The FTC’s current lawsuit against Amazon is a perfect example of the statist mentality that undergirds antitrust laws. Amazon is an enormously big and hugely successful business enterprise. Therefore, according to statists, it must be an anti-competitive “monopoly.” The Federal Trade Commission and the Justice Department, the argument goes, need to take judicial action against Amazon to “weaken it” by breaking it into independent competitive parts. In this way, America’s “free-enterprise” system will be strengthened.
It’s all pure, unadulterated economic nonsense, oftentimes driven by envy and covetousness.
In a free-market economy, a company gets big and successful by satisfying consumers. If it produces goods or services that consumers like, it makes money. Amazon has clearly done that. Beginning as a book seller, Amazon now sells everything under the sun. The reason it is so big and successful is that it has satisfied consumers.
In a free society, a company has the right to become as big and successful as it wants. In the absence of fraud, a company’s bigness and success is none of the government’s business. This includes the right to merge with other companies, thereby becoming even bigger. After all, we are talking about private property. A person’s private property is his. As such, he has the right to sell his business to whomever he wants, including a larger firm, even if the sale means a smaller number of competitors in the marketplace.
Statists claim that if enterprises are free of government control and regulation, a few businesses will get bigger and bigger and finally “monopolize” major sectors of the economy.
Really?
Then how do they explain the fact that the most of the top 50 companies in the United States in the 1960s are no longer in the top 50 today? If big companies just keep getting bigger and more powerful, then those top 50 companies in the 1960s should be gigantic enterprises today. But they’re not.
The reason is consumer sovereignty. By their purchases, consumers decide which companies are going to be big and prosperous. Those top 50 companies in the 1960s were unable to continue satisfying consumers. Other businesses induced their customers to shift to the new companies.
Thus, in a genuinely free market, there is constant dynamism taking place. Companies become big and successful by satisfying consumers. At the same time, there are other companies entering the marketplace that begin attracting consumers. Over time, the big, successful companies lose market share. The new ones take their place. The process is continuous.
Thus, people don’t need the FTC or antitrust laws to protect society from big, successful companies like Amazon. A free market does that job. Like all other companies, Amazon is under constant pressure to continue satisfying consumers. If it fails to do so, it falters, just as those top 50 companies in the 1960s ended up faltering.
What the FTC and the Justice Department do, however, is take a snapshot in time. They see Amazon as a big, successful company today and decide that they need to break it up. They are unable to see the dynamism of a free market over a long period of time. In the process, they end up destroying or damaging companies that are doing a fantastic job in satisfying consumers.
The only genuine monopolies are those economic enterprises that the law protects from competition by prohibiting competitors from entering the marketplace. The genuine monopolist holds a privileged position in the marketplace because it doesn’t have to concern itself with competition. That’s where higher prices and abuse of customers come into play. The monopolist knows that customers cannot go elsewhere to a competitor.
A perfect example of a genuine monopoly is the U.S. Postal Service. Federal law prohibits companies from competing against the Postal Service in the delivery of first-class mail. If a company does compete, the Justice Department will immediately spring into action by filing a lawsuit for injunctive relief agains the competing firm. A federal judge will immediately grant the injunction. If the competing firm decides to ignore the injunction and continues competing, the federal judge will order U.S. marshals to take its officials into custody and jail them, where they will remain until they repent and agree to close down their business.
Not surprisingly, statists never express any concern for real monopolies like the Postal Service. They just hate the big, successful private firms and want to see them broken up or even destroyed. Using the force to government to target “the rich” makes them feel good.
Among the best things Americans could ever do to restore a genuine free market to our land is abolish antitrust laws, the FTC, and genuine monopolies like the Postal Service.