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STAFF NEWS & ANALYSIS
Market Monopolies Are Caused by Government, Not Technology, and Should be Removed by the Courts
By Daily Bell Staff - February 16, 2017

Monopolies Are Worse Than We Thought … Economists are increasingly turning their attention to the problem of monopoly. This doesn’t mean literal monopoly, like when one utility company provides all the power in a city. It refers to market concentration in general — when an industry goes from having 20 players to having only 10, or when the four biggest companies in an industry start taking a bigger and bigger share of sales. This sort of creeping oligopoly acts much like a literal monopoly — it raises prices, limits market size and tends to make the economy less efficient. – Bloomberg

Market concentration hurts workers according to this article. It’s true, but makes no distinction between voluntary monopolies and imposed monopolies.

In some cases, monopolies are valuable and adopted voluntarily. For instance, light bulbs are standardized. This is a form of voluntary monopoly and customers do not react against it from what we can tell.

Then there’s the Federal Reserve, which has been given the power to regulate and print money.

The Fed is a government monopoly with all the negatives we associate with this kind of monopoly. It runs money for the sake of a handful of people and not for the larger good.

Additionally, the idea that the Fed could run money and regulate banks for the larger good is suspect anyway. It is not going to turn into an eleemosynary institution just because it has the ability to exercise a monopoly.

More:

I suspect that creeping monopoly will prove to be one of the main reasons for decreasing business dynamism. And it could even be a contributor to slow productivity growth.

In other words, many of the diseases in our economy can probably be traced, at least in part, to the problem of market concentration. In a previous post, I mentioned a couple of potential causes. The obvious culprit would be a more lax attitude toward antitrust enforcement.

If free-market fundamentalism caused the U.S. to be friendlier toward big mergers since the 1990s, this could have encouraged concentration. One problem with this story is that antitrust fines have actually been on the rise: Regulation can increase monopoly power by raising barriers to entry.

Even within a couple of grafs the author says two contradictory things. First he says the antitrust enforcement has made monopolies more common. Then he says that antitrust fines have been on the rise but that they too can encourage monopolies by creating barriers to entry.

The article says that if regulation is the main reason for monopolies than he will have to become “much more libertarian.” In fact it is already established that regulation is a main cause of monopolies.

However, the article doesn’t see it this way. Modern regulatory trends, he declares, have only been around since about 2000. Therefore blaming regulation for monopolies must not be true.

Additionally, the article mentions a recent paper claiming that a few “superstar” companies in various fields have naturally emerged as quasi-monopolies. Modern technology may simply have change the way companies relate to each other and to the market. “Those companies could simply be out-competing their rivals.”

Yet a third reason could be because technology has broadened competition and top brands are now far more ubiquitous. Big corporations can now more easily push out smaller ones.

Probably none of this is true. What builds big corporations with monopoly tendencies is what we have been saying all along: Monopoly force exercised through the court system, and by the legislature.

Remove intellectual property rights and corporate person-hood and you would go a long ways to naturally reducing the overly large size of corporations.

If technology is the culprit, then the problem will be complex indeed. But technology is not the culprit. America’s judicial system and legislature has created the problem and can solve it in large part by walking back a few of decisions.

Of course the chance of this are fairly minimal. The current system only makes thing more complicated over time.

Conclusion: But if the court at the federal level could be compelled to reexamine its decisions and then to change them, the US would become a much better place. Involuntary monopolies would become far fewer. And that would help everyone.

 

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  • autonomous

    But the courts at the federal level can’t be forced to do anything. The geniuses who gave us the ‘supreme’ court tied the only hands that would be capable of forcing judicial re-appraisal. The lifetime appointment of mere mortals to sit in such critical seats puts the supremes nearly out of the hands of voters. Sure we have a hand in selecting the selectors, but we’re far removed from from the selecting process. Once selected, the ‘justices’ are as beyond our reach as royalty would be. They’re even beyond the reach of revolution, which can only eliminate or replace government in total. Granted, any changes to such positions needs to be protected from whimsy, but they should be at least as amendable as the constitution itself.

    • Clearpoint

      We have a hand in selecting the legislators and the president, and how does that work out??? The democratic election of judges is far from an answer.

      • LawrenceNeal

        Selecting legislators, maybe, for all the good it does. Corporate Quislings. Selecting the President is done by the Electoral College.

      • autonomous

        I wasn’t suggesting direct election of judges. Look at what direct election of senators brought about. But we need some reign on judges besides age. Of course, no change in our government is likely, or even desirable, without a public willing to think deeply about government.

  • Doc

    “For instance, light bulbs are standardized. This is a form of voluntary monopoly and customers do not react against it from what we can tell.”

    Not sure if anybody would claim that standardized light bulbs is a monopoly. Anyway, it shows how confused the whole idea of a monopoly is.

    The only reasonable definition is the legal monopoly.

    I guess our overlords have plenty of interest in obscuring this.

    • Tony B.

      The monopoly of private people owning the medium of exchange makes all other monopolies kindergarten child’s play. Not one monopoly corporation can exist unless it is allowed to by the bankers who create bank credit (debt) as a favor to their friends while withholding it from those it wants to destroy.

      • Doc

        Yes, and these overlords hold the mothership of monopolies, the territorial state. That is how they grant the legal monopolies.

  • rahrog

    The federal court system is part of the federal government. They are not going to rule against their own power.

    It is up to The People to free themselves from tyranny.

    No part of any existing government anywhere on earth is working to bring liberty to individuals.

    • Maximiliano Plus Adrienne

      ain t that the truth or will trump and bannon proove us hopefully wrong? I still have hope but all those GOLDMÄNNER make me sceptical!

  • Clearpoint

    The monopoly problem is pervasive throughout the system. I would argue that government is a problem, but not the main underlying problem. I would argue that Wall Street is the major problem. Monopolies are both a highly profitable investment, and a very safe one. Monopolies are the perfect investment for those investors who want high returns and little or no risk. The only way to lose money is if the monopoly’s power gets broken. I think it is more accurate to say that Wall Street funds, strategizes, and directs the creation and growth of monopolies, and that the federal government is enlisted on their behalf to assist this growth and protect their monopoly status. Politicians and political power are temporary, and hence rented by monopolists. For example, the Clintons’, whose Clinton foundation prospered as long as they held their positions of political power. Hillary lost the presidential election, and the Clinton foundation closed its doors 2 months later for the simple reason that it no longer had a valuable service it could sell to the monopolists. Follow the money, because money does not easily lose its power.

    • Doc

      A monopoly in the US is a US monopoly, i.e. one inside the US territory. Break the territorial monopoly that the US government constitutes, and there is no monopolies for the Wall Steet to pay for.

      The US territorial government is the Mothership, from a US perspective.

      • thefinancedude

        i was going to point out – the article would be more accurate if: “The Fed is a (private) government monopoly” – the people are private, the government is private as its constructed as purely a services corporation…due to the common law that Americans inherited and shredded to its spiritual core (look into English common vs american – esp form of actions/causes – American common law was perfected by the state judges right before a pesky little thing called the war of northern aggression started/aka civil war)…

        it must be this way for the people retained their soveran status (the american spelling)…and entrusted their protection of it via an express trust granting the learned Ones of the time an ability to act and operate as a king AND pope of their own patch of land (ie white men, yes they screwed up by using their little egos which caused the need for the 14th which was used as a baited offer to invert one’s soveran status)…consequently the people abandoned their post and minds as the externally focused, industrial revolution technology dazzled everyone away from the ancient technology of common reason…yet the pendulum swings both ways 🙂

        in affect the people had a monopoly on their political power as that was the prerogative of the king and pope – monopolies are not bad, how they are used can be – ATT was basically a public monopoly on phone calls coast to coast and after they were forced to break up it did nothing more than drive costs up – in some industries it makes sense to allow monopolies, we just need to make them 100% public and 100% transparent – they dont get to keep secrets…that’s a whole nother ball of wax though eh? why do we allow our fear to dictate a future we can’t see? dream bigger…

        • Doc

          I think it’s the principle that matters, not whether ATT ran landlines cheaper than whatever corporations that replaced them.

          Monopolies are simply wrong.

          [Anyway, you likely wrote that on a handheld phone, not a major part of ATTs product range back then. They offered the same technology for 100 years or so.]

          • thefinancedude

            then i suppose the monopoly on your creations is wrong too…

            and actually no i dont use my blackberry to surf the internet, i’m old skool using dinosaurs like a computer built my self from the parts others built and shared (for money of course) …

          • Doc

            I don’t have a monopoly on my creations. The only definition of a monopoly that makes sense is the legal monopol, and I don’t have one.

      • Clearpoint

        In the 2008 bank bailout, the U.S. government bailed out not just U.S. banks, but European banks as well. Why did the U.S. government do this? Because the Lords of finance demanded them to do it. The U.S. government only sends in the monopoly of force, i.e. armies, when their is a valuable economic resource to exploit that finance cannot yet reach, i.e. like oil in the middle east. Other than that, the tool of choice is economic sanctions. High finance has much better and cheaper and effective tools to use than does the U.S. government. Armies destroy. Finance conquers and controls. The U.S. government is just one of these tools.

        • Doc

          Yeah, some people are running the territorial monopoly that is the US government as well.

        • Maximiliano Plus Adrienne

          once again bang on!

        • Tony B.

          Yes, the bailout was all about the worthless mortgage paper the bankers were getting richer than ever selling it as worth while. Foreclosures were everywhere. Government designed to serve its citizens should have given the money to the people buying the properties – paying the all the mortgages off. This way the bankers would gotten their pound of flesh and the people would have been literally home free. But no, that can’t be allowed. Instead the bankers got paid in full by the government and then get paid a second time by the people who still have to pay the mortgage even though the economy has gone south and west to Mexico and China.

    • Maximiliano Plus Adrienne

      bang on! u said it all! may your definition of monopolies b the blueprint 2 b taught at our schools throughout the universe! god bless u!

  • ICFubar

    Which comes first big business in cahoots with one another and its money directing government to do its bidding or big government passing legislation in favor of big business? Of course when these two become dance partners they can become inseparable and no one is allowed to cut in.

  • Useless Eater

    “Rothbard clearly prefers the second definition of monopoly—i.e., a grant
    of privilege from the state restricting competitive production or sale.
    This is a monopoly since entry into the privileged activity is
    prohibited by the state; logically, no such monopoly could ever exist in
    a free market. This definition will be adopted as the “proper” one
    should the final alternative definition prove nonsensical or
    illegitimate.”
    https://mises.org/library/critique-neoclassical-and-austrian-monopoly-theory

  • Yokai Yo

    Voluntary vs Imposed = all the difference.

  • Tony B.

    Market monopolies are created by prostitutes in government owned by the banker created giant corporations. It all comes back to the criminal PRIVATE fake money creators who do as they please with the exchange medium meaning they enslave the rest of the world for their benefit.

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