Good vs. Perfect
Posted by aogTuesday, 03 June 2003 at 07:35 TrackBack Ping URL
Carrying on from the previous post, Armed Liberal brought up anti-trust efforts as an example of good intervention by the government. I, however, disagree with that. I've never liked anti-trust law and I think we, as a country, would be better off if it had never existed. What would really have been good is if the anti-trust fervor had been applied to government monopolies, like, say, education.

One specific example brought up was the anti-trust action against Microsoft. If one thinks about the big picture, then the basis of the action was that Microsoft didn't benefit its customers enough. Part of the claim is that OEMs were harmed by Microsoft's purchasing agreemens. Yes, people like Michael Dell who became a billionare are the tragic victims of Microsoft's strategy. As for the citizenry, unless one takes the point of view that they're all completely stupid and / or delusional, the fact that they continue to buy Microsoft products indicates that they think the software makes them better off (I will admit that many liberals (not A.L.) believe exactly this).

Now, it's probably true that with hindsight we might have been able to change Microsoft's behaviour to create perfection, instead of Microsoft being simply good overall. But that suffers from two flaws. One, it's the past and says little about what could be done now. Second, it attacks the good in pursuit of the best, which is not a strategy that works in the real world. What is missing is not the bad things done by Microsoft, but an accounting of the costs of stopping those things. One need merely tote up the hit to pension funds from the drop in stock value to get one cost that probably outweighs everything else. To me the biggest cost was teaching the high tech industry that it has to pay off K street in order to function. Why smart people like A.L. aid and abet that kind of extortion is incomprehensible to me.

Comments — Formatting by Textile
pj Tuesday, 03 June 2003 at 20:23

Excellent observations, AOG. Antitrust law was and is based on rather dubious economic theory. The reality is that when people voluntarily choose to create a natural monopoly by patronizing the same firm, it’s because it would be costly to do otherwise. Insofar as the government forces people to do otherwise, it’s imposing additional costs on the economy.

As judges and politicians acknowledged, antitrust law was never motivated by a desire for economic efficiency, but rather by a desire to redistribute wealth from the lucky natural-monopolists (like Bill Gates) to less lucky others. Economic efficiency was sacrificed to achieve that.

End of Discussion