Paid Links & Adam Smith – Reality and Relevance

The great late economist Adam Smith wrote that:

“Every individual…generally, indeed, neither intends to promote the
public interest, nor knows how much he is promoting it. By preferring
the support of domestic to that of foreign industry he intends only his
own security; and by directing that industry in such a manner as its
produce may be of the greatest value, he intends only his own gain, and
he is in this, as in many other cases, led by an invisible hand to
promote an end which was no part of his intention“

Essentially, when the correct and natural incentive exists in an environment where agents act rationally, on average there will be a net benefit extended to all agents seemingly out of no where. Thus giving rise to the phrase, “the invisible hand.”

Google provides a stage for rational agents to exert actions designed to produce some  selfish effect – search engine optimization leads to expected higher rankings for themselves.
As it becomes more competitive to rank for keywords that have a critical amount of search volume, it becomes proportionately more difficult to rank for those keywords because the requisite inputs (resources) to achieve them become more costly.

Thus, those ranking for substantial keywords will probably be relevant, otherwise they wouldn’t have expended the necessary effort to begin with. If they were a function, and they spat out value less than they took in, how could they survive any longer? Are there web sites that have no social or economic purpose for the words they currently rank for? How much more perfect would our economy be if the most efficient businesses had top rankings?

That’d be a better matching between producers and sellers, no?

 Google saying that paid links are bad is simply a discouraging statement for webmasters who are faced with various monetization strategies. Also, there are only really 10 results in Google (or any other search engine for that matter) that do matter.

As the economic value of those spots becomes priced into the cost of attainment, there won’t be anyone there who can’t realize value equal to the effort expended/required adjusted for some profit margin.

Okay – even the skeptical empiricist would find the above a bit theoretical…but I wonder how far we are from “efficient searches – and just how much value is lost, or yet to be realized due to bad search results?

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Tags: paidlinks, adam smith, internet economics