Censorship by Anti-Trust

 Posted by on 13 November 2009 at 5:00 am  Economics, Politics
Nov 132009

Yesterday, Ari Armstrong published a good op-ed against the push by the American Booksellers Association appeal for antitrust action against sellers of low-price books like Amazon and Wal-mart. As he observes:

When politicians control the physical conveyance of ideas, they can control the ideas themselves. As a villain in Ayn Rand’s Atlas Shrugged explains, “If you breathe the word ‘censorship’ now, they’ll all scream bloody murder… But if you leave the spirit alone and make it a simple material issue — not a matter of ideas, but just a matter of paper, ink and printing presses — you accomplish your purpose much more smoothly.”

That was certainly the method used in the Soviet Union: the Bolsheviks suppressed opposition by taking control over mere property, namely the printing presses.

I see another parallel to Atlas Shrugged in this call for government intervention, particularly from the section that we just read for our Atlas Shrugged Reading Group. Ari writes:

The letter [from the American Booksellers Association] argues that selling low-priced books to people who want to buy them constitutes “illegal predatory pricing that is damaging to the book industry and harmful to consumers.”

You might think that “lower prices will encourage more reading and a greater sharing of ideas in the culture,” but you would be wrong, the ABA claims. Low-priced books will drive out “many independent bookstores,” put book buying “in very few hands,” and eventually allow “mega booksellers to raise prices,” the ABA asserts.

Ari’s response to that is right:

Once a retailer purchases books from a willing publisher without pricing restrictions, the retailer properly has the right to sell the book for any amount it deems proper. If the retailer wants to sell books below cost as a loss leader, give them away, or pay people to take them, that’s between them and their customers.

Yet notice that the ABA regards the most successful book sellers as eating up the whole market share, understood as a fixed pie, thereby taking business that would otherwise be given to the smaller bookseller. Yet that’s a naive view of markets. As Ayn Rand observes, large producers often make the existence of smaller ones possible by keeping down costs. She makes this point in the course of describing the effects of Ellis Wyatt’s quitting:

It had lasted less than six months after Ellis Wyatt had gone — that period which a columnist had gleefully called “the field day of the little fellow.” Every oil operator in the country, who owned three wells and whined that Ellis Wyatt left him no chance of livelihood, had rushed to fill the hole which Wyatt had left wide open. They formed leagues, cooperatives, associations; they pooled their resources and their letterheads. “The little fellow’s day in the sun,” the columnist had said. Their sun had been the flames that twisted through the derricks of Wyatt Oil. In its glare, they made the kind of fortunes they had dreamed about, fortunes requiring no competence or effort. Then their biggest customers, such as power companies, who drank oil by the trainful and would make no allowances for human frailty, began to convert to coal — and the smaller customers, who were more tolerant, began to go out of business — the boys in Washington imposed rationing on oil and an emergency tax on employers to support the unemployed oil field workers — then a few of the big oil companies closed down — then the little fellows in the sun discovered that a drilling bit which had cost a hundred dollars, now cost them five hundred, there being no market for oilfield equipment, and the suppliers having to earn on one drill what they had earned on five, or perish — then the pipe lines began to close, there being no one able to pay for their upkeep — then the railroads were granted permission to raise their freight rates, there being little oil to carry and the cost of running tank trains having crushed two small lines out of existence — and when the sun went down, they saw that the operating costs, which had once permitted them to exist on their sixty-acre fields, had been made possible by the miles of Wyatt’s hillside and had gone in the same coils of smoke. Not until their fortunes had vanished and their pumps had stopped, did the little fellows realize that no business in the country could afford to buy oil at the price it would now take them to produce it. Then the boys in Washington granted subsidies to the oil operators, but not all of the oil operators had friends in Washington, and there followed a situation which no one cared to examine too closely or to discuss.

Yes! Yes! Yes!

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