Thursday, September 22, 2011

Long Distance Warrior: Overcoming Government Monopolies


I watched an interesting documentary last night on William McGowan, the leader of MCI, formerly Microwave Communications Incorporated.   In a nutshell, prior to McGowan and MCI, AT&T had a monopoly on all phone service.  Sure that is hard to believe now with so many carriers, but that is how it was before the 70’s.  William McGowan did a little research and found out that AT&T did not have a government sanctioned monopoly, which meant they could encounter competition.  From his point of view, since they had 100% of market share, they could only go down and the competition he was offering would go up.  Through force of will and much litigation, MCI broke the AT&T monopoly and now we have the information age we have.  The key in his thinking was, just because AT&T has the monopoly, doesn’t mean they should have it. 
As I like to do, I would like to transfer this thinking to our federal government.  Obviously, the government we have now is not the government we had 100 years ago.  There was no social security or medicare 100 years ago, yet we still had elderly and poor.   You see, once the government gets involved in something, they become the monopoly in that thing, such as senior retirement and healthcare.  We can see how the introduction of Obamacare with the promise that nothing will change for those that don’t want it to, will effectively end privately funded healthcare.  This isn’t meant to be a discussion of the merits, or lack thereof, of this project, but merely to show the progression of the government monopoly.  Or look at the student loan program as another recent example. 
The problem with a government monopoly compared to a private monopoly is that a government monopoly carries the full force of law.  If AT&T wanted to collect past payments, they have to go through the court system.  If the government wants to collect, they directly garnish your wages.  So, when we debate the size and scale of government, most people believe it is too large, but they make the suckers choice and say it is too late to change.    Why can’t we act like McGowan and question all of these government programs and say, why should the government be the ones in charge of senior care, or poverty, or you name it.  I’ll guarantee we will do it better.

1 comment:

Kansas Bob said...

Using your telecom analogy I suspect that once the federal govt was forced to divest by the Tea Party (or whoever) they would (in a few years) reorganize and combine forces to eventually form four bureaucratic federal governments that created and operated a new genre of entitlement systems called "Smart Programs". Of course the largest and most bureaucratic spin-off would try to take over one of the small federal bureaucracies.

In the end everyone would naively hail the four system bureaucracy as so much better saying the benefits of the "Smart Programs" could have never been achieved through the old monopoly form of government. Sadly they would not understand that, like the telecom industry, things are not all that much better or different. And some would even write blog posts comparing those who broke up the old federal monopoly to the likes of William McGowan. :)