How US Government Regulations Have Led To Virtually Every Monopoly and Economic Crisis
by Mike Holly
1 Unfortunately, America has never had anything close to a free market economy.
2 Politicians receive support from special interests in exchange for granting regulations that deny other people the freedom to compete in the marketplace.
3 Regulations include granting monopolies, licensing, guarantees, mandates, subsidies, bargain sales and zoning.
4 Monopolies have controlled most industries, especially agriculture, energy, banking, manufacturing, housing, retail, health care, transportation, utilities and telecommunications.
5 Monopolization of the economy has increased costs, and reduced quality, innovation, productivity, jobs, wages, wealth equality, consumer demand and economic growth.
6 Slow growth has led to economic crises, like those involving energy, health care, food, housing, manufacturing, stagflation, financial panics, depressions, trade, global poverty, the Middle East and war.
7 Attempts to control economic growth with deficit spending and/or manipulating interest rates may delay crises, but makes them worse.
8 In particular, trying to stimulate growth by printing money to provide easy credit at lower interest rates increases private and government debt, promotes uneconomic and risky investments, and inflates asset prices, including homes and stocks.
9 Throughout American history, all political reforms have been corrupted by regulations favoring monopolies and led to crises.
10 Mercantilistic Monopolization (1783-1870)
11 After the Revolutionary War, politicians, like George Washington and even Thomas Jefferson, pursued British-style mercantilism.
12 The US economy was still based on colonialism, involving taking land from natives and granting or selling it to settlers for subsistence and commercial farming.
13 Regulation of banking blocked competition, created an oligopoly and led to financial panics and depressions commencing under a national bank in 1792 and 1819, and state-regulated banks in 1837 and 1857.
14 The industrial revolution offered mechanization, such as cotton spinning by the power loom, but import tariffs blocked the free trade of low-cost manufactured goods from Europe and created manufacturing oligopolies.
15 The Civil War was actually a dispute between Republicans like Abraham Lincoln representing manufacturing oligopolies in the North, and Democrats representing plantations in the South that refused to replace slavery using the North’s high-cost goods.
16 Regulated Monopolization (1870-1933)
17 Robber barons bought mostly Republican politicians as the economy shifted from agriculture to industry during the so-called Gilded Age of Capitalism.
18 The government created railroad monopolies by giving the robber barons favored low-interest loans, land grants and frontier privileges.
19 In turn, the railroads formed a conglomerate that monopolized much of the rest of the economy by favoring big customers like Standard Oil, big suppliers like Carnegie Steel, and big banks like JP Morgan.
20 Both railroad and banking monopolies, including both national and state regulated banks, were implicated in the severe financial panics that started in 1873 and 1893, and another panic in 1901. Banking regulation led to the panic in 1907.
21 During the Progressive Era, Republicans used regulation to form today’s state-regulated electricity and natural gas utility territorial monopolies, the Seven Sisters oil oligopoly created through federal antitrust, and a physician oligopoly created by restricting state licenses.
22 In 1913, the Democrats sanctioned the telephone monopoly and founded today’s Federal Reserve banking monopoly, that regulates the banks.
23 The Fed raised interest rates to cause a depression in 1920 that bankrupted many companies and led to manufacturing oligopolies, including in the automotive industry.
24 During the Roaring 1920s, only 200 corporations controlled over half of all U.S. industry and the richest one percent of the population owned 40% of the nation's wealth. Like recent times, the Fed responded by propping up the economy with easy credit.
25 But the low interest rates inflated stock prices, which increased wealth disparity. After the Fed tried to raise rates, the result was the Great Stock Market Crash of 1929.
26 During the 1930s, the monopolized economy failed to grow back to former levels and led to the Great Depression, the worst financial crisis in U.S. history, and then spread from the world’s largest economy globally, albeit with less severity abroad.
27 Socialistic Monopolization (1933-1975)
28 In 1933, Democrat President Franklin D Roosevelt led efforts to redistribute wealth for special interests by limiting competition through government takeovers in banking, trucking, airlines and housing, and restricting the supply of food and oil.
29 But nationalization failed to end the global depression, which eventually led to World War II.
30 Finally, the post war boom or “Golden Age of Capitalism” saw a dismantling of many wartime regulations and growing opportunities, especially in manufacturing.
31 During global rebuilding. the U.S. became the world’s economic leader with about four percent annual growth, even with increasing interest rates, decreasing debt and high taxes.
32 However, although wealth disparity was historically low, Democrats increased regulation of necessities, leading to today’s high costs.
33 FDR subsidized larger homes for the middle class by providing low interest rates, guarantees from the FHA, and securitization through a Fannie Mae secondary mortgage monopoly.
34 The resulting urban sprawl led to a shortage of affordable housing and slum projects for the poor.
35 FDR had also taken money from taxpayers to subsidize favored crops for farmers and agricultural conglomerates, which discouraged competition from alternative crops.
36 In 1973, the U.S. started subsidizing crop overproduction, which led to dumping food exports that retard agricultural and economic development in the developing world.
37 FDR had led support for the nationalization of oil industries for example in Mexico, and military spending to defend dictators in low-cost, oil-rich countries, especially Saudi Arabia.
38 In 1960, OPEC was founded and the cartel has since disrupted the global economy with alternating periods of restricting supply or price gouging, including the Energy Crisis of 1973-4, and flooding markets or predatory pricing like today.
39 In 1965, Democrats led nationalization of about half of health care purchasing through Medicare and Medicaid. These programs subsidized increased demand while the supply of doctors and hospitals was restricted by licensing and certificate of need, respectively.
40 The supply and demand imbalance resulted in the Health Care Crisis with skyrocketing costs nearly triple those of other developed countries, a loss of global competitiveness amounting to $1500 per car, and a much higher national debt.
41 The high cost of necessities caused by nationalization led to the dreaded stagflation of the 1970s, which is considered tied for the second worst financial crisis in U.S. history.
42 Deregulated Monopolization (1975-2000)
43 The Fed responded to inflation by raising interest rates, which caused the Great Recession of the early 1980s, which in turn led to the Savings and Loan Crisis.
44 Since 1982, the US has been buying time from crises through deficit spending by Congress, and lower interest rates and quantitative easing by the Fed, which increased wealth disparity again.
45 Meanwhile, both Democrat and Republican politicians created deregulated monopolies, while pursuing privatization of public industries and deregulation of private industries, by allowing the monopolies to write the rules, including bargain sales to cronies.
46 Partial deregulation was limited mainly to common carrier industries, including airlines in 1978, trucking in 1980, telecommunications in 1996, and electricity and natural gas utilities in some states during the 1990s, and also banking in 1999.
47 For example, state politicians allowed utility monopolies to design rigged trading schemes, gain preferential access to transport lines, and sell assets to affiliates for pennies on the dollar. Such manipulations led to the California Energy Crisis of 2000.
48 The realization that monopolies had been favored by the re-regulation in the Telecommunications Act of 1996, and Microsoft had achieved a software monopoly from overly-generous copyright regulations and as revealed during their antitrust trial in 1998, led to the bursting of the internet bubble in 2000 and consolidation of all three industries.
49 “Free trade“ suppressed inflation but created a global environmental crisis. After allegedly receiving campaign contributions from China, President Clinton granted them trade advantages with weaker environmental regulations that helped them become a manufacturing monopoly.
50 Fascist Monopolization (2000-today)
51 Fascist dictator Benito Mussolini of Italy said “The first stage of Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power.” Since 2000, big government Democrats and big business Republicans have sold influence under what has been called Corporatism.
52 U.S. House Speaker Paul Ryan explained: “In too many areas of the economy – especially energy, housing, finance, and health care – free enterprise has given way to government control in partnership with a few large or politically well-connected companies.”
53 Presidents George W. Bush and Obama have blocked the development of new low-cost, clean and reliable energy technologies with regulations favoring large energy providers and more expensive energy sources.
54 Along with former Fed Chairman Alan Greenspan, polls have shown most of the world believes the former oil man Bush invaded Iraq for oil. The war increased low-cost global oil production while causing the current crisis in the Middle East.
55 The oil and natural gas industry has also been granted preferential exemptions from U.S. environmental regulations and damages, that benefit only them, while threatening water crises.
56 In 2003, new regulations led to increased ethanol production from corn, but after that led to the global Food Crisis in 2007, Bush stopped the industry’s growth completely by mandating that the fuel be made from expensive-to-process cellulose.
57 Huge tax shelters for wealthy investors and subsidized transmission and backup with problematic natural gas, has made high-cost and intermittent wind and solar energy the lowest-cost energy sources.
58 Obama directed the government to finance politically-connected solar energy companies, like Solyndra, that went bankrupt.
59 Politicians allow utility monopolies to purchase electricity from any wind or solar energy developer they want, including themselves, affiliates and cronies.
60 Since 1998, Big Oil & Gas and utility monopolies have each spent over $2 billion lobbying Congress. The top five sectors lobbying Congress include energy, finance and health care.
61 Bush promoted home loans for the Fannie and Freddie duopoly and the Fed’s big banks, while encouraging the Fed to lower interest rates, leading to a bubble in home prices.
62 Soon after the Fed started raising rates, the bubble burst leading to the 2007 Subprime Mortgage Crisis, 2007 Financial Crisis, considered tied for the second worst financial crisis in U.S. history, 2008 Automotive Crisis and 2008 Global Recession that persists today.
63 In 2010, Obama signed Dodd Frank, which gave politicians more control over the Fed’s big banks, thereby increasing influence peddling and risks of crises. The Fed has been loaning trillions of dollars at low interest rates to the big banks.
64 Lower interest rates have encouraged financial engineering, like mergers, which allow Wall Street and corporate executives to use debt money to takeover and bleed profits from large corporations, who also receive preferential tax treatment, especially abroad.
65 The Bank for International Settlements, or so-called bank of central bankers, warns the debt-trap is now even worse than before 2007 and another global debt crisis is coming, especially when a slowing economy and/or higher interest rates make private and government debt toxic.
66 Finally, Obamacare threatens to increase rationing by allowing bureaucracies to control patient treatments and prices, while lobbied by the industry.
67 Future Solutions
68 Today’s corporatist Democrats blame non-existent free markets for crises, while fighting for more government control of monopolies.
69 Socialist Bernie Sanders seeks even more government control.
70 Corporatist Republicans claim support of free markets, while fighting for control by monopolies.
71 Donald Trump blames foreigners, even though the population of illegal immigrants has declined since 2008, and China is already moving toward cleaner technologies and more domestic spending.
72 The solution is taking as much power as possible out of the control of corruptible politicians and their monopoly supporters by making all markets as free and competitive as possible.
73 The move to free markets simply requires abolishing regulations that favor monopolies, including: Banking (abolish Fed and Dodd Frank), Home mortgages (abolish FHA, Freddie/Fannie duopoly and tax deductions), Agriculture (abolish crop subsidies).
74 Health care (abolish Obamacare and laws limiting supply of doctors, hospitals, drugs and insurance), Energy (abolish preferential environmental exemptions, grants, mandates and subsidies), Common carrier industries (abolish deregulation rules favoring monopolies among electricity and natural gas utilities, airlines, trucking, railroads, telecommunications and internet), Manufacturing (abolish environmental advantages in trade deals), and Retail (abolish preferential zoning and subsidies).
75 For more detailed explanations about how politicians have favored monopolies and thus caused economic crises, please see the references linked in the article entitled “The Long History of Government Meddling in the American Marketplace” by Mike Holly. Thank you for your attention.