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How to fix a broken economy

Wed, 24 Jul 2002 19:30:00 +0000

As the stock market continues its free-fall toward a bottom that seems ever more distant, while an endless progression of mighty corporations seize the headlines with their confessions of fudged numbers and faked profits, an increasingly jittery nation is looking to the CEO in chief for reassurance.

So far, neither the markets nor individual Americans are hearing what they want. President Bush's poll numbers are softening, and his stern remonstrations against corporate criminals do not appear to have instilled any backbone in investors. With each day, the bear market becomes more fully entrenched, the retirement nest eggs of millions of Americans wither away a little further and the sense that corporate America is a playground for corrupt delinquents strengthens.

It is true that the stock market is not the economy. It is also obvious that much of the corporate malfeasance that is currently being laid bare before a disgusted public began occurring long before Bush became president. But such caveats are becoming less and less helpful to the current administration, as each new revelation of accounting fraud and each new slump in the Dow slam into their predecessors like so many freight cars piling up against a suddenly stalled locomotive. At some point, one has to stop blaming the train wreck on the previous conductor.

Microsoft wins — or does it?

Thu, 28 Jun 2001 18:05:00 +0000

Lawrence Lessig, professor at Stanford Law School, who served as the court's "special master" in the Microsoft case:

Microsoft lost on every hard question; they won on every easy question. The court has found them liable for monopoly maintenance. That's the essence of the government's case. The court has also found that it did not decide in 1998 that tying software would be decided under a different standard. That was the essence of Microsoft's defense. The court has crafted a smart and innovative rule about the special problem of tying software. But even if Microsoft won in the application of that rule on remand, the core of the case is that Microsoft has lost. They violated the antitrust laws, and the real issue is now remedy.

Richard McKenzie, author of "Trust on Trial: How the Microsoft Case is Reframing the Rules of Competition":

On the one hand, Microsoft might be able to celebrate because the court's eliminated the threat of a breakup, at least immediately. But there are a lot of things in there that look like bad news. I'm keeping list of points for Microsoft and against, and right now -- I'm only on Page 60 -- the list against is far longer than the list for.

Triumph of the Brill

Sat, 31 Mar 2001 00:41:00 +0000

Brill's Inside Content. That's the rumored name of the new media empire that will be formed if Brill's Content merges with Inside, a deal that the Industry Standard reported on Thursday was in the works.

We applaud egomaniacal mogul Steven Brill's commitment to plastering his own name over every media property he acquires, and have some additional suggestions.

He should immediately acquire the anti-Dubya site Bushwatch.com, to form ContentInsideBrillsBush.com.

Napster: Hanging by a thread

Mon, 12 Feb 2001 20:30:00 +0000

Napster is still alive -- but just barely. A three-judge panel from the 9th Circuit Court of Appeals ruled for the recording industry on virtually every point of law at issue. Napster users, said the court, are infringing on recording industry copyrights, Napster has a responsiblity to halt that infringement and a preliminary injunction shutting down Napster is not just "warranted but required."

However, the court also ruled that the injunction must be modified before it is fully upheld by the appellate court. Specifically, the court is requiring that Napster be notified in advance that it is in violation of copyright in particular cases, and if Napster refuses to bar transmission of the songs across the Napster network, it will then be in violation -- and will be shut down.

The request for a modified injunction may offer Napster a small opening for survival, suggested several lawyers who have been following the case. Since District Court Judge Marilyn Patel delivered the original injunction, Napster has forged an alliance with the German media conglomerate Bertelsmann. Napster's new commercial profile might encourage Judge Patel to broker an agreement between the recording industry and Napster that allows the music-trading service to continue operating, said one lawyer.

Victory or defeat?

Mon, 12 Feb 2001 20:05:00 +0000

Although the Napster music-trading service is still breathing for now, most observers declare that the latest court decision spells imminent doom for the company. Now the question becomes, What next? Will Napster users flee to other file-trading networks? Or has the recording industry established its dominance over the new online world of music distribution once and for all? We asked our favorite suspects in the worlds of law, music and software for their opinions. Here's what they had to say.

Eben Moglen, professor of law, Columbia Law School

The record industry is about to discover that this was a terribly bad idea. The consequence of shutting down Napster -- whenever the injunction happens -- is that they will be on the cover of every major newsmagazine and 60 million people will again find out that you can share music online. They will also find out that Napster's servers have been replaced by the OpenNap -- a program that allows any computer anywhere to be a Napster server and help people share music.

How the ax falls

Thu, 25 Jan 2001 20:30:00 +0000

Vacuous venture capitalists, pompous marketing executives, egocentric programmers, lemminglike day traders -- one needn't look far when searching for dot-com downturn villains. From start to finish, the past few years of speculative new-economy bubble-headedness will no doubt go down in history as a gruesome case study in inept capitalist behavior.

Back in the day when IPOs for the likes of TheGlobe.com were sending stock prices to obscene heights, it was clear to plenty of cynical observers that hype had replaced substance in the Internet economy. But few people could have imagined just how ugly and stupid the end of all the fun and games would be.

Here at Salon, where we are both part of the dot-com mix and obliged to report on it, we have been reviewing an endless stream of story pitches from newly laid off dot-com employees lamenting their harsh new "emperor has no stock options" reality. Judged individually, these stories, most of which are drenched in a cloying cloud of ironic self-pity, don't tell us much more than how it feels to be a liberal arts major who got a groovy job just out of college and then lost it all of a sudden and gosh doesn't that really suck. But judged collectively, these "last days of my dot-com" stories start to add up -- as yet another datum of evidence proving that the entire dot-com explosion was just one massively botched-up amateur hour.

Our crystal ball

Wed, 03 Jan 2001 20:30:00 +0000

Recession? What recession?

In April, just as the NASDAQ is bottoming out at 1,632.46, a strange thing happens: iVillage.com turns a profit. It's a small profit, but the company is indeed in the black. A week later, Ask.com proudly announces that it, too, managed to make money in the first quarter of 2001, followed swiftly by similar announcements from theglobe.com, drkoop.com and, finally, Amazon.com. It seems that all the belt-tightening and dwindling competition really have turned the industry around.

Spurred on by these surprise recoveries, the economy immediately bounces back, perhaps too far back. The NASDAQ soars to late-1999 heights as investors frantically pick up dot-com stocks hoping to get them on the cheap before the companies turn profits. Venture capitalists go on pet-portal funding binges and entrepreneurs who once steered clear of Silicon Valley return in droves, driving real-estate prices even higher. Lear jet sales go through the roof as proud executives feel the need to spend their fledgling profits. Will they ever learn?

Bill Gates gets a promotion

The year the hype died

Fri, 22 Dec 2000 20:30:00 +0000

To say that the bloom came off the new economy rose in the year 2000 might be perceived, in some quarters, as a slight understatement. For venture capitalists, employees of dot-com startups and technology reporters, the implosion of the high-tech/Internet economy is an obvious choice for the honor of biggest (and most disappointing) story of the year. As layoffs mount and stock prices fall, it's becoming hard to remember those days just 12 months ago when it was impossible to turn on a TV without seeing a string of 10 pro dot-com commercials in a row. Alan Greenspan's famous description of the zeitgeist, "irrational exuberance," now seems more of an epitaph than a motto.

But the difficulties Net entrepreneurs have faced obscure the fact that the Internet does not neccessarily equal the "new economy." And the Internet, despite the flames engulfing technology start-ups of every description, just keeps chugging along. Exhibit A: the peer-to-peer movement led by Napster. Love Napster or hate it, it's hard to deny that its success is a function of the structure of the Internet. And even though advertisers are suddenly shying away from the Net, Internet usage rates show no signs of declining. In the year 2000, more people got online and stayed online than ever before: playing games, exchanging music files, and, of course, sending e-mail.