Is Craigslist As Ruthless As Wal-Mart?

More
walmart flickr user monochrome.png

Via Matt Yglesias, Barron YoungSmith has a post over at TNR arguing that Craiglist isn't a ruthless corporate killer of newspapers because unlike, say, Wal-Mart, Craigslist isn't driven by profit maximization:

While Wal-Mart is bent on maximizing returns for its shareholders--an appropriate goal, for a corporation--Craigslist is not. [...] Craigslist doesn't even try to profit from its economic activities, because its owners are devoted to a form of libertarian ideology.

But Craiglist doesn't have any shareholders! It's a privately held company. Wal-Mart is driven by profit maximization because its managers have a fiduciary duty to maximize shareholder value. If they don't, then (in theory) they'll be fired. And if they aren't fired, then (in theory) the company will be ripe for a gruesome Carl Icahn-style takeover. Craig Newmark, on the other hand, can do whatever the heck he wants. And because Craigslist is privately held, I don't know how you'd falsify the claim that what he does isn't motivated by a desire for profit.

(But maybe a lawyer will know this: At the very least, doesn't Craigslist need to show an intent to make a profit, if it wants to claim various business tax credits?)

A related point is what this means for newspapers. Both Matt and Barron say it doesn't make sense for profit-maximixing newspapers to compete with an ideologue like Newmark. But what I find odd about this sentiment is that newspapers have never really been profit-maximizing instituttions. There's the New York Times and its two classes of stock; there's the Washington Post, basically run on the dole with money from Kaplan test prep; there's the Associated Press, with its weird not-for-profit cooperative ownership structure (sounds socialist!). And while I'm all for adding to the list of crazy hybrid ownership structures, I'm not so eager to cheer the destruction the preexisting ones. 


Photo from Flickr user monochrome
Jump to comments
Presented by

Conor Clarke is the editor, with Michael Kinsley, of Creative Capitalism. He was previously a fellow at The Atlantic and an editor at The Guardian. More

Conor Clarke is the editor, with Michael Kinsley, of Creative Capitalism, an economics blog that was recently published in book form by Simon and Schuster. He was previously a fellow at The Atlantic and an editor at The Guardian. He is also on Twitter.
Get Today's Top Stories in Your Inbox (preview)

Why Are Americans So Bad at Saving Money?

The US is particularly miserable at putting aside money for the future. Should we blame our paychecks or our psychology?


Elsewhere on the web

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

The Death of Film

You'll never hear the whirring sound of a projector again.

Video

How to Hunt With Poison Darts

A Borneo hunter explains one of his tribe's oldest customs: the art of the blowpipe

Video

A Delightful, Pixar-Inspired Cartoon

An action figure and his reluctant sidekick trek across a kitchen in search of treasure.

Video

I Am an Undocumented Immigrant

"I look like a typical young American."

Video

Why Did I Study Physics?

Using hand-drawn cartoons to explain an academic passion

Writers

Up
Down

More in Politics

Just In