Wall Street Journal and AFL-CIO Unite

By Clive Crook

It's not every day that you see the editors of the Wall Street Journal agreeing with the leaders of the AFL-CIO on an issue of economic policy. Both authorities deplore the Justice Department's action against AT&T's takeover of T-Mobile. The Journal objects on standard "let the market have its way" grounds; AFL-CIO objects because it says the merger would create jobs (and, as AFL-CIO president Richard Trumka put it when the deal was first announced,  because of "the pro-worker policies of AT&T, one of the only unionized U.S. wireless companies").

On the face of it, the proposed deal does look anti-competitive. My opening prejudices are therefore aligned with the Justice Department--but the issue is complicated. I'm keeping an open mind. See Faulhaber et al on competition in the US wireless market (presumptively pro-merger); a note by the left-leaning EPI on the merger and its jobs impact (pro-merger); and David Neumark's rebuttal, on Sprint's behalf, of the EPI jobs estimate (anti-merger).

The essentially unforeseeable jobs impact is actually beside the point. What matters is whether the merger, by diminishing competition, would harm consumers. That is what Justice will have to prove, and it might be a struggle.

Whatever the merits of the DoJ's action, you can hardly accuse the administration of political opportunism in this. Blocking the merger--with its promises of repatriated jobs and new investment, however specious--is surely a riskier thing to do politically than letting it slide by. Right or wrong, this looks like a principled rather than a tactical or (as the Journal argues) self-interested intervention.


This article available online at:

http://www.theatlantic.com/business/archive/2011/09/wall-street-journal-and-afl-cio-unite/244493/