Monopolies Versus Stratospheric Growth

New Delhi: 11 May 2008
The previous post established the fact that this is the capital city of a host of government monopolies.

We attained the understanding that the monopolist undersupplies the good he is the master of – as in the case of the booze shops, which are few are far between.

Let us now proceed to a further understanding: of how monopolies depress the vital energy of a market order.

So, if the booze shop monopoly was abolished, thousands of shops would mushroom, employing people, satisfying customers, and also contributing to the earnings of all the stakeholders in the booze companies: workers, managers, shareholders – the lot.

Now, recall Say’s Law of Markets: When X is sold the very act creates the demand for all non-X.

So when the booze gets sold, the demand for all non-booze rises, and I am sure many of those who gain from the unleashing of competition will buy big, gas-guzzling SUVs, opulent mansions, plasma TVs, tandoori chicken: everything else.

Now imagine if all these monopolies were abolished.

Road companies would be bigger than automobiles, railways and airways combined. Their stakeholders would spend on all non-roads.

If DDA was abolished, thousands of real estate entrepreneurs would compete to develop land, build houses, offices, shops and malls. Their stakeholders would spend on all non-realty.

Thus, the conclusion: Monopolies Depress Markets.

Our pseudo-economists are all talking about “9 per cent growth” (scaled down to a very precise 8.5 per cent now) – but in reality all these government monopolies are retarding growth, big time.

If all these monopolies are abolished, if Liberty prevails, I wager my bottom dollar that the economy will grow so fast that no statistician will be able to measure the growth rate.

The growth rate will be a forgotten statistic.

Recall Sir John Cowptherwaite in colonial Hong Kong: He refused to set up a government statistical bureau – and see what happened! They now have a very high per capita ownership of Rolls-Royce cars – according to Rolls-Royce.