February 16, 2017

Monopolies are bad. So what about government?

I've been carping about monopolies and oligopolies off and on for years.  They harm the economy in so many ways; reducing competition and innovation, encourage crony capitalism, ferment inefficiency, kill jobs, cause price increases and become expansive to the point of being able to squash new competition before it has a chance to grow and offer alternatives to consumers.

Yesterday Bloomberg had a story lamenting the same problem, and it's worth a read.  Not surprisingly the article points out that government has a role to play in resisting concentration in the hands of a few power players.  While the article hurriedly dismisses it in the following paragraph, there's still real truth in this part;
Regulation can increase monopoly power by raising barriers to entry. If a new startup has to wade through oceans of red tape, pay millions of dollars in compliance costs and develop a whole regulatory compliance infrastructure just to start to be able to compete in a market, it gives the big established players a huge and enduring advantage. Big companies are able to bear the cost of regulation much better than small ones. If it turns out that regulation is a central reason behind increased market concentration, I’ll have to become much more libertarian.
Truthfully there are a lot of reasons for monopolies developing. Government regulation and inaction are only part of the problem, but they are part of the problem. When a government can fine a Financial Institution billions of dollars for ethical mistakes or misdeeds, there's an incentive for government to allow those entities to continue to exist as cash cows for government coffers. Fining hundreds of smaller banks for the same issue is less technically feasible and obviously less lucrative for government.

Progressive liberals throw around words like corporate welfare haphazardly because they view big business as antithetical to a better life for the little guy. The problem with monopolies does indeed cause problems for regular people, as I've mentioned above. It's easy for a monopoly to offshore jobs and still sell in America and the government has done little to stop it because the sales are still there and therefore the tax revenue.

But if that's the case, if monopolistic or oligopolistic power, as it centralizes and hardens is problematic for big business, why do those progressives not see the same issue with big government, which has pretty much unfetter monopolistic power? Not only can it dictate in markets that it is involved in (see Obamacare) it can rewrite the rules at will. It's not just a player, it's the referee. That's doubly dangerous and as Ronald Reagan said government is not the solution to the problem, government IS the problem.  As government continues to erode freedoms many people continue to invest their belief in it as the solution to their problems.  

Unlike the private sector in government the solution is simple - smaller government, leaner with less authority and more power in the hands of the states offers more choice for people on how to be governed.  Don't like your state government and think they're doing a bad job?  Move to another state that's doing a good job.  There are 49 alternatives and if a state's doing a bad job they still have to compete with others for populace.  So it's in their best interest to get it right.  Despite the weeping from Trump's win, you don't see celebrities fleeing to Canada and Norway and New Zealand. It's easier to move to Arizona or Texas or California where their governance might better suit your personal style.  The federal government if it isn't pared back, will implode in time under it's own weight.  Enough voters saw that and it's a big part of why president Trump won the election.

Take a look in the mirror if you're anti-big business and anti-capitalism.  You're complaining about big business power but ignoring much bigger government power in a misguided faith that it will act differently than big business. Everything is driven by self interest; government is no different. You are on a path to cede all of your power to a central state that dictates everything, including how, when and if you vote.  That's not freedom that's a recipe for servitude.  

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