Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Eurofine Against Intel Is Reminiscent of the 1930s

The European Union has just levied a $1.45 billion fine against Intel for "anti-competitive practices." Specifically, the Europen Commission fined Intel for giving "volume discounts" to purchasers who would by Intel's x86-line product "exclusively" of similar products made by competitors such as Advanced Micro Devices.

Lower prices for customers are a good thing, and are generally regarded as such. Except at a time like this, of price deflation. Then it scares the dickens out of governments, if for no reason that it means either lower wages, or higher unemployment, given that nominal wages are "sticky....  (Inflation is preferred because it has the opposite effect of lowering unemployment by reducing real wages, while maintaining "sticker price" pay.

That appears to be the driving force between this, and other European legislation. The 1930s version was called "beggar my neighbor," with the European countries scrambling to the bottom. (Burdened by the debt from the post World War I Versailles settlement, Hitler, and Germany, "won.") This time around, Europe is now "united" economically, meaning that "my neighbor" is now the United States, or perhaps Asian countries like China.

President Obama has signalled his intention of aligning his trade policy more closely with that of Europe. If he does, he might want to look at New Deal legislation such as the Robinson-Patman Act  (of1936), that prohibited giving volume discounts on groceries to chain stores (e.g. WalMart). That might help drive local stores out of business. Similar legislation then--and today--would represent a legal form of "price fixing." Such concerns "way back when" led to the Smoot Hawley tariff of 1930 on European goods.

Unfortunately, there is a tendency for one act to breed another. An escalating "trade war" is the last thing we need right now.