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Political Philosophy, Competition, and Competition Law, Part 1: The Road to and from Neoliberalism

The interplay among political philosophy, competition, and competition law remains, with some notable exceptions, understudied in the literature. Indeed,…

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“Edinburgh, Great Britain – July 7, 2010: Statue of Adam Smith in Edinburgh in front of St. Giles Cathedral at Parliament Square.”

The interplay among political philosophy, competition, and competition law remains, with some notable exceptions, understudied in the literature. Indeed, while examinations of the intersection between economics and competition law have taught us much, relatively little has been said about the value frameworks within which different visions of competition and competition law operate.

As Ronald Coase reminds us, questions of economics and political philosophy are interrelated, so that “problems of welfare economics must ultimately dissolve into a study of aesthetics and morals.” When we talk about economics, we talk about political philosophy, and vice versa. Every political philosophy reproduces economic prescriptions that reflect its core tenets. And every economic arrangement, in turn, evokes the normative values that undergird it. This is as true for socialism and fascism as it is for liberalism and neoliberalism.

Many economists have understood this. Milton Friedman, for instance, who spent most of his career studying social welfare, not ethics, admitted in Free to Choose that he was ultimately concerned with the preservation of a value: the liberty of the individual. Similarly, the avowed purpose of Friedrich Hayek’s The Constitution of Liberty was to maximize the state of human freedom, with coercion—i.e., the opposite of freedom—described as evil. James Buchanan fought to preserve political philosophy within the economic discipline, particularly worrying that:

Political economy was becoming unmoored from the types of philosophic and institutional analysis which were previously central to the field. In its flight from reality, Buchanan feared economics was in danger of abandoning social-philosophic issues for exclusively technical questions.

— John Kroencke, “Three Essays in the History of Economics”

Against this background, I propose to look at competition and competition law from a perspective that explicitly recognizes this connection. The goal is not to substitute, but rather to complement, our comparatively broad understanding of competition economics with a better grasp of the deeper normative implications of regulating competition in a certain way. If we agree with Robert Bork that antitrust is a subcategory of ideology that reflects and reacts upon deeper tensions in our society, the exercise might also be relevant beyond the relatively narrow confines of antitrust scholarship (which, on the other hand, seem to be getting wider and wider).

The Classical Liberal Revolution and the Unshackling of Competition

Mercantilism

When Adam Smith’s The Wealth of Nations was published in 1776, heavy economic regulation of the market through laws, by-laws, tariffs, and special privileges was the norm. Restrictions on imports were seen as protecting national wealth by preventing money from flowing out of the country—a policy premised on the conflation of money with wealth. A morass of legally backed and enforceable monopoly rights, granted either by royal decree or government-sanctioned by-laws, marred competition. Guilds reigned over tradesmen by restricting entry into the professions and segregating markets along narrow geographic lines. At every turn, economic activity was shot through with rules, restrictions, and regulations.

The Revolution in Political Economy

Classical liberals like Smith departed from the then-dominant mercantilist paradigm by arguing that nations prospered through trade and competition, and not protectionism and monopoly privileges. He demonstrated that both the seller and the buyer benefited from trade; and theorized the market as an automatic mechanism that allocated resources efficiently through the spontaneous, self-interested interaction of individuals.

Undergirding this position was the notion of the natural order, which Smith carried over from his own Theory of Moral Sentiments and which elaborated on arguments previously espoused by the French physiocrats (a neologism meaning “the rule of nature”), such as Anne Robert Jacques Turgot, François Quesnay, and Jacques Claude Marie Vincent de Gournay. The basic premise was that there existed a harmonious order of things established and maintained by means of subconscious balancing of the egoism of the individual and the greatest welfare for all.

The implications of this modest insight, which clashed directly with established mercantilist orthodoxy, were tremendous. If human freedom maximized social welfare, the justification for detailed government intervention in the economy was untenable. The principles of laissez-faire (a term probably coined by Gournay, who had been Turgot’s mentor) instead prescribed that the government should adopt a “night watchman” role, tending to modest tasks such as internal and external defense, the mediation of disputes, and certain public works that were not deemed profitable for the individual.

Freeing Competition from the Mercantilist Yoke

Smith’s general attitude also carried over to competition. Following the principles described above, classical liberals believed that price and product adjustments following market interactions among tradesmen (i.e., competition) would automatically maximize social utility. As Smith argued:

In general, if any branch of trade, or any division of labor, be advantageous to the public, the freer and more general the competition, it will always be the more so.

This did not mean that competition occurred in a legal void. Rather, Smith’s point was that there was no need to construct a comprehensive system of competition regulation, as markets would oversee themselves so long as a basic legal and institutional framework was in place and government refrained from actively abetting monopolies. Under this view, the only necessary “competition law” would be those individual laws that made competition possible, such as private property rights, contracts, unfair competition laws, and the laws against government and guild restrictions.

Liberal Political Philosophy: Utilitarian and Deontological Perspectives on Liberty and Individuality

Of course, this sort of volte face in political economy needed to be buttressed by a robust philosophical conception of the individual and the social order. Such ontological and moral theories were articulated in, among others, the Theory of Moral Sentiments and John Stuart Mill’s On Liberty. At the heart of the liberal position was the idea that undue restrictions on human freedom and individuality were not only intrinsically despotic, but also socially wasteful, as they precluded men from enjoying the fruits of the exercise of such freedoms. For instance, infringing the freedom to trade and to compete would rob the public of cheaper goods, while restrictions on freedom of expression would arrest the development of thoughts and ideas through open debate.

It is not clear whether the material or the ethical argument for freedom came first. In other words, whether classical liberalism constituted an ex-post rationalization of a moral preference for individual liberty, or precisely the reverse. The question may be immaterial, as classical liberals generally believed that the deontological and the consequentialist cases for liberty—save in the most peripheral of cases (e.g., violence against others)—largely overlapped.

Conclusion

In sum, classical liberalism offered a holistic, integrated view of societies, markets, morals, and individuals that was revolutionary for the time. The notion of competition as a force to be unshackled—rather than actively constructed and chaperoned—flowed organically from that account and its underlying values and assumptions. These included such values as personal freedom and individualism, along with foundational metaphysical presuppositions, such as the existence of a harmonious natural order that seamlessly guided individual actions for the benefit of the whole.

Where such base values and presumptions are eroded, however, the notion of a largely spontaneous, self-sustaining competitive process loses much of its rational, ethical, and moral legitimacy. Competition thus ceases to be tenable on its “own two feet” and must either be actively engineered and protected, or abandoned altogether as a viable organizing principle. In this sense, the crisis of liberalism the West experienced in the late 19th and early 20th centuries—which attacked the very foundations of classical liberal doctrine—can also be read as a crisis of competition.

In my next post, I’ll discuss the collectivist backlash against liberalism.

The post Political Philosophy, Competition, and Competition Law, Part 1: The Road to and from Neoliberalism appeared first on Truth on the Market.



Author: Lazar Radic

Economics

Visualizing The Uneven Fallout Of The Inflation Surge

Visualizing The Uneven Fallout Of The Inflation Surge

With Christmas just three weeks away and the holiday shopping season in full force,…

Visualizing The Uneven Fallout Of The Inflation Surge

With Christmas just three weeks away and the holiday shopping season in full force, now is the worst time of the year to be confronted with financial worries. And yet, as Statista’s Felix Richter details below, millions of Americans are facing financial hardship due to the recent surge in consumer prices.

According to a survey conducted by Gallup in November, 10 percent of U.S. adults have been caused severe financial hardship by the latest surge in inflation, severe meaning that it might affect their ability to maintain their current standard of living. Another 42 percent face moderate hardship, meaning that price increases affect them but don’t threaten their standard of living.

You will find more infographics at Statista

Making inflation woes worse is the fact that they affect lower income groups disproportionately. While it’s relatively easy to shrug off price increases when it only reduces the amount of money left at the end of the month, it is much harder for people who struggled to make ends meet even before prices started surging.

As the chart above shows, the perceived effect of recent price increases varies significantly by income group. While 71 percent of those living in households with an annual income of less than $40,000 experience some kind of financial hardship these day, just 29 percent of those earning $100,000 or more claim to do so.

Tyler Durden
Mon, 12/06/2021 – 19:20

Author: Tyler Durden

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Economics

Mish: Fauci And Biden Are Medical Hypocrites & A Political Disgrace

Mish: Fauci And Biden Are Medical Hypocrites & A Political Disgrace

Authored by Mike Shedlock via MishTalk.com,

Among the key reasons…

Mish: Fauci And Biden Are Medical Hypocrites & A Political Disgrace

Authored by Mike Shedlock via MishTalk.com,

Among the key reasons for mistrust of vaccinations are outright lies and excuses by Biden and his alleged experts coupled with medical and political hypocrisy…

No Tests for Illegal Immigrants 

On September 20, the White House Defends Not Requiring Negative COVID Tests From Illegal Migrants.

The rationale is an amazing political lie. White House Press Secretary Jen Psaki said the refugees are “not intending to stay here for a lengthy period of time.”

What?!!

Reporters pressed Psaki as to why there are so many steps pertaining to COVID-19 when flying into the country, such as providing vaccination proof or a negative COVID-19 test, but seemingly none for those who walk across the border. 

The intention is for them to be quarantined. That is our process, they’re not intending to stay here for a lengthy period of time, I don’t think it’s the same thing. It’s not the same thing,” responded Psaki.

Mandatory Vaccinations or Tests for US Citizens 

On November 4, the White House Fact Sheet announced Details of Two Major Vaccination Policies

First, the Department of Labor’s Occupational Safety and Health Administration (OSHA) is announcing the details of a requirement for employers with 100 or more employees to ensure each of their workers is fully vaccinated or tests for COVID-19 on at least a weekly basis. The OSHA rule will also require that these employers provide paid-time for employees to get vaccinated, and ensure all unvaccinated workers wear a face mask in the workplace. OSHA has a strong 50-year record of requiring employers to take common sense actions to prevent workers from getting sick or injured on the job. This rule will cover 84 million employees.

Second, the Centers for Medicare & Medicaid Services (CMS) at the Department of Health and Human Services is announcing the details of its requirement that health care workers at facilities participating in Medicare and Medicaid are fully vaccinated. The rule applies to more than 17 million workers at approximately 76,000 health care facilities, including hospitals and long-term care facilities.

Three Point Synopsis 

  1. There are no tests or vaccination requirements for illegal immigrants because “they’re not intending to stay here for a lengthy period of time.”

  2. 84 million US citizens must be fully vaccinated or have weekly tests for COVID-19.

  3. Point 2 is selective. It only applies to businesses of 100 or more people. 

The 5th circuit appeals court blasted the policy for numerous reasons. 

Summation of Key Terms Used by the Court

  • “Fatally flawed”

  • “One-size-fits-all sledgehammer”

  • The “one-size-fits-all Mandate” is simultaneously overinclusive and “underinclusive”

  • “Immense complexity”

  • “It regulates noneconomic inactivity that falls squarely within the States’ police power”

  • “True purpose is not to enhance workplace safety, but instead to ramp up vaccine uptake by any means necessary.”

Biden Doubles Down on Vaccine Mandate With Another Circuit Court

Did that stop Biden? 

Of course not. Due to a number of state challenges to the policy the cases were consolidated and moved to the 6th circuit court of appeals. 

Biden could have and should have backed down. Instead, Biden Doubles Down on Vaccine Mandate With Another Circuit Court.

Omicron Will Spread Anyway

Please note that when Asked about border COVID cases, Fauci says Omicron likely to spread anyway

Asked about concerns of Omicron spread amid a slew of COVID-19 cases among migrants at the southern border. Dr. Anthony Fauci said Friday that the variant was likely to spread in the country “no matter what.”

Fauci, President Biden’s chief medical adviser, was grilled by Fox News host Neil Cavuto about reports that said 18 percent of migrant families and 20 percent of unaccompanied minors tested positive for the coronavirus.

“I think given what we know about the transmissibility and a likely transmissibility advantage of Omicron … once it gets in there, it will likely, under the radar screen, be spreading no matter what you do to keep people out or not,” Fauci said during the rare appearance on the cable news channel.

Cavuto estimated that the percent of those infected could mean about 4,000 people infected in encampments if the overall number of migrants at the border crossing is about 20,000 people. If those numbers are the case, the host argued, wouldn’t that undo any efforts to curb the spread of the virus at US airports?

Fauci said he believed that would be a “moot point” as more cases are confirmed. There are now 13 states that have confirmed cases of the Omicron variant.

“You know, Neil, I don’t have an easy answer for that,” Fauci said. “I mean obviously Title 42 is still operable at the border, trying to keep people who should not come in into the country. There is testing that is done — I’m certain it’s not as extensive as we would like to see — but I have to admit, Neil, I don’t have an easy answer that’s a very difficult problem.”

Africa Travel Ban 

Also note that Fauci says Biden travel ban on African countries should be rolled back ‘as quickly as possible’

“We did not know it was in other countries at the time of the ban. It looked like it was just in South Africa,” Fauci said. “But right now, you’re right, it is out there, so it’s going to spread no matter what. So that’s the reason why I would feel that, hopefully, we can pull back on that ban as quickly as possible.”

Still, Fauci maintained that if a ban had not been instituted, people would have been upset and “crucified” the administration for its inaction.

In less than a week, Fauci was against the ban, promoted the ban, and is now against the ban, all for political, not medical reasons.

About Title 42

Bizarro Policy Problem

Fauci is now leaning on Title 42, but Biden vowed to kill that permanently. It’s in play because the Supreme court reinstated it over Biden’s wishes.

And despite the Supreme Court having the final say, Biden still proposes fighting the ruling.

For discussion, please consider Biden Restarts Trump’s Stay in Mexico Program Despite Calling it Dangerous and Inhumane

This conflicting hypocritical madness is on top of admitted Fauci lies where he flip flopped on the use of masks and travel bans.

Is it any wonder mistrust is high?

In a 2020 campaign pledge, Biden promised the nation he would get Covid-19 under control. Yet, despite a trillion in fiscal stimulus (creating an inflationary labor shortage in its wake), mask mandates, vaccine mandates and more restrictions with every surge, here we are.

Yes, Dr. Fauci it’s “a very difficult problem” compounded by lies, ineptitude, conflicting statements and “one-size-fits-all sledgehammer” Bizarro World policies some of which are unconstitutional.

*  *  *

Like these reports? If so, please Subscribe to MishTalk Email Alerts.

Tyler Durden
Mon, 12/06/2021 – 17:00

Author: Tyler Durden

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Economics

Bitcoin’s Dip Provides an Opportunity for Value Seekers

Bitcoin (CCC:BTC-USD) dipped below $50,000 per token during the Dec. 4 weekend. It is also now trading below $1 trillion in market capitalization. This…

Bitcoin (CCC:BTC-USD) dipped below $50,000 per token during the Dec. 4 weekend. It is also now trading below $1 trillion in market capitalization. This provides an opportunity for value seekers. As the cryptocurrency experiences weaknesses near the end of the year, expect to see sharp moves either way.

Source: Shutterstock

The most likely reason for the weaknesses is what traders call “consolidation,” according to Coin Telegraph magazine. Some sellers, likely due to tax reasons, are forced to sell before the end of the year. They either want to harvest profits to use against other short-term or long-term losses or vice versa.

As it stands, Bitcoin is now well off of its three-month high of $68,492 on Nov. 11. As of late Dec. 5, it was trading at $49,141. That represents a drop of 28.3% from its highs.

And Bitcoin is not the only crypto to take a hit recently. Ethereum (CCC:ETH-USD), the second-largest cryptocurrency is down as well. Ethereum recently peaked at $4,765 on Dec. 1 and was down 12.8% to $4,155 as of late Dec. 5.

What Happened to BTC Last Weekend

One trader called consolidation “a slow grind-up.” By that, he meant that various prior sticky points would have to be recaptured. This includes the $50,000 price mark, the trillion-dollar market cap (at just above $53,000) and various other previous highwater marks.

Decrypt called the drops on Friday, Dec. 4 and Sat., Dec. 5, a “crypto market crash.” At one point, the magazine pointed out, Bitcoin was down more than 18% in one 24-hour period and ETH tokens were down 15%.

The magazine blamed the omicron variant of Covid-19 and Nasdaq weakness. But the most likely reason is simply year-end tax selling. Those with profits in Bitcoin may want to cover losses from other crypto or stock trading, and those with losses in Bitcoin may want to reduce profits elsewhere. This is not wholly uncommon in the world of stocks, especially during the last week of November and the first week of December.

The reason is simple. Those with losses know they cannot rebuy their position for at least 31 days after the sales. So, just in case a rebound occurs early in the new year, they need to make their sales during the first week or so of December. This occurs very often, no matter the reason that sparked the downturn.

This explains the main reason why Bitcoin and other major cryptos have moved “in tandem,” as Decrypt magazine puts it, with the stock market. It has to do with the tax-related motivations of sellers more than anything else.

Where This Leaves Investors in Bitcoin

The best thing most investors can do with this situation is to be patient and try and average into your position. If you don’t already have a Bitcoin stake, it is probably a useful opportunity to begin accumulating one.

For one, even if the price of BTC keeps falling, at least you have the advantage of buying in at a point where the price is falling.

The math of this situation is very appealing. Let’s say you buy in today and the price falls another 25%. If you then buy in another position of equal dollar value, you gain a leverage effect.

For example, if the BTC price falls 25% from, say, $49,000 to $36,750, and you buy an equal or larger position at this lower price, you can pick up leverage. That is because if the price subsequently moves from $36,750 to $49,000, you gain 33.33% in value. This is a greater gain than the 25% loss. So an equal or larger bet at the lower price helps you to more than cover the loss.

This is why many value investors like to take an initial toe-hold stake in a falling security. They then take successively larger positions as the security drops. This is what many investors might end up doing now while Bitcoin and Ethereum prices are weak.

On the date of publication, Mark R. Hake did not hold any position (either directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.

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The post Bitcoin’s Dip Provides an Opportunity for Value Seekers appeared first on InvestorPlace.


Author: Mark R. Hake

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