[klwuzcfi] Money and the freedom of speech

Rush Limbaugh utters disgusting speech, calling Sandra Fluke a slut.  The disgusted people, forgetting the importance in a democracy the freedom of speech, even, or especially, offensive speech, think, "How can we punish Limbaugh for his speech?" and organize a boycott of the advertisers of his program.  The threat of the boycott is effective; sponsors pull advertisements, and Limbaugh is forced to apologize and will likely choose not to speak so freely in the future.

This is an interesting mechanism for curtailing the freedom of speech because there was no government involvement, seemingly a direct democracy in action.  (Note, however, that a democracy ought to protect free speech so strongly that not even a legislative majority or even unanimity can violate it: popular laws can be overturned as unconstitutional.)  This time, the action seemed to be for honorable (but misguided) purposes, but on another day it might not be so honorable.  Let's examine with an economic lens what is going on, with an eye toward preventing future such reduction of free speech.

In contrast to the Soviet government "disappearing" you to a gulag for your offensive speech, the mechanism of control here is money.

First we look at the receiver of the money.  There are two aspects.  The first is the "mundane" cost of broadcasting, from sound engineers to electricity.  Technology could help reduce those costs, making the threat of losing money less effective in curtailing free speech.

The second is, Limbaugh makes a living off of speaking.  If the money were reduced enough, he might, in principle, stop speaking and go and do something else that pays better, thus silencing the speaker (and that's bad).  Setting aside issues of intellectual property, speech -- a radio show -- is a public good.  The externalities caused by speech -- ideas, then actions -- are difficult to determine.  If the speech is disgusting and offensive, it might be even more difficult, and certainly a political minefield to publicly compensate the speaker.  Inducing the optimal production of public goods is a known very difficult problem.

On the other side of that money are the boycotters: a mass of people strategically using their buying power to affect sellers.  This is a partial monopsony (the dual of monopoly), a failure of the model of an efficient perfect market.