Monopolies and the Public Good

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2-03-08, 11:10 am



Recently I had the opportunity to read a paper written by my nephew, Michael, a high school student in southwestern Michigan. The report focused on monopolies in the United States economy. He did a commendable job of describing the various economic situations in which monopolies exist, and mentioned pure monopolies, natural monopolies (natural mind you, not free-range, not organic), geographic monopolies, technological monopolies, and governmental monopolies.

Michael’s paper touched on various economic scenarios and the resultant negative and positive implications of monopolistic activity. These can range from price gouging, decreases in product or service quality, and the stifling of innovation, to the stabilization of prices and the pure and simple consistent availability of necessary products and services.

My nephew wrapped up his report with a commentary on the railroad services in the U.S. He used Amtrak, the passenger train system, as an example of an existing monopoly. Michael’s conclusion was that Amtrak is a “real life example of how a monopoly can have a positive impact on the economy.” Then the report came to an abrupt end. I can recall from my own high school days how either the bell would ring, the school bus would arrive, or I had just simply run out of energy to dedicate to such a subject matter. Time to hand it in!


It just so happens that my whereabouts while writing these comments was a sleeper car on Amtrak’s Empire Builder as it whistled its monopolistic way across Washington State, Idaho, Montana, North Dakota, Minnesota, Wisconsin, and on into Chicago, Illinois. Sleeping, eating, drinking, reading, writing, gabbing, and sightseeing most certainly monopolized my time on the train.

Begging Michael’s forgiveness, I would like to expand on his discussion of the Amtrak example.

Over the past dozen years I have traveled with Amtrak at least ten times, from Michigan to the East coast and to the West Coast. If one takes a cross-country train trip in the U.S., it will be with Amtrak. Yes, it has a monopoly on passenger train travel. Actually, it is quite sensible and reasonable that passenger rail service would be operated by a single entity.

Granted, there are negatives associated with the Amtrak example. Consider innovation. Where are the high-speed tracks running nation wide and where are the hybrid-powered locomotives and the solar powered electrical systems? Consider services. Where are the railroad spurs that could tie major tracks to out-lying minor population centers? And how is it that Amtrak can stay in business while some tracks remain in sub-par condition and passenger trains often have to cede right-of-way on the rails to freight hauling trains and as a consequence compromise their efficiency?

I suggest that these are not insurmountable negatives.

Directing increased public funding to our passenger rail system is the solution. Not in the frivolous manner in which the U.S. has dumped crates full of millions of dollars into unaccountable hands in Iraq, for example, but in a tightly regulated manner with civilian and government monitoring.

First, we need to offer publicly funded incentives for real innovation, research, and development. Second, we must put public funds to work to improve, expand, and repair Amtrak infrastructure and equipment. Third, through public disclosure of the issues involved, we can promote the fair settlement of labor contracts for Amtrak workers, some of whom have been working without contracts for the past eight years. And finally, we need to greatly subsidize train passenger fares with an eye for increasing patronage and visibility.

Yes, I am not afraid of suggesting the use of public funds! Let’s make this monopoly work for the good of the people, the environment, and the economy.

Seems achievable, but why hasn’t it happened? We, in the U.S., have become convinced that monopolies are bad, like devils or viruses in our midst. I will argue that this anti-monopoly attitude works nicely into the hands of those few U.S. citizens who benefit immensely from our capitalist economy.

In past decades there have been movements to break up huge oil companies and giant phone companies. These sprawling companies were controlling so much of the wealth in their respective economic sectors that the entry of any one else into the sector was nearly impossible. These large monopolies had to be taken down for the benefit of the capitalist system. Once the giants were split up, we went from having ten wildly wealthy oil families to having twenty wealthy oil families. Has this done the rest of us any good? Perhaps in the short run, but not much, if any, over the decades since then.

As we move along into the twenty-first century it appears that, for now anyway, profitable monopolies are acceptable. We see insurance, banking, and telecommunications companies merging and buying each other out with hardly a whimper from the wealthy class.

The bottom line appears to be that if there is money to be made and no one with significant economic power makes a fuss, monopolies are just fine. We just won’t call them monopolies. However, if there is no money to be made and privatization is not an option, like in the Amtrak example, we don’t need it. Note the repeated efforts by many of our political leaders to cut or eliminate public funding for Amtrak.

In summary then, are monopolies good or are they bad? It appears to hinge upon who the beneficiaries are. As we see in the Amtrak example, a monopoly is as good as we are willing to make it.

Having shed light on the path toward making the passenger train industry into a successful monopoly, owned, controlled, and monitored by the public, why not open the drapes a bit more? How about public ownership of our oil resources? Why not take a look at the airlines? Remember now! Don’t get sucked in by the sham that paints a monopoly as a no-no!

Now is a good time to move beyond this predatory phase of human development that we call capitalism. How about thinking realistically in terms of cooperative rather than competitive economics and full employment rather than maintaining a reservoir of unemployed workers and families. Why not spread the wealth around more evenly by supporting monopolies that work and creating new, publicly controlled monopolies in sectors of our economy that are now the sources of vast wealth for a very few people.

Take a ride on Amtrak and see the country and the economy from another perspective. Perhaps the potential for economic justice that lies between the rails is why I enjoy train travel like I do.