The airline industry is a good example of one that is on the verge of being controlled by a monopoly. Do you remember Ozark Airlines? No you don't, because they merged with TWA. Do you remember TWA? No you don't because they merged with American. Similarly, other airlines of yesteryear, like Piedmont, Allegheny, Eastern, Western, Hughes Air West, National, New York Air, The Trump Shuttle, Pan Am, People Express, Frontier, Braniff, etc., etc. etc. have merged with and have been absorbed by other airlines. Now, the industry has consolidated into a handful of mega-carriers: American, Delta, Northwest, United, USAir, and Continental (if we ignore Southwest, JetBlue, Spirit, AirTran, the many foreign airlines that the government correctly prohibits from providing domestic service) and several other US airlines, it is clear that the industry is dominated by a single supplier.
As a consequence, air fares are now at thier lowest ever. Does this make sense? Of course it does: Low prices are an indication of "predatory pricing", where a large firm will cruelly undercut their competition and mercilessly offer their services for less. Then, when all competition is destroyed, these firms suddenly gouge their customers, charging what they please from then on.
Can you think of examples of such behavior? I'm sure you can. Wal-Mart is an excellent example (other than in markets that have Target, Costco, Best Buy, Home Depot, Circuit City, Sears, Barnes and Noble, and Internet access). IBM is another good example of a monopoly; thirteen years of antitrust litigation against their business-machine monopoly proved that.
All of which brings us back to antitrust laws. Clearly, the best force that can counteract monopolies is a single strong government. Unlike greedy private companies, the government is democratic. That is, you either like the government, or you don't. This elegant dichotomy is "win-win" -- and therefore, the government will fine, punish, and break up firms that are about to become monopolies. How does the government know which firms will otherwise become monopolies? By hiring economics experts; the strong analytic minds that knowingly predict all. It's the only thing that put the brakes on IBM from building every business machine in the world (to say nothing of slowing their future OS/2 powerhouse from utter domination).
Technically, antitrust laws are used against three economic hazards:
- 1) High monopoly prices
2) Low predatory prices
3) Equal collusion prices
Evidence of high, low, or equal prices is therefore sufficient cause for the government to mete out a punishment. And yet, even here, there are exceptions:
1) The government itself must be exempt from anti-trust. This is because an effective government must not ever have any competition. And although some people (generally fascists) erroneously equate high taxes with high prices, the two have nothing in common. Remember: High taxes are a moral imperative, and high prices are corporate gouging. And besides, how could Congress get anything done if its members didn’t collude to vote for necessary tariffs, quotas, research grants, etc. etc. etc. that benefit each other’s districts?
2) Not only must competition by discouraged among labor unions, it must be outlawed. If unions were allowed to compete, then how could a single union ever dominate an entire industry? And how else would they be able to collect dues from unwilling employees?
In general, big is bad and small is good. Cooperation is bad and self-sufficiency is good. But that doesn’t sound right, does it? Isn’t capitalist competitiveness at the heart of deprivation? And isn’t self-sufficiency a conservative idea? Therefore, we conclude that antitrust laws can also be used when there is evidence of either:
- 1) Competition
In summary, a good government should outlaw high prices, low prices, equal prices, competition, and cooperation. This much should be obvious.
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