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What The United Airlines Fiasco Teaches Us About Monopolies

in Economic Liberty, Liberator Online, News You Can Use, Personal Liberty by Alice Salles Comments are off

What The United Airlines Fiasco Teaches Us About Monopolies

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The United Airlines fiasco has been all over the news — for a good reason.

A passenger who had already been allowed to take his seat had his face bloodied as police officers were asked to physically remove the man from the plane. The incident had followed what many reported as being an issue with an overbooked flight but later, it was discovered that the man had been picked in a lottery to leave the full flight after United noticed it needed four seats for crew members.

United AirlinesThe passenger in question, David Dao, refused to leave the plane, even after the company offered $800 and a hotel stay to whoever accepted to relinquish their seat, and that’s when the police were called in to “help.”

Many have noted that legally speaking, Dao was in the right and United was in the wrong. But what many are ignoring in this story has to do with how we got to a point where a private organization needs the services of the state police to remove a customer who had not broken his contract.

If United had to compete for its customers in a free, open market, would they have treated any customer this way?

Ryan McMaken of the Mises Institute answers that question with an in-depth review of the U.S. airline industry. He explains that, in North America, the four top carriers enjoy 80 percent of the business, putting these four companies in a nearly total control of the domestic flying industry. But that occurs not because these firms form an official, government-backed cartel. Instead, government intervention is so heavy-handed that it provokes an artificial barrier to other airlines, making competition less likely to happen.

Take the U.S. ban on foreign carriers for instance. Because international airlines are not allowed to fly certain point-to-point destinations domestically, only domestic airlines have the privilege of doing so. Economically ignorant politicians defend this policy by saying that this protects American workers and consumers. Unfortunately, this particular protectionist policy has the exact opposite effect, as fewer companies mean fewer options for both job seekers and flyers.

Down the line, as competition is stifled and domestic companies enjoy an artificial monopoly over the industry, the consumer suffers greatly, as the top four carriers are allowed to act erratically and still have a virtual control of the market. With no options but to fly using one of these protected firms, these consumers are then forced to undergo severe mistreatment. In a free market, this type of incident could have destroyed United, but in an environment where protectionism rules, United will suffer for some time before it bounces back up as few companies are able to compete.

Drug Prices Are High Because Government Protects Monopolies

in Healthcare, Liberator Online, News You Can Use by Alice Salles Comments are off

Drug Prices Are High Because Government Protects Monopolies

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Ever since the EpiPen scandal hit the public like a ton of bricks, many outlets contended that greed, not cronyism, was to blame.

pillsBut when looked closely, EpiPen is just another example of corporate influence and lobbying shaping public policy. The ones who benefit are always the same individuals who pressed for changes in the first place.

In an article for the Fiscal Times, Mercatus Center’s Marc Joffe contended that the drug price problem could be fixed by targeting the Food and Drug Administration. But not by giving the agency more regulatory power. Instead, Joffe argues that, stripping the agency of its power would do America a world of good.

In the article, Joffe tells the story of how the FDA obtained its power, noting that it was a morning sickness pill that prompted the nationwide support for the Kefauver Harris Amendment, which “gave the [FDA] most of the power it now exerts in regulating drugs.”

As the FDA expanded its power, regulating every single piece of medication in America, drug prices increased considerably, while access to many life-saving drugs remains restricted. To Joffe, the “drug crisis” we now face as a nation has everything to do with the empowerment of the FDA, prompting the scholar to urge lawmakers to look at the free market for a solution if what they are truly after is to lower drug prices.

In a competitive market, Joffe writes, “price equals the marginal cost of production.” But even in an imperfect world, he contends that, when “prices [are] well above production costs,” firms see an incentive to compete. But if markets are restricted and companies are granted exclusive rights to produce and sell certain drugs, firms are unable to compete. Without competition, monopolies set the rules, making way to high costs and low effectiveness.

In his article, Joffe argues that, if Congress is serious about helping patients from all walks of life, they must stop considering the idea of passing laws to expedite the FDA’s approvals for new drugs. Instead, Joffe writes, “[allowing] multiple organizations to approve drugs, providing competition to the FDA … [or allowing] pharmaceutical companies sell whichever medications they believe to be safe and effective — with the understanding that patients can win large judgments if the companies fail to produce and market their treatments responsibly,” would both be better options that would deliver better, and more effective results.

Freedom, after all, is the answer to most of our problems. And that’s why governments often contend the opposite.

​THANKYOU: Citibank Sues AT&T Over Infringement of Trademark Law

in Liberator Online, News You Can Use by Advocates HQ Comments are off

​ THANKYOU: Citibank Sues AT&T Over Infringement of Trademark Law

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Chapman University law professor Tom W. Bell once told Reason magazine that copyright law goes against free speech rights protected under the US Constitution. But to Citigroup, the banking giant, copyright law is worth the breach of the law left by our visionary ancestors.

TrademarkAccording to Ars Technica, Citgroup has filed a lawsuit against technology company AT&T claiming a trademark infringement. The federal lawsuit, which was lodged this past Friday in New York federal court, contends that Citigroup has trademarked “ THANKYOU,” effectively barring AT&T and other companies from using the same sentence to, well, thank customers.

The lawsuit argues that:

“For many years, Citigroup has used trademarks consisting of and/or containing the term THANKYOU, including THANKYOU, CITI THANKYOU, CITIBUSINESS THANKYOU. THANKYOU FROM CITI, and THANKYOU YOUR WAY, in connection with a variety of customer loyalty, reward, incentive, and redemption programs (collectively, the ‘THANKYOU Marks’).”

But AT&T’s new marketing campaign, which advertises the AT&T Universal Card, a credit card backed by both AT&T and Citigoup, uses “ AT&T THANKS,”  and “ thanks”  as part of their advertising phrases, causing “consumer confusion”  and constituting “trademark infringement, false designation of origin, and unfair competition in violation of Citigroup’s rights.” The company contends that, since everybody knows that the “THANKYOU marks” are synonymous with Citigroup, the lawsuit asks the judge to block the so-called illegal marketing campaign, adding that Citigroup is entitled to unspecified damages.

To patent attorney and director of the Center for the Study of Innovative Freedom Stephan Kinsella, intellectual property is incompatible with capitalism.

In the past, as well as now, Kinsella argued during a Mises Institute event speech, intellectual property is how “sovereigns or monarchs”  issue “monopolies that [protect]  various goods and services for a limited period of time.”

When liberals, conservatives, and even some libertarians argue in favor of copyright laws and other intellectual property rules, Kinsella told the audience, they are arguing for the creation and protection of monopoly, an act that stands against the libertarian principles of free and voluntary trade.

The very roots of copyright, Kinsella also argued, is all about censorship.

When printing transformed communication, the government found a way to “control official and political thought” passing “copyright statutes to basically help limit what could be produced and said and what information people could copy and share with each other.”

In today’s world, large companies like Citigroup use copyright and trademark laws to strike deals and protect heir turf, crossing licenses to each other, just like Microsoft and Apple did, protecting their industry from giving smaller players the right to compete with them.

Again, instead of protecting the little guy, copyright laws are used to protect monopolies, making sure the industry’s giants are protected from outside competitors.

Instead of celebrating America’s free speech protections, companies like Citibank prefer to keep their influence unquestioned. Not surprising, considering the American multinational investment banking and financial services corporation is a powerful lobbying force in Washington.

Free Market or… Freed Market?

in Business and Economy, Communicating Liberty, Economic Liberty, Liberator Online by Sharon Harris Comments are off

(From the One Minute Liberty Tip section in Volume 19, No. 10 of the Liberator Online. Subscribe here!)

Free MarketHere’s a neat little phrase that can be very handy when talking about economics: “freed market.”

No, not “free market.”

Freed market.

Here’s why.

As we’ve discussed in the past, “capitalism” is often not a very useful word for libertarians to use to describe the economic system we advocate. Sheldon Richman of the Future of Freedom Foundation gives some good reasons for not always using the word “capitalism” here.

A more accurate and more popular (according to a Gallup poll) alternative I’ve discussed is “free enterprise.”  Also good is “free market.”

But even these useful words are often hijacked by big-government conservatives and others who don’t really mean what libertarians mean by genuine free enterprise.

Today’s economic system is nothing like a free market. Yet it is often described as one. So, when people see massive economic problems and scandals all around them — subsidies and bailouts of rich businesses, unemployment, high taxes, dangerous products, corporate favoritism, monopolies — all of which are due to anti-market actions — it’s natural that they would oppose the “free market” system that we supposedly have. After all, the terms “capitalism” and “free market” are frequently used by those who defend this very system.

Ugh! What confusion!

Which makes “freed market” a great phrase to toss into a discussion.

For example, asked about your economic views, you might say: “I believe in the free market. Or, to be more precise, a freed market.”

Your listener: “What do you mean, ‘freed’ market?”

And that gives you the chance to explain what libertarians actually believe. Something along these lines:

“I want to see our current economic system freed up, for consumers and for competitors. A free market — which we don’t have today — would do that, and we’d all benefit.”

You then persuasively share the many ways everyone would benefit from this.

The use of “freed market” lets you point out how government meddling and crony capitalism, not the market, are responsible for today’s economic woes. It frees you from defending the present system, while still letting you use successful examples from that system as examples of what libertarians are striving for.

Importantly, “freed market” also makes it clear that we don’t have a free market today. It makes it clearer that you are talking about a goal, a better future, something different and better than the status quo.

In short, it lets you present the free market as the solution — not the cause — of today’s problems. It lets you offer a vision of a better future — not a defense of current abuses.

It’s a neat little twist.

The word “freed market” and the idea behind it have been discussed a lot at the Center for a Stateless Society. Here’s an excerpt from “Embracing Markets, Opposing ‘Capitalism’” by Gary Chartier that nicely points out the difference between the economic system we have today — and the free market libertarians want to see:

“To a very significant degree, the economic system we have now is one from which peaceful, voluntary exchange is absent. An interlocking web of legal and regulatory privileges benefit the wealthy and well connected at the expense of everyone else (think patents and copyrights, tariffs, restrictions on banking, occupational licensing rules, land-use restrictions, etc.). The military-industrial complex funnels unbelievable amounts of money — at gunpoint — from ordinary people’s pockets and into the bank accounts of government contractors and their cronies.

“Subsidies of all kinds feed a network of privileged businesses and non-profits. And the state protects titles to land taken at gunpoint or engrossed by arbitrary fiat before distribution to favored individuals and groups. No, the economies of the US, Canada, Western Europe, Japan, and Australia, at least, aren’t centrally planned. The state doesn’t assert formal ownership of (most of) the means of production. But the state’s involvement at multiple levels in guaranteeing and bolstering economic privilege makes it hard to describe the economic system we have now as free.”

With the right listeners, the term “freed markets” can help you open minds to a new understanding of genuine economic freedom and the blessings it can bring.