What Monopolies Fear Most
Whenever I talk about freedom, people get scared. Lots of people like the idea of just a small “dash” of freedom. Or maybe, sprinkles of freedom. But when I talk about allowing the maximum amount of liberty to reign, many people act as if they are running from Godzilla.
People say, “We can’t just let the market run wild! The big corporations will all just join together, and form huge monopolies, and stomp all over the little guys.”
This is the main fear when it comes to the free market: Monopolies. In a sense, they have a good point. In a free market, what is to stop all the big companies from creating a cartel? What’s to stop them from raising prices through the roof? We need a government to protect us from all the giant Godzilla like monopolies!
But . . . look closely at any monopoly, and you’ll find that the true source of it’s power comes from government itself.
The shipping monopolies are a direct result of the Jones Act, which limits entries into the market, and makes everything more expensive.
The big cable and electric monopolies come from a nest of government rules and favors, dictating who can get a TV license, exorbitant fees for hooking up, FCC regulations, and government kick-backs. Small start-ups say that hooking up to the electric line would be a piece of cake, if it weren’t for all the government barriers.
Big pharmaceutical companies benefit from government granted patents, which restrict anyone else from building on their research. One scientist told the New York Times that they spend more time suing each other over patents, than actually doing meaningful research.
Enron, Monsanto, Goldman Sachs, Moody’s, Ma Bell, Big Oil, Big Sugar, Big Steel – all created with massive government privilege. Go down the list, and look at every single monopoly or oligopoly in the world, and you’ll find that reason they got so big in the first place, is because of government.
The economist Milton Friedman famously said, “You have one law you can pass. It’s only purpose is to reduce the extent of monopoly . . . what law would you pass?”
In fact, there is no law that reduces monopolies. Even anti-trust laws (which are supposed to break up monopolies), often have the opposite effect. Economist Dominick Armentano said, “95% of all anti-trust cases are simply one company suing another company.” Is it any wonder that the biggest cheerleaders for anti-monopoly regulation are the monopolies themselves?
If you wanted to kill the monster of monopoly, the best weapon is the free-market itself. After all, it’s easy to see that if a monopoly behaved poorly (by raising their prices, or making a poor product), then a smaller company could do a much better job, and steal their customers. Monopolies aren’t afraid of government. Monopolies are afraid of the free-market.
So the next time someone says to you, “We can’t just let the market run wild!”, always remember that strange as it may seem, the free-market is ultimately the best defense against the free-market itself. Let’s not forget that the government holds the monopoly on granting monopoly privilege. It holds the sole power on the legal use of force throughout society. The true terror that we, as defenders of liberty, must all be ready for is a government running wild with power.