NOBODY GIVES A [Expletive Deleted] ABOUT STEEL TARIFFS
I can see it now: "Honey, how about we go out to the porch, sit on the swing and watch the grass grow as we discuss the finer points of trade law and it's effects on the economy?"
"Oh, Robert..."
Or how about, "Timmy, I think it's time we've had a talk. You're going to be growing up fast soon and going through changes at a rapid pace. You'll be confused, you'll experience new sensations, and you'll be looking at Steel Tariffs in a whole new way."
Tee-hee! That's the first time I've ever seen steel tariffs made funny.
Wow. This piece suggests that Jane Fonda should have been tried for treason. Not that they're the first to say it. But it's not screechy -- its tone is quite understated, and it makes an interesting case. I, for one, was not aware of the way that Jane Fonda was apparently able to meet with severely beaten and malnourished POW's and turn around and tell their families that they were not only being well treated, but wished their families and loved ones to actively campaign for the regime that was holding them hostage.
I like this article on blogging from the register, although I suspect I may be one of the "attack blogs" he criticizes as an infinitely repeating punditry loop, and I don't think I merit making fun of because I'm not succeeding in being revolutionary. I'm not trying to be revolutionary; I'm saying things that I believe because I enjoy saying them, and for some reason a ridiculous number of you stop by every day to listen. I'd like to think that I'm getting a little word out about some basic economics, but I'm afraid that the people I'd like to reach will dismiss me because what I say doesn't agree with what they've already decided to believe. So I'm left with (hopefully) giving fellow travelers the correct tools to make their case. Not revolutionary. But nothing to sneeze at either.
Regarding my earlier post on steel tariffs in which I said that the Democrats currently screaming about them wouldn't have said a word if Gore had done it, Matthew Yglesias says that the point is that Gore wouldn't have done it. He points out that the Clinton Administration didn't do it, even though it would have helped Gore in West Virginia. Possibly true, though it's difficult to argue a hypothetical (just as difficult as it is for me to prove that the Democrats wouldn't be screaming, though Yglesias graciously admits that this is a strong probability). However, I think in this case the logic is flawed. You can't simply posit that Gore would have carried out every Clinton policy intact; follow that logic, and we have proof that George Bush I never raised taxes. Moreover, Gore wanted Kyoto, and Kyoto would have meant some major payoffs to labor constituencies in heavy-industry states like -- oh, say, the steelworkers.
I'm less astounded by the free trade Democrats (though I still think they would have given Gore a walk if it had become necessary to pass Kyoto) than I am by Democrats who are protectionist to the bone unless a Republican gets credit for the legislation. But no more so than by my silent siblings on the free market side.
Bias: A CBS Insider Exposes How the Media Distort the News While I wait for my next infusion of books from Amazon I've been dipping into the book collection of my sister, the social conservative, who has an extensive assortment of books I would broadly label conservative polemics. I was obviously particularly interested in this one because I'd read so many reviews: Tom Shales hates it, for reasons decidedly biased. Jonathan Chait's tone is more reasonable, but his assertions that there's really no media bias were handily refuted by Jonah Goldberg. The most balanced review I saw came from Lou Cannon in the National Review, whose assessment agrees with mine: the phenomenon Goldberg is covering is real, but the book is hopelessly sloppy.
All of its evidence is anecdotal, but that's all right; I can enjoy anecdotal evidence even if I wouldn't want to use it to make policy. But there's too little even of this; the evidence offered to support the central thesis is thinner than Calista Flockhart on Slim Fast. The book certainly has its moments -- but they are widely interspersed between long plaints about how badly the network treated Bernie Goldberg, how much Bernie Goldberg was hurt by Dan Rather, how disgusted Bernie Goldberg is with modern newstrends . . . all bolstered mainly by inanely detailed recounting of petty incidents in the life of -- you guessed it -- Bernie Goldberg. I suspect this is why so many reviews have focused on the question of whether or not there is media bias -- there's just not enough meat in the book to write a good review on. Media accounts that have tried to dissect the facts in the book have ended up in the sort of exchanges
You did!
Did not!
Did too!
That's because you're a big fat [liberal] [conservative] dooty-head!
that make you wonder if the proper place to hash this all out isn't the principal's office.
That said, it's the sort of book you have to read, because everyone else is talking about it. It reminds me of The Bell Curve, which no one I know except me has read, but about which everyone I know -- except me -- has a strong opinion. Once you have read it, you'll find to your amusement that people make all sorts of wildly inflated or just downright odd assertions about it's contents, and it provides a glorious moment of superiority when you can trump someone's argument by cooly asking whether they've read the book. So go ahead: click the link and buy it. Then you can join the rest of us in wondering what all the fuss is about.
I read with some hilarity this item on the Democrat's strategy in the New Republic, which seems to be a case study in poor polling:
The fundamental problem facing these Democrats is a familiar one: how to please faithful liberals without alienating moderate voters in the rural districts and states on which control of Congress hinges. One message already on display posits a battle of "local interests" versus "special interests." Voters will be urged not to support Congressman Jones because his votes for corporate allies of the White House--Enron and other big energy companies, for instance--put local highway projects, or health clinics, or whatever, at risk. One leading party strategist recently described it as "basically `The People versus The Powerful' again." For instance, Democrats recently polled the following question: "Enron, like many of the biggest corporations, used money and influence to get their way, at the expense of the public. We need leaders who will attack the abuses by big corporations that have too much influence over what happens in Washington." Fifty-eight percent of registered voters polled agreed a "great deal," while another 26 percent agreed a "fair amount."
One can imagine similar Republican poll questions showing "wide support" for their issues:
"Clinton, like many of the Democrats, is a lying, cheating horn-dog of the first order. We need leaders who will pay more than lip service to the truth and keep their hands to themselves."
"The Kyoto Treaty, like many environmental initiatives, would most likely contract our economic growth rate by between 33% and 50%. We need leaders who don't want to throw your wife out of work and force your brother-in-law to take up permanent residence on your couch."
"Social Security is having trouble and Tom Daschle, like many Democrats, wants to fiddle while Rome burns. We need leaders who can make sure that you spend your golden years on the golf course instead of the work house."
Make your own -- it's fun!
Poll questions like this are useless. Not only do they make prejudicial statements that your opponents, like it or not, will have ample time to refute during the campaign, but they produce abnormally high favorable responses to whatever it is you're proposing to curb whatever it is you just told them was wrong. No wonder the Dems are floundering.
it is nearly impossible for the private sector to not to be the cause of a recession, as the private sector represents the bulk of the economy. But let's not forget something - all that growth prior to this mild recession was from the same place. This was a capital spending and productivity boom, and a capital spending bust (the productivity boom is holding up so far). Also, capital spending busts have happened before; not every recession, even recently, is the result of an external shock.
So if someone gives you $10 and takes back $1, net-net you have a problem with that? To put it another way, if 10 telecoms beat each other up to give you cheaper long distance, and some of them go bust trying, you have a problem with that? If we create the extraordinary medium (and resource) through which I communicate now but make many seriously ill-advised investments along the way, the system needs second-guessing? I disagree.
The "right" economic solutions are extremely hard to find. It is a dynamic process. Some failed experimentation (and "wasted" investment) is necessary to achieve success. The two cannot be separated.
I read the Kaus piece, which says
Mighty Instapundit ridicules Congress for passing a "stimulus" bill just as the recession ends -- and sneers at the idea of "these guys second-guessing corporate executives on their business judgment." But wait a minute. What caused the recession in the first place? Wasn't this the first downturn in a long time to be produced, not by some sort of policy mistake or external shock but by a colossal failure of business judgment on the part of the executives, corporate and non-, who wasted billions on idiotic dot.com projects? They could have used some second-guessing! A little humility seems in order from the defenders of executive acumen. The dot.com bust is the sort of thing that wouldn't happen if the market were as perfect as it's sometimes cracked up to be, right? ....
and had the exact same reaction as Mindles. I was going to blog on it, but he did it first, and better. Unnecessary activity avoided! Productivity increases! Kill the bill -- we'll be out of the recession any minute!
A phrase in this excellent Economist article on businesses saving money during the recession caught my eye:
Europeans are shocked by the ruthlessness with which American firms slash jobs. In France earlier this year, the Constitutional Council decided to trim new legislation designed to make it even harder for French employers to lay off workers. It was, the council said, “a manifestly excessive attack on freedom of enterprise”. France's socialist prime minister, Lionel Jospin, did not like it. “Freedom of enterprise”, he reminded his country's industrialists, “is not the freedom to sack people.” But he is powerless to overturn the court's ruling.
Freedom of enterprise isn't the freedom to choose who you hire and fire. It's not the freedom to determine what you pay them or how many hours they work. It's not the freedom to determine what you sell or the words you use to sell it. No, freedom of enterprise is the freedom to choose the color of the drapes in your coporate headquarters.
In a related story, a similarly short-sighted appellate judge has thrown out my appeal of the US Patent Office's decision to reject my patent application for my breathtaking new invention: the apostrophe. The judge noted that while I do, indeed, hold the patent on the comma, I failed to establish either that the apostrophe was, as my lawyers had argued, just a variant application of the initial technology, or that the apostrophe represented a "unique contribution to human knowlege". While I had originally planned further appeals, my lawyers have curtailed these plans by informing me that they will no longer accept payment in cigar bands.
The Economist says that grade inflation isn't inflation -- it's grade compression, an important difference. Inflation would be a slow steady rise in all grades, including the top ones (A+, A++, A++*. . . whatever) and would only mean that people seeking information about candidates from, say, Harvard, would merely have to periodically adjust the "exchange rate" they use to compare graduates with those from other schools. Grade compression, however, dilutes the value of the information and forces employers and others to substitute more time consuming and possibly less reliable metrics.
At my business school, grades were curved to a strict 3.25, which limited inflation but had its own consequences. Because there were no half-grades (you could get an A, B, C, D, or F -- no +/-) this lead to some gamesmanship. The ultimate goal was to get a low A or a low B, putting in the efficient amount of effort needed to produce a desired outcome. Many students gamed the system by determining what classes they simply lacked the background or the ability to get an A in, and exerting the bare minimum effort necessary to avoid a C. Conversely, lots of people had the experience of getting a 95 average in a class and still getting a B because there simply weren't enough A's to go around. The appearance in a class of a couple of real slackers was a sign of delight to fellow students, who knew that they would pick up the C's that would subsidize a few more A's for the rest of us. So the system wasn't perfect.
We also faced the fact that most other business schools don't curve, so recruiters who weren't familiar with Chicago's practices would take a 3.5 average as a sign of a substandard performer, rather than someone pulling significantly above average. This could be dealt with if they asked -- but only if they asked.
Nonetheless, I think it was better than the alternative. I've heard (unconfirmed) rumors that at some schools the average GPA is a 3.8 -- in other words, all but the worst screw-ups get A's. Why bother? The grades no longer convey any information. Personally, I'd like to see a nationwide return to a time when a C was an average grade for someone working fairly hard, not a sign of disgrace.
The 19-year old isn't in the office today, so we're listening to the classic rock station, which seems to be trying to develop an "All Pink Floyd, All the Time" theme. It reminds me of that fake album commercial on Saturday Night Live: "You loved Stairway to Heaven once. . . you'll love it even more seventy five times, as recorded by our top recording artists. . . " I've heard no fewer than four songs from the Wall, plus standards like "Wish You Were Here".
Ahhhh. . . remember the days when listening to "Comfortably Numb" made you feel like you were really deep? When SD&RR were more than just a hobby? When you thought it was possible to be a Pulitzer Prize winning novelist and a supermodel? Sigh . . .
Meanwhile, just in case I wasn't feeling old enough, a friend sends me a this article, presumably designed to help me beat the biological clock. Is that a hint, Matt?
UpdateStairway to Heaven just came on. All I need is a pack of Camel Lights and some Mad Dog and the flashback to 1989 will be complete.
Shocking! Jonathan Last at The Weekly Standard does an article on blogs and what do we see. . . Instapundit, Andrew Sullivan, and Joshua Marshall get top billing. Where are the women? Where is the empowered, inclusive community we dreamed of, back when web browsers were all natural native crafts made out of macrame and organic produce by underprivileged third world women? Well, once the big corporations invaded our precious space, it should have been obvious that the white male power structure couldn't be far behind. Just as in any Capitalist Imperialist system, the rich and famous get richer and famouser, while poor, honest working people like me get the shaft. Could Last spare a precious few words of column space for a fine woman blogger like myself? No, not him -- he was too busy reinforcing the pernicious stereotype that only men are interesting or have important things to say. Oh, I know some people will say that the reason Jonathan Last didn't mention me is that he's never heard of me, or that I'm not as funny and interesting as Sullivan, Reynolds, or Marshall. That just goes to show that they're trapped in the patriarchalist paradigm, espousing "rules" that serve to reinforce the hierarchical, androcentric structure of the Blogosphere.
Well, I'll show Last. I'm going on a fast until I'm mentioned in his column. But since it might be a long fast, and I don't want to contribute to the perpetuation of the White Male Power Structure with my early demise, I'll still be eating enough calories to maintain life. At a healthy weight, I mean. In fact, some people who haven't been radically empowered might call it more of a reducing diet. Or just "eating right". But you can bet your copy of The Feminist's Guide to Saving the Earth that not one piece of Auntie Em's Organic Coffee Cake will pass these lips until this weblog appears at the Weekly Standard Online.
The other half of the two part series on the Netscape suit is up on Salon. The author, JJ Gifford, agrees with me that the appeals court gutted the core arguments Netscape had against Microsoft, and that the company is relying on the jury's emotions, rather than the law, to sustain the case. However, he (?) believes that Microsoft's behavior is so egregious that the company should be punished anyway, a conclusion I can't agree with -- taking aside the moral aspect, the effects on the business community, especially the technology business, would be disastrous. The more we turn the law into a lottery system, the more difficult it becomes for businesses to predict the outcomes of their actions. The more risk there is in the legal environment, the less investment. If Netscape wins, we're essentially saying to other companies: "even if the law is with you, your competitors can put you out of business if you're cuter." Which is not to minimize Microsoft's nasty tactics; only to point out that there really is a slippery slope to outsized legal verdicts. Many of the things competitors want Microsoft punished for, like bundling and exclusive distribution agreements, are perfectly legal -- how do I figure out where the tipping point is if I have a successful software business? This does not per se argue against anti-trust suits, but it does indicate the high cost of successful litigation in this area.
He also makes an extremely interesting point that I didn't address: monetary damages are meaningless to Microsoft, with its $36 billion cash hoard, so the companies will be aggressively seeking behavior remedies to cripple Microsoft. Yes, I mean cripple. AOL, Sun, Oracle and others are not interested in making Microsoft play fair; they want the company out of business. That's why they sought draconian remedies from the court, which Penfield Jackson obligingly provided. Gifford thinks that the breakup would have been the best remedy:
A so-called "structural remedy" -- a breakup -- would likely have been more effective. It would have replaced Microsoft with a pair of smaller but still strong companies, in a market suddenly open to competition. The collusion between operating systems and applications development that has long fortified Microsoft's monopoly would be erased. Unfortunately, the government declined to pursue such a breakup and instead opted merely to slap Microsoft's wrist. With these private actions, perhaps the company will at least get a spanking.
This ignores economic history. First of all, the anti-trust remedies that broke up great behemoths either moved along regional lines (AT&T), or along the fault lines left by previous mergers (Standard Oil). Breaking up an integrated company doesn't produce smaller, stronger companies in the short term; it's catastrophic, as centralized departments for everything except the product lines have to be dismantled and reassembled piecemeal.
It also makes it extremely time consuming to break the company up, as the court has to negotiate every last minor department, asset, and share. How will you compensate the shareholders? How do you split the stock up -- hard assets, soft assets, revenue, profit? Who gets Bill Gates and Steve Ballmer? Heads of department will try to poach the best employees for whatever company they're going to, leave the worst ones for the other company -- how do you prevent this? There's a thousand questions like this to be resolved, and the court will ultimately have to settle most of them. After years of economist and business leader testimony, negotations, and politicking, you finally produce a result -- and it takes further years to implement. You can require that every decision more complicated than what paperclips to buy get court approval, which eats up time but forces the company to stand still for the five or ten years the process takes, so that you can get a true handle on what's going on. Or you can let the company pretty much go about business as usual while you decide, which in the constantly changing technology industry means that the remedy will probably be inappropriate. Either way, by the end of this time, both Microsoft and Netscape will probably be close to death. Then the shareholders get to sue the government. Whee!
It's a very good article, but I'm extremely uncomfortable with Gifford's confidence that the legal system can easily intervene in a complex system like the technology market or a software company to produce results that will be desireable for the rest of us, not just the plaintiffs. Luckily I think that any outsized remedies handed down by a jury will be rapidly overturned on appeal.
It's an interesting question, though I think there's a question that bears on this one that Steven doesn't ask directly: what makes a merger successful?
The classic answer is "synergies", which in my experience is a weasel word that means "I'm not quite sure, but this is the amount we need to hit the EPS numbers that will make this deal sell on the street." Call me cynical. The AOL/Time Warner deal, which was supposed to create the amazing synergies by vertically integrating content, network, and access points, has yet to create shareholder value. As Den Beste points out, glomming two big companies with problems together by itself just creates a bigger company with bigger problems.
The idea that the AOL/Time Warner merger was a terrific idea was based on a flawed conception of what creates value in a merger. The story on the street was that ownership of the cable assets and the content would allow AOL to dominate the internet market, while AOL would be a massive promotion/distribution venue for Time Warner's assets. But it's hard to see what the merger accomplished that couldn't have been done much more cheaply with a distribution agreement. The problem with trying to up your shareholder value by purchasing a scarce asset (like Time Warner's near-monopoly cable network) is that whoever owns the asset charges full price for it. It's an economically neutral transaction, neither creating nor destroying value; it just transfers money from place to place. In order for such a transaction to create value, AOL would have to be better able to use the assets than Time Warner -- but since AOL had no particular expertise in managing cable infrastructure, there was no reason to think that the transfer would create value.
The other common fallacy is that it's somehow a moneymaking proposition for AOL to give Time Warner advertising, or for Time Warner to give AOL exclusive use of its assets. This comes from not fully pricing the cost to the company of giving away goods or services to other parts of the company. Let's say that I own an ice cream machine and you have a waffle-cone maker. We merge, and you start giving me waffle cones in which to sell my ice cream. I save the 10 cents it used to cost me for each cup to put the ice cream in, and I can charge 15 cents more for the resulting ice cream cones. Simple accounting shows this as a 25 cent increase in profits.
What this leaves out an important economic concept called opportunity costs. The opportunity cost of a project is the income from the next best alternative use of the resources necessary to complete the project. If you have a choice between two jobs, one at $100,000 and one at $125,000, and you take the higher-paying job, your opportunity cost is the $100,000 you could have been making at the job you didn't take. When opportunity costs exceed the income from the project, it's a bad investment of time and resources.
In this case, let's say that if you weren't giving them to me, you could sell your waffle cones to my competitor across the street for 30 cents. Suddenly the merger doesn't create value -- it destroys it. This is essentially what people were suggesting AOL/Time Warner could do -- hand over valuable resources, like advertising space or exclusive use of the cable assets -- to each other at less than they would sell them on the market. In fact, mergers encourage such behavior all the time, which is why over the long run they tend to destroy shareholder value.
There are two classic ways in which economists believe mergers can create value: redundancy, and co-specialized assets. The first is easy to understand. Say that, instead of a waffle cone maker, you also own an ice cream machine. In order to compete, we spend aggressively on advertising, signs, and the like. We also both have to be on our corner all day every day. If we consolidated, one of us could cover the store some days, the other the rest of the time. We could have one nicer sign. We could save money on milk by buying in bulk. Perhaps we could get rid of one expensive-to-maintain machine and just use the other. Such savings are called economies of scale, and while I have made them very simple in this example, the basic idea is that there is a profit-maximizing size for any given type of firm, and a merger of two like companies can produce value by achieving that size. This is the argument behind the HP/Compaq merger.
The other way that mergers create value is by merging firms that have prohibitively high transaction costs preventing them from making otherwise profitable deals. A transaction cost is any monetary or non-monetary cost, aside from the price, associated with making a deal. The amount of time you spend looking for a house is a transaction cost, as is the broker fee, the lawyer fee, the escrow fee, the filing fee. . . you get the idea. The price of the house you buy is not a transaction cost.
The most common transaction cost preventing otherwise profitable deals is something known as highly co-specialized assets. Consider the waffle cone maker. Suppose I come out with a bubble-gum flavored ice cream, and I want you to make a novelty cone in the shape of a bubble. I can sell this cone for $3.00 instead of $1.50 at little extra cost to me. However, for you to do this, you'll have to completely retrofit your waffle-cone maker. It won't be good for making anything except bubble-gum shaped cones. If the cone doesn't take off, or I get sick of bubble gum, or someone famous dies a horrible bubble-gum related death that kills the cone's popularity, you're stuck with an expensive cone-maker that's not good for anything. Moreover, since I know this, once you've done the retrofit, I might decide to tell you that my new price for bubble-gum shaped waffle cones is 5 cents -- take it or leave it. Since leaving it would mean going out of business, you're at my mercy as soon as you commit to the transaction. In this case, merging makes sense; I get my bubble-shaped cones, and you get a guaranteed share of the profits.
Whew! Hang in there . . . we're coming to the home stretch.
So let's look at the EU "merger". Is there redundancy? Absolutely. Tons of it. But over half the French population is employed by the government -- think they're going to initiate massive cutbacks? The "merger" is introducing another layer of redundancy, not removing it.
How about transaction costs? Well, here we hit the mother load, in the form of national differences that restrict the flow of capital and labor between countries. I'm talking of work restrictions and the like, of course, but I'm also talking about regulations not intended to restrict the flow, which nonetheless have that effect. Small differences in the tax code, for example, increase the cost of moving capital because you have to learn what the differences are before you can invest. The largest of these barriers -- language -- probably won't be resolved soon. But the second largest, currency, just got taken down. This is huge. Companies or individuals wishing to invest abroad no longer have to factor currency risk into their calculations. It also allows for increased competition between countries, which is always good for the world economy -- but there's the rub.
There's a third reason to merge, of course, and that's the hope that you can get rid of competition. If the two companies merging control enough of the market, there's the hope (on their part, not ours) that they can lock up a monopoly or near-monopoly and get fat and sloppy while raising prices and providing indifferent products. When it's two companies trying to do this, the FTC or its European equivalent screams like a banshee. When it's a bunch of top-heavy welfare states, the EU coos "harmonization".
If the EU uses closer integration to force the Highest Common Denominator of tax rates, rigid labor policies, and heavy social spending onto more flexible member nations, I suspect that the growth-killing effects of harmonization will far outweigh the growth-creating effects of the single currency and other lowered international barriers to capital and labor flows. Add in the extra redundancy from adding a layer of EU bureaucracy without removing any of the layers of bureaucracy in the member states, and I am forced to agree with Steven -- unless something radical changes, ever-tighter integration of the EU is more likely to slow growth than promote it. European dreams of becoming a superpower to rival or replace the US remain, for now, castles in the air.
Betty Crocker's Original 1950 Picture Cookbook Whenever I'm a little stressed, I take out my Betty Crocker Picture Cookbook and get lost in 50 years ago. It's the gift I give at every bridal shower, partly because it has some downright hilarious recipes (for hors d'oeuvres, have your guests roast Vienna Sausages over candles!) and passages like these helpful hints:
Harbor pleasant thoughts while working. It will make every task lighter and pleasanter. . .
Every morning before breakfast, comb hair, apply makeup, a dash of cologne, and perhaps some simple earrings. Does wonders for your morale. . .
Notice humorous and interesting incidents to relate at dinnertime, etc. . .
If after follwoing all these rules fro proper rest, excercise, diet, you are still tired and depressed, have a medical check-up and follow doctor's orders.
Helloooo, valium.
But that's not the only reason I love it. The best reason is that it is the single best guide I know to producing comfort food, even for beginniners. I wouldn't follow the instructions for preparing roasted meats (although I did pick up a good technique for stovetop barbeque chicken), but my mother, who's studied with Craig Claiborne and Julia Child, still uses this for most of her baking, from basic bread to airy, homemade cakes. It's perfect for beginners because while most of the recipes are simple, they were written before the advent of cooking oil, margarine, mixes, and other cooking evils that make all food taste like it came out of your high-school cafeteria. From four recipes for macaroni and cheese to our family's special Christmas bread, almost everything is awfully good. How can you not love a cookbook that has a supper dish called Pink Bunny? If you like comfort food, good basic dishes, or just retro stuff, highly recommend it.
Meanwhile, this little tidbit from the Wall Street Journal (Sorry, no link -- it requires a subscription):
WASHINGTON -- An attorney representing AOL Time Warner Inc. helped write a controversial agreement between two agencies dividing antitrust enforcement that steers future AOL merger reviews to the Justice Department's antitrust division -- headed by one of his former law partners.
The funny/sad thing about the Netscape lawsuit is that it is no longer a scrappy little David against Goliath -- it's one huge corporation against another, both of which are widely disliked by "serious" technology people.
There's been a large minority in the tech community that felt that, regardless of Microsoft's practices, the close involvement of key competitors in lawsuits was a dangerous precedent. In particular, questions have been raised about the involvement of Oracle, which has not been harmed by any of Microsoft's predatory practices yet is a key player, going through the garbage and writing briefs for DOJ lawyers. Why is Oracle involved? Because Microsoft makes database software that's cheaper than Oracle's -- and as Microsoft relentlessly improves it, it threatens Oracle's core business. Now there are serious concerns about whether certain key competitors, notably AOL/Time Warner (which as a media company is a veteran of working the regulatory system), are too good at litigation for comfort.
As someone who attempted to use Netscape's server technology, I can tell you that if there ever was a company that deserved to lose, it was Netscape. The software was expensive, bug-ridden, horrendously documented, and miserably supported.
Netscape would set up support forums for their server software that required paid subscriptions (on top of what you already paid for their server software) where there were no Netscape engineers to available to answer questions! Ultimately, these turned into buyer-venting sessions, where we ranted against Netscape and suggested alternatives to one another.
With its engineers totally walled off from the user base, each release of the Netscape server was worse than its predecessors. Ultimately, for my company, I chose the JavaWebServer.
The funny thing about the Netscape/Microsoft battle is that it's possible to argue that it was Netscape that acted like a monopoly: sitting there fat, dumb, and happy while someone else took their market share away.
Microsoft's initial releases are almost always junk that no one wants to use (I'd say always, but just because I can't think of an exception, doesn't mean there wasn't one). That's because Microsoft's business strategy relies on getting a product -- any product -- out early to establish a market presence, and then using the feedback from the market presence to relentlessly improve the product. You may not like the kind of code they write, but they are awfully good at developing a "look and feel" that makes consumers happy. As I argue in the article, this consumer focus, at the expense of developing innovative or elegant technology, is what gives the company its bad rap among technology people.
Netscape, on the other hand, is highly technology focused (which is why it was so funny/sad to see them eaten by the other great consumer conglomerate, AOL.) They built a great product, but they were not as aggressive about improvements as Microsoft was, especially on the consumer side. Unfortunately, they got a little soft in the days when they were the only game in town. Confident that there was no real competition from Microsoft, they introduced a passable browser -- Communicator 4.5 -- and some reportedly iffy server software. Unlike Microsoft, they didn't maintain an aggressive focus on consumers, as Kling's piece shows. Every release of a Microsoft product gets better. Netscape products got worse. In fairness, some of the decline in the server software was allegedly due to the fact that they had slowed the pace of browser development to focus on other things, and when IE 4.0 turned out to be decent, they had to pull back resources from everything else to hurl at the browser development team. Which didn't seem to help, of course, because Netscape 6.0 was worse than Communicator. And also in fairness, Netscape pretty clearly thought that it could takes its customers for granted because -- well, because it was Netscape. That's monopoly thinking.
Netscape was too confident that users would continue to use its technology simply because it was already the dominant technology in the market. They took the wrong lessons from Microsoft. Microsoft is not the technology leader in the market (by a long shot), but that doesn't mean the company doesn't innovate. It focuses its innovation on consumer features, which is what makes it so successful. Netscape assumed that once it had established dominance, it didn't matter that much what the company sold because the brand and the network effects would carry it. That's an assumption Microsoft never made, which is why it's around today.
Which makes sense. What can the feds offer the partners? No matter what they do, I'm pretty confident that every single Andersen partner is going to be stripped of all his/her assets in shareholder lawsuits -- unless a judge somehow moves to protect less senior partners in distant practices from the one that gave a pass to Enron. Which would be fair, in my opinion, since the junior folks in Seattle didn't have any idea what was happening in Houston -- but I don't know how likely it is. At any rate, the senior partners who are doing the negotiating are most probably going to have their pockets turned out for every last dime no matter what they do, so why settle with the feds? Those who aren't linked to the shredding order aren't going to see jail time anyway, and I doubt they feel so kindly to the partners who were involved that they're interested in undergoing financial and legal pain in order to spare them the rigors of life in one of our many penal institutions.
