iPhones and ringtones: a parable of markets.

"Markets in everything!"

There is a problem in the New Statesman office. Like so many companies, we have a growing abundance of iPhones. At least half of the 40 million they've sold are here somewhere, by my count. But all these people having the same phone leads to a downside: the distinctive Apple message alert goes off, and everyone checks their screens thinking that they are the ones with a new text.

There is an easy, socially optimal solution to this problem, of course: everyone changes their text tone to something new, we all grow to recognise our individual tones, and confusion need never reign again.

Unfortunately, what is socially optimal is not individually optimal. I don't want to change my ring tone, because I've already learnt to respond to it. If everyone else changed theirs, then I could keep mine the same. But those incentives are the same for everyone else; no-one wants to be the first mover, and everyone hopes to be a free-rider.

Why? Well, an economist might say its because there are no markets in action. If everyone could bid to be the person who gets to keep their old ringtone, then people would have an incentive – in the form of cold, hard cash – to switch, while the person who most wants to keep their phone sounding the way it used to forks out the money equivalent to how much they care. If we truly have an efficient market, then this cannot fail to make everyone better off. And if the highest someone is prepared to pay is lower than the lowest it would take to make everyone switch, then we are already at the optimal solution.

The alternative to markets, of course, is government intervention. We don't have a government, but we do have an editor, who could very easily impose a rule mandating that employees use custom ringtones. That would work almost as well, although it wouldn't be the optimal solution. And with that, there's always the risk of corruption. What happens when our he gets an iPhone?

Markets in everything, even ringtones. Credit: Getty

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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The snowflake Daily Mail cries over free market capitalism taking our blue passports

UK, hun?

The poor old whining snowflakes at the Daily Mail have discovered that maybe it’s better to put the state above private companies after all.

They’ve run a ranty yet doleful lament on their front page about Britain’s “ruling class” (which they are definitely, definitely not part of, of course) showing its “hate” for “our country” by letting a Franco-Dutch firm make our post-Brexit blue passports:

“Today the Mail has a question for Britain’s ruling class: Why DO you hate our country, its history, culture and the people’s sense of identity?”

In a beautiful bit of irony, the £490m contract to make our grim new tickets to bigotry was awarded to Gemalto, a Franco-Dutch firm that beat the British-based De La Rue (lol) that also tried bidding for the contract.

The Mail’s complaint seems to be that the bloody Frogs shouldn’t be making our passports – the UK should be doing it instead. So, according to this logic, either the state should make them, or, to guarantee a private British firm winning the contract, the state should ignore free market forces?

Neither seem particularly in tune with the Mail’s usual preferences. Nor those of the Tory Brexiteers, for that matter.

Yes, this is part of European competition law – big public contracts like this have to be open to bids from across the EU. But right-wingers in this country don’t seem to mind when foreign companies run our railways (Greater Anglia, West Midlands and ScotRail franchises are majority-owned by the Dutch state company Abellio).

Looks like these over-sensitive social justice warriors want to have their cake and eat it. Political correctness gone mad.

I'm a mole, innit.