Monopoly

I might regret posting this blog some day...

A couple of days ago, I decided to browse through my Microeconomics textbook for twenty minutes and I stumbled upon an article that discusses Microsoft´s monopoly. It said in the article that Microsoft is guilty of killing its early competitors such as Netscape by adding MSIExplorer to its OS package. It is quite interesting since I am really curious about the power of monopoly companies.

In the Philippines and most countries, monopoly companies usually render household necessities such as electricity, water, supposedly oil but it was deregulated during the Aquino administration, etc. Other basic needs are encompassed in the competitive market where there is small margin profits and where businessmen would easily say, "Hmmmf! To hell with that." And most of these monopolies are government regulated.

I cannot help it but admire the people who are able to capture a significant amount of market share and are able to sustain its dominance by increasing the barrier of entry so as to eliminate competitors. I commend them for their brilliance. I do not have any issues with Microsoft's dominance of the computer software market. I love Microsoft! I like Bill Gates too. I do not have any problem with Buffett's dominance of a newspaper company nor do I have a problem with San Miguel's apparent strength in the local brewery. I think they are doing a fantastic job and their efforts are giving them significant power to increase profit margins.

However, I do disagree with a couple of things regarding monopolies. For one, they tend to polarize people too much. Polarizing people is a good thing. You must produce a product that would be likened by a lot of customers with different tastes. The downside is it becomes detrimental to people's creativity and the variety that one would expect to find in the marketplace. People would love to have choices.

Allow me to digress, I am a big fan of democracy. In my opinion, if it could be implemented in a Plato environment, that is ideal environment, it is probably the best system of government because it has checks and balances; it empowers the people through suffrage; and it allows for a balanced distribution of power among its members. Now, it may not work because of cultural deficiencies and whatnot but I am just saying that if it could be used optimally and properly, it is the best government system! Now, the reason why I like democracy is amplified by my strong dislike of communism. In my personal opinion, I think communism especially if it is enforced fully would create the worst society ever given to man. For one, to completely surrender all your rights to the government is really wrong. To make things worse, to allow the government to assign your specialization, clothing and designation is pretty much utmost suppression of one's personhood! And this brings me to why I find dissatisfaction in monopolies especially if they are providers of basic needs.

No matter what price is set, if one really needs it, he/she would buy it. This is the explanation for the inelastic demand for necessities. No matter how bad a product is made, if it is the only one available, one would buy it. Lastly, no matter how many protest and cries people do for lowering the prices and increasing the quality of the products and/or services being provided, they can't do anything. Sad but it is true or would be true. The capability of monopolies to suppress people demand and act in a mediocre manner and still profit scares the hell out of me. Imagine living that life. Paying a high price to a bozo who can't do s**t really. That would suck.

Think of things this way. Why are we paying so much money for gas just because the OPEC is limiting its production? This is what I would call monopoly of energy source. And as we could see, entry to energy provision is really difficult for companies. Why is that? Because cars work with gasoline and diesel! Same thing for Microsoft! I personally use Linux and Microsoft in my computer. I would love to use Linux and let go of Microsoft despite my love for it because it is too freaking expensive. However, I cannot simply do it. Why? Because my printer, wireless lan, webcam,MP3 player, YM and a lot of other necessities do not work with Linux! And I do not have the necessary skills and... well... patience actually... to look for the kernels and install them via Terminals that I think is worse than MS-Dos.

So, there. I actually might have more reasons why I do not like monopolies but I am already lazy to recall them. Don't get the wrong notion though. I admire monopolies and I have high respect for the founder of companies that are able to dominate a market. However, I just feel bad that the consumers are left with their hands tied buying whatever is available.