Conservatives Are Wrong to Call for Government 'Trust Busting'

Censorship is when government limits speech, and tech firms are not monopolies. They are successful private businesses; others are free to compete with them.

One bedrock principle of American conservatism has been its commitment to a freer marketplace. As Ronald Reagan noted, "The societies that have achieved the most spectacular, broad-based progress are neither the most tightly controlled, nor the biggest in size, nor the wealthiest in natural resources." What unites them, he added, is their belief "in the magic of the marketplace." In an about face, conservatives these days are increasingly likely to view markets as a dangerous form of dark magic that must have more government control.

For instance, Glenn Harlan Reynolds, a University of Tennessee law professor and prominent right-of-center blogger, last week penned a USA Today column arguing that President Donald Trump ought to follow the lead of trust-busting Teddy Roosevelt and use his power to bust Facebook, Amazon, Netflix and Google. TR was a Republican, but he was a progressive, which makes him an odd hero for conservatives. Busting might sound benign, but it means government regulation and control.

Reynolds describes these "new tech monsters" as monopolies and quotes TR complaining that "when aggregated wealth demands what is unfair, its immense power can be met only by the still greater power of the people as a whole." This kind of rhetoric usually emanates from the political Left, which finds every inequity in the capitalistic system to be unfair. Its solution—and it always amounts to the same basic solution—is to empower the government (working on behalf of "the people as a whole") to tax, regulate and even commandeer private companies.

Nevertheless, I expect many populist Trump supporters are nodding their heads in agreement to this proposal. In fact, blustering about the tech industry has become something of a talking point on the right. The reasoning has little to do with principles and more to do with expediency. They don't like that these big, mostly Bay Area firms seem to be run by progressives. They argue that such companies have used their market power to "censor" conservative opinions. These critics offer some compelling examples of troubling behavior, even if they need a lesson in word usage. Censorship is when government limits speech. And these firms are not monopolies. They are successful private businesses, but others are free to compete with them.

Responding last month to conservative calls for breaking up tech companies, the Foundation for Economic Education's John Phelan noted, "In February 2007, The Guardian asked: 'Will Myspace ever lose its monopoly?' In April 2008, Facebook overtook Myspace in the Alexa rankings, and in 2009 Myspace lost half of its user base."

Indeed, the market shifts quickly and brutally. Companies that only a few years ago seemed as if they were permanent monopolies have gone away. Meanwhile, conservatives want to use the public-utility model to bust up these big companies, yet utilities are the nation's only true monopolies because the government uses its muscle to forbid any competition. Conservatives used to understand such elemental free-market ideas.

As Phelan detailed, the years of monopolized public telephone utilities were years of low innovation. Only after deregulation did the cell phone and all the other immense innovations take place. There's definitely a connection. Utilities are guaranteed a profit and protected from competition, so they don't innovate. They also are protected from liability, which explains some of the intractable problems and rising prices that take place on their watch. If you are guaranteed a profit based on a formula rather than your competitive prowess, how competitive will you be? If conservatives get their way with regard to the Internet, imagine how that will hobble its growth. And if you're worried about censorship now, just wait until the federal government—and Republicans won't always be in control of it, you know—gets its grubby paws on it.

Internet regulation isn't the only example. President Trump has brought many conservatives aboard his quest to expand tariffs, which are an aggressive form or taxation and regulation. The government slaps enormous taxes on companies that produce particular products to shield favored companies from competition. It also shifts trade decisions from private companies to bureaucrats. It's a pernicious form of crony capitalism that allows the government to pick winners and losers.

There always has been an anti-market element within the GOP, but that faction hadn't been in ascendancy until recently. Now such ideas are spreading. I remember when Fox News' Tucker Carlson complained that many of Amazon CEO Jeff Bezos' "employees are so poor" and that "you're paying their welfare benefits. And he's not the only tech billionaire offloading his payroll costs onto taxpayers. Why is only Bernie talking about it?"

Conservatives ought to think long and hard before heading down the Bernie Sanders path. It might be fun to stick it to private companies they don't happen to like. But it's never worth the price to abandon the magic of the marketplace in favor of the heavy hand of government.

Steven Greenhut is Western region director for the R Street Institute. He was a Register editorial writer from 1998-2009. Write to him at [e-mail].

This column was first published by the Orange County Register.