Apple Followup: Barbara Straniero's Mistaken Understanding of "Free Market"

A rebuttal to my NJ Star-Ledger letter-to-the-editor was published on 4/21/12. It was written by Barbara Straniero of Scotch Plains, NJ, and is available online under the heading, Antitrust laws wouldn't be needed if corporations played by the rules. 

Here is my response, posted in the comments section:

zemack April 21, 2012 at 10:39AM

Wouldn’t the company with the best product or the one with the lowest prices simply make the most profits?

 Generally, yes. And as you say, product quality and price are both relevant factors. But how are “lowest prices” set in a free market?

The true market value of a product would be decided by the consumer, who would receive the best value for the money.

Wrong. Otherwise, why wouldn’t any consumer decide on $0.00? Market value is established by mutual consent of “consumer” and producer. Prices are “fixed” every time a “consumer” voluntarily buys a product from a willing seller. Apple and the publishers voluntarily agreed to offer their products for sale at a certain price. “Consumers” voluntarily bought those products in droves, thus establishing market value. If that is price fixing, then every one of the billions of sales that take place in America is “price fixing,” and every e-book “consumer” is guilty of price fixing. In fact, it is the government that is trying to coercively fix prices below the established market value, not the companies or the “consumers.”

You speak of “free market rules,” but what do you think the “free” in free market means? It means, free from physical force and coercion. It means free and voluntary agreement. It means when both parties don’t agree on the terms of a contract, including price, each is free precisely to “take their business elsewhere” regardless of size (if “equal protection under the law” means anything).

Apple offered to contract with the publishers on certain terms, which included requiring offering the same pricing terms to Apple’s competitors. The publishers agreed to those terms voluntarily. Amazon then agreed to the publishers’ terms, voluntarily. “Consumers” then agreed to those pricing terms, by buying millions upon millions of e-books and e-readers. All transactions were voluntary. The publishers were free to turn down Apple’s contract. Amazon was free to turn down the publishers. “Consumers” were free to refuse to buy. None did. No other companies were barred from entering the market. Unless one has an ingrained entitlement mentality, one can call this nothing but “free and open competition.” What the companies did was compete. What the government is doing is stifling competition by criminalizing legitimate contracts.

As to your equation of “antitrust laws [with] copyright laws, bribery laws, corporate spying laws or computer hacking laws,” that is like equating an armed robber with his victims. The last four are intended to protect property rights and prosecute fraud. The antitrust laws upend “free market rules” by violating the rights of private citizens to engage freely in voluntary, mutually beneficial contracts. As I said in my letter, this case is legalized extortion by your government officials.

For more, I recommend:

The Abolition of Antitrust

States Join Extortion Racket Against Book Publishers

3 Things Everyone Needs to Know About the Apple Antitrust Case