Why Pokémon Go Represents The Best Of Capitalism
It really is amazing -- and very exciting -- to see how this free game has taken off.

Yet, there was a Vox article by Timothy Lee earlier this week, "Pokémon Go is everything that is wrong with late capitalism" because it's diverting money from local businesses:

If you were looking to have fun with some friends 50 years ago, you might have gone to a bowling alley. Maybe you would have hung out at a diner or gone to the movies.

These were all activities that involved spending a certain amount of money in the local economy. That created opportunities for adults in your town to start and run small businesses. It also meant that a teenager who wanted to find a summer job could find one waiting tables or taking tickets at the movie theater.

You can spend money on Pokémon Go too. But the economics of the game are very different. When you spend money on items in the Pokémon Go world, it doesn't go into the pocket of a local Pokémon entrepreneur -- it goes into the pockets of the huge California- and Japan-based global companies that created Pokémon Go.

Economist and engineer Michael Farren counters at Medium:

In fact, we think that Pokémon Go actually represents the best of capitalism. In less than a week the game has topped 15 million downloads and the 21 million active daily users spend an average of 33 minutes a day playing. That amounts to over 11.5 million hours of playing per day, and those numbers only look to increase. The app doesn't cost anything to download and play, which means that Nintendo and Niantic (the game developer) are essentially giving away tens of millions of dollars of value to the eager players. We know that's a bold statement. But this is why it's true: A person's time is scarce and valuable. Every moment they spend playing Pokémon Go they could instead be doing something else. The fact that they're voluntarily choosing to play means that the benefit of playing is more than the cost.

Economists call this the "consumer surplus" -- the difference between a customer's willingness to pay for a good or service and the price that it actually costs. It's a measurement of the dollar value gained by the consumer in the exchange. If a person was to buy a game of bowling for $5 that they value at $7, instead of playing an hour of Pokémon that they value at $3 for free, that person would lose out on value that would have made their life better.

So even if the average consumer surplus is only a measly dollar an hour, consumers are getting $11.5 million dollars of value each day. The fact that customers are buying special items to use in the game, spending upwards of $1.6 million each day, implies that the value players receive from the game is actually higher.

Farrell explains that economic growth doesn't simply come from spending money.

This view can lead us astray because it ignores the importance of entrepreneurs, whose role is critical in the creation of new products and services that improve everyone's well-being.

...Think of what would have been lost to society if entrepreneurs didn't have the funds and the freedom to take that gamble. And their success has spawned a sub-industry of "Poképreneurs" who are selling drinks and providing rides to Pokémon players. Economic growth -- and our increased social well-being -- depends on this kind of permissionless innovation.

...In short, Pokémon Go represents the very best of capitalism because it's premised on voluntary exchange -- no one is forced to download the game, players can stop playing at any time they like, and if they value the special items available in the game store they can buy them to enhance their fun.

How cool about the Poképreneurs -- this, to me is one of the great things about America: Coming up with creative entrepreneurial ideas, and the spirit in this country that encourages this.

Harry Cheadle writes at Vice (linked above on Poképreneurs):

Pokémon Go has become a boon to restaurants, bars, and other small businesses that have savvily purchased lures to attract Pokémon--and therefore the customers who love them--to their establishments. But you don't need a business to attempt to monetize Pokémon Go, all you need is a car. Craigslist is full of posting from people offering to drive players around in cars often equipped with WiFi, phone chargers, and snacks, letting them track down and catch rare Pokémon quickly.

Prices vary, but many drivers charge between $20 and $30 per passenger. A little unbelievably, some people are willing to pay these prices--one Pittsburgh-based driver and Pokémon guide says he's been "fully booked" from 11 AM and 3 PM, and his business is looking to partner with local ridesharing apps.

UPDATE: Loved this tweet:

‏@ClarkHat
Vox says embrace local, not distant, economy

So why should we read global Vox, w HQ in DC?