Share The Wealth by Chris Gupta
April 01, 2004

Roots of Medical & Other Monopolies


The following will help reinforce my earlier contention (Preface to Medical Veritas...) regarding the understanding of the root causes. Surely without understanding the problem one can hardly come to grips with the solution? Freedom and ethics in such sectors as medical, energy, etc. is very unlikely if we choose to ignore what is staring us in the face!

Chris Gupta
----------------------------
The problem lies in authoritarianism (i.e. government). When you give one group (the State) a monopoly on cohesive force (violence) you will always, and I mean, always have things like this . The problem is not medicine, the problem is GOVERNMENT. It's not lack of laws. It's not a faulty constitution. It's not that we need more studies. It's not that we need more citizen involvement. The problem lies squarely on the fact that we allow one group of people to have a monopoly on the use or force. NOTE: we all know that true monopolies are bad, yet we think it's ok for government to have monopolies. Hmmmm.... what's wrong with this picture?

If we didn't have any governing body to speak of we would not have this problem. People would be free to choose their own remedies. They would seek out whomever they wished for consultation (and not necessarily MDs).

In the free market, if a company puts out a crappy product people would find out and simply stop buying that product. The company would have to improve its quality or it would go out of business (the consumer would VOTE it out of office.... in real-time.... not after five years). In the event of a real injury the company will be sued out of existence, and it's CEOs possibly imprisoned. However, if you take our present situation we are all forced (BY GOVERNMENT) to accept their (crappy over priced) services (even if they lead to an early death). Now that's the danger of a true monopoly.

If anyone tries to compete with any government monopoly they will most certainly be in big trouble. Whereas in the free market the consumer gets to choose, and will only keep on choosing (voting for that company with their dollars) if that provider of goods and services can satisfy them in some way. If that so-called "cure for cancer" doesn't work then we'll soon find out and move onto another therapy. This will lead to higher quality health care through the process of elimination and (more importantly) unhampered experimentation (nature's unsurpassed survival of the fittest law) . Health care is just like any other good or service, because it is subject to the same natural laws of supply and demand.

The free market will always strive to bring the highest quality at the lowest prices (unless you have a cohesive force mucking things up). This comes about simply because of competition between providers. And, NO, there is no such thing as a true monopoly in a totally free market setting. In order to have a true monopoly you must use some sort of force in order to make things stay the same.

In the free market a company could only get people to buy into its products if it can provide better value than the next guy. This is why Wall-Mart is successful. Wall-Mart doesn't force people to buy its products. People buy them because they offer the lowest overall prices at the highest quality for that price range. If a company tries to set up a true monopoly by buying up its competition then it will soon find itself pricing its goods too high to make up for its capital expenditures. If it holds its prices down in order to put its competition out of business then it will drain away its capital reserves and go out of business as well. It will, in effect, be transferring its wealth to the public in the form of prices being lower than the true market rate. No company can afford to become a true monopoly using these methods in the long run. The only way it can hope to gain any form of monopoly is to compete with it competitors and try and out do them in the form of quality and price, and no one will complain about that.

If companies try to set up a cartel, this will not work in the long run either because as prices rise the temptation for one company to cheat will be too great. Also, when prices are too high this makes it very tempting for new entrepreneurs to enter the market and compete. If a cartel manages to hold together long enough new technology will be developed that will compete with the cartel indirectly. This is called parallel competition. This is the worst kind of competition because it's technologically dissimilar and can be cheaper to produce and more effective. A good example of this is when Sony came out with the Batamax system. It didn't want to license it to other manufactures. It wanted a monopoly. So another company called JVC developed the VHS format and they licensed it like crazy. Batamax was clearly the better technology at that time but JVC won out, it was a parallel technology, albeit slightly inferior --- but it satisfied the consumer and they voted for it with their dollars. BOOOM -- Bata GONE!!! This is true democracy at work. The free (unhampered) market is a beautiful thing. Can you imagine if the GOVERNMENT stepped in and prevented JVC from competing? la: Health Canada Puts Health at Risk!

The best thing for us to do is work to get ride of government as we know it. We must eliminate all forms of cohesive competition and allow people to choose, and, YES, even make mistakes.

Mike

See also: Secrecy & Conflict of Interest

 


posted by Chris Gupta on Thursday April 1 2004
updated on Saturday September 24 2005

URL of this article:
http://www.newmediaexplorer.org/chris/2004/04/01/roots_of_medical_other_monopolies.htm

 

 


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