Great analysis! One of the most restrictive "markets", if you can call it that, is the health care market. It is so dysfunctional as a result of government regulation, how can anyone be surprised when it can't cure us. Has anyone else noticed we are getting sicker, not healthier?
I will gleefully accept the likes of any government leader of the likes of Mile compared to the majority of the globalists (let's be real, Communists) mongrels that inhabit the WEF (Weakening Economic Freedom)!
Excellent Dr. Malone. Cracking open long static paradigms in a reexamination is always fascinating. I was also confused by this part of the speech that Milei gave but now am very pleased that he included it and that you were curious enough to research it in this way. Thank you. I think there are lots of modern day examples of monopolies that exist by virtue of privilege they've been granted by the USG. Blackrock certainly as mentioned in some of the comments, but also too big to fail banks, Google, and others in the Magnificent 7. Tesla would not exist without a deeply distorted scheme of government incentives offered to consumers for purchases and to Tesla itself for carbon offsets. It is not hard to understand why government would want to concentrate power and wealth in the Corporate world as long as they can control it and benefit from it. Might this be ultimately what the WEF is all about... leveraging such a scheme across national borders to further concentrate power and wealth... if so then ultimately it is free countries that will need to fight back against it for most definitely it is fascism at its very core. While he was cautious, it strikes me that Milei has in fact subtly identified the very existential risk that the WEF and socialist governments represent and while he may not have attacked monopolies per se he signaled that Argentina and governments generally should not be offering sustenance for the creation of monopolies if they wish to be free and lands of liberty. Brilliant on your part Dr. Malone and on Javier Milei's part as well.
I've studied this topic extensively. Here is a layman's explanation.
There is no such thing as a natural monopoly. It's a fallacy. Why? A monopoly is purportedly bad because it can exercise pricing power due to lack of competition. Even if we accept the premise of this position, in a free market the inevitable result of this behavior is more competition (someone will start another company and undercut prices). Therefore the only way to retain monopoly pricing power is to prevent competition. It’s not possible for competition to be prevented in a free market. If competition doesn’t exist, it is either because the company is not exercising its pricing power (i.e. selling at a loss or break-even, making it unattractive for competition to enter the market - and BTW, this benefits the consumer with lower prices) or because the company has no market (which would also suppress any desire to compete with it), and in either case, there is no “harm” to anyone. If a company is suppressing competition by selling at a loss with the expectation that eventually it will apply its pricing power, there is nothing preventing others from executing the same strategy, and of course the strategy is short term. For example, if all the retailers in the country want to try to collude on pricing, let them. It will only last for a short time, as one of them will be able to make more money (and take more share) by breaking out of the collusion and lowering prices. There is no long term incentive to collude, and if they do, it's freedom of contract to do so; or another retailer could come in and undercut the group. Instead, what happens in the long term is innovation. Note how retail went from local stores, to Wal-Mart to Amazon. Scale and service over time changed to bring prices down and service up. Many thought Wal-Mart was a "monopoly" or close to one. Then along came Amazon.
THE ONLY COMPANIES THAT EXERCISE MONOPOLY POWER ARE STATE-CREATED (the AT&T monopoly was entirely a government sponsored monopoly and had to be broken up because of lack of innovation). The force of the state physically prevents or suppresses competition and creates monopoly power (another example is the Federal Reserve - it has a monopoly on printing money and government has granted it this power through the Federal Reserve Act). Note the Internet and companies around it are blossoming. Why? Because it's a free market with very little regulation and a lot of competition. Banking, education and healthcare are all heavily regulated and subsidized - they are not pure monopolies, but more like cartels.
The first thing any successful company sees is competition from others. Any successful entrepreneur would admit to this fact. Price fixing just creates another weakness to compete against (the high price). But government interference or ineptitude can keep others from competing against the price fixing.
Many claim Standard Oil was a monopoly. It wasn't at all but it created our ridiculous anti trust law. Standard Oil was about freedom to contract, huge supply chain efficiencies that put small, inefficient producers out of business, and safer oil. See these five parts to the story of Std Oil which is very well researched:
Regulation is interference by force and immoral. It is aggression against others. I recommend the articles and videos below. Note this is mostly based on logic and an understanding of human behavior, not just data and statistics. The first one below is the one to start with. I can also recommend books that went through history and showed how companies that were assumed to be "monopolies" were not. Alcoa was one example. They had huge market share but what's interesting is prices kept falling! Why? Innovation by Alcoa and the big players brought prices down. Scale leads to capital to be invested to provide better products/services at a lower price. Big is not bad.
I am thrilled you took this on Dr. Malone. With that said - I have been getting Cato's newsletters for more than a decade. I was reading Mises Wire just this morning on Rising Interest Rates and the "Great Reset" Bubble and reviewing Rothbard on Wikipedia this morning. What do they have in common - Libertarian viewpoints. I would be a libertarian myself if it allowed for a robust understanding of human nature and a heart for humanity and adjusted their thought processes with this in mind. I read their output, I see they do not always agree and freely bash one another. Rothbard went from liking Ayn Rand to loving her then despising her.
I stick by my comment from the 18th “Milei is a classic econ book reader that fails to see the reality that 90+% of the world's wealth (and thus all corporations) is control by Vanguard, BlackRock and a few others. And they are control by the financial founding families who that allow them to claim that 90+%.”
I will add the following: Those financial founding families are the barons and bankers of the western world domain.
Capitalism or a true free market is still subject to the whims of fallen man. It was cutthroat in the 19th century as the barons destroyed competitors, bought up all necessary material for their dynasties, stifled other less-costly and more viable alternatives which allowed them to overprice all their products. Government saw a need to correct these monopolies but failed to implement sound policies. At the same time these same barons were bailing out $$ our broke government all while this was going on. The Theory of Moral Sentiments is no constraint on greed.
Thanks for sharing; I didn’t catch that when I saw his speech. Even in last interview I saw, he was quoting Milton Friedman, a world apart from what you shared. Thanks for keeping us informed!
As an economist and money manager, I was also struggling with Milei’s WEF speech as it pertains to monopolies. Thanks for the refresher on Rothbard, who, along with others from the Austrian School, I had read and enjoyed decades ago.
As far as Blackrock, Vanguard, and State Street, I think you and others continue to misunderstand how much passive index strategies and custody accounts have to do with “control” and “ownership” of companies. I would strongly encourage you to seek counsel from someone at the top at Vanguard (for example) and discuss what voting rights they exercise for all the shares in their mutual funds and ETFs, and what criteria they use when voting those shares. With State Street, ask them why they show up as “shareholder” for so many company shares, and what sort of voting rights they have for those shares. I think Ed Dowd should be able to help you directly with these conversations (and also enable introductions to senior people at VG, SS, and BR). Why not educate yourself and others, rather than propagate the narrative from a position of limited knowledge?
Well done Team Malone. This is a very impressive essay on complex economic philosophy and it is very relevant to real problems in the Governments and economies of what we may broadly call The West. (if not the whole world) It seems this discussion is a long way from pandemic public health governance issues and mRNA by which we came to know Dr. Malone but then again maybe we are not. At its core both of these discussions are about individual freedom of choice vs government regulation and coercion and whether we are talking about health care or more mundane purchase decisions there is a philosophical and practical connection. Many of us are in the process of getting a handle on who Argentina's Javier Milei really is and what he stands for. Indeed, we have learned through COVID to take what is said about anyone with a grain of salt. Nice to see the Malones applying their keen insight in new avenues of interest and doing a great job in the process. That is not easy. Clearly a lot of thought and study went into this. Thank you from Ontario.
Yes, the attacks against Milei are the same as those against you: someone or some people (with apologies to good "people") are instigating others to attack so as to divide and conquer. I've never been a fan of the term "controlled opposition," but that is what it is.
Question everything, especially attacks against our own. Because we must start with, everything is a lie. Now prove truth.
At least the old monopolists were content to become fabulously rich, build castles in Newport and, at least had the minimal decency to fund hospitals,, museums and charities.
The globalist pukes of today want to control our thoughts, speech schools and government. All the while freezing their evil brains for posterity and building post-apocalyptic underground lairs that a Bond villain would envy. Time for the peasants to sharpen the pitchforks and light the torches. Starting with Schwab.
As tempting as it is to see monopolies as seeded by distortions due to state action, monopolies, in acting in their own interest, will buy up competitors and/or products to remove them from the marketplace to manage their competition. The more money they have, the easier and more prevalent this behavior becomes. (I am just waiting for the day this happens to Substack.)
If there are no restrictions, Gates could gobble up all the farmland or at least enough to make prices rise and/or cause starvation.
Some people are given to gluttony and nothing is ever enough. They might be heads of corporations, heads of state or individuals.
Jefferson wanted an 11th Amendment to the Bill of Rights that would have made it illegal for corporations to own other corporations. Corporations would have held the status of artificial persons, not natural persons. At the very least, it would have made things possibly more transparent.
Look where we are now: all securities have been pooled and the investors that think they have property rights are at the bottom of the food chain in the priority list in bankruptcy. The NYSE has just backed off doing the same thing to land rights - but for how long?
Excellent discussion all. I was a bit worried about whether you would like this essay.- thanks
Robert
Great analysis! One of the most restrictive "markets", if you can call it that, is the health care market. It is so dysfunctional as a result of government regulation, how can anyone be surprised when it can't cure us. Has anyone else noticed we are getting sicker, not healthier?
Blackrock, is it or is it not, a monopolistic tyrant?
I will gleefully accept the likes of any government leader of the likes of Mile compared to the majority of the globalists (let's be real, Communists) mongrels that inhabit the WEF (Weakening Economic Freedom)!
Excellent Dr. Malone. Cracking open long static paradigms in a reexamination is always fascinating. I was also confused by this part of the speech that Milei gave but now am very pleased that he included it and that you were curious enough to research it in this way. Thank you. I think there are lots of modern day examples of monopolies that exist by virtue of privilege they've been granted by the USG. Blackrock certainly as mentioned in some of the comments, but also too big to fail banks, Google, and others in the Magnificent 7. Tesla would not exist without a deeply distorted scheme of government incentives offered to consumers for purchases and to Tesla itself for carbon offsets. It is not hard to understand why government would want to concentrate power and wealth in the Corporate world as long as they can control it and benefit from it. Might this be ultimately what the WEF is all about... leveraging such a scheme across national borders to further concentrate power and wealth... if so then ultimately it is free countries that will need to fight back against it for most definitely it is fascism at its very core. While he was cautious, it strikes me that Milei has in fact subtly identified the very existential risk that the WEF and socialist governments represent and while he may not have attacked monopolies per se he signaled that Argentina and governments generally should not be offering sustenance for the creation of monopolies if they wish to be free and lands of liberty. Brilliant on your part Dr. Malone and on Javier Milei's part as well.
I've studied this topic extensively. Here is a layman's explanation.
There is no such thing as a natural monopoly. It's a fallacy. Why? A monopoly is purportedly bad because it can exercise pricing power due to lack of competition. Even if we accept the premise of this position, in a free market the inevitable result of this behavior is more competition (someone will start another company and undercut prices). Therefore the only way to retain monopoly pricing power is to prevent competition. It’s not possible for competition to be prevented in a free market. If competition doesn’t exist, it is either because the company is not exercising its pricing power (i.e. selling at a loss or break-even, making it unattractive for competition to enter the market - and BTW, this benefits the consumer with lower prices) or because the company has no market (which would also suppress any desire to compete with it), and in either case, there is no “harm” to anyone. If a company is suppressing competition by selling at a loss with the expectation that eventually it will apply its pricing power, there is nothing preventing others from executing the same strategy, and of course the strategy is short term. For example, if all the retailers in the country want to try to collude on pricing, let them. It will only last for a short time, as one of them will be able to make more money (and take more share) by breaking out of the collusion and lowering prices. There is no long term incentive to collude, and if they do, it's freedom of contract to do so; or another retailer could come in and undercut the group. Instead, what happens in the long term is innovation. Note how retail went from local stores, to Wal-Mart to Amazon. Scale and service over time changed to bring prices down and service up. Many thought Wal-Mart was a "monopoly" or close to one. Then along came Amazon.
THE ONLY COMPANIES THAT EXERCISE MONOPOLY POWER ARE STATE-CREATED (the AT&T monopoly was entirely a government sponsored monopoly and had to be broken up because of lack of innovation). The force of the state physically prevents or suppresses competition and creates monopoly power (another example is the Federal Reserve - it has a monopoly on printing money and government has granted it this power through the Federal Reserve Act). Note the Internet and companies around it are blossoming. Why? Because it's a free market with very little regulation and a lot of competition. Banking, education and healthcare are all heavily regulated and subsidized - they are not pure monopolies, but more like cartels.
The first thing any successful company sees is competition from others. Any successful entrepreneur would admit to this fact. Price fixing just creates another weakness to compete against (the high price). But government interference or ineptitude can keep others from competing against the price fixing.
Many claim Standard Oil was a monopoly. It wasn't at all but it created our ridiculous anti trust law. Standard Oil was about freedom to contract, huge supply chain efficiencies that put small, inefficient producers out of business, and safer oil. See these five parts to the story of Std Oil which is very well researched:
https://www.masterresource.org/epstein-alex/vindicating-capitalism-standard-oil-i/
https://www.masterresource.org/epstein-alex/vindicating-capitalism-standard-oil-ii/
https://www.masterresource.org/epstein-alex/vindicating-capitalism-standard-oil-iii/
https://www.masterresource.org/epstein-alex/the-real-history-of-the-standard-oil-company-part-iv-pioneering-in-big-business/
https://www.masterresource.org/epstein-alex/capitalism-vindicated-standard-oil-part-v/
Regulation is interference by force and immoral. It is aggression against others. I recommend the articles and videos below. Note this is mostly based on logic and an understanding of human behavior, not just data and statistics. The first one below is the one to start with. I can also recommend books that went through history and showed how companies that were assumed to be "monopolies" were not. Alcoa was one example. They had huge market share but what's interesting is prices kept falling! Why? Innovation by Alcoa and the big players brought prices down. Scale leads to capital to be invested to provide better products/services at a lower price. Big is not bad.
Other materials:
https://mises.org/library/myth-natural-monopoly
ttps://mises.org/wire/capitalism-and-misunderstanding-monopoly
https://mises.org/library/antitrust-policy-both-harmful-and-useless
https://www.youtube.com/watch?v=WSVR9xJ-1Vc
https://www.youtube.com/watch?v=-q1fSNzYNhg
https://mises.org/library/net-neutrality-scam
https://mises.org/blog/ditch-net-neutrality-now
https://mises.org/library/peter-klein-net-neutrality-lie
https://mises.org/library/question-cable-monopoly
https://mises.org/library/why-public-utility-monopolies-fail
And this is why you're the man to follow; you catch things that are missed my many. Thank you!
I am thrilled you took this on Dr. Malone. With that said - I have been getting Cato's newsletters for more than a decade. I was reading Mises Wire just this morning on Rising Interest Rates and the "Great Reset" Bubble and reviewing Rothbard on Wikipedia this morning. What do they have in common - Libertarian viewpoints. I would be a libertarian myself if it allowed for a robust understanding of human nature and a heart for humanity and adjusted their thought processes with this in mind. I read their output, I see they do not always agree and freely bash one another. Rothbard went from liking Ayn Rand to loving her then despising her.
I stick by my comment from the 18th “Milei is a classic econ book reader that fails to see the reality that 90+% of the world's wealth (and thus all corporations) is control by Vanguard, BlackRock and a few others. And they are control by the financial founding families who that allow them to claim that 90+%.”
I will add the following: Those financial founding families are the barons and bankers of the western world domain.
Capitalism or a true free market is still subject to the whims of fallen man. It was cutthroat in the 19th century as the barons destroyed competitors, bought up all necessary material for their dynasties, stifled other less-costly and more viable alternatives which allowed them to overprice all their products. Government saw a need to correct these monopolies but failed to implement sound policies. At the same time these same barons were bailing out $$ our broke government all while this was going on. The Theory of Moral Sentiments is no constraint on greed.
Thanks for sharing; I didn’t catch that when I saw his speech. Even in last interview I saw, he was quoting Milton Friedman, a world apart from what you shared. Thanks for keeping us informed!
Thanks for this essay!
As an economist and money manager, I was also struggling with Milei’s WEF speech as it pertains to monopolies. Thanks for the refresher on Rothbard, who, along with others from the Austrian School, I had read and enjoyed decades ago.
As far as Blackrock, Vanguard, and State Street, I think you and others continue to misunderstand how much passive index strategies and custody accounts have to do with “control” and “ownership” of companies. I would strongly encourage you to seek counsel from someone at the top at Vanguard (for example) and discuss what voting rights they exercise for all the shares in their mutual funds and ETFs, and what criteria they use when voting those shares. With State Street, ask them why they show up as “shareholder” for so many company shares, and what sort of voting rights they have for those shares. I think Ed Dowd should be able to help you directly with these conversations (and also enable introductions to senior people at VG, SS, and BR). Why not educate yourself and others, rather than propagate the narrative from a position of limited knowledge?
Thanks, again!
Well done Team Malone. This is a very impressive essay on complex economic philosophy and it is very relevant to real problems in the Governments and economies of what we may broadly call The West. (if not the whole world) It seems this discussion is a long way from pandemic public health governance issues and mRNA by which we came to know Dr. Malone but then again maybe we are not. At its core both of these discussions are about individual freedom of choice vs government regulation and coercion and whether we are talking about health care or more mundane purchase decisions there is a philosophical and practical connection. Many of us are in the process of getting a handle on who Argentina's Javier Milei really is and what he stands for. Indeed, we have learned through COVID to take what is said about anyone with a grain of salt. Nice to see the Malones applying their keen insight in new avenues of interest and doing a great job in the process. That is not easy. Clearly a lot of thought and study went into this. Thank you from Ontario.
Yes, the attacks against Milei are the same as those against you: someone or some people (with apologies to good "people") are instigating others to attack so as to divide and conquer. I've never been a fan of the term "controlled opposition," but that is what it is.
Question everything, especially attacks against our own. Because we must start with, everything is a lie. Now prove truth.
At least the old monopolists were content to become fabulously rich, build castles in Newport and, at least had the minimal decency to fund hospitals,, museums and charities.
The globalist pukes of today want to control our thoughts, speech schools and government. All the while freezing their evil brains for posterity and building post-apocalyptic underground lairs that a Bond villain would envy. Time for the peasants to sharpen the pitchforks and light the torches. Starting with Schwab.
Doctor Malone, I absolutely 💯 tune in to your substack. I ALWAYS find it very educational and informative.
That being said, I'm missing the lead on this topic and all of the focus on the very colorful and energetic Melei.
Can you please advise on why all of the interest, attention and focus on Melei's actions and speeches?
I would like to know how his actions 🎬 affect the BIG PICTURE.
THANK 😊 YOU.
As tempting as it is to see monopolies as seeded by distortions due to state action, monopolies, in acting in their own interest, will buy up competitors and/or products to remove them from the marketplace to manage their competition. The more money they have, the easier and more prevalent this behavior becomes. (I am just waiting for the day this happens to Substack.)
If there are no restrictions, Gates could gobble up all the farmland or at least enough to make prices rise and/or cause starvation.
Some people are given to gluttony and nothing is ever enough. They might be heads of corporations, heads of state or individuals.
Jefferson wanted an 11th Amendment to the Bill of Rights that would have made it illegal for corporations to own other corporations. Corporations would have held the status of artificial persons, not natural persons. At the very least, it would have made things possibly more transparent.
Look where we are now: all securities have been pooled and the investors that think they have property rights are at the bottom of the food chain in the priority list in bankruptcy. The NYSE has just backed off doing the same thing to land rights - but for how long?
That photo is giving me clockwork orange flashbacks..... Hopefully not a representation of his plans for Argentina.