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Mailbag:

Adam Smith’s answer was the free market

January 10, 2009

In his recent commentary (“We cannot be a nation of shopkeepers,” Sounding Off, Jan. 8), Bob Schmidt claims that Adam Smith hated monopolies, which is true.

But Smith’s answer to monopolies was the free market. He rejected any antitrust law on the grounds that its execution could not be made “consistent with liberty and justice...”

Mr. Schmidt himself speaks of the government-granted monopoly of the East India Company.

Today, we have the government-granted Post Office monopoly. Notice that monopolies only exist by government fiat; they are virtually nonexistent in the free market.

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Mr. Schmidt speaks disdainfully of the “Robber Barons,” yet that moniker is a myth.

Early titans of industry such as John D. Rockefeller, Andrew Carnegie, et al, created enormous wealth not only for themselves but for thousands of employees and shareholders.

True, early on Rockefeller did have a monopoly on oil products, but that was only because, for example, he drove down the price of kerosene from 30 cents a gallon in 1969 to 9 cents in 1880, 7.4 cents in 1890, and 5.9 cents in 1897.

Only by continuously offering the customer ever-lower prices was Rockefeller able to hang on to his monopoly as long as he did, and he was never convicted under antitrust laws.

The main supporters of anti-monopoly laws are companies who can’t compete with other companies in the free market; thus, they sue their competitors to muscle in on the latter’s business and profits.

Mr. Schmidt worries about “the great economic power in the hands of...large firms” and the resulting “potential for abuse.” Consumers freely choose to buy goods and services from whomever they wish. What abuse can arise from such a system? I personally fear the abuse of government, which points a gun at me and says, “Do as I say or I shoot you,” more than I do the nonexistent abuse of any company, which cannot force me to do anything.

I think Jim Righeimer always gets it right about free markets, and Mr. Righeimer is a living oxymoron — a politician who believes in free markets. I think we all should fear the coming yearly trillion-dollar deficits as promised by President-elect Barack Obama more than any imagined abusive large firms.

David Pearse

Costa Mesa


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