When thinking about the National Labor Relations Board under President Obama, most observers recall the 2014 decision in NLRB v. Noel Canning, in which the U.S. Supreme Court unanimously ruled that Obama’s kangaroo-court “recess appointments”—made when the Senate was not actually in recess—were invalid.
Noel Canning was a huge setback for the administration, requiring the NLRB to reconsider 700 decisions rendered during the period in which it lacked a legitimate quorum.
Few have noticed, however, that the Board has not altered its course since that defeat.
Over at our sister site, the Library of Economics and Liberty, David Henderson has a post taking some issue with my view that the Obama administration’s antitrust division should not have agreed to the US Airways/American Airlines merger. He argues that the better course is not to block the merger and instead to permit the building of more airport landing slots and allow foreign airlines to fly between U.S. cities.
I agree entirely with these deregulatory measures. Indeed in prior posts, I have called for some of them. But the soundness of such policy proposals does not advance the case for this merger. The Justice Department has no power to deregulate airport construction; such zoning is controlled by state and local authorities. Even foreign airline entry is controlled by another agency: the Department of Transportation. By law and competition theory, the Department should take the world as it finds it.
As a matter of law, the antitrust merger guidelines tell competition regulators to consider ease of entry as part of assessing whether an industry is too concentrated to permit a given merger. And these guidelines make sense. If entry is easy, concentration of incumbents becomes less relevant, because they remain price takers, deterred by fear of new competitors from raising prices above competitive levels. But when entry is difficult, that crucial discipline is absent.
More generally, antitrust regulators cannot assume a world that does not exist, because that premise makes the perfect the enemy of the good.
Last week American Airlines took two extraordinary actions that confirm that the airline industry has become an entrenched oligopoly. First, American Airlines began a bizarre new advertising campaign. Its message: be a good flyer by showing consideration to your seatmates and maintain equanimity in the air. This advertisement makes little sense in a competitive industry. It does not tout low prices or any distinctive amenities of American that might help it gain market share. An industry that implicitly coordinates on price and amenities, however, might benefit from the such an advertisement, if it got more people to fly generally.
Second, American Airlines gave a $13 million severance payment to its President even though he was joining a rival, United Airlines. And the severance was not a matter of legal obligation but at its discretion. It is wholly against usual business practices to give gifts to a high level executive who goes to work for a rival. The more frequent reaction is to sue the official for endangering trade secrets. But again this course of action makes sense if American, United and other airlines are engaging in the implicit coordination made possible by oligopoly. The President of American would then still working for a common cause. Why not maintain goodwill in those circumstances?
My coblogger, John McGinnis, recently had a great post about the new programs for forgiving college loans for certain students. John was responding to this article in the New York Times about the programs. John had three complaints about the program, all of which I agree with: First, differential forgiveness [which forgives loans for people who work in the so called public interest sector but not the private sector] could distort choices in the labor market, to the disadvantage of the private sector. . . . Second, more favorable terms for student borrowing takes away pressure on educational institutions to cut costs. …
George W. Bush’s presidency had its problems, but Bush’s “Trumanesque,” plain-speaking style provided a certain clarity to American foreign policy. Granted, Bush had a propensity to mangle the English language, but generally speaking the American public and foreign leaders knew where he stood. His penchant for plain speaking occasionally got him into trouble, for in as much as Bush’s macho swagger turned off the more sensitive among us, his boasting about “bring ’em on” (regarding attacks on American forces in Iraq) or “there’s an old poster out West… that said, ‘Wanted, Dead or Alive’” (regarding the fate of Osama Bin Laden), was seen as positively imbecilic.
Mimicking the antics of George Costanza, the Obama team seems to think that by doing the opposite of George Bush they will usher in an era of universal peace and happiness.