WEBVTT NOTE The Fear of Monopoly - Part One 1 00:00:00.000 --> 00:00:02.000 The Fear of Monopoly 2 00:00:04.000 --> 00:00:08.000 Whenever we talk to people about the idea of a free market, 3 00:00:09.000 --> 00:00:16.000 most of them tend to express fears of what might happen if a free market actually appeared. 4 00:00:16.000 --> 00:00:22.000 Now, what we mean by a free market, of course, is a market that could be called laissez-faire, 5 00:00:22.000 --> 00:00:27.000 that is, one in which there is no government intervention of any kind for any reason. 6 00:00:27.000 --> 00:00:31.920 Any Reason. That is to say, the government would not help anybody, it wouldn't subsidize 7 00:00:31.920 --> 00:00:38.440 anybody, it wouldn't protect anybody, and of course, it would not intervene to tax anyone 8 00:00:38.440 --> 00:00:45.560 or regulate anyone. The market would behave as the individual participants in the market 9 00:00:45.560 --> 00:00:50.280 would cause it to behave by virtue of their independent actions. This is essentially what 10 00:00:50.280 --> 00:00:56.800 is meant by a free market. Incidentally, this does not exclude the area of protection. Protection 11 00:00:56.800 --> 00:01:01.280 Protection is something that falls into a separate category, and certainly it would 12 00:01:01.280 --> 00:01:05.840 be important that the market and the persons in it, including the private property and 13 00:01:05.840 --> 00:01:08.200 so on, be protected. 14 00:01:08.200 --> 00:01:12.240 But we are not talking about protection, we are talking about government, and these are 15 00:01:12.240 --> 00:01:14.480 two different things. 16 00:01:14.480 --> 00:01:17.720 Protection of course is certainly something that we want in the market. 17 00:01:17.720 --> 00:01:21.560 Whether or not government should be in there is really an overall question. 18 00:01:21.560 --> 00:01:27.280 And so we are now talking in terms of a free market and what would eventuate if we had 19 00:01:27.280 --> 00:01:33.320 a really free market. And as I've indicated, usually when this thought is suggested, people 20 00:01:33.320 --> 00:01:40.480 express various fears. Now, one of the fears that is very often brought forward is the 21 00:01:40.480 --> 00:01:47.320 fear that if we had a free market to it, one in which there was no intervention at all 22 00:01:47.320 --> 00:01:55.480 by Government, that monopolies would eventuate. In other words, there is a very popular notion 23 00:01:55.480 --> 00:02:01.560 that given a free market without government intervention, there would be a tendency for 24 00:02:01.560 --> 00:02:09.880 various industries to have fewer and fewer competitors in them, the result being that 25 00:02:09.880 --> 00:02:17.680 1 or maybe 2, a very limited number or possibly just one industry or one businessman in a 26 00:02:17.680 --> 00:02:25.520 given area would emerge as the total dominating factor in that area. He would have all of 27 00:02:25.520 --> 00:02:31.360 that particular type of business. He would dominate the field. And of course the result 28 00:02:31.360 --> 00:02:36.720 of this would be, and this is usually the fear expressed, that having obtained such 29 00:02:36.720 --> 00:02:41.920 In such a monopoly, then he could charge any price he wanted to, because there would be 30 00:02:41.920 --> 00:02:50.000 no competition. It is recognized here tacitly that if there is competition, well of course 31 00:02:50.000 --> 00:02:54.960 then he wouldn't be able to raise his prices as he pleased. But assuming that you had a 32 00:02:54.960 --> 00:03:01.720 free market, what would prevent one businessman or one industrialist from becoming exceptionally 33 00:03:31.720 --> 00:03:54.720 The General Fear of a High Price Made Possible by a Monopoly Made Possible by the Skills of a particular Businessman 34 00:04:01.720 --> 00:04:08.400 They express the fear that just a monopolist would have too much power. If they really 35 00:04:08.400 --> 00:04:12.640 were worried about a monopoly as such, they would certainly not ask the government to 36 00:04:12.640 --> 00:04:17.920 come in to intervene, because government is a monopoly. And the idea that you could avoid 37 00:04:17.920 --> 00:04:22.480 whatever competitive factors that exist in the market by really turning things over to 38 00:04:22.480 --> 00:04:27.840 an existing monopoly in an effort to escape monopoly is, of course, an absurdity. Clearly 39 00:04:27.840 --> 00:04:33.140 And there would be no point in doing that. But people really aren't afraid of monopoly 40 00:04:33.140 --> 00:04:39.720 as such. They really don't worry about what businessman is doing what. They really don't 41 00:04:39.720 --> 00:04:45.280 care about that. What they care about is how this is going to affect them personally. And 42 00:04:45.280 --> 00:04:51.360 they see this effect as coming to them in the form of high prices, and they are very 43 00:04:51.360 --> 00:04:54.040 much afraid of high prices. 44 00:04:54.040 --> 00:05:01.660 Now the thing then that we would have to examine would be what would happen in a market assuming 45 00:05:01.660 --> 00:05:08.200 a free market? What would be the natural conditions that would tend to develop? Are there natural 46 00:05:08.200 --> 00:05:14.720 factors in a free market that would inevitably move us toward monopoly, and consequently 47 00:05:14.720 --> 00:05:21.040 monopoly price? The argument of those who favor government intervention at this point 48 00:05:21.040 --> 00:05:27.440 is that that is the case. Given a free market, they will tell you, the market will inevitably 49 00:05:27.440 --> 00:05:38.020 move toward the emergence of a very limited number of competitors. Probably a single monopolist 50 00:05:38.020 --> 00:05:42.520 will appear and then of course we will be at his mercy. So what we have to do is to 51 00:05:42.520 --> 00:05:49.120 examine the conditions that would eventuate in a free market. Keep in mind that what we 52 00:05:49.120 --> 00:05:55.880 We have in this country today is not a free market. We have a market today into which 53 00:05:55.880 --> 00:06:03.040 the government intervenes constantly. So we do not have what we think of as a laissez-faire 54 00:06:03.040 --> 00:06:08.440 marketplace. We have to now imagine such a thing because we are not dealing with that, 55 00:06:08.440 --> 00:06:15.360 in fact. But we can, by using our brains and by employing logic, arrive at the kind of 56 00:06:15.360 --> 00:06:39.360 This is a fascinating area to me. It's particularly fascinating when I take into consideration some of the things that I have run into in my personal experience here. 57 00:06:39.360 --> 00:06:49.200 I got engaged a while ago with a young professor at one of the universities back east who wanted 58 00:06:49.200 --> 00:06:55.440 to debate with me in a letter as to what a monopoly was and whether or not a free market 59 00:06:55.440 --> 00:07:01.120 would lead into it. I think what had happened was that he had read something I had written 60 00:07:01.120 --> 00:07:08.280 in which I made the statement that given a free market we did not have to worry about 61 00:07:08.280 --> 00:07:15.820 Monopoly because in a free market a harmful monopoly could not appear. He took exception 62 00:07:15.820 --> 00:07:21.000 to that remark and challenged me in a letter, and wanted to know if perhaps there wasn't 63 00:07:21.000 --> 00:07:27.120 a typographical error, and that I couldn't possibly have intended to say what I had said. 64 00:07:27.120 --> 00:07:31.680 Well, I wrote back and assured him that I had intended to say what I had said, that 65 00:07:31.680 --> 00:07:36.480 it was not a typographical error, and that I would stand on that statement to it, that 66 00:07:36.480 --> 00:07:44.320 that given a free market there is no reason to fear a harmful monopoly. Well, he responded 67 00:07:44.320 --> 00:07:52.200 in due course and an exchange occurred between us that went on for a number of months. And 68 00:07:52.200 --> 00:07:59.400 everything I said to him in our correspondence turned out to be an argument that he would 69 00:07:59.400 --> 00:08:06.400 then convert to show that what I was talking about to it, the conditions in a free market, 70 00:08:06.400 --> 00:08:14.560 would inescapably lead into a monopoly condition. And every time I gave him an instance of competition 71 00:08:14.560 --> 00:08:21.840 happening in the market, he replied, well, this was really proof of monopoly. Well, after 72 00:08:21.840 --> 00:08:28.100 we exchanged enough letters in this area, I began to wonder if we were defining our 73 00:08:28.100 --> 00:08:32.660 terms properly because, of course, if you define your terms differently, you're just 74 00:09:32.660 --> 00:09:38.700 Well, he responded in due course that, of course, this is where he was standing. He 75 00:09:38.700 --> 00:09:44.780 was taking the government's position here, that the government has in its various antitrust 76 00:09:44.780 --> 00:09:51.320 measures and subsequent legislation ever since the first Antitrust Act of 1890, the Sherman 77 00:09:51.320 --> 00:09:58.220 Antitrust Act, he had been operating on the basis that the definitions of monopoly as 78 00:09:58.220 --> 00:10:03.740 They appear in this welter of law that we have would be valid and that this is where 79 00:10:03.740 --> 00:10:04.740 he was arguing. 80 00:10:04.740 --> 00:10:11.820 Well, now it just so happened that I had an attorney in my employ and I asked him to check 81 00:10:11.820 --> 00:10:19.020 out the law relating to antitrust so that we could get a good understanding in this 82 00:10:19.020 --> 00:10:20.020 area. 83 00:10:20.020 --> 00:10:24.340 Now, I am not an attorney and if you want to check it with your attorney, please do 84 00:10:24.340 --> 00:10:31.260 So, but here is what my attorney reported to me. We have, of course, beginning in 1890 85 00:10:31.260 --> 00:10:40.260 with the passage of the Sherman Antitrust Act, we have a vast library of law and rulings 86 00:10:40.260 --> 00:10:47.740 that have descended from the law that covers this field. In fact, it almost, you could 87 00:10:47.740 --> 00:10:57.740 It blankets and smothers the field. It is probably one of the most contradictory and 88 00:10:57.740 --> 00:11:03.140 prolific areas of law that we have in the country. For instance, there is one part of 89 00:11:03.140 --> 00:11:09.500 the law—I cannot tell you specifically which part of which law it is. As I say, you can 90 00:11:09.500 --> 00:11:13.180 check that with your attorney. I am not an attorney. He can tell you. But there is one 91 00:11:13.180 --> 00:11:20.420 One part of the law that specifies that if you are in business and you are selling a 92 00:11:20.420 --> 00:11:28.060 good or service at a price that is higher than that of your competition, and at the 93 00:11:28.060 --> 00:11:39.820 same time you are able to maintain as much as 8% of the market, that is defined as monopoly 94 00:11:39.820 --> 00:11:45.500 Monopoly per se. In other words, if your price is higher than your competition and you still 95 00:11:45.500 --> 00:11:52.660 are able to have 8% of the business, that is monopoly per se. The only reason, you see, 96 00:11:52.660 --> 00:11:58.780 in the government judgment, back of the law, that you could charge more than your competition 97 00:11:58.780 --> 00:12:05.020 and at the same time keep as much as 8% is because there are other factors at work that 98 00:12:05.020 --> 00:12:10.460 make you essentially a non-competitor. You're just in a class by yourself, and therefore 99 00:12:10.460 --> 00:12:19.020 under the law the government can cite you as a monopolist, take you into court, try 100 00:12:19.020 --> 00:12:25.820 you and convict you, after which you can be fined, imprisoned or both. Now that's one 101 00:12:25.820 --> 00:12:30.980 part of the law. However, there is another part of the law that specifies that if you 102 00:12:30.980 --> 00:12:36.780 If you charge less than your competition, never mind how much of the business you have, 103 00:12:36.780 --> 00:12:43.120 if you charge less than your competition, that is defined as a monopoly practice. Because 104 00:12:43.120 --> 00:12:48.400 the only reason that you are charging less is because you hope to put your competition 105 00:12:48.400 --> 00:12:53.600 out of business. Therefore you are seeking a monopoly and you are guilty under the law. 106 00:12:53.600 --> 00:13:00.240 You can be cited here, taken into court, tried, convicted, fined, imprisoned, or both. But 107 00:13:00.240 --> 00:13:05.000 But now there's still a third part of the law, which says that if you are charging the 108 00:13:05.000 --> 00:13:13.320 same price as your competition, that is collusion and conspiracy, and you are guilty of a felony, 109 00:13:13.320 --> 00:13:19.640 and you can be cited under the law, arrested, taken to court, tried, convicted, fined, imprisoned, 110 00:13:19.640 --> 00:13:20.640 or both. 111 00:13:20.640 --> 00:13:26.600 In other words, the way the laws are written, it specifies that if you are charging more 112 00:13:26.600 --> 00:13:33.240 more than your competition and still have 8% of the business, or if you are charging less 113 00:13:33.240 --> 00:13:37.520 than your competition, never mind how much business you are enjoying, or if you have 114 00:13:37.520 --> 00:13:42.480 the same price as your competition, you are guilty under the law. 115 00:13:42.480 --> 00:13:51.840 I had the interesting opportunity a few years ago to actually send a reporter to cover a 116 00:13:51.840 --> 00:13:57.120 A speech given by a man from the Justice Department, who happened to be in my part of the country 117 00:13:57.120 --> 00:14:03.460 at the time, who was talking about the activities of the antitrust provisions and the Justice 118 00:14:03.460 --> 00:14:09.360 Department in enforcing the antitrust provisions, and this man from the Justice Department stated 119 00:14:09.360 --> 00:14:15.860 flatly that if the Justice Department had the finances and the personnel, they could 120 00:14:15.860 --> 00:14:21.820 arrest and convict every successful businessman in the United States, because there is already 121 00:14:21.820 --> 00:14:51.820 So this was the thing I now played back to the professor on the East Coast. I said, if this is the way you are defining competition, then I have to give up. We can't talk anymore. Because if you are going to say that when the price is higher, that's monopoly. When it's lower, that's monopoly. And when it's the same, that's monopoly. 122 00:14:51.820 --> 00:14:57.300 Monopoly, there aren't any other places for prices to go. And therefore if putting a price 123 00:14:57.300 --> 00:15:02.760 on an item is monopoly, let's quit. There isn't any point in discussing anything. Well, 124 00:15:02.760 --> 00:15:08.180 he admitted that this is what he was doing. And of course if you're going to define every 125 00:15:08.180 --> 00:15:14.340 business action as a monopoly practice, we can of course stop talking. There is no point 126 00:15:14.340 --> 00:15:21.820 in Discussing it. But, of course, this is really an absurdity. Obviously, the word monopoly 127 00:15:21.820 --> 00:15:27.620 is an abstract term. And to understand what we mean by monopoly, we have to introduce 128 00:15:27.620 --> 00:15:33.500 a word that means the opposite of monopoly. And the opposite of monopoly is the word competition. 129 00:15:33.500 --> 00:15:38.300 Now what we have to find out is if there is such a thing as competition, if not, there 130 00:15:38.300 --> 00:15:43.540 is no point in having a word monopoly. To create an abstract that doesn't tell you 131 00:15:43.540 --> 00:15:50.540 The Theory of Money and Credit 132 00:16:13.540 --> 00:16:20.060 Meaning to the same man in the same situation to refer to monopoly or competition. The words 133 00:16:20.060 --> 00:16:25.540 are meaningless. They have no application to a situation. To have application, to create 134 00:16:25.540 --> 00:16:30.740 an abstraction, you create the abstraction because you want to show that it is opposite 135 00:16:30.740 --> 00:16:35.500 of another abstraction. So here we have two abstractions, the concept of monopoly on the 136 00:16:35.500 --> 00:16:40.060 one hand and the concept of competition on the other, and these are mutually exclusive 137 00:16:40.060 --> 00:16:48.700 So let me set that forth at the outset. Competition and monopoly are opposites. If you have one, 138 00:16:48.700 --> 00:16:54.100 it means that you do not have the other. To wit, if competition exists, that means the 139 00:16:54.100 --> 00:17:00.380 absence of monopoly. If monopoly exists, that means the absence of competition. So let's 140 00:17:00.380 --> 00:17:07.380 get our terms straight to begin with. Now, the question is, what happens in a market 141 00:17:07.380 --> 00:17:15.780 Assuming a free market, does a free market tend toward monopoly or does it tend toward competition? 142 00:17:16.900 --> 00:17:24.260 We should be advised, I suppose historically, to keep in mind that the word monopoly came into 143 00:17:24.260 --> 00:17:32.660 practice during the Middle Ages because kings granted monopolies. This is how it was done. 144 00:17:32.660 --> 00:17:38.500 When a businessman wanted to go into business back in these early days, and of course all 145 00:17:38.500 --> 00:17:44.660 business activity is risky, the businessman would probably be afraid of going into business 146 00:17:44.660 --> 00:17:51.680 unless he had some kind of guarantee that he wouldn't have to face too much competition. 147 00:17:51.680 --> 00:17:56.660 And so he would go to the king and say to him, Your Majesty, I would like to open such 148 00:17:56.660 --> 00:18:03.460 in such and such a business, in such a location, and I will pay you a sum—sometimes the sum 149 00:18:03.460 --> 00:18:11.140 was quite large—if you will grant me an exclusive monopoly to operate in that area. 150 00:18:11.140 --> 00:18:15.420 And if the king was pleased with the sum that was offered, or could raise it to a sum that 151 00:18:15.420 --> 00:18:21.620 he would finally agree to, why the king would issue an edict guaranteeing to this man that 152 00:18:21.620 --> 00:18:26.740 But he would have the exclusive right to operate that particular business in that particular 153 00:18:26.740 --> 00:18:31.980 location. And that is a monopoly. That's where the word comes from. It is a kingly 154 00:18:31.980 --> 00:18:39.780 grant of exclusion to a party willing to pay a fee. Now why would businessmen do that? 155 00:18:39.780 --> 00:18:46.200 Why would they be willing to go and pay a fee? Since there weren't any laws prohibiting 156 00:18:46.200 --> 00:18:53.400 Competition. Why were they worried about it, if there isn't such a thing in a free market? 157 00:18:53.400 --> 00:18:58.960 Clearly these businessmen were asking for government intervention right at the outset 158 00:18:58.960 --> 00:19:04.240 in order to give them a guarantee. But if a free market moves toward monopoly anyway, 159 00:19:04.240 --> 00:19:09.200 why didn't they just go into business? They would have easily obtained a monopoly. They 160 00:19:09.200 --> 00:19:14.740 didn't think so. They thought the minute they got into business they would face competition, 161 00:19:14.740 --> 00:19:19.820 and therefore they wanted an extra market activity to come in to keep that business 162 00:19:19.820 --> 00:19:24.740 out so that they would have clear sailing. Now that's where the word monopoly came 163 00:19:24.740 --> 00:19:31.220 from and that's where the concept came from. It is certainly obvious that if a free market 164 00:19:31.220 --> 00:19:37.600 tends toward monopoly, that whole exercise would be one of futility. They would automatically 165 00:19:37.600 --> 00:19:41.500 have a monopoly. If they didn't have it at the outset, they'd soon get it. Somebody 166 00:19:41.500 --> 00:19:45.540 Nobody would get a monopoly, because it would tend toward monopoly. So the logical thing 167 00:19:45.540 --> 00:19:49.680 for the businessman to do would have been simply to go into business. And as the first 168 00:19:49.680 --> 00:19:54.820 man in business, having an advantageous position right at the outset, he would have had no 169 00:19:54.820 --> 00:19:59.160 necessity for paying a big fee to the king in order to guarantee what the market would 170 00:19:59.160 --> 00:20:05.480 do for him anyway. Clearly, in the minds of these early businessmen, the free market didn't 171 00:20:05.480 --> 00:20:11.200 lead into monopoly. It led into competition, and that's what they were afraid of. So that's 172 00:20:11.200 --> 00:20:17.980 Were these early businessmen correct in fearing competition? They were certainly correct in 173 00:20:17.980 --> 00:20:22.800 realizing that given a free market, that's what they'd have to face. Competition is 174 00:20:22.800 --> 00:20:28.520 going to be the logical condition, the natural condition, in a free market in which the government 175 00:20:28.520 --> 00:20:34.380 does not intervene. In fact, let me point out to you that one of the basic items of 176 00:20:34.380 --> 00:20:43.100 of Competition is price. Assuming a free market, whether your price is higher than, lower than, 177 00:20:43.100 --> 00:20:49.480 or the same as your competition, that is a factor in competition and not an indication 178 00:20:49.480 --> 00:20:55.940 of monopoly, providing you are free to try to move the price. As long as you have a free 179 00:20:55.940 --> 00:21:02.500 market and the price can be moved, that is a factor in competition. So you can put down 180 00:21:02.500 --> 00:21:19.500 It is often on your list that the pricing factor, instead of being a monopoly factor, as the government would have you believe, it is actually a factor in competition, a primary factor in competition, and would remain so if there is no intervention. 181 00:21:19.500 --> 00:21:26.760 Another constant factor in competition would be quality. It happens that when businessmen 182 00:21:26.760 --> 00:21:32.120 get into the same business, supplying more or less the same type of good or service, 183 00:21:32.120 --> 00:21:39.700 they tend to find that their prices will equal out. It costs about so much to manufacture 184 00:21:39.700 --> 00:21:46.020 a ton of steel or to manufacture a kilowatt of electricity or to provide a lady's dress 185 00:21:46.020 --> 00:21:56.020 The amount of cost involved is only going to fluctuate fractions of pennies between one entrepreneur and another. 186 00:21:56.020 --> 00:22:03.020 They will very quickly find that they're on a head-on collision insofar as prices are concerned. 187 00:22:03.020 --> 00:22:09.020 Do what they will. Their prices are going to trend downward to the lowest possible level, 188 00:22:09.020 --> 00:22:11.020 and then you just can't go below that. 189 00:22:11.020 --> 00:22:15.020 And you don't dare go above it because if you do, your competitor gets the advantage. 190 00:22:15.020 --> 00:22:21.300 Advantage. So prices will trend downward and then they'll level off there. So the businessman 191 00:22:21.300 --> 00:22:27.500 seeking competition now turns around and introduces the element of quality. If he can't beat 192 00:22:27.500 --> 00:22:34.740 his competition on the basis of price, perhaps he can beat him on quality. He can add something. 193 00:22:34.740 --> 00:22:42.920 He can give green stamps. Or he can deliver. Or he can give you convenient credit terms. 194 00:22:42.920 --> 00:22:48.040 Or he can paint his widgets blue, and the others are just pink, and maybe some people 195 00:22:48.040 --> 00:22:51.300 prefer blue to pink, or something. 196 00:22:51.300 --> 00:22:53.560 He introduces some variation. 197 00:22:53.560 --> 00:23:00.520 He tries to come up with better quality, lighter weight, more durable merchandise, etc., etc., 198 00:23:00.520 --> 00:23:04.040 in an effort to become more competitive. 199 00:23:04.040 --> 00:23:09.840 Assuming the government doesn't regulate the quality, well, quality then becomes a factor 200 00:23:09.840 --> 00:23:11.120 in competition. 201 00:23:11.120 --> 00:23:17.120 Incidentally, most places where governments begin to intervene in the economy is at the 202 00:23:17.120 --> 00:23:22.960 level of price or quality. And actually, I could point out that a regulation that regulates 203 00:23:22.960 --> 00:23:30.640 quality has exactly the same effect in the market as a price regulation. If you are required 204 00:23:30.640 --> 00:23:37.160 to put out so much of something in order to sell it, it is the same as being compelled 205 00:23:37.160 --> 00:23:44.120 to sell it at such a price for so much. In every exchange you've got a good and money, 206 00:23:44.120 --> 00:23:50.440 or a service and money. And whether you regulate the money side of it, which is the price side, 207 00:23:50.440 --> 00:23:57.000 or the good side of it in relation to the money, the same effect occurs. Given a free 208 00:23:57.000 --> 00:24:04.000 market, price and quality are both active factors in competition. As long as the businessman 209 00:24:04.000 --> 00:24:11.080 is free without any law or government intervention, to try to beat his competition, then he can 210 00:24:11.080 --> 00:24:17.380 manipulate his prices, and the normal process of manipulation would be this, he will constantly 211 00:24:17.380 --> 00:24:23.560 endeavor to manipulate his prices downward, because that's where he gets his advantage, 212 00:24:23.560 --> 00:24:27.720 and he will constantly try to manipulate his quality upwards, because that's where he 213 00:24:27.720 --> 00:24:32.140 gets his advantage, assuming the market is free. 214 00:24:32.140 --> 00:24:42.100 In a free market, quality trends upward and prices trend downward. But now those are only 215 00:24:42.100 --> 00:24:50.780 two factors in competition. There are many more. I will get into some other factors here, 216 00:24:50.780 --> 00:24:57.500 and we have to examine a number of them before we see what we really have to deal with. But 217 00:24:57.500 --> 00:25:04.660 In the area of price and quality, governments are most active. They enter the field arguing 218 00:25:04.660 --> 00:25:11.840 that by so doing, they are protecting the consumer. In actual fact, they are not protecting 219 00:25:11.840 --> 00:25:22.740 the consumer. The consumer will pay an ever higher price and he will pay it for less and 220 00:25:22.740 --> 00:25:29.260 and less quality. The effort will be made not to improve the quality, but to figure 221 00:25:29.260 --> 00:25:36.260 out how to do the same thing cheaper. And therefore you continue to have a downgrading 222 00:25:36.680 --> 00:25:42.300 of merchandise and an upgrading of pricing once the government gets into the field of 223 00:25:42.300 --> 00:25:48.860 regulation. Certainly that should be a matter that we are all aware of at the present time. 224 00:25:48.860 --> 00:25:54.420 The quality of certain types of merchandise where government has primarily intervened 225 00:25:54.420 --> 00:26:01.340 steadily tends to deteriorate. And the price of these same items where government regulates 226 00:26:01.340 --> 00:26:07.060 steadily tends to increase. We figure out how to get substitutes, how to make things 227 00:26:07.060 --> 00:26:13.820 cheaper, not how to make them better. Because we are limited on the basis of government 228 00:26:13.820 --> 00:26:19.700 regulation, respecting the numbers of persons who can enter the field, the licensing fees, 229 00:26:19.700 --> 00:26:24.940 the requirements for how you operate, the standards and so on that are imposed upon 230 00:26:24.940 --> 00:26:31.020 all, only the very best can survive under these conditions, and thus the number of entrepreneurs 231 00:26:31.020 --> 00:26:36.340 engaged in a given area tend to be reduced with the passing of time. 232 00:26:36.340 --> 00:26:42.320 However, let's go into some of the other areas where competition is also a fact if 233 00:26:42.320 --> 00:26:48.200 If we are talking about a free market, let me just quickly name these, and then I'll 234 00:26:48.200 --> 00:26:56.720 get into them in detail in another lecture. The various areas of competition that I want 235 00:26:56.720 --> 00:27:05.600 to examine will include direct competition, parallel competition, dollar competition, 236 00:27:05.600 --> 00:27:14.480 and what we call market competition. These four areas, in addition to price and quality, 237 00:27:14.480 --> 00:27:24.520 make up the six fundamental areas where competition will exist given a free market. The major 238 00:27:24.520 --> 00:27:31.760 enemy of competition has always been the government, and yet the illusion exists, and it is an 239 00:27:31.760 --> 00:27:37.360 An illusion in the minds of many people that the government helps to preserve competition, 240 00:27:37.360 --> 00:27:43.120 when in point of fact it does precisely the opposite. So we'll want to take a good look 241 00:27:43.120 --> 00:27:48.120 at this and be sure you get to hear the next lecture. Thank you very much.