Reader Question: Why is There So Little Competition?

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Here’s the latest reader question, along with my reply!

Chris asks: I know you touch on this topic all the time and I’m sure if I was a more dedicated reader of yours I wouldn’t need to ask this – but I would love an entire article devoted solely to explaining how government regulations basically make it impossible for anybody to start a new American car company.

One hundred years ago, we had dozens of car companies, but now we have three – Ford, GM and Tesla. You and I know that these big car companies are all in favor of massive, expensive, time-consuming and difficult to comply with regulations so that small competitors are kept out of the marketplace, but I think one solid article really laying the facts out for everyone to see would be helpful for those of us who are constantly arguing with leftists who continually claim that we  need these government regulations to protect us from the evil, greedy corporations.

Our argument is that less regulation would open up the marketplace to new competitors, lower prices, increase innovation and even make us all safer as these newer companies attack the problems of safety from different, heretofore un-attacked angles, rather than being restricted by the unimaginative federal bureaucracy. Leftists are always talking about how much they hate Big Corporations, but they need to be taught that they are the ones protecting these Big Corporations from competition – and making them bigger – because of their insane religious devotion to Big Government.If you don’t want to write such an article, can you give me some suggestions for books that I could read on this subject?

My reply: Well, technically, there are four American car companies – you left out Chrysler – but your point is well-taken.

Let’s start with verbiage. I try to be careful about using “we” when discussing things like need – because only individuals know what their needs are and only a free market based on voluntary free exchange can truly satisfy those needs.

If we had a free market, there would cars (and everything else) to meet practically every conceivable need. We can look to the past – before the government got heavily involved in decreeing car design parameters – to see what this would be like. As recently as the ’70s one could buy a very basic – but very economical – little car like a VW Beetle or a massive Mercedes and almost limitless permutations in between. Some cars were air-cooled and rear-engined; others powered by huge V8s. In between were in-line sixes, V6s and fours.

Today, we have homogenized transportation modules because government lays down the fundamental parameters of vehicle design, especially as regards “safety” – which is an oily term as it’s used because what we are talking about is crash-test compliance, a different thing.

I think it should be up to the individual to decide for himself how much crash-test sturdiness he wants to buy – and whether he wishes to buy other things instead or pay less instead.

As you intimate, the remaining car companies favor all of this because it secures their position in the managed economy. Economist call this regulatory capture. By establishing all these rules and regulations, you make it prohibitively expensive for a newcomer to enter the field.

But – again – this happens because the premise that “we” need this and “we” need that has been accepted as the basis of the discussion by most people. But who then is “we”? It isn’t each of us, as individuals, freely choosing what meets our needs. It is each of us being old what we will be allowed to have – and will pay for –  by arrogant busybodies who claim to speak for “we.”

Well, they do not speak for me! And I expect they do not speak for you, either.

Let them know it.

When enough of us get tired of being told what we’ll be allowed to buy, we will have a free market again.

And our needs will be met!

Got a question about cars, Libertarian politics – or anything else? Click on the “ask Eric” link and send ’em in!

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3 COMMENTS

  1. When the price of old used cars approaches the cost of new ones things “might” change……although not necessarily for the better.

  2. It’s more than cars too. Just imagine if you could pick from two dozen cable-internet companies instead of most communities one or two (or three if you’re lucky). Why? Because most towns won’t allow more competition. I know in my town a third competitor wanted to service the community. But the town said no!

    So we have a “choice” of two very expensive, third rate cable companies. With competition I would pay far less and have far better service. But no…..

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