Independent Institute Response To Phillip Hallam-Baker ("network externality")
Paul Spirito
berezina at nihidyll.com
Thu Mar 1 08:04:31 PST 2001
David Theroux <DTheroux at independent.org> wrote:
> 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.
Not an argument, of course -- also, would you be more specific? You
appear to resemble remarks made by Paul Krugman in Slate a few years
back:
http://slate.msn.com/Dismal/96-08-15/Dismal.asp
So why does the supply-side idea keep on resurfacing?
Probably because of two key attributes that it shares with
certain other doctrines, like belief in the gold standard:
It appeals to the prejudices of extremely rich men, and it
offers self-esteem to the intellectually insecure.
The support of rich men is not a small matter. Despite its
centrality to political debate, economic research is a very
low-budget affair. The entire annual economics budget at the
National Science foundation is less than $20 million. What
this means is that even a handful of wealthy cranks can
support an impressive-looking array of think tanks, research
institutes, foundations, and so on devoted to promoting an
economic doctrine they like. (The role of a few key funders,
like the Coors and Olin Foundations, in building an
intellectual facade for late 20th-century conservatism is a
story that somebody needs to write.) The economists these
institutions can attract are not exactly the best and the
brightest. Supply-side troubadour Jude Wanniski has lately
been reduced to employing followers of Lyndon LaRouche. But
who needs brilliant, or even competent, researchers when you
already know all the answers?
> (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.)
Why should this impress us? Do you always break things down into left &
right? Ralph Nader & Pat Buchanan can't /both/ be wrong about trade, can
they? Oh, my.
> you apparently prefer to defend the blatant campaign
> for corporate welfare (antitrust protectionism),
Fyi, Phill has opposed the MS antitrust case.
> 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.
Assuming we're suspicious of spending our money & our time, would you
provide links to articles?
Thanks,
Paul
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