Wednesday, December 08, 2004

Broken windows and antitrust 

John Palmer has a funny line about antitrust:

Anti-trust in 2 Easy Lessons

  1. You must compete.
  2. You must not win.
He links to this article at Cattalarchy, in which a former WalMart manager exposes that WalMart engages in the heinous practice of matching a competitor's low prices. Basta!

Of course it's a case of what is seen and what is not seen. What is seen is that the local store suffers lower profits, and engages in behavior to demonize competition. What is not seen is the additional goods and services consumers get from receiving goods at lower prices. In the same vein, Craig Westover writes today on the broken window fallacy in public spending.

When a public project creates a benefit that people would willingly pay for even if they were not taxed, there is overall value to society. But when the only justification for a project is "creating jobs" or some vague notion of "economic development," then subsidies result in a net loss to society. Gains subsidized by government spending are always at the expense of others' losses.

Without apology, legitimate functions of government � prisons and public defenders among them � necessarily should be fully funded in the next session of the Legislature. "Job creation" and "economic development" without necessity should not.

Intriguingly, in the Catallarchy article, the presence of government in giving tax breaks to WalMart is the reason someone gives for forcing WalMart to charge higher prices.