Free-Market Economics

Eric Watt Forste (arkuat@pobox.com)
Fri, 11 Jul 1997 15:17:39 -0700


Just a quick comment on this Rockefeller business. I've read that
Rockefeller used the tactics of trying to pressure his competitors
into selling out to him by undercutting them and then offering to
buy their businesses while they were in distress. This set up an
arms race: several small-time oil operators caught on to what
Rockefeller was up to, and began to start up new oil businesses,
investing little or no capital in them, letting him lose money for
a while by undercutting them, and then selling them to Rockefeller
for far more than they were worth. I don't have any cites to the
primary literature on this (and I only read about it in secondary
literature, so I don't know how reliable the story is). And of
course, just as Rockerfeller's smalltime competition caught on to
what Rockerfeller was up to and took advantage of it, Rockefeller
probably only got burned a few times before he realized what was
going on.

My point is that markets are shapeshifting creatures, and however
awesome the power of a monopoly may be, the power of the government
is even more awesome. I'd prefer to see people fight monopolies
with the same sorts of tactics that are used to build up monopolies,
the way those smalltime competitors of Rockefeller purportedly did.
IMHO, the monopolies instituted and protected by governments nearly
always do more damage than the spontaneously emerging natural
monopolies. If you want to fight monopoly, it would be better to
try to get the government to stop prohibiting people from competing
in the delivery of first-class mail and other transportation,
communication, and power services (usually monopolized by government
fiat the world over) than to lobby for the government to intervene
in the business of a company that has never received any kind of
special treatment from the government. Microsoft certainly have
*far* less on their consciences than the RBOCs, the power companies,
and the various PTT agencies on the planet do.

(Perhaps I'm being too harsh on the RBOCs to counter any natural
prejudice arising from the fact that I'm currently working as a
contract programmer for Pacific Bell. ;) I'm only in it for the
money, so maybe I'm far more guilty than Bill Gates of profiting
from monopolistic practices.)

--
Eric Watt Forste ++ arkuat@pobox.com ++ expectation foils perception -pcd