Archive [May 2000]

As I write this, six-year-old Elian Gonzalez is undergoing freedom detox at the Wye Plantation, under the command and control of the odious Clinton lawyer/photographer, Greg Craig. The equally odious Clinton Administration is again hiding behind a dubious claim of “Executive Privilege” regarding subpoenaed e-mails it was supposed to have turned over, but decided instead to, as it said, “let sleeping dogs lie.” Emphasis on “lie.” Meanwhile, the Clinton Justice Department has declared its intention to divide Microsoft, the largest and most successful high-tech company in the history of the world, into two competing organizations.

I have a better idea: Rather than splitting up the software giant, let’s split up the Clinton Justice Department instead.

Or how about dividing up the FCC. Or rearranging the FDA … and the Bureau of Land Management … and the Census Bureau. And the IRS. Not to mention OSHA. Let’s divide up the EPA. The Commerce Department. The Education Department. The U.S. Fish and Wildlife Service. The BATF.

While we’re at it, let’s break up the Immigration and Naturalization Service, along with its ninja-style armed SWAT teams.

Which is the greater threat?

The United States Justice Department insists that consumers are being grievously harmed by Microsoft. According to all the latest polling data, however, consumers themselves don’t think so. Well, what do they know? Janet Reno, who hasn’t been able to find any violations of law in Bill Clinton’s long walk on the wild side in the White House, has had no trouble ferreting out lawlessness when it comes to browser bundling.

Such outrages must be dragged to the bar of justice, which is why Ms. Reno is going to make darn sure that consumers are “helped” by the Clinton Justice Department. They are going to be protected from Bill Gates’ monopoly whether they want to be protected from it or not, by golly.

All right, fine. Let’s talk about monopolies and their impact on the market. The unarguable fact is, free markets are far more frightened of government regulatory monopolies and government regulatory agencies than they are of private business monopolies. I don’t mean that Sun Microsystems is more worried about the Fish and Wildlife Service than it is about Microsoft. I’m saying that investors in general, the free markets and people who truly understand them, are far more concerned about the monopolistic regulatory power of government than they are of any private business monopolies.

One of the greatest illustrations of a federal government monopoly today is the national public education system. It is a federally run monopoly designed to enrich the teachers’ unions, which are the primary contributors to the Democratic Party. So everything possible is done in the federal regulatory agencies which oversee education to ensure teachers’ jobs, to prevent any competition in the form of vouchers, and to preclude any real standards for, and judgment of, teachers.

There is a plethora (for those of you in Rio Linda, that means “a lot”) of federal regulatory and administrative agencies in Washington; sometimes the “alphabet soup” of acronyms is said to constitute a fourth branch of government. Although staffed by unelected government bureaucrats, these agencies pass regulations that have the force of federal law.

According to the Pacific Legal Foundation, “Without the slightest change in the law, federal agencies … have taken it [upon] themselves to redefine their regulatory role and push an agenda that is not only contrary to public sentiment, but also violates the law they are trusted to enforce. These regulatory agencies, with expansive rule-making power, are today the most prolific producers of federal law, In fact, more federal law governing private activities is written by federal agencies like these than by Congress.” Pacific points out that “the art of the end run — that is, establishing government policy without actually succeeding in getting a law passed through Congress — is achieving new heights in the Clinton Administration.”

Whenever this bunch has not been able to get something via legislation, this President just signs an Executive Order. He says, in effect, “We’re going to do this anyway.” He recently took thousands of acres of property, with a lot of coal underneath it, from Utah — and simply declared it all into a national monument. He didn’t wait for Congress; he knew Congress wouldn’t have gone for it. So, he just decided to do it by fiat.

Markets are far more afraid of that kind of thing than they are of Bill Gates’s operating system. They’re far more afraid of the Energy Department or the Fish and Wildlife Service being able to come in and make your land useless and render it without value with a simple decree. They’re far more concerned about that then they are about private sector business monopolies.

Someday there might even emerge a realization that the federal antitrust laws should be revised to target government-sanctioned monopolies rather than private ones — or at least include government monopolies with the private monopolies.

Look at what’s happening here, folks. In a way, you could call this “tortism.” I think I will. I just coined the term. I’m sad to announce the discovery of a new form of government, a new -ism, if you will. We’ve got capitalism, we’ve got socialism, we’ve got fascism, we’ve got Communism. Now, we’ve got “tortism,” federal bureaucracy seizing power, a.k.a. the Justice Department, a tort legislature made up, in this case, of 19 state attorneys general and their army of mercenaries, the tort lawyers, colluding to eviscerate Microsoft.

This Administration has decided to sue in order to regulate the American economy, targeting Big Tobacco, targeting guns, threatening legal industries with lawsuits and bankruptcy. Now they’re going after Microsoft. This is the precise use of the Administration’s power to threaten via lawsuits, legal products, legal companies, and to shake them down.

What does “tortism” threaten? Well, it started by threatening a major American industry — a legal American industry — with bankruptcy: tobacco. It did not proclaim the product to be illegal, did not do anything of the sort, just threatened to sue them out of existence. Over time, with the sly use of public opinion polls and the blackmail — I mean, leverage — of state-sponsored lawsuits, this new “tortism” has been able to directly confiscate for the federal government a huge chunk of the earnings of the Big Tobacco companies.

So many people say to me, “But Rush, but Rush! Tobacco should be punished. It’s an unreasonably dangerous product causing harm to the consumer.” And my reply is, “The consumer has been properly notified. The people have been warned for 34 years that they can be killed by using the product.” A responsible government would have seen to it the product were banned if it were so deadly and so dangerous. They’d have taken it off the market. They would have, for the good of the people, made sure the product wasn’t available. But, no, they saw it as a huge pile of money to go and sue and confiscate because the citizens of the country are taxed to the max and won’t take anymore. So, you’ve got to go after these big companies — after you charge them with harming the public, or lying, or competing unfairly, or whatever.

“Tortism” has broken the spine of another legal American industry, the gun manufacturing industry, with threats of bankruptcy; and “tortism” just grabbed for the brass ring, America’s leading high-tech company, and with it control of the high-tech world. When Mao Tse-tung took over, he had his Gang of Four. “Tortism,” in this particular case, has the Gang of Nineteen — those 19 state attorneys general and their army of tort lawyers, who behind closed doors in secret under darkness of night over a weekend vetoed a mediated settlement between Microsoft and the government. I maintain that none of the subsequent tumult in the Dow Jones or the Nasdaq would have happened were it not for the failure of those settlement talks and the government’s case proceeding as it did.

The amount of wealth destroyed has been just amazing. As my favorite liberal columnist, Jim Glassman, put it in an article titled: “Is Government Strangling the New Economy?” in The Wall Street Journal:

“While Joel Klein (of the antitrust division] and his Justice Department were publicly and distastefully celebrating Judge Jackson’s decision [against Microsoft], the market capitalization of Microsoft was dropping by more than $100 billion. That’s not some theoretical figure. It is a loss in real wealth — in many cases, in retirement savings — of more than two million direct shareholders of Microsoft and of tens or millions more who have substantial holdings of Microsoft in their mutual funds and annuities … The Nasdaq carnage has been wide-ranging. And why not? The Internet intervention of government, often in league with trial lawyers, threatens every high-tech firm in America.”

But nearly everyone in the high-tech sector experienced some pretty serious dips, both in real price and in percentage. If this was supposed to be so good for Microsoft’s competitors, then why did they also take a hit? I still have not had anyone explain this to my satisfaction. Look what happened. It looked, for a while, as if the government was going to put them all out of business. It I wasn’t just Microsoft itself that plummeted. Microsoft’s customers, the Gateways, the Dells, all these people that helped bring the action, were going down with them. So were Microsoft’s competitors. I don’t think that any of that was anticipated. I don’t think that any of these companies thought that they were going to see the bottom drop out of their companies.

But this Administration has been running around claiming credit for the booming economy. They’ve been claiming credit for this high-flying high-tech business. Algore claimed to invent the whole Internet, for goodness sake! If they’re — going to take credit for it, then by gosh, they’re going to get blamed for it in this newsletter, and that is my whole point. This market shakeout wouldn’t be happening without the Clinton-Reno Justice Department having taken its action against Microsoft.

Now let me ask all you Gates-haters: Is whatever Microsoft did wrong worth what is happening now to the wealth that had been accrued in America? According to a Wall Street Journal editorial: “Washington may end up destroying a lot more than just $160 billion of Microsoft’s market cap. It’s positively chilling to hear Justice’s favorite economists saying that, well yes, a breakup would create massive uncertainty and slow things down for a while, but ‘in the long run we’ll be better off.’ Says who?”

On April 4, the day the market tanked, Professor Tom Hazlett, a dear friend of mine from my days back in Sacramento, who’s now fellow of high standing at the American Enterprise Institute, observed: “With friends like the Department of Justice, why do American consumers need Microsoft to stick it to them? Right now, the markets are in free fall and there’s no question that the collapse of the settlement talks in the Microsoft case kicked this out. This actually is part of a recurring pattern, that the market does not like the antitrust suit against Microsoft. The market does not think that the Department of Justice is going to end up helping customers.”

My whole point here is it’s not just Microsoft. A lot of things took place that would not have taken place had the lawyers not torpedoed the Microsoft deal. Those things that happened were not in the best interests of the market, or the best interests of the people. It was a very selfish thing that was done by people who have private interests and agendas. Microsoft’s problem is they’ve been too successful.

Who’s going to be next? It could be any business or industry. Walmart, for instance (after all, they sell guns.) Or, the Justice Department could go in and destroy the mom and pop Main Street operations, destroy the old back-bone of America. Can’t you just see it? I mean, you people at Walmart, I’m not joking about it. You are just the type of target this administration and its lawyer buddies are looking for. Whoever they pick, it’ll be sure to generate revenue — both politically and personally.

In any event, I want to be the first radio program sued by the Reno Justice Department as a monopoly.

My goal: air supremacy. We will do whatever it takes: give away ad time, give away opinions. Wouldn’t you like a radio you didn’t have to fiddle around with to find me?

I have to accomplish this before Clinton leaves, however — because once he’s out, the Justice Department is not going to go around attacking legitimate business. Justice will go back into the Justice Department.

But in the meantime, I am pursuing monopoly status. Janet Reno, come get me!