However what you and Ari proposes in regulating competition wont work. You need to pursuade the purchaser, not regulate. Conviction in the EU of Microsoft has made any difference? No, I dont see another operating system being marketed in competition.

However I’m open to suggestions on how to regulate Microsoft when the Linux or OS2 operating systems are not commercially available. Professionally maybe, but retail? Has Apple increased market share?

Still use Office 2000 suite. You do not need to upgrade and buy their new software. Star or Open office suites dont have database components so are useless for my personal application.

The security issues are prevalent in all OS systems. It is a myth to say they are no security holes in other software. Hackers have targetted the windows as it is the most widely implemented OS. Firefox has as many holes as IE used to have. The only secure system is an offline one.

What rules for the market would you implement with the big stick? If a company has over 60% market share you would have it broken up? What if you have no competitors? Such as Toll Holdings on the rail lines?

I guess in New Zealand we see this happening with a privately owned company (Telecom) being broken up with the big stick for the perceived greater good of society.

Are you suggesting Microsoft and McDonalds have the same big stick applied? Mmmmmmmmmm must buy shares in Apple and Wendys.

Ari,

“The problem is, in a free market… whichever design first starts gaining wide acceptance has a tremendous advantage over other designs, because we would have to pay (either directly or indirectly) the cost of retraining ourselves to use the new design. This creates an artificial barrier to entry into the market”

Welcome to the real world. That is how it works, has done and always will be, even in a regulated paradise. There are no artificail barriers in any market. Only real ones. Smart people know not only how to make a better keyboard but also how to market it and overcome those real barriers.

Something DVORAK has not done. Hence it fails and no amount of regulating will make the keyboard successful.

Remember, life is not fair, and regulations wont make it so.

Worrying about equal distribution of market share in non-key industries like computer operating systems and fast foods isn’t high on my list of priorities of making a fairer society.

Now opening up the rail net work to other freight companies (like transport companies do on our tarsealed roads) that is a much higher priority. (is it Green policy to remove this monopoly?)

And yes I would get rid of monopoly laws as they do more to protect the perceived perpertrators (by being able to engage in long and drawnout lawsuits where the penalties are puny) then if they were removed and the better product was aggressively marketed successfully (using shareholders funds) in competiton. Then the shareholders would reap the rewards of a successful partnership with the consumer.

MIcrosoft has been convicted of Monopoly on 2 continents and IIRC Japan. Microsoft destroyed Lotus and Wordperfect by purposeful sabotage of those applications at the OS level “The codes not done ’til Lotus won’t run” changes in the OS. It is an EXCELLENT example of how the real “market” fails the promise of market theory. Microsoft has probably set software development on this planet back a good 5 years out of the last 15. As a professional Software Engineer for the past 25 years I know quite well how buggy and careless they have been in their product and how far better products have been marginalized by them.

The hope is that OpenOffice succeeds in eroding MS dominance of the Office Suite. When/If that happens MS will be forced to build an OS that is actually more robust than the house-of-cards they’ve been delivering. OpenOffice is of course, not part of the “market” either in the sense that it is not a profit center for some company. Sun contributed the StarOffice seed but does not get a dime.

I can go on for a much longer post about MS. In Vista they may in part have responded to their fundamental design flaw with respect to security. I have yet to see anything substantive about that, and if they have it is a major step forward for them. It is a step that will give them integration headaches for several more years but they have to take that step if their dominance of the desktop starts eroding at the corporates.

Green views of the market are far closer in my perception to the reality of the market, than the worshipful reverence of the right. It works OK and we’re happy to use it, but it isn’t capable of doing everything and it isn’t at all fair unless someone with a big stick holds the players to some rules.

respectfully
BJ

You said:
“I my view qwerty keyboards are standard issue because everyone has trained on one since great grandma got her first typewriter. You are, in a free market, able to put out any design you like. What the manufacturers forget is that to get a new generation to use your new designs you have to design a better keyboard and train people to use it.”

The problem is, in a free market… whichever design first starts gaining wide acceptance has a tremendous advantage over other designs, because we would have to pay (either directly or indirectly) the cost of retraining ourselves to use the new design. This creates an artificial barrier to entry into the market, and better-designed layouts like Dvorak that are much more ergonomic and efficient don’t become sucessful because of the law of “whoever has more gets more”. This multiplies itself exponentially because small businesses offering better products can easily be absorbed into larger ones who have disposable income due to successfully locking in their products. Most of these cases of increasing returns are where there is some sort of barrier to entry in a particular market that, were it broken, would create an opportunity where products could truly compete under circumstances where the best one wins.

Likewise, Microsoft Windows doesn’t really succeed because it’s good. In fact it’s probably the worst modern OS solution out there. It succeeds because the way copyright laws work shield it from having to disclose its proprietary formats, allowing them to maintain incompatibility with other products, therefore forcing anyone who wants to maintain full compatibility with the rest of their installed userbase to continually use Windows.

We already HAVE regulations that replace free markets. They’re called anti-monopoly laws. You’re not suggesting we should get rid of those? I’m merely pointing out that we don’t do enough to support the principle of those laws. Look at telecom for an example- it’s doing everything it can do delay unbundling instead of preparing to be a more efficient and competitive product afterwards. Unbundling solves Telecom’s problem.

Likewise, I think banning advertising for fast-food, and perhaps giving it zoning restrictions, might help. So would legally requiring microsoft to provide enough insight into their code for other OSes to become compatible.

What I find disturbing beyond that though is that we still indoctrinate our economists in freemarket theory without teaching them the cases of increasing returns, which cause economic problems, and the cases of non-economic problems.

For instance, efficiency isn’t always beneficial, even if we ignore the cases of increasing returns. What if it overstresses us and reduces quality of life? Also, it might be more efficient for all of us to move to Europe and abandon New Zealand. But we might value the land and culture here too much for that. This is why I really applaud the Green Party for not falling for “free trade”. Free trade might be free and in some cases efficient, but it certainly isn’t fair to everyone.

OK I’ll take a swing at this one…
Businesses work within an environment of laws, regulations, tax code etc. which gives advantages to some and disadvantages to others. The examples cited by Gerrit and Sam are not dictated purely by market forces. The idea that the playing field is intrinsically level is an illusion. The tax code, employment law, council bylaws etc. could be modified in a way that tilts the balance in favour of genuine small business, co-operatives, charitable organisations etc. and against big business and franchisees.

As a Green, it’s certainly what I would want. I think that large companies are an intrinsically bad thing (for competition, obviously, but also for the humans that constitute them), and I would favour measures that, while not outlawing them, puts them at less of a competitive advantage than currently.

If a small company goes out of business because their landlord decides to sell the building they are using, the public’s desires have nothing to do with it. There’s been a couple of other examples of this in Wellington lately - Trade Aid lost their space because the bank next door offered the landlord a rent Trade Aid couldn’t possibly match - the shop was doing fine and had plenty of customers, but not enough to out bid a multi-natuional corporation.

The Railway station kiosk was a thriving business, but lost their space because On Track (is this what they are called these days?) decided to give a supermarket chain exclusive rights to retailing in the station complex. The kiosk was demonstrably catering for what the public wanted, but not for what the corporation wanted (i.e. lots more rent).

No I’m not suggesting regulation (I never even hinted at it). I’m pointing out that the market serves the interests of corporations not customers.

Isnt that the market at work?

The McDonalds franchisee must have worked out they had the customers to make the $1,000,000 investment required to have a return on investment.

The Hungry Horse obviously didnt cater for what the public wanted. No Hungry Horse did mind you!

Surely you are not suggesting regulation to limit the number of McDonalds outlets?

Nope, but to take the last example, I used to have the alternative of eating at “The Hungry Horse” burger bar in Manners Mall, but guess what - it got knocked down and a McDonald’s was built there instead. That doesn’t indicate a customer preference, just that NcDonald’s has the money to buy prime sites and small competitors don’t. Nor did the Hungry Horse do a lot of TV advertising, for obvious reasons. Nor did the HH have the clout to make demands for better prices for suppliers. In a nutshell, free markets mean the already big prosper.

It can be argued that sooner or later McDonald’s will slump and somebody else will take over, but I’ll probably be dead by then and my interest is in what the market provides today and tomorrow, not what may or may not happen in the far flung future.

“despite cases like the QWERTY keyboard layout, Microsoft Windows, McDonalds, and so on being excellent examples of how the free market fails to regulate itself”

Can you elaborate?

I my view qwerty keyboards are standard issue because everyone has trained on one since great grandma got her first typewriter. You are, in a free market, able to put out any design you like. What the manufacturers forget is that to get a new generation to use your new designs you have to design a better keyboard and train people to use it.

While no great fan of Microsoft bloated software, their dominance is due to the opposition short comings and their own incredibly smart marketing.

Somebody like Red Hat could put out a commercial Linux operating system to rival Microsoft. Get industry support from the third party vendors and go for it, but they wont why?

It is not the free markets fault, it is Red Hats reluctance too invest and compete. Dont blame Microsoft, blame the purchasers for not buying and vendors for not competing.

It is a free market after all and a regulated free market doesn’tn make sense. It is either free or not free through regulation.

How Mcdonalds fails to regulate itself I leave up to you to explain. They react to market forces increadibly swiftly. Faster then wendys. burger king, etc. They in my view are also very smart marketers. Bringing out new products and disseminating that to their customers in copy book fashion.

In the free market the customers choose what to buy. You are not forced to use a qwerty keyboards, Microsoft software or eat McDonalds burgers.

Are you suggesting that regulations should replace free markets?

Would you regulate that an alternative to qwerty keyboards be manufactured, Linux be mandatorially placed on new computers, and be forced not to eat at McDonalds?

The NZ $ rise isn’t all due to “hot money”… it is also losing a race to the bottom with the US $ which is doomed, though people are slow indeed to realize how bad the news there is. The more appropriate measure of our currency today is the cross with the Aussie and the Euro , and the price of Gold.

I have to say that… well maybe someone else says it better. Have you ever heard of “the mogambo guru” ???

Skip towards the bottom.

http://www.dailyreckoning.com/Issues/2007/DR040907.html