Ask a typical person to list the great laws of American history and almost without fail the Sherman Anti-Trust Act will appear. As we all know, the Gilded Age was an era when "unfettered capitalism produced the robber barons who ruthlessly exploited workers, brutally put down unions, gouged consumers, and corrupted politics." The Sherman Anti-Trust Act was used by enlightened statesmen like President Teddy Roosevelt to breakup the huge, abusive trusts like Rockefeller's Standard Oil. This put an end to their predatory ways, i.e., charging low prices to run their competition out of business and then charging higher monopoly prices. This is probably a fair summary of what is taught in a typical American school. Its major problem is that it is complete nonsense. Not one case in the history of antitrust enforcement has featured this behavior; and, as Casey Stengel would say, "You could look it up".
Anyone who would put any anti-trust law on a list of great laws is unlikely to have made any more than a superficial inspection of the theory and practice of antitrust. Dominic Armentano has written the best books available on the subject: Antitrust and Monopoly: Anatomy of a Policy Failure and the shorter Antitrust: The Case for Repeal. Both are accessible to the intelligent layman as this even shorter summary, "The Politically Incorrect Guide to Antitrust Policy".
By thoroughly debunking the competition models of modern microeconomics upon which the rationale for antitrust enforcement lies, Armentano pulls the rug from under it. Antitrust is special interest legislation that has been used by less efficient companies to cripple more efficient ones. The classic examples of evil monopolists like John D. Rockefeller always expanded output and lowered prices. Armentano concludes:
"Antitrust theory and history are both a myth and a hoax. The laws were never intended to help consumers...and their long historical track record is that they have not helped consumers. They have, instead, punished innovative and efficient business organizations while protecting less efficient competitors and every state-sanctioned monopoly. They have tended to make consumers poorer and the overall economy less efficient and they deserve to be repealed, not reformed. That the antitrust paradigm still can find support among a majority of economists, lawyers, and the public is a testament to intellectual laziness, to the power of special interest, and to decades of successful myth making."
There are monopolies out there and every one is "state-sanctioned"; there is no workable definition of a monopoly without the force of government to support it. While legal and medical professions are cartelized by anti-competitive licensing laws, the biggest state-sanctioned monopolies never have been and probably never will be subject to antitrust enforcement. I speak of the United States Postal Service and the Federal Reserve system, which hold monopolies on mail delivery and money creation, respectively.
The postal monopoly loses money year after year while its shortfalls are paid for by taxpayers. This monopoly depends on postal statutes which make it illegal to compete with the post office. FedEx and UPS are allowed to compete only based on the urgency or size of their deliveries or both. The Constitution allows Congress to establish a system of "Post Offices and post Roads". However, the Constitution does not prohibit competition. The postal monopoly could be broken easily without antitrust laws by simply repealing the postal statutes that make it illegal to complete with it.
The same could be said for the fiat (paper) money of the Federal Reserve. Federal Reserve notes could still circulate as money but people would be free create and choose whatever kind of money they wanted to use. This would a be great check on the well-established propensity of all central banks to inflate a currency (indeed,inflation is the very raison d'etre of central banks).
By thoroughly debunking the competition models of modern microeconomics upon which the rationale for antitrust enforcement lies, Armentano pulls the rug from under it. Antitrust is special interest legislation that has been used by less efficient companies to cripple more efficient ones. The classic examples of evil monopolists like John D. Rockefeller always expanded output and lowered prices. Armentano concludes:
"Antitrust theory and history are both a myth and a hoax. The laws were never intended to help consumers...and their long historical track record is that they have not helped consumers. They have, instead, punished innovative and efficient business organizations while protecting less efficient competitors and every state-sanctioned monopoly. They have tended to make consumers poorer and the overall economy less efficient and they deserve to be repealed, not reformed. That the antitrust paradigm still can find support among a majority of economists, lawyers, and the public is a testament to intellectual laziness, to the power of special interest, and to decades of successful myth making."
There are monopolies out there and every one is "state-sanctioned"; there is no workable definition of a monopoly without the force of government to support it. While legal and medical professions are cartelized by anti-competitive licensing laws, the biggest state-sanctioned monopolies never have been and probably never will be subject to antitrust enforcement. I speak of the United States Postal Service and the Federal Reserve system, which hold monopolies on mail delivery and money creation, respectively.
The postal monopoly loses money year after year while its shortfalls are paid for by taxpayers. This monopoly depends on postal statutes which make it illegal to compete with the post office. FedEx and UPS are allowed to compete only based on the urgency or size of their deliveries or both. The Constitution allows Congress to establish a system of "Post Offices and post Roads". However, the Constitution does not prohibit competition. The postal monopoly could be broken easily without antitrust laws by simply repealing the postal statutes that make it illegal to complete with it.
The same could be said for the fiat (paper) money of the Federal Reserve. Federal Reserve notes could still circulate as money but people would be free create and choose whatever kind of money they wanted to use. This would a be great check on the well-established propensity of all central banks to inflate a currency (indeed,inflation is the very raison d'etre of central banks).
As Ron Paul concludes:
"...allowing for competing currencies will allow market participants to choose a currency that suits their needs, rather than the needs of the government. The prospect of American citizens turning away from the dollar towards alternate currencies will provide the necessary impetus to the US government to regain control of the dollar and halt its downward spiral. Restoring soundness to the dollar will remove the government's ability and incentive to inflate the currency, and keep us from launching unconstitutional wars that burden our economy to excess.With a sound currency, everyone is better off, not just those who control the monetary system. I urge my colleagues to consider the redevelopment of a system of competing currencies."
Freedom to make peaceful agreements is a fundamental part of a free society. Those who think antitrust laws are good idea should be consistent and apply them in the only way they can do any good--against the government itself. The flag of Cornelius Vanderbilt's famous New Jersey-based steamship that broke Robert Fulton's government-granted steamship monopoly in New York waters read "New Jersey must be free". We could all benefit from a renewal of that kind of entrepreneurial spirit: "America Must Be Free".
"...allowing for competing currencies will allow market participants to choose a currency that suits their needs, rather than the needs of the government. The prospect of American citizens turning away from the dollar towards alternate currencies will provide the necessary impetus to the US government to regain control of the dollar and halt its downward spiral. Restoring soundness to the dollar will remove the government's ability and incentive to inflate the currency, and keep us from launching unconstitutional wars that burden our economy to excess.With a sound currency, everyone is better off, not just those who control the monetary system. I urge my colleagues to consider the redevelopment of a system of competing currencies."
Freedom to make peaceful agreements is a fundamental part of a free society. Those who think antitrust laws are good idea should be consistent and apply them in the only way they can do any good--against the government itself. The flag of Cornelius Vanderbilt's famous New Jersey-based steamship that broke Robert Fulton's government-granted steamship monopoly in New York waters read "New Jersey must be free". We could all benefit from a renewal of that kind of entrepreneurial spirit: "America Must Be Free".
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