Econ 101: Monopoly

Econ 101: Monopoly 

 

Outside of the public utilities field, monopolies are rare in the United States.  One reason is that federal antitrust laws generally prohibit monopolization. 

 

As a result of federal antitrust laws, most of the monopolies of the United States are now regulated monopolies.  The price of their products and certain other aspects of their business are controlled by various levels of government.  These monopolies are usually allowed to exist because of their substantial economies of scale. 

 

-       Economics, by Lila J. Truett & Dale B. Truett – University of Texas at San Antonio (Circa, Copyright 1982)

 

 

By Gregg Wall (7-8-2022)

 

All right, we need to make this short today.  Temptation is everywhere… the vodka is whispering sweet nothings from the freezer, there’s a box of maduros close by – that I’ve told my doctor I haven’t touched in years (almost entirely true), and sweet, sweet legal Canadian bud and edibles are in the drawer next to me.  In the distance, the Calgary Stampede.  Get thee behind me, Satan. 

 

It's been an interesting two weeks, notably the pissing match between Jeffrey Bezos, Big Oil & Gas and the President of the United States caught my attention.  Seems that Mr. Bezos and Big Oil & Gas didn’t like the POTUS - and/or staff - using the bully pulpit to educate consumers on how Big Oil was ripping off Americans at the pump.  The billionaire and Big Oil suggested the president, and/or staff, go take an Econ 101 course on markets. 

 

I don’t know what Econ course Mr. Bezos took … but this - then Republican - attended the University of Texas San Antonio and Austin, from ’82 through ’86.  Back then, we were taught that cartels & monopolies were about as close as one could get to communism without becoming the devil or Joseph Stalin.  My professors were clear on the topic, and I believe National Review and William F. Buckley were too (which at that time, I read religiously).  Absolutely key, the comparison between communism and monopoly is an axiomatic truth since both economic models call upon placing the means of production into a despot’s hands.  I can think of no more apt comparison or description, than between billionaire, American despots… and Joseph Stalin & Soviet dictators.  There’s a reason why Russia had all these oligarchs floating around, after the fall of the Soviet Union… it was a very smooth transition to place the means of production, and state assets, from one despotic regime to another.

 

In short, monopolies are communism by private proxy, that is to say authoritarian. That’s why, once upon a time in 1982, the US social compact said that any monopoly that existed was subject to very heavy control & regulation by the state, to ensure Americans were not ripped off by robber barons & utilities. 

 

Simply put, economic tyranny always leads to political tyranny.  And cartels and monopolies are tyranny defined, because they all too often end up - left unchecked & unregulated - exacting a predatory tax upon the consumer and labor.  That is why the only path to social justice is via economic justice.

 

So what happened between 1982, when I started attending college, and today, where we have billionaires yelling at the POTUS for not bowing to monopolistic corruption, decay, and ruin? 

 

Well, Americans had forty years of supply-side nonsense crammed down our throats; forty years of trickle-down tax policies; we have had thirty years of Clintonian neoliberalism and Larry Summers; we’ve suffered endless Wall St bailouts; and trillions of dollars of wealth transferred from the American taxpayer to billionaires, oligarchs, and Wall St.  Along with an unprecedented transfer of wealth, the national debt rose, catastrophically. The national debt was 1.4 trillion in 1982, today it’s 30 plus trillion.  (Imagine, President Reagan wringing his hands over a 1.4 trillion-dollar national debt?  I remember it well.)  We saw the arrival of private equity, the destroyer of businesses, innovations, jobs, and opportunity; along with all that cheap money, printed up by the FED, we’ve had unprecedented economic consolidation and the formation of cartels & monopolies in industry after industry. 

And the price for all this was only the impoverishment of Americans, endless austerity, and the elimination of the middle class. 

 

Companies no longer existed to serve Americans, they were there to serve, exclusively, management and shareholders.  With the transfer of wealth came an explosion of billionaires, from only thirteen in 1982 to in excess of seven hundred American billionaires today.  What a scam.

 

America went from a legitimate, rational form of capitalism in 1982 … one that actually still cared about a social compact… to the most predatory form of economic fascism the world has ever seen and will likely never see again (due to its highly destructive, planet killing nature). After the Soviet Union fell in the early 90s, America’s plutocrats felt liberated, unconstrained, and used their wealth to capture: academia, economics, government, the MSM, politicians, and think tanks.  Now, all the experts and talking heads would sing from the same greed-based hymnal: the supremacy of markets uber alles and of ultimate importance, the economy and economics taught strictly from the vantage point of capital, shareholders, and the supply-side.  Screw the public & the public good. 

 

Labor didn’t even register, in fact it was to be crushed and put down, jobs and the economy to be offshored along with the tax base. After all, American labor was a threat to profit maximization and American labor was far too costly, vis-à-vis global labor.  Market rule and commodification said that labor costs should be equal globally… so Asian & Indian labor must not be lifted up, American labor must be put down, wages must stagnate.   And indeed, they did. 

 

 

 

 

 

 

 

 

So yes, Mr. Bezos… yes, Mr. Planet Killing Big Oil … we did take Econ 101.  And yes, we can remember a time when the wise words of Messrs. Hayek & Smith were still heeded… with the simple admonishment that capitalism – rather than serve the public – can easily metastasize into that greatest of tyrannies: cartel and monopoly.  Separately, monopoly isn’t the only tyranny.  The dual side of monopoly is … monopsony, which attacks labor, suppliers, and vendors.  Let us all remember that to attack labor is to attack the consumer. 

 

And finally, Mr. Bezos, Mr. Oil… there is no market when it is dominated by one, two, and three players (or any number of members from a cartel) … there is only looting and stealing.  And Goddess save humanity if said monopoly uses cost inputs subject to Wall St speculation, because then the economy & public really takes a bath.  I believe that’s called demand destruction. 

 

Politicians, thankfully, are beginning to address the scam.  It’s not effective enough to address rampant consumer price gouging with state aid, which inevitably ends up in said monopoly’s bottom line.  No, that only emboldens the thief.  Crucially, it’s important to do both … help the consumer with aid… and also tackle the monopoly head on.  And that means, if the industry/monopolist refuses to compete, or accept price controls, the state itself must enter the market & provide direct competition.  

Antitrust enforcement and windfall profits taxation are also remedies to monopoly's reign of terror. 

 

Copyright JM Hamilton Publishing 2022