MACHAN'S BOMB-THROWING, GUN-NUT LIBERTARIANISM

[John Robert BEHRMAN <jbehrman@netropolis.net>]

  Tibor MACHAN's piece appeared in THE HOUSTON CHRONICLE last week. In it
  he asserts Microsoft's or any corporation's virtually sovereign right to
  conduct business free of any and all government interference. It is not
  clear whether such interference is feckless or just loathsome. But, I
  would hate to be in Microsoft's shoes when they walk into Washington's
  Juvenile Hall for white-bread corporations having violated their old
  plea-bargain.
  
  The WALL STREET JOURNAL echoed these sentiments with words to the effect
  that, short of selling munitions to Iran  or Iraq, Microsoft or any firm
  at any time should be free to engage in monopolistic practices. This is
  a defense of Microsoft today which has nothing to do with digital
  technology, since it applies just as well to Standard Oil a century ago.
  
  The argument makes no useful distinction between "technical innovations"
  and "innovative marketing" practices.
  
  The "increasing returns" from technological progress have long been seen
  as providing a "positive feedback" throughout the economy with benefits
  far outweighing temporary "monopoly rent". This argument was used from
  Hamilton's day through the 1920's to justify a high industrial tariff
  together with all the  federal police and a very big civil war required,
  in part, to enforce it. Since the 1930's the increasing returns argument
  has been used to justify massive federal outlays and financial
  guarantees for dams, power plants and other TVA-type construction. Now
  comes MACHAN and some other Libertarians with a clever argument that
  "increasing returns" justifies waivers, exceptions, or repeal of almost
  all common carriage regulation and anti-trust regulation.
  
  Here are the flaws in this truly nutty but, indeed, novel line of
  argument:
  
       First, "increasing returns" are hard to seperate from just bad
       accounting in very large organizations with a military-style "table
       of organization" but little or no understanding of the marginal
       cost and marginal revenue of whatever they do. Such organizations
       may be large private corporations, publishhing houses, movie
       studios, defense contractors, public utilities, or communist-style
       "bureaux". However, the plain, old accounting fallacy common to
       excessively large firms is the same regardless of its
       religio-political or aesthetical setting. And, its main
       consequences, Stalinist giantism, political corruption, and
       financial instability are  always and everywhere the same. No
       Microsoft apologist has come close to demonstrating "increasing
       returns", a very challenging exercise in mathematical economics or
       engineering, not poetry. And, pretending such phenomena exist when
       and where they do not is simply dangerous, hugely so.
  
       Second, "increasing returns" from technological progress, as it was
       very popularly known a century ago, are nothing like "innovative
       marketing" practices. Such practices are remarkably free of any
       novelty at all, save for changing fashions in the
       literary-political apologies offered for them. They are generally
       "bunko" or "con artistry" when associated with minority races or
       religions, rather than with precious heirs of the Anglo-American
       overclass or "financial institutions" deemed "too big to fail".
       Today, such practices are often associated with debt "pyramids"
       debt and speculative "bubbles", but these are far from new either.
  
  >From an old-fangled, conservative, and authentically Hamiltonian or
  genuinelly "German Liberal" perspective, it is infuriating for this old
  fart from Texas to see the hoary "infant industry" argument tarted up as
  a justification for Stalinist Giantism or Bubblenomics by folks who
  claim to admire Thos. JEFFERSON. Neither he or Aron BURR accused
  Hamilton or List of anything so outrageous as that. They simply argued
  for small-scale farming and for large-scale agricultural imports and
  exports. Of course, they were evasive on the Slave Trade and their plans
  for Texas.
  
  That brings us to the other problems with MACHAN et alia:
  
       Firstly, collecting tolls, tariffs or monopoly rent involves vast,
       detailed extension of the police power of the state. Some such
       powers are traditionally justified here by seperatng them from
       monarchy (republicanism), by some procedural limitations
       (anti-federalism), and by representative democracy
       (constitutionalism). Placing such power in the hands of some outfit
       with no more than a Letter of Marque, now called a Brand Name, is
       simply off the wall since, whatever Microsoft has, presumably some
       sort of "proprietary standard", that is not a Letter of Marque and
       Reprisal, entitling it to collect prizes or indirect taxes, nor a
       Letter of Patent, granting it a claim to royalty for a limited
       time. In short, there is no basis at all for excepting Microsoft
       from rules of domestic commerce all but the few "chosen
       instruments" of some sovereign country obey at home and even these
       obey when operating on or across the high seas.
  
  This seems like a quaint, arcane argument, but it is not: For one thing
  "global markets" were not invented by lawyers and lobbyists about a
  decade ago. They have sort of been around since the fifteenth century
  with a much more pervasive influence on our domestic economy one and two
  centuries ago than today. For another, the principal concern of the US
  military and diplomatic corps in several parts of the globe today, and
  even more tomorrow, is assertion of intellectual property rights and
  collection of royalties for American firms. This interesting tasking of
  our armed forces will probably supercede protection of "strategic" US
  and UK concession, largely mining, rights overseas as soon as Saddam
  Hussein gets a clue or a bullet.
  
  So, if the USGovernment  is to "trade off" its traditional interests in
  "open markets" and "human rights" in China, say, in order to uphold a
  "single issue" like Microsoft's bogusly novel marketing practices on the
  Pacific Rim and, say, task the USNavy to protect Taiwan which does a
  somewhat better job of paying Micrsoft's royalties than the PRC, then it
  is not reasonable to treat Microsoft like some sort of sovereign power
  in its own right equal or superior to the United or even Several States.
  
       Secondly, monopoly rent on any scale from the neighborhood crack
       dealer on up, requires force or, politely, police power to collect.
       There is nothing the least liberal about this today and never has
       been. In the present case, it entails the collection of
       "protection" money from OEMs who do not want to be trashed by
       Microsoft as well as policing Microsoft's interest in "owning the
       desktop", which is to say reducing everybody in the software world
       to the status of sharecroppers, serfs, slaves, or, if caught
       installing the wrong software, poachers. If that is Liberty, my
       folks were obviously on the wrong side in not just the Civil War,
       but every other war this country ever fought and, in the case of
       the South, lost.
  
  Let us all then learn a few hard lessons:
  
  In the absence of traditional regulation and a government which holds
  businesses large and small to the same rules, rules which reserve the
  armed forces, police powers, and everyday responsibility for public
  health and safety to the state and its lawful agents, to its
  subdivisions, to its lawful or, at least, lawyer-ridden
  instrumentalities, and, yes, even to its often tedious clap-trap, what
  you get is not the Second Coming of Ayn Rand or any other sort of
  libertarian utopia. You get a war of all against all, a situation where
  a few "millionerds" live in armed compounds like elite
  concession-holders in Haiti, like the dons of Mafiya Capitalism or or
  the warlords of Market Leninism.
  
  Those are awful regimes. Even those few who benefit from such regimes
  abroad take great care to send the better portion of their haardest
  currency or brightest children to the U.S. despite our crushing tax
  burderns, out-of-control bureaucrats, tree-hugging protesters, predatory
  lawyers and other right-wing calamaties. Those folks abroad have no end
  of privately-owned guns and military-grade computers or telephones. But,
  they do not feel very safe and, indeed, should be very afraid, not least
  of the United States.
  
  But, they send their money and kids here because, frankly, even enemies
  of the United States have more respect for our institutions, save for
  what right-wing international sees as our "feminized" military, than our
  own Bomb-Throwing, Gun-Nut Libertarians. That is too bad for all of
  those enemies and for the few American men and women under arms who have
  to remind clever fools all across the literary-political spectrum, from
  time to time, that we ain't all Micro- or any other sort of softies
  here.