Everyone Knows…

Note: This post from the Opus Publicum archives is a tongue-in-cheek followup to “How Libertarians Win Arguments.” It first appeared on January 20, 2014.

Everyone knows antitrust laws increase unemployment. You don’t agree? Well, consider this. Take a scenario where a firm has 1,000 employees and controls 50% of the market. Now, let’s say the Department of Justice (DOJ) issues a new set of enforcement guidelines, Big Is Bad, in which it will go after any business that controls more than 10% of a given market. After getting the federal courts to overturn its 1970s and 80s Chicago-informed antitrust jurisprudence, the DOJ prevails; they break up all of these big, bad businesses and, in the process, seriously erode economies of scope and scale. Moreover, these business are hit with major litigation costs and statutory fines. A big change in favor of vigorous antitrust enforcement means big economic effects. Now, of course we have lower-level antitrust enforcement in the U.S. than we did just 40 years ago without any “big is bad” policy, but we still have antitrust laws. Even some antitrust law is going to have some effect on businesses, ergo everyone knows that antitrust laws increase unemployment.

Everyone knows strict liability rules for common carriers such as international airlines increases unemployment. You don’t agree? Well consider this. Take a scenario where the U.S. agrees to an amendment to the Montreal Convention and imposes a strict liability base floor for any passengers killed in an accident at $1 billion. International airlines, such as United and Delta, will have a difficult time attracting insurers and, when they do attract them, the premiums will be so high that they will have to price flights out of the range for most people. The number of international flights will decrease and the airlines will have to lay off employees. Now, of course, the U.S. only subscribes to the current Convention’s mandate that carriers are strictly liable for up to $113,100 (more accurately 113,100 Special Drawing Rights) in proven damages. However, any strict liability rule for aircraft is going to have some effect on common carriers such as airlines, ergo everyone knows strict liability rules for common carriers increases unemployment.

Everyone knows the public police forces increase unemployment. You don’t agree? Well consider this. Take a scenario where a city pays its police officers $1 million a year. To fund this force, the city needs to impose a special sales tax which inflates the costs of goods and services sold in the city limits (let’s say a 10% sales tax on top of whatever state tax may be in place). So what happens? Businesses take flight for the suburbs or simply fold; unemployment increases as a result. Now, of course no city compensates their police officers at such a high rate, but all cities have police officers which they have to pay through tax revenue. So some taxes which shift costs onto businesses and individuals will be incurred. As such, everyone knows that the public police forces cause unemployment.

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