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One thing about Ron Paul's free market plan i dont understand fully...

I have done my research with Doctor Paul and agree with almost everything he says, however there is one thing i am confused about. I know there are laws against monopolies, and not allowing businesses to undercut intentionally to drive out small mom and pop shops, but under a Paul presidency would there be any regulations? or could a business that is heavily funded undercut for a few months in order to drive out competitors, or something to that effect. any information??



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There can be no such thing as a monopoly in a free market

In historical fact, nearly every major industry attempted to form free-market monopolies or cartels in the 19th century. They ALL (literally: every single one) failed, rapidly and catastrophically. This was long before anti-trust legislation. These monopolies and cartels failed because the possibility of competition in a free markets makes the monopoly concept unworkable - as soon as the monopoly tries to cut production and raise prices above the market rate, competitors enter and start taking market-share. The folks who failed to create monopolies in the free market learned their lesson, and they then lobbied the government to impose regulations, subsidies, tariffs, and so on to stifle competition - only then could they successfully create monopolies and cartels.

There are no monopolies/cartels except those created and supported by the government.

"Alas! I believe in the virtue of birds. And it only takes a feather for me to die laughing."

Tom Woods on companies lobbying government to stop competition

start at 27:30

http://www.youtube.com/watch?v=064YTtSxVSo

Check out the Laissez-Faire Journal at LFJournal.com


"The State is a gang of thieves writ large." - Murray Rothbard

Monopolies only exist because gov subsidy/regulation/mandate

Without that they would crumble back down to a competitive market, which is a win for the consumer and entrepreneur at the expense of the corporate/government robber barons and paid politicians.

As far as a monopoly that somehow occurs naturally, that is not necessarily a bad thing. That just means they were able to provide the best product for the lowest price with the best service. If they are not doing that their monopoly will no longer exist. Someone will come along with a better product, lower price or offer better service and they will lose market share to that person until they improve what they are offering.
Imagine that, businesses competing for your business! The return of the old saying "the customer is always right"! Business owners and salesman going out of their way give you the best deal or to resolve even the smallest of concerns. You can say good bye to waiting endlessly on hold for customer service. They couldnt afford to lose your business. That's what the free market will bring you.

Right now we have huge lumbering government sanctioned monopolies, cartels and government sponsored enterprises distorting and destroying the market. These big business don't have to compete, they've got it made, subsidized by your tax dollars and shielded from competition by regulations installed by your well greased congress critter. They don't have to listen to you, your complaints or demands. You are subject to their whims. You will jump when they tell you to and you will ask how high? They will change and violate their contracts at will without repercussion but if you even think about breaking your contract or renogociating any part of if think again unless you want to be dropped or face fines. They will hike prices and slip in hidden fees and give you lousy service and faulty products because they can, and they will because there's no one in your area that can afford to comply with the strangling high cost of regulations in order to compete. You are stuck with them or jack squat.

...Yet people fight for this system and against the free market solutions that would free them from these indignities.
It boggles the mind.

Just remove these government ties and sweetheart deals and we will have industries and enterprises that must compete on their own merits, work, innovate, serve and earn your business in order to survive and thrive. Money and investments will be more properly allocated toward those business and endeavors that are most worthwhile, competitive, and provide a good and needed service instead of being funneled into yet another bubbled industry. These resources will not be wasted or misdirected as carelessly or as blindly as much of the government and central economic planners have. They will reach maximum efficiency and produce maximum prosperity.

Fraud will still be enforced and other laws to ensure a fair playing field. Other than that the market will regulate prices, supply and demand, winners and losers. success and profit vs failure and bankruptcy are the most powerful motivators and regulators that can control the market. Neither can be bought or manipulated as easily as politicians or avoided as simply as taking another bailout.

Even the worst fears of those who reject or do not understand free markets are far better than the current economic nightmare we're living in.

I'll answer a little differently than some others

I may have missed the purpose of your question but I hope this helps.

Your question is at least difficult if not impossible to answer easily in a few paragraphs but I will attempt to get you headed in the right direction. When Ron Paul talks about reducing regulations he may be talking about the kind that may affect small business owners but, in most cases, reductions in regulations would affect "Mom & Pop" stores in small ways. If they lower taxes and regulation compliance costs they would only help small businesses survive. One small example might be the cost of record keeping and reporting taxes in an extremely complicated tax system. All overhead, including the cost of bookkeeping, attorneys or CPA's to help small businesses stay on the right side of the law have to be paid for by the sale of products. The more complicated the compliance the more most people need to pay for outside, or even inside, help. Paid help.

Depending on the size of the small business and number of employees there are potentially many government agencies, both in the Federal Government and on the local level, that regulate business and require expense to comply. These regulations continue to increase and are nearly never reduced or eliminated.

As someone who ran a small business for more many years I can say that I can't think of one government regulation that helps small businesses but can think of many that hurt and make it less easy to compete with larger competitors who have many advantages. Those advantages are too many to mention here but any small business owner who has been around a while can help you understand them.

Hope I helped a little. One small pet peeve I have that I haven't heard from Ron Paul or anyone else is that everything is paid for by the sale of a product or service or by debt financing. That means that every time you buy a can of soda you pay for all regulations and taxes in the cost of the product. It's a very high price for services that often you never benefit from. If we get that understanding across to the public in general we will all benefit greatly.

I won't do this but Google "regulations and small business" and I'm sure you will find enough reading material to last you the rest of your life.

Your worry is widely believed

Your worry is widely believed by many, but it is an apparition. From Tom Woods’s book Rollback:

This widely believed scenario is actually a phantom. Economist George Stigler declared that ‘today it would be embarrassing to encounter this argument in professional discourse.’ For one thing, the firm attempting it loses disproportionately, for it must take losses on its large market share. Consumers, meanwhile, stock up on items at these fire-sale prices, making it all the longer before the firm can expect to make up those losses. If the firm does manage to drive everyone else out of the business, its problems are only beginning. Any one of these firms can start up again at any time as soon as the ‘predatory’ firm begins charging the high prices it has been craving. If those firms literally went bankrupt as a result of the predatory pricing scheme of their competitor, then other entrepreneurs would have been able to acquire their assets for low prices at auction, making these firms much fiercer competitors as a result.

He goes on to say that scholars actually have a hard time finding an example of predatory pricing, where firms lower their prices to the point where their competitors go out of business, then raise their prices.

malo periculosam libertatem quam quietum servitium

I am an aristocrat. I love liberty; I hate equality. - John Randolph of Roanoke

hmm this is interesting

i like the answer too this because it makes alot of sense when broken down like this. however it would be hard to explain to an everyday person who might make the claim that paul is "pro big business".

That's easy, just ask them what big business is backing him?

What corporation is going out of their way to support Ron Paul and his free market ideas? Why are they all behind Romney and Obama who will ensure business as usual? Why aren't they flocking in droves to have him remove regulations and barriers to smaller competition? Because everyone knows he'll do it if placed in office. So its a sure thing if "big business" actually wanted that.

Once they pause to think about that for a moment, a light bulb usually goes off, or flag, and people are usually open to hear and learn more.

Sadly, you’re probably

Sadly, you’re probably correct. However, it should be mentioned that being “pro-market,” like Ron, does not equate necessarily to being “pro big-business.” I think people confuse these two. In truth, business are just like people; they want rewards at little expense, and if that means lobbying government to pass higher costing regulations, then so be it, since this will disproportionally harm their smaller competitors, whereas these bigger firms, with larger economies of scale, can handle the costs.

If you want more on big-business and big-government collusion and the fallacy that more regulations are implemented for the protection of consumers when, in reality, it is only to enrich the established firms at the expense of smaller business and competitors and, also, the consumers, then Tim Carney’s The Big Ripoff: How Big Business and Big Government Steal Your Money is a good start.

Incidentally, I have another book at my disposal, one, edited by Tom Woods, called Back on the Road to Serfdom: The Resurgence of Statism, which has an essay by Tim Carney on this corporatism scheme. As an example:

When Theodore Roosevelt proposed federal inspection of meat and meatpacking, the biggest meatpackers applauded. During FDR’s New Deal, big business almost universally supported the National Recovery Act, which was a legalized system of cartels. Richard Nixon’s firmest backers for his 1971 wage and price controls were from big business, led by the National Association of Manufacturers. Bill Clinton’s new regulations on genetically modified foods, requiring expansive testing before such foods could be sold, had an ally in Monsanto, the world leader in such food.

On and on…

Why?

Big business and big government feed off each other. When government gets bigger, companies reposition themselves to profit more from government. Also, big companies are more able to craft policies to fit their businesses. In other words, neither big business nor big government is bossing the other around—they’re both playing off each other.

malo periculosam libertatem quam quietum servitium

I am an aristocrat. I love liberty; I hate equality. - John Randolph of Roanoke

Do you know how monopolies are created?

Monopolies are created by government regulation.

Companies lobby government to impose regulations that benefit them.

For example: In the Taxi Cab industry, you see incredibly high licensing fees, why because taxi companies have lobbied local and state governments to impose these regulations and fees to keep new competition from springing up.

Another example is John D. Rockefeller actually lobbied for prohibition, because ethanol was a competitor to Standard oil.

The nylon rope industry lobbied to outlaw hemp because it was a competitor.

There actually used to be laws that made it illegal to sell products cheaper than the manufacturers suggested retail price.

Why, because all the big retailers were being being beaten by discount stores, so they lobbied to have laws passed that would make it illegal to sell below MSRP (that's crazy).

You see, because government has the ability to regulate, corporations lobby government to pass regulation to keep out competitors, making them monopolies.

Check out the Laissez-Faire Journal at LFJournal.com


"The State is a gang of thieves writ large." - Murray Rothbard

Breaking up monoplies on the local level

The central, unstated message of Paul's campaign is that regulation and law should be done at a local level, rather than a federal level.

What that ultimately does is gives people more freedom to decide what is good for them locally. Monopolies can be more easily broken up by local governments who create competing systems or refuse to allow monopolies access to public infrastructure unless certain requirements are met - and the process of determining those requirements is more visible and influenced by the people than is the case with federal requirements.

Related:
http://www.dailypaul.com/223767/what-ron-paul-needs-to-say-i...

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+ Civility first
+ Constructive comments

Best Regulation is Liberty's Core Principles

As you may know, when Ron talks about Liberty, he's using it with a specific meaning. Most outsiders don't know this meaning so they dismiss it or misunderstand it.

The liberty Ron's talking about is the Philosophy of Liberty wherein every individual is morally entitled to complete dominion over their own life, liberty, and property. Using force or coercion on others violates this core tenet.

This means no murder, no theft, no fraud, no vandalism, no rape, no kidnap, no slavery, no assault, no torture, no trespass.

So long as businesses aren't doing these things (or clever, sneaky ways to do these things or variations of them without looking like they're doing these things), and the option of getting in bed with politicians and lobbyists for an unfair advantage in the marketplace is off the table, the need for regulations is diminished if not eliminated.

Instead of Business X turning to government to prevent Business A's rise in the market, Business X will have to find new ways to compete just like anyone else. And, as they say, necessity is the mother of invention.

This might help

http://mises.org/daily/5930/

This explains the concept of regulations, and how big business gets bigger. As the previous poster said, governments don't prevent monopolies; they create them. The former CEO of Monsanto runs the FDA, the former head of GOldman Sachs runs the treasury dept, etc etc. Almost always, the sole purpose of federal regulations of any kind, is to squeeze out the little guy to the advantage of the mega corps.

Look at RP's donors compared to Mitt Obamney if you have further doubts

Tu ne cede malis sed contra audentior ito

good read.

good read.

Monopolies are created by government, not prevented by it

The cost of compliance with government regulations is as much a burden (if not more) on small businesses as is competing with larger businesses. That's why the crony capitalists love government regulations - it tends to limit their competitors.