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Source link: http://archive.mises.org/7235/obama-vows-more-central-planning/

Obama Vows More Central Planning

September 28, 2007 by

Barak Obama speaks on antitrust:

Regrettably, the current administration has what may be the weakest record of antitrust enforcement of any administration in the last half century. Between 1996 and 2000, the FTC and DOJ together challenged on average more than 70 mergers per year on the grounds that they would harm consumer welfare. In contrast, between 2001 and 2006, the FTC and DOJ on average only challenged 33. And in seven years, the Bush Justice Department has not brought a single monopolization case.

The consequences of lax enforcement for consumers are clear. Take health care, for example. There have been over 400 health care mergers in the last 10 years. The American Medical Association reports that 95% of insurance markets in the United States are now highly concentrated and the number of insurers has fallen by just under 20% since 2000. These changes were supposed to make the industry more efficient, but instead premiums have skyrocketed, increasing over 87 percent over the past six years. As president, I will direct my administration to reinvigorate antitrust enforcement. It will step up review of merger activity and take effective action to stop or restructure those mergers that are likely to harm consumer welfare, while quickly clearing those that do not.

Some talking points:

1. It’s not true that the current administration hasn’t brought any monopolization cases. Just today I filed an amicus brief in an FTC monopolization case. Obama seems disappointed that the DOJ and FTC have not brought a Microsoft-style blockbuster monopolization case, but there have been plenty of smaller monopolization cases.

2. The primary reason for the decline in the number of merger challenges post-2001 is that Congress raised the threshold for mandatory pre-merger filings. This means fewer mergers are subject to the type of advance review that lead to antitrust challenges.

3. Obama’s real beef isn’t with lax enforcers, but attentive judges. Since the FTC stopped the Staples/Office Depot merger during the Clinton era, there have been a series of merger review setbacks for the FTC and DOJ, most recently the Whole Foods-Wild Oats debacle. Courts are no longer turning a blind eye to the government’s nonsensical economic theories about market power.

4. I fail to see why Obama’s so upset about the lack of antitrust scrutiny of health insurance mergers, given that he’s promised to impose a slew of new government mandates on the insurance industry. If you’re going to establish a government-run health insurance cartel, there’s little to be gained by expanding antitrust enforcement.

5. How does Obama’s vow to “take effective action to stop or restructure those mergers that are likely to harm consumer welfare, while quickly clearing those that do not,” differ from existing policy? The DOJ and FTC permit most mergers and challenge a handful. Will Obama impose a mandatory minimum for merger challenges?

Obama’s remarks were in response to inquiries from a militant pro-antitrust group, so his statements are nothing more than a promise to expand the government welfare program known as antitrust. It seems merger review is the new ethanol.

{ 7 comments }

DC September 29, 2007 at 11:22 am

This is a great example of a political attempt at calculation that ultimately fails. Who’s to say 70 is the right number, especially compared to 33? Would 100 a year make Obama cringe as too much? How about 170? 400? What’s so bad about 33?

George Gaskell September 29, 2007 at 2:23 pm

Regrettably, the current administration has what may be the weakest record of antitrust enforcement of any administration in the last half century.

Wow. And here I thought that there weren’t any bright spots in the Bush administration.

Niels van der Linden September 29, 2007 at 8:08 pm

Obama = Chaved

Niels van der Linden September 29, 2007 at 8:09 pm

Obama = Chavez

Dave September 30, 2007 at 12:38 am

Sigh…

The only reason antitrust is even an issue is because of government intervention and regulations that encourage monoply- that is to say- government privelage in favor of certain companies and industries.

It is only in the context of free market that monopoly becomes a non-issue; in other words, industries with large, dominant firms would be few and far between- assuming they would exist at all.

However, the government, by introducing privilages, including, but not limited to such things as subsidies, tarrifs, misused copyright/patent protection, ect. cause the problem of monopoly te emerge.

Now, the most sensible thing to do would be to repeal the privilages given these firms. This is not likely to happen…

So I ask you, how do we handle this mess, gentalmen? Because it is silly to deny that the American economy is becoming more and more cartelized.

Jean Paul September 30, 2007 at 4:55 pm

“Now, the most sensible thing to do would be to repeal the privilages given these firms. This is not likely to happen…”

First you stop creating new privileges. But ultimately you have to dismantle the privileges that are there – NOT continue to fight the state-arsonist antitrust fire with more antitrust fire.

The tricky part is figuring out how to persuade society to let government be dismantled, and put those responsibilities back into the market. My favorite dream is voucher privatization of all gov’t functions and assets, with shares issued in proportion to lifetime tax contribution to whichever tax jurisdiction that funded the program.

Even allowing annual granularity of contribution ratios, per-person, per-jurisdiction, and per-program, all inflation-adjusted, this could still be calculated from a database of relatively simple complexity.

And anyway, a lot of the legislative privileges should just be given a countdown. Over N years, reduce the protection amount by M/N each year, where M is the initial amount. For example: cut tarriffs by 1/3 each year for three years; cut farm subsidies by 1/10 each year over ten years; etc.

It’s all been suggested before. The key thing is understanding. You have to get people to accept that freedom is the right decision. It could happen overnight without any fancy gradualism if people were just willing enough to accept it.

Howard April 19, 2008 at 12:06 pm

I WANT A PRESIDENT WHO REPRESENTS ALL AMERICANS

Here is Pastor Wright’s ‘Black Value System’
posted at his website. This is what Barak Obama
pledged an oath to for the past 20 years:
http://www.tucc.org/black_value_system.html

Pastor Wright gave Louis Farakan a life time
achievement award. Here is what Louis Farakan believes:
Posted at his own website.
http://www.noi.org/muslim_program.htm

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