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Old May 16, 2011, 11:25 PM
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The Myth of Natural Monopoly

A long and well footnoted article on the myth of natural monopilies. De Lorenzo takes on every argument you hear concerning the 'need' to allow the State to prevent competition, and explains the history behind the rise of allowing mercantilist-State collusion to strip consumers of the choice of providers.

Quote:
The theory of natural monopoly is an economic fiction. No such thing as a "natural" monopoly has ever existed. The history of the so-called public utility concept is that the late 19th and early 20th century "utilities" competed vigorously and, like all other industries, they did not like competition. They first secured government-sanctioned monopolies, and then, with the help of a few influential economists, constructed an ex post rationalization for their monopoly power.

This has to be one of the greatest corporate public relations coups of all time. "By a soothing process of rationalization," wrote Horace M. Gray more than 50 years ago, "men are able to oppose monopolies in general but to approve certain types of monopolies. … Since these monopolies were 'natural' and since nature is beneficent, it followed that they were 'good' monopolies. … Government was therefore justified in establishing 'good' monopolies."

In industry after industry, the natural monopoly concept is finally eroding. Electric power, cable TV, telephone services, and the mail, are all on the verge of being deregulated, either legislatively or de facto, due to technological change.

Introduced in the United States at about the same time communism was introduced to the former Soviet Union, franchise monopolies are about to become just as defunct. Like all monopolists, they will use every last resource to lobby to maintain their monopolistic privileges, but the potential gains to consumers of free markets are too great to justify them.


The theory of natural monopoly is a 19th century economic fiction that defends 19th century (or 18th century, in the case of the US Postal Service) monopolistic privileges, and has no useful place in the 21st century American economy.
The Myth of "natural" monopoly
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Old May 17, 2011, 01:13 AM
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We almost had an air transportation "natural monopoly" ...imagine what a disaster that would have turned into..

Imagine an..."Amtrak of the Air" with all the airplanes made by "American Motors"..
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Old May 17, 2011, 01:50 AM
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People would be convinced flying could only be expensive, limited, and deadly.
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Old May 17, 2011, 02:00 AM
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The Boeing 707 would have been designed by the same folks who made New Orleans' levy system.

The ford tri-motor of a parallel universe..

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Old May 17, 2011, 02:16 AM
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the design agreement was that factories in three cities would produce motors, in accordance with union work laws. keeping in line with good Keynesian thinking, using up these motors just to use them meant sticking one from each city on each plane. After all, it is merely keeping money flowing that matters, and that means consumption.
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Old May 17, 2011, 02:54 AM
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Originally Posted by Eljimb0 View Post
We almost had an air transportation "natural monopoly" ...imagine what a disaster that would have turned into..

Imagine an..."Amtrak of the Air" with all the airplanes made by "American Motors"..
A Javelin with Gremlins. Oooh!
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Old May 17, 2011, 03:05 AM
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We have deregulated nat gas and land line phones, problem is I pay $6.50 to the owner of the phone line and $25 per month to the owner of the gas line. So, say your actual gas usage is $8 for the month, like if you have a gas stove and gas heat and a gas dryer, and everything else is electric, you don't use the stove too much in the summer because the oven heats up the house, so you use the toaster oven, no heat, just mainly the dryer and stovetop, you get a bill for $33. Nice.

I don't recommend it, as the gas line owner also has to provide emergency service, like if you smell gas in your house, or if there is an idiot digging a hole without getting a utilities location. They also do all the turning on and off, basically, my provider is in another state, and they never do anything but bill and tell the local gas company that had a monopoly for over 100 years.

But now I can choose a gas provider, thing is, it costs $100 to switch providers. There is one feature that is interesting, you can lock in a rate, which is like playing the futures market. but the best rates are only for one year, (actually the two year deal can be a penny or two higher or lower, the risk is greater for either party) and when you are only using a significant amount of gas four months of the year, not so big a deal. Or you can pay market price, which means it fluctuates. They seem to always know when to offer these deals, as the market price is always higher than the one year price, whenever I have gotten to choose.
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Old May 17, 2011, 06:36 AM
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When you can no longer separate the government from business and vice versa, there is a problem. Was the UK a product of the East India Corp or the Crown?

We have our own such.
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Old May 17, 2011, 07:04 AM
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Everbody should just build their own.....

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Old May 17, 2011, 12:55 PM
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No, everybody should let the "peoples govt" build what is best for the people!!

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Old May 17, 2011, 12:59 PM
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the streets are always clean, traffic is never a problem, the people are 'content'



Hard to describe the feeling of satisfaction one gets when you sweep the streets with a broom you have made yourself!!
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Old May 17, 2011, 01:03 PM
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No, everybody should let the "peoples govt" build what is best for the people!!

No toilet paper or food, but at least they produce 300 million tons of concrete per year and nice looking missles, comrade!
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Old May 17, 2011, 01:04 PM
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Milton 'splains it best:
Milton Friedman - Monopoly (4 min 18 sec)
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Old May 17, 2011, 01:04 PM
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Originally Posted by Rufcut View Post
Everbody should just build their own.....

Attachment 4019964
Wow...a street packed with commerce, activity, creation, growth, and dynamism. Yes...a good thing in those respects.
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Old May 17, 2011, 01:08 PM
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The OP stated The stripping of choices.
Well

We have LOTS of choices for any product. Fact.

Other fact is ALL companies charge the SAME PRICE.

Checked out fuel prices lately.

Thank you Futures & Commidities price fixing crooks.
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