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Letter to the Editor
“Conservative” Court ruling will cripple the free market
web posted July 2, 2007
In last week’s Leegin v. PSKS ruling (pdf. file) the Supreme Court voted 5 to 4 to overturn the Sherman Anti-Trust Act, reauthorize monopolies and collusion among them, end free market competition, cripple the law of supply and demand, and set our country on a course bound to cause inflation, decimation of the middle class and other unforeseen consequences. In short, the ruling allows corporations and groups of corporations in an industry to set minimum retail prices for products and forbids retailers from selling those products at a discount.
Justice Kennedy summarized the majority’s rationale with the dangerous logic that minimum price agreements will eliminate competition, resulting in better customer service, making the higher prices worth it:
“If the consumer can then buy the product from a retailer that discounts because it has not spent capital providing services or developing a quality reputation, the high-service retailer will lose sales to the discounter, forcing it to cut back its services to a level lower than consumers would otherwise prefer. Minimum resale price maintenance alleviates the problem because it prevents the discounter from undercutting the service provider. With price competition decreased, the manufacturer’s retailers compete among themselves over services.”
Justice Breyer summarizes the minority dissent by writing “…Resale price maintenance agreements …can prevent dealers from offering customers the lower prices that many customers prefer; they can prevent dealers from responding to changes in demand, say falling demand, by cutting prices; …The only safe predictions to make about today’s decision are that it will likely raise the price of goods at retail (outlets).”
This radical ruling paves the way for big oil to roll prices up to astronomical numbers. It will allow communist Chinese corporations to set higher prices and make obscene profits off of the slave labor they force to produce the products. It will siphon off even more dollars to their economy at the expense of the American citizenry. Watch our trade deficit balloon even further. Look for European and Asian consumers to abandon American products in favor of countries that still have market competition. It’s an arrogant ruling because the so called “conservative” judges have stated that they know more about the marketplace than the forces of capitalism and the free market do! It’s another case of the court making law rather than interpreting it. It’s a case of turning control of the marketplace over to the producers and not the consumers. It reduces the freedom of the people to make economic choices. The five judges have rewritten the rules of our economy and overturned the foundations that have governed it for nearly 100 years. They have taken us back to the days of the robber barons of the late nineteenth century. The only winners here are mega-corporations and the lawyers who will reap billions in lawsuits challenging the ruling in the years to come. Other than U.S. consumers, the big losers are small businesses, the engine of the American economy that will be even less able to compete against the giants of industry. Internet businesses will also no longer be able to offer discounts based on low overhead costs.
What can we do? We can write our congressmen to register our outrage but if they can’t even agree to protect our national border they surely won’t care about the loss of our free market power. The only fixes I see for our country are either to ditch the two party system or call for a Constitutional Convention and reclaim the rights We the People have fought for only to have the politicians and judges redistribute them to the unworthy over the years. We’d best hurry though. Our rights are melting away faster than the glacial ice most are more concerned about.
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