Don’t block the Comcast–Time Warner Cable merger
Attempting to rally public opinion against the proposed merger of Comcast and Time Warner Cable, New York Times economist Paul Krugman has trotted out the usual array of fear-mongering antitrust platitudes. Companies that are “gigantic,” “huge,” and “overwhelmingly dominant,” says Krugman, are the equivalent of medieval “robber barons,” with “unchecked power” to “dictate terms” in the economy. Regulators dedicated to “policing monopoly power” should “cut Comcast down to size” and “say no” to the proposed merger.
If only Krugman were trying to clarify the issues rather than confuse them. He knows full well that the public perception of monopoly power in cable TV exists only because government restricts competition in cable TV. Local authorities grant exclusive franchises, freezing out competition by force of law, while the Federal Communications Commission controls industry structure through licenses and other regulatory powers. But Krugman doesn’t even acknowledge that these agencies routinely “dictate terms” to companies like Comcast and TWC. Nor does he point to the obvious solution: repealing laws that limit competition.
If Krugman were really trying to dispel the fog surrounding this merger, he would use his column to explain the crucial distinction between economic power and political power.
Economic power is a business’s ability to produce goods and services for sale, leaving others free to make a trade or not. Political power, by contrast, is the power of the gun—the power to coerce by threat of fines, de-licensing, even imprisonment, with no consent needed. On a free market, there are no corporate “robber barons” who can take what’s yours against your will. Only government has power to erect a coercive monopoly.
Those who sincerely want freedom of competition in cable TV should be protesting the labyrinthine regulatory system that stifles growth and innovation in the industry. In the meantime, we shouldn’t allow productive companies like Comcast and TWC to be made scapegoats for injustices committed by government regulators. Someday, in a future America that respects property rights, companies wanting to merge their operations will no longer need to beg permission from the federal government. But for now, contra Krugman, the powers that be should get out of the way of the Comcast-TWC merger.