Epstein: "The United States of Cartels"

The United States of Cartels
Richard A. Epstein
Defining Ideas
May 29, 2012

As the economies of both the United States and the European Union sputter along, political leaders continue to put forward the false choice between austerity and growth, without attending to the serious structural issues that have long plagued both of these major economies. In a previous DI column, I urged that the liberalization of labor markets was one key element of overall economic reform. Labor markets also play a critical role in understanding yet another overdue structural reform that deals with the distribution of power in both the U.S. and the EU: the need for dismantling long-standing cartel arrangements that cripple innovation and competition.

One distinctive feature of both the United States and the European Union is that they operate under a two-tier government structure. The U.S. federal system assigns responsibilities to both the federal government and the individual states. The EU does much the same thing. There are, of course, vast differences between the two systems. Most conspicuously, in the United States, no state has an independent voice in foreign affa