What's So Bad About Monopolies?

Devil's advocacy by Doug Collins, the Free Press

Opposing monopolies has been a traditional American pastime for progressives, but are monopolies really the problem? Or are we just afraid to regulate large companies sufficently?

There are plenty of monopolies I personally would like to see. For example, a single-payer health insurance system is much more efficient than the US system of thousands of insurance providers and HMOs. Let's face it: lots of countries now have a higher life expectancy than the US, and all or most of them have a single-payer medical system which delivers the care more cheaply than our system does.

Monopolies can simply be more efficient. Less bureacracy is one reason. When there is no monopoly, each small company must have its own president, it's own board, it's own peculiar process and paperwork. When you replace smaller companies with a single monopoly, you only need one president, one board, and your processes are standardized. Also, monopolies don't really need to waste so much money on advertising, since they aren't competing with any other companies.

There is the common fear that once a company establishes a monopoly, it will start raising prices and squeezing consumers. But why not just start regulating prices and other practices of the company at that point, rather than artificially breaking the company up?

Once a company controls, say, 70% of a market, we're hardly talking about free market capitalism anymore. If the market isn't free, and is dominated by a single company, that company should be subject to a lot more public intervention, which is a good thing. This would be similar to how our utility companies have operated up to now. Utility price rates are typically controlled by local governments. To increase rates, utilities must seek permission from the elected officials and go through a public process (although plans for electrical deregulation may muck that up considerably).

Let's apply these ideas to the famous Monopoly game of landlord domination, discussed in the accompanying articles. Let's say one landlord--Paul Allen or somebody with bucks--"won" the Monopoly game by buying up most of the property in Seattle. Fine. When most voters are tenants, they could start regulating some sense into landlord/tenant law rather than continue with the pipedream of everyone having an independently owned home in a dense urban setting. I'm talking serious rent price controls, repair or improvement expenses that tenants can routinely deduct out of their own rent, severe restrictions on evictions so tenants can have stable family lives. Once there are good legal protection for tenants and resonably low rents, being a property owner is nothing special to aspire to. Such regulations could also serve a double benefit of making rental property less attractive to large investors, thus lowering prices, and making property affordable to at least some.

Banks in the last ten or twenty years have been merging into ever bigger entities. Though the endgame of this would be the hypothetical "Last Bank," I doubt that such a bank would have worse customer service than the banks today. By that time, customers--and the general culture--would have become so fed up with exorbitant service fees and paltry returns that they would have long since regulated the business. If there is ever a "Last Bank" monopoly, perhaps it will serve the customer, rather than vice versa.