Henry C.K. Liu hliu at
Sun Apr 4 11:01:31 PDT 1999

If a comparison to real estate is valid, there should be real estate taxes for 100% corners on the internet. Also, there is such a thing as book value on established companies that provide comfort to investors. What we are seeing is a new social asset and its potential in the process of being privatized at great profit to a few. It is surplus value created not by the classical relationship between workers and capital, but because consumers and distributors.

Henry C.K. Liu

Nathan Newman wrote:

> -----Original Message-----
> From: Doug Henwood <dhenwood at>
> To: lbo-talk at <lbo-talk at>
> >[Quoting perma-bear James Grant makes me almost as queasy as evoking 1929,
> >given how (engagingly) wrong he's been over the last 15 years. But this
> >stuff is truly nuts.]
> I generally do think the Internet stock valuations are nuts, but the reality
> is that stock ownership is really not ownership of property value but is a
> claim on profits. The reason this is critical in Internet stocks is where
> profits are being derived. A chunk of value for all these firms is based on
> squatting on publicly funded goods - mostly the Internet itself - at
> strategic points and getting wealthy as foot traffic explodes. This makes
> much of the investment more akin to real estate speculation than to normal
> revenue-sales analysis. A square foot of land at what becomes St. Louis (to
> use a Henry George example) can expect astronomical returns pretty detached
> from the original price paid for the land, because the value is based on the
> social dynamics in which the land/Internet stock is enmeshed.
> The flip side of course is that most land speculated upon ends up being
> worthless. Some of these Internet stocks may be worth what people are
> paying, but all of them almost by definition cannot be.
> Aside from the real estate analogy, the other reality is that their value is
> partially derived from converting public knowledge into private goods
> protected by intellectual property laws. In that sense, the stock market
> may be implicitly betting on the returns to the real dollar value of
> investment by the public that some of these companies have managed to
> privatize for a song -- I mean algoritm. Netscape was a classic case of
> this, robbing the intellectual property of the University of Illinois and
> CERN, and creating a private commercial result it could own. Only the fact
> that it meant an even nastier IP leverager, Bill Gates, did its juggernaut
> get derailed. (It's worth remembering that Gates is basically an IP
> leverager; he got his start demanding copyright protection for his BASIC
> programs, software created under a NSF grant by university professors.)
> So traditional valuation comparisons with industrial concerns of the turn of
> the century may be poor analogies.
> --Nathan Newman

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