Lord Of The MonopolySubmitted by Treubig on Tue, 04/01/2014 - 07:37
I want to explain how the problems of today are connected. Lets use the book "Lord Of The Flies" as an example and replace children with adults. This is based on a true story that we are all living today.
One hundred people are on an airplane that crashes on an island. After days and weeks of trying to contact help, all hope of a rescue has been lost. The people have decided to make the best of the situation and start their own society.
After months of helping each other create tools for basic living needs such as a stove to boil water and cook, constructing a lean to for shelter, and spears for hunting, they decide to use their individual talents to help one another. They each find different ways to create things from the resources they have that may be traded for something someone else has created. One person may be good at making a bow and arrow but cannot make a hammock. He would make two bow and arrows so he can trade the bow and arrow with the person that is good at making a hammock.
Eventually they find that the system of barter is very inefficient because the person that is good at fishing cannot trade his fish for a hammock because the person with the hammock wants berries. The fisherman will have to find someone that picks berries to trade for his fish and trade the berries for the hammock.
While on this island, a few people stumble upon iron ore. They are able to use this iron ore to mold into many useful items. Because the iron ore is so scarce and everyone wanted to gather it for many different reasons, people began to use this to trade for other items. The iron ore became money.
Often times disputes would ensue for various reasons. This lead to fighting and in some cases death. So the people decided to create a government modeled after the United States. They created a constitutional republic. They voted for a president and a congress. They had trials for those who murdered and stole and a prison in a cave for those who were found guilty.
Decades have gone by and the population had grown because the people had children. Businesses were created and employees were paid in iron ore. Each family had their own type of business so goods and services were plentiful. It was a wonderful free island.
As time went on and the population grew, many families came up with ideas to compete with other families businesses. They found ways to create the same good or service at a lower price than the families that had been doing it for decades. The families that were veterans in that particular field of work were not happy that the new business was taking all their clients. Rather than changing their business model, they decided to call their friend that worked in the government to create workplace safety laws and occupational licensing. The business paid the politicians in the form of campaign contributions to pass the new laws or they themselves ran for office to get the laws passed. They said it was in the public's interest to do so. After the laws had been passed, the new business soon realized they did not have enough resources or iron ore to pay the licensing fees or pay to comply with the new regulations. They voiced their concerns but it fell on deaf ears. The public wanted safer working conditions. They were force out of that market.
Soon, other old inefficient companies caught on to the dirty trick and called for regulation and laws to be passed for their industry. The public was happy that the island was making progress to create safe working atmospheres. The old companies had succeeded in creating monopolies in their industry and could continue selling their over priced goods and services with no competition. The people were ignorant to the fact that they condoned the elimination of innovation and had become servants to the corporations.
While all this was going on, a banking institution had emerged. They handed out receipts for their iron ore. The bank called these dollars. This bank wanted to be the only bank in existence and wanted all the iron ore on the island. After spreading rumors that the new banks were stealing their iron ore, they experienced a bank run and the new banks failed. This gave the opportunity for the old original bank to cry to the government that banking institutions were unsafe split up, and they needed a central bank to regulate the issuance of the dollar. The people roared with excitement that another bank run would never happen again and all their iron ore would be safe in the one central bank who controlled the issuance of the bank note dollar which was easier to carry.
After a couple of years had gone by, the bank called for the government to make transactions with iron ore illegal. They argued that people are at risk of thieves and murderers taking the iron ore. Again, the people agreed with little objection. At that moment, a fiat currency was the only legal tender.
Since the majority of people worked for a monopolized company, and the central bank was irresponsibly printing dollars and hording the iron ore, the prices of things started to slowly rise. People started to notice that their pay was not getting as much as they needed and some became homeless. Outraged they protested and called for the government to create a minimum wage so families could afford to live. They protested the business and called them "greedy" and "selfish" for treating their employees so horribly.
At that point, the government had no choice but to create a minimum wage. The people cheered the government for helping them in a time of desperation and the politicians preached that they are there to represent the people. The business owners then started to find ways to eliminate the new costs imposed on them by the government.
The business owners then created new technology that would be cheaper than the employee and raised prices to make up for the added cost. Many lost their jobs and were unable to find work because of the competition per job. The people then cried to the government to create a system of welfare to help those in need while they looked for work. Because the people wanted this system, the politicians had no choice but to comply. Instead of raising taxes and creating a tax revolt, the politicians asked to central bank to lend the government money and they did, by printing it.
As the minimum wage rose and inflation was created, the prices began to soar and the people in large numbers lost their jobs and relied on government welfare to survive. The banking institution and the politicians realized that this was a recipe for disaster, so they started passing laws to spy on the people and jail dissidence. The last thing they wanted was to lose power and control.
The printing press was running through the day and the night to keep up with the peoples demands and the raising cost of living. Eventually, printing money was not good enough. Resources ran out and the confidence was lost in the dollar. People began to get angry and riot and the police fought them to try to keep the peace. All had been destroyed and burnt to the ground and people had died in this senseless battle caused by their government.
The people then realized that liberty and free markets would give the island maximum prosperity. They ignored the government when they said they would fix the problems because they understood that the government created the problems.
Author: Jeff Treubig