Regulation: QWERTY, Windows, and the myth of path dependence; Secondhand Smoke Risk Is Overrated

January/February 1996 • Policy Report

The risks of secondhand tobacco smoke and smog are wildly exaggerated, andMicrosoft’s position in the computer industry presents no risk at all. Thoseare among the findings in the latest issue of Regulation, the CatoInstitute’s quarterly review of business and government. In his articledispelling the myths surrounding secondhand smoke, economist W. Kip Viscusiof Duke University writes that the available evidence suggests that, farfrom being a significant health risk, secondhand smoke is little more thana nuisance — and one that is being dealt with effectively by private action.Viscusi also shows that, contrary to popular belief, given the highcigarette taxes smokers pay and their tendency to die young, they more thancompensate society for the costs they impose.

Environmentalists often advocate draconian measures to reduce the levelof ambient ozone, or “smog,” in cities. But Kenneth Chilton and ChristopherBoerner, policy analysts with the Center for the Study of American Business,review the medical evidence and conclude that at current levels of exposure,the vast majority of people should have few discernible symptoms of lungirritation.

One avant‐garde excuse for retaining federal powers to intervene in theeconomy is that certain inferior technologies that get to market first mayhave such a lead over latecomers that better approaches will never have achance. That theory, which economists call “path dependence,” provided therationale for the recent antitrust harassment of Microsoft. In theirarticle, “Policy and Path Dependence: From QWERTY to Windows 95,” economistsStan Liebowitz and Stephen Margolis demolish both the theoretical and theempirical cases for path dependence. Neither the case of the QWERTYtypewriter keyboard nor that of the VHS tape system — two examples frequentlycited — holds up under analysis.

The issue also features associate policy analyst James Bovard’s articleshowing that the 1990 farm bill had by 1995 cost taxpayers at least $56billion. Like past farm bills, it exceeded the projected cost, in this caseby $14 billion. The 36 million acres being idled under the ConservationReserve Program keep America’s output down, which may be the reason Americanfarmers’ share of the world wheat market has dropped from 51 percent in 1981to only 32 percent today. Bovard concludes that there is no good reason topostpone the abolition of farm subsidies.