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Antitrust Bill of Rights

          The following was sent to me as a private communication and I am
  accordingly omitting the name of the author--whom I knew during my years at
  the FTC.  He makes a good point:  "I would say to Charles Mueller:  It's not
  economic theory that is bad, it is bad economic theory that is bad."  Quite
  so.  But it doesn't address my central point, namely, that it is "virtually
  impossible for a country to have a meaningful antimonopoly policy that
  depends on the support of expert economic opinion."   A version of Gresham's
  law operates here with ferocious thoroughness:  In the antitrust courtroom,
  bad economic theory routinely drives out the good--as is evidenced by the
  collapse of antitrust enforcement in the U.S. once "economic theory" became
  the litmus test of legality.  
          With the flood of monopoly money available to those who espoused
  "bad economic theory," their numbers ballooned dramatically.  Those
  advocating "good" theory saw their ranks shrink accordingly--and even their
  empirical research hit the skids as well.  Today, the U.S. judiciary
  believes that sound economics and Chicago (pro-monopoly) theory are
  synonymous.  Have U.S. economists made any kind of collective effort to
  convince it otherwise?  So far as I have been able to determine, zero, zilch.
          Suppose, for example, that Ralph Nader should issue a call for a
  conference of leading antitrust economists for that purpose--to enlighten
  the U.S. judiciary (and FTC/Justice, plus Congress and the American public)
  on the distinction between "good" and "bad" economic theory in antitrust.
  How many supporters of the former--of serious antitrust enforcement--would
  show up?   
          No nation's economists--confronted with the lure of monopoly
  money--will make the financial sacrifice (in foregone "consulting" fees)
  necessary to support a meaningful national antimonopoly policy.  
          Economic theory is unworkable as an antitrust standard.  
          Charles Mueller, Editor
  Mase, Gunnar Myrdal once said: "It's the facts that are all theory!" In
  testifying as an "expert" witness in a number of cases, I viewed my job
  as interpreting "facts" found mostly in internal company documents put
  into evidence by the discovery process. Market definition was the
  crucial question in a number of those cases. George Stigler (or other
  economists using the Chicago School framework) found different facts to
  be relevant than those I found. The difference wasn't just a matter of
  who hired the gun. We were working from different theoretical concepts
  of the market. The difference is evident on page 271 of the book,
  MANAGERIAL ECONOMICS, that I wrote with Irv Grossack. Irv's first draft
  of the chapter expounded the conventional view that: "Perhaps the best
  test of whether products, buyers, and sellers are in the same market or
  in different narrow markets is based on the cross elasticity of demand."
  I insisted on putting in the "perhaps" and adding another paragraph in
  which I discussed the effect of monopolization on the cross elasticity
  of demand and referring to William Howard Taft's brilliant insight in
  Addyston Pipe and Steel in his lower court opinion in 1898. If a
  monopolist succeeds in raising his price in a market (for example,
  aluminum) he will get competition from, say, copper.  So he has
  competition. That doesn't mean he has not monopolized.
  In one case in which I testified on the market definition question, the
  defendant's attorneys brought forth a xerox copy of that page from the
  book and read to me Grossack's paragraph and asked whether I recognized
  it.  I said yes, and related the facts described above. The book was not
  in evidence, or even available at the trial so the judge ordered a break
  for lunch and required the defendant's attorneys to give the copy to the
  plaintiffs attorneys to look at over lunch. We found written in the
  margin by Grossack's paragraph: "good". In the margin by my paragraph
  was written: "not so good." After lunch that went into the record!
  I would say to Charles Mueller: it's not economic theory that is bad, it
  is bad economic theory that is bad. As Mueller recognizes, the biggest
  problem has been the indoctrination of many, if not most, of our federal
  judges with the Chicago doctrine that holds that monopoly doesn't exist
  except from government actions.