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The Conspiracy Letters
Join the fray! Email us at letters@poorandstupid.com. We reserve the right to publish all letters with authors' names, unless specified as not for publication or for publication anonymously. Letters may be edited for clarity and brevity.
Thursday, March 06, 2003
MICROSOFT: ANTI-ANTITRUST'S SHAME Unfortunately, the US lacks one thing that is really keeping a lot of people from agreeing with the idea of eviscerating antitrust ("Ice Cream, Mandrake... Children's Ice Cream" 3/5/2003). The Microsoft case demonstrates that there is a need for antitrust regualation because US law enforcement can't be bothered enforcing things like fraud statutes in an effective way.The computer industry depends on people making good faith efforts at interoperability and in truth-telling about what your very complicated software actually does. At key junctures Microsoft has been documented as purposefully sabotaging interoperability and lying about it. It has also been demonstrated in court that it's released booby-trapped code on at least one occasion (the DR-DOS case) that throws off spurious errors when that code comes in contact with a competitor's product and that the errors were of such a nature that the natural conclusion was that it was the competitor's fault. Beyond that, the most recent court-demonstrated case of fraud was just resolved when Timeline proved that Microsoft was a cheapskate in licensing Timeline patents. While Microsoft could use them, Microsoft could sell them to its customers, the customers could use them, but the customers couldn't further resell them. The fraud comes in that Microsoft, in its license terms, lied to its customers that they could, in fact resell that technology to their customers. This is of a piece with the massive fraud in the second half of the 90s when Microsoft claimed that its ISV community who spent thousands of dollars a piece to gain access to programming kits and documentation (not to mention countless more dollars in training and certification) actually had access to the full win32 API (application programming interface). They didn't, and eventually Microsoft admitted that they didn't, but simply lied that they had ever promised that such ISV programmers would have full access to the Win32 API.
There are other instances of fraud that are known but not court-proven so I won't bore you with the very long list here of companies who had their technology stolen by Microsoft while they were in negotiation to be bought out by them. The essence is that Microsoft is an 800 pound gorilla with a nasty legal department and ethics straight out of the mafia. Liberals fix this through the travesty of antitrust but conservatives reflexively defended predatory Microsoft instead of claiming that the better solution was to throw the relevant fraudsters in jail, put a plan together to clean up the culture of corruption, and let the market play things out thereafter.
If conservatives would make the principled case that truth-telling is a required facet of US business the case for eliminating antitrust will be massively strengthened. Arthur Andersen was great but it isn't enough. The Microsoft case is a badge of shame for the anti-antitrust movement. Until that's erased, a lot of people just won't get on board.
T. M. Lutas
Posted by Donald L. Luskin at 4:47 PM |
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COASE CALL 1991 Nobel winner in economics, Mr. Ronald Coase, does not have a Ph D in economics. He has a B.Sc (Economics) from London School of Economics.
Albert Cheng
Posted by Donald L. Luskin at 9:31 AM |
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Wednesday, March 05, 2003
ANTI-BUSINESS AS USUAL AT THE FTC As someone who tracks the FTC and antitrust regulators for a living, I can sadly tell you that yesterday's "ice cream merger" case is not an isolated incident ("Ice Cream, Mandrake... Children's Ice Cream" 3/5/2003). Last year, the FTC successfully derailed a merger in the jarred pickle industry. Before that, it was a merger involving "food service glassware" (a term that seems to refer to glasses and dishes sold to restaurants and hotels.) Believe me, the list goes on and on and on...The cause of this problem? All five members of the FTC are lawyers. As best we can tell, none have any significant experience in business or private wealth creation.
The five commissioners are appointed by the president and confirmed by the Senate. Each commissioner is appointed for a seven-year term. Four of the current commissioners were appointed by Clinton, and Chairman Tim Muris was named by Bush. This 4-1 ratio is somewhat misleading, however, because under the law, no more than three commissioners may come from each political party. In practice, this means that when a seat from a party opposite the president's comes up for appointment, the Senate leader actually reccomends the appointment. For example, there currently is an expired "Democratic" seat, and Tom Daschle has reccomended a replacement to the White House.
The FTC staff is largely career civil servants. Antitrust matters are handled by the Bureau of Competition, which is basically a roaming gang of dangerously underqualified antitrust lawyers. Most of the senior staff have been around for a long time, though we don't yet have exact dossiers on everyone (one of my projects is putting together a Mafia-like organization chart of the entire enterprise).
In the run of cases, the career lawyers basically manipulate the commissioners into rubber stamping their acts. But I suspect this ice cream case is being directed by Chairman Muris himself. Muris has an odd fascination with food and supermarket mergers, so I'm guessing his personal staff lawyers (he has three or four that I'm aware of) will play a major role in this case.
Antitrust, and the FTC in particular, traditionally enjoys bipartisan support. It's a great weapon to use against businesses you don't like, and since most people consider antitrust a matter beyond their comprehension, there's little popular scrutiny of these agencies.
Check our website. I'm using this case as a chance to test my new "mock and annoy" approach to fighting the FTC. Clearly playing them straight doesn't accomplish much.
Skip Oliva
President, Citizens for Voluntary Trade
Senior Fellow, Center for the Advancement of Capitalism
http://www.IntellectualPassivist.com
Posted by Donald L. Luskin at 8:33 PM |
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REGULATORS UNREGULATED? Great piece regarding Dreyers/Nestle today ("Ice Cream, Mandrake... Children's Ice Cream"). It reminds me of another FTC travesty about six years ago: the FTC blocking the Office Depot/Staples merger on the grounds that there would only be two competitors in the "office product superstore" category, which did not exist ten years before. Like they were the only places where one could buy office products, something that Walmart proved false.
This agency and the Department of Justice are out of control. The FTC should be killed and Justice should spend its time pursuing terrorists and prosecuting criminals, and nothing more. What amazes me is that business and what little conservative media exists is not up in arms over this stuff. Are they complacent or just exhausted from always fighting idiot bureaucrats?
Chris Luke
Posted by Donald L. Luskin at 7:31 PM |
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ANTI-ENTREPRENEURIAL ANTITRUST Good post on the government's gratifying efforts to save us from a superpremium ice cream monopoly ("Ice Cream Mandrake... Children's Ice Cream" 3/5/2003). Just one more thing: concentrations and high prices in areas where the barriers to entry are fairly low, as in ice cream making, also create niche opportunities for newcomers. That's how Ben & Jerry's got started (probably lots of others, too). They provided a great new market for struggling Vermont dairy farmers. So the FTC decision, in addition to thwarting a harmless combination, is anti-entrepreneurial. Go figure!
Mary Beausoleil
Posted by Donald L. Luskin at 10:37 AM |
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Tuesday, March 04, 2003
CONFESSIONS OF A RECOVERING ECON MAJOR I was an econ major in college, and the best way I have come up with to describe the discipline is "psychology with math." An argument could be made for anthropology or sociology, but neither of those are exactly hard sciences either. And one could say that psychology's theories have done almost as much damage to society as economic theories. Take a look at the child-rearing theories from the 60's and 70's, for example. But a sane person could make the same statement about any of the social sciences, where econ rightfully belongs.Joey Blabaum
Posted by Donald L. Luskin at 3:01 PM |
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LONG TERM CAPITAL, SHORT TERM MEMORY Concerning Buffett and his derivatives comments ("Buffett: Derivatives for Me, Not for Thee" 3/4/2003). And why did he try to do this -- make an attempt to take over Long Term Capital Management (http://slate.msn.com/id/1001867/)? Altruism? Attempting to save us from ourselves??
Kent Seymour
Posted by Donald L. Luskin at 12:53 PM |
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DANGEROUS DERIVATIVES It sounds like you are saying that derivatives are no big deal ("Buffett: Derivatives for Me, Not for Thee" 3/4/2003). How can that be? Don't get me wrong. Warren Buffet is being a little hypocritical based on his previous statements and actions, vis-a-vis derivatives, but to infer that derivatives have no impact on the financial health of the economy is not accurate.
The world of derivatives consists of a small number of highly connected businesses with little or no regulation. In some instances, derivatives may have a hand in manipulation of free markets. Additionally, derivatives control, especially the exotics, is akin to nuclear power. Can it be controlled? Absolutely! It is safe? Yes! Can an accident occur? Highly improbable....
But not impossible. Three Mile Island and Chernobyl are excellent examples. Once the parameters of any given system go outside of expected values, the probability of unexpected results grows geometrically. As the possible unexpected results increase, the higher the probability for a negative result given that the system was designed for a positive result. The difference between a controllable fission reaction and an uncontrollable fission reaction is one neutron.
Sean Haarsager
Posted by Donald L. Luskin at 12:51 PM |
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Sunday, March 02, 2003
BAD GUESS, BAD SURF Congratulations on the Trivial Pursuit citation ("My Trivial Immortality" (2/25/2003). You are a true cultural icon now. BTW, my guess for the answer was Jim Cramer, not Alan Greenspan.I read Brad DeLong's site a couple of times a week. He does some interesting writing on technology and the economics of technology, which is why I found his site in the first place. He also finds some interesting stats and books. I find being at his site like walking through the forest always being on the lookout for poison ivy.
Paul Philp
Radical Results Inc.
Posted by Donald L. Luskin at 6:29 PM |
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