Independent Institute Response To Phillip Hallam-Baker ("network externality")

[Phillip Hallam-Baker]

Mathew,

	Are you so ludicrously insecure that you have to resort to publishing put
downs from private email?

	I called Theroux's institute a crank tank in public. If he could support
his claims he would have made his reply public.

	The 'open letter' Theroux refers to is not in support of the Margolis crank
book as he claims, it is in support of Microsoft - a very different matter.

	The rhetoricaln tactics are so close to those of the IHR, where is Barry
Shien when you need him? The claim 'if you disagree with me it can only be
because you are stupid'.

	Paul Krugman can explain very complex economic theories to a lay audience
in the NYT. I have several degrees including a Doctorate in Nuclear physics.
If Theroux cannot justify the claims he makes except by reference to subject
authority then he is full of it.

	What this is really about is the political claim that economists have an
expert mystical power that only they can understand that gives them and only
them the ability to comment on political affairs, and that to ask them to
ustify their ludicrous and contradictory claims is to show oneself to be a
fool. Sounds like a couple of tailros who once worked for a certain emperor.

		Phill

> -----Original Message-----
> From: owner-fight-censorship at vorlon.mit.edu
> [mailto:owner-fight-censorship at vorlon.mit.edu]On Behalf Of Matthew
> Gaylor
> Sent: Thursday, March 01, 2001 8:43 AM
> To: fight-censorship at vorlon.mit.edu; cypherpunks at cyberpass.net;
> CYBERIA-L at listserv.aol.com
> Cc: 'Colin A. Reed'; Ken Brown
> Subject: Independent Institute Response To Phillip Hallam-Baker
> ("network externality")
>
>
> Date: Wed, 28 Feb 2001 23:19:12 -0800
> To: "Phillip Hallam-Baker" <hallam at ai.mit.edu>
> From: David Theroux <DTheroux at independent.org>
> Subject: RE: Microsoft Trial Judge Based His Break-Up "Remedy" On
> Flawed Theory, Not Facts
> Cc: freematt at coil.com (Matthew Gaylor)
>
> Dear Mr. Hallam-Baker,
>
> If you knew anything about the academic debate over "path dependence"
> ("network externality") theory you would know that the work by our
> research fellows, Stan Liebowitz and Stephen Margolis, has been
> appearing in the leading, scholarly, peer-reviewed, economics
> journals for the past ten years.  They have conclusively shown that
> "network externality" theory has absolutely no empirical evidence.
> And, no economists or any others have been able to show any errors in
> the devastating Liebowitz/Margolis analysis.  Indeed, hundreds
> academic economists have signed our Open Letter agreeing with this
> analysis.
>
> As a belief system without any scientific evidence and with people
> such as yourself who accept this urban legend without proof, "path
> dependence" is a house of cards that is being used to advance the
> corporate welfare ambitions of various major business and government
> interests.  In so doing, the Microsoft case has nothing to do with
> consumer welfare and everything to do with corporate welfare.  (For
> your information, it was the acclaimed, New Left historian Gabriel
> Kolko who first showed how antitrust has been used repeatedly for
> corporatist purposes since its initial adoption.)
>
> So, since you have obviously not even seen the Liebowitz/Margolis
> book, WINNERS, LOSERS & MICROSOFT: Competition and Antitrust in High
> Technology, and you apparently prefer to defend the blatant campaign
> for corporate welfare (antitrust protectionism), who indeed is the
> crank and right-winger here?
>
> Incidentally, so you do not continue to embarrass yourself, I would
> suggest you first learn the difference between the terms, "network
> effects" and "network externalities."  Reading the book, WINNERS,
> LOSERS & MICROSOFT, would make an excellent way to do so.
>
> David J. Theroux
> Founder and President
> The Independent Institute
> 100 Swan Way
> Oakland, CA 94621-1428
> 510-632-1366 Phone
> 510-568-6040 Fax
> DTheroux at independent.org
> http://www.independent.org
>
> >>  Microsoft won because of superior reviews? Come on, how
> stupid do you
> >>  think we are?  So if a company pays for glowing reviews
> that would be
> >>  okay?
> >
> >Matthew's argument is that 'network effects' do not exist, based on a
> >tendentious piece of propaganda pushed by a right wing crank
> tank. The crank
> >tank is attempting to proove that the free market is
> perfect, unsullied by
> >the possibility of monopoly that obviously ignorant writers
> such as Adam
> >Smith wrote at great length about.
> >
> >Hence the anecdotes such as QWERTY, Betamax are attacked as
> if they were the
> >best evidence, the sole evidence even for network effects. This is
> >historical revisionism in the service of dogmatic ideology.
> >
> >Positive feedback exists, get over it.
> >
> >>Obviously they have never tried to sell a product.  It's very
> >>  dificult to get consideration such that you could prove
> the technical
> >>  merits when there is a large existing supplier.
> >
> >That is only a weak network effect. People buy from Amazon
> because they have
> >a well known brand name, have established a customer
> reputation etc. But
> >there is no intrinsic advantage buying from a large online
> bookseller than a
> >medium sized one.
> >
> >There is a big advantage having a VHS video over Betamax
> however. If you
> >have VHS you can rent movies from stores, you can send tapes
> to friends who
> >have equipment to play it. The fact that a modern day VHS recorder is
> >technicaly superior to any Betamax machine made is
> irrelevant. At the time
> >the standard was set Sony and Betamax had the clearly
> superior technology.
> >
> >
> >A network effect exists when there is an intrinsic advantage
> to join the
> >bigger network. Operating systems have been understood to have strong
> >network effects since the 1950s. My company only supports
> one version of
> >UNIX for certain products because the cost of QA on each O/S
> variant is
> >significant. If we were choosing the technically best O/S
> platform we would
> >probably look at of the stripped down, hardened BSD
> variants, but we choose
> >the platform that most of our customers are already familliar with -
> >Solaris.
> >
> >When I wrote video-games for a living I wrote for the
> Sinclair ZX Spectrum
> >with a market of several million users, not the vastly more
> sophisticated
> >BBC computer - even though the spectrums would die after
> about 100 hours use
> >and need replacement. I would typically replace a spectrum
> three or four
> >times within the guarantee period. Writing a game for the
> bigger market gave
> >bigger returns. Customers bought the machines supported by
> the most games.
> >
> >
> >Network effects are the alpha and the omega of Internet
> business strategy.
> >
> >Ironically despite paying for the tendentious propaganda
> Microsoft appears
> >to be benefitting from the argument that network effects and
> 'tipping'
> >explain the emergence of a single operating system.
> >
> >I don't know if the DoJ should interpret recent events in
> Seatle as a divine
> >attempt to breakup Microsoft. If so it is really time for
> the DoJ to give up
> >since it evidently failed.
> >
> >		Phill
>
> --
> David J. Theroux
> Founder and President
> The Independent Institute
> 100 Swan Way
> Oakland, CA 94621-1428
> 510-632-1366 Phone
> 510-568-6040 Fax
> DTheroux at independent.org
> http://www.independent.org
>
>
> **************************************************************
> ************
> Subscribe to Freematt's Alerts: Pro-Individual Rights Issues
> Send a blank message to: freematt at coil.com with the words subscribe FA
> on the subject line. List is private and moderated (7-30
> messages per month)
> Matthew Gaylor, 2175 Bayfield Drive, Columbus, OH 43229
> (614) 313-5722  ICQ: 106212065   Archived at
> http://groups.yahoo.com/group/fa/
> **************************************************************
> ************
>