Government Regulations Create Monopolies and Stifle Competition

From our freedom to use or transform our private property emerges the freedom to trade it with anyone we choose. This freedom to trade inadvertently transforms mankind into a global supercomputer where private sector companies are always engaged in the process of economic competition which motivates companies to innovate and copy the innovations of competitors.

Economic competition inadvertently causes companies to cooperate in the creation and spread of superior information and subsequent socioeconomic order. Power door locks, power steering, anti-lock brakes, and countless other automotive innovations originated in one company and quickly spread to competitors due to people’s freedom to trade their life and order-sustaining wealth with the companies that provided them their cars at competitive prices.

Morals are ways of acting; they too are information which also emerges and spreads via economic competition to considerable degrees. It is hard-working, courteous people that treat customers and coworkers with mutual respect who—thanks to competition—motivate everyone else to be likewise. As Hayek writes:

Competition is, after all, always a process in which a small number makes it necessary for larger numbers to do what they do not like, be it to work harder, to change habits, or to devote a degree of attention, continuous application, or regularity to their work which without competition would not be needed.

A government regulation is essentially a way of doing things; it is information. Unlike information that arises in the private-competitive sector and is constantly being replaced by superior information due to economic competition, a government regulation is information that arises out of a few brains and is then forced upon the entire social order.

This information can only be changed via a painfully-slow monopolistic and bureaucratic apparatus made up of economically-ignorant politicians, lawyers, lobbyists, and special interest groups who always lack the necessary knowledge and incentives to discover and spread what is the best way to do something. In the free, private, competitive sector, information moves from the bottom (individual minds, entrepreneurs, innovators) to the top (influencers, trendsetters) as it is tested and refined. This is bypassed by top-down regulation and all government-monopoly action which ultimately comes at the expense of wiser private-competitive action. The more the government regulates, the more it paralyzes competitive knowledge discovery.

The Soviet Union’s rule by competition-immune monopoly of experts and scientists had disastrous consequences for scientific research as well. We are fooled into believing that it is “scientists” that make our wonderful innovations, but it is not scientists per se, but competition. The Soviet Union lacked competition, leading to massive, competition-immune bureaucracies that evolved to fight change. Thus, new discoveries are lost and this process warps research in political-ideological ways. A particularly disastrous scientist who rose to the top in the 1930s was Trofim Lysenko who led a campaign against the growing field of genetics, had many other scientists and critics persecuted, and whose competition-immune theories related to farming led to millions of deaths via crop failures in Russia. Later in China, this pseudoscience helped lead to the Great Chinese Famine, which claimed 15-55 million lives. Being a favorite of Stalin, and also on good terms with his successor, Nikita Khrushchev, it wasn’t until Khrushchev’s downfall in 1963 that Lysenko was thoroughly discredited. Rothbard summarizes:

The Lysenko controversy, the use of the State to eradicate the science of genetics in Soviet Russia, and the compulsory twisting of truth by the Soviet State to fit the ideological myths of its rulers, are well-known, but can hardly be overstressed. It is important to realize that it is not simply because the Soviet or Nazi leaders were particularly perverse men that they reached out to prevent or cripple science’s drive for truth; but because such actions are inherent in the very nature of statism, and central planning.

As government regulations have increased in the health care sector—turning it into a sort of island of paralyzed, top-down competitionless central planning—so have costs. These increased costs have led the sector to grow from consuming about 5 percent of the American GDP in 1960 to almost 20 percent today culminating in the coercive and tyrannical covid mania. During this time, Lysenko-like central planning bureaucrats—like former director of the National Institute of Allergy and Infectious Diseases (NIAID), Anthony Fauci—persuaded many governments into coercively shutting down their economies, forcing people to wear masks, separate from others via a 6-feet social distancing, etc. Of course, the coerced injections of vaccines where, according to the CDC, about 1 out of 35 people getting the first dose of the Pfizer-BioNTech vaccine were “unable to perform normal daily activities, unable to work, required care from doctor or health care professional.”

What a person must learn in order to legally offer medical advice via the licensing of doctors, where he must learn it via the licensing of medical schools, what chemical compounds can be legally consumed, how to test drugs, how the medical insurance industry should work, and countless other gigantic bodies of knowledge are dictated by monopolistic competition-less bureaucracies like the American Medical Association (AMA), the Food And Drug Administration (FDA), and numerous others.

By comparison, the information technology sector has very few government regulations, so competition motivates the creation and spread of superior information at breakneck speed and is obviously transforming our world right before our eyes. Teenagers can work at Google, Microsoft, Amazon, and write the software that keeps planes in the sky or people alive via software in medical equipment, yet there is no American Association of Computer Programmers. There is no government bureaucracy ensuring the proper functioning of the software that runs PCs, smart phones, the internet, or ensuring the lack of malware or viruses in software.

Freedom and competition in the software development industry is even quickly evolving culture. It is increasingly seen as uncool and backward to have a traditional degree, where one wastes thousands of dollars and time physically attending gigantic temple-like universities, inefficiently “learning” things that have nothing to do with being a productive software/IT professional.

Thanks to this lack of monopolistic, centralized decision-making, education in the software development and IT world is astounding. At places like www.freecodecamp.org, thousands of people are going from 0 experience to highly-paid computer programmers in just a few months for free.

IT companies—who reach a large enough size ultimately due to the great services they provide, like Microsoft, Google, Amazon—go about creating their own educational institutions which train and test people using their products. There are over 2.1 million individuals worldwide who have become Microsoft Certified Professionals (MCPs) by studying for and passing exams created by Microsoft. These exams change frequently to reflect the never-ending cycle of knowledge generation that exists in this freer and less-regulated sector of the economy.

Economic ignorance leads many to believe that since one has to be seemingly more careful with medicine, such monopolistic regulatory oversight is somehow necessary. Nobody knows who the greatest programmers in the world are, there is rightly no Nobel prize for them. The nearly 30 million lines of complex computer code that make up the Linux operating system that runs most of the world’s computers and is now an integral part of what founder of the Austrian School of economics, Carl Menger, and British philosopher, Herbert Spencer, so cleverly called the “social organism,” were created not so much by “smart” people, but by pure competition and pure freedom.