The Next Bipartisan Issue
Amy Klobuchar is pushing for Antitrust Laws so large companies can’t stifle startUps
“Disruption is what we want in tech, we want new companies coming up,” Klobuchar said. “Privacy and misinformation products have not been developed in the big market because big guys keep buying up the competition.”
Using her new initiative, “We rejuvenate capitalism.” and “We facilitate new startups.”
She has introduced a bill: The competition and anti-trust enforcement reform act (CALERA) which seeks to reform the Federal Trade Commission (FTC) and the Department of Justice anti-trust division. “Those regulatory agencies are basically shadows of what they were even under the administration of Ronald Regan.”
Facebook has acquired 89 companies since 2004.
“In the long-run we want choice and competition.”
“The free market is great as long as you have the anti-trust laws enforced which hasn’t been happening at all.”
The anti-trust legislation she seeks would not kill the big companies. It would only force them to engage in a more healthy competitive marketplace.
Klobachar gives a brief history of ant-trust sentiments: Anti-trust sentiments led to the American Revolution. The Tea Party was a revolt against higher taxes and against the monopoly of the East India Tea Company. Thomas Jefferson and others wanted more in the Constitution to protect competition and to regulate monopolies. The Sherman Act of 1890 and the Clayton Act of 1914 both attempted to put the brakes on run away monopolies. In 2008 we saw that more has to be done, because we had banking industries that were “too big to fail”.
Her new book is called Anti-trust.
Don’t trust in more government control. In 1890 Senator Sherman did to economies of scale what his brother did to Atlanta. Those trusts and monopolies greatly expanded goods and services with lower prices to be enjoyed by increasing shares of the population. Average per person wealth in the US was among the highest in the world before the anti-trust laws were passed. I do not trust any politician to tell us that she knows how to “rejuvenate capitalism.” Infantilize it into a ward of the state is what she really means.
Customer is king when markets are free of interference. “Stifle competition?” Big companies do that through low prices. The anti-trust laws call that “predatory pricing.” I did not make that up. Worried about big companies buying small companies? So what? The big companies apply their expertise in scaling up production of new products and methods. They stay big by being effective. Chrysler bought American Motors which bought Nash which bought Willy’s. Cars are better today, no problem.
“The anti-trust legislation she seeks would not kill the big companies. It would only force them to engage in a more healthy competitive marketplace.” Are we to thank her to not kill? She thinks she knows better than the customers what is “healthy competition,” and she is deluded. Her type call themselves “progressives” while they perpetrate nineteenth century power grab policies of centralized political control that retards liberty and prosperity.
And she lies about history. Taxes on tea were caused by government. Bailouts were from government. She conflates government with private business, as if the distinction between public an private is no longer valid. This is one of many fronts to advance political control. So-called “monopolies” don’t “run away,” they serve their customers, and when they don’t, they go out of business, replaced by other firms.
A real monopoly is government that has the sole legal right to force and coercion. In 2021 federal spending averaged $37,000 per household, forcing more dependency and more debt on current and future generations. But that doesn’t make the news while Senator Klobachar’s plan to make a bad old idea worse does.
Richard: Would you say that the break up of AT&T was a bad thing, because many people see it as a positive influence on that market that spurred innovation and the Cell phone industry?
Break-up or bankrupt by market forces is good. By government, usually not, I can’t think of an example where it was good. I doubt if breaking ATT by government fiat did any society-wide good and for years I have heard the opposite claim about innovation. In the 1950s the Government of Japan forced industries to merge to form Fuji Heavy Industries which among other things, made our recent Subaru.
Good rejoinder, Richard.
Now WinLoseorDraw would like to get your perspective (and ask a question) about some related history. In 2008 some over-speculation on the part of some financial and banking concerns created long foretold (by some) crash of the housing bubble at the time. Our government used our money to “fix” the problem. The justification was that these institutions were “too big to fail”. Hypothetically speaking, could you agree that a timely reduction in the size of those institutions before the crash (which admittedly didn’t happen) might have avoided the financial crisis that did occur?
For instance, if the worst housing investment debt at the time were held by several smaller businesses with less global reach and impact, those businesses could have gone bankrupt without the same level of chaos and without the “need” for government bailout, in the form of throwing our money at the problem.
No, I cannot agree.
There are always two parties to over-speculation–buyers and sellers. Borrowers made choices that did not work as they had hoped. Lending institutions responded to mounting pressures from expansionist government and its allies to lend more to the poor. One response was to bundle and securitize mortgages to spread the risk. Removal of those political pressures would have lessened the effects of changes in housing prices. A brief history of federal government distortions of the housing market follows.
1934. The National Housing Act empowered the Federal Housing Administration to “protect interests of lenders and borrowers.” The 74-year-old FHA did not protect them in the 2008 defaults.
1938. Congress established the Federal National Mortgage Association, called Fannie Mae, a good name for a nanny, a GSE, Government-Sponsored Enterprise, to “expand the secondary mortgage market by securitizing loans in the form of mortgage-backed securities.” GSEs have special powers that private firms do not.
1968. Another nanny, Ginnie Mae—Government National Mortgage Association—was empowered to “expand affordable housing.”
1970. Freddie Mac, the Federal Home Loan Mortgage Corporation, was established to “expand the secondary market for mortgages by guaranteeing loans.” In 2008 default mortgages, assets that had become liabilities were widespread throughout the financial sector.
1977. The Community Reinvestment Act, CRA empowered to “encourage lending to low-income people.”
1995. The Treasury Department promulgated new rules under the CRA to increase pressure on lenders to loan more to the poor, and empowered protest groups to extract more concessions from lenders. Here was an analysis in 2000 from one of the foretellers:
https://www.city-journal.org/html/trillion-dollar-bank-shakedown-bodes-ill-cities-12096.html
In 2007 President Bush and Senator McCain publicly warned that the mortgage system was faltering but Chairman Frank of the House Financial Services Committee rebuked them.
Big government is the problem, not big business. The Great Depression was blamed on private business while government accelerated the start of that depression with a sharp cut in the money supply and with tax increases. Government deepened and prolonged that depression and made it Great with continued market distortions. The 2008 defaults were blamed on private business while the real problem is massive political control of markets. Bailouts are more expansionist government controls to “fix” the problems caused by government. Now we have a new attack on large firms for some alleged sins and again government will “fix” a nonproblem.
It seems that when a business gets big enough it doesn’t need government help to stifle competition. Do you see no advantage to having competitive force in the market place?
Profits attract new firms to enter. Big firms lower prices to maintain market share. This is competition. Firms also compete by differentiating their products and by improving them. Market forces are good. Customers win.
WinLoseorDraw remembers seeing an informative video of the development of technology since the early nineteen hundreds when IBM invented a tabulating machine to read punch cards for compiling the Census. The point of the video was that the big corporations could never “see” what the next big thing was going to be. When the first big computers were built, they decreed that we might some day need as many as a dozen of them. Later, the first desk top computers were two person machined, one operator and one higher level executive standing behind them and looking over their shoulder.
Richard: The kind of internal competition you describe is valuable and necessary, but the kind of competitive spirit WinLoseorDraw is describing is grassroots competition, the kind that cuts right through the hide-bound bureaucratic superstructures, the kind that finds the next big thing, the kind that Giganticorps tend to stifle.