In a takedown of the Obama adminstration’s apparent attempt to use its legal howitzer, anti-trust chief Christine Varley, to prevent the airline industry from doing mergers that would save it, keep it out of bankruptcy, preserve jobs, and allow it to continue to provide service for consumers, Holman Jenkins asks the question, Does Obama Want to Own the Airlines? While describing the Justice Department’s move to block mergers that would save troubled corporations, in the guise of protecting the public from evil monopolies, he makes this trenchant comment:
Even now, she has turned her attention from airlines to the mobile-phone business on the theory that any industry that hasn’t collapsed into government receivership must be doing something wrong.
It’s all worth reading.
And for background in the sorry history of anti-trust law, you might want to read this. Just remember a simple principle: whenever the government gets involved, prices go up, supply goes down, and the only winners are the bureaucrats and successful lobbyists who wangle exceptions for their companies… all the while pretending that they’re protecting the free market and competition.
For now, let’s just say this. If you’re too successful and capture a larger share of the market than your competitors, look out; the feds are coming for you. If you’re struggling, and need to merge with some of your competitors in order to stay in business, create economies of scale that allow more efficient operation, and provide a service or product that the public will buy at a price you can sell it, look out. The feds are coming for you, too.
Basically, it’s simple. The feds would rather own you than see you succeed.
Clear?
They have the only monopoly that matters, and they intend to keep it.
November 1st, 2009 11:54 pm
I don’t believe that you have a grasp on the economics of a monopoly. I implore you to study it. You will find models ripe with deadweight loss and inefficiencies while lacking the “invisible hand” that you seem so fond of. Your criticisms of the government as a “monopoly” seem at odds with your full-fledged support of monopolistic firms.
November 2nd, 2009 10:34 am
I think you ignored the main point: monopolies of the damaging variety are only possible, assuming the rule of law and “free markets”, when government gives some businesses advantages over others.
Read the book I linked.
November 3rd, 2009 12:51 am
The difficult thing today is other countries giving advantage to their “chosen” companies. Backing them to “dump” in other countries allowing for that government backed company to create a monopoly. We can no longer think about companies within a country, but must look globally – and not just globally at a company – but globally at the companies and what government backing they enjoy. I see this everyday as I have the opportunity to work in manufacturing – in almost all areas of business (from sewage treatment to aerospace to machine tools to food processing to semiconductors to pumps etc.) Additionally, we have to look at the costs added in by governments into the costs of the manufactured goods (taxes, health care, safety regulations, green initiatives etc.) These all burden the cost of goods in some countries and not in others. Then companies can’t compete, so they go where these costs are not imposed on the products. And we cry…where are the manufacturing jobs going? Those big profit making evil guys are just out for another penny stomping on the little guy. Sorry for the soap box….