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Columns & Editorials

by Wes George



and Trading.

Mmmmmmm...... Good

To Break Up Microsoft Is A Slap In Capitalism's Face. Thanks, We Needed That!
May 1st, 2000

"…let me remind you why Gates is an icon for innovators, not just capitalists. He is the greatest innovator of my lifetime, the first person in the computer industry to understand the importance of building a technological system--by hook or by crook. While other computer pioneers sneer that Gates copied this or that, they fail to see that the greatest innovations of all are those that mesh discrete innovations of others in order to launch society-wide transformations. Gates did that. Not Gary Kildall or Alan Kay or Tim Berners-Lee"

G. Pascal Zachery, June issue of Technology Review

The financial elite who run the American economy hate it when the US government sticks its bureaucratic snout into the world of business conduct. No matter how evil the Microsoft Empire, there is something unsavorily comic about the Keystone Cops bolting in on Tin Lizzies with a so-called remedy.

It's an embarrassment to the philosophy of capitalism that the DOJ feels obligated to pierce Microsoft's corporate veil with regulatory batons held high.

Proponents of the free market system would have us believe the market is a self-regulating ship righting itself within a complex web of feedback mechanisms endemic to the free enterprise system. In a perfect world, competition--the free market's immune system-- should keep inefficient monopolies from ever blossoming like fungal infections on the economy's body.

Or perhaps, in a perfect world we'd all be driving fuel cell powered vehicles using Dvorak keyboards and the DOJ would be busting up the world biggest corporation--Apple-- while the world's richest man--Steve Jobs--whined about lost innovation and opportunity.

Of course, the world's economic system isn't perfectly healthy capitalism, it's sickened by multifarious government regulations, from spurious patents on concepts that should be in the public domain to oppressively high capital gains taxes and tariffs. Nevertheless, the youthful global digital economy, in spite of bearing the cost of the antiquated system of sovereign states, is the most open and robust economy in history.

The mere fact that the Microsoft monopoly even exists means the free market system has in some way failed us.

In the final coup de grace the Feds waltz on stage, a day late and a dollar short, to affirm that selfish Ayn Randian freedom "to innovate" isn't enough to govern a complex global economy. No, what's need is a "remedy" from a politically based government bureaucracy with a hidden agenda, nonetheless!

I won't deny that the whole free market system is a comic opera run fantastically amok. Although capitalism is undoubtedly more pleasant than some droll communist dictatorship, it remains to be seen in the long run whether humankind or the biosphere can ultimately withstand the accelerating onslaught of techno-capitalist innovation.

Government regulators everywhere, accustomed to their droit du seignior, must be thankful for anomalies like Microsoft. In a peaceful, ubiquitously networked, global economy it seems as if there are few productive roles for the anachronistic rules of sovereign states. Microsoft's criminally liable monopoly vindicates at least one useful function for the biggest bullies of them all.

The Feds have a history of intermittently raiding the party on Wall Street.

The antitrust break up of AT&T by the DOJ in 1984 released a rainbow of innovative options for the consumer that would have taken a century to achieve under the thumb of Ma Bell. Arguably the US economy would not lead the world in telecommunication and Internet technologies if AT&T had prevailed as a monopoly. An entire decade of rapid economic growth and productivity gains could have been forestalled if AT&T remained monolithically whole.

The effects of breaking up Microsoft could likewise liberate untapped and unfathomed innovation in our economy and set the stage for US dominance of digital technologies for decades to come. Or not. No one really knows.

No one can say what breaking up Microsoft will achieve because the Microsoft case is unlike any antitrust action ever undertaken. Busting up AT&T or Standard Oil was a fairly straight forward business of dividing up land rights, telephone lines, oil wells, tank farms and other hard assets.

Microsoft typifies the ephemeralization of the information age economy. The company's physical assets are of zero importance. All of Microsoft's worth is bound up in its worker's brains, in patents, in code and in sizable investments in other people's minds, patents and code. How do you divide a line of code or court order an engineer's mind share?

I'm no Microsoft apologist. In fact, I believe that the only remedy is to bust the company up. The Redmond leadership is so far into denial over their past crimes that nothing short of breaking up their clique will eliminate the unfair business practices they've yet to even recognize as a wrong. This is a company that has lost, or perhaps never had, an ethical rudder.

Microsoft isn't evil, they're just way out of their league.

Americans have an annoying tendency to attribute visionary genius to anyone who becomes roaringly successful in our lottery-like economy. Success is prima facie evidence of sainthood in the US. It stems from a mass media perversion of the time honored Marlboro man culture of self-sufficient hard work.

So the American media machine creates dumbed down models of "genius". For example Elvis Presley and Andy Warhol are every bit the geniuses, or more, that Goethe or Michelangelo are in the eyes of the mass media. Bill Gates and Steve Balmer are just this type of false genius--only not as world class as Elvis or Warhol.

Gates and Balmer, serendipitously perched on the top of the world's largest corporation, have finally risen to their level of incompetence. By failing to grok the argument against them and exhibiting a ridged inflexibility in negotiations with the DOJ they've proven their inability to effectively chart Microsoft's future.

I shed no tears for Redmond. However, it bodes ill for the future of our economy that such a thing as Microsoft ever came to pass in the first place. It means that innovation isn't always rewarded. It means that the best and the brightest don't necessarily triumph. It means that the most productive path for a society can be squelched for the profit of a few. It means that brutal force, whether at the end of an INS officer's gun barrel or in the confusion of a Microsoft FUD campaign, still rules the Earth.

On Wall Street, big brother government bureaucracy is the number one enemy of productivity, innovation, capital formation and often reason itself. It's ironic to have representatives of those same bureaucracies--Joel Klein's storm troopers--- telling the biggest corporation in the world and by proxy the US business community how to increase productivity, innovation, capital formation and rationality.

Worse, it implies that to keep capitalism from running amok we need big government--the very embodiment of every known human vice--to offer remedies and arbitrate the rule of law.

God help us all.

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Wes George writes about the financial side of being a Mac nut. Wes has followed Apple's finances for the last 7 years and comes to The Mac Observer every Monday to tell all about his opinions. He is, in his own words, "inordinately fond of money." If you would like to write Wes, make it nice. Someday you might own a company that has something to do with Apple, and Wes will probably still be writing for The Mac Observer...... On the other hand, Mr. George is known to love a rousing, hair-raising debate, so send him your worst!

Disclaimer: This column is for informational and entertainment purposes. While Mr. George may be sage indeed, his writings can not be construed as a solicitation to buy, nor an offering to sell any particular stock. As with any trading in the financial markets, you must use your own judgment to make the best trades that you can. Neither The Mac Observer nor Wes George may be held accountable for trading advice.

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