Crushing Economic Liberty to Protect Status Quo

About a year ago, I reported on CD about the Institute for Justice’s legal challenge of the anti-competitive protectionism in Nashville that was being practiced by the city’s high-end limousine cartel, with help from their government enablers, against competition from lower-cost entrepreneurs.

George Will writes in today’s Washington Post about the Nashville limo cartel, which he describes as the “collusion between entrenched businesses and compliant government.”

This is good time to invoke the spirit of French economist Bastiat, who wrote these words in a letter four days before his death in 1850:

“Treat all economic questions from the viewpoint of the consumer, for the interests of the consumer are the interests of the human race.”

Given a choice between siding with the disorganized, dispersed consumers/human race and the concentrated, well-organized special-interest of the producers, the politicians will crush economic liberty to protect the incumbent producers almost every time, and the city officials in Nashville are no exception. Sadly, the human race suffers.

Interestingly, in the Nashville case the government supported the price-fixing behavior of the limo cartel, which pressured city regulators to set prices at a $45 minimum charge for any ride. The intention of the price-fixing was obviously to squash competition from the cut-rate newcomers, who were charging only $25 to take customers to the Nashville airport. But in another recent case, the government just sentenced auto executive Norihiro Imai to one-year in jail, and imposed more than $550 million in fines on several auto suppliers, for fixing prices on automotive heater control panels.

So in some cases the government enables incumbent producers like limousine companies to fix prices and in other cases it fines and sends auto suppliers to jail for price-fixing? Welcome to the wacky world of government anti-trust.

About Mark J. Perry 262 Articles

Affiliation: University of Michigan

Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.

He holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University in Washington, D.C. and an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota.

Since 1997, Professor Perry has been a member of the Board of Scholars for the Mackinac Center for Public Policy, a nonpartisan research and public policy institute in Michigan.

Visit: Carpe Diem

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