October 24, 2017 5:05PM

Trump Hits Motorists with Ethanol Costs

The Trump administration acquiesced to the ethanol lobby in a recent decision on the costly Renewable Fuel Standard (RFS), says the Wall Street Journal. Under a Bush-era 2007 law, the mandated amount of biofuels in your gas tank is increasing, which puts upward pressure on gas and food prices and likely harms the environment.

Rather than supporting repeal of the anti-environmental RFS, the EPA announced it “won’t reduce its proposed 19.24 gallon biofuels quota for 2018, and many even increase it,” said the WSJ. Sadly, the administration “caved under pressure from the ethanol lobby and political extortion from Republican Senators Joni Ernst, Deb Fischer, and Chuck Grassley.”

At DownsizingGovernment.org, Nicholas Loris explains how the RFS harms consumers, damages the economy, and produces negative environmental effects. The RFS is also a bureaucratic nightmare, and has spawned a complex credit-trading system, which investor Carl Icahn said is a “$15 billion market full of manipulation, speculation and fraud.”

Loris notes that ethanol has only two-thirds the energy content of regular gas, so drivers get fewer miles per gallon the higher the share of ethanol and other biofuels mixed into their tanks.

So the next time you are pumping gas and see that “10% Ethanol” sticker, remember it’s a Big Government swindle perpetrated by the GOP.

For more on ethanol, see here.

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October 24, 2017 12:43PM

Don’t Blame Us Libertarians for School Choice Disappointment

The headline of Megan McArdle’s latest Bloomberg View piece stings, at least for a libertarian whose job is to advance educational freedom: “We Libertarians Were Really Wrong About School Vouchers.”

Ouch! But to this I say: Speak for yourself!

To be fair, I don’t know how things work for big-time columnists, but there’s a good chance McArdle didn’t pen her own headline. Pubs need clicks, and the shrewd marketeers at Bloomberg were no doubt well aware that such an inflammatory header would draw in all roughly ten professional libertarian school choicers, boosting readership by huge hundredths of a percent. And it is worth saying: While I’m not sure you would call them libertarians, John Chubb and Terry Moe’s Politics, Markets, and America’s Schools was seminal in launching the modern choice movement, and they did assert that choice would be a “panacea.” If that is what libertarians expected from the tiny choice programs we’ve gotten so far, yes, we were wrong. But that is not what libertarians should have expected.

The fact is we have not even come close to getting what we need—real, broad freedom, which McArdle and lots of libertarians call “the market.” (I’ve decided, by the way, that a "market” is a horrible way to conceptualize what libertarians want, because it implies education is all about efficient financial transactions. What we want is full-on human freedom.) None of the voucher, charter, scholarship tax credit, or education savings account programs we have gotten have even come close to a free market, as many libertarians have been decrying for decades.

How far are we? Thankfully, you don’t have to dig into old books to find out—we give you the lowdown in Educational Freedom: Remembering Andrew Coulson, Debating His Ideas (available in free PDF version or wherever fine books are sold)! Andrew was a leading critic of the kinds of hamstrung programs many choice supporters lauded for years—a few thousand kids with small vouchers here, public charter schools there—and the book contains multiple chapters examining what is needed for a true free market. As the Heartland Institute’s George Clowes lays out:

  • Parental choice of school
  • Direct parental financial responsibility
  • Freedom for educators to establish different types of schools
  • Explicit competition among educators
  • The profit motive for educators (and the need for a reliable revenue stream)
  • Universal access (including low- and high-income families)
  • Per-pupil funding comparable to the public schools, with the funding following the child

Man, are we far from a market! Charter schools cannot teach devotional religion and are part of the same state standards-and-testing accountability regimes as traditional public schools, cramping how meaningful a choice they can be, or how free their educators. Meanwhile, full per-pupil funding rarely makes its way out of traditional public schools and into charters, and establishing a new school can often be an excruciating and ultimately futile effort.

How about private school choice programs? The good news, at least in theory, is “private” means “real choice,” with schools free to teach whatever they want, how they want. And they come closer than charters, with religion allowed, and sometimes no state testing-based accountability. But some programs require state testing and boot schools that don’t get good grades—Indiana has about 35,000 voucher students, and those rules—and others have less stringent requirements, but testing nonetheless. Even more handicapping is that choice programs are usually poorly funded relative to the public schools and have mandated or de facto enrollment caps due to eligibility requirements or funding limits. In DC, for instance, a voucher is worth around a third of what is spent per-pupil in the public schools (and significantly less than charters) while enrollment is capped at about 2,000 students by the program’s budget. And allowing the profit motive to work is seen as the Mark of Cain, even though it is the lynchpin for taking quality and innovation to scale.

As a libertarian it is easy to get depressed, but only because we’ve barely scratched the surface of freedom. Indeed, the evidence even from this sad state of affairs strongly suggests freedom works. For one thing, Andrew Coulson analyzed the “market-ness” of education systems around the world—where school choice is often embraced more warmly than the home of Cowboy Capitalism—and he found that the more market-like a system, the better the outcomes. We have seen that in the U.S., too, where the “gold-standard” research has typically found that choice delivers slightly better test scores, and much higher graduation rates, at a fraction of the cost of traditional public schools. Even the research McArdle cites to help explain why choice has turned out to be a bummer—a study of centrally managed choice among only public high schools in New York City—suggests that the schools people choose produce better academic outcomes. It’s just that parents seem to prefer schools because they have better performing students rather than explicitly greater learning gains. But it turns out that signal works: “We find preferences are positively correlated with both peer quality and causal effects on student outcomes.”

Of course, what should ultimately thrill libertarians—and everyone else—about choice is not test bumps or dollars saved, but that it is the only education system that lets all people pursue what they believe is important in education without having to impose their views on everyone else, or live under the constant threat of having someone else’s values imposed on them. It is the only education system consistent with a truly free and equal society.

Megan McArdle is absolutely right to be disappointed that we are not where we need to be in education. But that is not because libertarian ideas are a bust. It is because we are so far from seeing them fully implemented.

October 24, 2017 11:45AM

ADA: Deaf/​Blind Patron Can Sue Movie Theater Demanding “Tactile Interpreter”

Reversing a trial court, the Third Circuit has ruled (McGann v. Cinemark) that a deaf/blind man is entitled to sue Cinemark under the Americans with Disabilities Act (ADA) demanding that it provide a “tactile interpreter” so that he can experience the movie Gone Girl. Each interpreter — two would be required because of the movie’s feature length — would narrate the film in American Sign Language (ASL) while McGann places his hand in contact with theirs to read the signs. The appellate judges rejected the argument that because of the need for subjective stylistic judgments about how to describe the movie’s action, on-the-fly translation would “fundamentally alter the nature of the good, service, facility, privilege, advantage, or accommodation being offered,” an exception that the law recognizes to its accommodation requirement. It sent the case back for further proceedings on whether the theater can plead “undue hardship,” a narrow defense that is often unavailable to large businesses which (it is argued) can cover even very high costs of accommodation with revenues earned from other patrons.

Like the Berkeley online courses fiasco, and the Main Street shakedown mills, and the emerging industry of web accessibility suit-filing, these are all developments to keep in mind when you hear people say that the courts are capable of working out the problems with the Americans with Disabilities Act by themselves and that Congress need not turn its attention to reform. (cross-posted and adapted from Overlawyered)

October 24, 2017 11:21AM

The Use and Abuse of “Reciprocity” in Trade Policy

One of the big demands of the Trump administration is that trade, and trade agreements, must be "reciprocal." Their concerns about reciprocity are misplaced, and miss the point about why we open our markets in the first place. Sure it’s great when other countries also open their markets, but there is more to be gained from unilateral opening than no liberalization at all. Frédéric Bastiat explained this peculiar desire for reciprocity in Economic Sophisms, where he wrote:

There are people (a small number, it is true, but there are some) who are beginning to understand that obstacles are no less obstacles for being artificial, and that we have more to gain from free trade than from a policy of protectionism, for precisely the same reason that a canal is more favorable to traffic than a "hilly, sandy, difficult road." 

But, they say, free trade must be reciprocal. If we lowered the barriers we have erected against the admission of Spanish goods, and if the Spaniards did not lower the barriers they have erected against the admission of ours, we should be victimized. Let us therefore make commercial treaties on the basis of exact reciprocity; let us make concessions in return for concessions; let us make the sacrifice of buying in order to obtain the advantage of selling.

People who reason in this way, I regret to say, are, whether they realize it or not, protectionists in principle; they are merely a little more inconsistent than the pure protectionists, just as the latter are more inconsistent than the advocates of total and absolute exclusion of all foreign products. 

This principle applies not just to border measures such as tariffs, but also to internal measures such as government procurement. Closing our procurement market to foreigners ignores the value of greater choice and competition. Politicians tend to oversell the advantages of selling (exports) over buying (imports), and incorrectly frame imports as a loss and exports as a gain. In fact, increased competition from foreign firms bidding on government contracts can get more value out of taxpayer dollars by increasing efficiency and gains in quality. 

Nonetheless, if people are going to make these demands for reciprocity, they should at least have some reasonable basis for determining whether there is, in fact, reciprocity. To paraphrase a famous line from the Princess Bride: They keep using that word, but it does not mean what they think it means. A recent demand from the Trump administration in the NAFTA renegotiation, related to government procurement, distorts the concept of reciprocity beyond recognition.  Here's a Politico report on Commerce Secretary Wilbur Ross' remarks on the subject: 

Ross was pressed on whether he thought the U.S. proposal on government procurement access was fair, given that it might result in less market access for Canada and Mexico than is granted to other countries through the WTO.

The U.S. proposal would cap Mexican and Canadian access to U.S. government projects at the combined total access those two countries provide to U.S. firms.

“It’s very good faith, our market is 10 times the size of either of those markets, so if you gave equal percentage market share we’d be giving them 10 for one, how is that good arithmetic?” Ross said. “It is actually to the benefit of the parties because it is the cumulative total of two economies rather than the individual one.”

Ross said the proposal helps address “one of the fundamental flaws, the president feels and I agree, that exists in NAFTA to begin with.”

“The fact is we think it was absurd in general to give away 10 times as much market access as you are getting back,” he said.

Ross' view appears to be that, in order for there to be reciprocity, the Canadian, Mexican, and U.S. procurement markets should all be open to foreign competition in the same nominal amounts. So, to take an illustrative example, if $10 billion of U.S. procurement is open to foreign competition, $10 billion of Canadian procurement and $10 billion of Mexican procurement should also be open. In his view, that is fair. And just to be nice, he says the U.S. will offer the combined amount that Canada and Mexico offer, so the U.S. will offer $20 billion. See, more than fair, right?

No, not at all! What he leaves out is that the differing size of the economies has an impact on outcomes. The share of the procurement market that each country has open to foreign competition is much different when the nominal amounts are the same, with a far smaller portion of the U.S. market open. And because the U.S. economy is much bigger, the United States has more companies that can compete for contracts.  So, if Canada opens up $10 billion of procurement to foreign competition, the U.S. is going to grab a big chunk of that. By contrast, if the U.S. opens up $10 billion (or even $20 billion) to foreign competition, Canada won't take very much. The result is that the approach Ross is pushing won't lead to reciprocity. Rather, with the nominal amount of market access the same, and the U.S. economy so much bigger, there will almost certainly be more sales by U.S. companies than by Canadian companies.

If you want to get somewhere close to reciprocity (again, not that we're advocating it), the way to do so is to open up a percentage of the procurement market to foreign competition. For example, each country could open up 10% of its procurement contracts. This is roughly the approach governments usually take now. Opening up procurement markets on a percentage basis is the best way to get us to a result where roughly the same amount of procurement contracts flow in both directions.

Ross doesn't like the current approach, saying that the U.S. has given away "10 times as much." But we haven't, for the reasons noted: There are fewer Canadian and Mexican companies, so they don't have the same ability to compete for procurement contracts. 

Adding additional restrictions to the government procurement market, which is valued at $4.4 trillion annually, will be a step in the wrong direction. If the U.S. undertakes measures to further restrict its procurement market, it will be equivalent to a self-inflicted wound. It may also be inevitable that other countries will follow suit, reducing international business opportunities for both foreign and U.S. firms around the world. 

October 23, 2017 3:20PM

Huge Fiscal Benefits of Including Legal Immigrant Dreamers in the DREAM Act

While Congress is rightly concerned about providing a pathway to citizenship for immigrant Dreamers without legal status, thousands of legal immigrants who are in the same position are being left behind. This decision to exclude legal immigrant Dreamers is not just inequitable. It is costly.

H-1B high-skilled foreign workers can bring their spouses and minor children with them to the United States on H-4 visas. The H-4 is a temporary visa that is valid for as long as the H-1B is. Once the child turns 21, however, the H-4 is canceled. Most employers also sponsor their H-1B employees for permanent residency (a “green card”), and their minor children can receive green cards with them. But again, if their children turn 21 while they are waiting, the law boots them from the line.

In a functioning immigration system, these situations would happen rarely, if ever. But because Congress has failed to update the limits on permanent residency since 1990 and because it discriminates against immigrants from populous countries, H-1B workers from India have to wait at least several decades for green cards. During this time, their children grow up as Americans, but then “age out,” losing both their H-4 status and their place in the green card line on their 21st birthday.

These kids are in almost the exact same position as those in the DACA program right now. Their parents brought them to the United States as young children; they grew up here; they have a temporary status now, but they will lose it if Congress fails to change the law. Yet the DREAM Act and other legislative solutions for immigrant Dreamers expressly and inexplicably exclude these legal immigrants. It is not hyperbole to say that the DREAM Act requires applicants to violate the law to qualify.

Why? Legal immigrant Dreamers would certainly qualify under the bill’s other requirements. Virtually all graduate U.S. high schools and enroll in U.S. colleges, and virtually none have criminal records that would disqualify them. Children of H-1Bs are some of the highest achieving children in American society today. In fact, 75 percent of the 2016 finalists for the Intel Science Talent Search—the leading science competition for U.S. high schoolers—had parents who were at one time on an H-1B visa.

This talent is a gigantic economic asset to the United States. According to the National Academy of Science’s 2016 report (NAS) on the fiscal effects of immigration, immigrants who enter as children and who have at least one college graduate parent—as all H-1B workers do—create a massive fiscal surplus. The NAS estimates that each H-4 child would have a 75-year net fiscal present value of between $143,000 and $316,000 to all levels of the U.S. government—federal, state, and local. Averaging NAS’s estimates from Table 8-14 for kids with college grad parents or parents with advanced degrees yields an estimated $252,000 net present value for each legal immigrant Dreamer.

Net present value estimates apply a discount rate to future costs and benefits on the (correct) theory that money today is more valuable than the same amount of money received three decades from now. One way to understand the net present value concept is to envision each one of these kids cutting a check to the government for $252,000 when they arrive in the country that would then be invested at 3 percent per year for the next 75 years.

The DREAM Act is already a big fiscal boost to the United States, but including the legal immigrant Dreamers would increase its fiscal benefits. The government doesn’t produce estimates of the number of children with H-4 status or how many are waiting in the backlog for green cards who could potentially qualify. However, DHS did estimate that 125,000 spouses of H-1Bs on H-4 visas had resided in the United States for at least 6 years as of 2015. Conservatively estimating that each married couple brought an average of one child with them, that’s a population of 125,000 kids. $252,000 multiplied by 125,000 kids is $31.4 billion in net fiscal benefits.

This number is likely low because it only counts H-4s. There are some, albeit fewer, legal immigrant Dreamers on the whole range of alphabet soup visas (E, O, J, L, P, etc.). All of these kids are children of skilled professionals in the United States, so their impacts are probably similar. The country likely will receive some of these benefits whether legal immigrants are included in the DREAM Act or not, as some kids will find a way to stay on their own, but to fully realize all of them, Congress needs to provide them with permanent residency.

The United States gains nothing from kicking legal immigrant Dreamers out or forcing them to maneuver America’s impossible immigration system to find other temporary statuses to stay in the country that is their home. And here’s the thing: the sponsors of the DREAM Act or any other proposal don’t need to add legal immigrant Dreamers or do anything special for them. They just need to not exclude them or go out of their way to treat them worse than other immigrants, as they have right now. All they need to do is strike the requirement that DREAM Act applicants break the law. Few changes so simple could benefit the United States so much.

October 23, 2017 9:54AM

GOP Tax Plan: Middle Class Gets Largest Cuts

Critics are saying that the Republican tax plan would give high earners the largest cuts. There has been a flood of news stories with that theme since the Tax Policy Center (TPC) released its analysis of the plan.

The TPC summary says, “Those with the very highest incomes would receive the biggest tax cuts,” and tables in the report encourage readers to come to that conclusion.

However, my parsing of TPC’s data reveals something different: the GOP plan would give the largest relative cuts to people in the middle. On average, middle-income earners would receive larger percentage tax cuts than higher-income earners.

The table shows data from TPC’s analysis and from its current law estimates released in March. Households are split into quintiles, or fifths, by income level. The columns titled “change” present the effects of the GOP cuts in different ways.

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Columns 1 and 2. These results from TPC’s report suggest that high earners would receive the largest cuts.

Column 3. These figures from TPC in March include all federal taxes—income, payroll, estate, and excise. Note that the higher quintiles have higher tax rates, so if we cut everyone’s taxes an equal percent, then the higher quintiles would receive the largest cuts.

Column 4. These results from TPC’s study show the GOP cuts as a percent of all current taxes paid. The top and bottom quintiles get the biggest cuts, and the middle and fourth quintiles the smallest. But there is a problem with TPC’s presentation—Congress is reforming income and estate taxes, but TPC includes payroll and excise taxes in these calculations, which slants the results. (My column 4 data are slightly different from data shown in TPC’s study because of rounding issues).

Column 5. This column shows current individual income, corporate income, and estate taxes, based on TPC’s March data. These are the taxes that Congress is reforming. Current tax payments are hugely tilted toward the top end. The bottom two quintiles do not pay any of these taxes, on average. If we cut everyone’s taxes an equal percent, then higher earners would get—and should get—the largest cuts.

Column 6. This column provides the best answer—in my view—to the question of which group gets the largest cuts under the GOP plan (at least the GOP plan as interpreted by TPC). The middle quintile gets a huge 20 percent tax cut, on average, which is much larger than the 12.0 and 12.7 percent cuts for the top two quintiles. Looked at this way, the middle-class would get the largest tax cuts under the GOP plan.

I have assumed so far that TPC’s underlying analysis is sound, but actually there are problems with it. The TPC analysis is not dynamic, and thus overstates revenue losses, particularly from corporate tax cuts. That factor combines with the TPC assumption (erroneous in my view) that the corporate tax burden mainly falls on shareholders, not workers. The result of those two factors is that TPC exaggerates the tax cuts going to the top end.

TPC has fine analysts and it produces an impressive stream of reports, but I wish they would present their results in a more even-handed way. As an example, when they publish a table showing that the top quintile would get income/estate tax cuts of $8,470 and the middle quintile would get $660 in 2018, on average, they should show that the former group will currently pay $66,701 of those taxes and the latter group will pay just $3,300, on average.

By the way, I do not think that the middle class should receive the largest tax cuts, so I do not agree with the rhetoric of either party on that issue. High earners should receive the largest cuts because they pay the highest rates, and reducing their rates would generate the most economic growth.

# # #

For more on the GOP tax plan, see here, here, and here. For a discussion of distribution tables, see this study by Jason Fichtner.

October 20, 2017 3:10PM

Antitrust for Fun and Profit: The Democrats’ Better Deal (Part 3)

This continues Part 1 and Part 2 of my critique of the arguments for aggressive antitrust activism offered in Steven Pearlstein’s Washington Post article, “Is Amazon Getting Too Big,” which is largely based on a loquacious law review article by Lina Kahn of the Google-funded “New America” think tank. 

My previous blogs found no factual evidence to support claims of Pearlstein and Kahn that many markets (which must include imported goods and services) are becoming dominated by near-monopolies who profit from overcharging and under-serving consumers.  

Yet the wordiest Kahn-Pearlstein arguments for more antitrust suits against large tech companies are not about facts at all, but about theories and predictions.

Kahn makes a plea for preemptive punishment based on omniscient futurism. “The current market is not always a good indication of competitive harm,” she writes.  Antitrust enforcers “have to ask what the future market will look like.” But how could antitrust enforcers’ predictions about what might or might not happen in the future be deemed a crime or a cause for civil damages?  If the law allowed courts to levy huge fines or break-up companies on the basis of prosecutors’ predictions of the future, the potential for whimsical damages and political corruption would be almost limitless.

We have already experienced extremely costly federal (and European) antitrust cases based largely on incredible predictions about “what the future market will look like” – mostly obviously in the cases against IBM and Microsoft.

IBM was the subject of 13 years of antitrust “investigation” (harassment) before the suit was finally dismissed "without merit" in 1982.  My first article about antitrust was a 1974 critique of the IBM case in Reason magazine which remains the best explanation (aside from this book) of what I mean about antitrust being “for fun and profit.”

Pearlstein imagines “it was the government’s aborted prosecution of IBM . . . that made Microsoft possible.”  But IBM’s decision to offer three operating systems for the PC and allow Microsoft to sell MS-DOS to Compaq had nothing to do with the government’s antitrust crusade against IBM.  That crusade was a well-funded project of Control Data, Honeywell, NCR and Sperry Rand – competitors of IBM’s who hoped to do better in court than they had with customers.

 “In May 1998,” notes Pearlstein, “U.S. attorneys general filed an antitrust suit against Microsoft, which lurks in the background of the current debate” (about Amazon, Google and Apple).  Microsoft was said to have a supposedly invincible monopoly of “Intel-based” personal computers (inexcusably excluding Apple, Sun, Palm, Linux and others from the market), but the prosecutors could not deny that this dominance was achieved legally by consumer preference. The essence of the antitrust allegations was that Microsoft was accused of extending its legal dominance in PCs to achieve a monopoly of Internet browsers and assorted “middleware” (media players, email clients and instant messaging) that could supposedly serve as “alternative platforms” to Windows (or iOS) in some totally incomprehensible fashion.  In reality, the Internet was the alternative platform, and it is platform-independent. Online services also don’t know or care which media player you use to watch movies or listen to music. Online tax return services don’t care either.

The government’s technologically illiterate case against Microsoft became a decade-long, ever-changing battle waged by prosecutors and judges who were unable to even contemplate that (1) Apple, Amazon and Google could ever be competitive rivals of Microsoft in hardware, software or services, or that (2) cellphones and tablets could possibly serve as handy computers.  The Microsoft settlement “barred Microsoft from entering into Windows agreements that excluded competitors from [offering software installed on] new computers, and forced the company to make Windows interoperable with non-Microsoft software.” But Windows had always been far more welcoming to outside software than Apple.  And the browsers, search engines or media players preloaded on new computers became a non-issue once broadband made it easy to install any or all of them on PCs, tablets and phones.  Open-source VLC soon became a popular media player, and open-source Firefox is a popular browser. Instant messaging is dominated by Facebook, Snapchat and Skype.

Google’s Android, Apple’s IOS and Amazon’s Kindle (which is not counted in those shares) have greatly eroded Microsoft’s share of all relevant markets without help from antitrust cops.  By July 2017, Windows had only a 26.8% share of platforms used to access the Internet, and IE/Edge had an 8% share of browsers

Ms. Kahn now worries that antitrust must now shift focus toward Microsoft’s (previously unnoticed) rivals lest they prove to be just as firmly entrenched as DOJ wrongly predicted that Windows and IE would now be.  “Google, Apple and Amazon have created disruptive technologies that changed the world,” says Kahn. “But the opportunity to compete must remain open for new entrants and smaller competitors that want their chance to change the world.”  Sure, but the opportunity to compete was always open and still is.  New entrants explain why IBM gave up making PCs, and why few people use Microsoft’s capable Edge browser or Bing search engine. 

Rather than offer any evidence that new entrants are somehow excluded from [undefined] markets supposedly dominated by Google, Apple and Amazon, Kahn offers theoretical conjecture.  Paraphrasing her, Pearlstein says, “Chicago antitrust theory is ill equipped to deal with high-tech industries, which naturally tend toward winner-take-all competition. In these, most of the expenses are in the form of upfront investments, such as software (think Apple and Microsoft), meaning that the cost of serving additional customers is close to zero. . . What this “post-Chicago” economics shows [asserts?] is that in such industries, firms that jump into an early lead can gain such an overwhelming advantage that new rivals find it nearly impossible to enter the market. . . [emphasis added].”  

Tim Muris and Bruce Kobyashi, by contrast, find Post-Chicago economics is all about “stylized theoretical models, producing possibility theorems that largely eschew empirical testing.  [The] lack of empirical verification of these theories likely has limited the impact of Post-Chicago School economics on U.S. antitrust law.”

Consider the possibility theorem that early entrants into high-tech gained “such an overwhelming advantage that new rivals [found] it nearly impossible to enter the market.”  Anything might be possible in theory, but that claim has not been true in fact.  

  • In personal computers, Apple, Commodore and Sinclair were first, followed by Apollo and the IBM PC in 1981, Osborne and Sun in 1982, Compaq in 1983.  Contrary to what trustbusters predicted, IBM gave up the ThinkPad business in 2005.
  • Netscape had an overwhelming dominance of Internet browsing in 1995, but that not deter Opera and Internet Explorer from entering the market that year, nor Firefox in 2002, Safari in 2003, or Google Chrome in 2008. 
  • AOL was the dominant Internet portal in 1993 until challenged by Netscape in 1994, Yahoo in 1995 and later by Comcast, Google, Facebook and many more. 
  • AltaVista, Lycos and Yahoo were meta-search engines that “jumped into an early lead,” yet were soon trumped by Google, Bing and numerous specialized “vertical” search engines (Amazon, Yelp, eBay, Trip Advisor, Expedia. . .) and Comparative Shopping Engines (Nextag, Shopzilla. . . ) which lobbied for “the absurd EU antitrust case against Google.”
  • Palm, Nokia and Motorola jumped into an early lead in cellphones, yet were shoved aside by Blackberry, which in turn was shoved aside (for the moment) by Samsung and iPhone.
  •  Friendster, Linked-in and My Space jumped into an early lead in social networking in 2002-03, yet Facebook did not find it impossible to jump into that market in 2004, nor did Twitter in 2006, followed by Google+, Snapchat, Instagram, and others.

Ms. Khan would not only have antitrust czars prosecuting cases based on their technological predictions, but would have them “overseeing concentrations of power that risk precluding real competition.” This “structural” approach removes all annoying requirements for evidence that competition is impeded in any way.  All that would be needed is a prosecutor’s perception that apparent concentration of undefinable “power” might someday risk some undefinable vision of “real competition” or otherwise harm some undefinable “public interest.” 

Pearlstein quotes former antitrust authorities who view Ms. Kahn’s proposed carte blanche antitrust mandate as an invitation to “political and ideological mischief.”  President Trump, for example, threatened Jeff Bezos with “a huge antitrust problem” because Amazon owns The Washington Post “and he’s using that as a tool for political power against me.” 

Mr. Pearlstein began his piece by noting that, “Democrats cited stepped-up antitrust enforcement as a centerpiece of their plan to deliver ‘a better deal’ for Americans should they regain control of Congress and the White House.”  If such stepped-up enforcement follows the advice of Pearlstein and Kahn, it would add paralyzing uncertainty to business plans and decisions.  The Kahn-Pearlstein vision of stepped-up antitrust activism is a recipe for judicial fiat.  It would encourage interest group meddling in business planning and pricing, invite political corruption, and largely replace the rule of law with the rule of lawyers.