A solution to the power of big tech, toxic media, monopoly, and the awful state of advertising.

Nobel prize winning economists on the urgent need to tax digital advertising.

In the Spring I read what seemed the provocative article The Urgent Need to Tax Digital Advertising by MIT economists Daron Acemoglu and Simon Johnson. I am a fan of their book Power and Progress which I've written about here. Most business and marketing people do not understand that power more than profit is the motivating force in economic behavior.

It's not a completely new idea. Economist Paul Romer has proposed it before. LIsten to him here on Capitalisnt. Why we should tax digital advertising.

At the time I was in the middle of a month of cross-country travel. I filed the idea away, interested in its reception in the media and advertising worlds.

I've seen nothing. Until now. This week linkedin.com/in/edzitron interviewed Daron Acemoglu for his always stimulating Better Offline podcast. The economist confirmed the policy proposal.

"the best way forward is to impose a flat tax on digital advertising revenue, set at a high rate above some low threshold of revenues"

I urge everyone in marketing and advertising to read the article and listen to the podcast. It's a provocative proposal, yet if a government made it policy and passed it into law, the tax would be relatively simple to administer and collect. Some key points from Acemoglu:

• Data surveillance business models cause proven societal damage (polarization, mental health).
• Governments routinely tax goods and services with negative externalities (tobacco, fuel).
• The tax only applies to advertising, and not to subscriptions or pay-for-view etc.
• The objective is to motivate innovation and competition in high quality content.
• With AI and automation set to make harms worse, practicable solutions are urgent.

On the podcast Acemoglu proposes a 50% tax, emphasizing the level must be high, and a shock to the established big tech monopolies. It must motivate a transformation that will change the behavior of consumers trained to expect their news and digital services for free.

As a consumer I'd pay a few $ a month for these services.

As a brand I'd want to minimize the rent I pay to big tech, and find new audiences,

As an agency I'd want media options with higher quality content and engaged audiences.

As a government I'd want genuine competition and innovation for economic growth.

Stewart Pearson

Stewart believes in Consilience, the unity of knowledge across disciplines. He has lived, worked, and traveled globally in Europe, Asia, and the U.S. He has settled in the Evergreen State and Seattle. After studying Statistics and Marxist Economics in the U.K. he had four decades of experience in marketing and advertising focused on building client brands directly and globally.?He was Global Chief Client Officer and Vice-Chairman of Wunderman, then the fastest-growing major agency in WPP. David Ogilvy once sent him a telex from India and Lester Wunderman told him stories of Picasso from the village in France where both of Stewart’s heroes had lived. Stewart is on LinkedIn and Twitter , and at [email protected] .

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