Capital Commerce: Courting business interests
The U.S. Supreme Court has handed down several decisions in recent days that could have a huge impact on America's business, markets, and economy. In Kelo v. New London, the court decided that government may use its powers of eminent domain to take private property and turn it over to other private citizens to foster economic development. In Metro-Goldwyn-Mayer Studios Inc. v. Grokster Ltd., the court ruled that computer file swapping services could be held liable if used for swapping copyrighted material. Then there was National Cable & Telecommunications Association. v. Brand X Internet Services, where the court said cable companies do not have to share their high-speed broadband lines with independent Internet service providers. The long-term fallout of these rulings? Some E-mail thought from some top experts:
Prof. Gary Becker of the University of Chicago, winner of the 1992 Nobel Prize for Economics:
"To be brief, the Brand X decision is very important because it recognizes that communications is now a very competitive industry with little "natural" monopoly. There is no reason to force cable or telephone companies to share their wires . . . The Kelo decision was a mistake not because it allowed private-sector-based condemnation but because it did not recognize that eminent domain is a bad principle in the modern world that should be scaled back, not widened. (See my post in the Becker-Posner blog). . . The Grokster decision is not obviously a good thing because it opens the floodgates to litigation against products that might be abused. I believe the courts should protect intellectual property but only in a limited way."
Arnold Kling, former economist at the Federal Reserve and Freddie Mac, coauthor of the EconLog blog:
"The cable TV decision does not change my view of the technology, which is that the last-mile fight is going to be won by wireless. Similarly, the Grokster decision does not change my view of the technology, which is that eventually music is going to be bundled with hard drives, not CD's, and updated via downloads on a flat-fee subscription basis. The Kelo decision also will not be historic, unless it generates a backlash. Today, when politicians say that they tax, spend, and regulate in the public interest, we give them the benefit of the doubt. Kelo ratified that. Under the backlash scenario, a movement would take us back in the direction of the Constitution, which was concerned with protecting citizens' rights from government encroachment. But I think that such a backlash scenario is pretty far-fetched."
Donald Luskin, chief investment officer at Trend Macrolytics and author of The Conspiracy to Keep You Poor and Stupid blog:
"It's quite a spectacle to watch the Supreme Court decide arbitrarily who has property rights in this country and who doesn't. If you are a homeowner, you don't. If you are a music publisher or a cable TV operator, you do. The next logical step is for cable operators to use eminent domain to take your home away from you and use it to produce licensed music . . . I don't think these decision have any long-term economic consequences. That's because they all confirm trends that are already well in place. If the decision had been in the opposite direction, then there would have been a market reaction because such decisions would have been countertrend."
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