Progress vs. Luddism

I came across two pieces of news today, one that made me optimistic about the future and one that made me see red with rage.  We’ll start with the good news:  Skype announced that it will be launching an initial public offering.  It’s shares will be traded on the Nasdaq.

Long-suffering readers have had to endure my pontifications on the virtues of Skype for years now. (Click here to view past posts on Skype.)  More than just a product, I view Skype as an embodiment of the creative destruction process.  Skype has lowered the cost of international calls to free in many cases and significantly cut costs in others.  This is painful for legacy telecom companies, but it is a boon to the consumer and to globalization itself.

Skype is already the biggest carrier of international  calls, and the initial public offering will only help it to expand.  This is great news.  (My only residual gripe is that I cannot use Skype on my AT&T Blackberry; currently, only Verizon customers have this privilege…not that I am bitter…)

Now for the bad news:  in an act of technophobia and luddism that is almost shocking, the Obama Administration’s Justice Department has threatened legal action against several American universities.  Their alleged crime?  Trying to help their students save money by offering their textbooks in electronic format on the Amazon Kindle rather than in hard copy!

The Justice Department’s  stated rationale is that e-readers discriminate against the blind, thus depriving blind students of their civil rights under the Americans With Disabilities Act.  (See article.)

I try to keep my blog posts apolitical; my beat is the financial markets, not Washington DC.  But the cynic in me can’t help but wonder if Obama’s Justice Department has ulterior motives.   Much like the original Luddites attempted to derail the Industrial Revolution by destroying factory equipment–all in an attempt to save obsolete craftsman jobs–could it be that the Obama Administration is retarding the Information Revolution as a way of paying back its supporters in academia?  Professors and college bookstores alike make a lot of money gouging their students with expensive text books.  Amazon’s ebooks cut into those fat margin, much to the benefit of the students that the universities are ostensibly there to educate.

It’s hard to believe that a move this heavy handed could really be about helping the blind. Surely, liberal-minded universities could find other ways to help their vision-impaired students.

At any rate, this just goes to show that every economic revolution has reactionary forces that try to hold it back.  In the end, new technology will win.  Obama’s Justice Department’s idiotic moves will be no more effective that King Canute’s attempts to command the tides.  EBooks will persevere.  Amazon, Apple and other sellers will make their products accessible to the vision impaired, or whatever disadvantaged group Obama’s Justice Department decides to champion next week.  It will make the products more expensive for the rest of us, of course.  But the end result will be falling costs and a wider spread of information.

Charles Lewis Sizemore, CFA
Co-author of the recently-published Boom or Bust: Understanding and Profiting from a Changing Consumer Economy

Read the original story at H. S. Dent