Recent lack of activity

For those of you who are somewhat regular readers, you may have noticed a significant decline in the frequency of my posts. Allow me to explain: thought my efforts of studying monopolies, I've encountered a point in which I am seeking to understand why it is a general perception among economists that monopolies are harmful to the consumer and the market in general, using mathematical, not theoretical, reasoning.

More specifically, I've spent over 20 hours researching the idea of the perfect market model, exploring its intricacies and questioning every assumption (why does the marginal revenue have to equal the marginal cost, why is the demand line flat in contrast to being a downward slope, why is the marginal cost curve also the supply curve, why would a firm want to enter if it only makes zero economic profit in the long term, how is it possible to make profit in the short term). Contrary to popular belief, my knowledge of actual economic functioning was severely limited, and, as such, it has taken me a great while (and a great deal of aid from the folks over at Yahoo! Answers) for me to begin to understand the neoclassical Austrian economic theory that seems to be permeating our society today.

That being said, I am hoping to be able to be finished sometime this week, so expect an abundant post focusing on the topic.

On a personal note to Lauren: I'll lend you the book as soon as I can; I really need it right now!

Antitrust: The Case for Repeal

I just received the long-awaited Antitrust: The Case for Repeal today in the mail. It's only about 112 pages long, so I'll be providing a detailed analysis of the works as soon as I am done. The book will also serve as to facilitate some of our discussions on here pertaining to capitalism, modern economic principles, and, of course, the theory/theories of antitrust and its role in the consumer, business, and industrial society.

Stay tuned!

St. Pete Times Editorial Response: Mexico City Abortion

After reading an article published by the St. Petersburg Times, expounding on the recent vote in Mexico City (a predominantly Roman Catholic region, as with the rest of Latin America) to legalize abortion in the first 12 weeks, this is the (brief) response that I sent to the editorial board:

A step in the right direction

Mexico City's decision to legalize abortion should be commended by the United States as well as the international community. Coming only a few days after the U.S. Supreme Court decision to uphold the Partial-Birth Abortion Ban Act, the ultimate test of individual freedom and autonomy will be when the case reaches the Supreme Court in Mexico. Let us hope that the Mexican government will embrace the principles of privacy, individual will, and protection against the collectivist tendencies that permeate through the mostly Catholic region.

I'll try to provide a more detailed analysis of the history of abortion constitutionality, both in United States and Latin America, as soon as I can.

[Update]

I received the following response in the comments section:

"That is also happening in many European countries that are also traditionally very conservative on such issues, it's a world wide trend, although in Europe it's more due to secularization than anything else."

Actually, from what it seems, in contrast to the major European nations, Mexico is fairly far behind in legalizing abortion, even to the most minimal extent.

In England, abortion has been available up to 24 weeks since 1967; in Denmark, it has been legal until the 12th week ever since 1973; in Italy, abortion though the 12th week has been legal since 1978 (was backed by a popular referendum in 1981); in Spain, though the regulations are substantially stringent, it has been legal to get abortion until the 12th week since 1985.

Either way look at this however, Mexico City should still be applauded for taking a step in the right (err, or is it left) direction.

Abortion Comment Answered

In response to my post focusing on the latest move of the U.S. Supreme Court to uphold the Partial-Birth Abortion Ban Act as constitutional, I received the following response from an anonymous commenter:

"just to clarify, from what I understand about this article, you're simply saying that the Supreme Court's desicion against abortion was made in order to keep them out of hot water by trying not to upset the majority of the U.S. population and was not influenced by the constitutionality... However, what happens when nothing about a topic is included in the constitution; how would they decide the outcome? right now, we are facing a new millineum, and it's accompanied by a new culture and overall new views on many different things, including the never ending arguement over what exactly is moral... The Supreme Court's interpretation of a subject like abortion obviously must change according to the time era, seeing as something that may seem unconstitutional a couple decades ago may seem constitutional now, and vica versa (like slavery)... And seeing as for the second time in a row the Supreme Court upheld its desicion regarding the banning of partial birth abortions (the first time being with different justices), it is obvious that they do not find it to be moral, but overall and most importantly, they do not find it to be constitutional..."

I'll go though this comment, point by point, offering my opinion and analysis of the issues that were raised and that need to be addressed.

"you're simply saying that the Supreme Court's desicion against abortion was made in order to keep them out of hot water by trying not to upset the majority of the U.S. population and was not influenced by the constitutionality"

Not at all; the premise of my argument lies in the principal that the role of the United States Supreme Court is not to interpret collective morality nor to uphold the will of the majority. The Framers, predominantly Madison and Jefferson, were very clear about the role of the judiciary in our constitutional republic. I was directly responding to Steve Kennedy, who contended that the ruling is justified as it has a support of the popular majority of this country.

"what happens when nothing about a topic is included in the constitution; how would they decide the outcome?"

The correct answer to this question would require several pages of discourse, so, let's focus on the issue of abortion, as that is our topic of discussion. Though the Framers certainly did not make any Constitutional provisions pertaining to abortion, the debate over abortion lies within the question of whether its prohibition would violate the citizens' right to privacy through the Due Process clause, enumerated in the 14th amendment, which is in the Constitution.

"right now, we are facing a new millineum, and it's accompanied by a new culture and overall new views on many different things, including the never ending arguement over what exactly is moral... The Supreme Court's interpretation of a subject like abortion obviously must change according to the time era..."

As the U.S. Supreme Court Justice George Southerland proclaimed, "A provision of the Constitution...does not mean one thing at one time and an entirely different thing at another time." Though constitutional perception by justices in cases as Plessy v. Ferguson surely reflected the views of the contemporary era, there is such a thing as an "incompetent judge." Am I stating that the current judiciary is incapable of carrying out their impartial duty of providing a check against the encroachment of the majority and the legislative/executive power? Perhaps so. By "incompetent," however, I mean one that does not utilize the process of textualism in interpreting constitutional law. In the words of Clint Bolick, "textualists start with the plain meaning of the text, but if it is ambiguous, they will consult the structure, purpose, and history of the provision." It seems to me that several of the current justices are endeavoring in what some call legal realism, essentially dictating laws from the bench. After all, how can it be justified to argue, as the majority of the court did, that "The Act’s failure to allow the banned procedure’s use where ” ‘necessary, in appropriate medical judgment, for preservation of the [mother’s] health,’ ” Ayotte v. Planned Parenthood of Northern New Eng., 546 U. S. 320, 327-328, does not have the effect of imposing an unconstitutional burden on the abortion right."?

"And seeing as for the second time in a row the Supreme Court upheld its desicion regarding the banning of partial birth abortions (the first time being with different justices), it is obvious that they do not find it to be moral, but overall and most importantly, they do not find it to be constitutional..."

I am a little bit curious as to which cases you're referring to. The only other case that specifically dealt with partial abortions and that included a different lineup of judges was in April of 2000 ( Stenberg vs. Carhart), when the U.S. Supreme Court struck down a Nebraskan law that prohibited the procedure.

Hopefully this will serve as a medium for facilitating further debate. Thanks for your input!

St. Pete Times Editorial Response: Abortion

On April 24th, 2007, Steve Kennedy from Safety Harbor made the following submission to the St. Petersburg Times:

In abortion ruling, our system worked

Let's see. Conservatives twice vote a president into office, and the majority rules.The president then appoints conservative judges to the U.S. Supreme Court, reflecting the views of the majority. The court's decision on the abortion issue happens to coincide with the views of those in the majority, and the majority's views are reinforced. It seems with this court, "moral concerns" are a consideration to the law where in recent previous courts they were not.

At this time, the majority of voters, men and women, are against abortion and outnumber those who are for it. It all started at the ballot box. So the country does not go backward just because you don't agree with the decision. It goes forward and our system of representation is maintained.

My response to the editorial board:

The role of the United States Supreme Court never was, isn't, and never should be to interpret cultural and contemporary morality. Furthermore, the judicial review was created to protect the rights of citizens against the very thing you seem to be advocating--popular will. As James Madison himself has quoted, "Wherever the real power in Government lies, there is the danger of oppression. In our Governments the real power lies in the majority of the Community, and the invasion of private rights is chiefly to be apprehended, not from acts of Government contrary to the sense of constituents, but from acts in Government is the mere instrument of the major number of its constituents."

As discussed by Clint Bollick, the Litigation Director at Institute for Justice, the Brown v. Board of Education decision "invalidated scores of laws reflecting passionately held social views, overturned well-established precedent, and cast America into upheaval." The United States of America is not, and should not be, for that matter, a pure democracy. It is a constitutional republic, one where oppression of the minority by the majority is checked and balanced by an impartial entity--the Supreme Court. The role of justices is not to interpret morality, it is to apply the constitutional criterion, one that not even a majority can overturn.

Future Revealed

I thought that I'd quickly run over as to which topics readers can expect to be covered in the next few weeks:

1. Capitalism & Judicial History (coming soon)
2. Affirmative action: judicial, rational, and practical failure.
3. Continuation of our antitrust series (first post concerned the definition of a monopoly)
4. Amtrak: A failure
5. Presidential candidate analysis

Though I am hoping to adhere to this outline, if you have any suggestions, feel free to leave a comment!

Monopolies: Definition Discourse

Because a great portion of my posts focus on the idea of monopolies in a free-market environment, perhaps it is time that we embark on a brief discourse of the issue. This will be the first of the many posts that will follow, providing a critical analysis of the idea of corporate efficiency and coerciveness.

First, as always, let us be clear on what a "monopoly" is. From my personal experience, it has been everything from "a business that can do anything it wants to" to "business that's the best in whatever business they do." For the purposes of objectivity, let us define monopoly as a single seller in a given field. Keep in mind that this definition does not take into account (1) how the monopoly came to be about, (2) the extent of powers and advantages that it has over its competitors, and (3) the venue for obtaining the advantages gained in point #2.

Rockefeller's Standard Oil refined 90% of America's oil in 1899--it was a monopoly. Though not adhering to the aforementioned definition, it can be persuasively argued that 90% did, indeed, constitute a monopolization of the market. Microsoft Corporation's operating system is said to run on 95% of the modern computer systems--as with Rockefeller, Microsoft is considered a monopoly in the modern business context. The United States Postal System, however, has exclusive rights to sell first and third class mail without any threat of private competition--it too is a monopoly, though many, especially the advocates of monopolies constituting the demons of modern society, certainly don't see it as so. Finally, Amtrak, the federally-owned railroad company that has never made a profit in its 32 year old history is certainly a monopoly.

Because of the diversity of businesses and corporations constituting as monopolies, we must assume an objective evaluation to determine whether the "monopoly" is "evil," or, as Nathaniel Branden, author of Question of Monopolies, published in the Intellectual Ammunition Department of The Objectivist Newsletter in June of 1062, put it, whether it has "exclusive control of a given field of production which is closed to and exempt from competition, so that those controlling the field are able to set arbitrary production policies and charge arbitrary pries, independent of the market, immune from the law of supply and demand." Theodore Roosevelt took a similar approach when he distinguished between "good trusts", or, the ones that helped the people, and "bad" trusts, the one that exploited the public (The Northern Securities Company was one of such trusts. It controlled Northern Pacific Railway, Great Northern Railway, Chicago, Burlington and Quincy Railroad and was subsequently dissolved).

Thus, let us look to Mr. Lawrence W. Reed, a scholar at the Mackinac Center for Public Policy. According to Reed, "When governments, by one method and to one degree or another, limit competition by means described above, the result is a coercive monopoly for producers who benefit from the limitation of competition." In contrast, the "efficiency" monopoly is one that gets its "high market share not because of any government grant of exclusive privilege, subsidy, special tax treatment, or the like, but because it simply does the best job."

Thus, we can conclude that a monopoly can be either (a) a coercive monopoly or (b) an efficiency monopoly. The USPS is a coercive monopoly--it has exclusive rights to sell and deliver 1st and 3rd class mail not because of its ability to do so at the lowest price, but because the United States government has granted exclusive privileges to the corporation, hampering private corporations from competing and ultimately lowering prices. As my analysis of the USPS found earlier on this blog indicates, because of the government benefits, USPS lacks accountability, is victim to arbitrary price shifts, and is a burden on the U.S. revenue. An efficient monopoly, in contrast, is one that has reached its dominant position on the market through its efficiency and ability to lower the means of production. Walmart is one such monopoly, it has achieved its market position because of its ability to provide the lowest prices, driving the competitors out of business.

Before moving onto our next article, covering (1) the kinds of benefits coercive monopolies are granted and (2) a general outline of the checks provided by free-market economy in impeding the growth of an abusive monopoly, it is crucial that we have a succinct understanding of what a "monopoly" truly means.

Until then, let me know if you have any questions!