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Technology Stocks : The New Qualcomm - a S&P500 company -- Ignore unavailable to you. Want to Upgrade?

To: John Biddle who wrote (840)	8/14/1999 10:54:00 AM
From: Art Bechhoefer	Read Replies (1) \| Respond to of 13582

John, if we take your view that government bureaucrats can't do anything right, particularly in regulatory policy, then Alan Greenspan and Secretary Rubin must have been making regulatory decisions on the economy at random, and it just happened that they turned out to be the right ones. When it comes to making decisions about CDMA, anybody who cared, and who had enough understanding about digital communications, could easily have studied the CDMA patents assigned to QUALCOMM, or could have read the textbook co-authored by Irwin Jacobs many years earlier. A reasonably prudent person, and particularly, a scientist or engineer working at a major telecommunications hardware company would have been able to figure out that this CDMA stuff was better than anything else, including GSM, TDMA, or worse, plain old analog cellular. Companies, even though they can see the handwriting on the wall, will often make decisions that maximize short term profits and delay major capital investments in new technology until there are no other alternatives. This is what I call "short term" decisionmaking, and it is precisely the sort of decisionmaking that independent regulators can guard against because they are not, or should not be oriented to short run solutions. I agree with you on one point. It is rare that we get regulators with the skill of a Rubin or a Greenspan. Most get their jobs, not because of their skills but because they know the right people. When you get regulators of the typical sort that frequent government regulatory agencies, you are entitled to the view that they are inept and incapable of doing a good job. But the point I am making is that if a system does not corrupt itself with incompetent people, the indepenedent loop provided by unbiased regulation becomes a valuable factor ensuring well formed, long range decisions of better quality than would occur without any independent regulation. If you want to go into the theory behind this, take a look at one of the last lectures of John von Neumann, given about 1957, with a title something close to "The Design of Reliable Systems from Unreliable Components." And if you want a great example of a regulated system, you need go no further than the U.S. Constitution.