Every conservative pledges fealty to "free markets," but it's not just a mantra - there's a reason why conservatives believe in letting markets rather than governing elites determine outcomes. Conservatives don't believe any collection of governing officials has sufficient knowledge to know what result a particular market should deliver, much less how to make it happen. So conservatives trust the bottom-up, real-time choices of millions of consumers and businesses acting in the marketplace to determine outcomes rather than trusting the supposed higher knowledge of politicians and bureaucrats attempting to direct things from the top down.
That's why it was disappointing to see Texas Attorney General and gubernatorial candidate Greg Abbott join the Obama administration in opposing the nearly concluded merger between American Airlines and US Airways. In doing so, he reveals that, in the choice between the modesty of markets and the arrogance of the governing elite, Abbott has surprisingly sided with the government class.
Perhaps no area of the law is more informed by one's political philosophy than antitrust law. If you accept the modest conservative assumption that markets are more reliable than bureaucrats, then you see mergers simply as an extension of economic freedom. If demonstrable harm to consumers results, there are armies of antitrust lawyers fully capable of going after any bad actors. Forbearance until there is evidence of demonstrable harm is a defensible conservative philosophy of antitrust.
Unfortunately, most of the time activist attorneys general like Eric Holder assume that they are in possession of such depths of wisdom and knowledge that they can know in advance the results of a merger, and that they are thus justified in placing themselves and their giant brains in the way of a carefully considered and planned merger affecting thousands of people and billions of dollars. And so they charge in where humbler men know better than to tread.
The policy danger of such an approach is that not only do governing elites not have enough knowledge to predict the impact of a merger, but neither can they anticipate all of the harmful unintended consequences of prohibiting the merger. Economies are just too complicated. Taken to its logical conclusion, the activist approach to antitrust leads to European-style competition policy, where the authorities unhesitatingly assume that they know how a particular market should work - they know how many companies are needed for a functioning market, they know how to define competition, they know what is best for consumers - and they manipulate markets at their whim.
The real question is: Why has Abbott made the stunning leap from the Texas model of economic freedom to European-style competition policy? Think I'm being unfair? During a radio interview with Dallas radio KSKY-AM's Mark Davis a few days ago, Abbott said that if consumers don't have a choice of more than three competitors, that's not a free market. Not only is that an expression of European-style competition policy, but it also no doubt caused jaws to drop among any number of other industries in Texas when they heard that their presumptive future governor thinks their industries aren't competitive, either.
Abbott is wrong to have dragged the state of Texas into an alliance with the likes of Holder in opposing the American Airlines/US Airways merger. The move calls into question Abbott's confidence in markets and it may give some Texas Republicans pause for thought as they contemplate Abbott's inevitable coronation as their nominee for governor.