The Truth about Sherman’s “Antitrust” Act | Mises Institute
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, as Adam Smith pointed out more than 200 years ago in The Wealth of Nations.
Oddly, antitrust regulation is still widely viewed as government s benevolent response to the failures and imperfections of the marketplace. Even economists who are usually skeptical of regulations enacted in the name of the public interest seem to lose their perspective when it comes to antitrust. George Stigler, for example, has stated: So far as I can tell, [the Sherman Act] is a public-interest law & in the same sense in which I think having private property, enforcement of contracts, and suppression of crime are public-interest phenomena&. I like the Sherman Act. [Quoted in Thomas Hazlett, Interview with George Stigler, Reason, January 1984: 46).]
A 1984 survey of professional economists revealed that 83 percent of the respondents believed that antitrust laws should be used vigorously to reduce monopoly power from its current level. [Bruno Frey, et al, Consensus and Dissension Among Economists, American Economic Review (May 1984): 986 84.] His opinion is widespread despite common knowledge among antitrust scholars that in practice the antitrust laws restrain output and the growth of productivity have contributed to a deterioration of the competitive position of U.S. industry, and are routinely used to subvert competition.
Why then do the antitrust laws continue to command such powerful support among economists and legal scholars when the pervasive failures are so well known? There are several possible explanations. Antitrust consultants and expert witnesses often stand to make a good deal of money, so financial self-interest may preclude criticism of antitrust. Many economists are also unable to voice informed opinions on antitrust. If it is not their area of expertise, they may not have kept up with research over the past 30 years, or excessive concentration on mathematical models may have left some economists somewhat detached from economic reality. Finally, it is widely believed that there was once a golden age of antitrust during which the public was protected from rapacious monopolists by benevolent public servants. According to this perspective, although mistakes have been made, more knowledgeable and public-spirited regulators can successfully reform antitrust. Once reformed, antitrust policy can then perform its original purpose and defend competition and free enterprise.
Unfortunately, the Sherman Act was never intended to protect competition. It was a blatantly protectionist act designed to shield smaller and less efficient businesses from their larger competitors. There never was a golden age of antitrust. The standard account of the origins of antitrust is a myth.
via mises.org
No idea if any of this is actually true, but it stands to reason.