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Tech Central Station: Will Justice's Controlled Burn of Microsoft Also Torch Silicon Valley?

Jun 01, 2000, 21:38 (18 Talkback[s])
(Other stories by James V. DeLong)

"The Department of Justice plans a controlled burn of Microsoft. At a hearing last week, Judge Jackson showed his eagerness to strike the match. And, just like the U.S. Park Service at Los Alamos, neither Justice nor the judge seems to understand the system with which they are tampering or have any interest in heeding adverse weather predictions."

"In a speech on May 10 entitled "The New Wealth of Nations," [Treasury Secretary Lawrence H.] Summer pondered some of the implications of the new technological world. He pointed out a problem in a world in which information-based goods involve "very large fixed costs and much smaller marginal costs": One of its characteristics might be "that the only incentive to produce anything is the possession of temporary monopoly power-because without that power the price will be bid down to marginal cost and the high initial fixed costs cannot be recouped. So the constant pursuit of that monopoly power becomes the central driving thrust of the new economy. And the creative destruction that results from all that striving becomes the essential spur of economic growth."

"Summers' musing may be right or it may be wrong; there is room for argument. But it is a serious idea, and it is not part of the world view of either the Department of Justice or the judge. And if it is right, then it could create a gale that drives their controlled burn out of all control."

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