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Won’t Big Businesses Abuse Their Power in a Free Market?

in Ask Dr. Ruwart, Liberator Online, Libertarian Answers on Issues by Mary Ruwart Comments are off

(From the Ask Dr. Ruwart section in Volume 20, No. 5 of the Liberator Online. Subscribe here!)

QUESTION: Won’t big businesses abuse their power in a free market? What if the only choices you have are bad businesses? For example, what if such companies grew so big that they could control the entire market?

MY SHORT ANSWER: In today’s society, you could indeed have a sector where all businesses are “bad,” because government lets some companies have a monopoly (e.g., local utilities, AT&T before deregulation, etc.) or a cartel (e.g., banks).

In a libertarian society, however, this would be much less likely. A sector with only “bad” businesses would soon be invaded by competitors who recognized that they could earn and retain customer loyalty (and profits) by being “good.”

In today’s society, many businesses are bigger than they would be in a libertarian one, because the high cost of regulation drives small firms out of business. For some examples, check out the cases of the small businesses that the libertarian Institute for Justice has tried to protect from over-regulation.

We are told, usually by government entities, that the free market creates monopolies, but actually it is the government that does so. For more on this subject, check out Chapter 7 in my book, Healing Our World (the 1992 edition is a free read on my website, www.ruwart.com).

LEARN MORE: Suggestions for further reading on this topic from Liberator Online editor James W. Harris:

Antitrust: The Case for Repeal by Dominick Armentano. This outstanding 100-page book — available as a FREE ebook from the Mises Institute — shows that anti-trust and anti-monopoly regulation, far from serving and protecting the public, is merely a tool used by powerful businesses against their competitors.

* “Federal Regulations Have Made You 75 Percent Poorer“ by Ronald Bailey, Reason magazine. This short and very readable 2013 article summarizes research by economists John Dawson and John Seater. The two compared U.S. economic growth with the growth in federal regulation since 1949, and calculated that federal regulations cost the average American household more than a quarter-million dollars in lost income — annually.



Short Answers to Tough Questions
Got questions?  Dr. Ruwart has answers! If you’d like answers to YOUR tough questions on libertarian issues, email Dr. Ruwart

Due to volume, Dr. Ruwart can’t personally acknowledge all emails. But we’ll run the best questions and answers in upcoming issues.

Dr. Ruwart’s previous Liberator Online answers are archived in searchable form.

Dr. Ruwart’s latest book Short Answers to the Tough Questions, Expanded Edition is available from the Advocates, as is her acclaimed classic Healing Our World.

Won’t Big Businesses Abuse Their Power in a Free Market?

in Ask Dr. Ruwart, Communicating Liberty, Liberator Online, Libertarian Answers on Issues by Mary Ruwart Comments are off

(From the Ask Dr. Ruwart section in Volume 19, No. 21 of the Liberator Online. Subscribe here!)

Big BusinessQUESTION: If you free big businesses from government regulations, how do you keep these same businesses from becoming an aristocracy and turning America into a feudal state?

MY SHORT ANSWER: In a libertarian society, you, the consumer, control businesses by voting to buy or not buy their products. You vote to keep them in business or shut them down. You eliminate the “bad guys” by purchasing only from the “good guys.”

In today’s society, government regulates some companies out of business, leaving a monopoly (like most local utility companies) or a cartel (like the banking industry). Limiting your choices limits your control.

Government doesn’t keep big business in check; government keeps big business big.

Business only has two ways to get big: by serving customers better than the competition or by getting Big Brother to regulate their competition out of business. Keeping government out of the marketplace keeps business in its true service role.

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LEARN MORE: Suggestions by Liberator Online editor James W. Harris for further reading on this topic:

* “Big Business and Big Government“ by Tim Carney, Cato Institute Policy Report, July/August 2006.

EXCERPT: “The history of big business is the history of big government. As the federal government has progressively become larger over the decades, every significant introduction of government regulation, taxation, and spending has been to the benefit of some big business. …big business and big government prosper from the perception that they are rivals instead of partners (in plunder). The history of big business is one of cooperation with big government. Most noteworthy expansions of government power are to the liking of, and at the request of, big business.”

* “The Only Way to Get Money Out of Politics“ by Sheldon Richman, Future of Freedom Foundation.

EXCERPT: “It’s a great myth that businesses, especially big prominent corporations, want less government intervention in the economy. On the contrary, they love government power because it provides things they can’t achieve in a freely competitive marketplace where force and fraud are barred. Corporations support and lobby for interventions that benefit themselves by hampering their competitors, both foreign and domestic. You often find companies asking for tariffs and other restrictions on imports that compete too effectively with their products. Agribusinesses welcome government (taxpayer) help in selling their products abroad; they also love subsidies, price supports, and acreage allotments. … In American history big companies were behind virtually ever advancement of the regulatory state.”


Short Answers to Tough QuestionsGot questions?  Dr. Ruwart has answers! If you’d like answers to YOUR tough questions on libertarian issues, email Dr. Ruwart

Due to volume, Dr. Ruwart can’t personally acknowledge all emails. But we’ll run the best questions and answers in upcoming issues.

Dr. Ruwart’s previous Liberator Online answers are archived in searchable form.

Dr. Ruwart’s latest book Short Answers to the Tough Questions, Expanded Edition is available from the Advocates, as is her acclaimed classic Healing Our World.