Economic Facts and Fallacies: The Free Market and the Big Brother Repression
Acknowledgements
In my limited knowledge, I would like to give sincere and grand thanks to the Mises Institute, which has introduced me to a thought process and state of mind that will grant me to proceed with caution by invariably questioning the orthodoxy and consensus of the times. I owe my knowledge and understanding of monopolies to Tom Woods, an economist with the Mises institute and Thomas J. DiLorenzo, the acclaimed President of the institute. Through my studies, Woods and DiLorenzo have aided in my understanding of the fallacy and ironically gigantic misconception that monopolies are inherently evil.
Introduction
During a US history class overview of Mark Twain's coined term, “The Gilded Age,” I came to believe that I was being misled in my education. This was not a critique of my educator, as she has been one of the best instructors I have had the pleasure of experiencing. I recall asking my teacher if it was true that there had been such abuse, schemes, monopolies and greed during these times. In her telling me yes, I continued to approach the words of the assigned textbooks and written assignments with disdain and a nullifying spirit. I hadn't fully denied the teachings that had been appointed to me until I had asked “Was government intervention necessary for us to get out of the depression.” Once it had been said to me that intervention was necessary, I became taken aback---- that my educator was a part of this Keynesian school of thought. In my search, I was introduced to the Mises Institute, an unrivaled libertarian “think tank.” Not only have they educated me on the truth of the gilded age, but that of nullification, the great depression, the secession of states and a plethora of orthodoxy.
The Entourage of Monopolistic Misrepresentations
Firstly, there are innumerable misrepresentations of what a monopoly is, what creates a monopoly, its implications and its faults. One commonly misrepresented allotment of the term “monopoly,” is the definition itself. The term “monopoly,” derived from the Greek word “monopōlion,” is defined by Yale Law School as “used in the law (monopoly) is not a tool of analysis but a standard of evaluation. Not all trust are held monopolistic but only “bad” trust; not all restraints of trade are to be condemned but only “unreasonable” restraints.” And by Harvard Law School it is defined as “doctrine (monopolistic) currently uses vacuous standards and conclusory labels that provide no meaningful guidance about which conduct will be condemned as exclusionary.” Harvard Law dictates a clear presence of confusion around the term “monopoly,” as found in the phrase “Labels that provide no meaningful guidance about which conduct will be condemned as exclusionary.” The word “monopoly” has been in use since ancient Greece; it was meant to be declared when a producer had the “right of exclusive sale.” Through the misinterpretation of the word, it has been deemed inherently and intrinsically evil, it is even equated to greed, most associated with “corporate greed.” There truly is no clear definition of what a “monopoly” is. A “monopoly,” seen by Harvard Law, as a firm which has more than 25% market share in a given industry may differ from the FTC's definition of the term monopoly which may be deemed by a 50% market share. Moreover, a monopoly differs from the mainstream English orthodoxy, which, declares that most words are not subjective but have a clear and definitive definition. Unlike the English convention, the word “monopoly” offers no reasonable definition that could be agreed upon by scholars, what is defined by Yale and or Harvard could be found contrary to a definition given by the FTC and or a federal judge who is Presuming over an antitrust case. In summary, the government offers no clear and or practical definition of what a “monopoly” is. This is not to say that private interest or educators know any better than the likes of politicians. Surprisingly, Harvard and Yale Law differ on the percentage of what deems a “monopoly” and or “monopolistic” tactics. Moreover, since there is no clear and unambiguous definition of the word, we as a society cannot contort the word in every which way, finding a definition that subtly fits into our conclusion and or view on what a company or firm is advocating for through tactics that we deem “monopolistic” and in turn, creating a “monopoly”
What Creates a Monopoly
Given that there is no unambiguous definition of a monopoly, we must apply one. Assume that a monopoly is a firm who has a market share above 50%. Though this is redundant and perpetuates the notion that the world of academia may apply what definition it sees fit, we must still establish it for this scenario. Now, given a feasible definition, we may apply it to the market. In a market such as the one of our current over regulated day and age, we find that there are winners and losers. But like never before, the market does not make losing applicable to big firms due to the artificial antitrust laws and regulations that price out small firms. We can gather that large firms find themselves unaccompanied by competition, insofar as to any feasible and proportional competition. Government, though created by the people, for the people and of the people, no longer finds itself serving the people; but that of private interest and or lobbyists. Regulation, viewed as a tool of the government, entrenched in a protectionist shell of bureaucracy, acts not as a tool, but as a weapon used to antagonize and persecute the foes of the firms in which they protect. For example, Paid sick leave and minimum wage. A firm such as McDonald’s may be fine with a minimum wage; McDonald’s may even lobby and advocate for a higher minimum wage. This advocacy is not due to McDonald’s acting in the name of “social justice” and or out of heartfelt equality or “fair” pay for all, but because the firm itself will not only sustain its revenue but may increase it due to the priced-out firms in which it competes against. To elucidate, by driving out firms through regulation that only one or a handful of larger firms may be able to afford, the firm(s) will absorb the market share lost by the firms that had been driven out, causing an “artificial monopoly.” Assume that the federal minimum wage was raised to 17.50$ an hour, firms such as McDonald’s, Amazon, Walmart, Target and Home Depot would have no problem with the selected wage as it would price out any small or somewhat proportional firms, creating what is a titled an “artificial monopoly”. Meaning, when government enacts legislation and or policies that force small firms out of business, it will lead to larger firms holding and or growing their market share. Moreover, one may see the loop of government backed regulation of “monopolies.” Though the paid sick leave and minimum wage create monopolies and protects said monopolies, it was not intended to have anything to do with de-monopolization, but to increase workers' rights, wages and protections. Another example would be “barriers to entry.” According to Tejvan Pettinger, a former Oxford University School of Economics student, “barriers of entry” are defined as “factors that prevent or make it difficult for new firms to enter a market.” To “prevent” and or make it “difficult” for a firm to enter a given market are terms in which add unnecessary overhead or other unwarranted costs that are not regularly associated with start-up costs. One example of a “barrier of entry” would be if the government only allowed for someone to purchase a plumbing license only if they would operate their jobs using X Firm plumbing equipment supply store, rather than allowing the operator to act on their own volition, finding a supply store in which offers equilibrium of a good. If there were Y, Z, and or C plumbing equipment supply store firms that offered lower prices for the same goods as firm X, then that would be an example of a “Barrier of entry.” Barriers of entry are not necessarily always attributed to government, as branding plays a great gathering role of market share that acts as a “barrier of entry.” Although, government backed “Barrier of entry(s)” can be the most severe due to the abuse and use of the justice system through punitive damages allotted onto a firm. The FTC writes “for over 100 years, the antitrust laws have had the same basic objective: to protect the process of competition for the benefit of consumers.” The FTC claims that its sole purpose is to “protect the process of competition for the benefit of the consumer.” Yet, we find that through the efforts of the FTC and tools given by the government, monopolies have grown. Not naturally, as monopolies should be formed if seen fit by the consumer insofar to the extent that they are to provide a greater service at a feasible consumer desired price point. But because government makes way for large firms to have a stronghold in the market due to the regulation against smaller firms. Though it is the admirable intention of government workers and bureaucrats to “help” the consumer, they truly come between a given contract in which two consenting parties, out of their own volition, are seeking to make an agreement. Moreover, government in the end benefits no party apart from the firm in which it has enacted legislation against inhibiting its market share.
The Role of Government
Government has become an unabridged tumor that continues to grow. Despite the needed slashes of bureaucracy, we find that regulatory power ever-expands. Assume for instance that there is a clear and objective definition of what a “monopoly” is, does it become the government's duty, privilege and or right to hold a predisposition to go after said “monopolies” and break them up? The role of government, to entrust its citizens with the inherent and principled natural rights which they are bestowed by their innate humanity. T0 protect said natural rights and incriminate those who violate the natural order, that being, a harmonic balance of rights, found through the principle that every man has a right to live, to the pursuit of happiness, to pursue a given religion, to own and operate his property along with many further God given rights. Given that the role of government is to protect the rights of the citizens, government should have no foot or occupation in declaring a firm as a “monopoly” and or proceeding with aggravated tactics to set hold upon a firms property, such tactics as allotting unjustified fines, forcing firm sell-offs and increasingly authoritarian central powered practices. It is the role of the government to protect the citizens' rights and to even fend off those who persecute the natural rights of its citizens. Conversely, it is the government itself that we find persecuting the natural rights of the citizen, in what instance, positive or negative, can the government find the privilege within itself to take the property of one; or to force them to sell it off in the name of “de-monopolization?” It is contrary, the government has no right, privilege and or feasible allotment of power to persecute a “monopoly.” There is an instance in which the government may “facilitate” some type of persecution against a “monopoly,” only if fraud has been committed against the consumer. Facilitate is used as the government adhering to natural rights theory and allotting the necessary resources or “facilities” for a firm to be put on trial for fraud, this does not give the government the right to deliberately target firms, but rather, to allow the citizens to utilize the body of the judicial system in which they can proceed further through trials and others gears by the legal system to be compensated by punitive or compensatory damages for wrong doing by a firm. Moreover, the government has no ground in the “battle” between the consumer and producer. The consumer is equally at fault as the “monopoly” if they are willing to enter a voluntary contract with the “monopoly” for some type of benefit.
The Knowledge of The Consumer and the Eventual “Monopoly”
The consumer may find that firm “A” offers a lower wholesale and or retail price than firm “B”, through which they proceed to spend their dollars at firm “A,” given that it is out of their own volition. Through this voluntary contract, if Firm A continues to keep the cost of their goods at the lowest price, finding equilibrium where supply and demand meet, then Firm A’s market share will justifiably grow alongside its increasing revenue. Conversely, Firm B will find itself with a diminishing revenue stream and or market share, eventually, Firm B may find itself priced out, not due to “predatory Pricing,” but rather, Firms A’s feasibly seamless business model. Assume that Firm B was priced out of the market, only allotting Firm A to inherit consumer demand. Contrary to orthodoxy, which deems that the quality of a “monopolies” product will decrease while the price either stays stagnant or rises, we find that this claim is a mischaracterization of incentives and reality. Though it is contrary to reality, allow Firm A to lower the quality of its products while superfluously raising the price of its goods, not only would this drive away consumers for a given amount of time, due to the consumer waiting for supply and demand to meet at a fair and “equitable” price point, but this would allow for competition. In this scenario, demand would either wain or stay relative to the price, causing Firm A’s revenue to decrease, whilst likewise incentivizing producers to enter the market, allowing for Firm C, D, E and F to compete with Firm A. Not only would it be of the interest for Firm A to meet the consumer at equilibrium, but to satisfy the consumers every want and or need, knowing that if they allow one competitor in the market, they no longer can have a strong foothold in said market. Moreover, given that Firm A is aware of the risk of competition, it can either pull itself by bootstraps and innovate, allowing prices to wain while supply stays relative to demand, meeting the consumer at a price point in which they feel justified to buy Firm A’s goods, and driving out competitors due to consumers finding the most satisfactory price with Firm A. Or, as may be witnessed by government propelled monopolies today, Firm A could lobby the government, calling for regulation of its market that only it could afford. In summary, it is neither of benefit to the producer and or Firm to practice “monopolistic” tendencies or to become a "monopoly.” Where monopolies may be found are not in and or by the free market, in which firms are allowed to compete, but by the regulated market, in which selected government backed firms are gifted regulation through lobbying, that only they could afford to see the hit in their books, whilst a smaller firm, just beginning to emerge in the market, may not be able to afford, due to government enforced regulation. The FTC writes “for over 100 years, the antitrust laws have had the same basic objective: to protect the process of competition for the benefit of consumers.” The FTC claims that its sole purpose is to “protect the process of competition for the benefit of the consumer.” The claim of “protecting” the consumer, made by the FTC, falls flat when introduced to the fruits of its labor. In what manner does the FTC “Protect” the consumer? Firstly, the FTC identifies a firm as engaging in “monopolistic” practices. As ambiguous as that may be, the FTC identifies a firm as being “monopolistic” by simply having far lower fixed cost or prices than its competitors. Conversely, what we find is that a firm setting significantly lower prices by fixed cost benefits the consumer to such a grand level that not even the FTC may begin to attempt. No amount of regulation through de-monopolization would benefit the consumer due to the FTC targeting Firms who offer the lowest and most advantageous prices for the consumer. Secondly, the FTC restricts consumers from being satisfied. It deliberately targets firms who offer prices that have found equilibrium by supply, demand and innovation that leads to lower fixed costs. Therefore, allowing the firm to lower its prices, its fixed costs have significantly decreased. By obstructing the process of lowering prices, which benefits the consumers tenfold, causing an artificial price. That being a price that could be lower due to equilibrium and a firm not only being able but pursuing a way to offer a lower price than its competitor. Lastly, protection of the consumer, if practiced by the free market and out of government control, would allow firms to compete and not punish the winner(s) unilaterally. Punishment for success disincentivizes firms to offer sufficient market price points.
Restoring The American Model: Restoration of Sound Business Operations
The American Entrepeneur, businessman, firm and or producer has long been a model that demonstrates that even through the stronghold of superfluous regulations, government interventions and societal misinterpretations, capitalism has continued to thrive and make way for the building of wealth in this country. The American producer not only shows that though there is a governmental albatross, but the laws of economics will also always apply, whether warranted or not. The greatest period of American history was that of the 18th century, in which we were accompanied by vast economic growth, unrivaled innovation, respect for natural law and great allotments of the Law. The 18th century may be shown to have hardships such as child labor, woman being deprived of the right to vote and rampant corruption, we must ask is this due to the free market or government attrition. It was during the period in which the United States was, the most unregulated it had been in history, in which we find that living standards improve dramatically and alongside other standards of life. The free market acts as a shield for personal liberties and freedom. As we are all granted the right to free speech and to vote, so are we granted that allotment by the free market. One is not forced out of their own volition to give their dollars in exchange for a good and or service, but it is found from a voluntary contract between the producer and consumer. So too can be said about the abolition of state regulations and government overreach in the case of abolition and nullification. By disengaging the rampant overreach, we may find a truly free market in which firms may operate without intrusion. The 18th century has its flaws, yes, but there are tradeoffs in every system in which man finds himself responsible. Unregulated capitalism offers tradeoffs that offers man to base his life and or path by his own God given hands, not that of a bureaucrat in Washington declaring that everyone person has the ‘right” to an income of 40,000$. Lastly, by allowing the free market to regulate itself and or the consumer to regulate it through the judicial system, we can find that government may stay in its rightful manner of protecting and shielding citizens' rights.
In conclusion, regulation in the free market in the name of “protecting” the consumer has been found conversely with the original intentions. It has become prevalent that there is usually corruption when government has a say into which firms may best suit a market and or are acting “fair.” If we as citizens leave it in the hands of unelected government bureaucrats in Washington to deem what percentage of the market a firm should have whilst maintaining “ethical,” “fair” and or “equitable” competition we will cease to have a voice in the market. The free market has brought millions out of poverty, fed billions and will continue to prosper despite government attempting to squander all success.
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