I had an excellent high school economics teacher. In a lecture on supply and demand he noted that when he was a young man he could buy some amount of weed for $10. But just a couple decades later the same amount was $100 even (adjusted for inflation, of course). In the interim the government had launched a war on drugs. That war focused primarily on reducing the drug supply through dramatic increases in the penalties for distribution and “diplomatic” action. However when you mapped out the price/volume curves it was pretty clear that the problem wasn’t that drugs were too easily available but rather that people really wanted them. We didn’t have a drug supply problem; we had a drug demand problem.

It has struck me ever since that we too often try to solve demand problems on the supply side to unsatisfactory results. Property crime goes down when people have access to food, healthcare, and housing but we tend to focus instead on increasing policing or sentencing. Studies have shown that education is critical to reducing teen pregnancy and STD transmission but too often the focus is on abstinence and even reducing easy access to birth control and condoms. If you were a chef and wanted to make more money you could add more tables or raise prices. In either case you might make a little more money but could only go so far until tables started coming up empty. You could decrease the cost of your food to raise profits but ostensibly that would reduce quality and over time reduce patronage. Alternatively you could make your food more delicious which would attract more people willing to pay a higher price. Why doesn’t everyone do that? Because that is by far the hardest of the options provided here. It is also the one with the best long term outcome if you can pull it off.

Content moderation on social networks strikes me as a similar problem; the more we invest in tools to review content the harder people work to circumvent those tools and share content we’d all rather not serve. As a society we don’t have a hate speech supply problem, we have a hate speech demand problem. Online platforms work on the supply side because they don’t control the demand side, and they will continue to invest huge amounts there to keep people safe. It is key component of our responsibility as a platform (and I think we do it better than any of our competitors here at Facebook). But until we make more social progress as a society we should temper our expectations for results.

I managed to work this theory to my advantage when I oversaw Facebook’s ads business from 2012-2017. It is very tempting to focus on growing the supply of spaces to show ads because that gives a predictable return on investment. However if demand remains fixed you are just buying your way down the inventory in terms of quality and into diminishing marginal returns. Instead we focused on the demand side which is slower to move and harder to measure but increases the value of existing inventory.