Econ Classmate Response (Professor Anthony ONLY)
Bigricker12
econ_classmates_week_6.docx1
Full Disclosure: I really, really dislike The Blaze for many of their political views.
The Blaze ran an article called "On Antitrust, Wretched Government Hypocrisy" that tries to show how the government fails to be in compliance with its own antitrust legislation. The main points are as follows:
The article argues that the government is all too eager to destroy a voluntary merger or a very successful business if they believe it will become a monopoly, however the government supports many monopolies in several areas including justice, violence, and mail services to name a few.
Second, it charges that the government is guilty of bundling routinely in the form of adding unwanted or unrelated legislation to more popular bills in order to pass.
Finally, the government regularly engages in price-fixing. While the private sector must avoid even the perception of price-fixing, the government does so via minimum wage laws and subsidies. Minimum wage laws put more stress on businesses while subsidies to "green" industry is meant to harm competing fossil fuels.
While I agree that what the government is doing is not market friendly or competitive, I completely disagree with his overall conclusion.
First, the government and private sector have completely different goals, responsibilities, and constraints, all for valid reasons. When he complains that the government has a monopoly on violence (which I infer is offensive operations and not self-defense) and justice, he does not give any alternative solution because the alternatives are either nobody has the right to violence or justice (negating the use of police or the courts) or sharing it with a non-governmental entity. I think a private sector organization authorized to go on the offensive or determine what justice is frightening to think about. While some government services such as the U.S. Postal Service do have significant issues, the whole reason most of them exist is because at the time there was a market failure for providing such services.
Second, while "bundling" legislation is unpopular and sometimes harmful, I think it does force the majority in the legislative branch to work with the minority better. If they vote on each piece of legislation individually, (besides taking a long time) it would allow the majority to marginalize the minority. After voting on what the majority wants (which will include many bills that need to pass or highly popular bills) there is a real possibility that they will decline to vote or pass bills submitted by the minority. By being able to add them to larger bills, the minority can make a play that forces the majority to talk them out of it or to alter it to more agreeable terms.
Finally, in regards to price fixing, the government and private sectors different goals and responsibilities. The government wants to makes sure people are taken care of (however they define that) while the private sector is concerned with profit. With minimum wage for example, the private sector is not concerned with if its employees can feed their families or earn an actual living as long as productivity remains high. This hurts the employees. The government has decided to step in and force businesses to pay a living wage they otherwise would have avoided. The case made against subsidies is also incredibly simplified. Most companies receive some form of subsidy or "welfare". Sometimes this is to encourage growth to keep people employed or keep a business acting in the best interests of the public and sometimes it is done to promote something that would better society (if green energy produces less pollution, that is a definite plus over conventional energy sources).
Albright, Logan (Sep 18th, 2015) "On Antitrust, Wretched Government Hypocrisy". The Blaze. Retrieved from http://www.theblaze.com/contributions/on-antitrust-wretched-government-hypocrisy/
2
In the year of 1890 congress has passed the first antitrust law, Sherman Act and in 1914 Congress passed Federal Trade Commission (FTC) Act which created two additional laws like Federal trade commission and Clayton Act. These three laws are collectively known as Antitrust Law and this is effective in the USA till today. The core objective of legislating these antitrust laws is to promote competition in the market so that consumers are benefited from lower priced, good quality products and firms get enough incentives to run their businesses efficiently.
Sherman Act prohibit every contract, combination that attempt to restrain trade and form a kind of monopolization in the market. If two firms combine or merge they may fix prices (If they are main suppliers in the market, they can make the fixed price as the existing market price and force consumers to buy at that price), rig bids and thus divide the entire market between them. In this manner they can hamper the competitive outlook of the market. Joint action by two or more companies can also restrain trade. In this case the individual or business houses may be prosecuted by the Department of Justice and may be penalized in terms of fine and imprisonment.
FTC prohibits unfair and deceptive methods of competition. Supreme court has legislated that the cases which violates the Sherman act automatically come under the violation of FTC. The Clayton act bans some specific business practices. If merger or acquisition among large firm increase the concentration ratio significantly and create an environment of monopoly, it actually distorts the competition and for this reason this comes under the violation of this act. In case of interlocking directorates (single entity takes business decision in competing industries), discriminatory prices and services among merchants, Clayton act may be violated.
The Clayton Act has been amended to become the Robinson-Patman Act that controls the prospect of monopoly by prohibiting inter-states commerce by firms that charge different prices for its goods in different states (Fontenot & Hyman, 2004).
References
