Misadventures in Capitalism: Weekend Roundup

February 25th, 2006  |  Published in Uncategorized

Like Tom Frank always says, it pays for leftists to read the business section. This week's business pages were such a gold mine of capitalist irrationality, I couldn't pick just one story. The lowlights:

The Threat to a Free (Business) Press. (Article is behind the stupid Times Select paywall.) The Bush administration's ongoing attempts to silence journalists are one thing; the bourgeoisie has always been ambivalent about allowing the rabble to speak its mind. But you would think that allowing business analysts to report honestly about a company's revenue and profitability is a basic prerequisite to rational capital allocation. Times columnist Joseph Nocera is up in arms about the antics of Patrick Byrne, CEO of the profit-challenged overstock.com, who is using the courts to silence journalists and research analysts who have written unfavorably about his company. The specifics of the case--including a demented speech in which Byrne refers to a nefarious conspiracy against his company, headed by a "sith lord"--are surreal and hilarious, but the underlying issue is a serious one. I mean, if the business press isn't immune to this kind of intimidation, then truly no one is safe.

The Blackberry vs. the Patent Trolls. This week saw another episode in the ongoing legal battle between Research in Motion, the Canadian company that makes the Blackberry handheld email device, and NTP, a company which is demanding money for what it says are patent infringments. Now, NTP is not a company which is protecting an investment in its technology--the sort of investment that patents are supposed to protect. In fact, NTP has never invested in or produced anything; it exists solely for the purpose of holding patents and suing people. RIM won a minor victory when a court refused to grant NTP an injunction; at the same time, the patent office has invalidated the NTP patents. Yet the Blackberry could still find itself shut down. Sadly, the judge seems ignorant of the real issues invovled, as he waxes bemused that the courts should be forced to decide on what ought to be purely a "business issue".

The Great Airline Ticket Swindle. When airlines advertise their ticket prices, there are required to list the full price--only certain government taxes and fees can be excluded. This makes price shopping with services like Orbitz and Travelocity easy for consumers. But now the Transportation Department looks set to allow all kinds of special surcharges to be tacked on to the listed price, from fuel surcharges to insurance. This despite the fact that virtually everyone--from individuals to travel agents to low-cost airlines--is opposed to the change. Only the big five, United, American, Northwest, Delta and Continental, are in favor. It's evident that this rule change serves no other purpose than to frustrate consumers and allow uncompetetive airlines to wrangle super-profits out of travellers. The situation that is being generated is what the economists call "imperfect information", and it's supposed to be a major hindrance to the functioning of a free market. But hey, who's keeping score anymore?

Selected Shorts. H&R Block saw its stock drop by two dollars when the tax preparation company announced that it had screwed up its own taxes. And no matter what Irwin Schiff tells you, if you don't pay taxes, you will go to jail.

Meanwhile, the housing bubble is still deflating. And don't let the hijinks of patent trolls and paranoid CEOs distract from the really imporant work that's taking place in the private sector: like the end of the living wage, and exciting new advances in spying-on-you technology.

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