Douglas Rushkoff
in The Guardian says AOL was doomed from the start “AOL was a training ground: an introduction to the internet for people who didn’t know how to deal with FTP. None of us thought it could last, because once the technological barriers to entry for the internet had been lowered, no one would need AOL’s simplistic interface or it’s child-safe, digital content wading pools. People would want to get on the “real” internet, using real browsers and email programs. ”
Looking at the prospects for electronic commerce a few years ago, I agreed, citing “a bleak outlook for the owners of portals and search engines. Portal services are of most benefit to ‘newbies’ (new users). They rely on the fact that because of inertia, people are slow to change their start page. Eventually, though most people stop surfing the Web and go directly to the sites that interest them. The whole idea of a portal as a ‘one-stop shop’ is the antithesis of the limitless variety that makes the Internet so appealing.”
But it’s really taken the rise of blogging to spell the final doom of portals. Who wants their internet experience selected by some sort of one-size-fits-all CMS software when like-minded (or opposite-minded) people are daily trawling the Web for interesting titbits. The imminent closure of Yahoo Internet Life is, I think, a sign of the times.

Dave Winer notes that Hollywood wants the right to hack your computer in order to protect its (asserted but not proven) intellectual property rights.
On the Australian scene, Kim Weatherall discusses how a sovereign nation should respond to criminal attacks from foreign countries where the rule of law is only for the rich.
The obvious question is: why haven’t fire-breathing defenders of national sovereignty like Janet Albrechtsen woken up to this threat ?

The NYT notes that people (starting with the government of California) have suddenly noticed that it’s not a good idea to do business with a corporation that would relocate in Bermuda to dodge taxes. “A company that would deliberately do a sham relocation offshore to escape taxes,” Mr. Angelides said, “would also look to bend environmental rules, shortchange workers or even stick it to their shareholders” (emphasis added).

Jason Soon picks me up on my excessively broad conclusions regarding the end of free-market reforms, noting that there’s a big distinction between financial markets and real world economies.
I’ll begin by conceding that when I said “it will be a great many years before anybody can use a phrase like “market discipline” with a straight face.”, I should really have said “financial market discipline”. (BTW, what’s the blogging etiquette on making ex post corrections in cases like this?). As Jason says, the bubble and bust of the last five years or so have discredited financial markets, not markets in general. There are no direct implications for issues like education vouchers.
That said, there are still plenty of implications. Among the policies discredited by the exposure of endemic crony capitalism on Wall Street are:
Financial deregulation (obviously)
Privatisation (particularly in the case of firms that remain as regulated monopolies, the case for privatisation rests primarily on the idea that financial markets exert beneficial discipline)
Support for income inequality, based on the idea that market outcomes reflect inherent merit, or, alternatively are necessary to the achievement of efficient outcomes.
Social security/superannuation reform
More generally, there is what might be called ‘free market triumphalism’. This is evident, for example, in the editorial pages of the Oz. No serious argument is ever made in favour of particular free-market policies. Instead, the assumption is that, if it’s the free-market policy, it must be right.
As a supporter of a mixed economy, I believe that some things are best dealt with by markets and others are not. I’m happy to argue about, say, educational vouchers, on the merits.
What I was reacting to is what I call the “argument from fashion”, which suggests that government intervention was all very well thirty or forty years ago, but is now out of step with the times. (The opposite argument was made in favour of government intervention for much of the 20th century, and was equally invalid).

Tom V, the “incredulous reader” I referred to a little while a ago now has his own blog, entitled bad analysis

Gareth Parker detects a timewarp, saying, “I INCREASINGLY feel that Robert Corr was born three or four decades too late.”
But it’s becoming more and more obvious that the ideas that have dominated the last three decades or so have run out of steam. For example, it will be a great many years before anybody can use a phrase like “market discipline” with a straight face. I don’t suppose that the replacement for market liberalism will be a direct return to the social-democratic and socialist ideas that dominated policy from World War Ii to the 1970s, but it will be more like them than like the 1980s ideology that is still driving John Howard.

The Australian editorial column is still pushing the free-market reform line, as if unaware that the ground has been cut from under its feet. But the message is starting to sink in. In the same paper, : George Megalogenis argues that the “Cronies’ boom is phony “. Megalogenis goes for a cyclical theory and argues that a big swing away from the free-market is already under way.

Brad DeLong has a great piece on Vulgar Monetarism. He makes a good case that money supply measures aren’t any use as a guide to the stance of monetary policy. I must say, though, that when I look at those graphs of M2 and M3, I wonder if the inflationary consequences of monetary expansion can be staved off forever.

Gareth Parker nails me on my embarrassing habit of giving fellow-bloggers surnames belonging to others. First, I called him Gareth Powell, then Heath Gibson became “Heath Ledger”. I should stop 6am blogging. In the meantime, look out “Weary” Dunlop , “Orville” Wright and “King” Arthur

Today’s Economist quotes the conventional wisdom on telecommunications from a year ago, noting:
TODAY, there is no economy but the global economy, no Internet but the global Internet, and no network but the global network,” wrote George Gilder, a technology guru, in February 2001. He predicted that two telecoms firms, Global Crossing and 360networks, “will battle for worldwide supremacy, but in a trillion-dollar market, there will be no loser.
At exactly the same time, I was writing
“The last few months have not been a good time for economic miracles. As late as November last year, we were still being told how the miraculous ‘New Economy’ had put an end to the business cycle in the United States. By Christmas, however, the Internet shakeout had turned into a full-scale collapse, with dozens of failures and downsizings every weak. Moreover, the downturn has spread from the flashy but economically inconsequential dotcoms to the large, and massively indebted, telecom sector”
Why was I right, and Gilder, along with most other commentators, wrong. Because I paid attention to the reality of natural monopoly
Throughout the last decade, wishful thinking about the benefits of competition has led to bad economic analysis. The costs have mounted from the billions to the trillions. Both the potential growth of the telecom sector and the strength of the US economy have been massively overestimated, because of the belief that competition is some sort of magic elixir.
There are real benefits from increasing competition where artificial barriers to entry have monopolised naturally competitive industries. But there are equally large costs in failing to take account of natural monopoly, externalities and all the other reasons why not all aspects of life are organised through competitive markets.