Devlin Barrett of the Associated Press performs a useful service in reporting the Obama administration’s plans to expand antitrust enforcement. It would have been pleasant had Barrett bothered to quote a single critic.
The antitrust laws are a fraud. The premise behind them is that on a free market companies can reach unjust or unfair or economically damaging levels of economic success. But this is simply not the case. On a free market, customers can choose whether to buy a company’s product, and others can choose to enter competition.
Instead, it is political power that creates harmful monopolies — though such monopolies generally are exempt from antitrust enforcement.
Throughout the history of the laws, antitrust actions have been brought by less-successful competitors and governmental agents with an axe to grind to punish successful companies at the expense of consumers and economic health.
Companies targeted by antitrust action are characterized by skillful and efficient management and operations, economies of scale, and wildly successful products at competitive prices. Typical results of antitrust action are higher prices and less-useful products. (This is merely a summary; for details see The Abolition of Antitrust and The Causes and Consequences of Antitrust.)
As Barrett summarizes, the Obama administration claims “lax enforcement by the Bush administration contributed to the current economic troubles.” But nowhere in the article is any support offered for that view. The fact is that lax antitrust enforcement had absolutely nothing to do with the modern economic crisis, which was instead caused by federal encouragement of risky loans and investments. Increased antitrust enforcement will only dampen economic recovery.
Barrett suggests that two companies at high risk of antitrust action are Intel and Google — two companies that have been enormously successful because they provide enormously valuable goods and services. The idea that these companies should be politically punished because they are successful is grotesque. (I personally benefit enormously from both companies; for instance, I am using Intel processors and Google software to publish this blog post.)
Here is Barrett’s most chilling line: “[Assistant Attorney General Christine] Varney said the Obama administration would try to follow the historic lessons of The Great Depression in pursuing antitrust cases even in a troubled economy.”
The historic lessons of the Great Depression are that politicians hampered economic recovery by going on witch hunts against businesses and business leaders. The fact that the Obama administration sees the Great Depression as some sort of model is truly frightening.
Here is a telling passage from Amity Shlaes’s The Forgotten Man (page 344):
[Robert] Jackson… had collected a set of specific instructions from Roosevelt… to define and prosecute antitrust violations, and, especially, to go after individuals. Sometimes — when he knew the targets, or liked them — Roosevelt suggested that Jackson soften. And always, Roosevelt took care not to harm those with special power to harm him. Learning from Jackson of a possible action against motion picture combines, Roosevelt said, “Do you really need to sue these men?” and asked that they be brought in for a talk. But other times he egged Jackson on.
This typifies what antitrust actions are all about — arbitrary political power brought against the successful for the “crime” of success.