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How to Lose at Monopoly

By Ken Root

I want to propose a way to make businesses more competitive. I want to have more workers in private industry and less on the government payroll. I want start-up businesses encouraged but I want companies to have a steeper hill to climb as they grow large and merge with competitors. I’m not trying to be pro-government or anti-government but this approach requires a credible regulatory environment and the will of the people to pressure Congress and the Administration to enforce laws fairly. At that, I’m sure I’ve lost many of you because past efforts to limit corporations have not been supported by government.

A monopoly should be seen as a failure rather than the ultimate success. Capitalism should provide the opportunity to succeed but the threat of failure should be constant. Corporations should be redefined with greater accountability placed on ownership and management with civil and criminal penalties as the tools to do so. Ethical conduct by management should be endorsed but legal and immoral acts should be condemned by society.

I don’t buy the theory that only big companies can come up with good ideas or new innovations. Looking back through our history, the ideas came from the entrepreneurs with the capital from investors. They all benefitted from this risk-reward concept. Now a company with a better product is usually bought by a behemoth who rolls it into a low cost, high volume production system. The original owner of the small and innovative company hits a wall when he realizes the path to more sophisticated production and larger distribution is blocked by a huge competitor. He sells and walks away because it is the easiest, and often the only, pathway.

There are now twenty-two million people working for some form of government in the United States. They may be faceless bureaucrats in Washington or your state capitol or the wonderful lady in the assessor’s office in the county courthouse. That is an amazingly large number of jobs supported by the private sector. Although these government employees pay taxes, they get their salaries from the money paid in from taxes. They outnumber manufacturing employees by a margin of two to one.

What if we change the system from the top? When a company gains a monopoly, it becomes the property of the federal government. It is nationalized. The employees now work for the government and their jobs are secure. Money made by the company goes to the treasury to pay operating costs and salaries. Those who owned the company from management to stockholders lose their investment and their positions as they are incorporated into the civil service jobs. We could do this in automobiles, chemicals, oil, heavy equipment, insurance, banking and many other areas where current mergers are moving companies into monopoly situations.

Of course, the end result would be chaos. The incentive to work and produce would diminish and the giant enterprises would become less competitive to imports and to small companies that would spring up to take the easy pickings. Workers may have security in the bureaucracy but those with a strong work ethic and desire for advancement would seek other jobs. Those who remain would be even less productive. Government would lose tax base and risk being blamed for shortages in either manufactured products or food production. American competitiveness would go down and those in office would be under pressure to pass laws that would reinstate private enterprise.

The system I’m describing is basically Soviet Communism. It is government owned enterprises that equalize people but, unfortunately, makes they equally poor. It strips citizens of their work ethic. To make a comeback from generations of a communist system takes several more generations. After the fall of the Soviet Union, people did not know how to work at real jobs in the private sector.

My objective is to take a hard look at unfettered capitalism which promotes incumbency. Corporations have too much power and too little accountability. White collar crime goes virtually unpunished. Fines of astonishing amounts can be levied against the company but damage done by top management is only punished by resignation, or retirement, with some shame and a lot of money.

A challenge for government is how to keep companies from having undue influence in the political, legislative and regulatory processes. Many companies fund both sides of a campaign so they have a friend in office, no matter who wins. They “shop” regulators so their pathway to a goal is less impeded by government agencies who are charged with enforcing the law. A lot of smart people work in corporate jobs for the purpose of navigating around and through government. They are charged with putting up barriers to competitors and maximizing the dominance of their brand.

With three more weeks of election madness ahead of us, I don’t see either candidate with a plan for American job growth. One side favors more government control and higher taxes on those who already pay most of the taxes. The other wants to make a fortress out of the country and fend off the rest of the world. Neither has a vision of how to foster growth or competition in the private sector. Nevertheless, one will be the incumbent in four years and assure us their policies will work better in the second term than they did in the firs