Will Washington Take Down Apple—And Why?
The U.S. Department of Justice has not only successfully sued Apple for arguably non-existent anti-trust violations in the e-book market. It has even demanded – and gotten – a court-appointed “monitor” placed inside the company to supervise the company’s pricing decisions.
This is a company that went from an $18 billion market value in 2000 to a $455 billion market value in 2013. During the same period, Microsoft’s market value fell from $603 billion to $290 billion. Should anyone expect the success story to continue now that the government is meddling with all the company’s pricing?
Apple appealed the anti-trust judgment this Tuesday but was unable to get the government “monitor’s” work suspended while the case is under appeal. Among the interesting facts that have come out about the “monitor,” Michael Bromwich, it has been revealed that he bills for his time at $1,100 an hour and charged $138,432 for his first two weeks of “work.”
Apple has labeled Bromwich’s appointment “unprecedented and unconstitutional.” We wish it were unprecedented. This form of government price interference and intimidation has become increasingly common.
Joseph Covington, who headed the Justice Department’s Foreign Corrupt Practices Act Division in the 1980s, told Forbes, in reference to monitors appointed to enforce that act, “This is good business for Justice Department lawyers who create the marketplace [for monitors] and then get… a job there [after they leave government].”
Nor is it limited to the Justice department. If a company gets into the sights of the Federal Trade Commission (FTC) or even the Food and Drug Administration (FDA), the terms of settlement increasingly include “monitoring” by highly paid lawyers, who are typically former FTC or FDA employees.
This is not just the small-time corruption it might seem. It is tremendously damaging to the economy. The collapse of the Soviet Union should have demonstrated once and for all how important honest and unimpeded prices are for an economy.
If the government takes control of pricing, as it is doing in more and more sectors of the economy, it is guaranteeing unemployment and economic suffering. It is also guaranteeing an ever greater problem of crony capitalism, as companies respond by increasing their campaign contributions or take other steps to buy influence in Washington.
Click here to read the rest of the article at AgainstCronyCapitalism.org.
Hunter Lewis is co-founder of AgainstCronyCapitalism.org, co-founder and former CEO of Cambridge Associates, a global investment firm, and author of two recent books, Free Prices Now!, about the Federal Reserve, and Crony Capitalism in America 2008-12.