Tuesday, February 5, 2013

Monstrous Monopoly

"Governments institutionalize something for nothing."

James Cook
Investment Consultant

Now that's a statement that can be taken a couple of ways!

First, in the free lunch sense.  The famous cliche that there is no such thing as a free lunch.  Well, there isn't!  Someone has to pay for everything.

So, if a gubment program is "institutionalized," are there people who think it's free?  And if so, why do they think that?  And if they think that, why do they think the money comes from "the gubment?"  Why don't they realize it comes from their neighbor?

They don't think that because they have been trained not to think that.

Another way the statement can be taken is in the sense of efficiency.  Gubment programs do get institutionalized!  They become "the norm."  They become "the way."  Some people think some of these things always were.

Aside from defense, which could not be provided by anything but central control (although control in this country is very decentralized centralized), what gubment program has not become unimaginably large, inefficient, intrusive and consuming?

At the point that a program becomes so consuming of treasure and citizenry, what is the benefit?  Is it for the ultimate good or for naught?  Truly it has become institutionalized.  But for nothing.


So why would or could our country be any different?

Bureaucracies, in effect, become monopolies.  If you don't think "health" care, with its hundreds of bureaucracies already written into its organizational chart (if THAT could ever be drawn up), will not grow to be the biggest monster in the world, think again. 

And it will consume this country's treasure and citizenry.

When the market demands something and the market gets it, that thing grows in importance.  But only so far!  It never consumes treasure and citizenry.  Why not?

Because in a free market a monopoly can never be!  Why?

The product market cycle!  Or product differentiation!  Or diminishing returns!  Economics!  Basic economics is the reason!

Bad products are removed and replaced!  Necessarily.  Do the scammers and hucksters get their way?  Yes, maybe, but only for a while.  Truth overtakes them and they go away.

There is a particular company out there that tries to push out the product market cycle with the phrase "new and improved!"  They want us to think that this product, or these products, that have been around for so very long, are different, truly new and improved.  They don't want to be overtaken by another similar product and its differentiation.  They are trying to bump out their market cycle a bit further.

Everyone is waiting for the new search engine, television, software, smart phone characteristic, sound system or portable computer device.  And we want it to be cheaper and cheaper!  Differentiation is happening so fast in so many things that we can't keep up with them all!  When we buy something it is already obsolete!  Or so it seems. 

But bureaucracy is different.  It is the supergigantosaur which will never get smaller, never become prehistoric, and never go away.  And each one will get more and more and more inefficient.  Each one will consume more and more and more treasure and citizenry.  Instead of getting cheaper, as it grows monstrously, it is fed with more and more dollars that are getting cheaper!


And, as Mr. Cook says, people get an institutional something for nothing.

But NOT a free lunch!

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