With the resignation of Christine Wilson from the Federal Trade Commission due to Lina Khans’s unwarranted and totalitarian anti-trust policies, Robert Bork is now in the news, again. Yes, he was unfairly “Borked” by the Democratic Party for his political views, mainly on civil rights legislation. We believe in piling on. We are now going to Bork him for his irrational views on economics, sub category, anti-trust policy.
What is his perspective on this matter? Bork is most famously associated with the stance that anti-trust policy should be predicated not on the basis of promoting the economic welfare of business, but, rather, that of consumers. As stated, there is nothing egregiously wrong with such a policy. The kicker comes in when we realize that he is urging this public policy as an aspect of free enterprise, with which he has been long and falsely associated. Even opinion molders such as the Wall Street Journal, who are otherwise strong advocates of private property rights, limited government and laissez-faire capitalism have fallen for Bork’s siren song. They are not at all in opposition to his call to place the big fat thumb of government on the supposed side of consumers in any other sector of the economy, but they have fallen like a ton of bricks for this one.
Suppose that the price of a unit of beans is $3. Consumers are complaining this this price is too high. What would a socialist, interventionist “consumer welfare standard” implement in response? Simple: Impose a price control on this item. But as any freshman who has honestly earned a C or better in economics 101 full well knows, this would create a shortage. Similarly, if consumers protest that their wages are too low, the ostensible remedy would be to create a minimum wage law, and/or raise its level (or more compulsory unionization). But again, apart from economic illiterates, it is a basic law of economics that these policies will lead to a surplus of labor, e.g., to unemployment.
But isn’t anti-trust different? Is not monopoly a “market failure?” Well, yes, where government is in charge. Think of the sclerotic U.S. Post Office, or the local motor vehicle bureau, where the prime product is long queues and waiting times. But these are hardly market failures. Rather, they are fiascos of government.
In contrast, there can be no such thing as a monopoly in the market place, since this type of enterprise is necessarily protected by laws prohibiting competition. Without such government interventions, there can be no such thing as a monopoly. Yes, there are large scale enterprises, and single sellers of a specific product, for example, the only grocery in small town Duckberg, located 100 miles away from the next location, or IBM, bfore others entered the computer field. But these are only monopolies in the view of people who do not understand economics.
What about a gigantic private firm that has achieved single seller status either via mergers or by previously satisfying consumers better than competitors and bankrupting the latter as a result? The perceived danger is that such a company will produce too little quantity and jack up prices into the stratosphere. It can now do so since there is little or no competition remaining. It can benefit from monopoly-like profiteering, to the great harm of consumers.
Stuff and nonsense. Such analysis is based upon invalid, illicit and illegitimate interpersonal comparisons of utility. It is akin to saying that Mike Tyson, when he was heavy weight champion of the world, should fight 15 times per year, but is “monopolistically withholding” effort and doing so only once per month. The charge is that we the consumers value those extra three bouts more than they cost Iron Mike. How do we know any such thing? Simple, the commie economists draw up a number of curves on the blackboard, supply, demand, marginal cost, marginal revenue, dead weight loss, profiteering, amongst them (don’t ask; take a course in intermediate microeconomics). If you have been punched in the nose upon numerous occasions, you will realize that these costs, and the benefits of the money derived, are all subjective. It is only stupid blackboard economics that says nay to these actual insights.
The granddaddy of all the arguments in favor of anti-trust policy is the Standard Oil case of 1911. There, John D. Rockefeller was wrongly accused of engaging in the nefarious practice of monopolizing. He was supposed to have radically lowered prices in one geographical area, driving into bankruptcy all local competitors, and then raised prices. Then financed by these untoward gains, he would pull this plan elsewhere, with the same results. He continued until he controlled the oil industry for the entire country. That is a fairy tale, as John McGee demonstrated. The real source of Rockefeller’s success, instead, was the he had a new technique for refining oil more effectively and cheaply than any of his competitors. That alleged plot is just plain silly. All the locals need have done purchased SO oil at the rock bottom prices, and then sell them when Rockefeller tried to raise prices.
No, a strict laissez faire policy means that government keeps its mitts off the economy. In his support of anti-trust policy, punishing success, Bork reveals himself as no free enterpriser. And this goes for all those who follow him down this particular garden path of using “the consumer welfare standard” justification for supporting this type of interference in the marketplace.
