WEBVTT NOTE 'The Myths of Anti-trust' 40th Anniversary 1 00:00:00.000 --> 00:00:07.080 Tom Armantano is one of the heroes of the revival of Austrian economics, and I'll start 2 00:00:07.080 --> 00:00:11.280 out by saying that, but I probably don't need to say it because the reason we're here is 3 00:00:11.280 --> 00:00:17.400 celebrating his book and his work. 4 00:00:17.400 --> 00:00:23.800 In trying to make that argument, I want to cover three things as I'm talking here. 5 00:00:23.800 --> 00:00:32.680 First of all, I want to talk about his book, The Myths of Antitrust, as a book about antitrust. 6 00:00:32.680 --> 00:00:38.640 Second of all, I want to talk about it as a book in Austrian economics. 7 00:00:38.640 --> 00:00:44.440 And finally, I want to talk a little bit about the intellectual environment in economics 8 00:00:44.440 --> 00:00:50.120 at the time the book was written, because I think that it makes it a little bit more 9 00:00:50.120 --> 00:00:54.120 It's more impressive to think about the book along those lines. 10 00:00:54.120 --> 00:01:03.120 If we think about the book along the lines of a book on antitrust, 11 00:01:03.120 --> 00:01:08.120 I mean, you've got to say it holds up pretty darn well after 40 years. 12 00:01:08.120 --> 00:01:11.120 I mean, you read it, the arguments seem fresh. 13 00:01:11.120 --> 00:01:18.120 He goes through and discusses and dissects the antitrust cases. 14 00:01:18.120 --> 00:01:31.120 So the book really holds up pretty well in defending the idea that anti-trust laws are against the public interest. 15 00:01:31.120 --> 00:01:41.120 Now, it's interesting to consider the degree to which arguments along those lines are persuasive. 16 00:01:41.120 --> 00:01:44.960 When I talk to my own students, I tell my students, 17 00:01:44.960 --> 00:01:50.240 if you want to understand why any policy exists, 18 00:01:50.240 --> 00:01:53.520 don't ask why is this in the public interest. 19 00:01:53.520 --> 00:01:56.760 Ask yourself who benefits from this policy 20 00:01:56.760 --> 00:01:59.880 and how much political power do they have? 21 00:01:59.880 --> 00:02:02.440 So that's an argument that sort of suggests 22 00:02:02.440 --> 00:02:08.440 that it's interests rather than ideas that are important. 23 00:02:08.440 --> 00:02:12.600 And I guess as academics, we might rebel against that a little bit. 24 00:02:12.600 --> 00:02:14.560 And I'm thinking on the other side, there's 25 00:02:14.560 --> 00:02:17.280 that famous passage at the end of John Maynard Keynes's 26 00:02:17.280 --> 00:02:20.400 General Theory, where Keynes says, 27 00:02:20.400 --> 00:02:24.760 the ideas of economists and political philosophers 28 00:02:24.760 --> 00:02:28.480 are more powerful than is commonly understood. 29 00:02:28.480 --> 00:02:34.280 Indeed, the world is ruled by little else. 30 00:02:34.280 --> 00:02:36.000 And I try to articulate that clearly. 31 00:02:36.000 --> 00:03:00.080 Indeed, the world is ruled by little elves, because my former colleague Roger Garrison tells this story, he used that quotation in class, he used that quotation from Keynes in class, and then later on in an exam, he relates back that a student writes on his exam, the world is ruled by little elves. 32 00:03:06.000 --> 00:03:14.160 And I have to say, economics probably in general isn't that funny, and I'll say, given Roger 33 00:03:14.160 --> 00:03:21.480 some credit, every funny thing I know about economics I heard from Roger. 34 00:03:21.480 --> 00:03:32.800 So it's interesting to consider which is more influential, ideas or special interests, but 35 00:03:32.800 --> 00:03:35.680 I do think they go together. 36 00:03:35.680 --> 00:03:41.800 I live in Tallahassee, Florida, the capital of Florida. 37 00:03:41.800 --> 00:03:45.280 And I do interact with the state legislature now and again. 38 00:03:45.280 --> 00:03:49.120 And I do see the power of special interests. 39 00:03:49.120 --> 00:03:51.240 But I also see that, in general, on issues 40 00:03:51.240 --> 00:03:52.800 there are people on both sides. 41 00:03:52.800 --> 00:03:54.800 And I think the people who are on both sides 42 00:03:54.800 --> 00:03:58.200 have their own interests. 43 00:03:58.200 --> 00:04:00.840 But they need arguments to back those interests up. 44 00:04:00.840 --> 00:04:08.640 And so if we can come up with the ideas and present the ideas, 45 00:04:08.640 --> 00:04:11.840 sometimes that can help the interests that 46 00:04:11.840 --> 00:04:14.920 are on the right side. 47 00:04:14.920 --> 00:04:17.840 In fact, I'm remembering from my own experience 48 00:04:17.840 --> 00:04:21.600 having a legislator call me up, a Florida legislator call me up, 49 00:04:21.600 --> 00:04:24.560 because he read something that I had written. 50 00:04:24.560 --> 00:04:26.760 And he said, we're holding hearings on this subject 51 00:04:26.760 --> 00:04:29.440 and so forth, and I've got this thing that you wrote. 52 00:04:29.440 --> 00:04:35.920 and he starts reading me over the phone, you said this and that and that and he said I want 53 00:04:35.920 --> 00:04:43.240 you to come down to our committee and say that and so I did but and you know when you 54 00:04:43.240 --> 00:04:50.840 think about the way that academics are used in the policy process it's not that gosh here's 55 00:04:50.840 --> 00:04:54.840 a college professor, this guy is so smart, let's hear what he has to say, no it's not 56 00:04:54.840 --> 00:04:59.940 not that at all, you know, it's that, you know, here's somebody who has the appearance 57 00:04:59.940 --> 00:05:04.360 of neutrality because he's an academic and he's going to say something that bolsters 58 00:05:04.360 --> 00:05:11.640 my case and so I'm going to try to get him to come down and give an argument that works 59 00:05:11.640 --> 00:05:15.440 on my side. 60 00:05:15.440 --> 00:05:21.640 And so again, when I think about the ideas, we look at Dom's book as a book on antitrust 61 00:05:21.640 --> 00:05:27.440 And one of the things that Don talked about when he was giving his talk about the book 62 00:05:27.440 --> 00:05:36.120 was maybe he made a mistake by saying that we ought to just abolish antitrust laws. 63 00:05:36.120 --> 00:05:41.480 But I don't think that's the case, because if you leave the laws in place, that just 64 00:05:41.480 --> 00:05:45.160 opens the door for special interests down the road. 65 00:05:45.160 --> 00:05:53.320 So I think, really, the best thing to do is to abolish the laws. 66 00:05:53.320 --> 00:05:59.160 And also, I don't know how much you want to be used as a foil or something, 67 00:05:59.160 --> 00:06:03.800 but if you take an extreme view, that makes people who are edging toward your view 68 00:06:03.800 --> 00:06:07.000 look like middle of the road. 69 00:06:07.000 --> 00:06:10.480 But anyways, when you think about the influence of ideas, 70 00:06:10.480 --> 00:06:15.760 And I think the book holds up really well. 71 00:06:15.760 --> 00:06:19.840 When you read it, it gives good solid arguments. 72 00:06:19.840 --> 00:06:26.920 And so it's a masterpiece in antitrust. 73 00:06:29.720 --> 00:06:32.000 I want to think a little bit about the book also 74 00:06:32.000 --> 00:06:35.640 as a book in Austrian economics, because it definitely 75 00:06:35.640 --> 00:06:40.680 has a solid Austrian foundation. 76 00:06:40.680 --> 00:06:43.680 And if you read the Myths of Antitrust, 77 00:06:43.680 --> 00:06:45.640 you look on the first page of the book, 78 00:06:45.640 --> 00:06:49.600 and there's a footnote on the first page of the book that 79 00:06:49.600 --> 00:06:52.240 references some influences. 80 00:06:52.240 --> 00:06:58.760 And the influences are Ludwig von Mises, Murray Rothbard, 81 00:06:58.760 --> 00:07:01.240 and Alchin and Allard. 82 00:07:01.240 --> 00:07:03.080 How did those guys get in there? 83 00:07:03.080 --> 00:07:33.080 But, I mean, right on the first page of the book, you know, you see where he's coming from and Mises and Rothbard there, and there at the beginning of the book, let me just read a little bit out of the book, which I hope I can read because it's written in my handwriting and I'm not reading the book, but just to get a flavor for the theoretical foundation, 84 00:07:33.080 --> 00:07:36.080 Foundation. 85 00:07:36.080 --> 00:07:43.620 Dom says, in the real world, as apart from economic fantasy, competition is a dynamic 86 00:07:43.620 --> 00:07:50.840 process where firms, to sustain their existence, must understand and exploit consumer demand, 87 00:07:50.840 --> 00:07:56.120 discover and employ economic resources, and adopt and employ technological change in order 88 00:07:56.120 --> 00:08:02.520 to meet the thrusts of the ever-changing market forces initiated by consumers, factors of 89 00:08:02.520 --> 00:08:05.880 of Production or by One's Economic Rivals. 90 00:08:05.880 --> 00:08:09.620 Competition is an endless series of differentiations 91 00:08:09.620 --> 00:08:14.200 and is as far from the docile and calm homogeneity assumptions 92 00:08:14.200 --> 00:08:16.120 as imaginable. 93 00:08:16.120 --> 00:08:19.200 Differentiations of product, of service, of quality, 94 00:08:19.200 --> 00:08:23.880 of convenience, of advertising, of technology, of innovation, 95 00:08:23.880 --> 00:08:28.200 and of price are the very essence of market competition, 96 00:08:28.200 --> 00:08:30.600 rather than imperfections or departures 97 00:08:30.600 --> 00:08:33.560 from some presumed ideal equilibrium. 98 00:08:33.560 --> 00:08:39.920 So you see from the references of people 99 00:08:39.920 --> 00:08:44.160 in the Austrian school, you see this Austrian foundation 100 00:08:44.160 --> 00:08:46.200 in the book. 101 00:08:46.200 --> 00:08:48.040 But that's a small part of the book. 102 00:08:48.040 --> 00:08:50.800 So we start out, we have this foundation. 103 00:08:50.800 --> 00:08:55.680 And then in what I think is just a model of the way 104 00:08:55.680 --> 00:08:59.320 that Austrian economics always have to be approached, 105 00:08:59.320 --> 00:09:03.440 but a good approach for doing research in Austrian economics, 106 00:09:03.440 --> 00:09:07.040 then Dom takes these ideas to all these antitrust cases. 107 00:09:07.040 --> 00:09:09.640 And so the bulk of the book is really, 108 00:09:09.640 --> 00:09:12.280 let's look at the facts. 109 00:09:12.280 --> 00:09:14.200 So he's got facts about the cases, 110 00:09:14.200 --> 00:09:16.720 let's look at the cases, let's look at what was said about them, 111 00:09:16.720 --> 00:09:19.200 let's look at how these cases were actually decided. 112 00:09:19.200 --> 00:09:23.840 And so starting from this Austrian foundation, 113 00:09:23.840 --> 00:09:26.560 the book is actually looking at real public policy issues 114 00:09:26.560 --> 00:09:35.160 using real facts, you know, and I think sometimes there's a tendency in research in Austrian 115 00:09:35.160 --> 00:09:39.440 economics to be perhaps overly theoretical, you know, to say, well, you know, here's our 116 00:09:39.440 --> 00:09:43.240 theory and here's why the neoclassical theory is wrong, and okay, fine, but what difference 117 00:09:43.240 --> 00:09:48.480 does that make? And if we're talking about antitrust policy, that's what Dom's book says. 118 00:09:48.480 --> 00:09:55.680 Here's what difference that makes. And he's looking at actual policies to illustrate that. 119 00:09:55.680 --> 00:10:02.240 So I think we can look, as I first wanted to do, look at the book as a book on antitrust, 120 00:10:02.240 --> 00:10:07.800 but think about it as a book in Austrian economics, and when you look at it that way, it's a really 121 00:10:07.800 --> 00:10:13.240 good model for the way that we ought to be doing research in Austrian economics. 122 00:10:13.240 --> 00:10:22.760 I think that's another reason why the book has held up so well for 40 years. 123 00:10:22.760 --> 00:10:31.120 And the final thing that I wanted to talk about is the academic and intellectual environment 124 00:10:31.120 --> 00:10:36.500 in economics at the time that the book was written. 125 00:10:36.500 --> 00:10:40.060 And I think Roy made some reference to this, the difference between what things were like 126 00:10:40.060 --> 00:10:46.820 in 1972 and 1982 when the second book came out. 127 00:10:46.820 --> 00:10:56.020 But when you look at the evolution of the Austrian School, you go back to 1972 or back 128 00:10:56.020 --> 00:11:02.820 to the 60s when you started writing the book, the Austrian School was almost non-existent. 129 00:11:02.820 --> 00:11:09.220 I mean, I think if you get right in the middle of the 20th century, and that's probably not 130 00:11:09.220 --> 00:11:14.940 exaggerating too much to say there was one Austrian economist, which was Ludwig von Mises. 131 00:11:14.940 --> 00:11:20.740 There are other people we could talk about, Hayek was still around but he sort of moved 132 00:11:20.740 --> 00:11:28.660 to other things, but really Ludwig von Mises was the core of the school and maybe the Austrian 133 00:11:28.660 --> 00:11:29.660 school. 134 00:11:29.660 --> 00:11:33.300 If he wasn't there, we might not be here today. 135 00:11:33.300 --> 00:11:41.940 And from there, there were a few students of Mises who were doing some work in Austrian 136 00:11:41.940 --> 00:11:47.840 in Economics, and of course, Kirzner and Rothbard are two of the giants. So they were doing 137 00:11:47.840 --> 00:11:54.980 work, but they were doing work more or less in isolation. I mean, they were putting out 138 00:11:54.980 --> 00:12:02.580 their work, but there really wasn't an Austrian school as such. And I think, as Roy noted 139 00:12:02.580 --> 00:12:07.660 some of the facts, I mean, there was a big Austrian revival that started in the 1970s 140 00:12:07.660 --> 00:12:13.660 there was a conference in South Royalton and then the conference that Dom organized in Hartford the next year 141 00:12:13.660 --> 00:12:19.660 so there was really a big revival in Austrian economics so that the school starts rebuilding 142 00:12:19.660 --> 00:12:25.660 as we move through the 70s into the 80s and 90s to today 143 00:12:25.660 --> 00:12:31.660 but if you go back to when this book was written, that intellectual infrastructure wasn't there 144 00:12:31.660 --> 00:12:39.580 wasn't there. So there were a few books, and Murray's book was cited. So there were a few 145 00:12:39.580 --> 00:12:45.260 books, but there just wasn't that Austrian school that was there. And one of the things 146 00:12:45.260 --> 00:12:51.340 I'm kind of interested in, Dom, is how did you run across this stuff? And how was it 147 00:12:51.340 --> 00:12:57.940 that you were captivated by it in order to use that as a foundation for your ideas? Because 148 00:12:57.940 --> 00:13:05.180 I mean, at the time, when I was an economics major in college, I actually graduated from 149 00:13:05.180 --> 00:13:12.600 college in 1972 when the book was published, and as a college student and economics major, 150 00:13:12.600 --> 00:13:17.340 I never heard of any of this stuff, you know, I mean, it was never presented in class, there 151 00:13:17.340 --> 00:13:23.380 wasn't, you know, so I mean, today, the Austrian School is prominent enough, if you read the 152 00:13:23.380 --> 00:13:28.580 New York Times, Paul Krugman is criticizing this school, but go back to the 70s, nobody 153 00:13:28.580 --> 00:13:35.080 would have even heard of it, nobody would have made mention of it. So Dom really wrote 154 00:13:35.080 --> 00:13:39.660 this book, this book was published when there was pretty much a vacuum, a few works around, 155 00:13:39.660 --> 00:13:47.860 but not really an Austrian school as such. And so when you look at the revival of the 156 00:13:47.860 --> 00:13:55.620 of the Austrian School, really one of the key books in it is the myth of anti-trust. 157 00:13:55.620 --> 00:14:00.500 You can look at the work of people like Mises, like Rothbard, like Kirzner, they're laying 158 00:14:00.500 --> 00:14:06.620 the foundation, but really a model for what the Austrian School can do, what we can do 159 00:14:06.620 --> 00:14:12.140 as Austrian economists, that book really serves very well. 160 00:14:12.140 --> 00:14:17.580 And so that's one of the reasons why I was saying, you know, Dom is one of the heroes 161 00:14:17.580 --> 00:14:22.020 of the Austrian revival, one of the people who's put out, you know, solid work that's 162 00:14:22.020 --> 00:14:27.460 endured for 40 years and has served as a model for the rest of the school. 163 00:14:27.460 --> 00:14:32.740 And so, you know, now we look around, I mean, look at the building here, the Mises Institute, 164 00:14:32.740 --> 00:14:39.780 the people who are here at the conference, and I know a lot of people who are at that 165 00:14:39.780 --> 00:14:41.760 at South Royalton's conference, 166 00:14:41.760 --> 00:14:46.180 daughtering up to the stage and so on. 167 00:14:46.180 --> 00:14:48.820 And there's a whole new generation of Austrian scholars 168 00:14:48.820 --> 00:14:53.540 who are following on, but there just wasn't 169 00:14:53.540 --> 00:14:55.980 that kind of intellectual infrastructure 170 00:14:55.980 --> 00:14:57.580 at the time that Dom's book was written. 171 00:14:57.580 --> 00:14:59.020 So he was putting out a book 172 00:14:59.020 --> 00:15:01.340 that didn't really have a support group, 173 00:15:01.340 --> 00:15:04.660 didn't really have the intellectual infrastructure. 174 00:15:04.660 --> 00:15:06.820 So it was a pretty courageous thing to put out the book 175 00:15:06.820 --> 00:15:12.100 and to pursue this line of reasoning. 176 00:15:12.100 --> 00:15:19.060 So I think you can look at Dom's work at several levels, like I said, and what I've tried to 177 00:15:19.060 --> 00:15:25.060 do in the time that I have had allotted, think about it as a book on antitrust. 178 00:15:25.060 --> 00:15:26.660 Great book. 179 00:15:26.660 --> 00:15:32.980 Think about it as a model for the way that we should be doing research in Austrian economics. 180 00:15:32.980 --> 00:15:34.400 It's a great book. 181 00:15:34.400 --> 00:15:40.640 And think about the environment at the time when the book was written and it's even more 182 00:15:40.640 --> 00:15:45.160 miraculous that Don was able to come up with the book and write the book. 183 00:15:45.160 --> 00:15:51.720 So I'll close with that but I will say, you know, I do have that lingering question about 184 00:15:51.720 --> 00:15:57.240 what was it that brought this work to your attention and why is it that you decided to 185 00:15:57.240 --> 00:15:58.240 pursue that. 186 00:15:58.240 --> 00:16:03.540 Again, reflecting on my own education, especially as an undergraduate, where, you know, these 187 00:16:03.540 --> 00:16:09.080 These ideas were so far below water that I'd never heard of until I got to graduate school. 188 00:16:09.080 --> 00:16:12.100 And I will say, when I got to graduate school, I didn't hear about it from my professors 189 00:16:12.100 --> 00:16:13.100 either. 190 00:16:13.100 --> 00:16:18.540 I had some fellow graduate students who'd run across the work and was exposed by them. 191 00:16:18.540 --> 00:16:21.380 So thank you very much. 192 00:16:21.380 --> 00:16:22.380 Thank you, Dom, for the book. 193 00:16:22.380 --> 00:16:24.380 Thank you very much.