Anti-trust
I was thinking this morning about the idea of anti-trust. Beyond the laws, and JP Morgan and Andrew Carnegie and the Rockefellers. What are people getting at when they talk about anti-trust? Well, the first word that springs to mind is ‘monopoly.’ And I think it’s here that ideas really begin to diverge. What is monopoly, where does it come from, what does it mean, can we evaluate it as good or bad, and if so, what’s the answer?
At minimum, ‘monopoly’ means a single individual (or single corporation) is the sole provider of a product or service. Whatever portion of the populace seeks to buy that commodity, all of them buy it from one company. Implicit in this scenario are the ideas that the company is, or once was, a private enterprise (i.e. it’s not the Department of Energy or somesuch), and that the goal of the company is to make money - profits - and the more the merrier. And here’s where I think a lot of people stop thinking, or start making judgements, or have a dozen red flags go up in their mind, which usually center on issues of public welfare, safety, exploitation, and/or competition, the plight of the small business owner, and political/economic power abuse. Then usually comes something about "greedy bastards", the dangers of unregulated capitalism, the robber barons of the 19th century, and possibly something about child labor and poor working conditions during the industrial revolution.
Well, that’s a lot of ground to cover, and typically beyond my pre-breakfast capabilities. Let’s go back to the idea of monopoly, and consider it in the context of laissez-faire capitalism*. When people sniff a monopoly (or potential monopoly), and yell anti-trust, what are they after? They say they want to foster competition, to "keep the market healthy." What good is competition? What end-result makes it worthwhile?** In my book, the honest answer is ever-better products and services for ever-lower prices. So really, we’re after value to the consumer. And, the assumption goes, if one company rules the market, it can charge whatever it wants, screw over the consumers, and actively block up-starts (either by making it impossibly expensive to get started, or by forcibly ousting competitors from the market).
Well, in laissez-faire capitalism (LFC), only part of those are allowed. Let’s think about how one would ‘force’ a competitor from the market. There’s the high road, where the monopolizer produces such a good product, for such a low price***, that an up-start could never compete; a viable margin for profit is only available to a company that deals in mega-gajillion volumes of the commodity. (Remember, in this scenario product quality is the best possible, and it doesn’t vary). If this is the case - what’s the problem? Consumers (which presumably includes the would-be competitor) are getting awesome deals for stuff they want to buy, and the stuff functions really really well. People are happy. The only potential griper is the would-be competitor. But, truth be told, no one has a "right" to be a competitor in any market he chooses. It’d be like saying I have a "right" to be a professional soccer player because, gosh, wouldn’t that be neat, and hey I’ve got legs too, see I can run, plus I come from a long line of soccer players, you can’t push a legacy player out, we’ve always been a family of soccer players, why won’t you let me play?!? Uh, no. There’s such thing as good judgement - in people assessing their own talents, resources, and acceptance of risk in relation to existing conditions, in employers hiring quality employees (athletes or factory line workers or vice presidents), and in what market you choose to ply your skills, in the gamble of making a buck. Nothing’s guaranteed, not for the little guy, and not for the big guy.
Which brings me to the low-road. What happens when a big company uses its economic and political heft to forcibly prevent the little guy from making in-roads? *ding ding* wrong question. That’s not possible in LFC. In LFC, government and business are thoroughly separated. The government doesn’t regulate business, but neither does it help it. The government, in LFC, exists to protect individual rights, which means dealing with those who violate individual rights. And violation of individual rights happens, broadly, in two possible ways, either directly or indirectly: by physical force, or by fraud. Harming another person (or collection of people, like another business), or defrauding him/them of what is rightfully theirs, is wrong. And the government acts on the same principle as an individual defending himself from physical attack: against someone who initiates the use of force on you, it’s both rational and right to fight back with force. The attacker sought to take something from you which wasn’t his. You, the defender, gain nothing in the altercation, but act to preserve that which was yours in the first place (your life, your property, etc.) while risking injury, which is an injustice. Provided your response is proportional to the perceived threat, you act justly in adequately defending yourself.
Part of a citizen’s contract with the state (i.e. what it means to be a citizen) is that you delegate the use of force (in self-defense) to the government in all but the most immediate situations. The downstream determination of wrong, of punishment and of recompensation, becomes the job of the government. So, if your neighbor decided to turn his backyard into a used-tire incineration service center (zoning laws notwithstanding), what would you do? Call the police and complain, hire a lawyer and sue his ass for making the air on your property unbreathable and a health risk, for junking up the walls of your house with burnt-rubber byproducts and soot, for ruining your furniture with stinky-rubber smell, etc. His actions have harmed your life and your property. That’s (an indirect) use of force, a violation of an individual’s right to life and property.
Same goes for a factory - next door, or next county - that’s polluting the air (or water or whatever), emitting toxins that hurt people, etc. This is what most pro-government-regulation people want - protection of people’s health and safety - which they don’t think capitalism ensures, because "look around you! Businesses are evil, exploitative dangers to public safety!". They’re wrong - public safety is what LFC ensures, but a mixed economy does not. Only in a mixed economy, where businesses can essentially buy government protection (lobbying, anyone? Lobbyists are white-collar goons), and buy, solicit, or hijack the one thing government has a monopoly on - the use of force. A mixed economy creates a market for trading of government favors, and the cost-benefit analysis for violating individual rights (to more or less a degree), becomes a factor to be determined situationally. It’s the principled, honest businessman that takes the high road right out of business - in a mixed economy (or in any state-run economy). This is where you get back-alley pressure against competitors, under-the-table dealing, extortion and blackmailing critics, buying off judges and politicians, and (at the farthest extreme) businesses run like the mob, where upstanding but nosy employees and their loved ones get RIP passes to dirt beds (like in The Firm) while in-the-know public defenders turn a blind eye, play dumb, and hide cash in their freezers. Throw their sorry asses in jail, that’s all illegal in LFC.
But, it’s important to note where the line is drawn in LFC. Most people concerned with public safety and welfare don’t actually protect individual rights. Well, first, they don’t use that term. It’s non-sensical in their worldview. They speak of ‘human rights’ which include a long litany of things they ‘feel’ are right, but which lack a rational basis (but not rationalizations): food, water, shelter, clothing, education, healthcare, a job, equal opportunity; in Europe this extends to a college education at least; if you’re in Sweden, this might extend to a car, a house, dental and vision care, and I don’t know what else.
These "rights" of humans are incompatible with individual rights of individual humans - which, remember, means the protection from the use of force (or fraud; fraud is basically mental force), or "life, liberty and the pursuit of happiness". Why are they not the same thing? Just ask, to anything in the list above, this question: how? Which, at the end of the day, translates into: at whose expense? "The government’s"? Where does it get its money? That’s right: your wallet. Your paycheck, your investments, your savings, your inheritance, your profits, your property, your time, your energy, your life.
And a government that gives things to even a single person without your consent is violating your individual rights (to your money, proerty, time, energy and life - redundant, but good for emphasis - the things that are absolutely yours until you choose to part with them). Why? Because if you said, "Hey! I didn’t say I wanted to pay for Mr. Jones’ daughter’s education, or Crazy Bob’s medication, or Senator Williams’ junket to the Bahamas! Give me my money back! No? Well don’t expect any more money from me. I withdraw my involuntary contributions to the government. From now on, I’ll keep what’s mine, and determine myself who and what I spend my money on. Yes, it’s a bit more work for me, but that’s my choice. Please notify the IRS they may close my file; I will not be paying taxes this year." *ding ding* wrong answer. If they don’t seize all or part of your property, you too will find your sorry ass on the cold floor of a jail cell. That’s because the government has a monopoly on that kind of force - which is good, if someone has actually used force against someone. But if your neighbor leaned over the fence and asked for a thousand bucks so he could install a new sprinkler system in his yard, and you declined to help him, then he busted down your door, impounded your car, pocketed your wallet, raided your safe, and then held a gun to your head, and marched you down his cellar steps and locked you in a closet for your insolence - that’s practically Hollywood! But that’s what the government is allowed to do. And that’s what your neighbors do do, and what you do, when you vote for another tax. You’re simply hiring the government to do the dirty work of robbing your neighbor for you. It doesn’t change the nature of the action, but people feel less guilty if they don’t have to do it themselves. What if we all had to be our neighbor’s tax collectors?? In the absense of a water-tight constitution, it’s the voters and politicians that decide how far to extend this impersonal power over each other - legitimately, or illegitimately, it’s anybody’s ballpark.
LFC (which was implied in principle, but never systematically implemented in the US (or ever in history, actually), because of some loopholes and inconsistencies in our constitution) properly restricts the function of government to punishing those who initiate the use of force against others. No other government does that. The fancy juggling of a mixed economy distracts people from noticing which direction the juggler is inching towards - statism. For the uber-liberals and remaining Marxists, their version of statism would amoung to some variant of "To each according to his need, from each according to his ability." Look around you. You, the producer, would be your brother’s keeper, no matter how undeserving, unambitious, disrespectful, hateful, lazy, dishonest, or mean he was. And he would be your keeper. And in this kind of world, the cockroaches eat the lions for lunch, and the dishonest rise to the top as they (fabricate and) claim the greatest need of all, while the able, strong, honest, innovative, pioneers and pillars of an achiever’s society perish in "service to others." And soon after, all the cockroaches perish for lack of food.# Or, statism can be theocracy or dictatorship, which simply differ in their rhetoric and employ more obvious militaristic means of oppression ("For the glory of God/Allah! For the good of the Motherland/Fatherland/Wilderness!!).
But back to monopoly. What’s wrong with it? The government is what’s wrong with it. Monopoly+govt clout = bad, bad news. Monopoly + LFC = the best quality products at the lowest price till someone figures out a better, faster, cheaper way of doing it. The real equation is LFC + the best, fastest, cheapest way of making X = monopoly (till someone takes your place). If someone has a monopoly in LFC, they’ve earned it, and consumers have voted them (with dollars) into the position, and can vote them out at any time. Cuz consumers with ambition and creativity and work ethic are the single greatest source of a company’s stiffest competition. And if they can’t wedge themselves into your market for a profit, well then they’ll find another market to shave a few pennies off of in order to make millions - or create a new market. As products improve in one area, they feed back into markets using those products, passing on increased savings and improved performance. And think of performance - pretty soon "better performance" means "new function" (I just bought a new cell phone today - just think of what they were like 10 years ago!!), and "new function" = "new market." There’s never a shortage of jobs in LFC. The rate-limiting reagent is simply the (voluntary) use of each individual’s mind. A monopoly, in LFC, represents a tremendous achievement, but one that must be actively maintained.
*Laissez-faire capitalism is not the economic (or political) system that we have today. Today we have a mixed economy, which is kind of a juggling act between a free market and government control/regulation. There’s no real equilibrium; you’ve just got to keep stuff going fast enough (either the changes to the system, or a large enough volume of turnover) that it’s deemed "good enough". Whatever that means, to whoever makes those decisions (*cough* voters). Usually it just means don’t change too fast; lacking any principles, there’s no rock-bottom or glass ceiling. So long as you don’t rock the boat too hard, too fast, you can sail pretty much anywhere. Isla da Muerta, anyone?
**But, ask yourself - can you imagine, say, Eliot Spitzer asking this question? No. He, and many others, garner the mantle of self-righteousness and "public defender" without asking why competition is right, or what makes it worthwhile - what we are protecting when we "foster competition." But systematically pusuing and prosecuting companies within striking distance of monopolies, without answers to these question, means the primary criterion for prosecution (i.e. suspected guilt) is success. In effect, or even in principle (depending on the self-honesty of the "public defender"), they seek out the achievers and prosecute them for achievement, on the assumption that they can’t have done it honestly, and even if they have, it’s in principle (thanks to anti-trust laws) wrong to be the best at what you do. If, however, you suck at providing added value to the consumer (i.e. you can’t maintain a viable marketshare), well then you’ve got the public defender’s ear. You might be entitled to some of the intellectual or material property forcibly taken from the evil monopolist (which is what anti-trust laws do), to help you secure a foothold in the market (at the expense of the market leader), to provide that essential bit of competition that the market leader has already vanquished to the benefit of himself and the consumers (and his competitors, as individual men). So really, the short thought of this post is "Anti-trust laws aren’t about benefit to the consumer, health of economies and markets, or long-term innovation; they’re about punishing the able for being able, by valuing the incapable more than the capable. And if people think LFC leads to forcible monopoly, that just goes to show people don’t know the first thing about LFC. They think they do - we all learned it in high school - but they don’t. So few do."
***Here I’m thinking of my fragmentary knowledge of the Microsoft anti-trust case. What was the problem? As I understand it, they were packaging Internet Explorer, a web browser, as a standard feature of the Windows operating system. Previously, you had to buy it separately, which meant added cost, plus the hassle of installing it. By packaging it with Windows, they were giving out a free product. If they upped the price of Windows to accomodate that - well, it just shows people were 1) willing to buy it and 2) it didn’t bother people bad enough or long enough to create sufficient time for someone to develop, market and sell an operating system that cost less (with or without a web-browser). So what if there’s a bit of a time and money cushion for Microsoft? It’s not indefinite. And consumers aren’t stupid. If you sell Windows "With Free Internet Explorer 4.27!!!" but it costs twice as much as Windows did before IE was packaged with it, it doesn’t take a genius to say, "Heyyyy, wait a minute - why’s this cost so much?? I dunno if I need Windows XTPME afterall…." And a company has its reputation and integrity to market as well. Take advantage of the consumer, his wallet, his trust, and his credulity a time too many, and a company with a great product can lose market share to a more reliable "safer bet" company without the economic clout, experience, or quite as much gleam on its product.
Another example I just recently heard - those PlayStations that just came out, which everybody was buying. What did they cost? $300? $500? I don’t remember. I heard one went for $25K on ebay. Anyway, I heard that the company was actually selling them - at peak demand! - for a loss. They expect to make up the difference - and make their profits - on game sales. Swallow that one, anti-capitalists: the company deemed it in their best, long-term, financial interest to sell their top product at a loss. But long-term, financial interest, with a goal of making profits, isn’t a loss, and it most certainly isn’t a sacrifice.
#I’m surprised how often people are surprised to learn that communism has killed over 100 million people - and not from wars. About 60 million people died under communism in the Soviet Union (from political purges, starvation, disease, or other state-mediated death; and in communism, everything is state-mediated). Another 40 million have died under communism in China. That’s right. Same deal. And how horrified are you that Hitler was responsible for the death of 6 million Jews? How noble must an experiment be to sustain the death of 100 million people while retaining its nobility? To all those who say communism was never given a proper try ("it’s never been fully implemented!"), I say, if it’s that hard to implement, if it takes over 100 million dead people to "still not have it quite right yet" - how noble can it possibly be? Not at all. Not in principle, not in practice, not ever. The anti-bourgoisie absconded with the word "noble", but not with its concept. If Stalin read aloud the Declaration of Independence - it wouldn’t make him a friend of freedom, or imply he had any grasp of the concepts implied.





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