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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Maurice Winn who wrote (59556)	1/27/2005 6:56:01 PM
From: Elroy Jetson	Read Replies (3) \| Respond to of 74559

The well known saying, "Behind every great fortune there is a crime" is as true for the USA as it was for Honore de Balzac's 19th century France and elsewhere. Which is to say that it's usually true and sometimes is not true. Upon investigation the exceptions prove the rule. Bill Gates owed his initial good fortune to very bad negotiating by IBM in which they gave away their store. He agreed to supply the DOS operating system for the IBM personal computer for a veritable fortune. He then purchased the DOS system from the company which created it for a very small sum. Gates expanded the Microsoft's fortune through market practices which are not legal under U.S. law or under the laws of most nations. This included co-developing OS2 with IBM in bad faith while simultaneously developing a competing system, Windows, in secret. It is this final act that enabled Microsoft to wrest the remaining 50% of the PC business from IBM. In a free market economy, it is amazing how similar the returns on invested capital are, whether the business be farming, home building, energy production, or electronics. There is the occasional business which earns out-sized returns when compared to the rest of the economy, one example is pharmaceutical firms. You can be quite certain that they do not operate under free market conditions - this is proven by their return on capital. This monopoly has nothing to do with their drug patents. A free market drug industry would attract capital and new firms until their return on capital matched that found in other industries. No, they have an actual monopoly which is purchased by lobbying the government. Take the example of one of America's first great family fortunes - the Astor family. The Astor's made their fortune smuggling opium into China. They purchased furs from American Indians which they shipped to the British East India Company (who shipped the furs to Europe for sale) in exchange for opium and then traded the opium for Chinese porcelain and antiquities which they sold in America. They invested their opium profits in Manhattan real estate and a dynasty was born.