Lies & The Lying Liars Who Tell Them
Mark Thornton's column about the FTC's violent intervention into the motion picture industry over 60 years ago nonetheless remains timely. The community of parasites that benefit from antitrust see the current intersection of economic depression and Obama-fueled statism as setting the stage for a new golden era of antitrust. I suspect they're right.
Walking through the bookstore today, I saw a lengthy, recently-published treatise by some lawyer promising that antitrust was really an engine of economic development. Antitrust will save us from the economic depression (caused by the Chicago School, Ayn Rand, and other free-marketeers) and restore competition to markets decimated by "monopolists." Indeed, if only we'd had more antitrust in the past decade, the current economic crisis could have been averted altogether. We need to "rebuild" our national antitrust capacity with the best and brightest minds to secure a prosperous future!
It's a crock of you-know-what. But people will buy it. The antitrust oligarchy has learned well from late-night infomercials. They know a good sales hook -- "antitrust will bring you more competition, lower prices, and better products!" -- and people will fall for it. Especially people with political power. The fact that it's the state and its thousands of tentacles that restricts competition and limits consumer choice will be conveniently forgotten.
But the core of the antitrust scam is the notion that "competition" can exist in a tangible form absent private property rights. Antitrust is simply another word for violence. Any type of antitrust action requires the violation of someone's property rights, whether it's forbidding a voluntary merger of firms, voiding a contract to sell a product at a given price, or restricting the free speech and association rights of individuals.
The antitrust oligarchy maintains that competition must overrule property rights -- in order to protect the "rights" of consumers -- but that implies one can acquire a right to something one does not possess. Consumption is not a source of rights. Nor does competition have any meaning when a group of self-selected oligarchs reserve the right to retroactively annul any exercise of property rights that offends them.
The oligarchy confuses this point by arguing the existence of hypothetical markets where outcomes are more "competitive." They are simply trying to restore the correct economic timeline, as if the market were an episode of Star Trek. If consumers pay more then a certain price for a commodity, clearly we're in the wrong timeline and corrective action must be taken! So not only must we reject private property rights -- we must also dismiss any economic concept of time-preference, since time is essentially meaningless in the antitrust world.
This is highly illogical, as Mr. Spock might say, yet it's persuasive to many folks because the mere possibility of an alternate marketplace is appealing. If only the government had attacked Microsoft sooner, some say, we'd live in a much better world today with better operating systems! No doubt this is what people believed in the 1940s when the FTC began tampering with the motion picture industry: Things will be much better with FTC "experts" driving competition then a bunch of monopolistic movie studios!
Of course, consumer discontent with the status quo is an important factor that drives market competition. Entrepreneurs compete to exploit such desires. But the antitrust oligarchy promises guaranteed results without any mention of the costs -- namely the diversion of capital away from satisfying consumers and towards appeasing the antitrust oligarchy! Every single advocate of antitrust maintains it is a costless intervention; or at least they never mention the costs, only the purported, magical benefits.
Unfortunately, another reason the antitrust oligarchy maintains its insane grasp on power is that even the opposition to antitrust has largely conceded the broadest contours of the delusion. Many in the Chicago School and other purported free-market cliques have argued for a restrained antitrust policy where intervention is subject to "economic analysis." I would sum up this argument as follows: "If we're going to lie, let's at least lie consistently, so people will accept it as truth."
(Or, to quote Leonard Nimoy, "They're lies. But they're entertaining lies. And in the end, isn't that the real truth? The answer is no.")
The antitrust oligarchy, however, seems content to simply lie at will. After all, once you've conceded the superiority of violence over property rights and voluntary action, why does it matter if people believe your specific arguments? The intellectual battle has already been won.
Comments (29)
gml
Although I believe anti-trust actions are usually misguided and often counter-productive I'm a bit of a Hayekian in that I think as long as governments do exist then they might as well exist to "plan for competition rather than against it."
Competition is good. If a firm gains "monopoly" status over a market or becomes "too big too fail" then it shouldn't exist. I often argue against government monopolies with my statist friends and I see market monopolies as only barely better than government ones. That this is not usually the case or the motivation for anti-trust actions undertaken by the government is another matter.
Is it ok if through entirely voluntarily actions my family line eventually manages to own the entire world and all its resources? That would be a resounding no from me.
Of course I don't believe for a second that real, definitive monopolies could exist for long under a truly free market. We do not, however, have anything even remotely approaching that (thanks State!). As mises once noted interventions have led to unintended consequences that then require further interventions to try and correct. Just because governments have screwed things up so bad that they literally create monopolistic conditions doesn't then mean that monopolies are good just because the government opposes (or pretends to oppose) them.
Whether government or private, monopolies are bad. Arguing that it is wrong to break them up because it is anti free-market is merely cheering for the status quo since they are not aquired through free market means.
Published: May 15, 2009 9:13 PM
S.M. Oliva
gml --
Your argument is little more then a straw man. Monopoly power can't exist without the state. And antitrust is NEVER about preventing monopoly; by definition, any antitrust action expands the regulator's monopoly powers.
Defending antitrust as a means of restraining monopoly is the moral equivalent of defending rape as a means of restraining women. Violence is violence.
Published: May 15, 2009 9:20 PM
Rellag
Two issues:
1) GML, please identify a current civil monopoly. Feel free to include any monopoly you believe would arise if not for FTC/DOJ intervention.
2) Skip - The constitution protects us from establishment of religion. However, there are large belief sets, including antitrust, Keynsian economics, academic finance, etc. which don't admit falsification or counterexamples and should best be characterized as religion or theology.
These sects/cults have been Established, either through federal agency, or the various state-owned or sponsored universities. Direct and indirect lending for tuition another avenue for remuneration.
You're best off thinking of antitrust theorists and mainstream economists as a synod of medieval cardinals who are predictably incented to give the monarch whatever answer is most pleasing to the monarch.
The resilience of these belief sets in light of near-continuous falsification over a 50 year period is a remarkable phenomenon.
Published: May 15, 2009 9:50 PM
S.M. Oliva
Rellag -
A fair point. I've made the religion comparison myself. Antitrusters are also like creepy magicians -- they use slight-of-hand to make things appear that don't really exist.
I would also note that in recent years, the antitrust oligarchy has managed to funnel money into the universities as "grants" from class-action awards. George Washington University recently received several million dollars to establish a pro-antitrust center, courtesy of several companies that paid off antitrust lawyers to go away.
Published: May 15, 2009 10:38 PM
newson
gml says:
"Is it ok if through entirely voluntarily actions my family line eventually manages to own the entire world and all its resources?"
you should read http://mises.org/econcalc.asp
this would help you understand why your imaginery scenario is impossible. the same calculation issues that afflict public ownership of the means of production also come into play when there exists a monopoly private owner. you may also want to observe what happens to large conglomerates (hint: michael milken and drexel burnham lambert).
Published: May 15, 2009 10:59 PM
newson
i agree with the tenor of this blog-post. anti-trust is all the more dangerous to laissez-faire in that it enjoys high public esteem, whilst playing to the notion that legitimate commercial activity needs to be checked. ("wild-west capitalism" etc).
that it is illogical and arbitrary (why are workers able to band together in unions, and yet business-owners doing the same are collusive?), seems to be overlooked by most.
Published: May 15, 2009 11:09 PM
resveratrol
I really enjoy reading your blog. Keep up the good work.
Published: May 16, 2009 2:04 AM
Inquisitor
"Although I believe anti-trust actions are usually misguided and often counter-productive I'm a bit of a Hayekian in that I think as long as governments do exist then they might as well exist to "plan for competition rather than against it.""
We need a violently enforced monopoly to "plan" for competition. Right. But monopolies are "bad". I have a "plan for competition" too. Eliminate the parasite.
Published: May 16, 2009 3:19 AM
Inquisitor
BTW to be fair I think people should re-read gml's post more carefully. Still, it's silly to expect a monopoly like the government to ever care much for competition when it and its buddies' interests are aligned contrarily.
Published: May 16, 2009 3:25 AM
Anonymous
GML,
How can you argumentatively justify aggression against a non-aggressor without contradicting yourself?
More specifically, do you think there are any norms (acceptable standards of behavior) implied in argumentation? I believe the norm implied in argumentation is this: It is illegitimate to engage in aggression against a non-aggressor. Any argumentation presupposes that norm, so it is impossible to argue otherwise.
A monopolist who gains his monopoly status through mutually beneficial voluntary exchange has not aggressed against anyone, so aggression against him is illegitimate. So how can you argumentatively justify aggression against a non-aggressor without falling into a contradiction?
Published: May 16, 2009 4:38 AM
(echo)witness
Excellent post and comments...
Anonymous,
I love your point about aggression and wish more people would think this way.
S.M. Olivia,
I wonder why more people don't realize that a state monopoly against monopolies is a monopoly. Curious...
Published: May 16, 2009 12:12 PM
Daniel
GML's "my family owning everything" argument reminds me of the argument against the gold standard that says that "what if the banks hoard all the gold?" Well, what use is it to them if they hoard all the gold? They wouldn't be able to spend it, thus, rendering its use as money worthless.
Published: May 16, 2009 2:00 PM
DJ
I'm new to the entire Austrian school of thought (which is a sad thing to admit, given that I'm a graduate of a top American business school). But, thanks goes to Ron Paul during the last elections for helping to arouse in me the sound and just economic theories that are found in the Austrian school. I am forever grateful.
That being said, forgive me for not yet understanding the point of view that most seem to adhere to on this site as it regards anti-trust (I agree with EVERYTHING else that I read on this site... I just can't grasp your stance on anti-trust). But here's my point of view:
I do not follow modern anti-trust regulation, and my general outlook is based around what we all learn in high school (breaking up the oil, railroad, etc monopolies in the early 20th century to encourage competition and keep prices level). I realize the contradiction of having the government monopoly using force to break up the industry monopolies that were formed through voluntary acts. HOWEVER, it seems to me that that it is inevitable that industry monopolists become aggressive to the people and to the economy at large, and that the government is (among very few instances) acting in the best interest of the people that it represents.
We do still have one existing monopoly that goes unchecked and the government doesn't touch. Actually, monopoly isn't the right word, but an oligopoly. And I mean the banks. The banks do not operate in a competitive market. And they are the most extreme example of what happens when corporations go unchecked. They not only exert their influence wherever they can in order to maximize profits, but then they corrupt the institutions that become subservient to them, which exacerbates the problem. Even institutions that supposedly have checks and balances like the US government.
Since our society and economy will always be exposed to the vices of human nature, and since tyranny will always be a result of increasing power in the hands of a few, no matter where the power begins to accumulate (whether in industry or government), then it seems to me that anti-trust is a good thing.
But, there are so many on here that are wiser than I. Perhaps I'm not taking everything into consideration. So point me in the right direction if you have some good resources.
Here's a question though. If laissez-faire will prevent monopolies from ultimately using their power to control people in unjust ways, then how does this happen? At what point does the "invisible hand" come into play?
Published: May 16, 2009 2:59 PM
Anonymous
DJ,
There are two ways to approach this problem: ethics and economics. You will see both approaches used because they both offer powerful insights.
Ethically, it is illegitimate to use aggression against a non-aggressor. This "Libertarian Axiom" is found in many of the great works on Libertarian thought. Start with Rothbard's "For a New Liberty", it's a great book and it's a really easy read. I also highly recommend the short articles by Hoppe on Argumentation Ethics. Hoppe's articles are the most rigorous ethical defenses of liberty ever written (these article can be found in Hoppe's "The Economics and Ethics of Private Property").
Economically, it is very doubtful that monopolies would exist in the unhampered market. Monopolies cannot engage in economic calculation, so they have the constant incentive to relinquish their monopoly power so the can calculate profit and loss. If you're really serious about learning Austrian economics and monopoly theory, then read "Man, Economy, and State" by Rothbard.
I also highly recommend Hoppe's "A Theory of Socialism and Capitalism". It's not an easy read, but it's well worth the effort.
Here's a good place to start if you're just looking for a short article: "From the Economics of Laissez Faire to Ethics of Libertarianism" by Hoppe. It starts on page 305 of this book:
http://mises.org/books/economicsethics.pdf
Published: May 16, 2009 3:39 PM
MB221
DJ: "We do still have one existing monopoly that goes unchecked and the government doesn't touch. Actually, monopoly isn't the right word, but an oligopoly. And I mean the banks. The banks do not operate in a competitive market. And they are the most extreme example of what happens when corporations go unchecked. They not only exert their influence wherever they can in order to maximize profits, but then they corrupt the institutions that become subservient to them, which exacerbates the problem. "
You are correct that the banking industry has some major problems, but I think you are slightly misplacing the blame here.
The banking industry doesn't operate in a free and competitive market, I agree. However, think about who it is that runs the banking and money creation industry - the Federal Reserve, arm of the federal government. There you will find the politics and corruption that is plaguing the world today.
If you ask me, the Fed was basically saving its own ass with the financial bailout sham, claiming "systemic risk" from some "toxic assets" blah blah blah. The Fed and the various branches of Federal regulation (the SEC, FTC, etc.) have known about these things for a long time now and have regulated/deregulated the markets to better facilitate their growth. The amount of money in the mortgage and credit default-swap markets is so incredibly enormous that only a central banking system with power like the Fed could possibly feed it.
The taxpayers, however, always get the short end of the stick whenever the bankers lose on their bets. The politicians in Washington do the job of making the public believe this is all for their own good.
The banking industry has got some problems, yes, but I have a hard time believing the same people who are at the very root of the problem somehow have the ability to 're-regulate' the distorted markets they have created into functioning like rational competitive industries.
It's enough to make my head spin sometimes.
Published: May 16, 2009 5:54 PM
newson
to dj:
check out the podcasts by di lorenzo in the media section. he explodes the cliché of the robber barons. also, you may want to read where mises seems to have erred on monopolies (http://mises.org/journals/qjae/pdf/qjae6_3_3.pdf)
Published: May 16, 2009 8:23 PM
newson
the paper i cited above makes the irrefutable point that breaking up a natural monopoly for the benefit of consumers involves making judgements about interpersonal valuation (the monopolist's deprivation is worth less than the consumer's gain), which goes against everything the austrian school stands for.
Published: May 16, 2009 8:35 PM
newson
the paper i cited above makes the irrefutable point that breaking up a natural monopoly for the benefit of consumers involves making judgements about interpersonal valuation (the monopolist's deprivation is worth less than the consumer's gain), which goes against everything the austrian school stands for.
Published: May 16, 2009 8:36 PM
S.M. Oliva
"the paper i cited above makes the irrefutable point that breaking up a natural monopoly for the benefit of consumers involves making judgements about interpersonal valuation (the monopolist's deprivation is worth less than the consumer's gain), which goes against everything the austrian school stands for."
And of course, the FTC's motto is "For the Consumer," meaning it ALWAYS values consumer gain as greater then the producer's loss -- indeed, it never considers the producer's loss at all.
Published: May 16, 2009 9:37 PM
DJ
I'm new to the entire Austrian school of thought (which is a sad thing to admit, given that I'm a graduate of a top American business school). But, thanks goes to Ron Paul during the last elections for helping to arouse in me the sound and just economic theories that are found in the Austrian school. I am forever grateful.
That being said, forgive me for not yet understanding the point of view that most seem to adhere to on this site as it regards anti-trust (I agree with EVERYTHING else that I read on this site... I just can't grasp your stance on anti-trust). But here's my point of view:
I do not follow modern anti-trust regulation, and my general outlook is based around what we all learn in high school (breaking up the oil, railroad, etc monopolies in the early 20th century to encourage competition and keep prices level). I realize the contradiction of having the government monopoly using force to break up the industry monopolies that were formed through voluntary acts. HOWEVER, it seems to me that that it is inevitable that industry monopolists become aggressive to the people and to the economy at large, and that the government is (among very few instances) acting in the best interest of the people that it represents.
We do still have one existing monopoly that goes unchecked and the government doesn't touch. Actually, monopoly isn't the right word, but an oligopoly. And I mean the banks. The banks do not operate in a competitive market. And they are the most extreme example of what happens when corporations go unchecked. They not only exert their influence wherever they can in order to maximize profits, but then they corrupt the institutions that become subservient to them, which exacerbates the problem. Even institutions that supposedly have checks and balances like the US government.
Since our society and economy will always be exposed to the vices of human nature, and since tyranny will always be a result of increasing power in the hands of a few, no matter where the power begins to accumulate (whether in industry or government), then it seems to me that anti-trust is a good thing.
But, there are so many on here that are wiser than I. Perhaps I'm not taking everything into consideration. So point me in the right direction if you have some good resources.
Here's a question though. If laissez-faire will prevent monopolies from ultimately using their power to control people in unjust ways, then how does this happen? At what point does the "invisible hand" come into play?
Published: May 16, 2009 10:13 PM
Anonymous
'the FTC's motto is "For the Consumer"'
I've always thought was funny. Apparently they don't understand Say's Law. All consumption is made possible by a previous act of production. It's impossible to design policies to favor only consumers, because producers are consumers.
Published: May 16, 2009 10:48 PM
danny
DJ
Those oligopoly banks would certainly have been broken up by a free market -- exactly this would have happened if not for government intervention.
Published: May 16, 2009 11:50 PM
newson
to sm oliva:
good point. however even ignoring anonymous' sensible comments about say's law, the private monopolist is only "punishing" current consumer; he's rewarding future consumers by withholding present production. so even using the ftc's own flawed charter there are internal contradictions.
Published: May 17, 2009 12:01 AM
Inquisitor
There is nothing inherently wrong with a "monopoly" or "oligopoly" provided it is not legally privileged, as all that means is that it is the most efficient structure for the industry and any tampering will cause inefficiency. These firms must constantly strive to maintain their position. Compare to the static, unopposed legally granted monopoly, under which the gov't itself comes.
Published: May 17, 2009 3:48 AM
S.M. Oliva
"good point. however even ignoring anonymous' sensible comments about say's law, the private monopolist is only "punishing" current consumer; he's rewarding future consumers by withholding present production. so even using the ftc's own flawed charter there are internal contradictions."
The FTC only cares about present consumers. If you look at any anti-merger complaint, the FTC will say it is necessary to intervene to prevent price increases in the short-term (generally defined as two years.)
Published: May 17, 2009 7:26 AM
Stephen Grossman
Antitrust is competition without production. Eg, the slander of Rockefeller's Standard Oil without any concern that it increased production, lowered prices and _standardized_ quality. Socialists reject reality for society because they value equality more than life.
Published: May 17, 2009 10:04 AM
S.M. Oliva
"Antitrust is competition without production."
Excellent observation.
Published: May 17, 2009 10:39 AM
Michael A. Clem
Right. The problem with government anti-trust actions is that they try to decide what the "appropriate" amount of competition should be, and whether there's "enough" competition in an industry. This is impossible to determine, since only consumers can, through their purchasing power, decide how much competition is enough. The more important consideration when it comes to monopoly power are the barries to entry. How easy is it for new competitors to enter the market, if they so choose? Naturally, most barriers to entry are caused by government regulation, and in some cases are quite severe, as when the government supports the monopoly. But they're never going to have an anti-trust action against the government...
Published: May 18, 2009 12:58 PM
prettyskin
@ MB221
"...think about who it is that runs the banking and money creation industry - the Federal Reserve, arm of the federal government. "
Really, the Federal Reserve is a private entity period. The word "Federal" was intentional by the partners to mislead the taxpayers. Since its existence, the Federal Reserve has infiltrated the federal government, littered with pharisaicalness bankers whom have taken over the monetary lifeline of the State. Therefore, the Federal Reserve is a monopoly and an oligarchy with our federal government seal and approval.
Published: May 18, 2009 8:28 PM