The Antitrust Paradox

WikiPedia has the article The Antitrust Paradox.

The Antitrust Paradox is a 1978 book by Robert Bork that criticized the state of United States antitrust law in the 1970s.

This book is important because “The Antitrust Paradox has shaped antitrust law …” Not having read the book, but only after reading another article and this WikiPedia article, I take the gist of the book as the following:

Bork argued that the original intent of antitrust laws as well as economic efficiency make consumer welfare and the protection of competition, rather than competitors, the only goals of antitrust law.[3] Thus, while it was appropriate to prohibit cartels that fix prices and divide markets and mergers that create monopolies, practices that are allegedly exclusionary, such as vertical agreements and price discrimination, did not harm consumers and so should not be prohibited. The paradox of antitrust enforcement was that legal intervention artificially raised prices by protecting inefficient competitors from competition.

I see a very major flaw in this analysis. “Consumer welfare” is a very short-sighted view of what is good for the economy and society. There is another very important group that can be identified, but is not mentioned in anything I have read about the book. That group consists of the workers.

With Bork’s focus on consumers, business has focused on another class that they could victimize. Instead of raising prices to which Bork shifted the courts to focus on, business realized that it could focus on cutting costs. With monopolies and cartels, you gain control over suppliers of goods to sell. You can force the suppliers to cut quality standards, outsource labor, cut wages, and accelerate the use of automation.

It is rather perverse economics and sociology to fail to see that consumers and workers tend to be the same people. So while you keep prices low to protect people in their role as consumers, the courts seem to have no care about keeping wages up to protect the same people in their roles as consumers.

We have people in judicial positions making decisions on what is good for society while they seem to have no clue as to how society works. Society is also an ecosystem, meaning that it is complex with many parts interacting with each other. If you mess with one part, there are all sorts of unintended (or unrecognized) reactions in the other parts. If you do not take a holistic view of the system, you can fix one part while doing great damage to another part. This is exactly what Robert Bork and the judicial system has done. Congress has taken no action to stop the damage.

My previous posts The Democrats Confront Monopoly and Big CEOs’ Thanksgiving Tax Feast also relate to this topic.

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