So he didn't see an equilibrium but oscillation between extremes.
Hadley later became President of Yale (1920?) and I think might have
been president of the AEA. Hadley's passage from 1896 is pretty close
in insight to what Huber had in the WSJ last Thursday -- and the remedy
he pushed -- don't enforce antitrust and don't regulate -- was the same
as well.
What's scary about Huber's article is that not only does he advocate 'un-regulation' and no enforcement of antitrust laws, he prescribes merging as the antidote for corporate failure. As if somehow, consumers (he doesn't mention workers who lose jobs during mergers and after their failures) are better off with goliath companies who, out of the goodness of their corporate hearts, will magically offer top notch services and infinite price stability. If only US Airways and UAL had merged, neither would have gone bankrupt. If only WorldCom had been allowed to merge with Sprint in 1999 (damn the DOJ!), it wouldn't have gone bankrupt. (WorldCom already admitted it was manipulating earning before the Sprint merger was rejected. Sprint's merger would have only clouded their fraud for longer.) If only PG&E had been bigger, California wouldn't have had to go about 'blaming others for manipulating markets.'
How long did it take Huber to think up the term 'Cuisinart' policies anyway?
Or is it a term that's been out there that I've missed?
He writes, "Most of the time, it's a mistake to force companies to share reservation systems, power transmission lines, copper loops and other core assets, on terms minutely prescribed by regulators. Such meddling promotes a short-term illusion of competition, but not the long-term reality."
Most of the time - when? Huber neglects to examine how sharing actually wasn't happening - the biggest communication and energy merger period in history was.
Since 1996, the volume of telecom mergers was $1.7 trillion (more than 12X the first half of the decade, energy volume was $855 billion (9X). The number of deals exploded too, meaning small companies were totally flamed.
Companies didn't share if they could find a way to acquire. New entrants (like Global Crossing) and more established companies (like WorldCom and Enron) who knew how to pal up with Wall Street bought whatever they could, then lied, then failed.
New entrants that didn't pal up failed first.
As Jim wrote in an earlier post:
2) ...the political power of the small businesses has faded. -
Small companies that arose but didn't grow through acquisition failed first. In telecoms, deregulating local phone lines may have brought increased competition for new entrant broadband carriers and competitive local phone companies (CLECs) for about ten minutes. But by not regulating capacity, new carriers could own, build or buy networks without barriers. Short term greed took over long term growth: 600,000 workers lost their jobs and more lost retirement funds.
and 3) ...many (businesses) see profits to be made through deregulation and lobby to make the form of that "dereg" such that it's more likely to make profits for them (as Enron made money off of California's "dereg").
And did Dynegy (with lobbying from its parent Chevron-Texaco), El Paso, Williams, Reliant, etc. Profit by control and manipulation, not through service. This was also the case with investment banks that traded energy and owned the underlying assets (and lobbied alongside the energy companies) and will be with commercial banks, like Bank of America, that are lobbying to get into the game. Deregulation or dissection of the power industry was an open ticket to manipulate, not because it provided an opportunity to share lines and plants, but because it coincided with the means to control their production and distribution. Still does.
Huber's seems to have been living in an alternate reality the past few years.
Nomi
