Progressive philanthropists forget the lessons of a century | Panda Anku

“Nearly a century ago, Supreme Court Justice Louis Brandeis wrote, ‘We must make our choices. We may have democracy, or we may have wealth in the hands of a few, but we cannot have both.’ Those words speak to us today with great urgency.” — From a July 20 ad in the Washington Post by leaders of progressive philanthropic groups calling for additional government restrictions on tech companies.

In the 106 years of antitrust law since Brandeis’ appointment to the court, it has become clear that enduring monopolies exist only when created, encouraged, or protected by the government itself. In fact, most threats to opportunity and economic mobility today come from too much regulation, not too little.

Despite more than a century of evidence contradicting the claims of Brandeis and his cronies, the push for aggressive antitrust regulation is all the rage in many of our nation’s most important institutions. Academics have long had an abstract fondness for larger governments, so their enthusiasm for more regulation comes as no surprise. But recently, many politicians on both the left and the right have taken up the “Big is Bad” banner by backing legislation to extend the scope of antitrust laws.

Now some wealthy private sector individuals and organizations, many with wealth created by the big corporations targeted by progressives a century ago, are throwing tacks over their shoulders at the next generation of innovators. Philanthropists who are calling for increased antitrust action against today’s most successful companies aspire to magnanimous gravitas, but are actually only trailing the ladder of prosperity.

Whatever the motives—be they good intentions, self-interest, or guilt—the empirical evidence is unequivocal: capitalism has done more to lift people out of poverty and suffering than any system has ever attempted. Government regulation, including antitrust law, cannot claim anywhere near the same success.

The antitrust cases of the past, which today’s progressives cite to support their call for a new crackdown, do not support their claims. The case that started it all Standard Oil Co. of New Jersey v. United States, led to the dissolution of a company that was losing market share, competing against 150 other companies and lowering prices for its customers for decades. Another famous cartel case, US vs AT&T, is an example of government action being confused with the solution rather than the problem. The ruling broke a monopoly created and maintained by the government. The innovation boost after its dismantling resulted from the opening of the telecommunications market, not from antitrust intervention.

Until courts fundamentally reformed antitrust law in the late 1970s and early 1980s, adopting the consumer protection standard as its guiding light, American antitrust policy was an indecipherable, contradictory, mangled mess that hurt consumers at least as often as it helped them. In 1966, Judge Potter Stewart wrote in a dissenting opinion that the only consistency he could find in antitrust law was that “the government always wins.” This uncertain environment is no place to run a business, but many are working to revitalize it with expanded antitrust regulations.

Today’s most valuable target left and right is “Big Tech”. Antitrust enthusiasts claim that the country’s biggest tech companies are stifling innovation and hurting small businesses and consumers.

Nothing is further from the truth.

The recent advert from some of America’s largest left-wing foundations accused: “Amazon, Apple, Google and Facebook control access to key areas of online commerce and economic activity.” But big digital platforms are empowering millions of small businesses, customers across the country and on to reach all over the world. The Amazon and Facebook marketplaces and Google’s “Near Me” search results offer start-ups and entrepreneurs a trusted intermediary, efficient advertising and technical know-how. Independent app developers immediately benefit from Apple’s reputation for privacy and security when they meet the company’s quality standards to sell on their app store. Big Tech and Little Tech enter into a symbiotic relationship.

Consumers benefit from these relationships and competition in the technology sector is thriving. A flood of new social media apps is pushing established market leaders to further innovate. Meta is betting billions on virtual reality to become the next online reality. A previously unknown company called Zoom took over video conferencing when Americans were working and studying from home. Amazon is motivating traditional big-box stores like Target to step up their online game. All of this benefits consumers; no bureaucratic interference required.

The greatest cost of antitrust regulation is the market solutions it prevents. Making the Federal Trade Commission a regime of absolute discretion, with the power to break up productive companies and ban experimentation with novel business arrangements, is a poor solution to finding a problem. Concerns about political disagreements with conservatives are also not addressed by the economic regulation of antitrust measures; fusing the problems means bearing all the costs and reaping none of the benefits.

If big government that puts the interests of smaller competitors ahead of consumers’ interests is a “reimagining of capitalism,” then skip it.

It’s particularly mind-numbing that calls to downgrade consumer welfare are coming from some of the country’s wealthiest and most elite foundations — and this at a time of economic hardship for so many working Americans. Individuals and organizations charged with the mission and blessed with the means to do good in the world should promote the prerequisites for capitalism: the rule of law, property rights, and free exchange. It is this economic freedom, coupled with the political framework of the US Constitution, that has led to America’s unprecedented success and the greatest happiness for its people.

Jessica Melugin is Director of the Center for Technology and Innovation at the Competitive Enterprise Institute, a free market public policy organization in Washington, DC

Leave a Comment