Government ownership produces monopolies that harm consumers.  This podcast looks at the threats of monopolies in health care, education, and religion.

 

In the United States, we’ve been blessed with freedom of choice, which has produced a two-part system: What the government offers, and what the free market offers.  Increasingly, we are being forced into a governmental system with only one supplier, taking away choice.

 

The Oldest Mistake in Economics

In economics, this looks attractive.  The next time you go through a traffic intersection and there are three gas stations on four of the corners, you’re welcome to observe that it’s not a good use of resources to oversupply the market in that way.   Yes, lots of resources are used in that supply scenario.  I often say in my class at Dallas Baptist University....On the other hand.... If there was only ONE gas station, which we call a mono-poly, or a monopoly if you say it fast.  Here’s where the fallen nature comes in.  If the suppliers were not fallen this would work fine.  But they are.  Mexico ran this experiment with their national oil company, Pemex and it produced lower production and higher prices.  This week, Chile announced they are nationalizing their lithium mines.  In an article titled “The Oldest Mistake in Economics” this week, Mary Anastasia O’Grady explains it this way, “It’s never a good idea to allow career politicians to manage the economy. They’re not a financially astute bunch and their incentives are all wrong. Yet developing countries rich in natural resources continually repeat the mistake.”  I wish only developing countries made this mistake.  We’re looking increasingly like that system in the US.  Ms. O’Grady’s conclusion is prescient, “The President of Chile is licking his chops at the prospect of a new state company whose patronage jobs and budgets will increase his power.”  Yep, it’s all about power. 

Powerful governmental bureaucrats start by providing innocent subsidies to an industry.  Their subsidies cause the industry to falter, so the governments increase their support.  Then, in industries from health care to education - even religion - they end up taking over the industry, and eventually “The Government Owns It All.”  Lord Acton was right, “Power corrupts, and absolute power corrupts absolutely.”  I like the Lord Acton book by Himmelfarb, but there are others.

Let’s return to our country, the richest country in the history of the world.  We got here by encouraging competition, and we will lose our position as the world’s greatest economy if we go down the Road to Serfdom to which we are currently being led.

 

The Rationing Mechanism

When a government-granted monopoly occurs, the quality and quantity of the supply is decreased.  It’s explained clearly by Gregory Mankiw in the Macroeconomics textbook I use at Dallas Baptist University.  He writes, “In response to the shortage, some mechanism for rationing the product will naturally develop.  The mechanism could be long lines: Or, sellers could ration the product according to their own personal biases, selling them only to friends, relatives, or members of their own racial or ethnic group.   Discrimination according to seller bias is both inefficient and often unfair.  By contrast, the rationing mechanism in a free, competitive market is both efficient and impersonal.  Free markets ration goods with prices.”

Okay, goods and services WILL get distributed.  We only have the power to determine HOW they get d...