Whenever a major new technology or economic system is innovated, society has to develop new rules of the road to make things work. And it takes time to figure out what those rules should be because we need to see what happens without rules.

For instance, in the second half of the 19th Century, corporations swelled in size and for the first time in history, the owners (i.e. the stockholders) of the companies and their managers often became separated. To be sure, the managers had a fiduciary duty to the stockholders, but it was often honored in the breech rather than the observance for there was no way to force the managers to be honest.

After the Civil War, for instance, the managers of the newly chartered Union Pacific Railroad set up their own construction company, gave it a fancy French name—Crédit Mobilier—and wildly over-charged the railroad to build it. To keep Congress happy (the Union Pacific had a national charter), they let members buy Crédit Mobilier stock and pay for it out of the immense dividends, often 100 percent of the par value. When the scandal broke, one-third of the members of Congress lost their seats in the election of 1874.

Managers had a strong incentive to keep the books in ways that made them look good, whereas the stockholders (and the underwriting Wall Street banks) wanted honest books kept in a consistent way.

So, in the 1880s and ’90s, Wall Street began requiring corporations to issue quarterly and annual reports, to keep their books according to what today is called generally accepted accounting principles (GAAP), and to have those books certified as accurate and complete by an independent accountant.

When corporations, thanks to consolidation into trusts, threatened to become too powerful, this was checked by a series of antitrust acts.

At first, the automobile was just a rich man’s toy (the first major American auto racing trophy, established in 1904, was called the Vanderbilt Cup). When automobiles that the middle class could afford began to be built, beginning with the Ford Model-T in 1908, the number of cars on the nation’s roads (which were overwhelmingly narrow and dirt) rapidly increased.

Over the next few years, driving licenses became mandatory, as did license plates. The electric traffic light was invented in 1912.

Now a major new technology, social media, is having a major impact in many ways, including politics. The Communications Decency Act, Section 230, passed in 1996 at the dawn of the Internet, protects internet companies that, unlike publishers, supposedly have no control over what is posted on their sites.

But both Twitter and Facebook have taken to suppressing information—overwhelmingly information helpful to Donald Trump, specifically, and conservatives, generally—they don’t want published. An example from this week is a story in the New York Post that alleges that a laptop owned by Hunter Biden was turned in to the FBI by a computer repairman after he noted the contents of the hard drive, including compromising emails and salacious photos and videos. The repairman later provided a copy of the drive to Rudy Giuliani.

The situation is discussed at length in Thursday’s COMMENTARY podcast, and the truth of the story is anyone’s guess.

But do Facebook and Twitter and Youtube (owned by Google) have the right to pick and choose what political information appears on their systems and still enjoy the protections of Section 230?

In 1949, in the early days of television, TV companies were subjected to the Fairness Doctrine, which required broadcasters to present both sides of political issues. At that time, TV viewers usually had a choice of only two or three channels (we New Yorkers were spoiled rotten with six channels in the 1950s). But as cable TV spread in the 1980s and people could watch dozens or even hundreds of channels the Fairness Doctrine was dropped in 1987 as being no longer needed.

But social media is, to a large extent, what economists call a “natural monopoly”–like electric utilities and, until recently, phone companies–where multiple companies make no economic sense. The problem here isn’t the cost of operations but the fact that everyone wants the largest possible audience, so their post can “go viral.” When you pick up the phone, you want to be able to call anyone, not just a select few. It’s the same with Twitter and Facebook.

Clearly, rules of the road for social media need to be developed and soon. As it stands now, Facebook and Twitter have demonstrated they have far too much political power under the existing rules.

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