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Conscious Commitment: The Golden Age of Antitrust

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Part 3 of 5 in a series, "The History of Antitrust"

No mollycoddling.jpgFor the first ten years of its legal life, the Sherman Antitrust Act did not receive much attention from regulators or from the public. The two presidents of the 1890s, Grover Cleveland and William McKinley, emphasized sound tariff policy as a means of lowering prices and promoting competition and did not attempt to utilize the Sherman Act as a major tool to attain those same goals. However, their efforts proved highly ineffective, and at the turn of the century the country was conscious of the need for antitrust enforcement as it has never been before or since.

The activists of the day, commonly known as the Progressives, espoused an economic reform plan fundamentally dissimilar to the liberalism of today in several important respects. For example, though the Socialist party did gain some traction in these turbulent years under the leadership of dynamic, persuasive labor organizer Eugene Debs, the core of the movement sought to protect rather than overthrow the system of free market capitalism. Most prominent agitators of the day emphasized the responsibilities of corporations to offer fair wages to employees and fair choices to consumers, but did not contend that government ought to assume those responsibilities. As a result, attention centered on monopolization and its injurious effects. Reform magazines such as McClure's and LaFollette's stirred public sentiment against the trusts by highlighting individual cases of wrongdoing and by bringing complex economic debates directly to the public forum. Though this "muckraking" journalistic genre could include factually inaccurate or overly sensational serials, it also comprised works as enduring as Ida Tarbell's History of the Standard Oil Company, a meticulously detailed study of the methods used to restrain trade, and Louis Brandeis' Other People's Money, a scathing look at the banking industry that demonstrated how "The fetters that bind the people are forged of the people's own gold." The literary sphere contributed pioneering novels such as Upton Sinclair's The Jungle, the tale of an immigrant laborer who experiences firsthand the duplicitous practices of the meatpacking industry, and Frank Norris' The Octopus, a scathing indictment of the Central Pacific Railroad. The ringing words of Theodore Roosevelt's first State of the Union recognized this tide of public sentiment and epitomized the principles underlying it:

"There are real and grave evils, one of the chief being over-capitalization because of its many baleful consequences; and a resolute and practical effort must be made to correct these evils. There is a widespread conviction in the minds of the American people that the great corporations known as trusts are in certain of their features and tendencies hurtful to the general welfare... It should be as much the aim of those who seek social betterment to rid the business world of crimes of cunning as to rid the entire body politic of crimes of violence. Great corporations exist only because they are created and safeguarded by our institutions; and it is therefore our right and our duty to see that they work in harmony with these institutions."

The central tenets of antitrust policy were as much a part of popular culture as of law; and this, in turn, spurred the authorities to take further action at almost every level. The federal Department of Commerce and Labor, Interstate Commerce Commission, and Federal Trade Commission were all creatures of this period, as was the Antitrust Division of the Justice Department. In 1904, the Supreme Court declared that the Sherman Act was a lawful measure designed to preserve and not encumber freedom of contract, in a landmark decision that compelled the Northern Securities railway conglomerate to dissolve: "If, in the judgment of Congress, the public convenience or the general welfare will be best subserved when the natural laws of competition are left undisturbed by those engaged in interstate commerce, that must be, for all, the end of the matter if this is to remain a government of laws, and not of men." Northern Securities v. United States, 193 U.S. 197 (1904). Additionally, the lawmakers of the several states repeatedly endeavored to address the problem of interstate monopolies affecting commerce within their borders. One commission report from the New York state legislature succinctly summarizes the importance of maintaining free commerce:

"1. Competition between buyers of the raw material enhances the price to the producer.
2. Competition between sellers of the manufactured article reduces its price to the consumer.
3. Reduction of price multiplies the number of consumers.
4. Increase of consumption stimulates production to supply the increased demand.
5. Increase of production implies an increase in the employment of labour.
6. Competition between the employers of labour enhances the wages of labour.
7. Enhancement of the wages of labour involves the material and moral amelioration of the condition of the labouring class.
8. Competition to sell stimulates to improvements in the quality of the article offered.
9. Competition to sell urging reduction in the cost of the article, ingenuity is quickened to the invention of expense-saving and labour-saving machinery, and so a stimulus is applied to the progress of the useful arts and sciences. In short, competition ministers to the welfare of all classes of the community, and augments the resources and power of the state." 


Roosevelt Taft.jpgThe first decade of the twentieth century was the zenith of antitrust enforcement in the United States. Citizens' mounting discontent with untrammeled oligopoly had finally found its voice in the progressivism of the Roosevelt administration, and the rare harmony between official policy and public beliefs led to real change in many cases. Yet these conditions could not last indefinitely. The special interests had been unable to maintain their hold over the popular presses and had even suffered major defeats in the courts such as that in Northern Securities - yet they did not quietly acquiesce to the societal shifts threatening their prominence. In 1912, they succeeded in wresting the Republican nomination away from Roosevelt, who had a majority of the popular vote, and instead supporting William H. Taft, whose record showed only unsuccessful, indifferent attempts to enforce the Sherman Act - and the resulting schism in the Republican party caused the election of little-known New Jersey governor Woodrow Wilson. He had made vague promises about economic liberty during the campaign, but did not actively protect that right once in office and failed to effectively enforce the Clayton Act of 1914. As Roosevelt complained from the stump, "The chapter describing what Mr. Wilson has done about trusts... would read precisely like a chapter describing snakes in Ireland, which ran: 'There are no snakes in Ireland.' Mr. Wilson has done precisely and exactly nothing about the trusts." 

The so-called golden age of the free market had clearly ended. Three years later America entered World War I, and the resulting shortages of many commodities enabled corporations to justify all manner of monopolistic actions in the name of the war effort. A decade of laissez-faire tolerance of the trusts followed, when the lack of competition was justified by an unsustainable illusion of prosperity. As subsequent events would prove, nothing short of complete economic collapse could reawaken the United States to the importance of antitrust enforcement.

Another Broken Promise: The Repeal of NAFTA

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Assembly line.jpgWhen I voiced my support for President Trump shortly before the election back in November, I did so because of his stance on one crucial issue: trade. During the campaign, he unconditionally pledged to repeal NAFTA and work to bring manufacturing jobs back to the United States. However, since then, he morphed this obligation into an effort to "renegotiate" the baneful deal to protect U.S. interests to a greater extent, and only scrap it entirely if that proved impossible; and just this week, he removed even that possibility, promising only to renegotiate NAFTA in a limited way that would be unlikely to materially improve this country's economy.

Trump's renegotiation program is no longer expected to address the wider problem of American corporations outsourcing jobs to foreign factories - rather, it will merely further the chimerical goal of "fair competition" between domestic factories subject to stringent environmental regulations, labor laws, and taxes, and foreign sweatshops in which workers currently earn as little as $3.94 per day. Also, it is unlikely that anything will be done to curb Mexico's deleterious pattern of re-exporting goods, such as clothing or furniture, that originated in the United States as raw materials, such as cotton or timber.

Any changes to the trade deal are likely to affect only a few industries, without any significant impact on the attrition of domestic manufacturing or the availability of American-made products. The renegotiation may lead to the abatement of unfair trade policies placing tariffs upon U.S. dairy products but allowing the untrammeled duty-free flow of Canadian soft lumber into this country; and, possibly, the percentage of North American content required in untaxed auto parts could be raised. However, as time passes and the commitments of the campaign transform into conciliation and compromise, actual reform or repeal of the North American Free Trade Agreement - and actual performance of the promise that got Donald Trump into the White House - seems increasingly improbable.

A Funny Thing Happened on My Way Through Title 42

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Title 42.jpgThis week, on President Trump's precise hundredth day in office, the federal government is (yet again) set to go broke unless an appropriations bill can be approved. The main conflicts preventing a funding compromise are the White House's insistence that federal subsidizing of sanctuary cities come to an end, the Democrats' refusal to block bailouts to the insurance industry written into the text of the Affordable Care Act, and the attempts to reconcile the President's $30 billion defense spending request with the mounting national debt. However, while the debate over these controversies continues in Congress, a much larger question is also implicated - how much should the United States of America actually cost?


The issue shouldn't actually be that complex. We don't need to analyze Gross National Product and skyrocketing income disparity and our current trade balance: one look at the United States Code should be enough to convince anyone that some serious spring cleaning is in order.


The U.S.C., which contains almost all federal Congressional enactments, is currently 5,759 Constitutions, 74,870 pages and fifty-two titles long. The first of these is deceptively straightforward, at twenty-seven pages which mostly define words used throughout the Code. This one is the place to go if you've ever wondered what the phrase "products of American fisheries" or the word "person" means (respectively. Seafood comes at §6, and humans will just have to wait until §8). The shortest of these is Title 9, which covers Arbitration in eleven pages and is probably one of the briefest documents pertaining to arbitration ever published (say what you will about mandatory ADR, but you've got to love any statute more straightforward and concise than the subject with which it deals). The longest, by far, is #42, which comes in at 13,385 pages and contains some things worthwhile, like the Civil Rights Act of 1964. And some things of more questionable merit, to say the least, like §12705c., "Grants for Regulatory Barrier Removal Strategies and Implementation." You read that right - they've apparently taken to spending money on plans to regulate overregulation1. Making matters worse, this behemoth comes with no index, just a four-page list of its one hundred and fifty-nine chapters.


Personally, I don't trust anything with a table of contents that long2. Even the overview is a little staggering - it does tell you where to find the things you might expect, like Social Security and the Clean Air Act, but it also contains chapters with intriguingly irrelevant laws defining the mathematical term "average" (42 U.S.C. §2992c) and providing for space exploration (somehow, Congress thought this item fit better here than in Title 51, which is devoted exclusively to outer space). When there are this many individual ideas and policies thrown pell-mell into one document, it's inevitable that some will be forgotten about and enforcement will be a complete nightmare.


Don't believe me? Well, let's hunt up something everyone knows about, that should be fairly easily accessible. You might suppose that Obamacare, for example, would be a frequently referenced and therefore clearly marked section. Half of it is indeed filed under the identifiable if somewhat specious heading "Quality, Affordable Health Care for All Americans" - that is, the second half. The notorious Act actually begins at 42 U.S.C. §300gg 3, which I assure you is an actual component of Title 42 and not just a random letter-number combination generated by a hyperactive squirrel scampering across my keyboard. 42 U.S.C. §300 is eight hundred and thirteen pages long, and deals mostly with health services and partly with drinking water4. However, just when it starts resembling a cohesive, orderly piece of legislation, it disappears like a subterranean river under mountains of vitally important documents such as those defining the word "governor" or dedicated to "Soil Information Assistance for Community Planning and Resource Development," then magically reappears at §18011, where it finally gets a proper label. If you do manage to get Congress' copy - which, despite its manifold faults, can at least be perused in one piece - the entire title really can to seem like a jigsaw puzzle someone put together wrong.


Also complicating matters is the sheer number of laws dealing with precisely the same problems under slightly different headings, and funded out of completely different sections of this country's coffers. There are chapters 25 and 50, "Federal Flood Insurance" and "National Flood Insurance," respectively (admittedly, the former has been all but repealed - all but the part that costs money, which is still going strong and still has up to five hundred million dollars at its disposal). There are chapters 98 and 99, "Ocean Energy Thermal Conversion Research and Development" and its successor "Ocean Energy Thermal Conversion," both of which deal with precisely the same subject, except one of them covers its territory in nine fairly straightforward sections while the other verbosely provides desperately needed clarification on the subject through such enlightening enactments as yet another definition of "governor" (over the course of the Title, we are educated as to the meaning of this word a grand total of eleven times). And then, of course, there are "Intergovernmental Personnel Program," the closely related "Advisory Commission on Intergovernmental Relations," and "Intergovernmental Cooperation" - these are much more difficult to ascertain the merits of, however. On the one hand, the most cursory examination of the Code reveals the redundancy of a significant number of statutes, and it seems impossible to believe that this many federally funded programs could possibly be simultaneously necessary. On the other, though, the most cursory examination of the Code reveals that Congress barely keeps tabs on the laws it passes itself, and probably needs all the intergovernmental cooperation it can get.


I'll admit, this confusion can partially be attributed to the fact that half the contents of Title 42 have nothing to do with its stated purpose. There are things such as "School Lunch Programs" and some scholarship opportunities that should probably be located in Title 20, "Education;" there are "Criminal Justice Identification, Information and Communication" guidelines, "Community Safety Recidivism Protection," and legislation pertaining to just about every crime in the calendar5, which might be more appropriately moved to Title 18, the federal criminal code - and all this gives one the strange sense that this title would be more appropriately captioned "Congress' Grand Article I, Section 8 Grab Bag" than "Public Health and Welfare," like it is now. But the problems with the United States Code are too significant to be solved by mere rearranging or streamlining. Every line in our law that is not absolutely essential to the fulfillment of federal Constitutional obligations could be costing taxpayers, and diverting scarce funds that could otherwise be allocated to necessary and productive programs.


1 Before long, we'll hear of the establishment of the Overregulation Elimination Agency, vested with the power to enforce their conclusions through appropriate rule-making, and when we do it will doubtless be located in Title 42. You heard it here first.


2 Neither does Adobe Reader, apparently, which took a brave stand against governmental overreach by "Not Responding" every time I tried to locate any particular thing inside this Brobdingnagian document. So I tried to see what methods the government itself had come up with to speed the research process along a little, but apparently they've got problems of their own:


USCtimeout.jpg


3 Don't believe everything you hear on the news: this right here is the real reason why Congress didn't repeal the "Affordable" Care Act when it got the chance. Once you've managed to find a place for the darned thing and fit it snugly into what has to be the most complicated single law ever promulgated, who would have the heart to take it out again and re-number everything that comes after it?


4 Even though it deals with some of the same subject matter, it is definitely not to be confused with "Water Resources Planning," "Water Resources Research," "Secure Water," or Title 33, which deals mainly with "Navigable Waterways." I wasn't actually even looking for our nation's policy on H2O, but suddenly I'm drowning in a veritable sea of surplusage - I suppose next time I need something from the Code, I'll just wait until the clouds roll back and the waters part.


5 This expression is truly quite baffling, if you think about it too hard. I mean, we've all seen planners adorned with pictures of tropical beaches or flower-themed date books, but have you ever encountered a fifty-two week Gregorian crime calendar? I didn't think so.


Balanced Budget Amendment Introduced

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Ickes bandwagon.jpgOn April 8th of this year, H.J. Res. 48 was introduced by Congressman John Ratcliffe and referred to the House Judiciary Committee, officially introducing a proposed twenty-eighth amendment to the Constitution which would limit allocable federal funding to actual government revenue. This measure would effectively prohibit Congress from adding to our existing spending deficit of nearly $20 trillion dollars, curtailing the extravagant and extraneous expenditures currently rampant throughout federal agencies and departments. The amendment reads in full:

"1. Total outlays for any fiscal year shall not exceed total receipts for that fiscal year, unless two-thirds of the whole number of each House of Congress shall provide by law for a specific excess of outlays over receipts by a rollcall vote.
2. Total outlays for any fiscal year shall not exceed 18 percent of economic output of the United States, unless two-thirds of each House of Congress shall provide for a specific increase of outlays above this amount.
3. The limit on the debt of the United States held by the public shall not be increased unless three-fourths of the whole number of each House shall provide by law for such an increase by a rollcall vote.
4. Prior to each fiscal year, by not later than such date as Congress may by law require, the President shall transmit to Congress a proposed budget for the United States Government for that fiscal year in which total outlays do not exceed total receipts. If the President fails to transmit to Congress a proposed budget which meets the requirements of the previous sentence by the date required by Congress, the President may not receive any compensation for his services for any month which follows that date until the President transmits to Congress a proposed budget which meets such requirements.
5. For each fiscal year, by not later than such date as Congress may by law require, Congress shall consider and approve a budget for the United States Government which meets the requirements of section 4 of this article. If Congress fails to approve a budget which meets such requirements by the date required by Congress, Members of Congress may not receive any compensation for their services for any month which follows that date until Congress approves a budget which meets such requirements.
6. A bill to increase revenue shall not become law unless two-thirds of the whole number of each House shall provide by law for such an increase by a rollcall vote.
7. The Congress may waive the provisions of this article for any fiscal year in which a declaration of war is in effect. The provisions of this article may be waived for any fiscal year in which the United States is engaged in military conflict which causes an imminent and serious military threat to national security and is so declared by a joint resolution, adopted by a majority of the whole number of each House, which becomes law. Any such waiver must identify and be limited to the specific excess or increase for that fiscal year made necessary by the identified military conflict.
8. The Congress shall enforce and implement this article by appropriate legislation, which may rely on estimates of outlays and receipts.
9. A court may not enter an order in any action, including for purposes of enforcing this article, that results in an increase in the collection of revenue.
10. Total receipts shall include all receipts of the United States Government except those derived from borrowing. Total outlays shall include all outlays of the United States Government except for those for repayment of debt principal.
11. This article shall take effect beginning with the seventh fiscal year beginning after its ratification."


Harrison debt.jpgOver the past decades and centuries, those concerned with Washington's culture of wastefulness have repeatedly endeavored to enact similar legislation. When confronted with the massive deficits created by the Revolutionary War and subsequent inflation, Thomas Jefferson hoped that contemporary lawmakers would "render the immortal service of introducing this practice not that it is expected that Congress should formally declare such a principle. They wisely enough avoid deciding on abstract questions but they may be induced to keep themselves within its limits." In 1982, the Senate achieved the required two-thirds majority but the amendment was voted down in the House, and in 1995, it passed the House but failed to garner a single vote in the Senate. However, as our nation finds itself approximately $19,900,000,000,000 in debt and American citizens grow increasingly frustrated with the corruption and inefficiency of their government, any concerns about the effects of widespread budget cuts must give way to the imperative of ending our insouciant spending patterns. Perhaps the recognition that the present situation simply cannot continue will provide the impetus necessary to navigate the amendment through the Committee to the House and Senate floors and then the states, finally writing fiscal responsibility into our Constitution.

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