Monday, November 8, 1999

Week of 11/08/1999

The World’s Largest Monopoly
- by David Matthews 2

Quick, tell me who has the largest, most powerful monopoly in the world!

The answer may surprise you.

Coca-Cola? Nope.

Visa and Master Card? I said "monopoly." Besides they aren’t it.

Your local phone service? You’re getting warmer.

Your cable company? Close…

Microsoft? Despite the recent claims in the media, this is just a goldfish being compared to a whale.

So what is the largest, most powerful monopoly in the world?

The United States government.

Now I know that raised some eyebrows, but think about it.

If you look up the word "monopoly" in the American Heritage Dictionary, you’ll find it listed as "exclusive ownership or control, as of a given commodity or business activity; a company or group having such control; a commodity or service thus controlled." And while some businesses can wield such control, no group can do this with more power, and with more devastating effect, than government.

Now let’s suppose you run a local pizza shop, selling a large pepperoni pizza for $8, while your competition - let’s call them Sticky Pizza - sells theirs for $12. You don’t spend as much on advertising, and you don’t run too many special deals, but you still rake in more customers than your competition. So the owner of Sticky Pizza goes to you and says your prices are too low for him to compete fairly. You tell him too bad, you’re making a modest profit, and you aren’t going to risk that now by raising prices just to suit Sticky Pizza.

So that pizza owner goes to the government and says that you’re engaging in price-fixing to drive out any kind of competition. Now the government is looking into how you do business, and demanding you give in to Sticky Pizza’s demands. Other government agencies may also get called in to see how you’re able to make a profit selling pizzas that cheaply. The Equal Employment Opportunity Commission (EEOC) may want to look at who you’re hiring, and how much they’re getting paid. The local health inspectors may decide to scrutinize your business for possible health code violations. They may even have been encouraged by a "concerned citizen" who possibly has some connection to Sticky Pizza. Since we’re talking a local business, the local government may even draft some new business ordinance setting pizza prices no lower than $10 for "the sake of competition." So between the lawyers to get the government off your back and the mandated higher prices, you go out of business. So much for "competition."

Now that’s local government. What about the United States Government? Same kind of game, but multiplied on a much larger scale.

Let’s start with the myth that Uncle Sam is all for competition. Let’s get brutally honest here.. the US Government is about as interested in business competition as I am in watching infomercials.

If the federal government is all for competition, then perhaps they can explain why they are eager to kowtow to the wishes of cable companies over satellite providers?

In many communities, the cable companies enjoy tremendous power over the public. They determine which channels will be available, and have the power to bundle each channel into certain "packages" for the public to purchase. For instance, take the three most popular channels like USA Network, MTV, and VH1, and call it the "special value package." Do the same with the premium movie channels, the cable news and business channels; each in their own separate "package" for people to pay extra for. Then combine that with the "basic" package of local networks and public access, and the cable companies can make more money off the public without having to add more channels. I’ve seen it happen, so I know it isn’t fictional.

The government’s solution? Regulate the prices. They passed laws which hindered what kind of cable packages could be offered.. but all it really did was allow the cable companies to continue their monopolistic practices. And when those laws were too stringent? The cable companies got government to bypass those laws under the Telecommunications Deregulation Act of 1996.

But satellite companies provided some real competition to both local networks and to cable companies, because they were able to provide channels the local cable companies didn’t want to provide, and provide national network feeds, which cut out local broadcasters. So the cable companies went to Congress to pass even more laws which hindered the satellite companies from competing. They also got many local zoning boards to enact regulations which hindered people from getting those bulky monster reception dishes. Even when satellite companies came out with smaller dishes for their digital satellite systems, they were still hindered by the laws written at the behest of cable companies.

So now more laws are being presented to Congress.. which are - as of this article’s date - being rewritten in committee to appease the cable companies. Which leads me to wonder.. if the federal government is so interested in competition in the business world, why is it that they were so eager to hinder satellite companies in the first place? After all, if the federal government didn’t hinder the satellite companies in the 1980’s, then they wouldn’t have needed to regulate cable prices in the early 1990’s.. and they wouldn’t have had to de-regulate them in 1996.

How about the government’s own "monopoly" - the US Postal Service? Oh sure, the USPS doesn’t consider itself to be part of the federal government.. they much rather call themselves a "semi-independent" operation. After all, they graciously allow private carriers like United Parcel Service and Federal Express to do commercial deliveries. But deliver the regular mail? Fat chance of seeing that happen! And now the post office claims they can’t compete against the Internet and e-mail. They may actually have to cut back on services and raise postage prices yet again. Of course, if the federal government was REALLY interested in competition, they would let the postal service be a real private operation, and then let it sink or swim with UPS and Federal Express offering the same local mail services. Then we’d see how the post office would compete against e-mail.

How about the gas we pay at the pump? The United States is more dependant now on imported oil than it was during the gas crunch of the 1970’s. You’ll notice now that gas prices are slowly creeping up universally no matter which pump you go to. Price fixing by the oil companies? Not according to the federal government. No, according to Uncle Sam, this is just normal "competition."

You know, that’s the doublespeak of government.. break up AT&T because they claim its too big, but say nothing about the cable companies. Go after Microsoft because of their operating system, but say nothing about the 100% control by Apple over both the hardware and software of their systems. Claim to be all for "competition" while silently protecting other businesses.

In many ways, the federal government under President Bill Clinton’s tenure acts much like a real monopoly. They decide selectively which laws to enforce, and which judicial decisions to obey. If Congress can’t pass a law that meets Clinton’s approval, he’ll write an executive order that has the same force of law.

And the federal government can be quite devastating to businesses. In 1971, President Richard Nixon ordered mandatory price freezes which were intended to last one year, but the effects spread to three years, and resulted in an economic recession.

Even the political system operates under strict monopolist rules. Democrats and Republicans have written those rules so that their parties are ensured continued control in government. Just ask any member of the Reform Party or the Libertarian Party how hard it is to even get included on the ballot. Under current election laws, Abraham Lincoln would not have been allowed on the ballot, since the Republican Party then was a "fledgling third party" under the Democrats and the Whigs. You would think that a government so interested in healthy competition wouldn’t mind practicing what they preach, right?

So why not get out of the country? That’s what many people would say.. the competition to our form of government is what’s offered in other countries. We don’t like it, we can leave to a government that suits us. Right? There’s just one little problem… the US Government’s reach is not limited to its own borders. There is not a place on the Earth that the US Government does not want to reach out and affect in some way.

Remember Manuel Noriega? The leader of Panama, indicted on drug charges in Miami, was literally deposed by the United States government under the orders of President George Bush. Yes, Noriega was suppressing that country’s election, and he did detain his eventual successor for a while, but instead of letting the people rebel against Noriega, a foreign power stepped in.

The US has been meddling in many a foreign matter for quite some time. And there are many who feel that the US should continue to serve as the world’s policeman, and to do so even more aggressively than before. However, if that is the case, than it would make the US even more of a monopolist power than ever before - and do to the world what Hitler’s Third Reich and Stalin’s Communist Party could never accomplish even at their peak. Certainly not something AT&T could accomplish.. or Microsoft for that matter.

If the US government wants to claim they support competition in the business world, fine. Let them do it from a position of neutrality. And certainly they should make sure their own house is clean before preaching to others about the housekeeping. To do otherwise would only serve as an insult to the American public it represents.

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