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Friday, November 21, 2014

State Monopolies Aren't What They Used to Be

November 21, 2014Julian Adorney

Tags Free MarketsMonopoly and Competition

As governments expand their control over society, it can be easy for liberty advocates to get discouraged. As Obamacare imposes mandates and price controls on private health care, as the Federal Reserve manipulates currency, and as stories of police abuse become more common, one can be forgiven for thinking that freedom is on the decline.

But in many ways, freedom is on the rise. Laws pile up, but entrepreneurs increasingly innovate around them. The evolution of the Internet — and the entrepreneurs who have capitalized on this platform to develop new technologies — are enabling users to do an end-run around government and offer competition to the State. In many areas where the State once held a monopoly, new technologies are offering people choices.

Technology itself (in the hands of the private sector) is necessary but not sufficient to challenge State monopolies, because governments can ultimately outlaw whatever they wish. Advocates for liberty must also oppose state monopolies wherever they are enforced. Libertarians should be vocal — in person and in print — about the problems of government and the virtues of competition. Ideological support can reinforce market alternatives to government services, and the two combined can create a freer world.

Cryptocurrencies are a prime example of the challenges technology represents to government monopolies. For the past several hundred years, governments have had a near-total monopoly on currency. They could devalue, hyperinflate, and wreck currencies; and ordinary people had little choice but to continue using government money. The only alternative was barter, which raised a host of problems.

With cryptocurrencies, the monopoly has been challenged. For some, it is now practical to use such currencies to buy and sell a host of products and services. These currencies have value independent of the dollar, and they enable users to make the conscious choice to eschew government-backed money in favor of private currency. By doing so, they have challenged the government monopoly on money. While many people still rely on the Federal Reserve’s dollars, everyone with a computer — at least in theory — now has the option to conduct his business outside of the State’s currency.

Products like the “Peacekeeper” app do the same thing in the emergency response industry. For decades, peoples’ only option in an emergency was either self-reliance or a call to 911. Either James could fight a burglar off with a Colt .45, or he could rely on the police. Even as stories of bad cops multiplied, and as the government bureaucracy created long wait times, people had no other options. Those who could not defend themselves against armed criminals had to rely on 911.

Peacekeeper does an end-run around 911 by enabling users to rely on a voluntary network of their friends, neighbors, and family for help in an emergency. It has the potential to offer better, faster, more personal service than 911. More importantly, it gives users who are discontented with 911 an outlet by enabling them to switch to a private-sector competitor.

States Seek to Strengthen Their Monopolies

Competition to government monopolies are emerging in every industry. The United States government relentlessly tries to expand its sphere. Onerous rules on gun ownership attempt to make citizens reliant on the government for defense. Common Core strengthens the federal hold on education. The FDA bans alternative medicine, attempting to make users reliant on state-approved treatments.

But even as governments try to bring more and more economic activity under their control, entrepreneurs are enabling people to go around the State.

Want to avoid Obamacare? Oscar Salazar is planning to launch a new health care model he describes as “Like Uber, but with doctors.” Want your children to learn outside of Common Core? New resources like Khan Academy make it easy. Want non-FDA approved medications and treatments? The Internet and a globally connected world make acquiring these from less repressive countries easy. 3D printing has the potential to make a mockery of gun control laws, and in the future we may be 3D printing medications at home.

The United States government is, for the foreseeable future at least, here to stay. But central to government power is the idea of monopoly: a person must use government services to do X, or else not do X. Sally must use government-licensed taxis, or else not engage in ride-sharing at all. She must rely on 911 for emergency response, or rely on no-one.

This monopoly is at the heart of State power. Governments are by nature bloated and inefficient. They run over budget and fail to focus on the consumer. Given a choice between a government service and a private service, few people will choose the former. One doesn’t choose the Post Office when one has FedEx as an option (ceteris paribus). In order to maintain control, governments need to maintain their monopoly.

But this very monopoly is being challenged by dozens of entrepreneurs, innovating around and beyond the State. It’s not necessary that the state die off completely for other options to emerge. The Post Office still exists, but FedEx enhances peoples’ freedom by offering a private alternative. That same competition is now being applied to currency, emergency response, education, and a host of other industries.

As private enterprises give people options outside of the State, freedom expands in new and unexpected ways.