Washington’s latest attempt to put a stop to economic success in the name of “fairness”
In an economy characterized by slow growth, one might expect the government to do what it can to help speed the pace of business. In economics, speed is crucial: the rate at which things are made, discovered, invented, and delivered is fundamental to how healthy and prosperous an economy is. In a flourishing economy, people are able to quickly do things like find jobs, sell homes, release new versions of software, translate scientific discoveries into medical cures, or accumulate enough savings to take a family vacation. In a feeble economy, these things take a long time—if they happen at all.
For tangible evidence of this, compare the pace of economic life in America to that in The Democratic Republic of Congo, the world’s poorest country. In the U.S., things change relatively quickly: every year (or month or day) brings new technologies, new companies, and new hit entertainers. In the Congo, each year brings the same struggle as the years, decades, and centuries before (except for advances imported from the outside). There’s good reason that “economic slowdown” is synonymous with economic problems.
A busy day at the office, therefore, is a good day for the economy. The opposite is not. That’s why this recent description by The New York Times of a major U.S. company is of such concern: “its competitiveness [has been] sapped by months spent in limbo. . . . This is a business that is treading water.” Why, particularly in a difficult economy, would any company “tread water”? In this case, by no fault of its own: the company is T-Mobile, and it has been waiting for a government agency to decide its fate. Struggling to attract new customers, the company gladly accepted an offer to merge with a competitor, AT&T. But in America, mutual consent isn’t enough to permit such a merger: the government must grant permission.
In this case, the government’s decision—after 6 months of deliberation—was to deny the merger. With billions of dollars and the livelihood of thousands at stake, a few people at the Justice Department have decided that they don’t like the idea, and therefore the companies will be forced to continue to tread water for months or years to come as the case is decided in the courts.
The reasoning behind this senseless impediment to economic progress? The government alleges that consumers may pay higher prices for wireless service, and that jobs may be lost. While it’s folly to get wrapped up in details, two facts are worth mentioning. First, T-Mobile is losing customers because it is a discount, no-frills service in a market where most people would rather pay more for advanced smartphones. Second, it is universally agreed that T-Mobile will eventually disappear one way or another, regardless of whether it happens as a result of merging with AT&T or not.
But those arguments are ultimately beside the point. The very fact that this merger required approval is based on the fallacious notion that a government agency should be in charge of deciding how and whether business deals get done in the first place. On what basis should a bureaucrat in Washington be able to decide whether it is best for individual Americans to pay more or less for their mobile phones? On what basis should an appointed politician in the Justice Department determine whether companies should be allowed to combine, reduce, or expand positions when merging workforces? What justifies any government entity coercing these decisions, which are rightfully the province of individual consumers and businesspeople?
There is no valid basis. Advocates of such policies argue vaguely that “consumers must be protected.” But if protection means defending someone from threat or violence, there is none involved: there is only a government agency deciding how it thinks a group of people should run their businesses, and forcing them to do so on behalf of anonymous consumers, each of whom is fully capable of deciding for himself where to buy a mobile phone and how much he is willing to pay for it.
Government officials and “consumer advocates” say they are simply concerned about helping people afford a cell phone when they defend their paternalistic policies. That motive seems downright friendly compared to the deeper meaning of the antitrust laws that grant government the power to tell companies what they are allowed to do. Antitrust law is supposedly invoked to prevent “coercive” monopolies from taking over an industry. But it’s obvious that no coercion is involved here. Nobody has, out of fear of bodily harm, canceled their T-Mobile account and walked into an AT&T store for a shiny new iPhone. They’ve done it willingly (and eagerly). Nobody forced T-Mobile to agree to merge: they want to. Nobody prevented other companies from trying to make a deal: they were outbid in a free contest.
Why then is it a problem when a company outgains its competitors? Competition is good, the antitrust advocates say—but only when there is a level playing field, when no player becomes a clear winner and others are defeated. If a company is too good, attracts too many customers, and gets “too big,” the government intervenes to make things “fair” by restricting or punishing it. AT&T is only the latest in a long line of victims of what Ayn Rand long ago identified as “the penalizing of ability for being ability, the penalizing of success for being success, and the sacrifice of productive genius to the demands of envious mediocrity.”
Many people throw up their hands in response to the present economic stagnation, a problem they view as highly complex and without obvious solution. Meanwhile, they remain passive about or even express support for such government interventions, which curtail economic freedom and prevent forward movement by prohibiting business decisions that are made precisely because they make economic sense. The economy may be complex, but the solution needn’t be. The first step: get Washington out of the way, and let America get some work done.
Image: http://www.istockphoto.com/stock-illustration-11183685-business-held-bac…
