Think tanks wrap-up

Nov. 4, 2002 at 6:03 PM
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WASHINGTON, Nov. 4 (UPI) -- The UPI think tank wrap-up is a daily digest covering opinion pieces, reactions to recent news events and position statements released by various think tanks.

The Competitive Enterprise Institute

(CEI is a conservative, free-market think tank that supports principles of free enterprise and limited government, opposes government regulation, and actively engages in public policy debate.)

WASHINGTON -- C:\Spin -- The Microsoft trip: "Are we there yet?"

by James V. DeLong

Judge Colleen Kollar-Kotelly is regarded as an intelligent and meticulous legal craftswoman. This reputation is confirmed by her 500 pages of opinions in the Microsoft case, in which she upheld the settlement between the company and the Department of Justice, and imposed only limited additional restrictions in response to the demands of the non-settling states.

Her conclusions were dominated by a focus on the need for a tight connection between any remedies imposed and the narrow scope of Microsoft's offenses, as defined by the D.C. Circuit Court last year. The monopoly at issue encompasses only operating systems for personal computers based on Intel chips, not PCs generally, computers at large, or the world. This monopoly was lawfully attained, and there is no legal basis to break it up.

Microsoft's offenses lay in actions designed to maintain this limited monopoly, particularly in its treatment of "middleware," software which, by allowing applications to run on more than one operating system, or OS, would encourage development of alternative OSs.

Working within this framework, the judge found that the federal settlement, tailored to force Microsoft to be more accommodating of middleware, easily meets the statutory standard of "the public interest." In the next opinion, the dissenting states got a few additions, but she rejected arguments that the narrow liability finding is a general hunting license to compel "drastic alterations to Microsoft products (or) ... to aspects of its business model which do not involve illegal conduct."

We at CEI, who think the case was misbegotten and that antitrust enforcement in general has degenerated into a mishmash of abstractions that can be twisted to support any conclusion, remain grumpy. And Microsoft is now subject to a load of regulations, with a potential for future mischief.

But this is no criticism of Judge Kollar-Kotelly, who was bound by the prior findings in the case. She got the big picture absolutely right by emphasizing that this is a legal proceeding, not a legislative hearing, a political campaign, or a witch-hunt, and that the remedies must be circumscribed by the proven offenses. An expansive view that crafting remedies is an exercise in free form restructuring would have been a disaster, for Microsoft, the tech sector, and the overall state of antitrust law.

There is no guarantee against further appeals, but the opinion is bulletproof. The Washington, D.C. Circuit Court will not overturn it. This phase of the case is over.

But the decree must be implemented, and the requirements are complex, which creates a possibility of continuing guerilla war. Aware of this, the judge insisted on retaining authority to act on her own motion to enforce the decree, and she warned all sides that she will use it.

For example, she noted that the Department of Justice/Microsoft settlement "adopts a clear and consistent philosophy such that the provisions form a tightly woven fabric." (In other words, "Don't try to play word games with me.") And she had harsh words for all -- for plaintiffs who tried to leverage a narrow liability finding into a rivals' wish-list, and for Microsoft's "minimalist view of its own illegal conduct."

The luck of the lottery of judicial assignments gave us all a winner this time. Microsoft is already implementing the decree, and swears that it has indeed been sensitized to the need to deal not just fairly but generously with other players in the industry.

The judge will enforce this; she promised to hold Microsoft's directors personally responsible for implementing "the letter and the spirit" of the decree. Now it is up to the plaintiffs to end the uncertainty and let the entire tech sector get on with its business.

(James V. DeLong is a senior fellow at the Project on Technology and Innovation at the Competitive Enterprise Institute.)

The National Center for Policy Analysis

(The NCPA is a nonprofit, nonpartisan public policy research institute that seeks innovative private sector solutions to public policy problems.)

DALLAS, Texas-- Betting the elections

by Bruce Bartlett

As the election gets down to the wire, pundits of all kinds are speculating on the outcome. Usually, they look at polls, debates, press coverage, advertising and such. Economists prefer to look at markets. They are signaling that maintenance of the status quo is the most likely outcome, with continued Republican control of the House and Democratic control of the Senate.

For some years, the University of Iowa has run a futures market on key elections. Investors can buy contracts for various electoral outcomes, with prices changing depending on events. Right now, contracts are available for four possible outcomes on Tuesday: Republican House/Republican Senate, Republican House/Democratic Senate, Democratic House/Republican Senate, and Democratic House/Democratic Senate.

The Web site for those interested is

As of Oct. 31, the prices showed that there is a 1-in-2 chance of Republicans keeping the House and Democrats keeping the Senate. In other words, even money.

The chances of full Democratic control of Congress and of Republicans gaining full control are almost exactly the same at 1-in-4. However, in recent days the odds of full Democratic control have virtually doubled. They were 1-in-8 just a few days ago. Simultaneously, the odds of full Republican control have fallen from 1-in-3.

The most unlikely result, according to the market, is Democratic control of the House combined with Republican control of the Senate. The chances of that happening are just 1-in-25.

Anyone who feels that these odds are wrong is free to bet their own money by buying a contract. However, my reading of the polls suggests that the market's judgment is pretty close to the mark.

It's hard to say which party will be more disappointed by continuation of the status quo. Both had hoped to make gains at the other's expense. But realistically, it was always the Republicans who had the most to lose. They had more seats in the Senate to defend (20 Republican vs. 14 for Democrats) and had a powerful historical trend going against them. The party controlling the White House almost always loses in midterm elections.

Political scientist Larry Sabato has assembled a history of midterm elections at The record is virtually unbroken since 1934. The sole exception was in 1998, when Democrats picked up nine House seats despite holding the White House. However, they lost two Senate seats in the process, leaving Republicans in control of both houses of Congress.

Given the strong proclivity of voters to punish the party holding the White House in midterm congressional elections, Republicans have to view continued control of the House with great relief. This is especially so in light of their thin margin and the poor state of the economy, which normally spells doom for the party in the White House. In 1982, for example, in the midst of a similar economic downturn, Republicans lost 26 House seats.

Why Republicans seem to be getting a pass from voters on the economy is a mystery. It may be that they are becoming more economically sophisticated as a result of increased stock ownership and the proliferation of cable business programs. Thus the latest NBC/Wall Street Journal poll shows 34 percent of voters primarily blaming the Sept. 11, 2001, terrorist attacks for the economic slowdown, with 16 percent saying it is just the normal business cycle. Only 12 percent said it was due to the Bush administration's policies -- the same percentage that blames the Clinton administration.

In any case, it is clear that Democrats did little to exploit their apparent advantage on the economy. While they talk a great deal about it, they have never come forward with a meaningful economic stimulus program. The reason may be that voters are more inclined toward Republican-style tax cuts for stimulus, rather than Democrat spending programs. According to the same poll, 48 percent of voters favor more tax cuts to stimulate the economy, with only 31 percent preferring more spending.

Of course, elections affect the economy as well as the other way around. Economist Augustine Faucher of thinks continued gridlock is not all bad. Although it may stymie Republican efforts to make last year's tax cut permanent and reform Social Security, it may also doom Democrat plans for a big government prescription drug plan and a patient's bill of rights that would increase lawsuits against HMOs. Thus budget deficits are likely to be smaller under gridlock than if either party controls Congress entirely.

One thing that is certain is that the outcome of Tuesday's elections will tell us almost nothing about what will happen in 2004. Republicans lost big in 1982, yet Ronald Reagan came back to win easily in 1984. Similarly, Democrats lost big in 1994, but Bill Clinton won handily in 1996.

(Bruce Bartlett is a senior fellow at the National Center for Policy Analysis.)

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