Bearded one, I would have to agree with those who say that the Greenspan statement is a criticism of DOJ's action against Microsoft.
With the caveat that I have not seen the whole statement in unfiltered, unedited form, let me suggest that the following quote, which appears in the Wall Street Journal's account ( interactive.wsj.com ), is a direct criticism of the theory behind the DOJ's suit:
"I would feel very uncomfortable if we inhibited various different types of mergers or acquisitions on the basis of some presumed projection as to how markets would evolve," he told lawmakers Tuesday. Particularly in technology industries, he said, "history is strewn with people making projections that have turned out to be grossly inaccurate."
And then there's:
"I would like to see far more firm roots to our judgments as to whether particular market positions do, in fact, undercut competition or are only presumed on the basis of some generalized judgment of how economic forces are going to evolve," he said. There "ought to be a higher degree of humility" when enforcers make such projections, he added.
I agree with you that DOJ's theory is inconsistent with trying to break up the Microsoft monopoly; indeed, as I said before, I think the DOJ complaint alleges facts which, if true, would tend to prove that Microsoft is a natural monopoly.
However, at least if I understand it, what is also true is that the DOJ lawsuit is based on certain predictions about how technology markets are likely to evolve and an attempt to influence the course of that evolution. Specifically, the DOJ is relying on the predictions generated by the theory of "network effects" as expounded by W. Brian Arthur and others, and is attempting to influence the evolution of the market by imposing what Arthur and others of his ilk call "rules" to limit Microsoft's freedom of action and ability to reinforce its "lock-in" through "unfair" and predatory behavior.
So, as I read the limited Greenspan comments I have seen, Greenspan is saying that the government is not capable of predicting accurately how high technology markets are likely to evolve and that monopolies, in the absence of governmental sanction, are not likely to be sufficiently durable to justify government intervention. To me, that sounds like about as direct a criticism of the DOJ action as one is likely to get from Mr. Greenspan.
Joel Klein's response, also quoted in the article, makes it clear that he understands the critical nature of Greenspan's comments.
Finally, there is nothing surprising in the content of Greenpan's comments. It is a well known fact that he is a person of libertarian persuasion and an early disciple of Ayn Rand. These criticisms of his are entirely consistent with (indeed, they are a direct application of) the ideas of economists of the classical liberal (aka libertarian) persuasion, such as Hayek, who say that it is impossible for government to engage in economic planning with any justifiable degree of confidence that the outcome will be desirable. |
