This article is a part of the The Politicization of Antitrust symposium.
[TOTM: The following is the first in a series of posts by TOTM guests and authors on the politicization of antitrust. The entire series of posts is available here.]
This post is authored by Steven J. Cernak, Partner at Bona Law and Adjunct Professor, University of Michigan Law School and Western Michigan University Thomas M. Cooley Law School. This paper represents the current views of the author alone and not necessarily the views of any past, present or future employer or client.
When some antitrust practitioners hear “the politicization of antitrust,” they cringe while imagining, say, merger approval hanging on the size of the bribe or closeness of the connection with the right politician. Even a more benign interpretation of the phrase “politicization of antitrust” might drive some antitrust technocrats up the wall: “Why must the mainstream media and, heaven forbid, politicians start weighing in on what antitrust interpretations, policy and law should be? Don’t they know that we have it all figured out and, if we decide it needs any tweaks, we’ll make those over drinks at the ABA Antitrust Section Spring Meeting?”
While I agree with the reaction to the cringe-worthy interpretation of “politicization,” I think members of the antitrust community should not be surprised or hostile to the second interpretation, that is, all the new attention from new people. Such attention is not unusual historically; more importantly, it provides an opportunity to explain the benefits and limits of antitrust enforcement and the competitive process it is meant to protect.
The Sherman Act itself, along with its state-level predecessors, was the product of a political reaction to perceived problems of the late 19th Century – hence all of today’s references to a “new gilded age” as echoes of the political arguments of 1890. Since then, the Sherman Act has not been immutable. The U.S. antitrust laws have changed – and new antitrust enforcers have even been added – when the political debates convinced enough that change was necessary. Today’s political discussion could be surprising to so many members of the antitrust community because they were not even alive when the last major change was debated and passed.
More generally, the U.S. political position on other government regulation of – or intervention or participation in – free markets has varied considerably over the years. While controversial when they were passed, we now take Medicare and Medicaid for granted and debate “Medicare for all” – why shouldn’t an overhaul of the Sherman Act also be a legitimate political discussion? The Interstate Commerce Commission might be gone and forgotten but at one time it garnered political support to regulate the most powerful industries of the late 19th and early 20th Century – why should a debate on new ways to regulate today’s powerful industries be out of the question?
So today’s antitrust practitioners should avoid the temptation to proclaim an “end of history” and that all antitrust policy questions have been asked and answered and instead, as some of us have been suggesting since at least the last election cycle, join the political debate. But now, for those of us who are generally supportive of the U.S. antitrust status quo, the question is how?
Some have been pushing back on the supposed evidence that a change in antitrust or other governmental policies is necessary. For instance, in late 2015 the White House Council of Economic Advisers published a paper on increased concentration in many industries which others have used as evidence of a failure of antitrust law to protect competition. Josh Wright has used several platforms to point out that the industry measurement was too broad and the concentration level too low to be useful in these discussions. Also, he reminded readers that concentration and levels of competition are different concepts that are not necessarily linked. On questions surrounding inequality and stagnation of standards of living, Russ Roberts has produced a series of videos that try to explain why any such questions are difficult to answer with the easy numbers available and why, perhaps, it is not correct that “the rich got all the gains.”
Others, like Dan Crane for instance, have advanced the debate by trying to get those commentators who are unhappy with the status quo to explain what they see as the problems and the proposed fixes. While it might be too much to ask for unanimity among a diverse group of commentators, the debate might be more productive now that some more specific complaints and solutions have begun to emerge.
Even if the problems are properly identified, we should not allow anyone to blithely assume that any – or any particular – increase in government oversight will solve it without creating different issues. The Federal Trade Commission tackled this issue in its final hearing on Competition and Consumer Protection in the 21st Century with a panel on Frank Easterbrook’s seminal “Limits of Antitrust” paper. I was fortunate enough to be on that panel and tried to summarize the ongoing importance of “Limits,” and advance the broader debate, by encouraging those who would change antitrust policy and increase supervision of the market to have appropriate “regulatory humility” (a term borrowed from former FTC Chairman Maureen Ohlhausen) about what can be accomplished.
I identified three varieties of humility present in “Limits” and pertinent here. First, there is the humility to recognize that mastering anything as complex as an economy or any significant industry will require knowledge of innumerable items, some unseen or poorly understood, and so could be impossible. Here, Easterbrook echoes Friedrich Hayek’s “Pretense of Knowledge” Nobel acceptance speech.
Second, there is the humility to recognize that any judge or enforcer, like any other human being, is subject to her own biases and predilections, whether based on experience or the institutional framework within which she works. While market participants might not be perfect, great thinkers from Madison to Kovacic have recognized that “men (or any agency leaders) are not angels” either. As Thibault Schrepel has explained, it would be “romantic” to assume that any newly-empowered government enforcer will always act in the best interest of her constituents.
Finally, there is the humility to recognize that humanity has been around a long time and faced a number of issues and that we might learn something from how our predecessors reacted to what appear to be similar issues in history. Given my personal history and current interests, I have focused on events from the automotive industry; however, the story of the unassailable power (until it wasn’t) of A&P and how it spawned the Robinson-Patman Act, ably told by Tim Muris and Jonathan Neuchterlein, might be more pertinent here. So challenging those advocating for big changes to explain why they are so confident this time around can be useful.
But while all those avenues of argument can be effective in explaining why greater government intervention in the form of new antitrust policies might be worse than the status quo, we also must do a better job at explaining why antitrust and the market forces it protects are actually good for society. If democratic capitalism really has “lengthened the life span, made the elimination of poverty and famine thinkable, enlarged the range of human choice” as claimed by Michael Novak in The Spirit of Democratic Capitalism, we should do more to spread that good news.
Maybe we need to spend more time telling and retelling the “I, Pencil” or “It’s a Wonderful Loaf” stories about how well markets can and do work at coordinating the self-interested behavior of many to the benefit of even more. Then we can illustrate the limited role of antitrust in that complex effort – say, punishing any collusion among the mills or bakers in those two stories to ensure the process works as beautifully and simply displayed. For the first time in decades, politicians and real people, like the consumers whose welfare we are supposed to be protecting, are paying attention to our wonderful world of antitrust. We should seize the opportunity to explain what we do and why it matters and discuss if any improvements can be made.