Monday, July 14, 2008

Professor Don Boudreaux's WSJ Letter -- Relearning Lessons From 118 Years Ago

A week or so ago, I made the point, that over the last 50 years, Exxon has probably saved consumers more money than any other firm. Wal-Mart probably wins this race for the past 25 years. At the time I wrote, I had never heard of Congressman William Mason, cited in the letter posted below. Don Boudreaux's letter in today's WSJ shows the extremes of democratic tyranny. It is the human condition that permits us to vote our pocketbooks over our principles. In the 1890's a coalition of small businesses, media and politicians turned the tables upside down and broke up the most efficient large businesses in the name of lowering prices. Of course, the most efficient of large businesses are able to offer the lowest prices. As history shows, politicians sometimes win by attacking a problem with an upside down solution. Today, politicians fight oil drilling in the name of the environment while allowing millions of tons of toxic fumes to spew from coal fired smokestacks.

I am not the first to declare that I do not enjoy fighting my way though a Wal-Mart, but the reason the crowds are there is because the prices are very low. Wal-Mart provides more pay, more social security, and more health care than any other company on the earth. Union organizers, small retailers and all the time lefties continue to attack Wal-Mart. Environmentalist continue to attack "obscene" Exxon profits. History may not repeat but it definitely rhymes. Below is the letter by Professor Boudreaux.

July 14, 2008

Domestic Protectionism

Don Boudreaux

This letter of mine appears in today's edition of the Wall Street Journal:

Edwin Rockefeller accurately describes antitrust proceedings as "the debris of past political demagoguery" (Letters, July 10). Research shows that the 1890 Sherman Antitrust Act was not sparked by fears of high, monopoly prices: Real prices charged by the so-called trusts fell steadily during the decade leading up to the passage of that statute. Instead, that first national antitrust statute was the result of hostility to the low prices charged by the innovative entrepreneurs who pioneered the use of new technologies that, for the first time, enabled individual firms to serve a transcontinental market.

Populist hostility to the efficiency of firms such as Standard Oil filled congressional debate over the act. Congressman William Mason (R., Ill.), for example, thundered on June 20, 1890, that "Trusts have made products cheaper, have reduced prices; but if the price of oil, for instance, were reduced to one cent a barrel, it would not right the wrong done to the people of this country by the 'trusts' which have destroyed legitimate competition and driven honest men from legitimate business enterprises."

Donald J. Boudreaux

The pioneering piece of research to consult here is Thomas J. DiLorenzo, "The Origins of Antitrust: An Interest-Group Perspective," International Review of Law and Economics (June 1985).