Punished for Getting the Gold

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On August 4th, Michael Phelps swam his final event in the 2012 London Summer Olympics and won the gold. Those last one hundred meters also marked the end of his Olympic career. With 18 gold, 2 silver, and 2 bronze medals, Phelps is the most decorated Olympic athlete in history. “I did it,” he said. “I’ve been able to do things nobody’s ever done and that’s what I’ve always wanted to do.” The previous day, President Obama had called Phelps from Air Force One to congratulate him on his winnings thus far, and offered words of encouragement for his last day.

But while Obama celebrated one productive American’s ability, it’s worth noting the President’s treatment of other successful Americans this year. In particular, the actions of his Justice Department toward Apple and several publishing companies should be noted.

This past April, Obama’s Justice Department threw the antitrust book at said companies on the grounds that they were colluding to drive up prices for e-books. The Justice Department’s motive was to protect American consumers from the producers’ “unfair” prices by forcing the companies to charge a “fairer rate.

It makes sense for the Justice Department to be concerned with business practices that deceive consumers and hide the facts about their products’ actual value. But antitrust laws actually end up punishing hard workers, not just cheaters.

Consider that under antitrust laws, an individual’s business can be sued for listing prices as “too high,” “too low,” or “too close” to the competition’s own. In other words, if you want to try to earn a profit by selling your products—like e-books—at too high of a rate, then you can be fined for “price gouging.” But if you go the other way and sell lower than your competitors it’s considered “predatory pricing.” Even if you match a competitor’s price tag, you aren’t necessarily safe from a court summons—you might be guilty of “collusion.”

In essence, the Department’s antitrust laws are a means of preventing businesses from profiting “too much.” They are a form of restraining the development of smart ideas and innovative technology. They work to deflect productive rewards from the supposedly “overly” competent to the less efficient businesses for the sake of “fairness.”

Imagine if this same protocol had been adapted to the Olympic swim heats in London. Picture the outrage by gold medalists like Phelps if the committee decided to hold him back in the race or take away his medal because he was too fast. Any nation with a shred of self-esteem would boycott the punishing of her successful athletes, yet this damnation of ability is exactly what America’s antitrust laws perpetrate on many companies.

Apple’s innovative products and services represent a titanic achievement. The ability to download potentially millions of books and store them on a versatile device like an iPad is an unprecedented luxury. Its creators should be celebrated and rewarded for their achievement, just like Michael Phelps’ and the other American athletes, but they aren’t. They’re hated for it by their own “Justice” Department.

Obama’s antitrust-enforcers act to destroy companies of ability in the economy. The Michael Phelpses of business want to swim as fast as their minds and bodies can go, but they can’t because the judge keeps moving the finish line away, on grounds that they’ll win too many golds.

In actuality, Mr. Obama needs to make many more phone calls to congratulate—and apologize to—winners other than Michael Phelps.

Posted by on August 23, 2012. Filed under Business & Economics, Summer 2012. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry