The Ambiguities of Competition

Michigan is in a slump, but I bet they still import cheap orange juice from Florida.  Should Michigan designate "orange development zones," so Michiganders can develop orange groves and juice processing plants where local workers can take pride in doing real jobs that support their local community?

No, I thought not (and the example is not original with me).  But it is a good introduction to the ambiguities of competition policy that seem to beset some parts of the polisphere (that one, I think, is original with me).  The immediate example is Rick Perry and his supposed "job-creating machine" in Texas.  Turns out that a good deal of Perry "job creation" is nicking off job from other states.  Should we be disturbed about the success of Texas as a job stealing shifting machine? Obviously if the jobs were going to (gasp!) Mexico, there would be a terrific uproar. Should we feel any less outraged (more forgiving) because they are staying "at home?"

Another example, I think related. Matt Yglesias has glommmed on to the idea the crushing of unions may improve the quality of the beer. I think he's basically right. (Some) people say that unions are "a conspiracy in restraint of trade." I think that is snarl talk, but I'd agree that in order to be a successful union, you have to be part of a conspiracy in restraint of trade. So in the 1950s, management and unions in the auto industry, protected against competition, divvied up the economic rents while we all drove crap cars.

Yglesias presses on to complicate his beer example by pointing out that the beer cartel may actually help to generate better beer, insofar as it provides an incubator for the development of beer-making skill. Good so far although I think he is just scratching the surface of a much larger issue here. Example: I think one of the most under-reported stories in the public arena is the role of the government (monopoly, with the death penalty) in generating good ideas from which others get to profit (Jim Fallows has a superb post on this point).

I don't have much to add to the analysis except to point out that (a) the problem is ever with us and (b) it seems unsolvable. I may be sensitive to the issue right now because I've been reading T.J. Stiles' superb biography of Cornelius Vanderbilt , in which Stiles does a masterful job of situating Vanderbilt at the center of a tectonic shift in our notion of government--I mean the shift from "mercantilism" to a model of "free competition." In particular, Stiles is devastating in his demonstration of how Vanderbilt mastered the art of (a) excoriating "monopolies;" and (b) crushing competitors, so as to build monopolies; and (c) threatening to build monopolies so as to be bought off. Self-contradiction: it's as American as Apple Pie (all right reserved).