As damaging, and ruinous as Australia’s version of the Sherman Act, the ACCC, already is, Kevin Rudd has decided to intensify this protectionist measure.
The Rudd Government will today announce new measures aimed at promoting competition and cracking down on anti-competitive behaviour by big businesses.
Monopolies and cartels exist and endure only as government imposed arrangements. This was understood, as was also theory of capital until the 1930’s, which due to the rise of central planners and novelties purveyed as economic theory fell out of view. It was why until the 1930’s monopoly was never discussed - all understood what a monopoly is. As DiLorenzo summed up (of the US):
The Truth About Sherman
Today regulation is generally recognized as a mechanism by which special interests lobby the government to create barriers to entry or other special privileges. Research has shown, for example, that the Civil Aeronautics Board cartelized the airline industry, the Interstate Commerce Commission helped monopolize the railroad and the trucking industries, the Federal Deposit Insurance Corporation sharply limited entry into the banking business, and occupational licensing created entry barriers into hundreds of occupations. Much of the history of regulation chronicles monopoly privileges procured through the auspices of the state….
Those politicians responsible for the Sherman Act (1890) deceived the public by claiming it was a measure aimed at protecting consumers against ‘trusts’ - monopolies and cartels. It was a protectionist measure aimed at preventing entry into markets of competitive firms run by entrepreneurs. The object of damaging successful firms is to protect, as Di Lorenzo also related, “incompetent businesses from superior competition, not to protect consumers from monopoly”. Entrepreneurial firms, consumers and labour all lost out with the imposition of the Sherman Act.
It is ironic to consider that in contrast to today, Unions in America did not demand and support the Act. Today, they are demanding the Act be weilded against companies such as Walmart. What those Unions would thus do, is assist protectionists in condeming labour to less productive jobs and with that, falling income.
The Sherman Act was used against the free market, competitive firm, Microsoft. The irony in this action was that some of the hostile parties - software firms inclusive of Java, ride on the back of Microsoft’s operating system and integrated software. Next, they were not producing products that could displace Mircrosoft. Contrast this to the British firm Unix and the development of its pc version, Linux, and Apple’s redevelopment of its products. As Gates correctly said, Microsoft is not a monopoly. 240 economists signed an open letter, published in the major US papers against the Act and the action:
“An Open Letter to President Clinton From 240 Economists On Antitrust Protectionism.” It said, in part, “Consumers did not ask for these antitrust actions - rival business firms did. Consumers of high technology have enjoyed falling prices, expanding outputs, and a breathtaking array of new products and innovations. … Increasingly, however, some firms have sought to handicap their rivals’ races by turning to government for protection. … Many of these cases are based on speculation about some vaguely specified consumer harm in some unspecified future, and many of the proposed interventions will weaken successful U.S. firms and impede their competitiveness abroad.”
It should be noted that there are US Judges who are blunt about the real force of the Sherman Act. Justices Bork, smeared by the Stalinist Democrats, and Posner have firmly set out that the Act punishes entrepreneurs, protects inefficient interests, punishes consumers, imposes real losses and burdens. Indeed DiLorenzo quotes Bork in the above linked article:
Robert Bork might not have been exaggerating when, writing in his book, The Antitrust Paradox, he remarked that if government were to somehow force the economy into “competitive equilibrium,” it would have approximately the same effect on personal wealth as several strategically placed nuclear explosions.
Well, that is what Rudd, and the Right - courtesy of the CIS are about to do Australians with their carbon tax, so why not finish the serfs off properly!
Australia has its own Sherman Act, the Australian Consumer and Competition Commission. The assumption used to justify this protectionist regulatory regime is the falsehood of perfect competition. The defining test (also fallacious) is market concentration. The fallacy of perfect competition in fact serves those who are hostile to free markets. Portectionists, as DiLorenzo observes, seized on it. This fact points up how palpably bad the “free market think tanks” in Australia are - the CIS and the IPA:
Once the economics profession embraced the “perfect” competition theory which…means “the absence of all competitive activities,” it also embraced antitrust regulation. For…
The related falsehood of monopsony was used by the ACTU against labour market reform. Shockingly, the Right conceded that lie. Yet, it is understandable why they did so - apart from the monstrosities the likes of Hugh Morgan and Des Moore put up as theory of labour markets. The Right believes in the lie of perfect competition.
The ACTU’s objective is a mercanitilist’s aim. That is, to extract effective minimum rates higher than real market prices. This means enforcement of protection of unionised labour. It’s funny but this, if any monopoly exists, really looks as if it is exerted by central government for selected interests. There, it was, under the old IRC regime.
The ACCC is also appallingly destructive, as this case illuminates:
Anti-merger laws are bad for the Australian economy, Mr Barnaby Joyce
… go back to 2000 when the express trucking company McPhee and four of its executives were fined $4 million in a federal court for…
Then there is the recent, infamous case of Richard Pratt, his Visyboard and Amcor. In fighting the action, they must have been advised by ignoramuses - not only their lawyers, but, since it turns on economics, also ‘economic advisers’.
One is not altogether sympathetic to Pratt. He has supped with the Devil and the Devil seized his dining cutlery, rammed it up under his rib cage and rummaged around his gizzards. Dick Pratt fully supports ‘evironmentalism’ and watermelon red measures. Seeing that greeny-hugging bastard suffer is not an unmixed joy.The fly in the ointment is, he was skewered for the wrong reasons.
Rudd is an ingornamus, and so is the rest of his Cabinet and their advisers. What, exactly, is the Right’s excuse for committing economic sabotage throught the Australian version of the Sherman Act? More so in view of, despite their public propaganda efforts, the Right has never advanced nor defended the case for free markets and genuine Liberalism. They have acted with deliberation for contrary aims.
One target of protectionists is the supermarket majors. The public campaign against them asserts the chains are supposed to:
1. sell to consumers at low and even lowering prices;
2. but not at a price that puts the inefficient out of business;
3. will pay some protectionist suppliers prices higher than their real market values.
4. The majors are in violation of 1,2 &3;
5. this means they must be operating as a cartel.
It’s a bizarrely schizophrenic list of demands that can only be imposed by government coercion. Yet, it doesn’t require much effort to draw the correct conclusion, efficient producers, consumers, and employees and capital can only be damaged by the imposition of those demands.
One type of protectionists are those pretending to be in the business of agricultural production. To repeat, 40-45% of farms are successful business operations, supplying 95-98% of total output. The other 50-60% producing a very expensive piffling 2-5% of output are fully propped up by transfers. It is this lot who are trying to extract more out of much abused successful producers and consumers, by the deliberate attempt to force retailers and, in reality, consumers, to pay more. Take, for example, meat :
The ineffectual are complaining the majors are forcing livestock prices down while charging profit taking prices to consumers. Hey presto, they are running a cartel. A figure shows how absurd this claim is: The major’s build their earnings on thin margins of 1% to 2% on products sold.
What is funny is, according to the fallacy of perfect competition, the numbers of butchers is large. From the fallacy of perfect competition, by definition the markets in meat are highly competitive.
There are many, sole proprietor, single shop butchers in suburbs and towns, and a number of small independent butcher chains. This is in addition to independent supermarket/mixed business shops and small chains. There is also a reasonably large array of types of meat sellers. Victorians have dozens of alternatives within a matter of minutes of their doorsteps. They are not bound to major supermarkets for meat. So if the majors are making profit, why aren’t a significant number of others selling at lower prices, thus eliminating those profits?
The reason the protectionists give is, the majors have negotiated high volume supply contracts with a limited number of large-scale, efficient producers. This is, they assert, proof of monopoly,with the smoking gun of ‘collusion’. No, it is evidence of producers and buyers resolving efficient production of meat. The objection is nothing less than the incompetent crying foul because they are not successful in the business of meat production.
What is really going on in meat pricing is buried under the whining and also the fallacies of perfect competition. The reality is protectionists, to get their way, are supporting measures that will damage successful retailers and consumers. They are using fallacious ‘economics’ to push their case.
Rudd has made this clear, the object is to force successful firms and consumers to subsidise the inefficient and handover to them unearned incomes. It’s a policy of capital liquidation and deliberately forcing down the real incomes of consumers so that a lucky few can enrich themselves even though they are failures as businessmen and businesswomen. Successful enterprises and consumers can get stuffed. Rudd has made this plain:
Where appropriate, legal cases involving a misuse of market power will be heard in the Federal Magistrates Court rather than in the Federal Court.
The reforms will also strengthen the role of the ACCC
Australia’s Right never did unwind the “Sherman Act”. They fully support it and, in reality, have told Rudd to screw Australians. Oh, not intentionally. No, it is because the Right parrots the textbook, as does Jason Soon, who seems oblivious to the force of what he has written in:
Tackling price-fixing cartels
The force of the Australian version of the Sherman Act protecting “incompetent businesses from superior competition”, and its fallacious economic justification, perfect competition, is the breaking up and smashing of the latter. Rudd can cut to the chase and decree his own great leap forward.
Rudd can order the break up of BHP, Shell, Woodside Petroleum and Caltex. Next, order every Australian household to drill for oil and distil ethanol in their backyards. In five years time there willl be a gloriously competitive market with many producers producing ‘efficiently’ and selling at much lower prices. Hail, Chairman Kev!
It is risible that Soon and the CIS regard themselves as authorities on Hayek. The Right are oblivious to the genuinely ruinous force of Australia’s version of the Sherman Act, and to the fact that Rudd’s decision to intensify it will compound its ruinuous impact. Their economic shallowness fuels their demonstrated callousness.