When the federal government intervenes in the economy, it regularly accrues to the benefit of Big Business and to the detriment of smaller competitors and taxpayers.
That’s the story with the Biden administration’s latest antitrust action, which successfully blocked the merger of JetBlue and Spirit Airlines. If the two of them had combined, they would have become the fifth-largest airline and still be much smaller than any of the big four airlines — Delta, American, United, and Southwest.
So President Joe Biden used antitrust law to protect the four titans of the industry from similarly scaled competition.
Biden’s argument, if we are to be generous, is that it’s more important for Spirit, Jet Blue, SkyWest, and Allegiant to have more competition than for Delta, American, United, and Southwest to have more competition.
A federal judge bought this argument.
Now maybe it’s true in some sense. Maybe the optimal market shape for consumers is to have two different tiers of airlines, discount and full-service, and to have as many discount carriers as possible. But it’s just as likely that what best benefits consumers is an airline market in which no airline or small cadre of airlines is protected by a moat.
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It’s also possible that whatever losses the consumer incurs from some suboptimal airline arrangement are made up for by gains to labor, to suppliers, or in economic efficiency.
That is, nobody is smart enough to know exactly what is best, and so Biden and a federal judge playing chess master with this industry is hubristic folly. When we see the government intervention benefit the biggest businesses in the industry, we ought to be even more skeptical.
