In a recent speech to businessmen at a technology industry conference, Senator Orrin Hatch (R-UT), a long-time proponent of breaking up Microsoft, stated that he supported “strict enforcement of antitrust laws” because they are “essential to the health of the economy and to healthy competition in the [technology] industry”. [Wired News, June 7, 2000] While these claims are demonstrably false, what is most chilling about his speech is that he subjected the audience of businessmen to a blatant extortionist threat that reveals the essence of antitrust laws: they are tools for power lusting politicians to run protection rackets against businessmen.
Have antitrust laws been essential to the health of the economy, as Senator Hatch claims? The antitrust case against Microsoft has annihilated one hundred billion dollars of its stockholder’s investments. NASDAQ began its dramatic decline immediately following the announcement, taking with it one trillion dollars’ worth of people’s retirement and savings accounts, and drying up much of the venture capital that has been driving the past decade’s economic growth.
In the long term, if Microsoft is split up, the trend toward increased ease of use in computers, brought by an integrated operating system, browser, and other applications, will be prohibited. Rates of innovation, made possible by Microsoft’s enormous R&D budget, will be slowed. The trend toward cheaper software, because of the economies of scale that Microsoft provides, will be disrupted.
Note that for over two decades the computer industry has been virtually unregulated and the freest from government intervention. It has produced literally tens of thousands of new companies, thousands of millionaires, dozens of billionaires, and significant wealth for tens of millions of other people. This unprecedented economic boom took occurred in large part because there was no government intervention, and no antitrust action taken, in the computer industry.
Is Senator Hatch correct to say that antitrust laws have been essential to competition? No industry even comes close to the amount and rate of innovations, which is proof of an abundance of competition. Indeed, industry giant IBM (who was harassed by the Justice Department for years) nearly fell several years ago because it was not keeping up with the competitive nature of the industry. This industry has been the most competitive-without antitrust action.
The most damaging result of a Microsoft break-up will be the incitement of fear and reservation among the most successful businessmen in the computer industry. They will no longer enjoy their exceptional freedom. Instead of focusing their minds on developing better products and creating wealth for their shareholders, these businessmen will have a great distraction. As businessmen in other less innovative industries, they too will have to be obsessed with ingratiating themselves with politicians and testing the political wind for every major decision they make in order avoid becoming an antitrust target. How is it “healthy competition” in an atmosphere where businesses succeed and fail, based not on their strength in market-share but in strength in lobbying politicians?
In what can only be construed as a threat, Hatch said to the businessmen, “antitrust law is both the least restrictive and most attractive alternative to heavy-handed legislation”. He advised them: “If you want to get involved in business, you should get involved in politics. But if you want to get involved in politics, you must get involved in business”.
How do businessmen “get involved in politics”? They contribute money to campaigns and buy “favors” – just as those anti-Microsoft companies from Utah did.
How does a politician “get involved in business”? He can give advice to businesses, for one thing. The Senator said he gave “advice” to Microsoft, but “they don’t pay any attention to it”. Which leads to another way a politician can get involved in business: he can distinguish who takes his “advice” and who doesn’t. He can also, of course, distinguish how some companies get “involved in politics” in a way that adds to his political power, from those who don’t. He can push for antitrust laws against Microsoft and protect those who have curried his favor – and have made him more powerful.
The Senator’s message to businessmen is: you had better respect and support me, listen to me when I tell you what to do, or else I’ll get you like we got Microsoft. And if you balk at how we are taking down Microsoft with antitrust laws, we can pass laws that will hurt you all.
This is a blatant protection racket with the government’s might behind it. The mafia protection racket works by telling businessmen they need “protection”, and that they had better listen to “advice”, and then they destroy the first business whose owner stands up for his rights and says “get lost”. Another tactic is to take down the biggest of the bunch in order to send a clear message that no business is safe. At least to Senator Hatch, Microsoft said “get lost” and they clearly are the biggest of the bunch.
Senator Hatch eloquently demonstrates how antitrust laws are nothing more than a tool for power lusters like him, in the same way that firebombs are tools for the mafia. Antitrust laws terrorize businessmen into kow-towing to the politicians and contributing to their campaign funds and, more importantly, ingratiating them with the sense of power that they crave. The only “healthy competition” that antitrust laws inspire is competition among businessmen to be protected – at the expense of other businessmen — from power lusters like Hatch.
For two decades the technology industry was exceptionally free from regulation, and it provided tremendous wealth to our economy. It is the most competitive industry there is. The antitrust case against Microsoft is an assault on the industry, it has annihilated tremendous wealth, and it has crippled its rate of growth and innovations. The industry, its businessmen, employees, investors, and customers, are all victims. The only winners are power lusters like Senator Hatch and, for the time being, the businessmen in his protection racket.