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Jens 'n' Frens
Idle thoughts of a relatively libertarian Republican in Cambridge, MA, and whomever he invites. Mostly political.
"A strong conviction that something must be done is the parent of many bad measures."
-- Daniel Webster
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Friday, March 26, 2004 :::
David Bernstein on anti-trust (emphasis added, and I didn't read the piece he links to):This post by Kieran at Crooked Timber on antitrust law and libertarianism leads to the following thoughts: The right way to look at antitrust law is not whether economic theory suggests that particular monopolies can and will exist that can, in theory, be corrected through government action, to the benefit of both consumer welfare and economic efficiency. Microsoft's browser may or may not be such a monopoly, I lack the expertise to judge. The real question is whether, once one establishes a regime of antitrust law, whether that regime is going to do more overall harm than good. Just based on ideological grounds, I prefer to avoid regulations, but I'm less fundamentally opposed to antitrust laws than, for example, I believe Dean to be. But from a practical standpoint, Bernstein asks the right question, and I believe he comes to the right conclusion as well -- that the cases where government intervention is particularly useful are likely to be rare, and are probably outweighed by the cases where the government intervenes inappropriately.
See also Juan non-Volokh's follow-up (this time, the emphasis is his):Markets versus Politics - The Real Choice: David's excellent point below is not just applicable to antitrust. Rather, it is the proper mode of analysis for all public policy questions, and it deserves to be reiterated. Too often policy arguments proceed as follows: A) the market "fails" because it does not produce the theoretically optimal result, therefore B) government intervention is necessary. But B does not follow from A. The failure of market processes to produce an optimal result does not ensure that the political process will do a better job. From a libertarian perspective – or any perspective that is inherently suspicious of government intervention – the burden should be on those advocating government intervention to explain why the political process can be expected to produce a better result than the marketplace. In such an inquiry, the theoretical virtues of government intervention are no more relevant than a basic equilibrium model of perfect competition. Both are blackboard abstractions that often have little bearing on what occurs in the real world. What matters is how political intervention -- and make no mistake, government intervention in the marketplace is always political -- is likely to affect the status quo ante, and whether the consequences of such intervention (and the attendant rent-seeking, transaction costs, etc.) constitute an improvement in the real world.
Political intervention in the marketplace may be well intentioned, but that does not make it any more likely to generate positive results. Indeed, insofar as noble intentions leave the likely consequences of such interventions unexamined, such policies may make us all worse off.
::: posted by Steven at 9:19 AM
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