Government Against Business

Last week, U.S. District Judge Thomas Jackson ruled that MicroSoft violated federal antitrust laws and harmed consumers. Judge Jackson found that MicroSoft: (a) used its position to "monopolize the Web browser market" to the detriment of competitors (b) "unlawfully tying its Web browser to its operating system" and (c) MicroSoft could be sued under state anti-competition laws. U.S. Assistant Attorney General Joe Klein said the decision against MicroSoft will benefit consumers by opening the door to competition. The Clinton administration's attack on MicroSoft, along with the Court's acquiescence, should worry all of us. Let's look at it.

The government's chief economic expert witness, MIT's Professor Franklin Fisher, accused MicroSoft of predatory pricing, a practice where low prices are charged in order to drive one's competitors out of business and then later charge high prices. Professor Fisher's testimony is a disgrace to the economics profession. If one surveys modern economic literature, or polls academic economists, he'd find very little evidence, if any, for the use of predatory pricing as a means to monopoly wealth. There are far more effective means to monopoly wealth that don't entail the costs and risks of a predatory pricing strategy.

Let's look at competition in general. The point of competition is to attract, to the detriment of your competitors, their customers. There should be laws preventing people from bombing their competitors' production facilities or spreading lies about the attributes and quality of their competitors' product as a means to attract customers. Also, companies shouldn't be able to go to lawmakers to get laws passed to the detriment of their competitors; however, legislators encourage that practice in return for campaign contributions. There's no evidence that MicroSoft has committed any of these despicable acts to capture their competitors' customers.

MicroSoft's competitors, in the high-tech industry, are the people who've gone whining to Washington; it wasn't customers. After all MicroSoft is as profitable as it is because customers like you and me voluntary chose its product. Computer manufacturers voluntarily installed its operating system, bundled as it is, rather than use some other operating system they were free to use if they desired. MicroSoft, unlike Congress, has no power to coerce.

Many people think monopoly is evil by definition. Monopoly practices are not inherently evil. For example, I hold a monopoly on the affections of Mrs. Williams. She holds a monopoly on mine. Read the Ten Commandments. The first says, "Thou shalt have no other Gods before me." The second says, "Thou shalt not make any graven image . . ." A third says, ". . . for I the Lord thy God am a jealous God." That sounds like a monopoly to me. If you assume monopoly is evil, then marriage and Christianity are evil.

There are monopolistic practices that are evil that we need to address. There's the Post Office monopoly that threatens violence against anyone who competes against it in the delivery of first class mail. There's the government education monopoly, a.k.a. public education, that's destroying our children whilst charging us higher and higher prices for doing so. Then there's the American sugar industry monopoly that gets Congress to enact tariffs and quotas on foreign sugar so they can charge us higher sugar prices. The list of these government-backed and sponsored harmful-to-the-customer monopolies is virtually without end. Unlike MicroSoft who has been providing customers with higher and higher quality products at lower and lower prices, the government-backed and sponsored monopolies have been giving us at least higher prices if not lower quality at the same time. I say leave MicroSoft alone and go after these evil monopolies.

Walter E. Williams
c16-00
April 7, 2000
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