Competing Interests And The Ultimate Monopoly
Here is a question for you: why do you think a monopoly is illegal?
Monopolies are not illegal because they are staffed with criminals, or because they are formed with criminal intent; monopolies are illegal because in the absence of competition, the monopoly ceases to serve any interest but its own. Always.
We call our statutes that outlaw monopolies “anti-trust” laws. How ironic, then, that so many of us trust our government – the ultimate monopoly – to regulate our corporations, the ultimate instrument of competition.
Corporations are the playing field upon which economic competition occurs. A corporation must compete for customers, compete for employees, compete for stockholders, and compete for capital financing.
We have been conditioned to believe that government is the only source of regulation and law-making; but in free markets, competition regulates firms and laws of economics determine outcomes. It’s neither the sheriff nor the priest that keeps the first auto mechanic honest in a small town; it’s the second mechanic.
There are millions of American corporations, but the term conjures up images of the largest few among them. Size is not where the action is in terms of economic growth; it is the small firms that invent, innovate, adapt, and change the world. And little guys getting bigger is what creates jobs and expands GDP.
Why do you think that CEO’s of our largest corporations – Gates, Buffet, Immelt – favor increasing taxes on millionaires? Because they are billionaires. It is the millionaires, the owners of those smaller firms, who threaten the #1 perch held by the billionaire corporatists who have already made it to the top. It is the millionaires who will displace them, just as Steve Jobs replaced IBM in his day.
There is no act of Congress or executive regulation that commands invention; rebels invent new things. Everything that now is was once a radical idea in the mind of one employee in one firm who was unsatisfied with things as they were. Many, if not most, useful innovations were conceived while we were supposed to be working on something else. One company fired Ole Evinrude for wasting time on his stupid idea of a motorized boat for personal use. I have one of his sketches in my office.
It is fashionable these days to hold all corporations in contempt; and many have indeed earned our scorn. Those who distrust markets and trust government reflexively demand more regulation, more mandates, more taxation, and more restrictions on competition to protect the “public interest” – as if the dairy farmer and the single mom both had the same fair price in mind for a gallon of milk.
What the statists forget is that the government they trust is the ultimate monopoly, and the reason that monopolies are illegal is that they serve no interests other than their own. Government employees do not exchange their human nature for angel’s wings when they take the job, and government workers are perhaps the least qualified to regulate a private economy.
How could we possibly expect members of the government monopoly to imagine, let alone to enact, policies which expand competition and free exchange in the private sector? How well could you referee a sport you never played, never watched, and whose rules you never bothered to learn? What skill could you coach into that Julia person except for filing a grievance over lack of playing time?
Has a monopoly ever given up power voluntarily so that competition can flourish? We need only look at our government schools to see how vigorously a monopoly fights choice and competition, stifles innovation and improvement, and protects its grip on money and power. Monopolies do not reform themselves.
In a free market, if a corporation does not serve its customers’ interests, it dies. If a corporation does not serve its employees’ interests, it dies. If a corporation does not serve its shareholders’ interests, it dies. If a corporation does not profit, it dies. The proper role for government in a system of free enterprise is to protect property rights and grieve silently when firms fail.
In 2006, before the economy was shifted into Park, roughly 500,000 small businesses – nearly 1 in 10 – failed in the United States because they did not serve the interests of customers, employees, or shareholders. But an even larger number of new ones were formed to take their place – that is how a healthy economy grows.
It is that constant churn, the perpetual weeding of the garden, which made our American free enterprise system different from the other variants of capitalism, particularly the European socialist strain we are now trying to impose on ourselves here. It is why we were – past tense – the envy of the world for over a century.
That European socialist model of corporatist protectionism has produced 40 years of job and wage stagnation over there; and we are in year number four of proving it was no fluke. In 2009 – the most recent year of U.S. government data on business mortality – there were 171,000 fewer new businesses formed in the United States than the number that failed.
In Wisconsin, over 12,000 firms went out of business in 2009. With them went 103,000 jobs that are never coming back. No amount of seasonal adjustment to monthly BLS job estimates will change that. It is the formation and growth of new businesses that will lift this state and this nation out of the mire.
The fact that 2009 is the most recent data our government has compiled on business formation tells us how little the government monopoly understands about the American economy it has taken upon itself to regulate.
How can a government that still doesn’t know the number of business starts, stops, expansions, and contractions from 2010 expect to regulate the economy in 2012, or enact policies that promote economic growth in 2013? Can any candidate for any office from either party cite a single business formation statistic while he/she is bloviating about jobs and employment?
The government monopoly can’t possibly do a good job of centrally managing a real-time global economy using information that is three years old. And yet, they are about to add health care, energy, and our banking system to the scope of their direct control – how could that possibly turn out well for us?
The short answer is that it won’t; and government will fail us for same reason that a monopoly is illegal in the private sector– it does not serve any interest but its own.
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