Still reading Ayn Rand’s “Capitalism: The Unknown Ideal” and a passage jumped out at me regarding price fixing and anti-trust. Given recent news regarding Apple’s supposed price fixing in e-books, the on going concerns about Obamacare, not to mention such government practices as; rent control, price controls in all manner of agricultural products, this quote jumped out at me.
By what conceivable standard can the policy of price-fixing be a crime, when practiced by businessmen, but a public benefit, when practiced by the government? There are many industries, in peacetime-trucking, for instance-whose prices are fixed by the government. If price fixing is harmful to competition, to industry, to production, to consumers, to the whole economy, and to the “public interest”-as the advocates of antitrust laws have claimed-then how can that same harmful policy become beneficial in the hands of the government? Since there is no rational answer to this question, I suggest that you question the economic knowledge, the purpose, and the motives of the champions of antitrust.
As Ayn Rand points out, how, if Apple is in the wrong for supposedly fixing prices for e-books, can the government be correct in compelling companies to provide the same level of coverage at similar prices in health insurance, artificially maintain higher than market prices for goods such as sugar, milk and other products? Do people actually believe that a practice done by individuals in private business is “evil”, but suddenly becomes “good” when practiced by individuals who happen to be elected to public office?
Need to address one part of Ayn Rand’s quote. The example she uses of peacetime trucking is no longer valid. She wrote her book prior to the deregulation of the 1980’s, during the time when the FTC set transport rates across the board, both for trucking and the railroads. Depending on who you talk to, deregulation was either a boon to the trucking industry and the greater economy, or the cause of a precipitous drop in wages for individual drivers and smaller companies.
During the reign of the FTC, transport rates (and as a result, wages) were set by the government. The imposition of a artificial floor under the costs of shipping and barriers to entry of new companies by over-regulation prevented a lot of innovation and expansion. When the industry was de-regulated in the 80’s, it opened up the field to competitors able to offer better service at lower rates, which helped lower costs to the end user, whether it was for energy and fuel, or milk and cereal, but also resulted in a squeeze on wages for drivers. In this way, the industry operated much as a “closed shop” in a heavily unionized industry when faced with competition.
Other than that, her point is still quite valid. If an action is illegal and harmful to the public when a private company does it, having the government commit the same doesn’t confer legitimacy.