TGIF: By Right or Permission?

"Trump administration approves sale of CBS parent company Paramount after concessions" —NPR

If the deal struck by Paramount and President Donald Trump sickens you, your intuitions and perhaps your principles are in good working order. Make no mistake about what's at the root of such things: ominipotent government. You need its permission for all kinds of things—so much for individual rights.

As the NPR story states, the headline termination of The Late Show (which I've never watched) came "amid a flurry of steps taken by Paramount and Skydance Media—which has been seeking to acquire the media conglomerate—to appease the Trump administration. On Thursday, federal regulators announced they had voted to approve the deal valued at $8 billion." It goes on:

Paramount paid $16 million to resolve a lawsuit filed by Trump as a private individual against CBS and 60 Minutes. Skydance CEO David Ellison promised to eliminate all U.S.-based DEI programs at Paramount and to create a new ombudsman to field complaints of ideological bias in news coverage. Skydance has not denied Trump's assertions the network will run $20 million worth of public service announcements consistent with his ideological beliefs.

Federal Communications Commission Chair Brendan Carr cited Skydance's promises to make "significant changes in the once storied CBS broadcast network."

Hang on. Paramount/CBS accepted the series of conditions—which you may or may not like—demanded by the Trump administration as the price for having its sale to Skydance Media approved ... by the same Trump administration. It's the principle, not the conditions, that matters.

What's wrong with this picture? Here's a good first crack at the answer: that's not capitalism, although this happened in that supposedly quintessentially capitalist country, the United States. In a market economy, two companies are free to combine if that's what their owners want. The offensiveness of the "settlement" is even more egregious because it involves a media company—I've heard rumors that there's a First Amendment in the Constitution. But does the First Amendment apply? Thanks to Herbert Hoover, who was secretary of commerce in the 1920s, the airwaves are treated as public property, that is, government property, in the United States, giving the state broad power to set terms on their use.

A good deal of activity in America requires government permission. Sometimes a government agency, perhaps with a push from the president, imposes conditions before saying yes. Sometimes it just says no. A government that has the power to approve or veto mergers and acquisitions has the power to set the terms of business. Bye-bye capitalism, freedom, and steady prosperity. (The Great Recession was partly caused by the government's requiring banks to make mortgage loans to bad credit risks if they wanted mergers, etc., approved.) Needless to say, bureaucrats can't know what "the market" knows because knowledge is dispersed throughout society and is often unarticulated and even inarticulable. Any system that smacks of central planning is for losers.

Donald Trump did not start this, however much he enjoys exercising the frightfully expanded powers of his office. This goes back over a century. Think of the Interstate Commerce Act of 1887, Sherman Antitrust Act of 1890, Radio Act of 1912, Federal Reserve Act of 1913, Federal Trade Commission Act of 1914, Radio Act of 1927, Federal Communications Act of 1934, Banking Act of 1935, and the Civil Aeronautics Act of 1938. They all interfere with business conduct, which means individual conduct. Businesses are associations of theoretically free people. I'm sure that's not an exhaustive list. Individual states have their own regulatory agencies too. (The Civil Aerorautics Board and Interstate Commerce Commission were abolished in the 1980s and 1990s, respectively, after a weird fit of deregulation that started under Democratic President Jimmy Carter. Go figure.)

A society is free to the extent that one needs no meddling authority's green light to engage in, in Leonard Read's phrase, "anything that's peaceful," or in Robert Nozick's phrase, "capitalist acts between consenting adults." As Timothy Sandefur of the Goldwater Institute writes, "freedom means not having to ask permission." Contrast that with totalitarian states, such as National Socialist Germany and the Bolsheviks' international socialist Soviet Union. There, the rule was, more or less, that which is not prohibited is required. As F. A. Hayek pointed out in The Road to Serfdom, in those states, one was not even free to decide how to spend one's "free time."

By the rights-not-permissions standard, America fails to live up to its reputation as a free country. Of course, this can be exaggerated. Freedom has not (yet?) been abolished, which is why we are still wealthy and getting wealthier. Persevering, enterprising people work around political obstacles, and in a traditionally private-property system, the state can't keep tabs on everything. God bless the loopholes! Less-than-full capitalism goes a long way, but not far enough.

Still, freedom has been eroding from the high, however imperfect, level it had reached in late 19th-century America. The erosion, alas, has not ceased, despite some setbacks. Rule by permission rather than by right obviously suits The Maestro, The Sun King, that is, the current resident of 1600 Pennsylvania Avenue. If you doubt that those titles fit the man, check out his latest trade deals with South Korea and Japan, according to which those countries will reportedly invest billions of dollars in the United States in ways directed by Donald Trump. (That's what he says anyway; the foreign governments aren't quite so sure.) One commentator dubbed this "Republican socialism" in contrast to Democratic socialism. Well put.

Sandefur asks:

So how have we come to the point where today you need to get the government’s permission for a wide variety of the things that you spend your daily life doing? You need a permit to build a house, own a gun, get a job, to buy some things, run businesses, pay your employees—even freedom of speech now often comes with some sort of permit requirement. We have colleges and political conventions setting up “free speech zones,” which are basically cages where you’re allowed to express your opinion.

And let's not forget mergers and acquisitions. "The most offensive part of the permission system, across the board, is how it deters innovation," Sandefur writes. That's what bureaucracies do. (See his book The Permission Society: How the Ruling Class Turns Our Freedoms into Privileges and What We Can Do About It. Also, The Institute for Justice, heroically, has been devoted to helping ordinary people challenge the "permission society" in the courts.)

The socialists of all parties will defend such government power on the grounds that people should have a say in everything that affects them. That may sound good on first hearing, but a moment's scrutiny exposes it as a recipe for total state control. What does "affect" mean? Should you have a say in which religious institution, if any, your neighbors attend? Should you have a say in what restaurant opens down the street? Should you have a say in the wage contract your business-owning neighbor offers prospective employees? These things may "affect" you.

The principle that all should have a say in whatever affects them, of course, usually means that democratic, representative government should oversee those peaceful activities. But in reality, that "power" is a joke. One vote is a drop in the ocean. The idea that you have a real say by voting periodically for politicians is a delusion. Beware "democratic socialists." They are hawking snake oil.

There is, however, one sense in which you do have a say in what affects you. In the free market you control your spending. If you don't like a product or a company, you can do business with someone else. Hence, through your buying and abstention, you and your fellow consumers determine who controls scarce resources for the production of consumer and producer goods. That's real control. It puts democratic power to shame, and it is exactly the sort of control that the socialists of all parties despise.

 

Abolish Antitrust!

"That there is inequality of ability or monetary income on the free market should surprise no one. As we have seen above, men are not “equal” in their tastes, interests, abilities, or locations. Resources are not distributed “equally” over the earth.16 This inequality or diversity in abilities and distribution of resources insures inequality of income on the free market. And, since a man’s monetary assets are derived from his and his ancestors’ abilities in serving consumers on the market, it is not surprising that there is inequality of monetary wealth as well.

"The term 'free competition,' then, will prove misleading unless it is interpreted to mean free action, i.e., freedom to compete or not to compete as the individual wills.

"It should be clear from the foregoing discussion that there is nothing particularly reprehensible or destructive of consumer freedom in the establishment of a 'monopoly price' or in a cartel action. A cartel action, if it is a voluntary one, cannot injure freedom of competition and, if it proves profitable, benefits rather than injures the consumers. It is perfectly consonant with a free society, with individual self-sovereignty, and with the earning of money through serving consumers.

As Benjamin R. Tucker brilliantly concluded in dealing with the problem of cartels and competition:

'That the right to cooperate is as unquestionable as the right to compete; the right to compete involves the right to refrain from competition; cooperation is often a method of competition, and competition is always, in the larger view, a method of cooperation ... each is a legitimate, orderly, non-invasive exercise of the individual will under the social law of equal liberty....

'Viewed in the light of these irrefutable propositions, the trust, then, like every other industrial combination endeavoring to do collectively nothing but what each member of the combination might fully endeavor to do individually, is, per se, an unimpeachable institution. To assail or control or deny this form of cooperation on the ground that it is itself a denial of competition is an absurdity. It is an absurdity, because it proves too much. The trust is a denial of competition in no other sense than that in which competition itself is a denial of competition. (Italics ours.) The trust denies competition only by producing and selling more cheaply than those outside of the trust can produce and sell; but in that sense every successful individual competitor also denies competition.... The fact is that there is one denial of competition which is the right of all, and that there is another denial of competition which is the right of none. All of us, whether out of a trust or in it, have a right to deny competition by competing, but none of us, whether in a trust or out of it, have a right to deny competition by arbitrary decree, by interference with voluntary effort, by forcible suppression of initiative.'

"This is not to say, of course, that joint co-operation or combination is necessarily 'better than' competition among firms. We simply conclude that the relative extent of areas within or between firms on the free market will be precisely that proportion most conducive to the well-being of consumers and producers alike. This is the same as our previous conclusion that the size of a firm will tend to be established at the level most serviceable to the consumers."

—Murray N. Rothbard, Man, Economy, and State

TGIF: Why Isn't Antifa Marching for Apple?

I was all ready to don a black mask for the Antifa demonstration when I realized that the self-styled antifascists hadn't planned a demonstration. What are they waiting for?

After all, the national government has just started a new fascistic crusade. You'd expect the guardians against fascism to be out of the gate with great dispatch. But they aren't.

You haven't heard about the latest fascistic crusade? It's the Justice Department's antitrust suit against Apple for "monopolizing" the smartphone market, or maybe it's the "luxury" smartphone market. The government is keeping its options open on this.

The government says Apple's iPhone accounts for 65 percent of the American market, depending on how you define "the market." (Worldwide the iPhone is only 20-30 percent.) That doesn't sound like a monopoly because 40 percent for the competition ain't chopped liver. But let's not be bothered with facts. Apple says its U.S. share is under 50 percent.

Isn't calling the government's action fascistic a stretch? Well, maybe, but it's not a big stretch to say it's another step down the road to serfdom. (Okay, that's not my term. It's Hayek's.) Remember: the word fascist once meant something more than "I hate you."

If you read what the founders of fascism wrote, you'll see that this political philosophy is not at its core racist or anti-Semitic, though it is nationalistic. It is the view that the nation is essentially a single organism with the state as the head. Liberal individualism was declared feeble and inadequate for the 20th century. In contrast to class conflict, fascism preached internal harmony among the big blocs, labor, business, and other corporate entities. This was the touted cooperation of all significant groups -- corporatism ( which didn't mean business corporations ran everything).

In light of that orientation, a free economy, like liberal individualism, could not be tolerated. In its place was dirigisme, which comes from the French for to direct. It's the view that the state, on behalf of the nation, should direct economic activity for the nation's good. Business can remain in private hands and even make a (state-defined) reasonable profit -- but only so long as it serves the people's (state-defined) interest. In other words, "owners" hold their property provisionally, at the pleasure of the wise leader. Otherwise, they're out. That's right: ownership, business, and profit may not serve -- ugh! -- selfish ends. They must serve only (state-defined) public ends. (See my entry on fascism in the Concise Encyclopedia of Economics.)

That explains other key features of fascism, such as the one-party-rule brutality. As Hayek showed, our wise leaders could not make a plan to harmonize the whole society if anyone were free to make his or her own plans, either alone or in concert with others, as a consumer or producer. How can we have a proper planned society if any individual can disrupt it just by living as he or she wishes?

So where the hell is Antifa? Forget the black masks, and forgo the smashing of windows or harassing of people at outdoor cafes. But make your position clear: you do not want this step toward fascism in America. Justice for Apple and all victims of antitrust oppression!

Specifically, the Justice [!] Department

alleges that Apple illegally maintains a monopoly over smartphones by selectively imposing contractual restrictions on, and withholding critical access points from, developers. Apple undermines apps, products, and services that would otherwise make users less reliant on the iPhone, promote interoperability, and lower costs for consumers and developers. Apple exercises its monopoly power to extract more money from consumers, developers, content creators, artists, publishers, small businesses, and merchants, among others.

Translation: consumers who choose the iPhone over an Android phone because they like its distinctive features don't realize they are being exploited. (Full disclosure: I'm an Android guy.)

The complaint has a lot to do with Apple's app store. Apple exercises closer control over apps than Google does with its competing Android app store. Apple's rebuttal of the government charges is reported here. As Professor Thomas B. Nachbar of the University of Virginia Law School says, "The basic theory of the lawsuit is that Apple is squelching the development of apps – such as so-called 'super apps' that are essentially a gateway to a variety of services or apps – cloud streaming game apps, messaging apps, services (especially financial services, such as digital wallets) and accessories (such as smartwatches) – in order to insulate the iPhone from the rise of potential competitors."

He goes on: "Much of the conduct the government is complaining of in this case are things that Apple says it does to either protect its users or provide them a distinctive customer experience." Apple also says its approach is intended to protect its customers' privacy and let parents limit what their kids can do with their iPhones.

Apple's and Google's different app policies have advantages and disadvantages regarding variety, security, privacy, and user experience. Different users will want different things. Do the antitrust bureaucrats not get that? It's all about trade-offs. Who should decide? Which approach is "best"? That depends on who you are and what you want. That's the great thing about markets and competition, even our less-than-fully-free system laden with patents, copyrights, trade restrictions, etc. Companies can create different bundles of features and then let consumers choose which bundle they like best. All that's necessary is to dismantle legal barriers to market entry.

The antitrust bureaucrats don't like that system. It's too, well, free. (They'd say, Orwell-style, "restricted.")  Besides, they need to earn their high salaries. So they pretend to know how the ideal phone market should look, and they have the power to do something about it. But they'll have to get through the courts, which may yet save consumers from the conformity-imposing bureaucrats. Time might be on our side. As Axios says, "The case is likely to take years to resolve. By the time it's settled, we might be using our smartphones in very different ways."

I don't like fascism, so I don't like antitrust bureaucrats. We should have sent those mini Mussolinis packing long ago. What about it, Antifa? Show you're antifascism after all.

TGIF: The Knowledge that Only Free Markets Disclose

As a follow-up to my recent article about F. A. Hayek's classic article "The Use of Knowledge in Society" (1945), I thought it worth extending Hayek's exploration of this area of social theory. In 1968 the Nobel laureate-economist delivered a lecture in German known in English as "Competition as a Discovery Procedure." It's an alluring title, and anyone concerned with what makes for a good and prosperous society should be familiar with Hayek's basic point.

Hayek gets right to it. He notes that standard macroeconomists are guilty of having "investigated competition primarily under assumptions which, if they were actually true, would make competition completely useless and uninteresting." By that, he meant, "If anyone actually knew everything that economic theory designated as 'data,' competition would indeed be a highly wasteful method of securing adjustment to these facts."

In other words, if all the "data" were actually accessible data, solving society's scarcity problem would be a piece of cake, at least if the government's computer was powerful enough. (I'm led to understand that, fortunately, many economists have advanced since he gave this lecture, probably in part because of his challenge.)

"Hence," Hayek went on,

it is also not surprising that some authors have concluded that we can either completely renounce the market, or that its outcomes are to be considered at most a first step toward creating a social product that we can then manipulate, correct, or redistribute in any way we please.

Unfortunately, lots of such people are still around today.

Hayek (like his teacher Ludwig von Mises) knew that he needed to show that Adam Smith's "system of natural liberty" performed a critical service to mankind that could not be otherwise performed: the production of knowledge that is needed in a changing world of scarcity in which each individual must make plans but also be ready to adjust his or her plans in light of what other free individuals are doing. And that's what Hayek did, building on Mises and others. Hayek made contributions to the economic, or "practical," case for freedom that have been woefully unappreciated. The Austrian school of economics that Hayek was part of needs to be discussed more than ever.

Just as any sort of contest would be pointless if we infallibly knew the outcome in advance, Hayek wrote, so would marketplace competition. He considered "competition systematically as a procedure for discovering facts which, if the procedure did not exist, would remain unknown or at least would not be used." (Emphasis added.)

(Although, Hayek's German title, Der Wettbewerb als Entdeckungsverfahrenh, has been translated as "competition as a discovery procedure." I regard the word process as more appropriate because, unlike procedure, it suggests improvisation, spontaneity, and serendipity. Hayek's work overflows with an understanding of what he called spontaneous, or unplanned, order.)

Hayek reiterated his theme from "The Use of Knowledge in Society" even as he extended it. He wanted to know how can we even identify goods apart from what the market discloses over time through free producer and consumer action.

Which goods are scarce, however, or which things are goods, or how scarce or valuable they are, is precisely one of the conditions that competition should discover: in each case it is the preliminary outcomes of the market process that inform individuals where it is worthwhile to search. Utilizing the widely diffused knowledge in a society with an advanced division of labor cannot be based on the condition that individuals know all the concrete uses that can be made of the objects in their environment. Their attention will be directed by the prices the market offers for various goods and services.

Bottom line: government administrators may be able to give orders, but they cannot benefit the population. The Soviet Union no doubt used up resources making things that few people wanted. Hayek went on:

This means, among other things, that each individual’s particular combination of skills and abilities—which in many regards is always unique—will not only (and not even primarily) be skills that the person in question can recite in detail or report to a government agency. Rather, the knowledge of which I am speaking consists to a great extent of the ability to detect certain conditions—an ability that individuals can use effectively only when the market tells them what kinds of goods and services are demanded, and how urgently.

It's not magic that produces the knowledge that makes abundance possible for everyone. It's freedom of action, contract, and private property in a legal-political environment in which people peacefully and cooperatively pursue their happiness. The discoveries Hayek was talking about can take place only when people can 1) freely produce and offer products and services to others and 2) freely buy or not buy according to their own judgment. This includes labor services. Without that freedom, which is limited if not precluded by central planning and less-comprehensive regulation, an economy cannot be expected to benefit a large population.

The full case for a free society obviously has a rights-based, or justice-based, component, We are reasoning social beings who seek happiness. And the also has an important epistemic component, which Mises, Hayek, and others have laid out. We want justice for all individuals, and we want them to flourish. In a world of scarcity and dispersed and tacit knowledge, the free market is required. The moral is also practical.

TGIF: Fins Left, Right, and Center

Th[e] central question is not clarified, it is obscured, by our common political categories of left, right, and center.

--Carl Oglesby, Containment and Change

You got fins to the left, fins to the right
And you're the only bait in town.

--Jimmy Buffett, "Fins"

Champions of individual liberty and its prerequisites can't help but be disheartened by today's political landscape. For decades the Respectable Center has delivered perpetual war, domestic surveillance and secret police, a national vice squad on steroids, uncontrolled spending, soon-to-be-insolvent "entitlement" programs, sky's-the-limit borrowing, Fed monetization, alternating inflation and recession, at-best-sluggish economic growth, impediments to economic mobility, and other bad things.

That's what the "adults in the room" have given us, and that's what they will keep on giving us. The remarkable improvement in living standards that has reached virtually all levels of American society has occurred demonstrably in spite of, not because of, the government.

No wonder many people are looking for an alternative. So what about the most prominent alternatives? Those would be the nihilist identitarian left and the angry populist, or class-oriented, right and left. The outlook is no less good there.

We can dispatch the identitarians quickly. This is the group whose members think that what matters most about people is their membership in tribes defined by unchosen incidental characteristics. Actual liberals -- those who favor individualism and individual freedom  -- can muster no enthusiasm for a program that holds the pseudoscientific category of race, the reality-based categories of sex and sexual orientation, or the abused and worse-than-worthless category of gender as central both to personal identity and social status.

So let's turn to right and left populism. Class leftism may seem promising, but when class analysis comes from ignorant prejudice against commerce and contract, it's fraught with danger. Class populists (left and right) have never learned that the bogey "corporate power" requires the state's power and can't exist without it. I call it "the most dangerous derivative." (See my "Wall Street Couldn't Have Done It Alone." For an alternative, pro-market class analysis, see Social Class and State Power: Exploring an Alternative Radical Tradition.")

If populism simply meant the rejection of rule by elites, what sensible person could object to it? Over the last few years we've seen what elites with political power can do when they control public health.

Unfortunately, we cannot judge political movements only by what they oppose. What do they favor? Aye, there's the rub. The populists on both sides will say they favor freedom and democracy, but those two standards clash with each other. If the majority rules, what happens to the minority's rights and freedom? The populist might concede that some matters ought to be beyond the reach of the majority -- political expression, for example -- but what and how many matters? The committed democrat will want to keep those matters to the barest minimum -- in the name of freedom. It's a scam.

So again, what about the freedom of the minority, the smallest of which is the individual? Populists evade the question by resorting to what the classical liberal Benjamin Constant called the "liberty of the ancients." In his 1819 essay, "The Liberty of the Ancients Compared with that of the Liberty of the Moderns," Constant pointed out that our notion of liberty has changed since antiquity. For the ancients, liberty consisted exclusively of the freedom to participate directly in the political process. As Constant went on:

But if this was what the ancients called liberty, they admitted as compatible with this collective freedom the complete subjection of the individual to the authority of the community. You find among them almost none of the enjoyments which ... form part of the liberty of the moderns. All private actions were submitted to a severe surveillance. No importance was given to individual independence, neither in relation to opinions, nor to labor, nor, above all, to religion. The right to choose one's own religious affiliation, a right which we regard as one of the most precious, would have seemed to the ancients a crime and a sacrilege. In the domains which seem to us the most useful, the authority of the social body interposed itself and obstructed the will of individuals. Among the Spartans, Therpandrus could not add a string to his lyre without causing offense to the ephors. In the most domestic of relations the public authority again intervened. The young Lacedaemonian could not visit his new bride freely. In Rome, the censors cast a searching eye over family life. The laws regulated customs, and as customs touch on everything, there was hardly anything that the laws did not regulate.

The world of 1800s modernity, Constant continued, had a different notion: liberty consisted not only of the freedom to participate in governance but also of the right to live a private life, including the right to use one's property unmolested. As he put it:

First ask yourselves, Gentlemen, what an Englishman, a French-man, and a citizen of the United States of America understand today by the word "liberty". For each of them it is the right to be subjected only to the laws, and to be neither arrested, detained, put to death or maltreated in any way by the arbitrary will of one or more individuals. It is the right of everyone to express their opinion, choose a profession and practice it, to dispose of property, and even to abuse it; to come and go without permission, and without having to account for their motives or undertakings. It is everyone's right to associate with other individuals, either to discuss their interests, or to profess the religion which they and their associates prefer, or even simply to occupy their days or hours in a way which is most compatible with their inclinations or whims. 

Clearly, the populists subscribe to the ancient notion of liberty, and they may not take umbrage at that statement. Whether left or right, they prefer the coercive communitarian politics of antiquity to the individualism and voluntaryism of Enlightenment liberal modernism.

So no wonder they support restrictions on imports and exports, which interfere with our freedom to trade with whoever is willing to trade with us; immigrant restrictions, which interfere with non-Americans' freedom to improve their situation and Americans' freedom to associate with them in all kinds of fruitful ways; and antitrust prosecutions of private tech companies, which interfere with freedom of enterprise and private property.

In each case the populists reject the proven bountiful spontaneous order of markets in favor of collectivist answers both to real and imagined problems. That is, instead of opposing government policies that create and exacerbate problems that are mistakenly attributed to free trade, the free movement of people across arbitrary national borders, and Big Tech as such, they propose that "we" directly address those problems at the ballot box and in the halls of Congress and the offices of unaccountable regulatory agencies. It's social engineering plain and simple.

However, contrary to populist fantasies, there is no "we" that actually rules. For one thing, who is to be included in -- and excluded from -- the "we"? That's a political, not a metaphysical, decision. At best, it's an exercise in question-begging.

Moreover, the voters' diverse views and feelings are always filtered through politicians and bureaucrats, whose frame of reference is partly defined by well-connected special interests. Those are the people who will say what if any products we may buy from and sell to non-Americans; which non-Americans we may and may not socialize with, hire, sell to, and rent to; and what disfavored private companies may do with their own assets.

In other words, populism in the end resembles elitism -- except, as Bryan Caplan argues, at least elites tend to be more economically literate than the masses and so might be "the lesser poison." In public opinion polling, the more-educated respondents are more likely to be favorable to trade with foreigners and immigration. Caplan credits elites with watering down the masses' most extreme demands for protectionism and closed borders, if not quashing them entirely. As he once tweeted, "Elites' problem isn't being 'out of touch' with masses. Elites' problem is denying how irrational masses really are." For any card-carrying populist, this is heresy. (See Caplan's book, The Myth of the Rational Voter: Why Democracies Choose Bad Policies. I review it here.)

To their credit, the populists of left and right support free political speech (although they erroneously apply the same standard to the government and to private firms) and oppose foreign military intervention. But this group -- which comprises such otherwise diverse people as Batya Ungar-Sargon of Newsweek, Glenn Greenwald of System Update, Brendan O'Neill of Spiked, and Tucker Carlson of Fox News -- would have the government spend the savings due to a noninterventionist foreign policy domestically rather than leaving it in the pockets of the taxpayers, who after all are the ones who earned it through the production of wealth for consumers.

Contrary to the populists, the alternative to democracy is not some flavor of authoritarian elitism. It's what's F. A. Hayek called the market order, which is rooted in individual freedom -- in a word, libertarianism.

TGIF: Bust the Conservative "Trust Busters"

When right-wing leader Sen. Josh Hawley (R-MO) recently declared that "liberty and monopoly do not go together," I fantasized that he had become a free-market anarchist. When I hear monopoly, I think government because what's the most literal of monopolies (or source of monopoly power) than the state?

Imagine my disappointment when I realized that, quite the contrary, he was embracing expanded government power over consensual interaction in the marketplace. He was introducing his aggressively named Trust-Busting for the Twenty-First Century Act. Hawley wants to be the our day's Theodore Roosevelt, also a Republican but no friend of individual liberty and free-market interaction.

Hawley says would like to break up Major League Baseball, Big Tech, Big Telecom, Big Banks, and Big Pharma, as well as limit or prohibit what other big companies can do, such as merge with or acquire other companies. It's quite a comprehensive serving of government powers from a guy who probably tells himself he favors limited government. That's how things are. Conservatives have long had higher priorities than defending peaceful interaction in all spheres. Hawley is no friend of liberty.

Like any good conservative, for Hawley many things outrank individual liberty: protection of the culture from the left, for example. In other words, when the left proposes government power as a solution to a real or imagined problem, Hawleyites propose some other expansion of government power, for example, regulation of social media and search engines on behalf of conservative groups. Mentions of liberty are mostly lip-service intended to keep some imagined coalition together.

Hawley's news release says his "new legislation [is designed] to take back control from big business and return it to the American people. Senator Hawley’s bill will crack down on mergers and acquisitions by mega-corporations and strengthen antitrust enforcement to pursue the breakup of dominant, anticompetitive firms."

As we'll see, this approach assumes that the anticompetitive power of business is an independent variable, rather than something derived from political power in countless ways. If all the intended and unintended anticompetitive laws and regulations were repealed, the Federal Register would be considerably thinner and we'd all be considerably freer. Competition would thrive. That's why I call corporate power "the most dangerous derivative"--it's generated by the government and wouldn't exist without it.

The release says, "A small group of woke mega-corporations control the products Americans can buy, the information Americans can receive, and the speech Americans can engage in. These monopoly powers control our speech, our economy, our country, and their control has only grown because Washington has aided and abetted their quest for endless power."

This is a gross overstatement, even with all the laws on the books. But to the extent Hawley is correct, it's too bad he fails to understand that he is indicting the interventionist state--that is, politicians and bureaucrats--and not of the market process, which when left alone has built-in safeguards against anticonsumer activities. It's called competition, but it must be left unmolested by the state, many of whose interventions enable firms to grow bigger than they would be in a free market. (See Milton and Rose Friedman's chapter "Who Protects the Consumer?" in Free to Choose.)

"Woke corporations want to run this country and Washington is happy to let them. It’s time to bust up them up and restore competition," the release states.

The word woke here indicates that culture is what drives Hawley and his allies. I don't mean that anything labeled "woke" is innocuous (far from it), just that Hawley wants to punish companies that take what in his view is the wrong side of today's raging political-cultural issues. He is incensed that Major League Baseball pulled its all-state game out of Atlanta because it disapproves of Republican-favored election-rule changes in Georgia. For Hawley, moving the game is an illegitimate attempt to influence public policy. His solution? Subject MLB to antitrust law. (He's joined by fellow Republicans Sen. Ted Cruz of Texas and Mike Lee of Utah.) That doesn't sound like the proposal of a small-government man.

Here are some things Hawley's bill would do:

• Ban all mergers and acquisitions by companies with market capitalization exceeding $100 billion;
• Empower the FTC to designate “dominant digital firms” exercising dominant market power in particular internet markets, which will be prohibited from buying out potential competitors;
• Prohibit dominant digital firms from privileging their own search results over those of competitors without explicit disclosure;
• Reform the Sherman and Clayton Acts to make clear that direct evidence of anticompetitive conduct is sufficient to support an antitrust claim, which will allow enforcers to effectively pursue the breakup of dominant firms and prevent antitrust cases from devolving into battles between economists;
• Replace the outdated numerically-focused standard for evaluating antitrust cases, which allows giant conglomerates to escape scrutiny by focusing on short-term considerations, with a standard emphasizing the protection of competition in the U.S.;
• Clarify that “vertical” mergers are not exempt from antitrust scrutiny;
• Drastically increase antitrust penalties by requiring companies that lose federal antitrust suits to forfeit all their profits resulting from monopolistic conduct

That's quite an undertaking (an appropriate word in both senses) for any government, considering that the mortals who would enforce such a law would lack the essential knowledge and incentives needed to do the right thing. The history of antitrust is a history of cronyism and special pleading, but what would you expect?.

The bill would expand the Progressive-era Sherman and Clayton acts in several ominous ways. For example:

In any case alleging a violation of this section 5 or section 1 in which a plaintiff establishes by a preponderance of the evidence (including direct evidence) the existence of substantial market power or the anticompetitive or otherwise detrimental effects of particular practices, a plaintiff need neither define the scope of a relevant market nor establish the share of such a market controlled by the defendant.

Even if one wrongly grants the legitimacy of antitrust law, it is absurd that the relevant market or market share of the defendant would not need to be defined by the government or other plaintiff. How would one know that a firm was monopolistic? (Years ago the government sued the major ready-to-eat cereal companies for monopolistic  activity on the basis of a narrow definition of the breakfast-food market that excluded all the alternatives to cold cereal.)

No acquisition shall be presumed not to substantially lessen competition or tend to create a monopoly only because the parties to the acquisition do not compete directly against one another at the time of the acquisition.

Again, even many people who favor antitrust distinguish between horizontal acquisitions, in which a firm buys another firm that makes the same product, and a vertical one, in which a firm buys another firm that makes the first firm's inputs or buys its products. Hawley wants to go an extra step to insure that no company valued at more than $100 billion could change a market through an acquisition. That's true conservatism!

The bill would also have new rules for what it calls a "dominant digital firm," which would be any company that is accessible through the internet and "possesses dominant market power in any market related to that website or service." Here conservatives propose to enlist the state to go after the social networks and search engines for real and alleged mistreatment of ... conservatives presumably. The Federal Trade Commission (FTC), another  creature of the Progressive movement, would be given the power to designate a person, partnership, or corporation as a dominant digital firm," at which time new rules apply. Oddly, this is the one section that acknowledges that government puts its thumb on the scale in economic matters: in determining a firm's "market power," the FTC would consider "the extent to which the firm benefits from government contracts or other privileges." That is an important point, but the solution is to withdraw the anticompetitive privileges, not to impose new restrictions.

None of this means that big business deserves nothing but praise. With some rare exceptions, many business people, as Friedman often pointed out, have long seen the government as a convenient way to get what they couldn't get through free competition. That's why antitrust was so often used not to protect consumers, but to protect less-efficient firms that fared poorly in the market. (See D. T. Armentano's classic, Antitrust and Monopoly: Anatomy of a Policy Failure.)

Moreover, we all should be bothered that the social network owners think it's right to mediate what is true and false in their customers' conversations and feeds. Social networks are private firms, but that doesn't make anything they do a good thing. Besides, we may justifiably wonder how much of what they do in this regard is done to stave off government regulation from progressives. They know the eye of the state is upon them. Further, we may also suspect that the big networks have calculated that when regulation comes, they, the experts, would be called on to write the rules--as long as they are seen as behaving well.

The argument against antitrust law is that it misconstrues the market. When free it is not a static condition but a process in perpetual motion, in which entrepreneurs are always trying to profit by better serving customers. In an unmolested market the threat of potential competition would do as much to keep a single firm on the customers' side as actual competition. So quantitative indicators are misleading. As D. T. Armentano says, high profits in an industry with one or two firms is not a barrier to new competition but an engraved invitation. Moreover, even a cartel agreement among a few sellers couldn't prevent "cheating" by parties to increase revenues; nor could it prevent new entrants from taking advantage of the dominant firms' disregard of consumer welfare.

Hawley's bill declares, "It is the policy of the United States that the principal standard for evaluating the permissibility of practices under this Act is the protection of economic competition within the United States.’’ But "competition" is too abstract a thing to protect, and history shows that such a goal opens the gates to complaints from inefficient firms (or their advocates in the regulatory bureaucracy) that claim they are victims of efficient firms' "anticompetitive" actions when in fact they are victims of their own inefficiency. 

Instead of protecting competition (aka weak firms), let's protect individual liberty for everyone.

The bill's chances of passing a Congress controlled by the Democratic Party are nonexistent of course. But this isn't because it would grant new controls over peaceful activities. Rather, it's because Hawley's motive is to rein in "woke" corporations. No doubt the Democrats will have their own antitrust bill before long.