Antitrust Policy – on YouTube?

Wow, there’s something for everyone
on YouTube! I have to give props to the American Antitrust Institute for their
slick film on antitrust regulation (to steal from Tim’s recent post, I avoid saying
"antitrust enforcement" or "antitrust authority" – and so should you – because
these phrases impart too much credence to antitrust law).

The film – called Fair Fight in the Marketplace – is an example
of a public policy organization making a difficult regulatory issue easier to
understand, while at the same time persuading the audience to its way of
thinking. Predictably, their film touts the theoretical aspirations of antitrust policy, and leaves out the messes that are often created by antitrust regulation.

The movie starts from a premise that antitrust law actually works for consumers. However, most believers in free markets find that reality doesn’t match this assessment. While the ideals of antitrust regulation might be
appealing, its reduction to practice has been a costly endeavor. Milton Friedman
had this to say about antitrust in a 1999 Cato Policy Report: 

My own views about the antitrust
laws have changed greatly over time. When I started in this business, as a
believer in competition, I was a great supporter of antitrust laws; I thought
enforcing them was one of the few desirable things that the government could do
to promote more competition. But as I watched what actually happened, I saw
that, instead of promoting competition, antitrust laws tended to do exactly the
opposite, because they tended, like so many government activities, to be taken
over by the people they were supposed to regulate and control. And so over time
I have gradually come to the conclusion that antitrust laws do far more harm
than good and that we would be better off if we didn’t have them at all, if we
could get rid of them.

In a classic 1983 article in Regulation magazine, Fred Smith, President of the Competitive Enterprise Institute, has this to say in "Why Not Abolish Antitrust?":

Antitrust laws, in their static way, ban activities for which officials and scholars have not yet discovered the rationale; markets are more dynamic than that. 

One can go on and on about antitrust regulation. But the main point is this: way too many people place too much faith in the antitrust dogma without measuring its real results. Like any form of economic regulation, there needs to be a cost/benefit analysis. It’s fair to say that antitrust regulation has costs that exceed its benefits. Too bad "Fair Fight" left out this fair criticism.

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