Chronicle of the Conspiracy
Saturday, February 28, 2004HERE'S HOW THE GAME IS PLAYED Dave Hogberg documents how Walmart got shaken down for political protection money. Learning the lessons of Microsoft.
Posted by Donald L. Luskin at 4:35 PM | link
INTERESTING TIMES? THERE HAVE BEEN MORE INTERESTING TIMES From a newsgroup:
Recent comments about how we live in dangerous and chilling times (after 9/11) should be seen in perspective to 1968, when:25000 American soldiers had been killed in 3 years of the Vietnam War.I have posted rare video tape footage of CBS News on April 4, the day Martin Luther King was assassinated, and ABC News coverage of the Democratic National Convention from Aug 28, 1968, the night of the largest riots, the fight over the Vietnam War plank (whether to change Democratic party plank to allow Vietnam the right to determine its own government and stop bombing the north) and Vice President Humphrey's nomination: http://www.e-pix.com/1968.
Posted by Donald L. Luskin at 4:24 PM | link
CAN YOU CALL THE FBI FOR PURE MALICIOUS STUPIDITY? Here's a letter typical of the hundreds I've received on my series of articles on Oracle's attempt to acquire PeopleSoft (1, 2, and 3).
After reading all of your articles regarding the proposed Oracle/Peoplesoft hostile takeover, I have to admit your prejudiced opinions in your most recent Smart Money article "Power to the PeopleSoft" have reached an all time high for rampant capitalist hysteria mongering.
Posted by Donald L. Luskin at 12:11 PM | link
Campaign finance experts say the change symbolizes a continuing shift in the president's financial support, moving away from his usual backers like oil and gas companies and toward financial-services companies that have become increasingly supportive.I have to wonder how the anonymous "experts" that the Times always summons up would explain why Bob Hope is no longer entertaining at White House functions. Does that symbolize a continuing shift toward comedians with more of an "edge" in today's more sophisticated world?
Posted by Donald L. Luskin at 10:10 AM | link
THE QUOTABLE RUMMY Love him or hate him, you can't say he's just another mealy-mouthed bureaucrat.
Posted by Donald L. Luskin at 10:01 AM | link
Friday, February 27, 2004ORACLE/PEOPLESOFT: THE DEPARTMENT OF INJUSTICE INTERVENES Here's my SmartMoney.com column for today.
Larry Ellison is one of the richest men in the United States. But as an investor, I'm not jealous of the founder of Oracle. Let me tell you why.
I happen to live quite near him in a town in Silicon Valley, and almost every day I drive by the site of the astonishing new home he has spent the last several years building. On what is perhaps the most expensive residential acreage not just in California but in the world, he has built a 45-acre Japanese palace and installed himself as shogun.
You can't drive by it without thinking of an old joke: "What's the difference between God and Larry Ellison? God doesn't think he's Larry Ellison."
I couldn't begin to match the splendor of his home. But there's one thing I can do that Larry Ellison can't do. I can buy shares of PeopleSoft any time I want. After all, it's a public company. All I have to do is put in an order, and the same is true for you. Capitalism is a wonderful thing.
But not for Larry Ellison. When he wants to buy PeopleSoft — and right now his company, Oracle, wants to buy the whole thing — he has to go hat in hand to bureaucrats in Washington and Brussels and try to convince them that buying PeopleSoft won't make him a criminal.
That's right, this is another column about Oracle's attempted hostile takeover of PeopleSoft. Why? Because email continues to pour in from readers about my two previous columns on it (I'm Mad as Hell at PeopleSoft and We, the PeopleSoft). And because on Thursday the Department of Justice and the attorneys general of six states announced that they would block the acquisition on antitrust grounds.
Let's set aside the matter I reported in my earlier columns, that PeopleSoft Chief Executive Craig Conway has been lobbying the DOJ to block the deal, seizing the antitrust laws for use as his own personal weapon in a business rivalry. Let's set aside that shareholders like me are justifiably up in arms because Conway's apparently successful strategy will likely prevent us from selling to Oracle at the tender price of $26 — nearly five bucks better than the current price. But before we set all that aside, let me just say as a shareholder: Thanks for nothing, Mr. Conway.
Beyond all that, there's a much larger issue at stake here. It's the issue of how antitrust law is going to be interpreted and enforced in this country, and what risk that might present for our economy.
To block an acquisition on antitrust grounds, the DOJ must assert (and possibly defend in court) that the acquisition will reduce competition and raise consumer prices in a particular product market. The narrower the definition of "market," the more likely the acquisition will be seen as anticompetitive.
Let me make an absurd example, just to drive home the point. Suppose that you own a company that competes with two other companies making red, button-down short-sleeved shirts. You want to achieve greater manufacturing efficiencies, so you decide to acquire one of your two competitors. You think maybe those efficiencies could even allow you to offer lower prices to your customers and help you make your red, button-down short-sleeved shirts a bigger and bigger factor in the clothing market.
But no, the DOJ tells you that you can't do it. It decided that there's no such thing as the clothing market. Instead, it decided that there's a separate and distinct market for red, button-down short-sleeved shirts, and it couldn't possibly allow competition in that market to dwindle to two from three (because its computer models say that fewer competitors in a market means higher prices, no matter what).
Sadly, this example isn't so absurd. Last year the DOJ blocked the acquisition of Dreyer's Grand Ice Cream by Nestle on the grounds that it would narrow competition to two from three in what it called "the market for super-premium ice cream." Did you even know there was such a market? Well, you do now. The two companies ended up doing their deal, but they had to agree to have the DOJ dictate to them all manner of product and distribution divestitures.
The DOJ is arguing — just as Conway scripted them to — that Oracle and PeopleSoft are two out of three competitors in the narrowly defined market for enterprise human-resources and financial software systems serving the very largest corporations and governments. The third one is the leader in the market, SAP. By including not only a description of the product but also a description of the particular kind of customer who currently uses it, it's like talking about the market for red, button-down short-sleeved shirts for blonde, left-handed piano players. Now that's a narrow market.
But wait. Surely the DOJ will take into account that the market is ever-changing, especially the market for technology-driven services. Surely it recognizes that even if the competitors dwindle to two, there's nothing stopping a new competitor from arising on the scene. In fact, Microsoft has made it clear that it intends to spend billions to compete in this very market.
Guess again. The New York Times reported Friday that R. Hewitt Pate, the newly installed assistant attorney general of antitrust, has stated that "the agency's lawyers did not consider the possibility of future competitors in making their decision."
That absurd confession by Pate may be the wedge Oracle needs to fight the DOJ in court, as the company announced Thursday that it'll do.
If Oracle can't prevail, then PeopleSoft's shareholders can kiss Oracle's $9.4 billion deal goodbye. And the American companies PeopleSoft and Oracle can continue to play second and third fiddle to Germany's SAP, while the politicians babble about losing jobs to overseas competitors.
Just how much devastation are we going to let antitrust law wreck upon our economy? Does it take a genius to see that when the DOJ won its antitrust judgment against Microsoft, it just happened to be nearly the exact moment the Nasdaq topped out back in 2000? Is it too great a stretch to wonder whether WorldCom would've had to cook the books if the DOJ hadn't blocked its plans to merge with Sprint at about the same time?
So don't envy Larry Ellison as he sits in his private Japanese palace. For the rich really are different. They are far less free. You and I can buy PeopleSoft. Larry Ellison can't.
On the other hand, don't take too much comfort. Sure, we can buy PeopleSoft now. But thanks to the DOJ, we live in an economy being increasingly throttled by intrusive and capricious antitrust enforcement.
In fact, give the Department of Justice a couple of more years and maybe it'll figure out a reason why you and I can't buy PeopleSoft either. #include file="inset2.asp" -->
Posted by Donald L. Luskin at 3:22 PM | link
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A BI-PARTISAN CHORUS Lying in Ponds adds its voice to the bipartisan chorus calling for the New York Times to reform its columnist corrections policy. Hat tip: The National Debate.
Posted by Donald L. Luskin at 9:26 AM | link
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JOKE OF THE DAY
Posted by Donald L. Luskin at 3:09 AM | link
Thursday, February 26, 2004LOVE THOSE ROGUES Friend David Duval sends this link to coverage of the Lou Dobbs Rogue Fund -- a collection of America's most evil capitalists (you know, "exporting American jobs" and all that stuff). You guessed it. The fund has had fabulous performance.
Posted by Donald L. Luskin at 7:47 AM | link
...when I came to the 24/7 Customer call center in Bangalore to observe hundreds of Indian young people doing service jobs via long distance answering the phones for U.S. firms, providing technical support for U.S. computer giants or selling credit cards for global banks I was prepared to denounce the whole thing. "How can it be good for America to have all these Indians doing our white-collar jobs?" I asked 24/7's founder, S. Nagarajan.Oh, I suppose he gets to the right answer. But it's based on the moral premise that a business practice should be permitted or forbidden based on someone's judgment about whether it helps America -- rather than on the first principle that the owner of capital should be able to deploy that capital to hire anyone he wants anywhere he wants for whatever reason. So it rings hollow when Friedman congratulates himself in the column's first paragraphs:
I've been in India for only a few days and I am already thinking about reincarnation. In my next life, I want to be a demagogue.
Which is all just a tricky way of saying that business activity should be regulated by smart people in positions of authority, and that Tom Friedman thinks he's the smartest guy in the room. He should decide. And fortunately, this time, his decision happens to coincident with free market. Next time maybe it won't be.
Update... An alert reader reminds me of Friedman's last column in which he sang in the demagogic anti-Bush chorus on this issue, saying "managing this phenomenon will require a public policy response — something more serious than the Bush mantra of let the market sort it out." Apparently since Sunday the market has sorted it out.
Posted by Donald L. Luskin at 5:52 AM | link
JOKE OF THE DAY
Posted by Donald L. Luskin at 2:40 AM | link
Wednesday, February 25, 2004
"...a number of conservative tax experts have praised it because it is even handed, based on solidly researched facts and is not ideological... I hope you read my book because every single reader I have heard from has spoken highly of my work."Well, I will read it when he sends me the autographed copy I asked for. But in the meantime, reader Jim Glass has come up with the following quotations from a lengthy review of Johnson's book by Sheldon D. Pollack, J.D., Ph.D., University of Delaware, in a recent issue of Tax Notes (the professional journal often cited praisefully by Paul Krugman -- here, here and http://www.pkarchive.org/column/122603.html). Let's just say that the reviewer's opinions of the book don't quite match the author's claims.
Perfectly Legal is "an important account of the IRS's declining state of health and its increasingly moribund capacity to enforce our tax laws... [with] solid investigative reports on a wide range of topics, expanding on what previously appeared in the Times .. the greatest contribution in Perfectly Legal [is] exposing the scandalous lack of resources given to the IRS..."
Posted by Donald L. Luskin at 10:08 PM | link
TEST YOUR REGIONAL DIALECT It's fun, and it's free. Thanks to Ken Prevo.
Posted by Donald L. Luskin at 9:53 PM | link
THESE TIMES GUYS ARE SO THIN SKINNED (2) Waxman has a stalker!
Posted by Donald L. Luskin at 9:49 PM | link
KRUGMAN MAKES THE ONION Now he's really hit the big time. Thanks to several readers who pointed this out.
Posted by Donald L. Luskin at 9:44 PM | link
JOKE OF THE DAY
Posted by Donald L. Luskin at 10:14 AM | link
Krugman claims that the drop in federal revenues "probably reflects an epidemic of tax avoidance and evasion" by "wealthy people who don't feel like paying taxes." Krugman's evidence for this? None, really, except to recommend that readers buy a book on the subject by his Times colleague David Cay Johnston. Operators are standing by.Here's Johnston's note to me, in part (I'm editing to leave out several examples of tax evasion by "the rich" cited in his book):
1. I suppose Paul Krugman could be considered a colleague, but since he works for the Op-Ed page and I work in news and they are totally separate that seems a stretch.For God's sake... Johnston continues:
2. My book PERFECTLY LEGAL, about which you wrote "operators are standing by" is on the bestseller lists -- and a number of conservative tax experts have praised it because it is even handed, based on solidly researched facts and is not ideological... When law enforcement fails to do its job that is usually a matter of grave concern. That you treated my book so flippantly reflects, I hope, your attempt at humor and not a cavalier attitude toward criminal conduct when it comes to taxes. I hope you read my book because every single reader I have heard from has spoken highly of my work.Well, like I said: "operators are standing by." Even as he chides me for not praising his book in a column that isn't even about his book (for guys like him, it's always about me), he's trying to get me to read the damn thing. I told him that if he sent me a free autographed copy I would.
Posted by Donald L. Luskin at 12:16 AM | link
Tuesday, February 24, 2004IF ONLY IT WERE THIS SIMPLE... A charmingly naive op-ed from Thomas Sowell in today's Journal. Sowell argues that economic fallacies dominate the public debate (true) and that economic truths lay moldering in textbooks unknown to the electorate (sort of true). What he doesn't mention is that those same textbooks include more lies than truths, and that public intellectuals like Paul Krugman are all too skilled at pulling the lies from the textbooks and credentialling them with their lofty origins. Sowell should confront the reality that the real conflict here isn't between ignorance and knowledge. It is between lies and truth. The public debate will always be dominated by fallacies -- the real question is whether it will be shaped by deliberate lies or deliberate truths.
Posted by Donald L. Luskin at 1:07 PM | link
SO WHAT ARE WE WAITING FOR? ...to break up the BBC? Next target: PBS.
Posted by Donald L. Luskin at 1:02 PM | link
JOKE OF THE DAY
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WHAT WILL BRAD DELONG SAY? Bloomberg's Caroline Baum quotes me defending trickle-down economics and quoting Ronald Reagan!
Posted by Donald L. Luskin at 9:14 AM | link
Monday, February 23, 2004NOTES FROM THE PC HOT-ZONE From a reader who asked to have his name withheld:
Thank you for posting that exceptional story from City Journal about the "infectious PC movement." As a Phillips Academy Andover graduate ('99), I can verify the depiction of one of our school deans, Mr. Robert Edwards. Let me first say that Mr. Edwards is indeed a friendly, amiable chap who loves the school and enjoys impacting the student's lives. Unfortunately, the message he preaches is devastatingly divisive, as the article goes onto describe. I went to Andover from a small town in Pennsylvania, where my two closest friends are a Philippino immigrant, and a gentleman whose mother is from a west African country, and a white father. It was clearly obvious that my friends didn't look like me, but that was never an issue. We were three kids from a catholic school that had the same interests and developed a strong relationship. Each of us knew of our heritage, and did not need some "academic" dean to generalize about who came from what. It troubles me to think about the "education" and "awareness" that my friends may have been subjected to. 40 years ago we likely would not be so close. It angers me that people like Mr. Edwards are constantly try to divide America, rather then working toward a race-neutral country, where people will think of themselves as Americans above all else.
Posted by Donald L. Luskin at 4:18 PM | link
AND WHO CARES? Naomi Wolf -- the woman paid $15,000 a month by Al Gore's presidential campaign to teach him to dress like an "alpha male" -- has gone public after twenty years of blessed silence with the claim that she was "sexually encroached upon" by Yale professor Harold Bloom, who she says put his hand on her thigh. And she can't figure out why Yale officials aren't returning her calls now or taking her seriously. I couldn't bring myself to wade through the whole self-pitying, self-congratulating article. But it seemed that the matter of Yalie Bill Clinton and Monica Lewinsky was not mentioned. Thanks to reader Jill Olson for the link.
Posted by Donald L. Luskin at 1:12 PM | link
CONGRATULATIONS TO AN OLD FRIEND Dave Nadig is a dad for the second time... and the birth is blogged (all fifty hours of it!).
Posted by Donald L. Luskin at 12:29 PM | link
JOKE OF THE DAY
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Sunday, February 22, 2004ABSURD REICH Reader Marc Segan notes,
Actually the Friedman prescription from Robert Reich is worse than you've explained -- it's internally self-contradictory isn't it? He's saying that we need MORE unionization in precisely those jobs that are NOT threatened by outsourcing? That's an ideologically driven non-sequiter.
Posted by Donald L. Luskin at 4:50 PM | link
I am writing from Saddam's old presidential palace in downtown Baghdad. Please withhold my name.
Posted by Donald L. Luskin at 4:43 PM | link
JUST DESERTS Nolan Garrity, the reader who pointed out the stark factual contradiction about the military meaning of "desertion" in The New Yorker, wrote to let me know that I erred. I said that the two contradictory articles appeared in two successive issues, when in fact they appeared in the same issue (February 16) just a few pages apart from each other. Thanks, Nolan. I will correct my original posting.
Posted by Donald L. Luskin at 4:31 PM | link
"The fundamental question we have to ask as a society is, what do we do about it?" notes Robert Reich, the former labor secretary and now Brandeis University professor. "For starters, we're going to have to get serious about some of the things we just gab about — job training, life-long learning, wage insurance. And perhaps we need to welcome more unionization in the personal services area — retail, hotel, restaurant and hospital jobs which cannot be moved overseas — in order to stabilize their wages and health care benefits." Maybe, as a transition measure, adds Mr. Reich, companies shouldn't be allowed to deduct the full cost of outsourcing, creating a small tax that could be used to help people adjust.
Posted by Donald L. Luskin at 11:20 AM | link
IF OKRENT DOES NOTHING ELSE... ...but inspire this kind of outpouring of frank reader comment to the New York Times, his tenure will have been worth it. Check it out.
Posted by Donald L. Luskin at 11:13 AM | link
DON'T THEY UNDERSTAND THE DIFFERENCE BETWEEN PUNDITRY AND REALITY? From an op-ed in today's San Francisco Chronicle on the CIA:
If Bush had appointed an investigative commission headed by Valerie Plame (the outed CIA wife of Ambassador Joseph Wilson) and composed of such journalists as Seymour Hersh, Jim Fallows, Stephen Kinzer and Paul Krugman, its report would probably be worth reading. Short of that, I propose abolishing the agency and reducing our annual deficit by about $30 billion.
Posted by Donald L. Luskin at 11:11 AM | link
THE PC MOVEMENT INFECTS PREP-SCHOOLS A devastating diagnosis from City Journal. Must reading.
Posted by Donald L. Luskin at 12:03 AM | link