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Faults in the Free Market

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Vincent L. Anderson posted on Fri, Mar 12 2010 6:53 AM

The gentleman in the vid argues that water distribution will lead to a monopoly, and that the state monopoly is not only more preferable, but that a private company would not be able to do it as cheaply.I vaguely remembering reading an article here that touched on geographic monopolies, but I don't remember all of the points it made exactly (and I can't find it). It seems to me that a geographic monopoly isn't a true monopoly at all, because if the demand for something is great enough people will discover the means to meet their needs. However, I'm not so well informed on water distribution systems and I am a bit fuzzy on how the market would work this situation out exactly. Any suggestions?

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Private companies can supply homes with stuff like natural gas quite easily. That stuff exists in "geographic monopolies", so what's the difference with water?

If somebody seriously tried to charge exorbitant prices for water we'd all go outside with buckets and just collect the liquid gold when it rains...

"I don't believe in ghosts, sermons, or stories about money" - Rooster Cogburn, True Grit.
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limitgov replied on Fri, Mar 12 2010 10:03 AM

How in the world can the private sector not do it for the exact same price?

Would the government be using free labor or some advantage the private sector doesn't have access to?

Although, they wouldn't need all the admin staff to report to other government agencies, so it should be cheaper.

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xahrx replied on Fri, Mar 12 2010 11:41 AM

Sounds like another riff on natural monopoly, which is a myth.  Whether it be for geographic reasons or because of supposedly massive upfront costs you butt up against one problem: even if it were possible ot establish a genuine monopoly in some market, what they hell are they going to do with that power, make slaves out of the rest of the planet?  Consumers aren't the only ones with an interest against monopolies.  What about the monopoly's suppliers?  Do you think they'll be happy with the lower business volume?  What about sellers of everything else that the rest of the planet has to skimp on now that the monopoly is charging such high prices?  Even a geographical barrier can be overcome, how does the monopoly maintain control over time?

"I was just in the bathroom getting ready to leave the house, if you must know, and a sudden wave of admiration for the cotton swab came over me." - Anonymous
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