Genesis
Response
Penultimate
Finale
July 18th, 2021
I am very pleased that the organizers of this discussion—it is far from a debate—between myself and Ashley Baker posed the question in the singular form—seeking a goal and not many for the antitrust law. The great analytical advantage of this approach is that it both allows for the advancement of true statements and the exposure of false ones. If a political program is committed to two or more goals, the range of permissible results becomes far broader, often with disastrous consequences. The Federal Reserve for example states that “the goals of monetary policy are to promote maximum employment, stable prices and moderate long term interest rates.” The last two goals are close enough that there is not likely to be much tension between them, but monetary policy is a poor tool with which to manage employment policy. It is far better to deal with these issues by handling (i.e. removing) most of the heavy-handed regulation that exists in these markets whether in the form of minimum wage or overtime regulation, compulsory unionization, mandatory paid leave or another set of devices. The Fed can do none of these things, so at a time when it has to deal with potential threats of inflation, it should leave labor market issues alone.
The same is true in dealing with the antitrust laws. As Baker and others have often explained the consumer welfare standard is a measure that seeks to maximize the welfare of a single group. As stated I think that the standard is inexact because a far better measure of social welfare would take into account producer welfare as well. It would be unwise to adopt a policy for example that gave consumers 100 in benefits at the cost of 1000 to producers. But that correction is in keeping with a single goal, and thus is at variance with the ill-devised programs of people like Tim Wu and Lina Khan who promoted a plurality of goals under the false banner that speaks of the Curse of Bigness or the glories of the Robinson-Patman Act.
At no point, however, do they and their compatriots face up to this basic challenge. If there are some other goals, then there must be some reduction in the sum of consumer plus producer surplus. Stated otherwise, there is a necessary retreat from any Pareto Optimal solution. The question is what collateral gain offsets these losses. It is common for many people to echo the recent claim of President Biden in his executive order on competition policy that the antitrust laws should promote the virtue of “democratic accountability.” But there is no empirical evidence to support the proposition that large firms exert undue levels of political influence, and every theoretical reason to think otherwise. Thus Franklin Roosevelt’s dominant New Deal trope was to denounce monopolists who had few votes, but to cater to extensive cartels in farming and employment, where the votes where. And so multiple antitrust goals led to the worst of economic results—government sponsored cartels at both the state and federal level.
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