RECAP: Robert H. Bork, Jr. Discusses The Consumer Welfare Standard at Virtual Event Hosted by NetChoice on Antitrust
Transcript of Robert H. Bork, Jr., President of The Bork Foundation, Remarks:
Thank you for that kind introduction. I am grateful for the opportunity to speak to this audience. After a laborious process, we are about to republish The Antitrust Paradox which has long been out of print. Books should be available on Amazon in April. The new edition is special because it includes all the elements of the two previous editions and a new introduction by Senator Mike Lee, who is a friend and champion of the Consumer Welfare Standard. You can keep track of the relaunch by going to antitrustparadox.com
I have been a little nervous about speaking to you today not because Carl used a 15-year-old photo of me when I had hair and my hair had color. And not because NetChoice gave me top billing over the far more distinguished Judge Ginsburg, But because they said I was a decades-long expert in the field of antitrust.
True confession: I am not a lawyer, although I play one on Zoom, but I did get my degree, of sorts, at the dinner table growing up.
So, I think I have a good insight into The Antitrust Paradox and the man who wrote it.
My father is known to most people as that guy who did not make it onto the Supreme Court. And some don’t even know who he is: One high school student grumbled on Twitter a few years ago, “Who is Robert Bork and why is he on my Government AP exam?”
Of course, my father was much more than his Supreme Court nomination. And in one area of law, antitrust, he was everything.
When my father died in 2012, Professor Barach Orbach told The Washington Post, “Antitrust was defined by Robert Bork. I cannot overstate his influence. Any antitrust person would tell you the same thing. Perhaps we will differ on the interpretation of him, but Robert Bork is the single most important person in antitrust in America. Whatever happened in 1987 was insignificant by comparison.”
How did it happen that a man many think of first as a judge and constitutional scholar made arguably his greatest contribution to law in antitrust?
The way Professor Orbach explained it is eerily similar to where we find our country today.
Professor Orbach told the Post:
“In the nineteen sixties, [Bork] was concerned the socialists would take over the country through antitrust. Antitrust then was about protecting small businesses. He built a full framework about how antitrust should be more about economic efficiency than about helping small businesses.”
This was my father’s impetus to write a book that would change America for the better and would contribute to 40 years of economic growth and innovation.
I was in 7th grade then practicing math by adding up his students’ exam scores as my father worked in his cramped, attic study in New Haven to carefully develop and substantiate his concept of antitrust law.
I have vivid memories of him: He was 40, sitting at a desk my mother made for him from an old door, scribbling with his a Scripto mechanical pencil on the blue-lined pages of his yellow legal pads. A cloud of smoke surrounded him from the Kent cigarette hanging from the corner of his mouth.
This was before the beard.
While I was practicing my addition and subtraction, my father was teaching himself calculus. He explained in an article about the same time: “The specialist in antitrust should have as much command of basic price theory as specialists in other fields of law have of forensic medicine or tax accounting or the principles of chemistry.” So, my father taught himself calculus.
The product of his labors was his masterpiece, The Antitrust Paradox: A Policy at War With Itself.
The conclusion of his work was the profound declaration that antitrust law was designed to protect consumers.
The Supreme Court had demonstrated this by habitually prohibiting price fixing, which it identified as maximizing the welfare of the consumer as the Sherman Act’s defining principle. And yet, antitrust law had become a mélange of conflicting decisions that tended to raise prices and support inefficient firms to the detriment of consumers. That was the “paradox” of his title.
Post-1940, the Court’s antitrust jurisprudence focused on more exotic goals: restricting vertical mergers, tying products together and other practices that my father’s study of economics showed usually posed no harm to consumers. Thus, the Court’s findings directly contradicted the Court’s objective.
Worse, he saw that antitrust law had fallen under the sway of subjective biases. Justice Louis Brandeis denounced the “curse of bigness” against “small dealers and worthy men” – the idea being that it was the job of the law to protect small, often artisanal firms against the predations of larger, more efficient firms. Justice William O. Douglas took up this cudgel in the 60s and 70s, thwacking businesses for being too big, too successful, and too corporate.
Robert Bork assailed this jurisprudence as early as 1967, when he took to the pages of Fortune magazine to criticize Justice Douglas for punishing Procter and Gamble for its acquisition of Clorox. Douglas’s opinion was that the increased efficiencies had raised “entry barriers,” thus harming competition.
My father met this kind of thinking with cool disdain.
Like many antitrust opinions he criticized, Douglass’s had no real economic analysis. There was no attempt to define “raising entry barriers” in actual, economic terms. If the ease of entry is the hallmark of competition, he wrote, then it should be lawful for Clorox and its rivals to rig prices – the higher the prevailing price of bleach, after all, the easier it would be for outside firms to enter the market.
What was getting lost here was the obvious question: Did the merger or acquisition or practice in question harm or benefit consumers? To provide the means to answer these questions is why I found my father studying calculus late at night. He believed judges have a duty to think through the real-world consequences of their jurisprudence in terms of business and economics.
Thus, the Consumer Welfare Standard was born as the metric by which to apply a cost-benefit analysis to antitrust law by weighing those costs and benefits from the perspective of the consumer.
There are those who wrongly attach a political description or motive to the Consumer Welfare Standard, such as “conservative,” “Republican,” or “pro-business.” The Consumer Welfare Standard has no political affiliation or ideology. It is simply pro-consumer. My father was equally critical of Republican and Democrat administrations when they misapplied or misunderstood antitrust law. That is why he was able to support the government’s lawsuit against Microsoft when he thought a real harm to consumers had occurred.
The Antitrust Paradox also advanced the view that judges should apply neutral principles, with no slant against or for “bigness,” or “small dealers,” or a magical ability to identify “worthy men.” Justice Douglas, who longed to become president, was perhaps the greatest example of what my father thought a judge should never be – a philosopher king on a bench.
Robert Bork saw that if antitrust law were detached from consumer welfare, it would be free to pursue aesthetic and political goals at the expense of consumers and innovation.
Worst of all, he saw in the jurisprudence of his times a dangerous anti-democratic principle arising. There is a kind of consumer democracy that Americans practice at the checkout aisle by voting with their dollars. Then there is actual democracy in the laws made by officials elected by the people.
When judges use antitrust law to reorder business according to their personal whims or aesthetic principles, they degrade both forms of democracy.
Antitrust law detached from the Consumer Welfare Standard becomes a judicial Ouija board – it is apt to go anywhere and spell out anything guided by the personal preferences of the judge. Such rootless jurisprudence allows judges to create new law, introducing a level of unpredictability into mergers and acquisitions that stymies innovation, harming consumers.
My father advocated for a principle validated by empirical research, supported by history, and leavened with his dry, sardonic take on the state of the law.
I cannot think of any other book that changed the practice of law almost instantly.
The first Supreme Court opinion to cite The Antitrust Paradox came just a year after the book’s publication. From that moment on, the Court explicitly adopted the Consumer Welfare Standard as antitrust’s defining principle. In 1993, the Court cited The Antitrust Paradox in another case, even though my father was a lawyer representing the respondent in that very case. As you can imagine, when the Court cites you in your own case, you are almost certain to win – and he did.
And so, for forty-three years, the Consumer Welfare Standard has been the North Star for adjudicating antitrust law in the United States.
In a preface for the forthcoming 2021 edition of The Antitrust Paradox, Senator Mike Lee writes: “Judge Bork’s ideas stand out for their disarming clarity and near-total victory. Returning to his seminal antitrust treatise over 40 years after its publication dispels any doubt. What he wrote as an argument for what the law should be now reads more like a penetrating exposition of what the law is.”
That is, until now.
This common understanding of antitrust law’s purpose is in danger of being replaced by theories that are even more vague, subjective, and politicized than they were before the book was published. We are seeing a renewed push to forget what we have learned and embrace what we once legitimately rejected. For example:
Critics now charge that the Consumer Welfare Standard has an obsessive focus on price at the expense of innovation and competition. This has never been true. The Antitrust Paradox established that a successful consumer standard bears many fruits in addition to low prices among them – innovation, output, abundant product choices, and quality.
As my father wrote in his September 1969 Fortune article, “Economics provides one other lesson that should be written in red letters across every antitrust prosecutor’s bathroom mirror: Injury to competitors is irrelevant to the question of injury to competition and consumer welfare … The only legitimate goal of our present statutes is the maximization of consumer welfare … Efficiency-motivated mergers deserve the law’s protection. The market will penalize those that do not in fact create efficiency.”
These principles are now being jettisoned.
What is behind this renewed wave of rootless antitrust action? Why is the happening now?
On the left, a new Brandeis movement is underway, articulated by Lina Khan and others. Ms. Khan says, “The new Brandeis movement isn’t just about antitrust. Rather, it is about values.”
Sen. Amy Klobuchar has introduced into the 117th Congress a sweeping bill that contains many provisions to protect “workers and consumers, spurring innovation, and promoting economic equity.”
Once again, a body of law meant to defend consumers is now being adorned like the White House Christmas tree. It protects workers. It promotes equity. It somehow and here is the jurisprudential Ouija board – helps us realize new and better “values.”
Antitrust is in danger of becoming the Swiss Army knife of laws, only it will not open a single bottle of wine.
Sen. Elizabeth Warren, not to be outdone, would transform antitrust law into mechanisms for government to regulate any American business of significant size. And she drew on Lina Khan to come up with her plan to bust up the Big Tech companies.
On the right, conservatives, outraged by the liberal bias by Big Tech, are suddenly all too happy to join in this dilution of long-standing antitrust principles. Many are ready to throw out the Consumer Welfare Standard and neutral principles all to give Marc Zuckerberg and Jeff Bezos a little heartburn.
So, we live at an odd moment when antitrust law has become a kind of Tinder for politicians, matching one strange bedfellow after another.
“You like breaking up Big Tech?” ask Ted Cruz, Donald Trump, and Josh Hawley to Lina Khan, Elizabeth Warren and Amy Klobuchar, “well, so do we.”
And so, they all swiped right.
The result is antitrust lawsuits against Google and Facebook supported by both the Trump and Biden Administrations, as well as by almost every state. Ken Paxton, the Texas Attorney General who tried to overturn Joe Biden’s election in the Supreme Court, is taking the lead for liberals like Letitia James of New York.
As I was watching all this unfold, I felt I had to do something to reinforce what we already know. We know what works – a legal regime that has protected consumers for decades. So, I established the Bork Foundation and the Antitrust Education Project and became a publisher, bringing The Antitrust Paradox back into print. I am here today to defend the Consumer Welfare Standard from this bipartisan assault.
So, I want to tell you…
If you are a conservative and you are angry at Amazon for dropping Parler from its servers…
Or you believe there are serious free speech implications in Facebook’s blacklisting of former President Trump…
Or you were angered when Twitter suppressed the Hunter Biden laptop story, while not suppressing other stories…
Or – if you are a progressive concerned about rising inequality…
Or the crushing of small business…
Or the need for more civil discourse and quelling of extremism…
I hear you. Your concerns are valid.
And I say, trust innovation. These technologies are still young. We are still finding our way. When upstart tech developers get billions for being acquired, the big incumbents are not choking off innovation. They are acting as VC funds for innovation – with the ability to quickly bring to market new services on the scale of network effects.
We should have faith that innovation will be uncontainable. It will eventually explode today’s paradigm.
We have seen time and again that if you have patience, the market solves problems. So, we should trust time and innovation to trim today’s redwoods as they trimmed Kodak and MySpace. With the rise of blockchain, AI and the Internet of Things, it is only matter of time before we will be talking about a transformed landscape and, I am sure, a whole new set of thorny issues to argue about.
But introducing more complexity and more lawyers into the market for a vague quest for values is a recipe for more inequality. It is not a path to growth. Remember, the Department of Justice once sued IBM for its monopolization of digital technology. Judge Bork called the effort by policymakers to foresee and game the future an “economic extravaganza.”
Such extravaganzas will not only fail, but they will also breed new horrors. To buy into antitrust as the answer to the shortcomings of society and our culture – to seek to enforce “values” and “equity” and other nebulousities – can only be to the detriment of consumers, innovation, and a free market.
The Consumer Welfare Standard works because it discards nostalgia, aesthetics, and other idiosyncratic notions in favor of what actually works best for consumers. We should continue, as Robert Bork taught, to rigorously analyze the “productive efficiency” of a business in strictly economic terms of its impact on consumer benefit. That is the one value that counts.
For almost a half-century, courts have applied antitrust law consistently under one fair and neutral standard. It has been understood that the welfare of the consumer is the North Star – and should always be the result – of any antitrust ruling.
That is why I am proud to republish and represent The Antitrust Paradox to a newly skeptical world.