Mr. Lewis e-mailed me twice in the past 24 hours, each time to express his “relief” that I’m not an economist working for the DOJ or FTC. (This fact is a relief also to me!)
Mr. Lewis:
You correctly infer that I oppose antitrust action against Google, but you incorrectly think that my opposition comes from “simpleminded econ 101 theories with zero friction and perfect information.” And contrary to your suggestion, I’m aware that “Google’s customers can’t switch to alternatives without sustaining significant costs.”
If you read my blog you’ll discover that I’m among the last people on earth to assume zero friction and perfect information. In fact, my understanding of markets requires the existence of friction and imperfect information. These apparent bugs in markets are, in a real way, features, for each friction and imperfection presents a profit opportunity to be seized by creative entrepreneurs. In our non-nirvana reality, this seizing of profit opportunities is never perfect or complete. But if you study economic history you’ll learn that it does occur and that it forms an on-going process – a market process – of steady improvement. Such a process is the best that we mortals can hope for.
A final point. Perhaps it’s true that Google’s customers, while they can switch, must incur significant costs to do so. But doesn’t this fact testify to Google’s excellence rather than evilness? To me it appears that the reason such switching isn’t ‘easy’ is that Google is so very superior to any of its rivals. For this offense you wish to sink into Google the fangs of antitrust?!
Please study the history of antitrust. It’s a sleazy parade of economic ignorance and lawyerly arrogance marching alongside rent-seekers grasping for protection from competition. The DOJ’s current action against Google is part of this parade.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
