The Origins of Antitrust: Rhetoric vs. Reality
![handle is hein.journals/rcatorbg13 and id is 28 raw text is: The Origins of
Antitrust
Rhetoric vs. Reality
Thomas J. DiLorenzo
Today regulation is generally recognized as
a mechanism by which special interests
lobby the government to create barriers to
entry or other special privileges. Research has
shown, for example, that the Civil Aeronautics
Board cartelized the airline industry, the Inter-
state Commerce Commission helped monopolize
the railroad and trucking industries, the Federal
Deposit Insurance Corporation sharply limited
entry into the banking business, and occupa-
tional licensing created entry barriers into hun-
dreds of occupations. Much of the history of reg-
ulation chronicles monopoly privileges procured
through the auspices of the state, as Adam Smith
pointed out more than 200 years ago in The
Wealth of Nations.
Oddly, antitrust regulation is still widely
viewed as government's benevolent response to
the failures and imperfections of the mar-
ketplace. Even economists who are usually skep-
tical of regulations enacted in the name of the
public interest seem to lose their perspective
when it comes to antitrust. George Stigler, for
example, has stated: So far as I can tell, [the
Sherman Act] is a public-interest law . . . in the
same sense in which I think having private prop-
Thomas J. DiLorenzo holds the Probasco Chair for
Free Enterprise at the University of Tennessee,
Chattanooga.
26 REGULATION, FALL 1990
erty, enforcement of contracts, and suppression
of crime are public-interest phenomena. . . . I
like the Sherman Act.
A 1984 survey of professional economists re-
vealed that 83 percent of the respondents be-
lieved that antitrust laws should be used vigor-
ously to reduce monopoly power from its current
level. This opinion is widespread despite com-
mon knowledge among antitrust scholars that in
practice the antitrust laws restrain output and
the growth of productivity, have contributed to a
deterioration of the competitive position of U.S.
industry, and are routinely used to subvert com-
petition.
Why then do the antitrust laws continue to
command such powerful support among econo-
mists and legal scholars when the pervasive fail-
ures are so well known? There are several possi-
ble explanations. Antitrust consultants and ex-
pert witnesses often stand to make a good deal of
money, so financial self-interest may preclude
criticism of antitrust. Many economists are also
unable to voice informed opinions on antitrust.
If it is not their area of expertise, they may not
have kept up with research over the past thirty
years, or excessive concentration on mathemat-
ical models may have left some economists
somewhat detached from economic reality. Fi-
nally, it is widely believed that there was once a
golden age of antitrust during which the pub-
lic was protected from rapacious monopolists by](ViewImageLocal?handle=hein.journals/rcatorbg13&div=6&collection=&method=preview&ext=.png&size=3)
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The Origins of Antitrust: Rhetoric vs. Reality
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