What We All Get Wrong About Polarization
Why demand-side thinking is key to understanding the problem of polarization
Polarization is a complex issue. One complicating factor is the public’s poor understanding of supply and demand.
Almost every time I find myself discussing polarization or the general direction of the country, the same 3-4 culprits for our collective woes tend to crop up. The major culprits tend to be, in no particular order:
The media
Social media
Politicians
Some combination or derivative of the above
What do all of these “culprits” have in common? Contrary to popular belief, they are actually not to blame.
In fact, all of these culprits can best be thought of as just suppliers in a marketplace, and in efficient marketplaces, demand drives supply, not the other way around.
This understanding of the primacy of demand in product creation, what I’ll call “demand-side thinking”,1 is key to understanding polarization.
The Media as an Industry
“The media” is best thought of as an industry. The fact that the media is, in fact, an industry, makes this seem like an obvious statement, but the number of people who believe the media is instead a cabal of media execs who unilaterally decree a one-sided partisan tone and style of coverage for the entire media industry is shocking.
This interpretation couldn’t be further from the truth. The media industry is a competitive marketplace with hundreds of competing media outlets, each of which are free to produce the types of news coverage they wish. Narratives to the contrary are typically simply tired talking points from the early 90s when there truly were only a handful of national news organizations and none of them were explicitly right-leaning yet.
As the helpful chart below from AllSides shows, the media now comes in all shapes and sizes and represents virtually every political viewpoint out there. Anyone who claims “the media” is a tool of the elite or “the left” has simply not taken the time to look at different media sources or update their 30-year-old talking points.
Since the media is an industry, it makes sense to think about the media in terms of supply and demand.
In most industries, people easily understand what drives the process of product creation. In the auto industry, for example, car companies (the suppliers) are always trying to figure out what mix of safety features, performance specs, and cost competitiveness is going to be most appealing to their target audience (the demand). The suppliers can get clues about these demand signals through customer focus groups, customer feedback, or actual purchase data, but regardless of what form the data takes, it is always coming from the demand.
The demand drives suppliers to create certain products. Suppliers who cannot create products that are demanded will either be forced to adapt or go out of business. Of course, there is some reciprocity, as car companies will run ads to try and influence customers, but in general, the demand side of the equation is the prime mover in product creation.
Therefore, the products in any given market are a reflection of the demand. The more efficient the market, the more accurate the reflection. Demand drives supply, not the other way around.
The media industry is no different.
The media companies (the suppliers) create news coverage (the products) to meet consumer demand. Therefore, the products in the media industry are caused by the demand.
Even though this demand-side thinking is easily understood for most industries, it runs counter to how many people think about the media industry. In the typical view, as shown below, the media force-feeds media coverage to consumers whether they like it or not, with no real input from the consumers about what they’d like to see.
In reality, the picture should look something more like the below, in which it’s actually the consumers who are driving product creation. The consumers drive product creation through their sending of demand signals to the suppliers. Again, demand drives supply, not the other way around. Media coverage is a result and reflection of consumer demand.
I know that’s a lot of jargon, so here’s a quick test that will hopefully make this clearer:
Who is responsible for the increasingly negative news shown in the graphic below?
Your first thought might be that it’s the media’s fault. After all, they’re the ones creating negative news.
But wait, who is the media creating negative news FOR? Using demand-side thinking, we know that the media creates coverage for consumption. If the news is getting more negative, it’s not because that’s what the media wants, it’s because that’s what consumers want, and the media is trying to meet that demand.
Car companies try their best to produce the cars that people want. Chocolate companies try their best to create the chocolate that people want. Media companies try their best to create the media coverage that people want, so if the coverage is negative, it’s because people are demanding the negativity. This is demand-side thinking.
Social Media as an Industry
This same supply and demand relationship exists within the social media content generation “industry” as well. The demand (social media users) drives the supply (content creators), and the content creators who typically have the largest audiences and generate the most engagement are the ones who cater to their demand the most effectively.
Demand-side thinking for social media content creation is below:
Demand-side thinking for social media is even more counterintuitive than traditional media since most people don’t think of themselves as existing in a marketplace when they are scrolling Instagram. Despite that feeling, each like, share, or other engagement is actually a demand signal that drives content creators who are chasing that demand.
A good example is the rise in ASMR content. As it became obvious that ASMR content was receiving more engagement, content creators rushed to create more ASMR content. Content creators aren’t producing ASMR content because they like it, they create it because YOU like it.
Again, the degree to which the products in a market are a genuine reflection of that market’s demand is a function of the market’s competitiveness and efficiency. When consumers can easily switch between different suppliers and barriers to entry are low, the products will better reflect demand. The social media industry is an example of this type of efficient market.
Politics as an Industry
Finally, the most important industry to discuss as it relates to polarization is politics. Again, supply and demand are the name of the game, and again, the demand, contrary to popular belief, is what drives the supply.
Demand-side thinking for politics is below:
The products in this industry are political talking points and policy proposals, with the politicians and political parties functioning as the suppliers. Politicians supply talking points and policy proposals to voters in response to voter demands. When voters’ priorities shift, the talking points and policy proposals coming from politicians shift to meet that change in demand.
A good example of this is the left’s about-face on the “defund the police” movement. Voters made it clear that this was not a winning issue, so the left disavowed this position to meet that voter demand.
Admittedly, this industry is less efficient than either the traditional media or social media industries given the high barriers to entry for new entrants and the fact that voting only occurs every 2-6 years, rather than on a daily or even hourly basis.
That said, it’s still a fairly efficient industry in which politicians and their teams of analysts pour over survey data, focus group analyses, think tank reports, and personal conversations to figure out what it is that voters want to hear and see. The resulting talking points and policy proposals attempt to meet voter demands. One more time for the folks in the back: demand drives supply, not the other way around.
So What?
So why does this matter? Who cares that demand drives supply?
Demand-side thinking is key to understanding polarization because it allows us to correctly identify who is at fault for the things most people believe are causing polarization.
Some examples:
Do you think increasingly negative traditional media is partially to blame for polarization? Well, who drives and rewards the decisions the media makes? Turns out, it’s the public
Do you think social media outrage clickbait and conspiracy theories are partially to blame for polarization? Well, who drives and rewards the decisions that content creators make? Turns out, it’s the public
Do you think divisive rhetoric and fearmongering from politicians is partially to blame for polarization? Well, who drives and rewards politicians to act the way they do? Turns out, it’s the public
Rather than incorrectly placing blame on the suppliers, demand-side thinking allows us to correctly understand the true drivers of the negative products we see in each of these three marketplaces.
The true driver in each of these markets is the public.
By understanding this truth, we can begin to come up with solutions that can actually address this root cause, rather than chasing Band-Aids for boogeymen that are not actually causing the negative products that everyone agrees need to be fixed.
In my next post, I’ll explain why the demand signals that the public sends to the media, social media, and politicians are so disjointed from the demand signals the public thinks they’re sending. Demand-side thinking is a key piece of the puzzle and helps us understand what is not to blame. My next post will help us understand what is causing the public to act the way we are and who/what we should be blaming instead.
TL;DR
Many of the major supposed causes of polarization (the media, social media, and politicians) are actually not causes at all.
These scapegoats are simply suppliers in a marketplace, producing products that the public demands. Demand drives supply, not the other way around.
Therefore, any polarization solutions or talking points that blame the media, social media, politicians, or other downstream suppliers should be viewed skeptically.
To fix the root problem, we need to shift our focus from the supply to the demand, i.e., the public.
Not to be confused with demand-side economics. I’m making no claim here about the aggregate output of an economy at the macro level. The sole claim embedded in demand-side thinking is that demand, not supply, drives product creation within a specific marketplace.
One other example where a lack of demand-side thinking drives me up the wall - the famous "100 private companies are responsible for 70% of all carbon emissions".
Apart from not being completely true (many of the companies on that list if 100 aren't private at all, about a third are owned by national governments); it misses the point completely that these companies (regardless of whether they're privatised or nationalised) aren't burning fossil fuels for shits and giggles - they're burning those fossil fuels because we, the consumers, are demanding it through our purchasing decisions.
Great piece, but I do wonder if the ‘Supply’ element is underplayed - particularly in the present context, when social media companies use algorithms to essentially appeal to the baser instincts of human nature and ensconce us in our comfortable information bubbles.
In that sense, are media and social media not helping to create the demand (ala a drug dealer getting addicts hooked)? Ditto with politicians/elites, most of whom have given up on persuasion for base turnout at election time (and whose actions also shape media coverage)?
Nonetheless, I fully agree that the demand element is under appreciated. Human beings love drama and modern politics is one place we can get it by the bucketload.