Economics was one of my favorite subjects while I was attending BYU, because it made sense. For me economics was about formalizing things that I understood innately, but maybe couldn’t express. That is how I feel about this topic. Centralization, or in other words, monopoly, is something that we all understand is bad, but many of us submit to it out of laziness or fear of failure.
How Do We Known Monopolies Are Bad?
Centralization in economics is easy to visualize as a wheel where the hub is where we all have to go to get what we want/need and we are all of the spokes. When I think of wheels, I think of cars. When I think of cars, it isn’t a far stretch to think of the DMV (If you give a mouse a cookie). None of us expects to receive good and timely service when we go to the DMV. This is a reason why it is a go to topic for comedians, like airline food or politics. Is there a reason why we dread going to the DMV? Is this something that must be bad?
When we go to the DMV, we are already put off, because something is standing between us and what we want. You don’t want to pay a fee to license your car, title your car, or get your car inspected, but we are required by law to do it. As an individual you don’t have a choice if you want to drive (and you know you do), so you jump through all the hoops that they put in front of you, and you’ll stand in line to do it. If you had a choice, you would take care of your licensing needs almost any other way imaginable. So what does this have to do with economics?
Monopoly Is When There Is Only One Real Choice
In economics a monopoly is where a single source dominates the market to the point where they can control the price. One of the major goals in marketing is to try to convince your customers that you monopolize the market, because then you can charge more for your product. Apple does a great job of convincing many of its customers that you cannot get a smartphone from anywhere else. This is why they are one of the most profitable companies. Ask someone who uses an Android why people buy iPhones, and they will likely use words like “sheeple” or “fanboi”, but in truth, the grass is just as green on the Samsung side of the fence.
The Illusion Of Choice In Your Local Store
If you aren’t thinking about it or going out of your way to buy specific things on a regular basis, then you are probably more subject to monopolies than you know. Walmart is a great example of this. My wife and I used to be able to buy a particular brand of Swiss cheese that is made in Utah, and it was delicious and inexpensive, Gossner. My wife and I bought the last blocks of Gossner Swiss Cheese that we could at Walmart, and then it disappeared. We asked employees where it was, and they just said that they were out. Well I called Gossner and got to speak to the CEO, because its a small company, and he said that Walmart refused to carry their products.
Walmart is really good at presenting the illusion of choice, but you can really only buy what they decide they are going to stock. If you don’t believe me, you can read this article about how Wal-Mart removed Glad and Hefty brand products from its shelves (at least temporarily). The other thing that Wal-Mart is really good at is bullying other stores out of business. They offer convenience of a one-stop shop, and when most of us are in a hurry, we usually just stop at the default location, instead of patronizing other shops where we might have to got to multiple places to buy all the things we need.
Monopoly In The Workplace
CEO’s all over the world want you to believe that the only way you can make a living is to work for them. I heard a joke recently that went something like this.
I was admiring my CEO’s new Lamborghini recently.
He saw this and told me, “This thing is pretty cool, and you know.
If you work really hard and put in your hours,
next year I’ll buy another one.”
The Russians have a saying that I really like, “В каждой шутке доля правды”–translation “In every joke there is an element of truth.” The truth is that the owners of the world are the ones making money. This is most likely true of your landlords if you are renting a house, and it is true of the owners of the company you work for. The truth is that if the company you are working for is profitable, it is most likely because your customers are paying more for your time than you are receiving for it as the employee. My cousin recently started his own business, and I respect him a for his answer to my question as to whether he would quit wrenching and just manage his company. He said “Are you kidding? I am my best employee.”
The Internet Is The Best Anti-Monopoly
Odds are when I was talking about monopolies in shopping, a lot of you were thinking to yourselves “I can buy whatever I want on Amazon.” If that is what you were thinking, then you understand the crux of my point. One of the greatest things about the internet is that nobody owns it, so there is no central hub in this wheel. You can interact with anybody else that is online. Not only does this mean that you can buy whatever anybody in the world is willing to sell/ship, but it also means that if you have an idea that might be worth something, you can share it online. I am a big fan of youtube, because it allows a lot of people that have good ideas to find an audience and make a business out of it.
If you are consuming music or video entertainment through youtube, pandora, etc, then you are bucking the system by not going through the record labels or television networks. The odds are that you feel like you are better off for having access to these resources. The reality is that we are all better off for being able to interact with each other without having to go through a central hub. This is the beauty of services like uber, rvshare, and airbnb. They allow people who need things to connect with people who have those things and want money. We are all better off for being able to interact with each other directly, so if you enjoyed this, please share it.