10/17/2009

The irony of granting the State enough power to prevent "free-market monopolies."

Tom DiLorenzo wrote a fantastic paper titled, "The Myth of the Natural Monopoly" which shows that the instances generally referred to as examples of how monopolies can occur in the free-market, and thus we need government to protect us from this, were all actually government-created monopolies in one form or another. Murray Rothbard contends that not only has there never been an instance of a free-market monopoly, but also that there never even could be a monopoly that emerges on the market without the assistance or intervention of government in some way.

Anyways, this is relevant to my post today because I always find it hilarious when supporters of the State cite monopolies as their greatest fear of a free-market system. Therefore let's create the most massive monopoly known to man in the form of the State, to protect us from the possibility of a smaller monopoly that could theoretically one day emerge if we left the market unchecked. Well there are other problems besides the redundant theoretic ones with this solution. Not least of which is the State can be used in manners not originally intended (shocking, I know!) See recent events, or the article below for one example of these "unfortunate side effects" to the legalizing of a monopoly known as the State.



"In October of last year, a Goldman Sachs Vice President, Neel Kashkari, was named by former Goldman CEO and then-Treasury Secretary Hank Pauslon to oversee the$700 billion TARP bailout. In January of this year, Tim Geithner hired a former Goldman Sachs lobbyist, Mark Patterson, to be his top aide and Chief of Staff. In March, President Obama nominated Goldman Sachs executive Gary Gensler to head the Commodity Futures Trading Commission, which regulates futures markets, even though (or "because") Gensler confessed to lax regulation during the Clinton administration over the very derivative instruments that caused the financial crisis. In April, Goldman hired as its top lobbyist Michael Paese, the top aide to Rep. Barney Frank on the House Financial Services Committee which Frank chairs."

"The bailout of AIG -- which resulted in massive federal government monies to Goldman -- was engineered at a meeting between Paulson, Geithner and Goldman CEO Lloyd Blankfein. Last year, Goldman paid top Obama economics adviser Larry Summers $135,000 for a one-day visit to Goldman."

The full article is absolutely mind blowing reading:
Another Goldman executive named to key government post as its profits skyrocket.

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