 Dr. Armin Tano is professor of economics at the University of Hartford where he has taught since 1976. He has also taught at the University of Connecticut where he received his PhD in economics in 1966 with a dissertation on the political economy of William Graham Sumner. His teaching areas include anti-trust economics and law, government regulation of business, energy economics, money, banking, libertarian political economy, and business and society in the MBA program. Professor Armin Tano is the author of the Myths of Anti-Trust Economic Theory and Legal Cases published by Arlington House in 1972. And his essays have appeared in five other books including William Snavely's Theory of Economic Systems, Yale Brosnan's The Competitive Economy, Louis M. Spadaro's New Directions in Austrian Economics. His articles and reviews have appeared in journals such as the Anti-Trust Law and Economics Review, Human Events, Inquiry, The New York Times, and Business and Society Review. He is also the author of the forthcoming volume The Competitive Economy and Anti-Trust Policy to be published in late 1981 by John Wiley and Sun's publishers. Dr. Armin Tano has lectured widely to business and academic audiences both in the United States and abroad. His lectures include Talks at Harvard, Cornell, Dartmouth, Tufts, Stanford, and UCLA Law School, among others. His talks before business audiences include the Wisconsin Forum and the 73rd Annual Convention of the Midwest Gas Association. In December of 1980, he was the featured speaker at the 22nd Annual Management Seminar Series sponsored by the Rochester Institute of Technology. His organizational affiliations include the advisory boards of the Center for the Defense of Free Enterprise and the Council for a Competitive Economy. He is also on the editorial board of the Journal of Libertarian Studies and Reason Papers. His public affairs program, Byline, is heard on 150 stations across the country twice every month. Professor Armin Tano is the recipient of the 1980 Levy Foundation Award for Excellence in Private Enterprise Education presented by the Freedoms Foundation at Valley Forge. We have asked Dr. Armin Tano to speak to us today in view of his clear understanding of markets, contrasted to the confusion in this land surrounding business concentration. Dr. Armin Tano's address is entitled Competition, Monopoly, and Antitrust. Dr. Thank you very much. When I sent that resume, I didn't think you would read it all. I'm impressed. I'm very happy to be here today. I want to make one correction but this is something certainly the introducer could not have known. I learned something about market power dealing with a publisher and suddenly discovered that the title of my book has been changed. I thought the competitive economy and antitrust policy was a beautiful title. It said it all but the marketing people at Wiley prevailed and the book will now be titled Antitrust and Monopoly, Anatomy of a Policy Failure and it will hopefully be out around January 1st. I'd like to talk about competition theory, monopoly theory, and antitrust policy today and I would think the way to get into this discussion, discussion of the antitrust laws and economic theory, would be to ask can the antitrust laws be reformed. There apparently seems to be a movement in Washington since the Reagan election in the antitrust area and at least from what we read antitrust policy in the future, at least for the next three years, will be more rational than it's been in the past. The Assistant Attorney General of the United States, Mr. Baxter, has said that bigness is not badness. We have a new bright Chicago type FTC chairman. We've got some interesting appointments at the FTC people and some of us know and I think would approve of. And the word that goes out is that efficiency is not evil. Mergers that improve efficiency will not be opposed and that the only concern really of the Justice Department on into the future will be with price fixing. Mr. Baxter has said while bigness is not bad, price fixers are bad and in fact price fixers may go to jail, businessmen may go to jail. But certainly tying agreements, which prior to roughly 1977 were illegal almost per se, will not be opposed as strenuously as they have been in the past. Price discrimination cases, I would not expect many of those to be brought at all. And apparently there will be a new look in mergers and in the monopoly area, which I think would give some of us at least a little reason for optimism. But what I would like to argue here today is that I am not very optimistic at all about this. And let me try to point out some of the reasons why I'm not. While we've been told, for example, that bigness is not badness and that mergers are allowable, I read in the paper Monday that a merger, a proposed merger, contemplated merger between a couple of brewers might in fact restrain competition and the Justice Department wants to look into this. We were told that the Surreal's case, the case that's been ongoing now since 1972 against the so-called ready to eat Surreal's companies, we were told that that case was a ludicrous case and certainly would be done away with. And as some of you may recall, the hearing examiner decided about three weeks ago, the hearing examiner for the Federal Trade Commission decided that it was a nonsense case and recommended that the full FTC drop the case away. But the case has not been dropped away. If you thought the Surreal's case is gone, it's not gone yet. The FTC wants more time to decide whether, in fact, they've invested too much in that case and perhaps they want to proceed with that case. In fact, I've been waiting for the decision in that case because I've got a description of it in my book and I want to say that the Surreal's case no longer exists, but it apparently still does exist. And the FTC will decide November 9th whether they want to accept the hearing examiner's report or overrule it. Also, as I want to argue today, if we believe in the market and you believe in competition, believe it or not, you must also oppose the Federal Trade Commission and the Justice Department's position on price fixing. I want to argue, in fact, that it doesn't make any sense to try to reform the antitrust laws, that what we must do is abolish the antitrust laws, even in the area of price fixing, that a competitive economy doesn't need an anti-monopoly law. It doesn't need an antitrust law. It doesn't need a price discrimination law or Italian contract law or a law that forbids or even restrains or restricts merger activity. And it certainly doesn't need a law against price fixing. And I think there are three ways to argue about any public policy, including antitrust policy. You can argue sort of like a three-legged stool. You can argue from a moral perspective. You can argue from a theoretical perspective and you can argue from a practical or case perspective. And I would hold that antitrust doesn't make any sense on any of those perspectives. Even if antitrust were practical, even if it were theoretically sound, it's not morally acceptable to people who believe in a free society. Individuals have rights, they have property rights, the right to use their own property in ways which they intend, so long as they don't violate the rights of others. Trade is peaceful. And if it is peaceful, it ought not to be interfered with. There ought to be no intervention. Price discrimination is a peaceful act. Merging is a peaceful act. Price fixing is a peaceful act. No one's rights are violated. If you and I agree that we will restrict our production or charge a common price, we don't violate anyone's rights. All we're doing is deciding what we want to do voluntarily with our own property. So whatever else these activities are, price discrimination, tying, monopolizing, if that makes any sense at all, and price fixing, they're not rights violations. So I would argue that the antitrust laws don't have any place, any moral place in a free society, because they inherently violate people's rights to do what they want with their own property. And therefore, we should oppose such laws from a moral perspective. And I urge businessmen to do this too. I don't think it strategically sound as businessmen simply to deal with the practical implications of public policy. It's important to do that. It's important to deal with the practical implications, but not solely with those implications. Because you will always be vulnerable from a moral perspective. And we ought never to be vulnerable from a moral perspective. We have to stick up for rights. And we have to notice rights. And we have to argue that antitrust laws violate rights. So the first objection to any antitrust laws would be that they violate people's rights. People ought to be able to make any agreement they want to, so long as those agreements are peaceful agreements. Now, from a theoretical point of view, I would argue antitrust don't make, doesn't make any sense either. The antitrust movement in America since 1890, I would argue, has been founded on an incorrect theory of monopoly and an incorrect theory of competition. The correct theory of monopoly. In fact, you can almost argue that the, that the antitrust laws don't have anything to do with monopoly. Because monopoly, as I understand it, and as Adam Smith understood it, was government restriction on entry into the market or government restriction of competition. The government is the source of monopoly. The firms protected from competition may in fact be monopolist. They may have monopoly power, but the source of the monopoly power is the state. So if you want to abolish monopoly, if you want to create competition in the market, if you want open competitive markets, then what you must do, said Adam Smith 206 years ago, is remove the restrictions on entry in competition. In fact, even when Smith starts to discuss anti-price fixing laws, because as some of us note, there's a famous phrase in The Wealth of Nations where he talks about businessmen rarely getting together but to hatch a conspiracy against the public. And everybody quotes that. The next two lines of the paragraph, which no one quotes are, even though business, I'm paraphrasing, even though businessmen do this, we ought to make no law against it, he says. And then there's a last great sentence on why we ought to make no law against it. He says, I can't conceive of a law that we could make against price fixing that would be consistent with liberty and justice. Ultimately, he was a libertarian. Ultimately, it was liberty and justice that were far more important than any arguments about efficiency or marginal cost pricing or anything that the economist might bring up to try to defend a law against price fixing or prices or output restrictions. So from a theoretical point of view, if you hold the correct theory of monopoly that the state, in fact, is the source of monopoly power, then the way to get competition in the market is simply remove government intervention. And competition will arise as a natural phenomena. There are tremendous advantages to that point of view. One advantage is you then don't get into the numbers game. You don't have to worry about how many companies there are. You don't get into arbitrary definitions of competition as a lot of small little firms producing homogeneous products. And none of that matters. The only condition then for competition is the markets be open. There could be one firm in the market or a dozen firms in the market. It really depends how many firms consumers choose to support. So the concentration then, all discussions of concentration then become relatively irrelevant. You can have a concentration discussion, but it's irrelevant as to whether there's competition in the market or as to whether the markets are serving consumers. The only relevant question is are there artificial restrictions on entry in competition? If there aren't, then the markets are in fact serving consumers. Competition theory in economics, at least since Alfred Marshall, at least since the late 19th century, has been associated, competition has been associated with small companies producing relatively homogeneous products in markets where information is very good or if not good perfect. Product differentiation has always been singled out. This was particularly true in the Depression and some of the writings of the theoretical economists. Product differentiation has been singled out as always an element of monopoly and monopoly power. Again, the advantage of adopting the alternative theory of monopoly that I gave you is you don't fall into this trap. Product differentiation in fact becomes an element of competition. It becomes a way that firms compete in the market and you're never drawn into making the mistake of associating product differentiation and monopoly power with that view. These theories are wrong in my view. The notion that product differentiation is an element of monopoly or advertising is an element of monopoly. As far as I'm concerned, these are elements of competition. In an open competitive market, firms differentiate their products prior to provide services and warranties and guarantees and other advantages and that's the nature of the competitive process, the open competitive process. So from a theoretical point of view, one could argue and I trust doesn't make any sense either. It holds the wrong theory of monopoly and the theory of competition that has dominated and I trust discussions is an irrelevant theory. There's perfectly competitive market with small companies and homogeneous products. That's not the way firms compete. It's not the way they ought to compete and yet businessmen and markets are chastised by economists and by antitrust lawyers because the real markets don't in fact look like the perfectly competitive model. Now if theory and morality don't convince you about antitrust and why we got to do away with the antitrust laws, I would think reading an antitrust case would do it. I always always challenge my students, always challenge anyone who believes in antitrust to just take the time to sit down and read an antitrust case. Don't read what someone else has written about the case. I mean I was a graduate student and I accepted what my professor told me and we really never read the cases. All we did is read what someone said about the cases and then I came to the University of Hartford and I had to teach an antitrust course and I said well Jesus I better go read the case. I better go read the cases, actually read the cases. I don't want to tell my students things that are incorrect and I discovered that the real world of antitrust was 180 degrees different from what I've been led to believe that if you sit down and read a case you know that antitrust doesn't make any sense at all. You don't have to be theoretical, you don't have to be a moralist, all you have to do is look at the practical facts and you find that outputs are never restricted and prices are hardly ever increased and technology is hardly ever repressed or restrained and competitors are hardly ever put out of the market with predatory practices and if you don't believe those things you just read these monopoly cases where the government alleges that all of this happened and you discover that it didn't happen at all and I'd like to take you through very quickly some of these cases because I think it's important that we understand history. I think it's important that we understand what firms, what large corporations did in an open competitive market. They've been accused of monopolizing. I think it's important that we that we understand that they weren't monopolizing. Now the certainly the most important industry in this respect I would think would be the petroleum industry where the charge of monopoly is always made and of course the charge was made in the 19th century that that industry was monopolized by one company, Standard Oil of New Jersey and that's the reason the government broke the company up in 1911. Well I don't think either one of those things is true. I don't think standard monopolized the market in the 19th century and I don't think that's the reason the government broke them up. If you go back into the 19th century and you look at outputs and prices and numbers of companies and whether there were any restrictions on entry into the market, in my view with my theoretical approach to monopoly and competition of course the markets were competitive because there was very little government intervention in the petroleum industry between 1860 and 1911. There was some intervention. There was some state laws. There were some restrictions but they weren't restrictions on entry. They weren't price controls or price restrictions. There were no to my knowledge tariffs and quotas during this early period. So that from my perspective the markets were certainly competitive but from my colleagues' perspectives were the markets competitive. I.E. did one firm come to have all the market. Did it destroy its competition? Did it raise its price? No. The price of oil fell, price of kerosene for example fell from around 80 cents in the early period roughly 1862 to about 6 cents a gallon. When standard oil was indicted for being an all embracing monopoly price of kerosene was 6 cents which was the lowest it had ever been in the history of the industry. In 1906 when standard was taken to court in St. Louis, Missouri for restricting production and raising price their lawyers presented evidence that in fact outputs had been expanding throughout the entire period and that prices were as low as they'd ever been. In 1906 there were approximately 130 oil companies, oil refiners, not just oil companies, oil refiners in the market. Standard was one of them. Standard oil was a holding company. It was the name of a group of companies, a group of standard companies but if you took the share of the market of all these standard companies it was only roughly 68 percent. There were 130 other companies competing, some of them had very big names, we still know them, Sun Oil was there, Gulf was there, Texaco was there, Pure Oil Company. These are large vertically integrated refining companies that existed prior to the divestiture of the standard oil company. They competed with standard, they made money. The industry was not monopolized by one company, it could not have been and it was not. And therefore the anti-trust suit against standard certainly wasn't a suit against the firm just about ready to gobble up the entire industry. The trends were all the other way. Standard's highest share of the market, if that's relevant, was way back in the 1880s where it was around 85, 86, 87 percent but at the time of the trial it was around 68 percent and declining. And the reason for that of course was that the markets were open to competition and that oil was being found all over the country and that the nature of the end product was changing. We were moving out of the kerosene age into fuel oil and gasoline and no company, even the Rockefeller company is smart enough and able enough to take care of all of those things. Rockefeller put all his eggs in one basket, he watched the basket, he was a penny pincher, he was careful, he was clever, the company made a lot of money but it couldn't monopolize. It couldn't monopolize and did not monopolize. If monopoly makes any sense, again in the neoclassical sense of the term. Remember in my term, with my terminology there's no monopoly anyway because there's no regulation. Even if we had had one company with 100 percent of the market there would have been no monopoly for me because the markets would still have been open to competition. If consumers want to make a monopoly out of any firm I say let them go ahead and do it. If consumers want to buy from one company rather than from a group of companies that's their own business. We as buyers can choose to support any number of companies. If we want to take a chance with one company then fine. The notion of predatory practices is consumers buying the goods they want at lower prices. That's somehow as evil. I've never been able to understand that. My economist friends have been writing articles about this in the journals for the last 10 years. When is predatory pricing evil? When should we allow it? When the prices are below average costs, when they're below marginal costs, when they're below average variable cost. They've been fighting this out for the last 10 years. It's all absurd. Let businessmen charge any prices they want to and if consumers want to take advantage of lower prices for whatever reason let them take advantage of it. And that will change the market structure. Well, then it changes the market structure. So what? What does market structure got to do with competition? Nothing. When I was told I had 30 minutes to do criticism of the antitrust laws, which is 90 years of being antitrust. I knew that it couldn't be done. We can cite cases all day. I was told to leave some time for questions. There are many, many other cases. Let's put it this way. There are many, many other cases that you would want to read. Remember cases never prove anything anyway. I can cite a case. Someone else can cite another case. Don't let cases make decide the issue for you. I would argue do the moral argument, do the theoretical argument, and then do some case work to illustrate some of the points that have been brought out with a theoretical or moral discussion. But just to make a few more points on some other cases, one could do the Alcoa case. Alcoa was accused of being a monopolist, taken to court, lost at the lower court, excuse me, won at the lower court, but the decision was reversed by the circuit court. And there's a famous decision, 1945, Alcoa, where we have a firm that was allegedly alone in the market. There were no other competitors monopolizing and ultimately found guilty in 1945. It's a classic case. Everybody in antitrust does it, the Alcoa case. Now why did Alcoa lose that case? Why did Judge Hand in 1945 find Alcoa guilty? Well, he said Alcoa is a very efficient company. In fact, he goes on and on about Alcoa's efficiency. He said every time an opportunity for profit came around, the Alcoa, the aluminum company of America seized it. Every time demand increased, they were there with more supply to fill that demand. In other words, they responded and reacted to market signals so efficiently that no new business organization would in fact risk entry into the market in competition. And by the way, there were many other companies that were anxious to produce aluminum. Henry Ford thought he wanted to produce aluminum. James B. Duke, the multi-millionaire in tobacco and in electric power, thought he could and certainly could have produced aluminum if he had chose to. But what everyone discovered in a 50-year period, 1887-1937, in which the aluminum company of America dominated the aluminum market, what everyone discovered was that Alcoa was an incredibly efficient company, sold the good at the lowest conceivable price in the market, and took about nine and a half percent on their investment and that no one really wanted to give away their money and try to compete with Alcoa under those circumstances. And the judge admits this. The judge admits all of this in the trial. Judge Hand says all of this that it was efficiency, low price, making supply readily available, et cetera, et cetera. But he was finding the company guilty because, of course, it was a monopoly and being a monopoly violated the law. Now, in one sense, Judge Hand is right. The antitrust laws have never been changed. The Sherman Act has never been changed. It still says every contract or combination in restraint of trade is illegal. It doesn't say every reasonable or every unreasonable contract or combination is illegal. And that had been the standard up until the Alcoa case that if you had acted reasonably, you would not be convicted. So while Judge Hand was a good jurist, I hope some of us would argue he was a bad economist because what he was doing was making efficiency itself a restraint of trade. He was turning antitrust on its head. If antitrust ever made any sense, and I don't think it ever did, it was being turned on its head in the Alcoa case. To be efficient was to restrain competition. To be efficient was to restrain trade. To be efficient was to injure consumers. Now, that's the reverse of the truth. And yet that is what Hand is saying in the 1945 decision. And we've had a lot of decisions since 1945 where very similar things have been said. It was said in United Shoe Machinery. It was said in Brown Shoe. It was said in Vons. It was said in a lot of classic cases, Procter Clorox. A lot of classic cases in the 50s, 60s, and early 70s. That's part of what we've got to purge if the antitrust laws can be reformed, which I don't think is possible. But that would be part of what we would have to purge, the notion that efficiency itself is somehow a restraint of trade or competition. Now, I haven't said anything about price fixing. And maybe rather than try to make a defense of the price fixer, I would leave that to questions if anyone would want to bring that out in the question and answer period. Because I think it takes a little time. And I have 20 after one. And I'm told we have to end at 130. So thank you very much. They're still in court. I believe the case is almost concluded. I believe the defense is almost concluded. I think Baxter might have been asked a question at the press conference. But certainly, they're not going to abandon that case. He's been getting all the questions about the AT&T case. But I don't recall any pronouncements specifically about the IVN case. I'm a business consultant. And over the years, I have found that many businessmen, certainly not all, but many businessmen are lazy, they're inefficient, and they're all for competition as long as it's not in their industry. And consequently, they seek out protection from competition. They seek out protection from new entrants at the state legislatures, in the Congress, and even at the local level where appropriate. It seems to me that the antitrust laws serve as another way to use the state to try and neutralize, to some extent, this natural inclination on the part of many business people. Again, particularly the weaker and less efficient ones who are seeking out the protection of the state. And it would seem to me that that might be a rationale for having antitrust laws, particularly the laws of price fixing, in effect, trying to neutralize the efforts, other efforts within the political process. How do you feel about that? And how do you protect us from the state if you do away with the antitrust laws? I don't think the antitrust laws protect us from the state. Let me phrase it. How do you protect us from businessmen using the state to protect their own interests? I don't think two wrongs ever make a right. So if we don't want businessmen using the state, I mean, their own interests against consumers, and certainly you're right, that is the source of monopoly power for the most part. I mean, track back monopoly power, real monopoly power. You track it back to licensing and certificates of public conveniences and franchises and restrictions on so-called international trade. And that tracks back, usually, the pressure on the part of business organizations, usually trade associations, for favors and privileges. And that's the source of monopoly power. And that's what we would have to deal with. Now, you can talk about a demand for favors and privileges or a demand for monopoly power and a supply of that power. And you're either going to have to deal with the demand side or the supply side. I would choose to deal with the supply side of that. Dry up the supply. Make it impossible. Make it illegal. Make it unconstitutional. To, in fact, offer a tariff or a subsidy or a license to anyone, ever. I believe what Williams and other people have drafted a constitutional clause, very neat, clear little clause that says no government or no state or no Congress can ever interfere with people's rights to carry out exchanges. That'll do it. Because every one of these rules interferes with voluntary exchange. And I ought to have the right to carry out any exchange, no matter where that person lives, no matter what color they are, no matter what currency is being used. And every time there's an interference with that, that's monopoly. Although I did, at one point in my career, dabble with the idea that since we've got these evil things out there, these monopolies, and we've got the antitrust department and the Federal Trade Commission, if we could sick them on the government monopolist, if we could somehow turn antitrust in the Federal Trade Commission around to prosecute monopoly, then that would be a useful thing in terms of the consumer's interest. And when Jim Liebler was at the Federal Trade Commission, I'm told, this is what Jim said in motion, the idea that the FTC would not go after price discriminators that were, in fact, enhancing the competitive process, but go after the licensing boards and this kind of thing. Something to be said for that, but something to be said for that in an imperfect world. Yet I'm not supporting it, and I will not support it before this group, certainly. That's an incredibly, A, I think it's an immoral, fundamentally an immoral position for me to take, and A, it's an incredibly dangerous position from a practical point of view. The right people are in only for a very short period of time, then the wrong people are in and the damn FTC is still there, ready to prosecute competition again. So I don't accept that position. If we really want competitive markets, we have to move against licensing and restrictions on voluntary trade and we have to get rid of the antitrust laws because the antitrust laws restrain competition. They don't restrain monopoly. They never restrain monopoly. They don't have anything to do with monopoly. They restrain competition. All the cases are competitive firms. Some of them are big, but they're all competitive firms. Would you care to cover the international reach and the trust as the practical aspect of the question? No, I would not. I'm against all the antitrust. So to the extent that it has any effect on international trade and companies that are foreign companies, I would still move against the laws. I don't wish to make any other statement other than that, I think. In other words, I don't want to talk about foreign antitrust law and things like that. That's much too complicated. All right. You mentioned property rights and most libertarians don't leave. No, I didn't mention copyrights. You did not mention patents and franchises and certificates of public convenience. Let's talk about individual rights. Would you go as far as many libertarians do and argue that when there's a breach of a price-fixing or production allocation contract that this would not be arguable in a court of law? Well, there's a couple of positions you can take on this. You can make all the agreements you let go, which is what we do. Or you can say the agreements are not illegal, but not enforceable, which is what I understand is the most frequent position in some of the Chicago schools in the position that maybe we don't even need a law against price-fixing, but we wouldn't allow the agreements to be enforceable in court. But I don't accept that either. It seems to me the agreements ought to be enforceable in a court. But what we mean by enforceable would be the debate. And as I've explained many times at different groups, what we are arguing is this. If you and I have signed a contract and if we've inserted a clause in the contract which says that I will forfeit a bond of $500 to you, should I breach the contract, that's the enforceable part of the contract, that's the enforceable part. In other words, the court cannot say just because you and I said we're going to charge a dollar for our light bulbs, that in fact we must charge a dollar for our light bulbs. In other words, I'm adopting what's called the title transfer theory of property rights. And under title transfer, it's theft unless that $500 goes over to you. And that's the part of the contract the courts would enforce. But it's not theft, although it is a breach of contract, not theft simply for me to decide that I want to charge $0.50 now instead of a dollar. And the court could not force me to charge the dollar. No. No. A case such as exist in California with the Sunfish growers, agricultural cooperative, enforcing their rules that only a certain portion of a crop can come to the market when it's enforced by the California Department of Agriculture. How do you handle a situation like that? I don't want a Department of Agriculture to tell you that. I don't want any marketing rules. If the rules are set by the association, I don't have any problem. But if the association's rules are enforced by the state, or if in fact they're the state's rules, which is what usually happens, then I'm against that. Is there a problem that exists now? How do we address it? Well, that's a strategic question. You and I could have a very long discussion on what's the most efficient way to go about trying to get rid of such rules. Whether we work intellectually, whether we bring legal suits under the first... I don't know, frankly. And I don't think anyone in this room knows. Everyone pretends to know, but no one knows what's the proper strategy, most efficient strategy. I don't know. I've chosen to go lecture and write. And ultimately someone else will move against the state and get rid of these damn rules. You know, we've got to think historically. We must not despair. Almost every rule in regulation that's ever been created, almost every price control, for example, that's ever been put on, has been taken off historically. We do make progress in, I think, at least, looking back. So I would not despair about the Department of Agriculture in any state. Hopefully if we do our homework, we can move against such regulations and get rid of them, ultimately. Do you favor the continuation of the patent trade market copyright system that we have in this country? I don't favor the continuation of the patent system and I'm against the Patent Restoration Act, which is currently in the Congress, which would extend the life of the patent. Because the effect of life of patent isn't 17 years, say, it says in the industry, it's roughly about 10 years. So there's a bill in Congress right now that would in fact make it a full 17 years by not granting the patent until in fact it came to the market with the product. Okay, and I'm against that because I think the whole idea of patenting is wrong. No, I think trade marks and copyrights are appropriate. I think it's appropriate in the private market system that you protect private property rights, but I think it's also important that you not restrict and restrain competition and someone else's right to market or sell something in the market, and that's what the patent does. To the extent that the patent goes beyond the copyright, I'm against it. Now, some people would argue the patent and the copyright coexist. I mean, one is not greater than the other, but I think it is. I think a patent does prevent a second, third or fourth independent discoverer from in fact marketing and selling a good in the market, whereas a copyright does not. So to the extent that the patent doesn't appear with my rights, let's say I'm the second discoverer of something, independently discovered some drug which I now want to bring to the market and sell, to the extent that the patent forbids me from doing that, makes it illegal for me to do that. I say it's wrong. A copyright system would not do that. I would be able to copyright as a second discoverer and the burden of proof would be on the first discoverer to in fact prove that I'd stolen the discovery. And if I hadn't stolen the discovery, it seems to me I have a perfect right to sell it. Now, please don't, well, please don't. Maybe privately we can talk about the practical problems associated with such systems, but there are practical problems with copyrights, period. I mean, we've had practical problems with copyrights for a very long time, but I think that would be my position. No patents, trademarks, sure, why not? I own my name, I don't have a problem with that. I think people that own and have a property right to signs and names, I don't see that as a violation of anyone else's rights. And certainly copywriting books and photographs and works of art and things like that seem to me to make a lot of sense. The way it is, it creates itself as an obstacle in the course of competition to make available a product or service in the market. Just accepting the concept of organizing to compete against the monopoly, circumvent the obstacles, that certainly must be the answer that we have to seek between the producer and the consumer of the product or service. A partnership of that kind certainly can't be obstructed. And you don't have to spend the money and support the lawyers who go to court to defend you or protect you against an anti-monopoly using the courts due and the laws that are subversive. And I think what we're really talking about is a matter of business and work ethic. And if your trade associations that we have are individually. If we don't have a business and work ethic in our relationship, the consumers are gonna buy the product or service anything, you're either gonna be the king or the victim of the market and he'll decide. I agree, I think markets are inherently competitive. And I think you're right if there is a, what you're calling a monopolist in the market and the monopolist is in fact, not providing good service than someone else will. By the way, I don't think there's anything more competitive than a firm trying to become a monopolist. They're great danger of having laws against monopolists. We don't have a law against monopoly in America. We have a law against monopolizing, that's the problem. You could argue that's the problem. Sherman Act doesn't make monopoly illegal, it makes monopolizing illegal. In fact there was a great debate on the floor of the Senate when the Sherman Act was passed about whether they were making monopoly illegal or whether they were making monopolizing illegal and in fact they were making monopolizing illegal. Now nothing could be in fact more competitive than attempting to monopolize a market. That's why the antitrust, you could argue that's why the antitrust laws have been used so perversely. Because nothing could be more competitive than trying to monopolize a market. So we've been using the laws against firms that have been the most competitive firms in the sense that they've been trying to monopolize markets which is a very competitive process. And I would not want to interfere with that process. But you're right too, I mean you could have a firm that was suddenly lazy, inefficient, but that firm would lose market share. You see, there are no cases against firms like that. There are very few cases against, we never prosecute large, inefficient companies that are repressing technological change because they lose market share and therefore are not of interest to the Justice Department. They're always bringing the cases against the good firms. Why bring a case against the failing firm or a bankrupt firm or a firm that's losing market share? That's the nonsense of antitrust from a case point of view, Joe. A historical question, was the Sherman Act passed because of a improper economic theory or was there a hidden agenda? Well, Jerry O'Driscoll at NYU hopefully will do the definitive piece of research on whether there was a hidden agenda. What he seems to be saying in a preliminary article that I read was that the Congress had just gotten through passing some good high tariff laws and everyone knew the tariff was monopoly. And to cover their butt, to in fact fool the public as to their real intention, what they had to do is pass a real paper tiger kind of antitrust law to really pretend that they were really against monopoly. Well, at the same time, in fact, the Republicans had just gotten through passing some of the highest tariffs bills that had gone through and the big debates in the 1880s over monopoly was about the tariff. There'd always been about the tariff. Everyone knew tariffs created monopolies. So you went and passed the Sherman Act just to try to ameliorate that kind of difficulty. There's also other hidden agendas too. Senator Sherman himself seems to have had his own little hidden agenda. He wasn't the pro-consumer advocate that some of the history books pretend. He had apparently presidential ambitions and wanted to get his name on a big bill. Also, by the way, in the bill itself, when it was written, it had a provision explicitly that said you want to make illegal business acts that raise the cost to the consumer, the expression raise the cost to the consumer was actually in the bill and that was taken out when it was passed. So if you thought it was a pro-consumer type of bill, at least the original draft indicated that it might have been, but what happened to that? And why didn't the Congress, when it saw that it had passed the bill without that provision in it? Why didn't the Congress revise the Sherman Act? Because everyone pretends that the antitrust laws are pro-consumer laws, and yet they're not. They've never been used. I don't think they should be pro-consumer or anti-consumer, but they've never been used in a so-called pro-consumer way. Why they took the price out of the rate and the cost of the consumers, what you said about the tariff, the tariff obviously raised the cost of everything they did to the consumer. No, apparently it was taken out because of a constitutional problem. Senator Horror, who took the bill through the Senate, felt there was a constitutional problem with explicitly saying, having that language in the law, so it was taken out for that reason, that he didn't think it would have survived a constitutional test. That's my understanding. You know, we had a speaker yesterday who mentioned the importance of ideas and language, and I think this is a good example of the idea of stealing words like fair profit, particularly the case of this really imperfectly competitive market model that all the students are taught. Now you can say, well, yeah, it really is not always not a perfect model. That's not even a desirable model. You really wouldn't want no innovation. It seems that somehow or other that's gotta get described differently to the students that learn it because they come out and say, if it doesn't look like this model, obviously it's less than perfect. And how do you go about doing that? Well, progress is being made, Herschel, on that. The professors who still teach the courses, I think most of them are wrapped up in the model, but the students who are now reading some of the new books that are coming out. For example, we use Gordhanian Stroop at the University of Hartford and the Gordhanian Stroop principal's text has an excellent micro-section where they say very clearly that perfect competition or pure competition is not what competition's about and they stress over and over again the process notion. And in fact, when they get to innovation and product differentiation and things like that, they say this is what competition is and it doesn't spoil competition. They say it very clearly and I think you will see this more and more in the principal's books as time goes on, but it takes a long time to get rid of a bad idea. And that's a very bad idea, an incredibly bad idea. Chicago school people, by the way, still cling to it. That's one problem I have with some of them. They still cling to that perfect competitive model. The Bork book is filled with it and yet after he finishes his model, perfect competition model work, he says, well, now we can pretty much ignore it and forget it and yet it's in the book and he pretends in fact that it is meaningful and then he suddenly tells you to forget it. So I don't know what the Chicago people are gonna do with this model. I would hope they would join us, us Austrians and Libertarians and say that the whole model, the perfectly competitive model is totally worthless and we should throw it out. Thank you very much.