Commentary

Microsoft Eh?

Dateline: 06/02/00

"The U.S. is now a dangerous place for Microsoft"

- Michael Murphy
The California Technology Stock Letter

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Seattle and Vancouver are abuzz over the suggestion by Tech Stock Maven Michael Murphy that Microsoft should pull up stakes and move to Canada.

In the May 26, 2000 issue of his California Technology Stock Letter, he writes that with the new Internet economy, "products can be developed in any jurisdiction, or any combination of jurisdictions or, in a real sense, in no jurisdiction". Knowledge workers can work from anywhere and live wherever they wish.

He goes on to argue that in this environment, "central governments are reduced to the weakened position they so richly deserve". Which brings him to Microsoft.

He avers that Judge Thomas Penfield Jackson "doesn't have a clue" when it comes to prescribing a remedy in the Microsoft anti-trust case. The proposal to split Microsoft into small pieces is, in Murphy's view, abject foolishness.

Which brings him to his startling conclusion. "In the interests of its shareholders," he argues, "Microsoft should negotiate a deal with the Canadian government. A five year tax holiday plus a government loan to build a new campus in Vancouver sounds about right."

By this action, Canada "would become the home of the leading New Economy company and signal their interest in making high tech their future."

On Thursday, BCTV's Newshour asked the provincial Minister of Investment, Gordon Wilson, whether the government would welcome such a move. Wilson fairly glowed at the idea. And yes, certainly the government was open to discussions on the matter. He'd be pleased to talk to Bill Gates if he wanted to come up and talk.

Microsoft, for its part, has said they intend to fight the U.S. government and has no immediate plans to leave Seattle.

Galt's Gulch North

There is a certain irony in Murphy's suggestion. Fans of Ayn Rand's best selling novel, Atlas Shrugged, which tells the story of what happens when the country's leading industrialists go on strike, have long supported Gates in his battle against the American government. Some have even suggested that, if push comes to shove, Gates should do what the Randian heroes did - go on strike. Dissolve Microsoft and let America go to hell in a handbasket of its own making.

Now Murphy suggests that Canada, and more specifically, B.C. with its socialist government, would make a suitable Galt's Gulch (the secret hideaway that the strikers in Atlas Shrugged retired to). It is an amusing suggestion, but, alas, not one that is likely to come to pass.

First of all, Canada's perverse nationalists would oppose any such move. While the government generally ignores these rabble rousers, they would probably mount a significant opposition.

Secondly, the government recently nixed a plan to offer tax concessions to NHL hockey teams because of massive public opposition. If the Canadian taxpayer was incensed at the idea of bailing out millionaire hockey players, it's doubtful that the taxpayer will sit still for the idea of giving tax concessions to the second richest man in the world.

And thirdly, (and probably the most significant), the U.S. government would employ all its diplomatic might to make sure it never happened. The loss of Microsoft to Canada would be a devastating slap in the face to the U.S. government.

But you gotta love the idea! I've argued in this spot before that the government should abolish the corporate income tax. Nothing would do more for the economy than this simple move. Why not start with Microsoft - offer them tax free status and over a five year period phase in tax free status for all corporations.

But Murphy's suggestion of a government loan has got to go. I'm surprised such an avid free market advocate would even suggest it.

If Gates eventually decides to make like Atlas and shrug, he'll have to actively set about destroying Microsoft rather than abandoning it to the those who would loot it. As a Canadian, I hope he does think about Murphy's proposal and negotiate a move to the Great White North. It's far better than dismantling his life's work, and far better than knuckling under to the Luddites and know-nothings. The consequences for Canada, for the U.S. and for the world economy would be revolutionary.

Other Links of Interest

The California Technology Stock Letter - Linked directly to the article mentioned, though only the first page is online as a teaser. The actual Microsoft references are on page 3 & 4.

The Gorilla Game - My review of a book that explains why companies like Microsoft grow so dominant in the high tech industry.

Antitrust: U.S. v. Microsoft - About.com Windows Guide Ed Bott has this excellent collection of articles and information on the Microsoft case.

Saving Canadian Hockey - My argument for abolishing the corporate income tax.

See also the links in the box at the head of this article.

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