Inline with recent PFF intellectual property writings on the fallacy of marginal costs, perfect competition and absolute free markets, here's a good piece by Hance Haney of the Discovery Institute applying these lessons to antitrust.

The New York Times claims the Bush Administration has abdicated its responsibility to act as a "referee," as if one is needed. The newspaper complains the administration hasn't brought a single major monopoly case under the Sherman Act, as if that proves anything. Most amusing of all, it notes that career officials were "demoralized" when the administration cleared Whirlpool's acquisition of Maytag, inferring this could happen again. The Times didn't explain the relevence of that. Apparently, some believe, bureaucrats ought to be able to perform their jobs as they see fit, or at least their judgment is superior to elected politicians or officials who've been confirmed by the Senate.

...As many others have noted, the antitrust crowd worships the myth of "perfect competition," a hypothetically idyllic marketplace in which many, many indistinguishable providers compete on price alone (e.g., steel, sugar beets, air travel). In such a market, profit is eliminated. Bureaucrats act as referees, if possible, to make sure that no one wins and no one loses. This utopian fantasy isn't harmful where innovation is neither desirable nor possible. But where investment is needed to improve services, profit is the spur.

posted by Noel Le @ 3:56 PM | Markets: Business, Investment & Innovation

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