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Re: on the size of government

Rod Maingot — Wed, 16 May 2007 02:54:34 -0000

I would encourage you to read von Mises, Hayek, and Rand. They make a compelling argument that monopolies form in mixed economies in relative proportion to state interference - especially subsidies. As long as companies can lobby the government for more regulations and “safety controls” to raise barriers to entry, monopolies will exist.

Re: on the size of government

nader — Tue, 15 May 2007 20:15:12 -0000

Yeah, this one is actually elementary economics. Unchecked capitalism tends towards monopoly. Easy to see how this would occur as the minute any market entity has some competitive advantage over the others, it will exponentially increase that advantage (by re-investing it's higher marginal profits etc.) and devour the competition.

As rick mentions above, monopolies are the antithesis of competition - one supplier for a good or service doesn't compete with itself. Pure free market capitalism is inherently unstable, and will tend towards self-destruction unless it is regulated.

So, if you look at markets from a wider level of analysis you see that an unregulated market will only see the greater innovations and benefits of competition until the market power has become too concentrated in a few entities. Regulation which shifts the market power away from the monopoly will ultimately result in greater innovations and competitive benefits because it makes the market more stable in perpetuity (if regulated well).

Re: on the size of government

rick — Mon, 14 May 2007 12:02:14 -0000

It's not nonsense at all. Look at what's happenened to radio. Insufficient regulation has led to massive consolidation of stations into a tiny handful of parent corporations (primarily Viacom and Clear Channel).

Maybe it would be a bit easier to stomach with a sports analogy. Sports have rules. Say football, which has tons of them. The rules exist for many reasons, but primarily they exist to promote competition. If they broke Peyton Manning's knee every time he stepped on the field, or if the Raiders put 150 receivers on the field, it wouldn't be very competitive.

And we need to pay the referee to show up and blow the whistle.

Monopolies are the outcome of deregulation, and they are the antithesis of competition. Just like cultural anarchy, economic anarchy is a beautiful ideal but one that cannot be successful on any but the smallest of scales.

Re: on the size of government

Rod Maingot — Mon, 14 May 2007 07:37:41 -0000

Regulation promotes competition? What kind of nonsense is this? Regulation is always a form of interference, that is simply the nature of regulation. A more plausible (but still wrong) argument would be that regulation interferes with competition to induce a positive outcome for one competitor, and a less positive outcome for another.