has a more specific definition of rent seeking: https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking. > Rent-seeking is an attempt to obtain economic rent (i.e., the portion of income paid to a factor of production in excess of what is needed to keep it employed in its current use) by manipulating the social or political environment in which economic activities occur, rather than by creating new wealth. With regards to pay-day lending, what is "higher than necessary?" Payday lending is an incredibly competitive market--not only is there a payday lender on every corner in poor neighborhoods, but such loans are easily available online, and there is competition from pawn shops, etc. Interest rates for payday loans almost certainly reflect a competitive market price accounting for the risk of default.
- dragonwriter 8y ago
  > Removing the ability to advertising makes both problems worse, by reducing competition. There is a good argument that increasing cost of visibility reduces competition. That a ban on Google advertising for this industry does that is far less clear; notably, banning advertising means the top relevant search result is the top organic result, not the top ad, so you've now potentially got similar visibility with zero Google ads spend as before took considerable ad spend.
  - rayiner 8y ago
    Do Google ads have the general effect of suppressing competition, or is it just for bail companies?
    - dragonwriter 8y ago
      Google having ads increase the cost of visibility if the main way they convert is on searches for a relevant query where Google has good organic results; whether that's the main way bail bonds ads converts is expressly a point of uncertainty in my upthread post (it's part of the “if” clause); that Google has quality organic results for the industry on the most obvious search query seems to be the case from a bit of experimentation.
      - rayiner 8y ago
        Isn't that a damning indictment of Google's whole business model--that paid advertisements decrease competition in entire industries where organic search results would otherwise provide information discovery closer to optimal?
        dragonwriter 8y ago
        > Isn't that a damning indictment of Google's whole business model No. > that paid advertisements decrease competition in entire industries where organic search results would otherwise provide information discovery closer to optimal? If Google's entire business model were seeking only search ads for those industries (or any ads for those industries where experience showed most ad conversions would be from searches for which industry competitors would be shown in lead positions in organic results), that would be a damning indictment of Google's whole business model, sure. As that is not the case, and there seems to be good reason to believe that in many industries Google ads lower the net cost of visibility, it's probably more an illustration. that something being generally good can still be bad in specific cases, and that the fallacy of division is still a fallacy.

rayiner 8y ago

"Opaque financing offers" is handwaving. If its anything like payday lending, the real complaint is that the bonds "keep people in debt for months or years." But that's not because of opaque financing, but because poor people don't have much free cash flow to service a loan, and are bad credit risks statistically so the interest on that loan has to be relatively high. Removing the ability to advertising makes both problems worse, by reducing competition.

joshuamorton 8y ago
Payday lending goes beyond that. Its rent-seeking in the same way that reordering charges to repeatedly overdraft someone is rent-seeking. Sure "don't be poor" is one way to solve that issue, but even a poor and reasonably reliable person can be taken advantage of by payday loans (whose interest rates are always >100% APR, which is 10-20x more than anything else). There's a reason payday loans interest rates are capped [in many jurisdictions]: a 500% APR isn't something that arises normally.
- rayiner 8y ago
  That’s not what “rent seeking” means.
  - joshuamorton 8y ago
    >Rent-seeking is an individual's or entity's use of company, organizational or individual resources to obtain economic gain without reciprocating any benefits to society through wealth creation. Does reordering charges to overdraft someone more than they should be provide economic benefit to society at large? No. Does it give the bank additional economic gain? Yes. Does charging higher than necessary interest rates to low-income, low-information consumers provide economic benefit to society at large? No.[1] Does it give the lender additional economic gain? Yes. It is rent seeking, quite clearly. [1]: In fact, there's a decent argument to be made that in the long term it lowers the velocity of money and actively harms the economy.
    - rayiner 8y ago
      That can't be the right definition of rent seeking. Consider the decision of what price to sell an iPhone at. Selling it at $600 versus $500 does not create additional wealth, but does result in economic gain for Apple. But by your reasoning, setting the price at anything above cost is "rent seeking." Wikipedia has a more specific definition of rent seeking: https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking. > Rent-seeking is an attempt to obtain economic rent (i.e., the portion of income paid to a factor of production in excess of what is needed to keep it employed in its current use) by manipulating the social or political environment in which economic activities occur, rather than by creating new wealth. With regards to pay-day lending, what is "higher than necessary?" Payday lending is an incredibly competitive market--not only is there a payday lender on every corner in poor neighborhoods, but such loans are easily available online, and there is competition from pawn shops, etc. Interest rates for payday loans almost certainly reflect a competitive market price accounting for the risk of default.
dragonwriter 8y ago
> Removing the ability to advertising makes both problems worse, by reducing competition. There is a good argument that increasing cost of visibility reduces competition. That a ban on Google advertising for this industry does that is far less clear; notably, banning advertising means the top relevant search result is the top organic result, not the top ad, so you've now potentially got similar visibility with zero Google ads spend as before took considerable ad spend.
- rayiner 8y ago
  Do Google ads have the general effect of suppressing competition, or is it just for bail companies?
  - dragonwriter 8y ago
    Google having ads increase the cost of visibility if the main way they convert is on searches for a relevant query where Google has good organic results; whether that's the main way bail bonds ads converts is expressly a point of uncertainty in my upthread post (it's part of the “if” clause); that Google has quality organic results for the industry on the most obvious search query seems to be the case from a bit of experimentation.
    - rayiner 8y ago
      Isn't that a damning indictment of Google's whole business model--that paid advertisements decrease competition in entire industries where organic search results would otherwise provide information discovery closer to optimal?
      - dragonwriter 8y ago
        > Isn't that a damning indictment of Google's whole business model No. > that paid advertisements decrease competition in entire industries where organic search results would otherwise provide information discovery closer to optimal? If Google's entire business model were seeking only search ads for those industries (or any ads for those industries where experience showed most ad conversions would be from searches for which industry competitors would be shown in lead positions in organic results), that would be a damning indictment of Google's whole business model, sure. As that is not the case, and there seems to be good reason to believe that in many industries Google ads lower the net cost of visibility, it's probably more an illustration. that something being generally good can still be bad in specific cases, and that the fallacy of division is still a fallacy.