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The focus of antitrust on prices is the direct result of Bork's influence on the Supreme Court, as this excellent article makes clear [1]: >And so Bork argued
by IBM 8y ago
The focus of antitrust on prices is the direct result of Bork's influence on the Supreme Court, as this excellent article makes clear [1]:
>And so Bork argued that federal judges must resolve the “paradox” by declaring that the only legitimate purpose of antitrust law was to promote “consumer welfare,” basically meaning lower prices. And the only way to promote consumer welfare was to promote efficiency, because efficiency meant more production, which meant cheaper products. Any other purpose would interfere with efficiency and must therefore be ignored.
>To see how radical this was, just consider one example of something not captured by consumer welfare: employee welfare. In a town dominated by a single employer, workers may be forced to submit to poverty wages and abusive work conditions. Coal miners know this all too well—so do Walmart employees. (See Alec MacGillis, “What J. D. Vance Doesn’t Get About Appalachia.”) But to Bork, that could never justify antitrust enforcement so long as the product stayed cheap.
>The Antitrust Paradox makes for remarkable reading today. Like a caricature of a Chicago School economist, Bork explicitly warned against learning from experience. Rather, all business practices should be judged based on what “simple” (his word) economic models predict. “Only theory can separate the competitive from the anticompetitive,” he wrote. And theory says consolidation is good, because it means strong firms are crushing weak ones.
[1] https://washingtonmonthly.com/magazine/novemberdecember-2017/the-democrats-confront-monopoly/ https://washingtonmonthly.com/magazine/novemberdecember-2017...
- clairity 8y agothanks for that article. this was the money quote for me: "... a central riddle of the 2000s: from 1999 to 2009, the economy had added zero new jobs. Even before the real estate bubble burst, growth was historically weak. Explanations like technology and offshoring didn’t quite add up. Longman and Lynn had a novel theory: the rise in corporate consolidation was the culprit. Small businesses drive most job creation in the U.S. A monopoly, meanwhile, has little reason to hire more workers, because it can just charge higher prices." people who talk about automation taking jobs being the problem or universal basic income being the answer should take heed of this, the central economic issue underlying today's societal and political challenges. monopolies are anti-capitalist.
- IBM 8y agoI think it's the most pressing political issue right now.
- dreamcompiler 8y agoMonopolies are not anti-capitalist; they are the natural result of unregulated capitalism.
- clairity 8y agoit's well-accepted that monopolized markets are undesireable in capitalism, so i don't think it's wrong to state it as anti-capitalist. but let's leave the semantics aside. strictly speaking, unregulated markets don't have to devolve into monopoly, but functional markets are not particularly stable on their own, so monopoly does tend to be a common result. it's like a dipolar chaotic system where the second pole is stronger than the first--once the system flips to the second pole, it's hard to get it back. even regulated markets can devolve into monopoly, as we all well know just by looking around. the early 20th century compromise was to allow monopolies to form but strongly regulate them. over time, we've allowed moneyed interests to weaken those regulations, with the entirely predictable result of the current imbalance of wealth distribution and social unrest.
- dreamcompiler 8y agoPoints taken. Well-said.