The Mises Institute monthly, free with membership
Volume 17 Number 8
by Thomas J. DiLorenzo
Two events during the third week of May proved once again that antitrust regulation is
nothing but a scheme to divert the
public's attention away from the real monopoly menace in society: the state. The first event was
a phony "predatory
pricing" lawsuit filed by the Antitrust Division of the US Justice Department against American
Airlines for cutting its prices
in response to stiff competition by lower-priced competitors. The company was just doing what
is necessary to survive in a
competitive market, but was accused of conspiring to drive all of its competition out of the
Dallas market. Only a
government lawyer trained at an Ivy League law school could believe such foolishness.
The second event was the US Supreme Court's decision that it was unconstitutional for any
state to attempt to reduce the
burden on its taxpayers by reducing the welfare benefits payable to new residents. True
federalism died in 1865 when the
right of secession was abolished by force of arms, but every once in a while it attempts to
High taxes and a
large welfare population make a state unattractive to business owners, all other things equal, and
some state politicians
recognize this. So, in an attempt to become more competitive in attracting businesses (and
population), some states
attempted to reduce their welfare burdens. They were tired of being "welfare magnets."
But that was quickly nullified by the Supreme Court which, for more than a century, has
been the driving force for the
centralization of governmental power; that is, for monopoly government. The Supreme Court's
decision establishes the
court as a "cartel manager" that uses the coercive powers of the state to destroy any competition
among the states that might
lead to lower taxes. All states must provide uniform benefit levels to all welfare recipients,
including new state residents. It
is a blatant price-fixing scheme that would lead to prison if it was administered by private-sector
The Court's decision is unequivocally unconstitutional if one uses the Constitution, rather
than fanciful legal theories, as a
guide. James Madison said, "I cannot undertake to lay my finger on the article of the
Constitution which grants a right to
Congress of expending, on the objects of benevolence, the money of their constituents."
Another insidious, state-sponsored cartel scheme that is gathering momentum is so-called
"regionalism," a euphemism for
the creation of monopolistic government in metropolitan areas. For the past thirty years state
intervention has all but
destroyed many American cities, which have become islands of socialism in a sea of capitalism.
High taxes, failure to
control crime (caused mainly by the government's war on drugs), the awful socialized school
system, the destruction of the
family and the work ethic by welfare, and rampant political corruption have caused millions of
Americans and myriad
businesses to flee the cities.
Statists never admit their failures. Indeed, to the statist failure is "success." For rather than
interventionist "root causes" of urban decay (to borrow one of Janet Reno's favorite phrases),
they propose even more
intervention. The proposal is to have state governments impose on metropolitan areas, without a
vote of the citizens of those
areas, a new "regional" taxing authority that could impose a new layer of taxation on the
residents of all counties within a
metropolitan area. The tax revenues would then be used to continue to fund the failed
government school monopoly,
welfare, government housing projects, and any number of equally destructive government
programs. As Mises warned, one
government intervention always begets another.
An additional aspect of so-called regionalism is Vice President Al Gore's "livability agenda,"
which also goes under the
rubric of "smart growth" and addresses the phenomenon of suburban "sprawl." The essence of
this agenda is to make life
more difficult for suburbanites by driving up housing and land prices with "growth control"
It is hoped that if tax and regulatory sprawl become sufficiently onerous suburbanites will be
forced to move back into the
cities, where they can live in less expensive, "low-density housing" (i.e., small apartments) and
commute to work on dirty,
inefficient, and often dangerous "mass transit." Most importantly, they can also be more
efficiently taxed by the urban
So-called regionalism is just another monopolistic price-fixing scheme concocted by the
state. Indeed, virtually everything
the state does is aimed at giving itself more and more monopolistic control over our lives, our
wealth, and our bank
accounts. That is why antitrust regulation has never been anything but a political smokescreen
designed to confuse the
public over the true source of monopoly power.
Thomas J. DiLorenzo is professor of economics
at Loyola College.