Wednesday, April 22, 2009

Free Markets (14) - Economic Power

Many people claim that economic power must be controlled. There is a lot of confusion behind this belief.

The basic assumption is that political power is good and economic power is bad. This is just assumed never proven. The reality is that political power has done terrible evil throughout history. There is no reason why political power should be trusted.

Economic power is never defined. A common assumption is that size equates with economic power. That is not true. General Motors is huge, but its economic power is fleeting. GM cannot force a single person to purchase a car. I bought a Honda several years ago and GM was powerless to do anything about it. GM wanted me to buy one of their cars, but I defied them. I defeated the Goliath of the auto industry all on my own.

In the last few months, General Motors have fallen by half and they have been powerless to prevent this. So much for economic power.

General Motors has done better with political power than using economic power. When they went down to Washington with the rest of the Big Three, they got billions of dollars from other people.

This is generally true. Economic power generally proves to be unreal. What appears to be economic power is generally political power. Those with economic power have generally gained it by persuading the political powers to give them a privileged position. People who are worried about economic power should be more precise about what they mean.

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