Deadweight losses

by Henry on March 23, 2004

Brad DeLong speaks to the costs of Microsoft’s market dominance.

I certainly think that I have been harmed by Microsoft’s bundling Internet Explorer with its Windows operating system. Remember the days when there was not one single dominant browser that came preinstalled on 95% of PCs sold? Back then there was ferocious competition in the browser market, as first a number of competitors and then Netscape and Microsoft worked furiously to upgrade their browsers and add new features to them. … And now? There is no progress in browsers at all. Why should anyone (besides crazed open sourcies) write a new browser? Why should Microsoft spend any money improving its browser?

It’s a point that’s made eloquently in Albert Hirschman’s Exit, Voice and Loyalty. Hirschman, who has had far greater influence on political scientists and sociologists than his fellow economists (Brad is an exception) points out that the real costs of monopoly are much greater than the inefficient prices they maintain to extract rents. Monopolies are lazy. They have no reason to respond to their customers – where else, after all, can dissatisfied customers go? Without the threat of exit, monopolies face few incentives to improve their service.

Of course, it’s far harder to model or to measure these effects than it is to measure the inefficiencies caused by monopoly pricing (and even that involves a fair amount of guesswork). Still, they’re the real reason for welcoming the EU’s forthcoming decision to restrain Microsoft’s shenanigans with media player software. If Microsoft has its way, we can expect to have similarly sloppy, bug-ridden media software, with infrequent updates and proprietary standards. This isn’t to say that Microsoft’s competitors have the consumer’s interests at heart: inside every lean, hungry entrepreneur, there’s a bloated monopolist struggling to get out. But without competition, there’s no restraint on firms’ ability to abuse consumers, and sometimes (as here) the maintenance of competition requires vigorous state intervention.

{ 48 comments }

1

Kramer 03.23.04 at 5:56 pm

I know, I know, I know, that this is probably not really the point of this post. But within the academic environment in which I work most folks seem to use Mozilla. Either in the Firebird or Firefox versions it’s fast, suppresses pop ups nicely and handle pdfs well (my main requirements). Stop me as I mount my soap box, but I think its still not too late to switch browsers – choose the lean/mean/hungry software.

2

Arthur Wouk 03.23.04 at 6:25 pm

I hope the comments don’t degenerate into a “Microsoft suck” fest. I see enough of that on the Internet.

I use Mozilla, too. I recommend it.

3

Mario 03.23.04 at 6:39 pm

Should there be a distiction between a monopoly that grew naturally and without wrongdoing and one that expanded unfairly? Or, should all monopolies or share the same fate? I know that a monopoly would have the ability to abuse its customers, but what if it hasn’t yet?

4

Mrs Tilton 03.23.04 at 6:51 pm

Should there be a distiction between a monopoly that grew naturally and without wrongdoing and one that expanded unfairly?

There is, at least under US law. In very broad strokes:

– It is not illegal to be or become a monopoly.

– It is illegal to do improper things in the attempt to become a monopoly.

– And, if you have a monopoly, it is illegal to do improper things to maintain or exploit that status (and some things might be improper for you that would not be for a non-monopolist).

5

Jim Henley 03.23.04 at 6:56 pm

Brad can be such a maroon sometimes. “crazed open sources” – jeez. Who cares if the advances aren’t coming from for-profit corporations? Does Brad belong to some For-Profit Corporation Defense League? I use Firefox by default and Opera for anything Firefox won’t handle. Is Brad aware that Netscape was the FIRST company to try to charge for a browser, and scandalized everyone because browsers were supposed to be FREE? Does he realize that other operating systems (e.g. OS/2 and, IIRC, most flavors of Unix) came with bundled browsers? MS was only playing catch-up. Had they not released a free bundled browser we’d either have been reading about a) the death of Microsoft, or b) MS’s dereliction of duty, using their monopoly power to thumb their noses at the commonly-accepted industry standard (real OS’s come with browsers).

6

Sebastian Holsclaw 03.23.04 at 7:02 pm

An excellent explanation of hidden costs of monopoly. Shall we apply the lessons to universal health care?

7

VJ 03.23.04 at 7:07 pm

Ditto for the miserable email programs that have just not kept up with the times (or the needs) of customers. I mean where do you go to be able to carry a months worth of email in your inbox? Two weeks up and out seems to be the absolute limits here, which is just miserable for all sorts of reasons.

8

bill carone 03.23.04 at 7:12 pm

“there’s no restraint on firms’ ability to abuse consumers”

JOKE
I love the language used.

“Please. Mr. Monopolist, please don’t. You’re hurting me. Please don’t sell me something for $100 that I value at $200. Please. No!!!!”
END JOKE

9

Gavin 03.23.04 at 7:22 pm

It’s a bit unfair on economists to say they ignore the dynamic aspects of monopoly – after all, Adam Smith said that monopoly is a great enemy to good management and Sir John Hicks said that the best of all monopoly profits is a quiet life.

Bill: That’s not a joke! The deadweight loss of monopoly comes from all the consumers who cannot afford the product at the monopoly price but who would buy at the competitive price… no-one should care about transferring consumer surplus to producers per se.

Sebastian: I like the point about healthcare very much.

Mario: Mrs Tilton’s answer is also true of EU law. Monopoly-maintaining conduct is illegal, not monopoly itself.

10

Henry 03.23.04 at 7:31 pm

Sebastian – knew that you or someone else would be coming at me with that line of argument. And indeed, it has some truth. But with government provided services, there’s the possibility that the other force that Hirschman talks about – voice – can play an important role in restraining bad behavior and pushing towards improvements in services.

11

Antoni Jaume 03.23.04 at 7:53 pm

Universal health care is not a monopoly in itself. But then how do you oppress people with their livelyhood if they can get a good health care?

DSW

12

Sigivald 03.23.04 at 8:17 pm

Proprietary standards? Sounds like Netscape just as much as IE. (“Blink”, anyone? And rendering differences between browser platforms cannot, on logical grounds, always be labeled as “MS getting it wrong”…)

Bug-ridden and sloppy media software? Well, I’m not sure about bugs, but Real’s software has always, in my experience, been utter crap. (Why does anyone use RealMedia? Ever?)

Software will have bugs. Always. Everyone will make “proprietary” enhancements. Always. MS still has plenty of incentive to innovate and fix bugs (they, uh, DO put out service packs and patches with great regularity, no?), because they, like all big players in the industry, are quie rightly paranoid (vis. Intel).

Stagnation is death, for a software company, even if it’s owned by Bill Gates. (If this was not true, we wouldn’t have had 2k replacing NT, and then XP replacing 2k and ME, and we wouldn’t have Longhorn coming eventually.)

13

Ben Hyde 03.23.04 at 8:27 pm

Let me second the recomendation for Hirschman’s book Exit, Voice, and Loyality. It’s a much more nuanced look at these issues than I’ve ever found elsewhere.

In parituclar he makes an arguement that an excess of any one of the three can lead to lousy outcomes. So while a highly commoditized market with a lot of competitors will empower consumers to exit one vendor when ever they are unsatisfied it will also cause curious effect that the vendor never actually recieves any signal as to what’s going wrong. I.e. he get’s no voice input. That you need some loyality to force the customers to complain rather than leave.

The provocative point Hirschman makes near the beginning of this book is that while economics usually assumes that customer exit will create a signal that causes the firm to improve there is actually no carefully collected evidence to show that mechanism works! Further he points out that any such signal will need to be not to strong and not to weak. Too strong and the firm dies before it can respond, too weak and it gets ignored.

He wrote the book during a period when “love it or leave it” was a popular cliche to throw at antiwar protesters. He also says some very interesting things about politicians who resign as a matter of principle. All of which is quite topical again.

Krugman wrote a very nice essay about Hirshman that you can find on the web here: http://www.wws.princeton.edu/~pkrugman/dishpan.html

14

Jonathan Wilde 03.23.04 at 8:33 pm

Sebastian – knew that you or someone else would be coming at me with that line of argument. And indeed, it has some truth. But with government provided services, there’s the possibility that the other force that Hirschman talks about – voice – can play an important role in restraining bad behavior and pushing towards improvements in services.

Which system is more responsive to consumers’ desire for improved services – market provided services or government provided services?

If I were to become dissatisfied with my current hosting service, I could switch to another one. As a result, the hosting service has people on call 24 hours a day to answer questions and field ‘trouble tickets’. They know that I can always take my money elsewhere and thus take my complaints seriously. Their bad behavior is restrained by their own self-interest.

Yet, if I become dissatisfied with my (hypothetical) child’s public school, I would have to wait till the next round of school board elections in which my particular vote has little chance of influencing the outcome. They have little incentive to change their bad behavior.

And not only that, a government-enforced monopoly is a winner-takes-all system. Everyone’s child gets the same public school whereas there are literally thousands of different hosting companies and plans on the market.

15

Sebastian Holsclaw 03.23.04 at 8:35 pm

“Sebastian – knew that you or someone else would be coming at me with that line of argument. And indeed, it has some truth. But with government provided services, there’s the possibility that the other force that Hirschman talks about – voice – can play an important role in restraining bad behavior and pushing towards improvements in services.”

Always happy to oblige with the logically expected. ;)

Your main point about monopoly is not that it encourages bad behaviour, but rather that it encourages lazy behaviour. The need to innovate is stifled. I say ‘need’ because in a competitive environment you must innovate to succeed. Government control removes that need.

I don’t think your invocation of ‘voice’ saves the analysis. A huge number of important innovations start out at the margins and gain strength through the sorting of companies which takes place through profit and loss. A large majority (or even plurality) ‘voice’ will not demand these innovations because it will not see the need for them. However ‘voice’ will demand other innovations which they can forsee the need for, but which may not be efficient solutions to the problem at hand. The thing about ‘profit’ and its more important brother ‘loss’ is that they sort out good ideas from bad at a marginal level which does not have to come to the eye of majorities.

Government does not do that. The idea that government is particularly responsive to ‘voice’ in producing innovation strikes me as an article of faith. Or rather the idea that it does so with an particular speed is an article of faith. I’m perfectly willing to conceed that the government might come up with innovations after 30 or 40 years which the market could produce in 5.

16

bill carone 03.23.04 at 8:42 pm

“The deadweight loss of monopoly comes from all the consumers who cannot afford the product at the monopoly price but who would buy at the competitive price…”

I understand; I also don’t buy the idea that _not_ selling something to someone can be considered abuse of that person. (JOKE After all, think of all the things Henry isn’t selling to me. What abuse I take. END JOKE).

It is a deadweight loss, and perhaps government should step in and reduce the loss. Calling it “abusing consumers” is silly, hence the joke.

17

Jason McCullough 03.23.04 at 8:46 pm

“An excellent explanation of hidden costs of monopoly. Shall we apply the lessons to universal health care? “

I wasn’t aware universal health care included all health care providers being owned by the same entity. You’re confusing “monopoly in health care insurance” with “monopoly in the providing of health care services.”

18

Brian Weatherson 03.23.04 at 8:56 pm

I’d like to second what Jason said. The only monopoly that is even nominally on the cards for health care in America is a monopoly on health *insurance*. (In fact not even that is really likely – if we got to a situation like Australia where there is universal basic coverage and competition for extended coverage it would be about as far as we could go politically in anything like the forseeable future.)

If anyone is seeing large benefits to consumers from competition in health insurance these days, I’d be mighty surprised. I’d say consumers have done quite badly out of competition in the health insurance market in recent years actually.

And government agencies can face competitive pressures provided the system is structured in the right way. Even if the government itself doesn’t face competition, individuals working in key roles do, and that can, if the system is working, provide an incentive for those individuals to innovate to gain advantages.

19

Mark 03.23.04 at 9:16 pm

Another (probably off topic) side effect of the Microsoft monopoly is the ease with which it allows the spread of viruses.

It’s not the poor quality of the Outlook application that is the cause of this but rather its ubiquity.

The homogenity of the network is its weakness. If there was a greater variety of e-mail applications in use then the damage done to the network by viruses would be considerably less, regardless of the quality of the software.

This point probably has more to do with the theory of evolution than anti-trust.

20

Steve 03.23.04 at 9:17 pm

I’ve experienced two forms of health care in my life: the American, private, messy, bug-ridden health care system, and the American Military public, messy, bug-ridden, underfunded health care system. I prefer our private system.

Advocates of universal health care (or health care insurance)-the argument here makes a lot of sense. Monopolies are bad for consumers. Your experience with non-health care monopolies makes sense, I assume-Monopolies are bad for consumers. My experience with health care monopolies makes sense-Monopolies are bad for consumers. Whence is your continuing faith in government funded health care?

Steve

21

digamma 03.23.04 at 9:40 pm

Should there be a distiction between a monopoly that grew naturally and without wrongdoing and one that expanded unfairly? Or, should all monopolies or share the same fate? I know that a monopoly would have the ability to abuse its customers, but what if it hasn’t yet?

Let me put this another way: should there be a distinction between a competitor that was defeated naturally through its own wrongdoing and one that was defeated unfairly? Or should all competitors receive the same government protection? Any attack on Windows Media Player is protection to RealNetworks, which makes one of the most irritating programs ever.

Krugman wrote a very nice essay about Microsoft that you can find on the web here.

I am very interested in this issue, and I’m very sorry to see this thread degrade into a rehash of the healthcare debate.

22

asg 03.23.04 at 10:08 pm

What on earth does DeLong mean when he says there’s been no progress in browsers? What about the development, following on the heels of the blog phenomenon, of web-driven newsreaders that check any number of blogs for updates, translate them into readable text, and present it all for you in time order so you don’t have to continually re-check your favorite blogs? Is this not a huge improvement in web-browsing technology?

Moreover, the “furious competition to improve the product” DeLong mentions is… what? Both tried to keep pace with web authoring standards and add minor new features like bookmarks, accessible page view history, automated secure connection support, etc. After Netscape popularized graphical browsing, the rest of the changes were incremental, not dramatic.

As an aside, the most hilarious thing about the Netscape brouhaha was that, at the same time Netscape was whining in court that big bad Billy Gates had abused his OS market share in order to reduce the value of their product to nearly zero, they were negotiating a $1 billion merger with AOL.

Of course, Microsoft views the integration of the browser with the OS as a feature. DeLong may not like that feature, but his personal likes and dislikes are not a foundation for sound public policy.

23

Zizka 03.23.04 at 10:12 pm

I have four family members who have been quite happy with the Canadian monopoly healthcare system.

Thank you, Sebastian, for preventing an interesting thread from erupting. I have better things to do anyway.

24

asg 03.23.04 at 10:17 pm

While waiting for the previous post to process I thought of another several recent browser innovations: Shockwave Flash 5, the Google toolbar plugin, popup ad blockers, browser-driven cookie-cleaners, and automated web-form-fillers. Maybe DeLong is complaining that these things aren’t being dropped in his lap, but he also seems to think that having them pre-installed would also be anticompetitive in some way.

25

Sebastian Holsclaw 03.23.04 at 10:18 pm

“I wasn’t aware universal health care included all health care providers being owned by the same entity. You’re confusing “monopoly in health care insurance” with “monopoly in the providing of health care services.””

I’m not confused though it is a difficult area. You are right there is a difference, but you are wrong to suggest that there is a dispositive difference. A monopoly on health care insurance would be a very large control of payments in a single governmental entity. It would have all the inefficiencies discussed above for insurance. And it would cause all sorts of problems with health care services even if they were not directly controlled by the government. To put it in Microsoft terms: Microsoft does not contol the software market. It only controls a very large portion of the operating system market. But this control lets it push around just about everyone in the more general software market. The insurance market drives a huge portion of health care payments. The rest of the health care industry could not survive without money, which the government would then control.

Think of it in empire terms. Did the USSR need to actually have a Russian president in East Germany to control it? It controlled the military and economic levers. That was enough.

26

anon 03.23.04 at 10:26 pm

Jonathan Wilde, your comment about hosting providers ignores the cost of migration. I worked for a small web design firm, which hosted its smaller customers’ sites at a certain hosting provider. This hosting provider had shitty customer service, shitty servers, and average prices. Why didn’t we switch?
1. We were locked into long-term contracts
2. We didn’t want to risk downtime or worse.

It’s possible to migrate between hosting companies without downtime. But it’s not easy. And a small firm often can’t afford it.

Interestingly, these are the same reasons that it’s tough to switch between schools.

27

andrew 03.23.04 at 10:27 pm

As to the measurement of the “missing” innovation due to monopoly: what about “reverse” hedonic pricing? Though, yeah, it would be a big guessing game of “what would’ve been”, but couldn’t some kind of trend-line thingie be estimated? Especially if we’re claiming “harm” then some date and magnitude should be apparent.

I guess what I’m saying is, it doesn’t seem that such estimates would be so very much more subjective than current hedonic pricing techniques currently used in GDP and productivity accounting.

28

anon 03.23.04 at 10:31 pm

vj, I use Evolution for mail. It accesses my main mailbox (~4,000 messages) via IMAP, and it stores my archives locally (over 100,000 messages). It works pretty well on a not-particularly-fast machine (1ghz/512 mb ram).

29

Rik 03.23.04 at 10:33 pm

I’m currently unable to read mr DeLong’s log – cable connection acting funny – but I’d like to point to Norwegian browser Opera. To me this is far better than IE. Opera is the very proof that there is still improvement in browsers. The real problem is the Messenger. At least with browsers you have a choice, for IM’s the situation far, far worse. Not only is there is no choice, the product’s upgrades are – once installed – actually downgrades. So that’s where the competition should be.

30

rvman 03.23.04 at 10:48 pm

Technically, in universal health care there would be a monopsonist – a single dominant buyer of health care, not a monopolist – a single dominant seller. The inefficiency arguments against are similar, but not identical.

31

Leo Casey 03.23.04 at 10:56 pm

I think that is a too narrow reading of Hirshman, which brings forth the sort of laissez-faire market fundamentalism — do away with “monopolies” in health care, in public education, etc. — that has broken out in this thread. “Exit” is not necessarily the only effective option; “voice” can be just as effective. The problem with MS is that there is no avenue for “voice” and precious few mass means to “exit.” That is a rather different from publicly owned, controlled and directed services.

32

Jonathan Wilde 03.23.04 at 11:29 pm

“Exit” is not necessarily the only effective option; “voice” can be just as effective.

Can you please clarify? With Exit, the institution no longer has your patronage. With Voice, the institution still has your patronage, only now they also have your dissatisfaction. (Sorry if this is an oversimplification.)

It seems that the threat of lack of patronage is much more potent than the mere threat of dissatisfaction.

33

Chris Lightfoot 03.24.04 at 12:05 am

“It’s not the poor quality of the Outlook application that is the cause of this [spreading of viruses] but rather its ubiquity.”

Hmm. I don’t think it’s quite as simple as that. In particular, the particular feature which allows viruses to spread easily is not an example of “poor quality”, but a design decision (to do with guessing the types of files). Usually these things are seen as a trade-off between security and convenience, but I’m not sure what motivated the particular decision here. Anyway, this is a problem in Windows, rather than Outlook.

34

Jason McCullough 03.24.04 at 2:01 am

“A monopoly on health care insurance would be a very large control of payments in a single governmental entity. It would have all the inefficiencies discussed above for insurance. And it would cause all sorts of problems with health care services even if they were not directly controlled by the government. To put it in Microsoft terms: Microsoft does not contol the software market. It only controls a very large portion of the operating system market. But this control lets it push around just about everyone in the more general software market. The insurance market drives a huge portion of health care payments. The rest of the health care industry could not survive without money, which the government would then control.”

This would make sense if it was in the cards for the government to refuse to let you choose your providers, which would reduce competition in teh provision of health care providers. Which it isn’t. You’ve also got to compare it to our current “private” system, where virtually everyone who has a remarkable restriction of choice in who the insurer will let them use.

35

asg 03.24.04 at 2:56 am

At least with browsers you have a choice, for IM’s the situation far, far worse. Not only is there is no choice, the product’s upgrades are – once installed – actually downgrades. So that’s where the competition should be.

What the heck are you talking about?! Instant messaging software right now is where browsers were in 1995! Off the top of my head I can think of five competing instant-message software apps: MSN Messenger, AOL IM, ICQ, Jabber, and DBabble. I know Sun has a Java one as well. And that’s not counting the gazillions that have been designed purely for intranet use. If you don’t think the IM market is competitive then I wonder what market is!

36

Brian Weatherson 03.24.04 at 4:41 am

Again, I just want to second Jason’s comments. The individual health consumer can have plenty of choices even if the govt provides universal insurance.

In Australia I had plenty of choices as to which doctors I went to, and I would frequently change if I didn’t like one of them. (Or, more commonly, if they weren’t open at the hours I decided I wanted to see a doctor.) When I was covered by my parents health-care this would occasionally include using privately funded doctors, but when I was ‘paying’ it was always doctors being paid by the govt general insurance. In those days I had plenty of choice, a lot more choice than I’ve ever felt like I’ve got in America even with what I take it is pretty good health coverage by American standards.

I wonder if there’s any polling on people who have lived under many different health care systems about which one they prefer. I certainly found it was better being (my kind of) consumer in Australia than America, but maybe my experiences were quite atypical.

37

nick 03.24.04 at 6:17 am

I’ve experienced two forms of health care in my life: the American, private, messy, bug-ridden health care system, and the American Military public, messy, bug-ridden, underfunded health care system. I prefer our private system.

Well, that’s such a very large distribution from which to draw your conclusions.

Returning to the non-hijacked discussion: the problem with Microsoft’s dominance of the basic browser market is that it has, undoubtedly, got lazy.

On the one hand, it’s thrown all of its development efforts into the bloated, pay-as-you-go MSN Explorer, in an attempt to compete with AOL. (Coincidentally enough, there’s actually competition in that specific area of everything-but-the-kitchen-sink dial-up/email/browser applications.)

On the other hand, while IE has market dominance, it has shitty shitty standards support, which infuriates developers who now have browsers which render pages as they’d expect, but have to design around the bugs and inconsistencies in IE because that’s what people get with Windows.

IE has damaged the development of better sites. It’s not just to be seen from the side of the browser user.

38

Steve 03.24.04 at 12:49 pm

“I’ve experienced two forms of health care in my life: the American, private, messy, bug-ridden health care system, and the American Military public, messy, bug-ridden, underfunded health care system. I prefer our private system.

Well, that’s such a very large distribution from which to draw your conclusions.”

Larger than your’s I’d warrant.

steve

39

Keith 03.24.04 at 2:28 pm

Personally, I think the only reason most people stick with Microsoft’s overrated products is because that’s what comes on the machine. It bennefits the manufacturer and MS to bundle everything together as it draws in lazy consumers who think searching for freeware and shareware is too technical or time consuming. MS browsers and Word processors work well enough so why bother? The answer is simple: you can get faster, more user friendly and efficient programs for free or next to nothing but it takes effort. Not a lot of effort but not a lot of effort is nore than most people are willing to put forth. So they use what they’re given and complain when it crashes on them.

As a side note, I just finished purging all Microsoft products from my laptop. Grant it, I’m a Mac user so it wasn’t that hard. AppleWorks 6 instead of MS Office 10, Safari as my main browser with Mozilla’s Camino as my backup (for the.02% of websites that don’t support Safari).

If you go to versiontracker.com, the process of purging MS apps becomes so much easier. You could do it on a saturday afternoon and it might cost you $50 if you go for the flashy shareware.

40

Leo Casey 03.24.04 at 5:04 pm

>> Can you please clarify? With Exit, the institution no longer has your patronage. With Voice, the institution still has your patronage, only now they also have your dissatisfaction. (Sorry if this is an oversimplification.) < < >> It seems that the threat of lack of patronage is much more potent than the mere threat of dissatisfaction. < < You read "voice" too narrowly, as a simple expression of discontent or unhappiness. "Voice" can also be read as participation, directly or by representative proxy, in the decisions which govern public institutions, and Hirshman discusses this meaning. The import of this second meaning of voice is that there is a crucial distinction to be made between a private entity, providing a private, consumer good, such as Microsoft, and a public entity, providing a service which is a public, as well as a private, good. For Microsoft, the only sense in which we can talk of "voice" is an expression of consumer dissatisfaction which it is entirely free to mostly ignore, given its quasi-monopolistic position in the market; for public education and public health, there are democratic political processes, both representative and participatory, through which "voice" can play a role in the formulation of policy and the delivery of the service. The market funbdamentalism of libertarians is premised on denying the efficacy of this second sense of "voice" in the provision of services which are public goods, and insisting that it is only as a consumer, and not as a citizen, that one can effect the larger world. But in point of fact, combinationss of citizens, through organized, self-conscious political vehicles, have much more impact than aggregates of disparate consumers. The public is more than the aggregate of different private interests, and the public good needs more than the "invisible hand" of laissez-faire markets to be realized.

41

Sebastian Holsclaw 03.24.04 at 5:22 pm

“For Microsoft, the only sense in which we can talk of “voice” is an expression of consumer dissatisfaction which it is entirely free to mostly ignore, given its quasi-monopolistic position in the market; for public education and public health, there are democratic political processes, both representative and participatory, through which “voice” can play a role in the formulation of policy and the delivery of the service.”

Very idealistic concept of voice. I wonder if Hirshman has actually had to work with government bureaucrats on a day to day basis. In the US, public education is a classic example of a government-run institution which is almost completely unresponsive to the ‘voice’ of the parents. Almost every legislator who can afford to opt out of the public system does so. They would be the ones with the very most ‘voice’ yet they still adopt an ‘exit’ strategy. That suggests to me that ‘voice’ isn’t all it is cracked up to be.

42

Mark 03.24.04 at 6:01 pm

Hi Chris,

I said: “It’s not the poor quality of the Outlook application that is the cause of this [spreading of viruses] but rather its ubiquity.”

Then you said: “Hmm. I don’t think it’s quite as simple as that.”

I agree. Of course the nature of the software is a factor. If Outlook didn’t have the virus-sending feature then that would solve everything.

My point was that the virus problem wouldn’t be as pronounced if Outlook usage wasn’t as widespread. If there was more variety of applications then the virus writers would have to write adaptations to each in order to have the same effect. It would take too much effort.

At present, targeting only Outlook and Windows is sufficient to cause serious problems to the entire network.

43

Leo Casey 03.24.04 at 6:42 pm

>> Very idealistic concept of voice. I wonder if Hirshman has actually had to work with government bureaucrats on a day to day basis. In the US, public education is a classic example of a government-run institution which is almost completely unresponsive to the ‘voice’ of the parents. Almost every legislator who can afford to opt out of the public system does so. They would be the ones with the very most ‘voice’ yet they still adopt an ‘exit’ strategy. That suggests to me that ‘voice’ isn’t all it is cracked up to be. < < This is the argument put forward by market fundamentalists who want to privatize public schools, most notably in the "rational choice" text of Chubb and Moe, "Politics, Markets and American Schools." It never seems to dawn on these folks that when you start out with a explanatory model based on a conception of human beings as entirely self-interested, instrumentally rational beings -- that is, as beings that are perfectly aligned with laissez-faire markets -- it is not all that difficult to come up with a conclusion that markets are the only effective means for the delivery of public goods such as education. It is an argument which, taken to its logical conclusion, would completely replace the citizen with the consumer, the public with an aggregate of private interests, democracy with laissez-faire markets. It is most interesting that arguments for the privatization and marketization of public education almost always operate from first principles, how markets function in theory, and never discuss the actual operations of such experiments in the real world, such as in New Zealand or in Pinochet's Chile, under the direction of Milton Friedman. Nor is any attention paid to the consequences of the massive privatization and marketization of American health care over the last three decades. If this was done, than it would become manifestly clear that if there is any idealist notion in these discussions, it is that of the sovereign consumer, shaping public service through laissez-markets, so that the service is delivered more efficiently and with higher quality. Tell that to the consumers of HMO health care.

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Dan Simon 03.24.04 at 7:04 pm

I don’t understand why the market dominance of Microsoft’s browser acts as any kind of barrier to innovation. A browser isn’t an end-to-end system–anyone is free to market a browser with whizzy new features that IE doesn’t have. If it’s attractive enough, users will buy it, and the new browser will make its developers rich.

Or are you claiming that the problem is that Microsoft undercuts competitors by giving away IE for free, thus encouraging clients to make do with a mediocre alternative rather than pay for some innovative would-be competitor? Putting aside whether this argument applies to browsers (or whether it makes any sense at all), you might want to consider its implications a bit more carefully. The claim that “good enough” software given away for free discourages innovation, and that free software therefore should be prevented from achieving a dominant position in the market, may not be quite as objectionable to Microsoft as you might think.

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Sebastian Holsclaw 03.24.04 at 8:05 pm

Leo, Funny that you suggest I engage only in theory while ignoring my quite concrete example where ‘voice’ doesn’t produce the changes that its proponents suggest it should.

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Jason McCullough 03.24.04 at 8:05 pm

“Almost every legislator who can afford to opt out of the public system does so.”

That’s because they’re the rich elite, not because they’re uniquely positioned to see what’s wrong with it or something in their official capacity. It’s entirely overdetermined by income. I’m not sure what adding “legislator” does.

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Sebastian Holsclaw 03.24.04 at 9:31 pm

But they are also the ones with the best ‘voice’. And even if you hate my legislator example, surely you understand that the public schools in the US have not been successful–they aren’t responding to voice, they aren’t responding to practicially anything.

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Leo Casey 03.25.04 at 11:51 pm

>> Leo, Funny that you suggest I engage only in theory while ignoring my quite concrete example where ‘voice’ doesn’t produce the changes that its proponents suggest it should. < < Your sweeping generalizations about American public education, made from afar, are not exactly what I would call a "concrete example."

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