Coase, Information and Dean

Everett Ehrlich has a very interesting article applying some of Roland Coase's (economist du jour) ideas to the Howard Dean campaign. Fascinating, but somewhat misguided, almost science fiction in the way it focuses on a couple ideas and stretches them out. It's a fun ride, raising good questions, but his fundamental premise is fundamentally flawed:

But the Internet has changed all that in one crucial respect that wouldn't surprise Coase one bit. 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.

Now this ignores a few potent issues. While the internet might make it easier to get information from halfway around the world, it also makes it dramatically easier to create information. The problem shifts from gathering information, to filtering information. The internet opens up new methodologies for organization building, but does it make it fundamentally easier? You are reading this on the internet, can you build Howard Dean's organization?

Not all information is equal. Knowing the direct line to the oval office is worth more then knowing my cell phone number. And information is not the end all be all. Just cause you've learned the number to the oval office doesn't mean the president will listen to you. In short information isn't quite as simple as Ehrlich would make it out to be. And Dean isn't quite as revolutionary either. There is more value in the traditional party structure then Ehrlich realizes when he predicts Dean would form a third party if he loses this election. Dean on the other hand is well aware that the dems organization is still worth something. The internet is a component, not the whole machine.

[via Many to Many]