Saturday, May 11, 2013

The Year the Microsofties Lost Their Lock-in

Cast: Bob, a brooding loser. Applejuice, (use your imagination) Lola, the love interest John, visiting scholar from New Zealand's Institute of Silly Economics (NZISE) Bartender

Act I

[Bob, in his living room in Santa Clara, California, watching CNN] [From the TV]:"And today in Washington, D.C. the U.S. Court of Appeals ruled unanimously to overturn the verdict of Thomas Penfield Jackson in the Microsoft anti-trust case. "Jackson, in May of 2000, had ordered Microsoft broken into 51 different companies (one for each state and the District of Columbia), because the Redmond, Washington software giant had been found to be illegally meeting customers' needs and driving the technology revolution, which many leading New Zealand economists feel has brought the world to near the Redline on the Phillips Curve. And is just not nice. "Let's go to Judy Woolbrain for more. Judy." "Yes Bernie, it's true, the Reaganite Appeals Court has sided with the Buccaneer, Bill Gates, and unless the Supreme Court rules otherwise, the world is again safe for unbridled innovation. Standing beside me is constitutional law expert, Ann Coulter. Ann, what do you think convinced the Appeals Court to rule as they did?" "Common sense, the rule of law, elementary economics. Though on the latter, I'm not sure the Microsoft briefs would have accomplished the trick. But thanks to a brilliant exposition of the relevant issues in a Friend of the Court brief, by Patrick of Susupply (a man I'm definitely eager to meet), it was impossible for any sentient judge to be unaware of what was at stake." Bob (throwing a Berkenstock through his TV screen): "Those Damn Capitalists." [exits stage left, of course, to his front porch] "It's just not fair. They exploit the workers. They lock in the unwashed masses to inferior software. They don't contribute." [A voice from the shadows]: "No, it definitely is not. And the country is on the verge of being taken over lock, stock and barrel by rampant, inefficient, free enterprise. The fundamental problem for the allocative efficiency of competitive markets arises from externalities. 
"Informational externalities encourage 'technology adoption bandwagons'. It is possible for a particular standard to become entrenched in the market, despite the fact that most users would have preferred a different one. 

"With market dynamics of that sort, history is a decisive determinant of the dominant selection that will emerge from the array of contending products and technologies. QWERTY is a case in point. Nothing in the process guarantees an outcome governed by forward-looking consideration of which among the available options would turn out to be 'best' from the viewpoint of the whole collective of technology users, let alone optimal for economic welfare in society at large. This is a fundamental economic propositionabout the nature of technological evolution in network industries-one that business leaders and economic policymakers cannot afford to ignore."

Bob: "Just who are you anyway?"

Applejuice (stepping out of the shadow): "Call me Applejuice. Cigarette?"

[Cigarette lights itself in Applejuice's hand.]

Bob:  "How did you do that?"

Applejuice: " All Souls College. Everyone there can do it. "But tell me, Bob--"

Bob: "How did you know my name?"

Applejuice: "Pretty hard not to what with all those posts about Sraffa on usenet, Bob. Which brings me to the reason I'm here. I'm looking for the right man for a job. A very special job.  This man has to have what it takes; single-minded devotion to avenging society's exploitation by a ruthless monopoly.

Bob: "You want me to play centerfield for the Oakland Athletics?"

Applejuice: "NO. I want you to be the CEO of a Silicon Valley start-up. I want you to shepherd a new internet browser/Operating System onto the world stage.  I'm talking a trillion dollar IPO.

"Not that we'd keep any of it for ourselves, of course."

Bob: "What's the catch?"

Applejuice: "Catch! My boy, you're a cynic. I'm just here to set the world on a course for a better tomorrow. Here, just sign this contract."

Bob (reading quickly under the dim porch light): "My soul!  Hey, what is this?"

Applejuice: "Not to worry. Let's go downtown. I want you to meet a friend.

[Lights Fade]

Act II

[A bar in San Jose, a patron, John, sitting on a stool, watching the TV tuned to CNN] John: [Slamming his glass down on the bar] "SUSUPPLY! On the evening news! I come here to get away from HIM. I've FORGOTTEN more economics than he'll ever know. Bartender, another double." Bartender: "Okay, okay. Just calm down, John. Try to forget about all the hard luck you've experienced. It's getting annoying to the other patrons listening to the same thing night after night, some of them are even threatening to call the Junior College you're teaching at, and complain about you." [Enter Applejuice and Bob, as the above dialogue ensues. Applejuice points Bob to a corner table where a voluptuous redhead sits alone. As he passes him, Applejuice casts a sidelong look of interest at John.] Applejuice: [sitting down at the corner table] "Lola, meet Bob." Lola: "Well, hello handsome. I hope you're not going to talk shop like Mr. Applejuice always does." Bob: "Don't tell me you're another neo-classical economist married to exploded dogma." Applejuice: "Now, now, Bob. We're just here to get acquainted. Lola: [Taking Bob's hand] "Yes, Sugar. Why don't you order a diet Coke, and relax." Bob: "But Applejuice has a plan to save the world from corporate exploitation. And---" Lola: "Of course he does. I'm here to help you both. You know [wink and smile]:
"A little brains, a little talent,
"With an emphasis on the latta    

"Mr. Applejuice, I think Bob and I would be more comfortable as a twosome."

Applejuice: "Sure. Sure. Excuse me."

Bob: [glances first at Lola, then with a panicky expression at Applejuice] "You're not leaving me alone with her!"

Applejuice: "I'm just going to have a drink at the bar. You sit here and see that whatever Lola wants--"

Lola: [Batting her eyebrows] "Lola gets."


[At the bar stools] John: [To no one] "I've got more talent in my little finger than the whole faculty at Chicago." Applejuice: [sits down next to John] "I'm sure you do, Professor. I tried to communicate my view to them that there is an amazing irony of rhetorical success in the inordinate attention that was captured by one specific illustration of the workings of path dependence, and the consequent significance with which debates over its factual details continues to be endowed. 

"QWERTY, the now-popular emblem of path dependence, has acquired associations in the literature that threaten to obscure the very ideas that it was enlisted to impart to the economics profession. Itwould be implausible for me to avow very great regret in having contributed to that state of affairs. But, I would accept some blame--for offering an illustration that in the hands of others could turn into a proverbial red-herring, ready for dragging across the trail of path dependence.

"The proviso is that I am allowed to enter a plea of 'mitigating historical circumstances.' "

John: "Damn right, you are."

Applejuice: "In the Fall of 1984 I was confronted by a rhetorical challenge. I had involved myself in the plans of Professor William Parker (then of the Yale Department of Economics) to stage a session of the upcoming American Economic Association Meetings--on the need for economists to study (some, more) economic history. I duly had been allotted 20 minutes to have a go at this issue myself." 

John: "Can't say anything in 20 minutes."

Applejuice: "Right. 

"What message, compressed into so brief a timespan, would persuade the economist in the street to turn his or her mind to the possibility that history might matter in what they were doing professionally? Getting attention was a first requirement, and so my talk would start out with references to Sex [turns to look back at Lola and Bob in the corner].

"Seizing the audience's attention was one thing, but how to keep it? One generally reliable tactic of reinforcement suggested itself: the application of a stimulating shock. What is the subject that jolts economists even more than mention of Sex? Inefficiency!"

John: "I know it always does with me."

Applejuice: "So, I would have to produce a story involving an economic process that could not shake loose from the influence of past events, and one in which rational autonomous agents were led to a shared, collective outcome that would judged to be no better for some, and for others definitely worse than a feasible alternative. 

"And if that didn't suffice, more "shock" would have to be applied: show that although all the players individually might wish to choose otherwise were they only able to wipe away the past and start again, it was more than likely that they would go on living with their unsatisfactory (Pareto inferior) situation--because of the difficulties or expense of coordinating the actions that would be needed for them to collectively achieve an escape. I do freely admit to having seized upon the history of typewriter (and computer) keyboard layouts as providing me with just such a rhetorical device."

John: "Nobody could blame you. Perfectly understandable."

Applejuice: "Whatever novelty may be associated with my paper resides largely in the surprising audience response, rather than in either the story's ingredients or its challenging message."

John: "Rude children. Non-entities with chips on their shoulders.  No appreciation for real scholarship anymore.  I don't know why the government here lets it go on."

Applejuice: "Well thanks to this Patrick of Susupply character, it doesn't look like the government can help us."

John: "You've got that right. There MUST be something that can be done.

Applejuice: "Funny you should say that. I've been working on a plan, but I'm in need of a consultant to help bring it to fruition. [Takes folded contract out of his inside coat pocket]

[John, slowly turns and looks at Applejuice.  Lights fade.]


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