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  • The 1983 Video Game Crash and a History Lesson for Lina Khan

    Posted on by Azrael Comment

    The video game industry is getting a lot of attention lately thanks to both exciting tech advancements and unprecedented interference by the Federal Trade Commission (FTC). The sector has witnessed substantial growth in recent years, which is why antitrust concerns are being raised by Federal Trade Commission (FTC) Chair, Lina Khan. It can often feel like ancient history, but video gaming’s future hasn’t always been so bright in the U.S. In fact, it was almost “game over” for the business at the start of the 1980s.

    The 1983 Video Game Crash, as it is known today by industry insiders, left the market for video games with no clear path to recovery. A primary culprit for the industry’s downfall was third party publishers, who were flooding the market with subpar products. Up until this time, Activision was a primary provider of video games, and with interest in gaming growing fast, other opportunistic firms sought to get in on the action by offering lower-priced, lower-quality games to consumers.

    Parents would scoop up a handful of these off-brand games for the price of one Activision video game, assuming that their kids would be thrilled. They quickly learn this was not the case.

    User reviews didn’t exist at this time and since parents weren’t consulting other children for feedback on the games being sold, it was hard to be clued in on what was worth buying.

    Trust in the gaming market dropped, and increasingly risk-averse consumers were hesitant to buy the top-shelf games for fear of being duped again.

    It wasn’t until Nintendo released the Nintendo Entertainment System in 1985 that interest in gaming rebounded. Super Mario Bros, along with other addictive games like Tetris, Atari’s Gauntlet, and Sega’s OutRun, restored interest and faith in gaming products. Since then, the industry has grown at an impressive rate.

    Access and options for gamers have dramatically improved thanks to tech innovations in mobile gaming, as well as the surge of engagement during the COVID-19 lockdowns. Consumers were particularly eager for novel in-home entertainment, and multiplayer as well as online-based gaming allowed them to connect and create affinity networks like never before. And though the pandemic was a nightmare for millions of Americans, gaming has been credited as “a positive force in the field of mental health.”

    Today gaming is big business, on track to be worth $321 billion by 2026, which is why Lina Khan and the FTC have their sights set on the sector. Since her appointment as FTC Chair by President Joe Biden, Khan has made clear her negative view of corporate growth, which is unfortunate, given that US gaming firms have yet to catch up with the likes of Japan’s Sony Interactive Entertainment Studios.

    The Japanese juggernaut’s long march toward market dominance solidified in 2020 when Sony released the Playstation 5 (PS5), which quickly became the global favorite for next-generation gaming consoles.

    In response, Microsoft’s US-based Xbox Games Studios went on defense, announcing its plan to purchase Activision-Blizzard in January 2022. The merger brought Guitar Hero, World of Warcraft, Call of Duty, Diablo, and Candy Crush Saga all under one roof. Microsoft’s interest, therefore, is unsurprising, but this mutually beneficial business transaction between Microsoft and Activision-Blizzard was enough to draw the attention and legal might of Lina Khan’s FTC.

    Instead of allowing Microsoft to improve its competitive stance against Sony, the FTC sought to block the merger. The legal battle turned out to be a huge waste of time and resources at taxpayers expense. What is particularly puzzling is the fact that other jurisdictions around the world were already greenlighting the deal, and yet our own government opposed an American firm’s advancement against a foreign entity with 70 percent market share.

    Fortunately for Microsoft, Khan’s claims against the merger carried little weight in court. Unfortunately for Khan, her failed filing has led many to call into question her understanding of business and antitrust law. For instance, the FTC asserted that the merger could result in Microsoft restricting Activision-Blizzard games only to Xbox consoles, an unconvincing claim given Microsoft’s standing commitment to maintain the distribution status quo with Sony.

    The hypocrisy was clear to gamers watching the case play out in court, who are most all aware that Sony’s popular title, The Last of Us, is only available on PlayStation consoles. And who is to say there is anything wrong with exclusivity in the first place?

    The role of the FTC is to ensure consumer welfare in the marketplace, and right now it seems Khan is willfully overstepping her authority. It’s unclear who exactly she thinks the FTC is protecting in slowing down Microsoft. The FTC’s interference is delaying opportunities for gamers and developers at a time when creativity for gaming content is really taking off. Although the 2020 lockdowns surged interest in gaming users, the ability for developers to collaborate and curate new games has been hampered by remote work and other hardships brought on by the pandemic.

    If we have learned any lessons from the Video Game Crash of 1983, it should be that improvements in gaming access and quality should be encouraged, not derailed. Today’s gamers have high expectations for new and innovative experiences, and FTC interference only gets in the way of content development and distribution.

    Though the great gaming crash occurred just before Lina Khan was born, the FTC’s youngest chair in its history should familiarize herself with how this industry has survived and thrived since its inception. Gamers call the shots, and like other consumers, they’re the most powerful source of accountability for an industry supported by their hard-earned dollars.

    The FTC stepped far outside its lane at the expense of taxpayers, and one can only hope that a lesson was learned.


    Kimberlee Josephson

    Dr. Kimberlee Josephson is an Associate Professor of Business at Lebanon Valley College in Annville, Pennsylvania, and a Research Fellow for the Consumer Choice Center.

    This article was originally published on FEE.org. Read the original article.


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  • Why the United States Lost Its AAA Credit Rating

    Posted on by Azrael Comment

    For the second time in its history, the United States saw its AAA rating on long-term debt downgraded by a credit rating firm.

    Fitch Ratings said the downgrade of the U.S., which is now rated AA+, “reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to ‘AA’ and ‘AAA’ rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions.”

    In the wake of the downgrade, the first since S&P downgraded the U.S. in 2011 amid a similar debt-ceiling showdown, Democratic politicians and White House officials immediately attacked both Republicans and Fitch.

    “The downgrade by Fitch shows that House Republicans’ reckless brinksmanship and flirting with default has negative consequences for the country,” said Senate Majority Leader Chuck Schumer (D-NY).

    Meanwhile, Treasury Secretary Janet Yellen slammed Fitch, calling the decision “flawed” and “entirely unwarranted.” She was echoed by press secretary Karine Jean-Pierre.

    “It defies reality to downgrade the United States at a moment when President Biden has delivered the strongest recovery of any major economy in the world,” Jean-Pierre said. (CNN inexplicably blamed the downgrade on Jan. 6, even though Fitch in its report made no mention of the event, which happened 2 1/2 years ago.)

    Perhaps such a reaction should not surprise us. Pointing fingers and blaming others is what politicians do best. Yet pointing fingers will not change a troubling reality: The federal government is facing a fiscal reckoning.

    Most people probably don’t even know that in June, the national debt hit $32 trillion. If you find this strange because it feels like only yesterday that the national debt was $20 trillion, you can be forgiven. It practically was.

    It was in 2017 that the national debt hit $20 trillion. You read that correctly: The U.S. government racked up an astonishing $12 trillion in six years. Sadly this spending frenzy will have serious consequences for the future of our children and grandchildren.

    The federal government is now shelling out an unprecedented amount of money to pay interest on its debt — $476 billion in 2022, an increase of 35% from the previous year.

    The nonpartisan Peter G. Peterson Foundation says Americans are likely to spend $9 trillion in interest on the debt over the next decade, making it perhaps the single largest federal expenditure in the coming years and crowding out other programs.

    Lawmakers in Washington seem oblivious to the threat. Despite record revenues, federal spending continues to outpace tax receipts at a growing rate. In May 2022, the Congressional Budget Office estimated the federal government would rack up $15.7 trillion in new debt over the next decade; this year, the CBO adjusted the figure to $19 trillion, largely because of legislative changes.

    This isn’t to say the debt-ceiling drama did not play a role in Fitch’s downgrade; it clearly did. What partisans are neglecting to tell you is that the standoff stemmed from the other causes Fitch alluded to in its downgrade — ”the expected fiscal deterioration” of the federal government and the “growing general government debt burden.”

    These are serious threats, and instead of pointing fingers at Fitch and Republicans, the White House and Schumer should be addressing them. Instead, Democrats are calling for student debt “cancellation,” Medicare for All, and a fatter Pentagon.

    There’s a troubling disconnect with reality here. It’s not unlike those who insist the historic inflation that began in 2021 stemmed from “corporate greed,” not trillions of dollars the Federal Reserve printed to flood the economy with money.

    The Biden administration is of course not solely to blame for this debt. But it’s time for leaders to get honest about this fiscal recklessness, which history shows is more difficult to correct than it might seem because of the perverse incentives and corruption it spawns.

    America’s Founding Fathers warned about such dangers. James Madison called public debt “a public curse, and in a Republican Government a greater curse than any other.” Benjamin Franklin called it a threat to liberty.

    To keep independence, “we must not let our rulers load us with perpetual debt,” warned Thomas Jefferson.

    People, especially leaders in Washington, have failed to heed these warnings. Sadly, it will be the generations of tomorrow who will pay if we fail to learn from our mistakes.

    This article originally appeared in The Washington Examiner.


    Jon Miltimore

    Jonathan Miltimore is the Editor at Large of FEE.org at the Foundation for Economic Education.

    This article was originally published on FEE.org. Read the original article.


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  • The Real Reason Beer Companies Are Going Woke

    Posted on by Azrael Comment

    The puns were flowing like wine, or rather, beer, on social media this week when Miller Lite went viral for an ad campaign that blasted its own brand for “sexism.”

    “Hold my beer, Budweiser! Miller Lite’s new feminist spokeswoman is here to cuss at you and explain why men are evil,” wrote Not the Bee.

    “Miller Lite apparently wants the Bud Light boycott treatment too,” said Rogan O’Handley, a Hollywood lawyer turned conservative commentator and supporter of former President Donald Trump. “Newsflash: After a hard day’s work, working-class beer drinkers don’t want to be lectured like they’re in a gender studies class at SUNY-Oswego.”

    The ad features Ilana Glazer, a comedian who claimed women were the first brewers in history but were betrayed by corporate America.

    “From Mesopotamia to the Middle Ages to colonial America, women were the ones doing the brewing,” Glazer said. “Centuries later, how did the industry pay homage to the founding mothers of beer? They put us in bikinis.”

    To make amends, Miller Lite is buying up vintage ad art featuring women in swimwear, which it will turn into compost to support female brewers. “That good s*** helps farmers grow quality hops,” one woman explains.

    Many accused Miller Lite of following the “woke” path of Bud Light, which witnessed a collapse in sales following a March Madness ad campaign featuring transgender influencer Dylan Mulvaney that prompted Anheuser-Busch to issue an apology .

    “We never intended to be part of a discussion that divides people,” wrote CEO Brendan Whitworth.

    What many on social media failed to realize is that Miller Lite’s ad was released before Bud Light’s implosion. It had just received little attention. It’s not clear if Miller Lite’s ad will have the same effect on beer sales as Bud Light’s. Some commentators on Twitter said they appreciated the ad.

    “I actually think that Miller Lite got it a lot more right than Bud Lite in how it approached a female demo,” wrote Emily Zanotti of Fox News.

    That’s the nature of commercials, of course. They are subjective. What might make one person feel uncomfortable might appeal to someone else.

    I’m apparently a Neanderthal who likes the old-school Miller Lite commercials, whether they feature women in bikinis or Bob Uecker masquerading as Rodney Dangerfield at a costume party. I don’t like feeling lectured. That’s just me.

    People naturally have different preferences and tastes in commercials, and that’s OK. The thing is, I’m actually Miller Lite’s target demo: a 40-something male beer drinker.

    This invites questions. Why are Bud Light and Miller Lite making commercials that alienate their own consumer base? More importantly, why are they wading into controversial matters such as transgenderism, third-wave feminism, and nonbinary gender at all?

    The primary answer is the rise of environmental, social, and corporate governance, a term coined during a 2004 United Nations initiative (“ Who Cares Wins ”) that grades companies on social performance.

    ESG was born from the idea that traditional capitalism needs to be replaced with a more caring, socially conscious capitalism that serves other “stakeholders.” And what started as “guidelines and recommendations” have become explicit standards set by ESG rating agencies that impose steep costs on publicly traded companies, especially those that don’t comply.

    The thing is, companies are not jazzed about having to dance to the tune of a small cabal of central bankers and asset managers. A 2022 CNBC survey showed that while executives support ESG publicly, privately, they harbor serious concerns. Yet not playing ball is not an option.

    “If a company has to do disclosures, and it has some executives who are ‘not into ESG,’ it should be thinking about the cost of not becoming more concerned,” Eileen Murray, a former executive of Bridgewater Associates, the largest hedge fund in the world, told CNBC .

    Miller Lite and Bud Light drinkers have every right to be annoyed by ads they don’t like. But they should understand these publicly traded companies are playing a balancing act on who they risk alienating, their consumers or ESG puppeteers.

    This article was republished with permission from the Washington Examiner.


    Jon Miltimore

    Jonathan Miltimore is the Managing Editor of FEE.org. (Follow him on Substack.)

    His writing/reporting has been the subject of articles in TIME magazine, The Wall Street Journal, CNN, Forbes, Fox News, and the Star Tribune.

    Bylines: Newsweek, The Washington Times, MSN.com, The Washington Examiner, The Daily Caller, The Federalist, the Epoch Times. 

    This article was originally published on FEE.org. Read the original article.


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