On Competition

[k-onmmunist]

On Competition

There seems to be an obsession of those who deem themselves ‘progressives’ with competition law. They would have you believe that monopolies defy the free market, that they are the sign of an unhealthy economy and that they damage the consumer. Nothing could be further from the truth. It makes no sense to punish success of entrepreneurs by the economic equivalent of balkanisation, especially in a society that wants to be seen as a meritocracy. Yet, these men such as Theodore Roosevelt and William Taft are paraded and revered as ‘trust busters’. Lets take the United States as an example of our analysis of competition law.

The first anti-trust law in the US was signed in 1890, as the Sherman Anti-Trust Act. Authored by Senator John Sherman, a Republican, here is a small sample of the act:

“Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court.”

So already, successful companies are being accused of ‘conspiracy’. Quite clearly an anti-capitalist statement, no?

Probably the most famous case was that of Standard Oil. One of the largest corporations of it’s day, a lawsuit was brought against it in 1911, resulting in the case Standard Oil Co. of New Jersey v United States. Standard Oil was accused of ‘under-pricing it’s competitors’. Therefore, by offering a cheap, affordable price to the consumer, Standard Oil was made a target of the wrath of anti-corporate populists. In addition, by the time the case was ending, Standard Oil’s share of the market had dropped from 90% to 60% due to the practical obsolescence of kerosene. Its a fact that very few of the richest companies from the turn of the last century are still successful today. Markets change, making a real monopoly (with the exception of those held by the government) impossible.

There are many other cases of unfair action by governments on corporations. However, the main point behind this is that the anti-trust laws do not actually benefit the consumer at all. Bigger corporations are better able to provide new, more efficient technology than smaller businesses. Many new products could have been delayed in development, or even missed out on altogether because of competition law.

The growth of larger more effective companies is a fact of capitalism. There used to be hundreds of motorcar manufacturers in the US; now there are just the Big Three. There also used to be many Internet companies, many of which died with the bursting of the dot com bubble, leaving Yahoo, Amazon and Google as kings.

Competition law where it does exist is not even enforced properly, probably due to the damage it would do if applied as often as its terms would specify. For example, US Steel, the first $1 billion corporation when founded in 1901, was spared the punishment of being broken up, although it was attempted in 1911. Not only this, but it was allowed to expand unmolested when it bought the Tennessee Coal, Iron and Railroad Company in 1907, one of the original components of the Dow Jones Industrial Average. At the time, US Steel controlled 67% of the United State’s steel production. Now it controls less than 10%, showing how unrealistic the concept of an all-powerful mega-corporation really is.

However, let it not be said that corporations can do completely as they wish. I support a limited form of competition law to punish behaviour such as restricting output or gouging prices unnecessarily. These acts really do harm the consumer, and they must be stopped and the perpetrators punished, whether by a fine, or by breaking up the company.

The saddest fact of all in this is the lack of controversy over government monopolies, which are in fact the only true monopolies. For example, the post office (The Royal Mail in the UK) could be efficiently run under privatisation. In fact, on June 4th 2009, the partial privatisation of Royal Mail was suggested in Parliament, but due to the current recession, has been delayed.

There have even been proposals by more radical libertarians such as anarcho-capitalists, for the privatisation of the army and the police. Although this is certainly an interesting proposal, I am undecided as to how good an idea it would be to place the national defence in the hands of corporations.

Nevertheless, it is a clear advantage for the consumer to allow the free market to prosper with as little interference from the government as possible, and this applies also to the question of monopolies and trusts.

[Scam of God]

Monopolies do defy the free market, because they cannot be shored up without government assistance: patent laws are a corporatist measure designed to protect a few large conglomerations at the expense of small business. An actual libertarian - which you prove time and again not to be - would call for the repeal of all patent and intellectual property laws, to create an economic environment conductive to real competition, which is as a concept anathema to every corporatist in this nation.

I don't oppose the State just for the sake of opposing the State. I also abhor such monstrosities as the military-industrial complex, whose express purpose it is to fill the coffers of Boeing and Lockheed-Martin with public gild through the utilization of such things as guaranteed contracts: the corporation must not ever be permitted to control the affairs of the State.

[k-onmmunist]

How am I less of a libertarian for opposing government interference by breaking up successful and profitable companies? Most Libertarian thinkers also oppose anti-trust laws.

[Scam of God]

How am I less of a libertarian for opposing government interference by breaking up successful and profitable companies? Most Libertarian thinkers also oppose anti-trust laws.

Because you support instead the government's interference in propping up trusts - again, through intellectual property and patent laws, through guaranteed contracts, etc. Should the government play favorites in deciding which companies are worthy of being propped up?

Of course, this totally slips your mind, because it requires an act of doublethink to both acknowledge this and maintain your traditional right-wing political alliances. At the end of the day you're not really interested in free markets; what you really want is corporatism, which is the subversion by business of the State, both of which work hand-in-hand to deprive men of their liberty.

[rdouty]

Let us not forget that monopolies are also indirectly experiencing competition. For example, many view the ultimate monopoly in the USA's history to be Standard Oil Company. But Standard Oil Company charged  lower prices because than any other gas company. They controlled the market because they sold the cheapest product. If Standard Oil rose it prices, well, that would then gives more opportunity to other businesses and investments to enter the oil industry. The market has more strength, than many give it credit.

As for price gouging, as stated above. This may just be an aside, but the greatest culprit of price gouging is the so-called "evil" oil industry. Let me say this: "price gouging in the oil industry is beneficial to the consumer." For example, after Hurricane  Katrina gas prices sky rocketed. Many blamed the industry for "price gouging", but would one rather have a shortage of oil, or allow the the supply of oil and price to stabilize.

[RIP Robert H Bork]

Amazing, how much Winston changed.

Of course I still doubt its reality.

[k-onmmunist]

Amazing, how much Winston changed.

Of course I still doubt its reality.

Meh. Doubt all you like, I changed my mind.

[phk]

How am I less of a libertarian for opposing government interference by breaking up successful and profitable companies? Most Libertarian thinkers also oppose anti-trust laws.

Because you support instead the government's interference in propping up trusts - again, through intellectual property and patent laws, through guaranteed contracts, etc. Should the government play favorites in deciding which companies are worthy of being propped up?

Of course, this totally slips your mind, because it requires an act of doublethink to both acknowledge this and maintain your traditional right-wing political alliances. At the end of the day you're not really interested in free markets; what you really want is corporatism, which is the subversion by business of the State, both of which work hand-in-hand to deprive men of their liberty.

What about natural monopolies through network effects?

[Southern Senator North Carolina Yankee]

The Tennessee, Coal, Oil and Railroad company was allowed to be purchased unmolested in 1907 because of the Panic of 1907. Think of it as the Merril Lynch of its day. They actually got TR to agree prior to the deal being made official to not try and break it up, for the good of stablizing the markets.

[Scam of God]

How am I less of a libertarian for opposing government interference by breaking up successful and profitable companies? Most Libertarian thinkers also oppose anti-trust laws.

Because you support instead the government's interference in propping up trusts - again, through intellectual property and patent laws, through guaranteed contracts, etc. Should the government play favorites in deciding which companies are worthy of being propped up?

Of course, this totally slips your mind, because it requires an act of doublethink to both acknowledge this and maintain your traditional right-wing political alliances. At the end of the day you're not really interested in free markets; what you really want is corporatism, which is the subversion by business of the State, both of which work hand-in-hand to deprive men of their liberty.

What about natural monopolies through network effects?

Such things very rarely occur, and when they do, it's almost because of the novel aspect of the service offered. I have not seen a pertinent monopoly yet where the State did not have an active hand in keeping it buoyed.