The Case Against All Antitrust Legislation (lecture 31 of 32)
These notes are from the lecture The Case Against All Antitrust Legislation, given at the Mises University. Any errors are mine, feel free to point them out so that I can correct them. This lecture was given by Prof. DiLorenzo.
- Railroads coming together in 1800s.
- Centralized meat packing in Chicago.
- Shipped dressed beef long distances from all over.
- All of the sudden, had all kinds of competition.
- Impetus for anti-trust law was actually to prop up the price of beef.
- Scales of economies and railroad transport were lowering prices all over.
- Anti-Trust Laws: Whenever you see one company suing another, it is because company A does something that benefits consumers (lowering prices) that company B doesn't like.
Reformers vs. Abolitionists
- Austrians -- abolish anti-trust
- Chicagoeans -- reform anti-trust
Abolishing Anti-Trust Laws
- Anti-trust alws are inherently incompatable with competition:
- When created, even Socialists opposed anti-trust laws.
- Competititon is a dynamic ongoing process.
- If you disrupt this, you will mess things up.
- Anti-trust laws regulate trading, market advertising, raising prices ("price-gouging"), leaving some prices the same ("collusion"), cutting prices ("undercutting"), mergers.
- In a sense, a corporation is just a merger of assets between shareholders; company-mergers are more of the same.
- "Treble damages" -- pay 3x what "overpriced"; but no way to know what the "market rate" should have been.
- Witch-hunt against companies with large market-share.
- Historically Protectionist:
- Not a single book on history had a statistic on the output levels in the 1880's era.
- There were 17 industries in which DiLorenzo could find some historical data:
- Real GNP increased 24% from 1880 to 1890; the "cartelized" restricted industries increased by 100%.
- While general prices fell 7%, the prices of those general industries went down much more.
- So, they were expanding production 10x faster than the GNP and cutting prices faster than the general price-level was dropping.
- Congressmembers actually know this.
- So, anti-trust law was protectionism, in the guise of "increasing competition".
- New York Times -- anti-trust law was passed to clear way to bring in tariffs; they passed off a big anti-consumer law, with tariffs and protectionism; anti-trust was used as smoke-screen.
- "Exclusion" from consumers is a bad thing.
- 114-year history of destroying competititon.
- "Perfect competition" requires the Sherman Anti-Trust law -- "many firms". Economists of the 1890s saw all of the statistics, and saw the prices dropping from mergers.
- Anti-Trust and Monopoly (Independent Institute).
- Nirvana fallacy -- comparing reality to perfect competitive ideal; but real competititon is between before and after innovation.
- Incompatible with private property and freedom of association. Business activities don't harm anyone; Sherman is anti-free speech: even if you just "say" you want to fix prices, you can go to jail. In fact, any regulation of prospect of regulation stiffles free speech on the part of business-people, because of the fear of retaliation.
- Anti Rule of Law:
- Continual, capricious harassment of successful businessmen.
- Law vagueness: anti-trust laws are vague.
- The meaning of these laws is decided post hoc.
- No-one knows what's legal vs. illegal, until the State sweeps down on them.
- Businessmen, innovation, initiative, etc are stiffled.