IPcentral Weblog
  The DACA Blog

Friday, May 21, 2004

Databases and Monopolies (Government Monopolies, That Is)
(previous | next)

Stephen Moore, President of the Club for Growth (a political organization dedicated to government fiscal responsibility and deregulation) has a column in today's Washington Times on "Who Needs the NYSE?" His basic point, echoing Richard Baker, the Chair of the Subcommittee on Capital Markets of the House Financial Services Committee, is that the New York Stock Exchange "derives its power not from the marketplace, but from government charter."

A focus of Moore's critique is the information problem: "Perhaps the most harmful monopoly power bestowed on the NYSE is its status as an information cartel for the stock market. Brokerage firms are forced by regulation to send information . . . of great value . . . to the exchange . . . . Those same firms are then forced to buy the aggregated data stream back whem providing a stock quote . . . . This grants the NYSE an information cartel and impairs the liquidity of the stock market."

Protection of property rights and investment in databases is important to the long-term health of the economy and to simple Lockean justice. But the NYSE situation illustrates the problems when the government creates and continues ossified monopolies unrelated to real value added, monopolies that will be defended to the max with political contributions and other forms of influence.

The correct approach is to define the property rights correctly and assign them to the people doing the work -- and this in itself presents exquisitely difficult issues -- and then let the parties deal by private contract. The firms that produce the data, and their customers, should be able to bargain with the aggregators to share the value created.

This "less government action is more" approach is particularly important in a time of great uncertainty over the role of information in the economy and the society and over how information will produce value in the future. Part of the genius of F. A. Hayek was his emphasis on Competition as a Discovery Procedure, a process of learning and feedback rather than the static equilibrium of the academic blackboard.

posted by James DeLong @ 10:42 AM | General

Share |

Link to this Entry | Printer-Friendly

Post a Comment:

Blog Main
RSS Feed  
Recent Posts
  EFF-PFF Amicus Brief in Schwarzenegger v. EMA Supreme Court Videogame Violence Case
New OECD Study Finds That Improved IPR Protections Benefit Developing Countries
Hubris, Cowardice, File-sharing, and TechDirt
iPhones, DRM, and Doom-Mongers
"Rogue Archivist" Carl Malamud On How to Fix Gov2.0
Coping with Information Overload: Thoughts on Hamlet's BlackBerry by William Powers
How Many Times Has Michael "Dr. Doom" Copps Forecast an Internet Apocalypse?
Google / Verizon Proposal May Be Important Compromise, But Regulatory Trajectory Concerns Many
Two Schools of Internet Pessimism
GAO: Wireless Prices Plummeting; Public Knowledge: We Must Regulate!
Archives by Month
  September 2010
August 2010
July 2010
June 2010
  - (see all)
Archives by Topic
  - A La Carte
- Add category
- Advertising & Marketing
- Antitrust & Competition Policy
- Appleplectics
- Books & Book Reviews
- Broadband
- Cable
- Campaign Finance Law
- Capitalism
- Capitol Hill
- China
- Commons
- Communications
- Copyright
- Cutting the Video Cord
- Cyber-Security
- Digital Americas
- Digital Europe
- Digital Europe 2006
- Digital TV
- E-commerce
- e-Government & Transparency
- Economics
- Education
- Electricity
- Energy
- Events
- Exaflood
- Free Speech
- Gambling
- General
- Generic Rant
- Global Innovation
- Googlephobia
- Googlephobia
- Human Capital
- Innovation
- Intermediary Deputization & Section 230
- Internet
- Internet Governance
- Internet TV
- Interoperability
- IP
- Local Franchising
- Mass Media
- Media Regulation
- Monetary Policy
- Municipal Ownership
- Net Neutrality
- Neutrality
- Non-PFF Podcasts
- Ongoing Series
- Online Safety & Parental Controls
- Open Source
- PFF Podcasts
- Philosophy / Cyber-Libertarianism
- Privacy
- Privacy Solutions
- Regulation
- Search
- Security
- Software
- Space
- Spectrum
- Sports
- State Policy
- Supreme Court
- Taxes
- The FCC
- The FTC
- The News Frontier
- Think Tanks
- Trade
- Trademark
- Universal Service
- Video Games & Virtual Worlds
- VoIP
- What We're Reading
- Wireless
- Wireline
Archives by Author
PFF Blogosphere Archives
We welcome comments by email - look for a link to the author's email address in the byline of each post. Please let us know if we may publish your remarks.

The Progress & Freedom Foundation