Once again I wind up the year with a few loose ends that do not provide enough fodder for a full column. Hopefully, this will clean up the business of 2006 so that I can wish each of you a happy holiday season and my best wishes for a terrific 2007.
On several occasions, I have written about my objections to the concept of an optional federal charter. While most of the field people I know are of a similar mind, a few do not agree and have asked for more specificity as to my objections. My main concern has always been the probable loss of the “state action doctrine” which enables the states to provide such things as anti-rebate statutes and replacement regulations. Historical experiences will, I believe, justify this concern.
In 1931, California passed the first fair trade law in the nation. The law provided that manufacturers could set the price for their merchandise and all retailers must adhere to that price. The purpose of the law was to protect small businesses from competition from large department stores that could afford to discount the goods. Other states soon followed with similar laws. In about 1937, the courts struck down such laws as being in violation of the Sherman Anti-Trust Act. A sympathetic Congress quickly passed the “Miller-Tydings Act,” which exempted state fair trade laws–much like the McCarran-Ferguson Act exempted insurance. Over time, the concept of discounting became more prevalent and acceptable, and states repealed their fair trade laws. In 1975, Congress repealed the Miller-Tydings Act, and fair trade laws are now illegal in all states.
I have seen nothing in any of the OFC proposals that would seek to preserve “State Action Doctrine” for companies operating with a federal charter. To have a parallel system with some companies operating free of anti-rebate statutes and replacement regulations while state-chartered companies are still restrained would, I believe, create chaos in the marketplace and perhaps bring pressure to eliminate these rules altogether. I do not believe Congress would be as sympathetic today towards price stability as it was in 1937. I’m certain that would be the case with Sen. Trent Lott, R-Miss., who has vowed to repeal McCarran-Ferguson. This is not a good time to give him more ammunition.
I don’t normally get involved in politics in this column, but I feel that I have license to do so in response to Steve Piontek’s November 13th editorial, entitled “‘S Wonderful.” Steve’s exuberance over the election of Democrats to control the Senate and House was overflowing, to say the least. I will no doubt hear from those who share his enthusiasm for the new order–but what the heck–here goes.
One of the great thinkers of the ancient world, Aristotle, observed in the 4th century B.C.: “He, who has never learned to follow, cannot be a good leader.”
For the past six years, Democrats in Congress have been miserable followers. For almost all of this time, they have whined about lost elections and griped about tax cuts that pulled us out of the recession President Bush inherited, doing so in the shortest time on record and continuing to provide a robust economy. In my opinion, their leaders have voted against major security initiatives to protect the country, blocked vital appointments and undermined the President in foreign affairs, ultimately making diplomacy more difficult.