more on OECD on employment protective laws

[David Farber <dave () farber net>]

Begin forwarded message:

From: Gerry Faulhaber <gerry-faulhaber () mchsi com>
Date: April 26, 2006 9:44:59 AM EDT
To: John Levine <johnl () iecc com>, dave () farber net
Subject: Re: [IP] more on OECD on employment protective laws

Well, I am all for antitrust enforcement, and we certainly saw a  
spate of that in the 20th century, an industrial age with highly  
constrained capital availability.  Standard Oil comes to mind (1911)  
as well as more dubious ones, such as Alcoa and Kodak-Berkey.  But  
the last and biggest IBM case was dropped in 1982, coincident with  
the successful conclusion of the AT&T case.

We certainly are effective in keeping firms merging to monopoly, but  
growing to monopoly is not in fact illegal, nor is pricing like a  
monopolist once you are there.  Abusing your monopoly with  
anticompetitve actions is illegal, and that is what the Microsoft  
case was all about.  And it is not for lack of trying; every  
businessperson worth a quarter of their salary is trying to obtain a  
monopoly; as with Microsoft, that monopoly if obtained can be  
successfully defended (largely) with talented legal staff, so it is  
not clear that declaring something illegal will in any way abate the  
urge and action to monopolize (drugs are illegal too, but that  
doesn't appear to stop people from profiting from them).

However, when everyone is striving to win, to be the monopolist, the  
paradoxical result is competition.  This seems to be the ubiquitous  
outcome, and it is very good news indeed.  Only in countries that  
support and protect their firms are monopolies widespread, curiously  
in the name of the public good.

Again I state the challenge: do we see monopolies that have grown to  
be so purely in the private market?

Professor Gerald R. Faulhaber
Business & Public Policy Dept.
Wharton School, University of Pennsylvania
Philadelphia, PA 19104
Professor of Law
University of Pennsylvania Law School
----- Original Message ----- From: "John Levine" <johnl () iecc com>
To: <dave () farber net>; "Gerry Faulhaber" <gerry-faulhaber () mchsi com>
Sent: Tuesday, April 25, 2006 11:13 AM
Subject: Re: [IP] more on OECD on employment protective laws


> > Wow, is Nelson's analysis on point.  Once you get past Microsoft, it
> > is very hard to name a monopoly that arose through purely private
> > means.
>
> Gosh, do you suppose that has anything to do with the fact that it's
> been illegal for a business to act as a monopoly in the US for the
> past century, unless it's a government regulated one?  Surely you know
> that if you turned the clock back to 1900, you'd be hard pressed to
> find a major industry that wasn't dominated by a single large company
> or a cartel.
>
> Through the 20th century there were all sorts of anti-trust actions to
> break up monopolies.  I can think of at least two just against IBM,
> one for punch cards, the other for mainframe software.  With the
> glaring and temporary (if the EU has anything to say about it)
> exception of Microsoft, all of the non-statutory monopolies in the US
> are gone.
>
> Regards,
> John Levine, johnl () iecc com, Primary Perpetrator of "The Internet  
> for Dummies",
> Information Superhighwayman wanna-be, http://www.johnlevine.com, Mayor
> "More Wiener schnitzel, please", said Tom, revealingly.
>
> PS: Do they still teach business history at Wharton?  There's an awful
> lot that happened during the 20th century that's directly relevant to
> what's going on now, if only people knew about it.



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