Loot Seekers Attack Microsoft

November 15, 1999 Letters to the Editor Wall Street Journal

In his latest attack on Microsoft, Robert Bork shows once again that he is decades behind the times as far as economic theory is concerned (“A Predatory Monopoly,” Manager’s Journal, Nov. 8). Repeating an argument that was made three days earlier in the New York Times (Nov. 5) by fellow lawyer and Microsoft critic Robert Reich, Mr. Bork denounced Microsoft’s hiring of lobbyists and public relations firms to defend itself against the political and public relations assault on the company that has been orchestrated by Mr. Bork’s benefactor, Netscape. “Nothing comparable in intensity” has ever occurred in the history of antitrust, Mr. Bork says of Microsoft’s defensive political actions.

But it is Microsoft’s competitors who have waged a 10-year political battle aimed at achieving for themselves through the political process what they have failed to achieve in the marketplace. Microsoft’s belated efforts in the political area pale in comparison. Economists call the kind of behavior displayed by Microsoft’s rivals (including the hiring of Mr. Bork) “rent seeking,” defined as the use of the political process to procure special privileges, including regulations that harm one’s competitors. Lobbying for protectionism is a classic example of rent seeking, as is harassing one’s more successful competitors with antitrust lawsuits.

Microsoft’s defensive actions are labeled “rent avoidance” in the economics literature. It is rent seeking that is predatory, anti-competitive, socially wasteful and immoral. Rent avoidance, on the other hand, is meritorious, for it is an attempt to foil the plans of political predators. It takes real mendacity to assert, as Mr. Bork does, that the opposite is true.

Thomas J. DiLorenzo Professor of Economics Loyola College in Maryland Baltimore