Recently by Thomas DiLorenzo: The Watermelon Summit
For centuries the common law defined "monopoly" as a governmental grant to an individual or enterprise to operate without any legal competition. Government-sanctioned monopoly was a key feature of European "mercantilism," the type of political/economic system that Adam Smith railed against in his famous 1776 treatise, An Inquiry into the Nature and Causes of The Wealth of Nations. So-called mercantilism was essentially a collection of government policies, such as protectionist tariffs and government-sanctioned monopolies, which benefited producers at the expense of consumers. Granting such favors to politically-connected businesses was a way in which the European monarchs could share in the plunder of their citizens through kickbacks from the monopolists. Today these kickbacks go by various euphemisms, such as "campaign contributions."
Of course, the worst of all monopolies is a government-run monopoly financed directly by tax dollars, for the consumers' refusal to pay for the "services" of government monopolists can lead to the forceful confiscation of one's income and property or prison (for tax evasion). At least with most "private" government franchise monopolies a consumer can always say "no thanks, I'm not wasting my money; you can go play in the traffic as far as I'm concerned."
There is no such thing as "free-market monopoly" and there never has been. The notion of "free-market monopoly" is especially ridiculous in today's age of globalization, where competition can spring up from anywhere on the planet — as long as governments do not interfere with the free market by prohibiting competition, as they often do in myriad ways. Monopoly has always been solely a creation of government.
In addition to being the sole source of monopoly power, government is also a relentless propagandist in opposition to genuine free-market competition. Its university systems are filled to capacity with poorly-educated anti-capitalist ideologues of all sorts, including thousands of "market failure" economists who spend their entire careers spinning tall tales of mathematical models that purport to define a "perfect" market. Having concocted such definitions they then matter-of-factly point out that, lo and behold, real-world markets "fail" to meet their definitions of "perfection." This is known as "the Nirvana fallacy" among free-market economists.
No such perfectionist models of government are ever invented by the market failure economists for the obvious reason that government failures would appear to be many orders of magnitude worse than anything that ever happens in the marketplace. For example, the Ponzi scheme known as "Social Security" is a thousand times worse than the most famous private Ponzi scheme, the one pulled off by Bernie Madoff. Madoff's rip-offs "only" amounted to some $50 billion compared to trillions of dollars in Social Security System rip-offs and swindles. And the Madoff scheme was not an example of the free market but of criminal behavior.
That government is always and everywhere the source of monopoly power was on display recently in the June 24, 2012 issue of the Palm Beach Post in an article entitled "21 Arrested in 3 Delray Gambling Raids." Like most other states, the state of Florida "legislated" itself a legal monopoly in gambling and advertises relentlessly to persuade mostly lower-income Floridians to spend more than $4 billion/year on lottery tickets. These billions are used to pay the salaries and perks of myriad government bureaucrats, including not only $25 million/year for lottery employees, but subsidies for government school bureaucrats, TV-watching/weight-lifting fire station loafers (our "first responders"), police, and many others.
The state of Florida, like other states, is not hesitant to use deadly force to protect its gambling monopoly. As such, it is no different from any other criminal gang that protects its monopoly profits from illicit drugs, prostitution, kidnapping, extortion, etc. According to the article in the Palm Beach Post, the state's lottery police got wind of a private lottery game called "bolita" taking place in the back room of a hair salon. The game involved about a dozen people and a bag with 100 numbered marbles. The people in the room were putting money in on gambles as to what numbers would be pulled out of the bag, just as the state lottery does several times a week but on a massively larger scale.
"Something sinister was going on" there, the Delray Beach, Florida police were quoted as saying. Consequently, "SWAT teams from the Delray Beach and Boca Raton police departments arrested 21 people." The newspaper article included pictures of "a couple of dozen officers" who arrived in a faux tank dressed in camouflage, wearing bullet-proof vests, and carrying automatic rifles. Twelve people were arrested while all of the hair salon's patrons were "detained" (a.k.a. kidnapped) for hours while undergoing "questioning" by police. The cops must have realized how ridiculous they looked (jungle camouflage in a suburban hair salon?!) since they immediately came up with the rationale for the raid that "Bolita can lead to bigger crimes . . ." Today's bolita player may well become the next serial killer in the eyes of the Florida lottery police.
An especially entertaining (and educational) aspect of the Palm Beach Post article is the fact that the newspaper placed directly below the article about the hair salon raid the latest winning Florida lottery numbers for the previous evening, including "Fantasy 5," "Play 4," "Cash 3," and "Mega Money" picks.
Thomas J. DiLorenzo [send him mail] is professor of economics at Loyola College in Maryland and the author of The Real Lincoln; Lincoln Unmasked: What You're Not Supposed To Know about Dishonest Abe and How Capitalism Saved America. His latest book is Hamilton's Curse: How Jefferson's Archenemy Betrayed the American Revolution — And What It Means for America Today. His next book is entitled Organized Crime: The Unvarnished Truth About Government.