Who’s Really Responsible for Monopolies?

On my 93.1 WIBC program  Friday 7/1/2011, we detailed the source of most monopolistic behavior in American business.  It’s not evil companies, it’s government control, regulation and meddling in the free market.  In a truly free market, monopolies can only exist for a brief blip in time, usually when a technology or idea is new.  Quickly, others see opportunities to innovate or improve on the idea and compete with the market leader.  It’s only with government interference  that any company can use an iron fist of force over their competition and consumers.  That iron fist is, of course, the power of governments own laws and regulations.

I got the idea for this show from an article  at 247wallst.com, The New Generation of American Monopolies. I don’t agree with their analysis of our current “monopolies” but I do give a h/t for the idea for the show, thanks guys!

Let’s take a look at three 2011 case studies that demonstrates  government involvement in the free market that not only created monopolistic environments, but had the potential to kill innovations, job growth and budding industries.

17 Hydroxy Progesterone

Dr Jen Gunter

Dr Jen Gunter, The Preemie Primer

First, the 17 Hydroxy Progesterone / KV Pharmaceuticals case.  I spoke with Dr. Jen Gunter, author of The Preemie Primer who has been active in protesting this case about the drug, the FDA’s involvement and the consequences of that involvment.

Related Links:

CON Laws in Missouri

Timothy Sandefuer, Pacfic Legal Foundation

Timothy Sandefuer, Pacfic Legal Foundation

I discovered our second case study in an article in Regulation Magazine by Tomothy Sandefuer at Pacific Legal Foundation.  Tim represents Michael Munie, a St Louis business owner who wanted to expand his moving business to include the entire state of Missouri.  He thought he would just apply for the license, pay the fee and “move on” so to speak.  But that’s when Mr. Munie found out that his competitors would have the ability to prevent him from entering the market thanks to Missouri’s “Certificate of Necessity” Laws.

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Cosmetology Board -VS- Eyebrow Threading

Tim Keller

Tim Keller, Institute for Justice

Our final case study is one that was filed in Arizona this week by Tim Keller at the Institute for Justice.  You may have seen the little shops in the malls, usually at a kiosk or maybe even in a strip mall, Eyebrow Threading.  It’s cheaper, faster and less painful than waxing or other forms of hair removal.  That doesn’t sit well with the Arizona Board of Cosmetology so they have decided to force eyebrow threaders to complete board approved education and licensing, none of which has anything to do with threading.  It’s government protectionism at it’s ugliest.

BONUS Feature, the IJ’s video on this case.

Vodpod videos no longer available.

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There may be circumstances where some sort of regulations, approval or licensing may be a legitimate public service; I do want to know that my doctor is qualified to open me up and fix my heart or that the semi-truck driver next to me on I-70 has the required skills to drive the damn thing safely.  I’m not sold on those being jobs for government.  What does a bureaucrat in government know about medicine or driving an 70,000 pound truck?  Not much.  What they do know is how to return favors, sell influence and eliminate competition for their friends.  Worse yet, government does those things with the threat of violence that comes with the power of the state.

While  dominant companies do emerge from time to time in a free market, true monopolies don’t exist. The dominant company will remain dominant as long as they are providing good products or services at a fair price.  But dominance generally fades as competitors enter the market and innovate.  In a free market, the government’s only job is to protect consumers and competitors from force and fraud by a dominant company. You don’t need hundreds of thousands of rules and regulations to do this.  Most of us know what constitutes force or fraud.  Current government interference in the market oversteps constitutional limits and as a by-product creates the very monopolistic environment it purports to eliminate.


About Larry Downes

Son, brother, husband, father, boss, mentor & friend. Believer in unfettered personal liberty. Occasional host on 93.1 WIBC in Indianapolis.

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