More featuring Viv Forbes»

Viv ForbesStuck on Red & Other Essays (first published by Business Queensland and Common Sense in 1990), pp. 19-21.About the Author»

What do Al Capone, John D. Rockefeller, the Australian Wool Corporation, Australia Post, the Real Estate Institute, the ABC, the textile industry, the Milk Board, Queensland Rail, the State Universities and most trade unions have in common?

Every one has tried to eliminate competition and control their markets. They have all sought captive consumers for their products or members.

Capone used guns and thugs. Rockefeller used money, management, marketing and manipulation. The Australian Wool Corporation tried to buy permanent market prosperity using funds taxed from its members. Unions have at times used pickets, abuse, intimidation or even violence to eliminate what they call “scabbing” or “body snatching”.

However, none of these operators has been entirely successful because objections from customers, either through black markets or to the authorities, has provided some relief.

For most trades and businesses, utopia is to be able to sell your products in a closed-shop monopoly while retaining the freedom to buy your needs in open competitive markets.

Only two types of monopoly can exist for any significant time.

The first is a free enterprise monopoly which has no legislative protection but which dominates its market by supply goods of such type, quality or price that no one is able or prepared to offer competitive products. Almost no examples exist — Kodak, Alcoa, Xerox and IBM have exhibited some characteristics of free market monopolies, but none have been able to eliminate competition for any significant time. (Even OPEC, supported by its member governments, cannot eliminate cheating within its ranks or competition from outsiders or other products.)

The history of business shows that the only effective way to permanently protect your market is to buy or be granted a Crown Monopoly.

The origins of this practice go back several hundred years to the English kings who discovered that they could raise funds to pay the troops by selling Crown Monopolies to rich barons or merchants. In return for a lump sum or annual payment to the king, the holder of a Crown Monopoly had his market protected by the soldiers — a cunning way of raising taxes without the knowledge of the consumers being taxed.

Legislative protection remains the essential feature of all legal monopolies today and these have proved to be the only monopolies that have successfully eliminated competition in their markets.

Australia Post and Telecom are among the most infamous examples, but there are hundreds of them in Australia. However, unlike the Crown Monopolies of old, many of today’s legal monopolies use their market power to deliver most of their monopoly profits, not to the taxpayers who own them, but to their employees via above-market wages or feather-bedded conditions.

Others use predatory pricing as well as legal barriers to gather and monopolise their markets. Examples are numerous and include the ABC, the state universities and the state hospitals. Operating under the smoke-screen of “aid for the needy” or “the national interest”, these monopolies have used zero-pricing to weaken or destroy the competition and thus become arrogantly independent of their customers. Then using slogans such as “academic freedom”, “editorial independence”, or “no political interference” they have evaded control by the owners and thus become run by and largely for the benefit of employees.

There is another whole class of crown monopolies which use legal barriers to protect trades and professions from competition. This usually takes the form of occupational licensing or registration and has its origins in the medieval guilds.

The medical and legal professions manage to maintain the most effective closed shop. Most other trades or professions have also managed to convince gullible or venal politicians to grant them varying degrees of protection from competition.

The pressure for more job licensing always increases as the economy slows and, right on cue, some hard-pressed operators in fields such as real estate, motor dealers, mechanics and home repairers are right now pressing politicians for legislative protection.

Usually this bid to outlaw competitors is clothed in respectability by patriotic appeals to “protecting the consumers”. The threatened group usually resorts to emotive slander of the competition using words like “quacks, shonks, charlatans, shady operators, rip-off merchants, fly-by-nighters or back-yarders”. As most occupations have a share or such people, even politics, it is usually possible to find distraught and tearful pensioner who has been defrauded and who can be paraded on “Current Affairs” to bludgeon the Minister to introduce or tighten registration or licensing provisions. (The simply solution is to charge the criminal operator with fraud and publicise the safety of dealing with trade association members.)

The stated aims of job licensing are usually given as, to protect the consumer, to drive out charlatans, and to upgrade the standard of the profession.

However, government job licensing provides no benefits that could not be achieved better by voluntary associations.

The evils are numerous.

Firstly, they are wrong in principle because they destroy the right of consumers to choose that combination of quality, price and risk that suits them best. This harms the poorer consumers who are robbed of the right to take a risk on a cheaper, maybe unqualified operator. They are treated as children too stupid to make that choice for themselves.

Secondly, the licensing boards are costly and often lead to corruption and politically motivated decisions. All such boards quickly come to be dominated and then controlled by the groups they are supposed to be regulating. Moreover, they often involve disturbing invasions of the privacy of both operator and client.

Thirdly, they tend to protect the existing establishment and to ossify its current knowledge and practices. They slam the door on those who wish to enter the trade especially if they have new or unconventional ideas. This inhibits discovery and innovation in the licensed occupations.

It is time to call for an end to Crown Monopolies wherever they are found. They are always either unnecessary or injurious.

(in order of appearance on Economics.org.au)
  1. Lang Hancock's Five Point Plan to Cripple Australia
  2. Put Windmills in National Parks
  3. Magnifying National Disasters
  4. Please Don't Feed the Animals
  5. Buy Birdsville Made?
  6. The Economics of Flood Risk
  7. Touring Bureaucrats
  8. Our slip-shod laws to blame
  9. Why Wind Won't Work
  10. A Profusion of "Prices"
  11. R.I.P. Ron Kitching - pioneer, explorer, author, family man, entrepreneur, scholar
  12. The Carbon Pollution Lie
  13. Closing Down Australia
  14. The Anti-Industry
  15. The Pyramid Builders
  16. Carbon Tax Bribery
  17. Crown Monopolies
  18. Carbon Tax Job Losses
  19. What Next, a Tax on Water?
  20. Carbon Health Warnings Coming Soon
  21. Growth Mythology
  22. The Tax Collection Industry
  23. Propaganda Puts Paid to Proof
  24. The Milk of the Welfare Teat is Watered Down
  25. "Crops for Cars" as Bad as Everlasting Drought
  26. Poll speech sets record
  27. The Emissions Trading Casino
  28. The Contract Society
  29. A Model Ministry
  30. The Five Point Plan to kill the economy with High Cost Electricity
  31. Put a Sunset Clause in the Carbon Tax
  32. Stuck on Red
  33. Time to Butcher "Aussie Beef"
  34. Carbon Tax Lies and Bribes
  35. The Middle of the Road
  36. United against taxes
  37. Call for Govt administrator
  38. Property & Prosperity
  39. "The Science is Settled" BUT Durban Climate Summit Not Cancelled
  40. No End to Fuelish Policies?
  41. The Right to Discriminate
  42. Sell the CES
  43. Free Water Costs Too Dam Much
  44. Creating Unemployment
  45. Viv Forbes Wins 1986 Adam Smith Award
  46. 1985 news item on Tax Payers United, Centre 2000 and the Australian Adam Smith Club
  47. Having the numbers is not the same as having the truth
  48. Who's Who in the Workers Party
  49. David Russell Leads 1975 Workers Party Queensland Senate Team
  50. Caught in a welfare whirlpool
  51. Global Warming Season
  52. Mining in Queensland, Past, Present and Future
  53. WEATHER IS USUALLY UNUSUAL
  54. Political branch formed
  55. Ron Manners on the Workers Party
  56. Viv Forbes on Libertarian Strategy and the Constant Resources Myth
  57. The New Brisbane Line?
  58. Carbon Lies
  59. We Mine to Live
  60. Save the taxpayer
  61. Solving Three Canberra Problems
  62. Vested Interests in the Climate Debate
  63. Carbon Tax Retrospective?
  64. Carbon Price Propaganda Taxes the Truth
  65. Don't Burn Food for Motor Spirit - Feed People not Cars
  66. Two Big Climate Taxes
  67. Greens Rediscover Hydrogen Car
  68. Atlas of Australia
  69. Shutting Out The Sun
  70. Safety Mania
  71. Coal - Sinking in the Swamps
  72. Hobbling the Competition
  73. Cubic Currency Coming
  74. "Dear Government"
  75. Viv Forbes mocks Flannery in 1988
  76. What we have is not a drug problem but a drug law problem
  77. Smoking, Health and Freedom
  78. Privatise Now! while they are still worth something
  79. The Electoral Act should allow voters to choose "none of the above"
  80. The New Federalism
  81. Sunset for Solar Subsidies
  82. The mouse will roar
  83. The Road to Homelessness
  84. Planning & Prosperity
  85. Viv Forbes and Jim Fryar vs Malcolm Fraser in 1979
  86. Quip, Quote, Rant and Rave: four of Viv Forbes' letters to the editor in The Australian in 1979
  87. Australia's First Official Political Party Poet Laureate: The Progress Party's Ken Hood in 1979
  88. Our homeless regulation refugees
  89. Progress Party and Workers Party lead The Australian
  90. Viv Forbes in 1978 on loss-making government, the Berlin Wall and misdirected blasts of hot-air
Powered by Hackadelic Sliding Notes 1.6.5
Forbes has long been active in politics, economic education, business and the global warming debate, and was winner of the Australian Adam Smith Award “For outstanding services to the Free Society” in 1986.Powered by Hackadelic Sliding Notes 1.6.5