America’s Last Free Market Under Threat

Amid all the public scrutiny and government regulation that befell American industry throughout the past decades, one sector notably remained relatively untouched by the state. That very sector, at the same time, expanded enormously and revolutionized business and private lives alike at prices that continue to decline up to this very day. But even ICT is no longer safe in today’s supposedly free market.

Nearly all people in the United States can have access to computer and information technologies today, usually at low prices and oftentimes, in the case of software at least, even for free. The sector at large employs hundreds of thousands of people with companies as Apple, Google, Hewlett-Packard, IBM, Intel and Microsoft ranking among the largest in the world while representing the pride of America’s twenty-first century economy. This would be one of the finest success stories of modern capitalism if it weren’t for an American government that has grown convinced that big business is necessarily bad; that the larger the company, the greater the danger it poses to the public interest; that no corporation making tens of billions of dollars in profits can ever be one of benefit to “society.”

So, in April, the Justice Department stepped up its investigation into the hiring practices at some of these companies, alleging that they would have agreed not to recruit each other’s employees. The investigation is pushing the boundaries of antitrust law because, if proven, no prices were fixed, rather the companies involved may have been holding down labor costs; something antitrust legislation doesn’t specifically address. According to The Wall Street Journal, the industry makes the case that it would be harder to enter into collaborative ventures with other companies if they fear losing valuable employees.

Also focus of antitrust enforcement is Internet giant Google. Supposedly, the search engine wields too much “market power,” denying competitors an equal chance at success. The New York Times reports that the way Google displays its search results may be soon be considered unfair. According to Silicon Valley lawyer Gary Reback who, in the 1990s, almost singlehandedly brought the antitrust weight of the federal government down on that era’s high tech heavyweight, Microsoft, Google is the “arbiter of every single thing on the Web, and it favors its properties over everyone else’s.” Reback suspects that what Google wants to do, “is control Internet traffic. Anything that undermines its ability to do that is threatening.”

What Reback and antitrust enforcers conveniently neglect to consider is just how Google has been able to “control Internet traffic” in recent years — not because it employs any uncanny schemes that push competitors off the market. Google is only successful by the grace of its users. The company enjoys a predominant position among search engines and web applications not because it’s a bad one, but precisely because it provides superior service and does so for free.

Of course, this is exactly why Google is guilty. According to the intermingling maze that is antitrust legislation, every company is criminal from the moment it tries to improve its services or products. When it charges “too much,” it has an “intent to monopolize” whereas prices regarded as “too low” can be cause for prosecution for “unfair competition” and the “restraint of trade” which is, in fact, the only, remotely objective standard that antitrust law provides. Lastly, if a company maintains prices that are exactly the same as its competitors’, it may well be guilty of “conspiracy.”

That insane laws as these represent the greatest injustice ever perpetrated against private business in the United States may be evident from the Judge Billings Learned Hand’s (1872-1961) ruling in the case United States v. Aluminum Company of America of 1945. In his opinion for the US Court of Appeals for the Second Circuit, Judge Hand noted:

It was not inevitable that [ALCOA] should always anticipate increases in the demand for ingot and be prepared to supply them. Nothing compelled it to keep doubling and redoubling its capacity before others entered the field. It insists that it never excluded competitors; but we can think of no more effective exclusion than progressively to embrace each new opportunity as it opened, and to face every newcomer with new capacity already geared into a great organization, having the advantage of experience, trade connections and the elite of personnel.

Read that last part carefully and the full meaning of antitrust law becomes perfectly clear: to punish successful companies — for being successful.

No wonder that Cass Sunstein, President Barack Obama’s regulatory czar, is hard at work pressing down on the last bastallion of free-market economics currency prospering virtually unrestrained: the Internet itself. In the interventionist mindset, this is just a place waiting to be pillaged by the instatiable greed of corporations. What the Internet needs, according to Sunstein, is a Fairness Doctrine.

Writing for Reason magazine, David Harsanyi quotes Sunstein as advocating for government to insist that all websites offer opposing viewpoints. “This was necessary,” notes Harsanyi, “because, as hundreds of millions of Internet users can attest, ferreting out competing perspectives online is all but impossible.” A Google search for “Cass Sunstein” for instance barely generated 303,000 results in 0.19 seconds.

And what if websites refused to acquiesce to this intrusion on free speech? “If we could get voluntary arrangements in that direction, it would be great,” Sunstein said at the time, “and if we can’t get voluntary arrangements, maybe Congress should hold hearings about mandates.” After all, Sunstein went on to say, “the word ‘voluntary’ is a little complicated. And sometimes people don’t do what’s best for our society.” Mandates, he said, were the “ultimate weapon designed to encourage people to do better.”

In fact, there is nothing complicated about “voluntary” arrangements at all. Complicated are mandates and incentives provided by government to try to encourage its citizens to “do better”, or, “what’s best for society.” Who’s to decide what’s “best for society”? Surely, Mr Sunstein will have a ready answer to that question.

One wonders what’s the need for regulation of the Internet. Or indeed, what’s the need for regulation of ICT altogether, considering how much the self-declared protectionists of the consumer ought to appreciate the quality service and opportunities offered by technology companies throughout the United States in recent years. It is no coincidence that the once sector that hasn’t yet been touched by pervasive government rules and restraints is the very sector that has grown most impressively the last twenty years.

But there is more at stake than the freedom of enterprise in this instance. Any regulation of the Internet borders by default on limiting the freedoms of speech and association. The Web represents the most vibrant sharing of ideas ever devised. It provides a platform to every opinion and every point of view. Why strike down on this? To protect the innocent consumer? Against what exactly? And why, for that matter, prosecute America’s most successful companies — for providing excellent service to consumers across America and around the world?

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