Seeking more active application of antitrust regulations, Steven Pearlstein wants the Supreme Court to reject “the view of Chicago school economists” – a view in which, according to Mr. Pearlstein, “monopolies are actually good for consumers because they attract the money and talent necessary for innovation” (“Can Obama Bring Back the Trust Busters?” May 17).
Mr. Pearlstein seriously misunderstands Chicago-school economics. Those economists do not believe that “monopolies are actually good for consumers.” Quite the contrary. What the researches of these economists do reveal, instead, is this: First, competition is so robust that it is seldom, if ever, squelched by firms who do not enjoy special government privileges; second, being big and/or extra-efficient does not make a firm a monopolist; and third, antitrust statutes themselves have often been used to restrain competition.
It’s disappointing that Mr. Pearlstein’s understanding of both Chicago-school economics and of antitrust is so superficial.
Donald J. Boudreaux