A proposal for a better standard of anti-trust

Anti-trust origins

Anti-trust regulations are called that because they were once considered generically anti-corporate regulations, like what tough-on-corporation politicians expound today. Think the trusts are oppressing the workers? Hit them with some regulations!

But eventually, anti-trust would come to by synonymous with curbing the power of monopoly. And with good reason. Market power is the way to get extraordinarily rich, both legitimately and illegitimately.

You don’t want your time to be a simple commodity. You want passive income, the kind of income you generate from ownership, i.e., profit. Under perfect competition, you can earn a wage based on your time commitment, but you cannot earn profit.


A crude way of detecting monopolies is by size. The bigger, the worse, or so it goes.

But it seems like there will be an arbitrary cutoff. What defines “big?” Believe it or not, economists have tried to find ways of calculating this. But even so, it’s still an arbitrary cutoff.

This method fell out of favor during the Reagan administration. People realized that some industries are actually more efficient when the firms are large (as opposed to other industries, were even much smaller firms can abuse market power). Demonizing size isn’t appropriate, because size isn’t always bad for the consumer.

The good of the consumer 

What replaced the focus on size was a focus on the “good of the consumer.” That is, perhaps, more specifically what you want, but the problem is that it’s much more ephemeral and subjective than size.

Regulating “good for the consumer” is like regulating speech. Who in government gets to decide what counts as “good” for the consumer? Shouldn’t that be revealed by the consumer’s choices? What is the government to say what consumers should or should not want?

Price too high? That’s “price gouging.” Price too low? That’s “anticompetitive dumping.” I’m not the first person to notice this nonsense. The market has a remarkable ability to correct when there are few barriers to entry, if we let it.

What I advocate: focus on the barriers to entry

Monopolies are a product of, essentially, a lack of competition. But people are naturally inclined to compete, to get a “share of the pie.” Therefore, whenever there is a monopoly, there is something preventing competition, i.e., preventing new businesses from entering into the market.

I believe that the only standard for anti-trust that makes sense is to focus on specific barriers to entry. There are actually not many.  I can put them into categories, grouped below:

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Almost every profitable company has one or more of these (usually only one). Don’t put too much stock in “good” vs “bad.” It’s based on whether I personally feel like profiting off of the technique is illegitimate.

The solutions are, right to left: fix (change the regulations), offset (fund counter-measures), and control (introduce or make use of regulations). The solution is not always to get rid of monopolies, but to compensate for the bad effects of them.

The key takeaway here is that, because there are many different types of monopolies (that are monopolies for very different reasons), there is no one single anti-trust solution. Put another way, you cannot have one anti-trust law. You must have six, because there are six types of monopolies. I have outlined the solutions below:

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Of course, any solution has a cost, and so should be pursued with at least as much caution as we pursue anti-trust solutions now. However, when we use anti-trust solutions, we should at least use appropriate solutions.

Right now, the predominantly discussed anti-trust solution is to force companies to break up. But there are many things we should be doing instead of that. For example, funding free-to-use (non-copyrighted) R&D would allow a more even playing field. Funding venture capital* would encourage more entrants into the industry.

Breaking up the big social media sites would be absolutely useless, because that is not the appropriate tool for the type of monopolies that social media companies are. (By the way, not all tech firms are the same type of monopoly, so referring to “tech firms” in the same sentence as anti-trust is misleading.)

What we should do instead with social media monopolies is regulate them (correctly). Force them to be politically neutral (hands-off) with their algorithms, and to not secretly violate users privacy. “The user chose to go on social media” is not a good argument; they should’ve been able to do that without privacy violations, but they had that option denied to them because of the existence of monopoly. 

By the way, I lied before about there only being 6 barriers to entry. A 7th one is land and natural resources, the subject of this whole (underrated) post.

A rebuke to socialism

Socialists call profits “exploitation.” My response is that they might be exploitation. But it depends on the barrier to entry that is allowing those profits to manifest. Is someone profiting off a new invention? Good, they should be rewarded. Is someone profiting off of rent-seeking? They should be stopped.