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

The risks of secondhand tobacco smoke and smog are wildly exaggerated, and Microsoft's position in the computer industry presents no risk at all. Those are among the findings in the latest issue of Regulation, the Cato Institute's quarterly review of business and government. In his article dispelling the myths surrounding secondhand smoke, economist W. Kip Viscusi of Duke University writes that the available evidence suggests that, far from being a significant health risk, secondhand smoke is little more than a nuisance — and one that is being dealt with effectively by private action. Viscusi also shows that, contrary to popular belief, given the high cigarette taxes smokers pay and their tendency to die young, they more than compensate society for the costs they impose.

Environmentalists often advocate draconian measures to reduce the level of ambient ozone, or "smog," in cities. But Kenneth Chilton and Christopher Boerner, 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 lung irritation.

One avant-garde excuse for retaining federal powers to intervene in the economy is that certain inferior technologies that get to market first may have such a lead over latecomers that better approaches will never have a chance. That theory, which economists call "path dependence," provided the rationale for the recent antitrust harassment of Microsoft. In their article, "Policy and Path Dependence: From QWERTY to Windows 95," economists Stan Liebowitz and Stephen Margolis demolish both the theoretical and the empirical cases for path dependence. Neither the case of the QWERTY typewriter keyboard nor that of the VHS tape system — two examples frequently cited — holds up under analysis.

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