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Oracle, Microsoft, & Truth

June 30, 2000

Ludwig von Mises, early in his career

The Microsoft saga has taken another interesting turn and, as usual, the observers are drawing the wrong conclusions. It turns out that Lawrence Ellison of Oracle, a rival of Microsoft, hired Bill Clinton's former dirt digger Terry Lenzer to investigate groups that spoke out in favor of Bill Gate's embattled company. After the initial leak that the groups were funded in part by Microsoft, the media painted a false picture of economists who would otherwise have been silent on the use of antitrust regulation.

This whole affair also raises larger questions about the role of economists in expressing opinions regarding government policies. Not surprisingly, the wisdom of Ludwig von Mises clashes with the current "wisdom" that comes from modern commentators, as we shall see later.

Last year, I along with a number of other economists in the United States received a form letter from the Independent Institute asking us to sign a petition that condemned the U.S. Government's persecution of Microsoft. While I did not sign the petition (out of sheer laziness, I must confess), apparently more than 200 of my colleagues did just that, and their names appeared in pro-Microsoft newspaper advertisements sponsored by the Independent Institute that ran for a full page. I regret not having sent in the signed form.

Not long after that, the New York Times, with information fed to it by IGI, the investigative firm that Bill Clinton hired to discredit Paula Jones, ran a lengthy story accusing the Independent Institute of being a Microsoft stooge. The Institute, according to the Times, had received about $150,000 from the software giant, something the "newspaper of record" implied discredited the institute's efforts to sway public opinion about Microsoft.

Soon afterward, the
National Taxpayers Union
Citizens for a Sound Economy
found themselves "exposed" in the Wall Street Journal and the Washington Post for having protested the government’s prosecution of Microsoft while receiving funds from that company. In other words, according to the mainstream press, the pro-Microsoft activities of these organizations were nothing more than a sham.

Of course, the debate has centered on how IGI gathered its material. Representatives of the Independent Institute and Citizens for a Sound Economy say that someone stole documents and computers from their offices. The investigators, along with Oracle, insist they gained all their information through legal channels, including digging through the trash left by the organizations.

While stealing and even examination of trash from the organizations are reprehensible, the real question should be this: "Does it matter whether or not Microsoft gave them any money at all?" No doubt, whatever Microsoft paid to the three groups is nothing compared to what Netscape paid Robert Bork to publicly declare through op-eds, letters, and press conferences that Microsoft was a public nuisance that the government should break into little pieces.

I happen to know some of the economists who signed the petition, and I also know they did not receive any compensation. Without their signatures, the Independent Institute's advertising campaign, whether funded by Microsoft or not, would have had zero influence. It was not Microsoft’s money that made the advertisements influential; rather, it was the fact that reputable economists, many of whom are also associated with the Mises Institute, were willing to publicly state that they believed the government's attacks upon that company were wrong. That Microsoft was indirectly paying for the advertisements had nothing to do with the deeply held beliefs of those economists.

(In the interests of full disclosure, I have written many times against the government's antitrust actions and have not received a penny from Bill Gates and company. My only connection with Microsoft is that I am writing this article on Word.)

That the press would find the conduct of those in the Independent Institute and like groups to be scandalous is testament to the fact that the current political culture is totally bereft of ideas. When it was disclosed that Ralph Nader had made millions of dollars in the stock market from the very firms he has publicly denounced, the Beltway press yawned. When the Independent Institute takes a rather insignificant amount of money from a firm out of favor with the government, journalists scream that the organization committed moral turpitude. Remember that the Independent Institute and Citizens for a Sound Economy have associates who had condemned antitrust laws long before Janet Reno had even contemplated attacking Microsoft.

Ludwig von Mises, who knew something about academic and political integrity long before Janet Reno and Lawrence Ellison were even born, wrote that the primary role of the economist is to proclaim the truth. Wrote the great master:

The paramount role that economic ideas play in the determination of
civic affairs explains why governments, political parties, and pressure groups
are intent upon restricting the freedom of economic thought. They are anxious to
propagandize the "good" doctrine and to silence the voice of the "bad" doctrines.
As they see it, truth has no inherent power which could make it ultimately prevail
solely by virtue of its being true.... Government is from God and has the sacred
duty of exterminating the heretic.

In other words, the relevance of the advertisements from the Independent Institute depends not upon who funds them, but what they say. If they speak the truth, then it does not matter that the money came from Bill Gates' pockets or anywhere else.

The modern political culture sees things otherwise. For example, the headline in the Wall Street Journal reads, "When Microsoft’s Spin Got Too Good, Oracle Hired Private Investigators." It never occurred to the journalists involved in the story or their sources from the U.S. Department of Justice and Microsoft rivals that perhaps those 200 plus economists just might be correct.


William Anderson teaches economics at North Greenville College. Send him MAIL.

See also Mises.org on Microsoft.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.

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