Linked by Dmitrij D. Czarkoff on Fri 31st Aug 2007 08:54 UTC
Editorial This article is an answer to "Competition Is Not Good" by Kroc and reading it wouldn't be comfortable without switching to and from the original article. I wrote it just because I do strongly disagree with Kroc and I believe I can prove that he is not as close to truth as it may seem from the first glance.
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RE[4]: I agree
by alcibiades on Fri 31st Aug 2007 18:29 UTC in reply to "RE[3]: I agree"
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We are getting a little off topic, but the crash of '29 was not caused by competition. It was caused by a previous government sponsored credit bubble starting in the early years of the century. If you want to understand it, research the effects of the founding of the Federal Reserve on bank reserve requirements and lending ability, in Murray Rothbard's book, available online. The depression which followed was also not caused by any lack of regulation. The standard account now is that it was largely caused by the actions the government took during the New Deal to decrease competition and keep prices up. The inevitable result was, output fell.

The US started to emerge from the depression with the arrival of the second phase of the New Deal in the late thirties - complete with trust-busting, enforcement of pro competition law, abolishing of price cartels and similar market rigging collusions. It was in fact competition which got the US out of it.

You mention Worldcom and Enron. You could also mention the subprime fiasco. This too, like the South Sea bubble in England, or the Mississippi Bubble in France, is the result of a government sponsored credit bubble. We seem to have them in the West roughly once ever 70-100 years. The reason they are so infrequent is they teach a lesson which stays in the memory for two generations at least.

The third generation, like those now blaming deregulation for Enron, has forgotten history, and so is condemned to repeat it. But not in exactly the same form. Derivatives replace Investment Trusts. Options replace bear and bull pools. Housing replaces stocks. The result is however very similar and equally dire.

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