Dominick T. Armentano – Antitrust and Monopoly: Anatomy of a Policy Failure
There are two main schools of thought on antitrust regulation. The traditional populist school prefers an active antitrust policy. Justice Brandeis famously advocated a “big is bad” rule, where big companies should be broken up due to their size, regardless of how consumers are affected. Other populists reach similar policy conclusions for different reasons, such as a larger vision of the good society.
This is usually contrasted with the Chicago approach, most famously exemplified by Richard Posner and Robert Bork. They advocate the consumer welfare standard, where big is ok unless it harms consumers. This is the general rule of thumb today, when antitrust enforcement is more restrained than in its smokestack-era heyday.
Armentano favors just getting rid of the whole antitrust mess altogether. He bases his approach mostly in economic reasoning, but also uses some logical and legal arguments and empirical evidence. He comes across as shrill and ideological at times, but his arguments are mostly sound.
The first two chapters give an overview of the economic and logical objections to antitrust regulation, and most of the rest of the book applies that theory to nearly a century of case law in various areas, from price fixing and price discrimination to tying and mergers.
Armentano’s book is surprisingly current for a book published in 1982. The post-Chicago antitrust slowdown means that only two major cases are missing—the 1980s AT&T breakup and the 1990s Microsoft case. With a populist president and progressive activists pushing for an antitrust revival against a mostly passionless opposition, this issue could get hot. What was old is new again, and could cause enormous consumer harm.
This book has its shortcomings. It relies too much on blackboard thinking for my taste, and Armentano understates the importance of regulatory capture and rent-seeking throughout, which both would have strengthened his position.
But his general approach needs to be a part of the debate. One side wants a lot of a bad thing. The other side also wants the bad thing, just less of it. Armentano argues that both sides have it wrong. Don’t have less of it, get rid of it.