The Informationist, a blog written by Bruce Abramson

The Aftermarket Economy

Cross-posted at Breitbart.com's BigGovernment

So Facebook filed its IPO papers, and the numbers are eye-popping.  The company appears to be worth about $100 billion, or a bit more than the GDP of Tunisia.  Others shade it a bit lower, but one thing is certain: it’s good to be Facebook.

Facebook is special because, in network economic terms, its product is a platform, and successful platforms are few and far between.  For all its bells and whistles and features and privacy policies, Facebook remains—at heart—a place that people hang out.  As the proprietor of a popular hangout, Facebook gets to write the rules guiding all the folks who think it’s a good place to pitch their businesses or to make some sales.  In network economic terms, these businesses operating inside Facebook’s business comprise an aftermarket.

Play-by-Play of the Nevada Caucus

Cross-posted at Breitbart.com's BigGovernment.

A couple of years ago, after the bubble crashed, my wife and I decided to buy a condo in Vegas.  There were many reasons behind that decision, but Sin City is known for delivering the unexpected.  And so, political junkie that I am, I suddenly found myself eligible to participate in an early, swing-state, caucus.  Las Vegas had taken me into virgin territory.

The Law & Economics of Aftermarkets

Coming up tomorrow (Tuesday 1/31): my one-hour intro to the law & economics of aftermarkets.  If you or someone you know plans to make money selling aps for the iPhone, Android, Facebook, or any other proprietary market, you need to know this stuff!

http://rimon.eventbrite.com/

What Government Should be Doing in the Markets

Cross-posted at Brietbart.com's BigGovernment

It’s hardly a secret that the 2012 election is shaping up as a contest between free markets and big government.  And while the choice seems clear in the current political environment, it’s important to recall that government does play a critical role in the development and maintenance of functioning markets.  Yet, as Tea Partiers, Occupiers, and Ron Paul acolytes all note, government has both abdicated that critical role and inserted itself where it does not belong.

If markets were magical places that flourished whenever government disappeared, Somalia would be the world’s leading economy.  Markets are sophisticated mechanisms that enable informed parties to exchange resources, voluntarily, to mutual benefit.  There’s a lot packed into that sentence.  For markets to work, participants must trust the system.  They must believe that they have—or least can access—the information they need to make informed decisions.  They must feel free from coercion—both explicit coercion and unacceptable take-it-or-leave-it offers.  They must trust the inherent fairness of the system, and they must believe that it is possible to enforce the rules of the marketplace by sanctioning cheaters.  The closer an actual market comes to meeting these needs, the better it will function.  The further a market drifts from these goals, the more likely it is to fail.  It is thus absolutely critical that someone—presumably the government—serve as the market referee and the guarantor of market enforcement.

First and foremost, market participants must believe that courts will honor contracts and property rights fairly, dispassionately, and smoothly.  Contracts allow strangers to exchange promises; property allows people to focus on matters in front of them without worrying about possessions that may be out of sight.  In the absence of enforceable contracts and property rights, people could never travel far from home, leverage their assets, or exchange current payment or performance for a promise of future delivery with anyone unfamiliar.  In short, a society that distrusts its courts cannot progress beyond a tribal or a village economy—even if it employs tribal or village markets.

 

In Praise of the Republican Field

Cross-posted with Breitbart.com's BigGovernment

I’ve grown weary reading about the disappointing nature of the Republican field for President.  So allow me to take a contrarian view: We have a solid field of candidates that seems to be leading to an exciting choice.

Stopping Online Piracy - One Way or Another

Cross-posted with breitbart.com's BigGovernment

The Stop Online Piracy Act (SOPA), currently the subject of hearings in the House Judiciary Committee, has generated interest far beyond the community of copyright lawyers.

To its proponents, SOPA is a critical addition to copyright law, necessary to help creative Americans protect their legitimate property rights from foreign attackers, and thus to preserve the numerous American jobs in our world-class creative industries.

To its opponents, SOPA is an unprecedented attack on civil liberties that threatens to destroy free speech, the Internet, and the thriving American technology sector—not to mention the many American jobs that it creates.

Who is right?  It turns out that they both are: SOPA will help copyright holders protect the rights that copyright law grants them by suppressing free speech and impeding the functioning of the Internet, with predictable consequences on American jobs.

This result is hardly an anomaly.

Obama Smarts vs. American Common Sense

Is Obama Smart?  It’s a question that more and more people are asking.  His devoted fans like to note that he made it through Columbia and Harvard—supposedly a stark contrast to Rick Perry’s less-than-stellar transcript from Texas A&M, though Obama’s refusal to release his own transcripts does blunt the comparison.

The Dead Villain Test: Separating Cause From Effect In The Islamic World

Cross-posted at breitbart.com's BigPeace

Osama bin Laden is dead, and the world is a better place for it.  Moammar Qaddafi may soon follow.  His departure, too, will leave the world a better place.  If all goes well, 2011 will also witness the demise of Bashar, heir to the Asad dynasty.  No one with a shred of decency will shed a tear.  The world will just keep getting better, one dead villain at a time.

These three men have brought untold misery, pain, suffering, and death to tens of millions of people—the overwhelming majority of them Muslims, though their Western victims number comfortably in the thousands.  With their dispatch, the Islamic world will exact its greatest measure of justice since (at least) the Iraqi execution of Saddam Hussein nearly five years ago.

What do Tech Investors Want?

Cross-posted at breitbart.com's BigGovernment

Last week, Google announced its plans to acquire Motorola Mobility, effecting a vertical integration from the Android operating system into hardware.  Investors responded by shaving roughly 13% off Google’s value—roughly twice as much as the NASDAQ lost and three times as much as the Dow.

A few days later, HP announced its plans to shed its PC division and acquire a software company.  The combined effect will be a shift from hardware—long HP’s mainstay—towards software.  Investors responded by knocking close to 20% from its value in a single day.

Google and Motorola: Concentrating Attention on Concentrated Power

Cross-posted with breitbart.com's BigGovernment

Google is one of the worlds most intriguing companies.  From its humble beginnings as a search engine company, Google has leveraged its mastery of the elusive formula for monetizing web traffic into a force capable of tangling with China—making it considerably stronger than our own State Department by some measures.  Its recent announcement that it plans to acquire Motorola Mobile makes it heir to a grand tradition of American manufacturing—not to mention possessor of a valuable trove of intellectual property, and a sudden direct competitor to stylish hardware king, Apple.

Along the way, Google has managed to wander into numerous areas of public policy, including privacy, data security, and telecommunications regulation.  It has attracted antitrust scrutiny, patent challenges, and copyright suits—along with the standard collection of business litigation.  It has become a significant contributor to election campaigns and an active bidder for government IT contracts.  Above all, Google has riveted the attention of both devoted fans and committed opponents.

What does it all mean?  How can we make sense of such a company?  And how can the answers to these questions inform contemporary political debate?