Antitrust: A Violation of Individual Rights

Recently, the Bowl Championship Series (BCS) has come under fire from Republican lawmakers (most notably, Sen. Orrin Hatch of Utah) for alleged monopoly practices. Beyond the immorality of any antitrust law, this is just ridiculous. Our economy is in serious trouble, we’re currently involved in two wars, Jenna Fischer is getting re-married, and N. Korea is getting ready to launch nuclear missiles at Hawaii – why are our (alleged) representatives worried about the BCS?

As to antitrust laws in general: they punish success, grant the government vast arbitrary power, cost consumers money, are incompatible with a free society, and have no basis whatsoever in economic reality. An antitrust law, simply put, prohibits monopolies. However, a monopoly is never clearly defined in these laws. It is important to distinguish between coercive and non-coercive monopolies. A coercive monopoly is one that exists through the use of force. The Postal Service is the example of a coercive monopoly that springs to mind. By law (meaning, through force) private enterprise is prohibited from carrying mail in the manner of the U.S. Postal Service. Because this is a government decree, force can be used against any violator – thus, you have a coercive monopoly.

Just for the sake of using a well-known example, let us look to Microsoft for an example of a non-coercive monopoly. The software giant, while allegedly being a former monopoly, had no power to force others to buy its products and services. At any time, other firms could have entered the market to compete with Microsoft (as Apple successfully did when it introduced the iPod and its new line of Macbooks). There is no coercive power being employed here. The only way for a company like Microsoft to maintain its “monopoly” status is for it continue to produce products that consumers are willing to buy at prices they are willing to pay. The consumers do not lose in this situation. In fact, they are the cause of Microsoft’s “monopoly” status -  a status which Microsoft could only maintain by continuing to please its customers. The only “losers” in this situation are those potential producers who cannot compete with Microsoft. And by what right does our government force Microsoft to give up what it has rightfully earned and by what right should the rest of us be forced to buy inferior and more expensive products?

The only historical cases in which coercive and destructive monopolies exist are those cases in which there was government intervention in the economy (railroads, utility companies, the Postal Service, etc.). Non-coercive monopolies (Wal-Mart, Microsoft, etc.) are created by voluntary agreement between two mutually benefiting parties – the producer and the consumers. If at any point consumers become dissatisfied with the monopoly provider, other firms are free to enter the market and compete with the established firm. The new entrants often win, as American automakers are learning the hard way (or would if the government would respect the rights of its citizens).

Here is an article on the allegations against the BCS:
http://sports.espn.go.com/ncf/news/story?id=4297972

And here is a fantastic article by Alan Greenspan on antitrust laws:
http://politicalinquirer.com/2007/12/12/interrupting-the-election-coverage-alan-greenspan-on-antitrust-circa-1961/