Intelligent Systems
Volume III, Number 1 February, 1996

A quarterly newsletter for clients and friends of Chenault Systems

New Company Name and Address

We have moved, and due to a new corporate structure, have decided to change our name to Chenault Systems, Inc. We are also doing business as simply Chenault Systems.

The new corporate address is:

Chenault Systems, Inc. 2407 Glen Morris Carrollton, Texas 75007

The new phone numbers are:

Phone: 214-306-3839 Data/Fax: 214-306-4027

Our electronic mail addresses are:

CompuServe: 72764,2620 Internet: 72764.2620@compuserve.com

On-line Red Raiders
By Tom Chenault

It's 7:00 PM, Saturday night, January 20, 1996. The nationally ranked Texas Tech men's basketball team (13-1) is playing Houston. Nobody outside of Texas can find the game on the radio. Tech alumni in Europe, Chicago, Los Angeles, or New York have no idea what is happening. My word, will these people have to wait for the next day newspapers to find out the score! This is no longer a problem. Texas Tech, along with many other schools have an on-line service on CompuServe. For Texas Tech, someone with the alumni group in Lubbock has a laptop at the game (or next to the radio) and simply types in the play-by-play story as the game progresses. Anybody in the world with access to the CompuServe network can log in, go to the Texas Tech on-line forum, and watch the play-by-play appear on their PC screen. They can also interact or "chat" with anyone else who happens to be in this forum.

You can also have sound. Through the Internet, the local radio station and a company name Audionet, you can actually listen (with a 15 second delay) to Texas Tech and several other college teams with a sound card. Someday, and it will not be long, you will be able to see the news, sports or any television program in the world on your computer screen, from anywhere in the world.

The Internet technology is now affordable to anyone who has a PC, a modem and a few extra dollars a month. Most people will be able to send electronic mail to a wider audience than Dan Rather commands. Move over ABC, CBS, CNN and NBC. We are doing it our way now.

Editorial Comment:

In our opinion, free enterprise and open market competition may not be perfect, but it seems to be the only societal system that has worked well so far. It certainly keeps us in line. The following is an excellent article from the editorial section of January 3, 1996, issue of the Wall Street Journal.

"Reprinted with permission of The Wall Street Journal copyright 1996 Dow Jones and Company, Inc. All rights reserved."

Microsoft and the 'Invisible Hand'
By Steven T. Khalil

The underlying premise of this article should hardly seem shocking: Bill Gates -- the founder of Microsoft and the richest man in the world -- is a capitalist. What is shocking, however, is that Mr. Gates believes in "Capitalism" the same way Adam Smith did more than 200 years ago.

For more than a decade, many have wondered what Mr. Gate's economic principles were based on. Much is revealed in his recently published book, "The Road Ahead." Mr. Gates writes about the information highway of the future creating Smith's ideal system of perfectly competitive markets; of consumers who are well informed and free to choose from the world's supply of goods and services; of computers empowering everyday people. Mr. Gates, like Smith before him, believes that capitalism is the best means to serve, protect and accommodate the common man. To the end, he feels that a computer-linked world is the best means to achieve what he calls "friction-free capitalism."

What is most impressive about Mr. Gates is that his success has not corrupted his principles. He has not become a statist businessman like so many others who enjoy the blessing of free enterprise while they're on their way up the ladder, and then, in an attempt to avoid competition, try to destroy it once they get to the top.

Microsoft, a company with great potential to destroy the federal postal monopoly and developing widespread use of electronic mail, is being attacked by a government agency created to break up monopolies. Go figure.

Mr. Gates realizes the dangers of government meddling in the computer industry, both for producers and consumers. The benefits that consumers will enjoy are dependent on unbridled competition within the industry; government intervention will only hinder its evolution. Mr. Gates writes of "de jure" vs. "de facto" standards -- i.e., governmental mandates vs. voluntary cooperation. He understands that the government cannot efficiently standardize an industry that literally changes by the minute. Voluntary cooperation must set the standards of the industry if Mr. Gates optimistic vision of the future is to come true. He realizes the importance of voluntary exchange and market forces in producing efficient results.

A major barrier to Mr. Gates vision is the federal government and its willingness to interfere with anything and everything, for all the wrong reasons. Eager to impede the success of Microsoft in the name of "protecting the consumer," the Federal Trade Commission continues to harass Microsoft over what it considers to be "unfair and monopolistic" trade practices. As usual, the federal government will be harming the very people it claims to be protecting.
The truth is that the only way a monopoly can exist for a prolonged period of time is if it is subsidized or protected by the government. The U.S. Postal Service makes for a good example. Here's a bitter irony: Microsoft, a company with great potential to destroy the federal postal monopoly and developing widespread use of electronic mail, is being attacked by a government agency created to break up monopolies. Go figure.
The computer industry as a whole should make it abundantly clear to any doubters that the free markets are far more effective at "protecting" the consumer than government controls. Because of fierce competition in the marketplace, the price of computers keeps going down, while at the same time the quality and capacity of computers keeps going up. As a result, the masses benefit at no cost to anyone. Mr. Gates achievements alone will, in effect, benefit billions of people without hurting anyone. When was the last time government intervention achieved this type of results?
If Microsoft is providing goods and services that satisfy consumer demands at a lower price than its competitors, then by all means, resources should shift to Microsoft. If other producers come along and produce a better product at a lower cost, resources should, and will, shift to them. The market should determine the winners and losers -- not the government.
We're back to Adam Smith's "invisible hand": If an exchange between two parties is voluntary, it will not take place unless both parties expect to benefit. As a result, commercial interactions better society even though the interests of each participant are purely selfish. This is a basic principle of capitalism. So if the federal government wants to assist the information revolution in the best interests of consumers and the general public, it should stay out of Mr. Gates's way.

Mr. Khalil, a free lance writer in Detroit, is a former staff member of the Federal Trade Commission

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