October 11, 1999
Wire Traffic Merges
Telecom Across The Ocean
Medical Research In Court
Wire Traffic Merges
Ameritech and SBC Communications cleared the final hurdle Wednesday in their merger bid, AP reports. The Federal Communications Commission has finally approved the $74 billion deal, which will create the nation's largest local telephone company. However, the merger is subject to conditions requiring that the companies open their markets to rivals and enter new markets to compete with established local phone companies.
"Antitrust is thought by some to be the bulwark of free enterprise. Without the vigilance of the Justice Department and the Federal Trade Commission, so the argument goes, giant corporations would ruthlessly destroy their smaller rivals and soon raise prices and profits at consumers' expense. But antitrust has a dark side. Opposition to mergers, though in theory based on worries that competition may be impaired, often in practice comes not from consumers whose interests antitrust is supposed to defend, but from competitors faced with the prospect of a larger, more aggressive rival," William F. Shughart II wrote in the 1998 Cato Policy Analysis "The Government's War on Mergers: The Fatal Conceit of Antitrust Policy".
"Because they respond to the demands of competitors, labor unions, and other well-organized groups having a stake in stopping mergers that promise to increase economic efficiency, the antitrust authorities all too often succeed, not in keeping prices from rising, but in keeping them from falling," Shughart continued. "The politicization of antitrust is not just a matter of historical curiosity. Politics stalks many of the high-profile cases brought by President Clinton's trustbusters, including Primestar's planned purchase of a key satellite slot as well as the mergers proposed between Staples and Office Depot, WorldCom and MCI, and Lockheed Martin and Northrop Grumman. When the antitrust authorities intervene to reshape markets at the behest of competitors, private decisions about how best to organize production are displaced by government decisions. Innovative firms are penalized, scale economies are lost, and competition is thwarted, not enhanced."
Telecom Across The Ocean
U.S. Ambassador to Japan Tom Foley has called on Japan to deregulate its telecommunications industry and make it easier for competitors to enter it, AP reports. Foley said Wednesday that a more open telecommunications industry in Japan would create jobs, stimulate investment and spur new businesses. But Foley did not call for full deregulation; instead, he urged the nation's government to lead an overhaul of the industry, "which would establish a regulatory system that makes promotion of competition its primary objective."
But what about the telecom industry here in the United States? In a Regulation article, "Telecompetition Revisited: An Agenda", Lawrence Gasman wrote, "The Republicans and Democrats are united in paying lip service to free markets in telecommunications. And it is true that with one important exception--the Cable Television Consumer Protection and Competition Act of 1992, which controlled the prices in the cable television industry--since the Carter administration telecommunications legislation has generally been presented to the public as deregulatory. But market entry and market performance have remained tightly controlled by the Federal Communications Commission (FCC) and the antitrust division of the U.S. Department of Justice, not to mention the state public utility commissions. Most policymakers' commitment to open markets for communications services is quite tenuous, and their proposals are frequently predicated to such a degree on long-range social goals that market forces are really just a small component in their thinking about the telecommunications industry. But while information technology's influence over our daily lives can indeed be expected to grow, that fact is not in itself an excuse for legislators to micromanage it."
In 1997, the Cato Institute hosted a conference on deregulation in the 1996 Telecommunications Act: "'The telecosm is too large, too heterogeneous, too turbulent, too creatively chaotic to be governed wholesale, from the top down,' said Peter Huber… senior fellow at the Manhattan Institute and author of Orwell's Revenge, and Tom Hazlett, professor of economics at the University of California at Davis, maintained that the Federal Communications Commission should be eliminated and regulation of the telecosm left to common law. Solveig Singleton, director of information studies at Cato, went one step further and considered what the telecom industry would look like had the FCC never been created and the industry never been regulated. She conceded that it is likely that the industry would be highly concentrated but argued that concentration is not necessarily a bad thing. 'When you look at many concentrated markets, such as the computer industry, consumers are doing quite well. We need to change our focus on what telecom competition should look like. Despite Reed Hundt's claims, it will never look like and will never have as many entrants as the market for shoes,'" reported the Cato Policy Report. The book Regulators' Revenge addresses telecom deregulation.
Medical Research In Court
An Arizona law prohibiting the use of fetal tissue in medical research has been found unconstitutional by a federal judge, AP reports. Judge William Browning said the law was too vague because it failed to define terms like "experimental" and did not draw clear line between experimental and standard practice. Similar laws in Utah, Louisiana and Illinois have already been overturned. The Center for Reproductive Law and Policy had challenged Arizona's fetal-tissue ban in 1996 on behalf of four people suffering from Parkinson's disease. Some studies suggest that fetal-tissue transplants can effectively treat Parkinson's because the tissue produces dopamine, a substance in the brain that controls voluntary movement.
Government interference in many types of research is hindering scientists, Don Doig argued in a Cato Policy Analysis, "He Who Pays the Piper: Federal Funding of Research": "Not too long ago, a sense of euphoria and opportunity pervaded the research world; funding was increasing rapidly, scientists encountered minimal red tape, and research departments were expanding. What has happened? Recent years have seen expanding involvement of the federal government in the funding of basic research, and with this involvement has come bureaucratization and politicization. Scientists and administrators within the research community have increasingly expressed alarm at this development. Researchers yearn for the halcyon days when ample resources were forthcoming from the government and regulation was relatively light… Additional federal regulations contribute in a myriad of other ways, sometimes minor, sometimes significant, to the costs of research projects and university administration. The cumulative effect is devastating. These regulations cover everything from equal employment opportunity, animal colony standards and recombinant DNA research, to fetal research. As is typical of federal regulations, the costs of these regulations -- in time, money, and lost opportunities -- are rarely considered."
The book Silencing Science by Steven Milloy and Michael Gough addresses fetal tissue research as well as issues like global warming, CFCs, cloning, silicone breast implants, and the EPA. The authors describe more than 20 efforts of individuals and organizations to stop science in its tracks using techniques ranging from defunding scientific research to quashing scientific debate.