Bailing Out the Ocean with a Teaspoon

[charles mueller <cmueller@metrolink.net>]

        Jamie Love says that he's received complaints from some members
about my posts.  That's hardly surprising, given the heavy anti-antitrust
bias of the list, as reflected in, for example, the posts of the actives.
Of its 156 members (the last time I checked), no less than l/3rd of them
(51) were 'concealed,' presumably because they belong to organizations that
don't favor antitrust enforcement and certainly not the kind that a Ralph
Nader affiliate might be expected to endorse.  A fair guess would be that a
substantial number of these 51 concealees are FTC/Justice people --which
would of course be consistent with my observation that these 2 agencies have
engaged in virtually no serious antimonopoly enforcement for the past couple
of decades.    

        Jamie receives complaints about me, I receive complaints about him.
An example is the following:  "Jealousy drives many people on the net. If a
person
like yourself is a good writer (as you are) and is getting more 'attention'
than the list owner (as you are) this sometimes angers the list owner."
Jamie has certainly displayed the latter, using--as I mentioned earlier--a
vocabulary laced with 4-letter words in private communications to me.  

        The list is virtually devoid (except, of course, for my own
contributions) of serious POLICY discussion.  Jamie provides us with news
bulletins (which are interesting and helpful) and a few members offer
occasional comments on them.  But where is the policy analysis?  Has Jamie
or any other member proffered an analysis of what U.S. antitrust policy IS,
today, in such areas as mergers; predatory pricing (e.g., as in the airline
industry); price discrimination (the kind induced, say, by Wal Mart and
other retail giants); tying; boycotts; exclusive dealing (beer, soft
drinks); resale price fixing; and so on?  Not that I've seen.  Even more
importantly, has Jamie suggested--or asked the members to suggest--what the
country's antitrust policy OUGHT to be in any of those areas?  Again, not
that I've seen.

        And this, in my view, is the real source of our disagreement (aside,
perhaps, from a couple of oversized egos).  Jamie's agenda, on the basis of
what we've seen from him so far, is what might be called an ad hoc
'cheerleading' role:  He picks a merger or practice he objects to, drafts a
letter of protest to the enforcement agencies (for Ralph to sign), and
otherwise cranks up the publicity machine to exert pressure for enforcement
action.  

        Now, no one who supports effective antitrust policy, certainly not
me, objects to this cheerleading.  On the contrary, it's obviously helpful:
Given the moribund state of our 2 enforcement agenices, such prodding in
selected cases is plainly in the public interest.  And the cases have been
selected well--Boeing, Staples/OD, and Microsoft, for example.  We can all
agree, then, that this ad hoc program is beneficial--and even necessary.  

        But is it SUFFICIENT?  Is it likely to lead to a reinvigoration of
U.S. antitrust?  Is it the best that Ralph Nader can do with the (however
modest) resources he is now using?  I maintain that the answer to all 3 of
these questions is a clear No.  In my view, this kind of ad hoc,
case-by-case prodding could continue for decades without making the
slightest dent in recreating an effective antimonopoly policy in America.

        What, then, COULD Ralph do that would have real potential in that
regard?  Consider his principal resource, his ability to get serious media
attention directed to problems of real national importance.  The key
antitrust problem--the one that lies at the root of the others--is the U.S.
judiciary's systematic indoctrination, since 1976 and continuing to date, in
pseudo-economic theory.

        A small example will illustrate the point.  A bastion of
Chicago-school 'economic' thinking is of course the 7th Circuit appeals
court in Chicago.  On January 21, 1997, it heard an interesting
monopoly/tying case.  (See my Antitrust Law & Economics Review, Vol. 27, No.
3, pp. 97-110.)  The city recently got a new sports stadium (the United
Center)--which replaced the former Chicago Stadium-- and with it a new
policy on snack concessions:  No food of any kind can be brought into the
stadium.  (Security personnel check patrons at the gate and confiscate any
food items.)  A group of licensed peanut vendors who had been essentially
put out of business (previous annual sales of some $500,000 per year) filed
suit in the federal district court in Chicago alleging that the stadium (1)
had a monopoly in the live presentation of NHL hockey and NBA basketball
games in Chicago and (2) used that primary monopoly to monopolize a
secondary market, food concessions in and around the stadium.  

        A 3-judge panel (Coffey, Manion, and Wood) of the 7th Circuit
affirmed the district judge's pretrial dismisal of the case, without
allowing discovery (or trial).  Thornton Elliott et al. v. United Center,
October 3, 1997.  Noting plaintiffs' argument that "the fewer the
[competing] food concessions, the higher the price the United Center can
charge for food its patrons consume, and the more consumers will suffer,"
the 3 judges had an answer:  "But people do not go to the United Center to
buy food; they go to watch a basketball game, a hockey game, or some other
special event.  The United Center can recoup the cost of putting on the
event in any number of ways.  It can charge very high ticket prices, and
allow unlimited numbers of food concessions in and around the stadium, OR it
can charge somewhat LOWER ticket prices and restrict the number of
concessions (thereby earning some of its profits from the food sales)."  

        The latter sentence embodies, of course, the familiar Chicago-school
fixed-sum or one-monopoly-profit economic theory--which holds that tying is
unobjectionable because, no matter how many 'secondary' markets are
captured, the sum of their profits (primary plus secondary) cannot exceed
the maximum profits of the primary (monopoly) market itself.  No additional
profits can be gained by the tying, so the public can't be injured by it.
But is that true?  

        The entire body of U.S. antitrust jurisprudence in 1998 is of
exactly of this sort.  (See my 'Dirty Dozen' U.S. Antitrust Cases, in my Web
site, below.)  

        The judges believe it because it's what they've been taught at all
those 2-week 'economic seminars' in sunny Florida (and are still being
taught there) sponsored by the corporate foundations (Olin, Schaife, et al)
and put on by Henry Manne's pro-monopoly propaganda mill housed at the
George Mason University in Virginia.

        I believe Ralph Nader could stop this pro-monopoly indoctrination of
our U.S. judges if he put his considerable talents to the task.  He could
rally knowledgeable, distinguished antitrust/economic scholars to point out
the errors in what the country's judiciary has been and is being taught.  He
might even be able to persuade the heads of FTC/Justice and the better of
our 50 state attorneys general to speak up against this wholesale delivery
of ex parte pro-monopoly advocacy to the federal bench.  With the focusing
of publicity on it, that judicial propaganda mill would ultimately have to
close up shop, give equal time to economists of opposing views, OR see its
judicial 'students' shamed into abandoning it.      

        By destroying that 'intellectual' underpinning of the judges'
pro-monopoly rulings, Ralph could open up America's courts once again to the
complaints of those 1,500 plaintiffs who were once able to get a fair
hearing before a jury of their peers --rather than before 3 indoctrinated
judges wielding fanciful, ex parte 'economic' theories.  With the
restoration of those PRIVATE antitrust cases--the kind that cost the
monopolists real dollars and thus serve as genuine deterrents to
anticompetitive corporate behavior--the law becomes effectively
SELF-ENFORCING.  Even sidewalk peanut vendors can win their cases before
fair judges who're prepared to honor the 7th amendment and allow unbiased
juries to hear their evidence.  

        Again, Ralph's prodding on selected cases helps.  But it is
essentially an attempt to bail out the ocean with a teaspoon.  He should
aim, instead, for the vulnerable nerve center of the pro-monopoly movement
in America, its Achilles heel--the patently unfair propaganda mill that
keeps our 1,000 judges busy killing antitrust cases before they have a
chance to reach a jury.  That ex parte machine, in my view, couldn't survive
serious public scrutiny.  Allowing an entire branch of our national
government--our 1,000 U.S. judges--to be intellectually bought with a few
million dollars worth of right-wing 'education' at Florida resorts in the
dead of winter is a national disgrace.  And bringing nationwide, systematic
injustice under the floodlight of sharp public examination is Ralph's forte.

        Charles Mueller, Editor
        ANTITRUST LAW & ECONOMICS REVIEW
        http://webpages.metrolink.net/~cmueller

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