How the antitrust laws help incumbents raise money
“The antitrust laws give the government the power to prosecute and convict any business concern in the country any time it chooses,” Ayn Rand wrote in 1962. Antitrust, she wrote, is “a haphazard accumulation of non-objective laws so vague, complex, contradictory and inconsistent that any business practice can now be construed as illegal, and by complying with one law a businessman opens himself to prosecution under several others.”
AT&T chairman and CEO Randall Stephenson announced today that the company is giving up on its $39 billion bid to acquire T-Mobile and will pay the $4 billion “break-up fee” rather than continue to fight with the government for the right to proceed with the deal.
“AT&T first announced its bid for T-Mobile in March,” Politico reported, “predicting soon after it would sail through an official review of the deal by the FCC and Department of Justice by early 2012.”
Not so fast there.
To the surprise of Wall Street and the experts who do this for a living, the Obama administration’s Department of Justice antitrust division took the matter to court. A couple of months later, the FCC decided to oppose the deal, too.
AT&T gave up.
Now, ask yourself this question: If it’s so terribly and obviously illegal for AT&T to acquire T-Mobile, why did all the lawyers and experts hired by AT&T and all the Wall Street firms that evaluated the deal miss this terribly obvious fact?
Perhaps it is because the antitrust laws are “a haphazard accumulation of non-objective laws so vague, complex, contradictory and inconsistent that any business practice can now be construed as illegal, and by complying with one law a businessman opens himself to prosecution under several others.”
Who benefits from the antitrust laws? Certainly not the companies that are doing business in America, or any of the unemployed people who would like to be hired by them. A smaller company that today appears to be saved by government restraints on a big company may see the matter differently when its own deals are tied up in court and its own profits are sucked dry by legal expenses.
In a government that is supposed to be one of limited power, the antitrust laws are a source of unlimited power.
“The threat of sudden destruction, of unpredictable retaliation for unnamed offenses, is a much more potent means of enslavement than explicit dictatorial laws,” Ayn Rand wrote. “It demands more than mere obedience; it leaves men no policy save one: to please the authorities; to please–in any issue, matter, or circumstance, for fear of an unknowable, unprovable vengeance.”
Now we know who benefits.
Government officials benefit when the laws — not only antitrust laws, but also laws like the Dodd-Frank financial reform or the health care reform act — are so vague that no one is sure what they prohibit or allow. This gives government officials all kinds of leverage over other people’s productive enterprises. They can pressure companies to do things that no law requires, like forgive some of the principal balance on home loans, or substitute apple slices for French fries in Happy Meals.
And there’s one more thing government officials can do with their unlimited power.
They can raise money.
How much money did AT&T donate to President Obama’s re-election campaign this year?
Don’t bother looking it up, here’s the answer: “Not enough.”
They gave President Obama $20,982 for the 2012 election cycle through the third quarter of 2011, if you’re curious.
Congress can get into the act, too. Certain industries have exemptions from the antitrust laws, and Congress regularly threatens to revoke those exemptions if industries don’t play ball. For example, there was no legal reason that Major League Baseball officials had to come before a committee of Congress to answer questions about steroid use. But when lawmakers warned darkly that Major League Baseball’s antitrust exemption might be reviewed, everybody was on a plane to Washington to cooperate voluntarily.
When the NFL decided to telecast an important game exclusively on the NFL Network four years ago, Senators Pat Leahy and Arlen Specter, respectively the chairman and ranking member of the Senate Judiciary Committee, sent the NFL a letter warning that they might introduce legislation to withdraw the NFL’s antitrust exemption. The NFL relented and the game was simulcast on CBS and NBC.
When health insurance companies released a study showing that the proposed health care reform bill would raise premium costs for policyholders by 18 percent more than they would otherwise rise, President Obama used one of his weekly addresses to threaten the insurance industry with the loss of its “privileged exemption” from the nation’s antitrust laws.
Who benefits from the antitrust laws? Any politician who wants to raise campaign cash or redistribute the wealth of someone else’s business.
“He does not have to exercise his power too frequently or too openly,” Ayn Rand wrote, “he merely has to have it and let his victims know that he has it; fear will do the rest.”
If you’re a business executive reading this post, try this little experiment. Put an empty coffee can under your desk. Every time you think of doing something that’s perfectly legal and within your rights, and then you catch yourself thinking, “I don’t know if the government would like that,” drop a dollar into the coffee can.
When the total reaches a hundred dollars, take it out and put it back in your wallet. If there’s one thing this government doesn’t like, it’s an accumulation of wealth.
© 2011
Source note: Ayn Rand, “Antitrust: The Rule of Unreason”; The Objectivist Newsletter; February, 1962. Reprinted in The Voice of Reason: Essays in Objectivist Thought by Ayn Rand, available from Amazon.com, the Ayn Rand Institute’s bookstore, and many other booksellers.
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Susan Shelley is running for Congress in California’s 30th District. She’s the author of the novel, The 37th Amendment and of a history of the Bill of Rights titled How the First Amendment Came to Protect Topless Dancing: A Citizen’s Guide to the Incorporation Doctrine.
