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Why Bill Gates Will Win
This is one of the most interesting--and important--discussion lists
I've been on. One man has captured the greatest industry of his age. The
world's mightiest industrial superpower--whose global supremacy rests on a
technological prowess that in turn pivots on that monopolized industry--has
let its only anti-monopoly weapon fall into such rusty disuse in the 2
preceding decades that it is now naked and disarmed before this newest--and
costliest--in its long parade of grasping Robber Barons. Accustomed to
waiving through its petty monopolists, the U.S. is now lacking even a
defensive eagle when the heavy tanks of a Bill Gates begin to rumble across
its economic borders.
Antitrust in America has been dead for 20 years. Its left-wing (a
la J.K. Galbraith) insists that because, in its collective world,
"efficiency" requires only 1 firm per industry, this 1 firm must be owned by
the public (government). Its right-wing (a la Milton Friedman) agrees with
the efficiency-equals-1-firm but avows that it must be privately owned.
Monopoly to the left, monopoly to the right. All displaying an astonishing
innocence of the real industrial world but what's in the "middle"? In all
of America, where can one find sustained intellectual support for the notion
of a genuinely competitive market--one where, for example, 10 or more firms
of roughly equal size come and go, exhausting all economies of scale,
competing over the decades and never being able to charge a price that
exceeds the competitive level (minimum unit cost plus a competitive profit)?
Where is the constituency for competition, the real kind where
survival depends on being at least as efficient (minimum unit costs) and as
innovative as the industry's best? Where profits are forever razor thin?
How many members of this list, for example, could be persuaded to stand up
and vote to spin-off Microsoft's stock to create, say, 10 "baby" Microsofts?
Makes you knees wobble a bit? Then you're not ready for the gritty world of
Bill Gates is personally relevant to this discussion because he IS
Microsoft. Every organization is indeed the shadow of a single man--and
Gates is by all accounts the driving force behind the ruthless, relentless
drive for ultimate power that we know as Microsoft. A major part of any
sensible remedy would be his removal from the company, no less than the
post-war ouster of the individual Japanese, German, and Italian architects
of their countries' WWII aggression after the fight was over. If you stop a
conqueror, you don't sensibly leave him in a position of power. Given a
chance--remember Saddam Hussein?--he'll try to kill you again.
What does U.S. antitrust in 1997 prohibit? Nothing that Bill Gates
is accused of doing. Just naked price-fixing (cartels). Nothing more.
Mergers uniting firms with 80% of a market are now common--and routinely
blessed by Klein, Pitofsky, and the Supreme Court. "Unfair" competition?
Surely you jest. Want to kill your competitors with predatory (below-cost)
prices? The U.S. Supreme Court applauds --and the Justice Department and
the FTC file amicus briefs that add their hallelujahs to the balcony chorus
when these economic homicides pile up. (See the Matsushita and Brooke cases
in my journal's 'Dirty Dozen U.S. Supreme Court Cases,' Vol. 27, No. 3, and
online at http://webpages.metrolink.net/~cmueller.)
There's one wild card in the deck--Sen. Orrin Hatch (R-Utah). He
has a constitutent (Caldera, of Salt Lake City) that has filed a formal
complaint against Microsoft in federal court. As chairman of the Senate
Judiciary Committee, Hatch is currently the master of U.S. antitrust. In
the past, he's never met a monopoly he didn't like. Bill Gates is his kind
of guy. But then there's this problem of his constituent, Caldera. Which
way to go? To be or not to be..... My bet is that Hatch will vote with the
monopolist, Bill Gates. Who else has managed to steal $40 billion and get
away with it--and has so much to ultimately lavish on his favorite senators?
Charles Mueller, Editor
ANTITRUST LAW & ECONOMICS REVIEW