Recently Darwin rebuffed a post talking about the lack of need for states to regulate corporations because non state entities are quite capable of doing it by themselves.

And remember when Corporate Accountability International broke up the AT&T monopoly in the 70s? That really proved how we don’t need government interfering with the market.

Your argument is that only the state can break up monopolies, which I will grant, can be harmful to markets, however I question the idea that monopolies can form in free markets.

The second you said AT&T I knew it was over. A cursory glance at it’s history yields several examples in which the state played a critical role in giving AT&T a monopoly. Hell at one point the telephone industry was nationalized with AT&T in charge.

However, the instance that I found most interesting was when state and local governments started granting AT&T monopolies over their regions to avoid redundancy infrastructure and costly competition (an oxymoron if ever I have heard one). Ostensibly this was done to reduce the cost of phone service in poor rural areas by reducing the amount of infrastructure needed by competing companies.

Hence, your example demonstrating the need for state intervention reveals that it was in fact the state that enabled AT&T’s monopoly. But the whip cream on top of this tasty milkshake of irony is that the state argued that granting monopolistic control to AT&T would help the poor by reducing the cost for developing the infrastructure needed for phone service in rural areas. This is precisely the rationale you uses on many occasions for regulating free markets.

These kinds of arguments always remind of one of our fundamental distinctions. You argue that one should distrust companies more than government while I argue the opposite. Governments have a monopoly on coercion, companies are incapable of coercion, unless, government wields it monopolistic power on behalf of that company. Bizarrely, in cases where this happens you don’t aim your sights on the bureaucrats and politicians that enable the company’s coercion, but rather criticize the companies implement for gaining governmental preference: the lobbyist. In your completely misplaced zeal to silence the lobbyists you happily give up first amendment rights which consolidates ever more power to the state.

Such strange argumentation is very common amongst liberals who are woefully ignorant of state power, and basic economics. You seem to fall very comfortably into this category.

This entry was posted on Tuesday, July 31st, 2007 at 1:48 am and is filed under Regulation, Capitalism. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.