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Sen. Paul Pledges to Repeal the “Harmful” Robinson-Patman Act
July 25, 2024
In 1933, Americans passed the 21st Amendment repealing the 18th Amendment, also known as Prohibition – aka, the stupidest law in American history. Three years later, Congress passed the Robinson-Patman Act, a reasonable contestant for the second-stupidest law in American history.
Robinson-Patman was meant to curb what was seen as predatory regional and national retail chains from undermining local businesses by offering consumers lower prices. It was a panic that presaged the anxiety over Walmart 60 years later. Walmart’s policy of “everyday low prices” was likened to the detonation of an economic neutron bomb. Yet cities and towns continued to exist and have small businesses. Economists eventually praised the “Walmart effect” for keeping inflation low.
Similar logic undermined the fears about national chains of the 1930s. By 1977, the Department of Justice released an analysis that showed that the Robinson-Patman Act increased consumer prices and harmed consumer welfare. As the years progressed, Robinson-Patman became so discredited that it was reduced to one of those quirky laws that are on the books but no longer enforced – like the law in Northfield, Connecticut, that makes it illegal to walk down the street eating a raw onion. (Personally, not eating raw onions sounds like a good law to me. It’s also illegal to eat a frog in California if it died in a frog-jumping contest. Raw onions and frogs, please no one put those two things together.)
Now, as the Harris campaign seeks someone to blame for inflation other than the administration’s own reckless budgetary policies, Robinson-Patman is being deployed to protect consumers from the deadly scourge of lower prices. Sen. Paul in a piece in Reason notes the absurdity of using the law to go after the rebates in drug prices negotiated by pharmacy benefit managers. “Savings from rebates are passed down in the form of lower premiums for patients,” Sen. Paul writes. “Rebates lower drug prices, they do not raise drug prices.”
Even early man understood this: Rebates are discounts. Consumers need discounts. Discounts good. Got that?
“Congress can no longer stand by as Biden plays the inflation blame game and the FTC’s power grab inevitably harms consumers,” Sen. Paul writes. “That is why I plan on introducing legislation that would repeal the harmful Robinson-Patman Act. If you want to ensure our economy thrives and consumers receive the most competitive price, a good start would be to rid the FTC of a power that prohibits competition.”
Clear thinking like that makes me grateful that we have a Sen. Paul – and makes me wish we had more like him. In the meantime, the difficulty Sen. Paul may have with his bill is winning over his fellow Republicans in the thrall of long-discredited progressive theories. By the way, in Arizona you can’t allow a donkey to sleep in your bathtub after 7 p.m.