Capitalism Through the Looking Glass
All economist agree, and politicians sometimes give lip service, there is a market economy axiom of “creative destruction”. The concept is simple. In the marketplace businesses have life cycles. The death of a business occurs when its value is superseded by a paradigm shift or something superior.
In the American form of Capitalism the axiom has been violated. As businesses and industries got larger they gathered political power and crafted laws to prevent the natural laws of destruction. The enacted laws perpetuate business models that are dinosaurs. The biggest culprit is the “Digital Millennium Act”. The Act bars all incumbents in the digital media field proffering revolutionary business models. The legal case involving RealNetWorks is a prime example (Google it).
In the scheme of things the record industry business model would have died long ago, as well as that of Hollywood. They would have been replaced by new businesses with different business models that reflect technology and social changes. In today’s world VCRs technology would be a none starter. The industry incumbents would argue that the risk of illegal copying was too great. Their political muscle today would made VCRs against the law in America. They were successful in doing so with Digital Audio Tap (DAP). It was a digital technology for cassette tapes.
This issue of American Capitalism has national security ramifications. The lack of this creative destruction of moving incumbents aside will result in America slipping from being the marketplace innovation engine. We have already seen that with the diverse electronic penetrations in Asia that are either barred, or technologically not available here. We do not have bullet trains (speeds over 200 miles an hour) primarily because it is not in the interest of the airline industry. We do not have a wealth of broadband services common in much of the rest of the world because faster speeds are not in the interest of Hollywood and the Record Industry. We are actively trying to kill peer-to-peer technology in the world.
But the world is changing as America buries its head. The station “France vingt-quatre” [in English France 24], the French international news channel, had an interesting segment. The channel carries segments of daily news from countries around the world. The Tiawan segment made a brief statement and did not elaborate. The news anchor said Chinese leadership was shocked. As a result of the Financial Crisis they have surpassed America as the largest market. China had not expected to do so for many years in the future. American might in the world is its market for goods and services. The military power is merely a collorary. Sooner or later America will lose the ability to force its patent laws on the rest of the world. Especially as other markets move to the fore.
America is marking time with its Capitalism. The marketplace innovation engine is moving East.
All economist agree, and politicians sometimes give lip service, there is a market economy axiom of “creative destruction”. The concept is simple. In the marketplace businesses have life cycles. The death of a business occurs when its value is superseded by a paradigm shift or something superior.
In the American form of Capitalism the axiom has been violated. As businesses and industries got larger they gathered political power and crafted laws to prevent the natural laws of destruction. The enacted laws perpetuate business models that are dinosaurs. The biggest culprit is the “Digital Millennium Act”. The Act bars all incumbents in the digital media field proffering revolutionary business models. The legal case involving RealNetWorks is a prime example (Google it).
In the scheme of things the record industry business model would have died long ago, as well as that of Hollywood. They would have been replaced by new businesses with different business models that reflect technology and social changes. In today’s world VCRs technology would be a none starter. The industry incumbents would argue that the risk of illegal copying was too great. Their political muscle today would made VCRs against the law in America. They were successful in doing so with Digital Audio Tap (DAP). It was a digital technology for cassette tapes.
This issue of American Capitalism has national security ramifications. The lack of this creative destruction of moving incumbents aside will result in America slipping from being the marketplace innovation engine. We have already seen that with the diverse electronic penetrations in Asia that are either barred, or technologically not available here. We do not have bullet trains (speeds over 200 miles an hour) primarily because it is not in the interest of the airline industry. We do not have a wealth of broadband services common in much of the rest of the world because faster speeds are not in the interest of Hollywood and the Record Industry. We are actively trying to kill peer-to-peer technology in the world.
But the world is changing as America buries its head. The station “France vingt-quatre” [in English France 24], the French international news channel, had an interesting segment. The channel carries segments of daily news from countries around the world. The Tiawan segment made a brief statement and did not elaborate. The news anchor said Chinese leadership was shocked. As a result of the Financial Crisis they have surpassed America as the largest market. China had not expected to do so for many years in the future. American might in the world is its market for goods and services. The military power is merely a collorary. Sooner or later America will lose the ability to force its patent laws on the rest of the world. Especially as other markets move to the fore.
America is marking time with its Capitalism. The marketplace innovation engine is moving East.
posted by CartoonsTE | 10:53 AM
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