The Misconceptions of Monopolies

Monopolies can exist in several situations but as you will come to understand, the detrimental effects are usually minimal when they do exist, except under very specific situations. Sadly, the political system and mainstream media have misled the American people into believing the government can and must be there to break these monopolies up when they do happen. We will review some very costly mistake initiated under corrupt motivations, of course, hidden by the passing of time.

Even though what I am writing here is well documented, I’m going to use simple economic principles and good old common sense to help prove these contentions. Just remember though, the studies have been done by academics supporting everything I write here. Two examples: https://goo.gl/5ASD6Q https://www.cobdencentre.org/2018/08/the-case-against-antitrust/

The most common “true” monopolies occur under two potential scenarios.

  1. The small-town monopoly. This is when you have such a small number of consumers in an area that having two stores supplying similar products or services would just not be able to be financially supported enough for both to be profitable. The small mining town hardware store is an example. The store may have to even charge higher prices to account for the extra costs in getting the goods transported to the remote location. The more remote the higher the transportation costs.  You can go to many small towns in America and see this with even my small town as an example. We have one hardware store (a monopoly) but because we are not that remote, the prices have remained very competitive. Common sense tells us if you only have a small number of miners that can and will buy pickaxes and shovels from a supplier, why would somebody go through the expense of opening up another store to also sell the same things.  Plus, some of the miners are going to bring tools with them, knowing that they would have to pay higher prices from the monopoly hardware store if they don’t, so these remote monopolies are not total monopolies, because they still have competition from the miners bringing in their own supplies. 
  • The New-Product/New Company Monopoly. The most famous case of a New Product Monopoly is the history of Alcoa Aluminum but there are many others. AIcoa was the company that invented the process for making aluminum, so initially, there wasn’t anybody competing with them, because nobody knew how to make aluminum before Alcoa started making it. It was by technological innovation, a monopoly. 

Not surprisingly, Alcoa was able to make huge profits prior to other competitors entering the market. We saw this same thing with cell phones and calculators in their infancy as new products. They were very expensive when they first came out and today some companies are given them away for free, as marketing incentives.      

Of course, the government jumped into the picture telling the public they needed to do something. What do you do with a new product monopoly, however, was the question? If you break up a company and nobody else can make the product, who is going to make the product or how do you break it up? Now, here is the really interesting part of this story and why Free Market monopolies, discussed below, don’t last very long. Whenever you have excess money being created by a business, i.e. profit, somebody is going to figure out how to compete against that company to get a part of it. In the case of Alcoa, a group of employees from within the company itself, broke off and formed a new company, obviously quitting Alcoa to compete for the excess profits. Soon others also entered the market as the uses for this very light metal increased. Today, much of an airplane and many products are made out of aluminum, so many companies around the world, now compete in this market. This story shows that true monopolies will disappear on their own accord as profits rise in any industry and others come in to compete. How much market share a company has, can get or may lose in the future is one major issue that every company must constantly evaluate for their specific market.  

The most important elements or factor(s) involving monopolies; is if and when they harm consumers, workers or when they try to stifle competition, neither of which New-Product or Small-Town monopolies, can really accomplish. There are just not enough people affected to be of any significance, as we have already learned, someone will usually enter into the marketplace, if large enough, when there are price gouging and excess profits. This is common sense, right? 

With New Products monopolies, the government also provides patent or copy write protections as an incentive to spend the time, energy and money to invent and create new products. This can create a problem as we are seeing in the pharmaceutical drug industry. Because of the tremendous amounts of money involved, the industry is pushing politicians and even Judges to extend the patent protection periods beyond the original guidelines established by law.  Then we wonder why drug costs are so high. Obviously, those in government are allowing big business and money to manipulate and influence society to the detriment of the majority. This happened with anti-trust legislation as well.

  • Government Granted Monopolies

This brings up and allows me to segue into another form of monopoly, those granted by legislative Acts at the various levels of government.  It can be as simple as a garbage company getting from a local municipality exclusive territory for garbage collections or a central bank like the Federal Reserve Bank enacted into law in 1913 by an Act of Congress. These are potentially the most dangerous type of monopoly because the competition is prohibited and exclusive operating power is granted. Common sense tells us that granting a monopoly to one group or company is exacted what the Sherman Anti-trust Act was supposed to do, protect the public from Robber Barron’s overcharging. How does the government justify granting a true monopoly to a very financially powerful group of bankers and investors?  

Why those in government think it’s good to have a monopoly in a public setting and a bad idea for a privately-owned company is interesting. Or are the wealthy special interests just able to manipulate the political system to gain special benefits and privileges? It is hard to know since no competition is legally allowed to see if one entity would do a better job at a cheaper price than the ones granted the monopoly.

Once again, history tells us different stories as to how monopolies have affected our lives. The government and mainstream media tell us one thing and academics and common sense often tell us another.

As an example, within just 16 years of the Federal Reserve Act of 1913 (FRA), our society was in the deepest and longer Depression in U.S. history, exactly what the FRA was supposed to stop from happening.  Bank runs, another situation the Federal Reserve Bank was supposed to stop, put many banks out of business with vast numbers of depositors losing their money under bankruptcy protection and the allowance by the Federal Reserve Bank (FRB), to fractional lend;  lending out more money by using existing deposits as collateral to borrow money from the FRB.  We’re not really told that it was the FRB’s own policies of allowing fractional lending is what caused millions of Americans to lose all of their money held by the FRB’s member banks.

Is it just coincident that this happened? I always ask myself, why would a society grant a monopoly to some of the wealthiest banking families in the U.S. and world? The Warburg family as an example, with one of the three sons Paul, who helped plan the Federal Reserve Bank is from Germany and the family still operates their today. He had worked with bankers in England France and Germany before coming to the U.S. https://en.wikipedia.org/wiki/Paul_Warburg

One of the more recent best-selling books on the subject is The Creature From Jekyll Island, the non-fiction story about how Paul Warburg, other banking interests and U.S. Government officials met at Jekyll Island, GA, the hunting estate then owned by J.P. Morgan, to plan for the enactment of the Federal Reserve Act.  Why was it secretly orchestrated and thus kept from most of the public eyes is a huge question?  Some employees involved did leak it, but conspiratorial news back then travels at much slower speeds. Is it coincidental that the XVI Amendment allowing direct taxation on income without apportionment as well as the Revenue Tax Act of 1913 also passed that every year? That an income tax is the 2nd platform, and a central bank the 5th platform of communism and that the Zionist movement supporting these social policies was being financed by major world banking and corporate interests?

Then ask yourself, why would bankers and other corporate interests want a banking monopoly under their control and an income tax? 

It is both more devious and brilliant than you can imagine.  Corporate welfare long a favored social policy for wealthy special interest, started in the early 1800s with the western railroad expansion, expanded under the guise of the general welfare, for both more infrastructure and defense spending.  The bankers were, of course, guaranteed their interest payment on the loans they gave these companies by the U.S. taxpayers who paid for all the government spending.  The central banking monopoly guaranteed their participation in the creating of money, lending guidelines and the determination of interest rates. Now, this is where it’s good to know a little about finance and economics.  A central bank can slow down economic activity by simply raising interest rates and requiring more reserves from the member banks as they have done multiple times through history. Individual and businesses are less likely to borrow money when interest rates are high and more likely to borrow when interest rates are lower. Common sense, right?  Additionally, the member banks cannot borrow as much themselves when they must put up more reserves as collateral, thus they have less money to lend. 

These two abilities give the Federal Reserve Bank the ability to literally slow down the entire economy or speed it up by lowering or increasing interest rates and reserve requirements.

Another huge question is, do they do it for themselves and other wealthy special interests or for what is in the best interests of the majority.

Free Market Monopolies

So far, we have only reviewed those monopolies that do exist most often in society but have minimal effects as do Small Town or New Product monopolies or can have profound effects if they are Government Granted ones.

As was previously briefly noted, true free market monopolies are very rare and if and when they exist, they are short-lived but here’s the problem. A true free market hasn’t really existed for very long, giving way to greater and greater government interventions after the overthrow of the European Monarchs in the late 1700s and early 1800s. Many smaller countries were still gaining their independence, well into the 20th century. Governments do not give up their powers and interventions easily.

The U.S. Federal Government started out with very few interventionists social policies with the entire Federal Government being paid for by only luxury import taxes.  Not one single penny was paid by a Citizen of the United States to the Federal Government and what minimal taxes there was were assessed and collected by the State Governments. Consider that the best way of telling how capitalistic a nation is, by determining the total taxes and redistribution of wealth social policies. The less the size and scope of government through redistributive taxes, the more capitalistic and vice versa, they more taxes and redistribution of wealth programs the more “socialistic” your society is considered. In the generalized context, this is my favored method of looking at the effects socio-economics has on society and how we define them. 

One could surely argue, that there are always various interests trying to manipulate the market for greater profits. how people do it is the key. If a company gets a local municipality to give it a garbage collection contract, they have just gotten a government granted a monopoly to pick up the trash from all the Citizens in that community. That’s obviously not a free market monopoly nor is generally the local sewer plant, unless it is a private sector company with no government restriction on who they can do business with and consumers are free to contract with others or have their own sewer system, both of which occur in our society. There are many smaller privately owned communities that own their own sewer treatment plants and people agree when they buy into the community to utilize the utility or provide their own. These are usually enforced with property covenants and restrictions as part of the deed when you purchase a property and the homeowners exercise management and financial control over the operations of the sewer plant. The point I’m trying to make is there is often two way to skin a cat and it doesn’t have to be by the government. However, government and special interest will often try to intervene, such as the local garbage company noted above despite constitutional prohibitions legally prohibited Municipalities from granting monopolies to private companies.                                 

Paul Krugman is Wrong, Again

As first a Democrat and then a Republican, it wasn’t until the late 1980s that I ran into libertarians. I kept debating them and finally succumbed to the logical economics they knew and understood. Yes, it’s both complicated and takes some time to learn but boy, it then becomes an eye opener and everything you thought you knew is then easy to recognize as truth or fallacy.

I have found the lack of economic education to be a fundamental problem facing our world. However, the really hard part is to overcome the false narratives of the ruling oligarchy and their lackeys like Krugman. We have long known Krugman to be an economist who supports the faux Marxist agenda and despite our showing his erroneous arguments time and time again, he still gets the headline attention in the New York Times and other major mainstream media outfits. You don’t think this by coincidence, do you? It’s all about redistributing the majorities money through taxation to the wealthy special interests

No Glass Ceiling After All

Economists have long known this yet the narrative among the democratic socialist movement and mainstream media is that white men are causing it. As if we all sit in our cushy glass offices looking for ways to keep women from coming up through the glass ceiling. The facts are women don’t grow up wanting to be auto mechanics, plumbers, welders or any job that gets their hands dirty or could break a nail. On top of that, they usually end up having children that distract them from their careers an almost never go into the same line of work they went to college for. Many little girls grow up wanting to be sexy vocalists, actresses or dancers and of course Hollywood and the music industry are there to take advantage of them with promises of wealth a grandeur. Most of us white guys have wives and daughters.

https://mises.org/power-market/new-study-confirms-gender-pay-gap-results-women-making-different-choices?utm_source=Mises+Institute+Subscriptions&utm_campaign=4aec28d9db-EMAIL_CAMPAIGN_9_21_2018_9_59_COPY_01&utm_medium=email&utm_term=0_8b52b2e1c0-4aec28d9db-228635529

War Is A Racket

If you have not seen the video, it shows that every war since the 1898 Spanish America War including WWI and WWII were started by either false stories and/or criminal activities and events done by those in our own government to make it look as if we have been aggressed upon. Even the Civil War was precipitated by wealthy special interest and with the Union military antagonizing the south into defending itself. The first shots fired by the south were in self- defense.

Why? War is very profitable for those who make weapons and the supplies even things like food for the soldiers. Over 139 million military combatants have lost their lives in just the 20th century, of course, most of them certainly not the children of those profiting from the wars. They are of course at Harward or Yale with college deferments.

The Sliding Scale of Socialism

Socialism; what is it anyway?       

Socialism can be explained as the number of total social programs enacted, times the financial costs to taxpayers; the more costs associated with the programs and their total numbers, as a percentage of gross domestic product, the greater the level of socialism.  So it’s a sliding scale depending on how many total social policies the government has enacted.

In simpler terms, the larger the government is, the more taxes are needed to pay for all the social programs and the more socialist your society would be considered. The lesser the number of taxes and social programs, the less socialistic your society would be considered. Many economists suggest, the larger the government and greater costs of the required taxes, the less per capita production there is; which would be an inverse relationship. However, we’re not here to debate the ideologies. We’re here just to understand what it really is and means and define the term socialism.       

Governments usually provide various services that are an expense to society. Although many deem socialism and communism as antonyms, this author prefers to look at socialism as a percentage of the economy where government services and products are provided, to the percentage provided by the private sector production. This is not perfect for a variety of reasons but can be used as a generality but surely don’t use it to compare different countries.  There are many things that make countries wealthy and there are many things that make countries poor.  If we knew what these were, we would have likely fixed the poor countries already. Lots of theories abound, but never take them a fact.  Knowing what is in the best interest of the majority is a fool’s errand.            

The primary deference between communism and socialism is private property rights. When there are no private property rights, the government then owns everything, and everyone worked for the government, that is communism. Whereas Venezuela, with its private-public partnership as many called it, is a mixed economic model as economist call it. It is a combination of a robust government sector and a substantive private sector, trying to work in harmony. This is a problem for a number of reasons, as Venezuela is experiencing but once that a discussion for another day.    

The bigger the government is without property ownership being held by the State, the more socialistic. Over the last 30 years or so, the government has been buying up more and more real estate so once homes, lands, businesses, commercial buildings, and rents are owned by the government, that is communism with everyone works for the government. Under socialism, private property rights are still in the hands of theCitizens, it’s just that the property and various activities are taxed to payfor the government, The more total taxation as a percentage of total productiveoutput, GDP, the more socialistic your society would be.       

As an example, many may not consider prisons and jails to be part of socialism, because it is a needed entity yet the fewer people incarcerated the less socialism and fewer government costs there would be. Of course, the more people you have incarcerated the larger the correction system must be to manage, feed, cloth, shelter and try to educate the prisoners.    

The balance between the size of the private sector and the size of government differs in societies with mixed economies, thus it can vary and therefore is a sliding scale.   

Socialism can be visualized in this authors opinion as a sliding scale. With minimal government (libertarianism) to the left and communism, total government to the far right. The Democratic Party would be right of the Republican Party “theoretically”, but in reality, they are very close to one another and much closer today to the far-right communism than to the far-left,  libertarianism.      

This is one of the great misunderstandings as to which political ideology is far right and which one is far left.  As an example, fascism appears to occur when the costs of government get too large in relation to the amount of production or GDP, the gross domestic product as I noted previously. The major fascist nations of Germany, Italy, and Japan during WWII all were highly socialistic with high levels of militarism compounding the size and costs of government. To enforce all the taxation as GDP wains from the expansion of the government sector, those in government enforcement become harsher and penalties such as incarcerations and fines stiffer as wages drop and taxes rise. Basically, the government is squeezing the profits out of the private sector to pay for the increased costs of government. Additionally, in the 20thcentury, with the advent of fiat currencies put in place around the world,governments could simply print more money to pay for the additional costs of an expanding government, but this debases the currency without increased productivity causing the devaluation of the currency which results in eventual price inflation, the rising of manufacturing and consumer prices. Where this author believes government central planners make a huge mistake, is crediting the production by private companies contracting with the government, as part of the GDP calculations when a bridge, jet fighter or a school is an expense to society. As an example, if all children were primarily educated via home computers, the costs of building schools could be eliminated. I am not saying this is a good or bad idea, its just an example of identifying costs and expenses associated with the government where the physical school itself is built by some private sector construction company but actually paid for by taxes. Today, we add the costs of building the school as GDP when it is an expense to our society making it appear that our society is more productive than it really is. A society cannot be more prosperous by increasing expenses as our society has seen since the 2008 Great Recession, with the cost of the Federal Government alone reaching $4 trillion annually with $1 trillion of that being printed with interest charges passed onto the taxpayers. 

To learn some more about it go to wikipedia and evaluate my analysis with theirs. https://en.wikipedia.org/wiki/Socialism 

    

What To Teach Our Children; to be good Citizens

We must teach our children that all human and individual rights are inalienable.
We must teach our children what inalienable rights are and that they cannot be justly usurped.
We must teach our children that liberty is better than involuntary servitude.
We must teach our children that they, as individuals, are more important than the state and the common good.
We must teach our children that giving to others is one of the human actions that create joy and happiness.
We must teach our children that taxation is an economic form of involuntary servitude.
We must teach our children the protection of individual property rights is more important than the redistribution of wealth to serve the common good.
We must teach our children that self-defense, both from criminals and from the tyranny of the State is an ethical responsibility to both themselves and to others.
We must teach our children that their ethical behavior is paramount to a civil society.
We must teach our children that honesty and integrity are fundamentals of ethical behavior.
We must teach our children that aggressions such as force, coercion or fraud are unethical behaviors that give rise to the lawful concept and use of self-defense.
We must teach our children that the use of force and coercion are both reasonable and lawful rationales to assert self-defense.
We must teach our children that self-defense is sometimes a legitimate and necessary means to deter force and coercion.
We must teach our children the concepts of Natural Law and the Non-Aggression Principle (NAP).
We must teach our children that equal justice under the laws of human nature is a necessary foundation for a civil society.
We must teach our children that all human beings have the same individual and inalienable rights unless and only if they try to usurp the rights of others through aggression, coercion or fraud.
We must teach our children that the non-aggressive actions by others, even if they offend them must be tolerated and that tolerance is a virtue.
We must teach our children that their non-aggressive behaviors and communications may offend others, therefore consider carefully your actions and what you say before taking them or speaking.
We must teach our children to work hard and smart. To work with others under the various ethical conventions, such as the Law Merchant, our world offers and to attempt to seek and achieve those things that benefit mankind.
We much teach our children the Law Merchant and how and why it came to be.
We must teach our children to stand up for what they believe and do not intellectually back down from those who do not wish there to be a civility.
We must teach our children that not all those that seek positions of authority can be trusted to either be truthful or just.
We must teach our children that wisdom does not always come easily or quickly. That they must work hard to both gain the experience and the knowledge to achieve it.
We must teach our children the patients is truly a virtue and that others will often fail to choose it.
We must teach our children that the use of the phrase “We must teach our children” at the beginning of each sentence is redundant and unnecessary.
That the historical stories passed down to us are often skewed to protect the improprieties of those involved and that we all fall short of perfection.
That our actions, sometimes even the simplest can have profound effects on others and the world.
That the planet is not a trash can and that pollution is simply stuff being in the wrong place; make sure it gets in the right place.
To be skeptical of those religions that grant special privileges or rights to those who believe in their doctrines, over those that do not.
That morality is subjective and is how you choose to ethically live your life. That others have the right to chose how they ethically live their lives subject to however the NAP, not harming others or their property through the aggressions of force, coercion or fraud.
To love and to care for and about others and to be honest with both your heart and your actions.
That hurtful words cannot be taken back once they are stated and that withholding them is often a sign of wisdom and virtue.

Alfred Lord Tennyson; “Tis better to have loved and lost than never to have loved at all.”

John Adams; “You have rights antecedent to all earthly governments; rights that cannot be repealed or restrained by human laws; rights derived from the great legislator of the universe.”

Thomas Jefferson; “A wise and frugal government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.”

George Washington; “Government is not reason, it is not eloquence, it is force, like fire it is a dangerous servant and a fearful master.”

So, the challenge to parents and educators; teach your children what is important and teach them the truth. I have a feeling that some of you may need to brush up a little on both.

Capitalism v. Statism/Free Enterprise v. Government

We have not been a capitalist society now for many years and crony-capitalism, the term the media has adopted, is really a disguise for what is in reality, one or a combination of the three primary entities, socialism, fascism and communism, referred to collectively as Statism by some economists.

There are several methods involving government revenue to create massive levels of redistribution of wealth required for a fascist system to come into existence. Whereas Communism uses direct ownership of the means of production to get the money to the centralized political point, Fascism uses taxes, fines and regulatory fees to achieve this. What makes a country more socialist or fascist depends primarily on the level of militarization and the police state apparatus; the later requiring oppressive levels to effectuate the collection of the higher levels of taxation, regulations, and controls to maintain the flow of money from the Citizens via the redistribution of wealth into a centralized political point, a/k/a the U.S. Treasury Department in the case of the United States. It is then divvied up to special interests based on political influences such as campaign contributions, lobbying, and fund-raising efforts. Then you have the massive bureaucracy administering and overseeing all the redistribution of wealth schemes.

Many believe because there are private sector companies involved in our system we have capitalism. Perhaps to some small degree, but our money isn’t even free market derived anymore and many of our most prominent corporations are to one portion or another government contractors, negating the positive effects that capitalism would have on our society. The more the government intervenes in the market, the more the effects of capitalism are negated. Hence, the term in The Wealth of Nations “unfetters” free markets, referring to capitalism, meaning lacking government interventions.

Grant you that the law and corporations are in collusion, but without the laws mandating the various social policies, the corporations would be much less powerful because it is the government interventions that grant them the benefits or subsidies. We have to have trade and free enterprise, but we are better off without the government interventions. Every social democracy around the world is having essentially the same problems the United States is having because all the nation-states are essentially doing the same things. We have long understood why socialism, fascism, and communism (Statism) don’t work, yet it is the nation-state that promotes it, surely not capitalism in and of itself. A true capitalist would never want government interventions, but statists love them.

One should always keep in mind that libertarian capitalism promotes self-discipline and the nation-state promotes authoritarian discipline. You must decide which one do you want to teach your children and that the enemies of liberty are almost always those granted privileges or benefits by the nation-state.

Take the survey and find out where do you stand on the issues: The Nolan Survey

The Myth of the Rational Voter

The Myth of the Rational Voter by Prof. Bryan Caplan http://www.youtube.com/watch?v=XKANfuq_92U&feature=youtu.be and the Myth of the Rule of Law by Professor Hasnas http://faculty.msb.edu/hasnasj/GTWebSite/MythWeb.htm as well as my assessment, The Democratic Capitalist Illusion, http://groups.google.com/group/HarrietRobbins/topics?hl=en of the ability of uneducated individuals participating in any form of democratic process dealing with political economy is highly unlikely to produce a desirable outcome. The key point being, uneducated in the area of political economy. People are not necessarily too stupid to vote, they just have not been taught how to be a good Citizen. They have not been taught to know the difference between a good and bad law, yet we are taught to go ahead and vote anyway with Party campaigns to get out the vote. The politicians are also lying and deceiving us as to what the will and will not do when elected to office. For those that are knowledgeable about the policial economy, we recognize many of the lies, because we know they can never deliver on the promises they make. To the uninformed, it emotionally influences them to vote for the wrong candidates. Hense why to the two major political Parties try so desperately to keep out any significant third Parties, especially the Libertarians whose sole purpose is the dismantling of political power through the minimizing of taxation.

As history has shown us time and time again, the majority of people will flat out vote their own individual rights away for social benefits, until they wake up one day under a totalitarian regime that the majority cannot dismantle or defeat. This is when atrocities such as mass exterminations and civil wars occur.

Couple that with the various religious influences from people who swear they are the children of God and you have what we historically called Government, none of which have worked well or greatly benefited the majority. We drown ourselves in fictional literary works, movies and sport just to bare the financial and physical oppression to both our minds and spirit.

Total US household debt soars to record above $13 trillion; could we Default

Add in the $20.5 trillion of Federal Government Debt and the combined debt of all States, Counties, and Municipalities of $3.098 Trillion, the total debt comes to over $37 Trillion.

“Since the day of Alexander Hamilton, the United States has never defaulted on the Federal debt.” The private debt is another issue and the defaults during the 2008 housing collapse and subsequent credit collapse should tell you something.

That’s what we budget-watchers always say. It’s a great talking point. One that helps bolster the argument that default should not be an option in Washington’s latest debt limit showdown.

There’s just one teensy problem: it isn’t exactly true. The United States defaulted on some Treasury bills in 1979 (ht: Jason Zweig). And it paid a steep price for stiffing bondholders.

States & Local Debt $1,184.0 State $1,914.6 Local $3,098.6 Total

https://www.cnbc.com/2018/02/13/total-us-household-debt-soars-to-record-above-13-trillion.html