Want Recovery? Remember Antitrust is Anti-Economy

by on August 10, 2009 · 23 comments

More restraint is in order when it comes to the Obama administrations intent to escalate “antitrust” enforcement against business and enterprise in America.

A skeptical interpretation of antitrust’s realities—up to and including recent campaigns targeting Intel, Google, XM-Sirius; and earlier campaigns against Microsoft and the AOL Time Warner merger, as well as rejected mergers like Echostar/DirecTV—is that antitrust often advances the well being of various species of political predators rather than consumers.

Antitrust is a form of economic regulation. And like all economic regulation, it transfers wealth from somebody to somebody else, often in response to special-interest urging. Partly in recognition of such shortcomings, many economic sectors like transportation and telecommunications were (partly) deregulated and liberalized during the last quarter of the 20th century. But antitrust regulation typically gets a pass. Even in the “new economy,” this century-old smokestack era concept is used to justify constraints and conditions imposed on vigorously competitive modern companies. Antitrust is wrongly seen as being in the public interest, as having a superior role to play in policing markets relative to the alternatives.

In antitrust cases, targeted companies’ rivals have a direct financial interest in the outcome. Appeals to antitrust as a public interest law do not change the fact that private motives of rivals, and even ambitious enforcers, are not simply lurking in the background, but running the show. The idea that antitrust helps consumers and that it has a role to play in the new economy deserves reexamination and challenge.

Under antitrust law, a laundry list of business practices (tying, bundling, discrimination, exclusive deals, and so on) are regarded suspiciously, some outlawed altogether. But business transactions are fundamentally voluntary, non-coercive dealings—unlike the forced antitrust interventions that rivals often seek. From this fresh perspective, one finds that even the most “despised” business behaviors—even collusion and mega-mergers—can be pro-competitive and pro-consumer. To the extent that antitrust regulation strikes down practices that have misunderstood or ignored efficiency justifications, especially in an information-based economy, individuals and society are made unnecessarily poorer.

The list of vilified business practices is long, but needn’t be, and we often try to explain why. If anyone cares about economic recovery and jobs, today’s aim should be to “deregulate to stimulate,” so a list of vilified trustbuster practices would be far more advantageous to consumers.

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Wayne Crews / Wayne Crews is vice president for policy and director of technology studies at the Competitive Enterprise Institute, and an adjunct scholar at the Cato Institute. He started the Dysfunction Network as a side project. He is a dad of four. Wayne's work explores the impact of government regulation of private activity: Areas of interest include antitrust and competition policy, safety and environmental issues, and information age concerns like privacy, online security, broadband policy, and intellectual property. Wayne is the author of the yearly report, Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State, and he co-authored the recent reports This Liberal Congress Went to Market? a Bipartisan Policy Agenda for the 110th Congress and Communications without Commissions: A National Plan for Reforming Telecom Regulation. Prior to the assorted government bailouts now taking place, he wrote the report Still Stimulating Like It’s 1999: Time to Rethink Bipartisan Collusion on Economic Stimulus Packages. Wayne is co-editor of the books Who Rules the Net: Internet Governance and Jurisdiction (2003) and Copy Fights: The Future of Intellectual Property In the Information Age (2002). He is co-author of What’s Yours Is Mine: Open Access and the Rise of Infrastructure Socialism (2003), and a contributing author to others. He has published in the Wall Street Journal, Chicago Tribune, Forbes, Communications Lawyer, the International Herald Tribune and others. He has made various TV appearances on Fox, CNN, ABC, CNBC and the Lehrer NewsHour, and his regulatory reform ideas have been featured prominently in such publications as the Washington Post, Forbes and Investor’s Business Daily. He is frequently invited to speak, and has testified before congressional committees on various issues. Earlier Wayne was a legislative aide in the United States Senate to Sen. Phil Gramm, covering regulatory and welfare reform issues. He was an Economist and Policy Analyst at Citizens for a Sound Economy Foundation, and has worked as an economist at the U.S. Food and Drug Administration and as a Research Assistant at the Center for the Study of Public Choice at George Mason University. He holds an M.B.A. from William and Mary and a B.S. from Lander College in Greenwood, South Carolina. He was a candidate for state senate as a libertarian while at Lander.

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