So my economics proffesor was talking about how public utilities like water and electricity are a monopoly, and how we need it. He explained that the costs would be too high for multiple, considering multiple companies laying piping and driving costs up. My response to him was that if costs were that high, very few companies would venture into doing such a thing, and it would not make a difference. Then he said something about price controls or something then continued lecturing about something else.
So would it be more expensive? Would monopolies exist in a free market? How do I respond to such claims that we need government control for public utilities?
Freedom has always been the only route to progress.
Tom Dilorenzo has a bit on public utilities. Basically there were actually hundreds of companies in practice and they provided very good service etc etc. Its a monopoly now because county/city regulations... although there is limited competition.
Even if he is correct that you can't build 6 pairs of pipes all by eachother, you can still get competition through contract bidding. So companies can bid on the contract to supply water and the best bid wins. Anti free marketers are attacking a straw man because they say it would be inconvenient for each individual to do the contracting. Well, consumers go and get representatives, called apartment complex managers and neighborhood associations, and then they solve the problem since they've specialized in it.
Then you go on the offense and say that the government has no incentive to provide public utilities because they don't lose money when they screw up. Then they'll say something about democracy, and you laugh and recite Bryan Caplan's argument. After you've wrecked them, simply point out that the public utility companies will gain control of the political apparatus and use it to form an actual cartel, jacking up prices and reducing quality.
I'm sure there would be a few monopolies by necessity, but I don't see his argument in saying that prices would be too high if multiple companies were laying pipes underground. That sounds like competition to me. If the second company was charging more for the service, then everyone would just go with the first. There's nothing wrong with a naturally-forming monopoly. There is something wrong, though, with making people pay for something they don't necessarily use. I'll never understand why people assume government monopolies aren't business in themselves. I mean, they aren't properly run, but they are businesses, in essence. And, if he thinks they're doing a good job with the monopoly, it'd only get better in the free market. You should ask him if he'd make the Amish pay for electricity costs since it's a public utility.
I don't understand why you think beyond this and yet my proffesor is so quick to reject other ideas. Aren't proffesors supposed to be, idk, well rounded? Thinkers?
Because beyond the surface level he is unwilling to be dissuaded from his assumptions which make up his paradigm or worldview or what not.
It's easy to reject good logic. You just 'will' it. You willfully ignore the alternatives and rationalize them away. Self-delusion is a pretty powerful thing.
In short, he's more emotional than logical.
Austrians have a different view on monopoly than the mainstream. I would recommend listening to Tom DiLorenzo's speech entitled "Monopoly And Competition": http://mises.org/media/1448 In a free market, there is the potential of one company being the sole supplier of a certain good, which means that they are just the most efficient at producing the good. The mainstream thinks that just because there is one company providing a good, they can then charge as much as they want and gouge the poor consumers!! Where they go wrong is that there is a ceiling on how high they can make the price before competitors begin to enter the market. As long as there is the THREAT of competition, that should be enough to keep prices below a ceiling (perhaps this price is higher than the maths equations show is the "efficient price", but there is still a ceiling on how high it can go). A monopoly can ONLY occur when the government restricts any competition from entering the field at all. Take for example, a water company who is the only supplier in your town decides to charge very high fees for water. - A water company a few towns over can decide to expand into your town - People in the town will be fed up and create their own water company - An outside company closely related (or not related at all) to water distribution may decide to enter the market because they can outcompete the monopolist.
Libertyandlife:I don't understand why you think beyond this and yet my proffesor is so quick to reject other ideas. Aren't proffesors supposed to be, idk, well rounded? Thinkers?