Anti Trust Part Two

In Part two I will go over such cases as the Alcoa Case, Borden Case, and Californias 2001 energy scare. Read part One HERE

ALCOA CASE (1945)

The Aluminum Company of America was one of the few corporations which successfully attained and held a monopoly on a product. This of course depends on how the market is defined. It is true that because of certain production patents Alcoa owned they were able to become the only producer of ‘primary’ aluminum, this they were able to hold for almost 20 years. In 1888 aluminum had no known uses, although its potential was obvious. The main problem was the extreme expense and the scarcity of the product. In the beginning, it would cost $5 to $8 dollars per pound, and Charles Hall (the man who discovered and patented the first commercial method for making aluminum) was unable to get more than 10 pounds produced a day. Because of this expense aluminum ingots were all but obsolete since it was unable to effectively compete with cheaper substitutes. However, by extremely effective entrepreneurial efforts they were able to produce 50 pounds a day by 1889, and over 1000 pounds a day in 1892, and by 1897 over 8000 pounds a day. Subsequently the price fell from $5 dollars in 1887 all the way to 37 cents by 1910, and by 1941 it fell all the way to 15 cents a pound.[1] Through Alcoa’s own ingenuity they were able to promote several uses for its product including; metal in the wire industry, for surgical instruments and other medical apparatus, and for fabrication into cooking utensils.

Alcoa was also accused of practicing many discriminatory business practices, but once again the facts tell another story. The making of aluminum ingots was very difficult and there are certain natural resources which were, and still are, needed. One claim against Alcoa was that it had monopolized bauxite deposits (used for mining the ore). Another claim was that they had monopolized water power sites, also that they conspired with a foreign cartel of producers.

The first case against Alcoa brought about by the Federal Trade Commission in 1925 was found to be in favor of Alcoa. The FTC examiner proved that Alcoa did not have a monopoly on bauxite deposits “there being sufficient supplies of bauxite in the world, exclusive of respondent’s holdings.” Also that Alcoa did not hold a monopoly on water power as “its holdings now being only a small percent of the available water power in the world.” Lastly it was found that Alcoa “never attempted to control and does not now control the market for foreign aluminum in the U.S”[2]

So this begs the question, why was Alcoa, after already being found innocent of all the claims, suddenly in 1945 convicted of being a monopoly and forced to break apart? Due to the lengthy and complex nature of the lawsuits against Alcoa a special act was passed on June 9th, 1944 which allowed a U.S. Circuit Court of Appeals to hear the case rather than the Supreme Court. The previous court of appeals found that if the market is defined not only by ‘primary’ ingot but also including secondary or ‘scrap’ ingot (also highly used at the time) Alcoa’s market share was a mere 33 percent, hardly a monopoly. The new Judges, headed by Judge Learned Hand, thusly reduced the relevant market to include only virgin ingot, which Alcoa was the sole supplier of in America. Alcoa supplied 90 percent of the virgin ingots in America, 10 percents came from foreign supplies. As Dr. Armentano shows

This broke familiar legal and economic guidelines as to the meaning of
‘monopolize’ and to the ‘relevant’ market under consideration. A relevant market
for a product ‘should include all firms whose production has so immediate and
substantial an effect on the prices and production of the firms in question that
the actions of the one group cannot be explained without direct reference to the
other. One should include in a market all firms whose products are, in fact,
good and directly available substitutes for one another in sales to some
significant group of buyers and exclude all others.[3]

So in essence, Judge Learned Hand had basically changed the way monopolies were discussed at the time, minimized the relevant market share and because of this came to the conclusion that in this skewed view of the market, Alcoa now was a monopoly. Once again the reality showed something different, Alcoa had in fact reduced prices and increased output, Judge Hand was condemning Alcoa for being too efficient and too good. In Judge Hand’s famous indictment of Alcoa he said:

It was not inevitable that it should always anticipate increases in the demand
for ingot and be prepared to supply them. Nothing compelled it to keep doubling
and redoubling its capacity before others entered the field. It insists
that it never excluded competitors; but we can think of no more effective
exclusion than progressively to embrace each new opportunity as it opened, and
to face every newcomer with new capacity already geared into a great
organization… (Emphasis mine)[4]

By condemning our most productive members of society for being too good and too efficient we are distorting the best use of our capital in America, while at the same time endorsing less efficient business practices and condemning the best within us. It is impossible for a businessman to start a business and know ahead of time whether or not he is going to break some arbitrary anti-trust law and go to jail or lose his investment. This brief history illustrates where anti-trusts have come from and two of their most disastrous cases, now it is important to understand the main underlying themes that are regularly attacked by anti-trust legislation.

VERTICAL AND TYING AGREEMENTS

In order to understand some of the damage anti-trust has caused it is important to get a full grasp on a few of the supposed negative consequences of a free and open market. The idea that a company will rise up and eventually gain enough power to discriminate in price and make vertical, and tying agreements is in actuality not a bad thing but in many cases a very effective way to allocate resources to their most efficient uses.

THE BORDEN CASE

Price discrimination is when some firm sells a product, usually homogeneous to different buyers at different prices Dr. Armentano’s case study of The Borden Evaporated Milk Case shows the irrationalities of attempting to enforce laws against price discrimination. In 1958 Borden was indicted for selling their product to different buyers at different prices. They had charged a smaller price for their milk that they had packed and sold to private-label customers than what they had charged for its own Borden brand of milk in retail stores. It is true that the milk sold to both buyers was chemically the same, ‘consumer perception’ of that same milk sold at retail was definitely not the same. “Consumers were willing to pay more for the Borden brand of evaporated milk than for milk packed by Borden but sold under various private labels.”[5] The reason for this is that Borden had at that point established a high reputation for their products. When Borden sold their products to private label companies their responsibility ended when the product left their factories, with their own product they were highly controlled on how they maintained the quality of milk they sold to their retail consumers. As Armentano notes the most important aspect of this case was that no one was injured by the lower prices charged to private-label distributors. Borden’s private-label costumers did not suffer by having a cheaper product, and Borden’s own costumers did not suffer by purchasing a high quality well known brand for slightly higher, especially when they could have switched to a cheaper brand of evaporated milk if they chose, also Borden only maintained an 11 percent market share in the Midwest.

The main complaints came from smaller less efficient Midwest firms who were losing business because of Borden’s efficiency. What had occurred is what happens nearly every time with anti-trust legislation, some smaller company complaining of a larger company that is lowering prices and providing a better product to their costumer’s, which is in turn negatively effecting their business. In fact over 90 percent of all anti-trust lawsuits are brought about by one private company suing another company.[6] Although the case was dismissed in 1967 this began to lead anti-trust legislation in a new direction, that of protecting high-cost rivals against lower-cost and more efficient companies.

CALIFORNIA’S 2001 ENERGY CRISIS

In 2001 there was a great scare that California, specifically the prosperous Silicon Valley, would possibly be shut down. That event could have shut down America’s whole economy. The reasons lauded at the time were the so called deregulation of the energy market in California. A bill was introduced to alleviate the problem, AB 1890. The fact is that bills like AB 1890 did not deregulate but simply shift regulations, and actually added a vast array of new regulations on power generators and distributors. AB 1890 is another attempt to reign in some form of ‘pure competition.’ Under AB 1890 it is not possible for energy companies to combine their generation with their distribution business. Editor of The Intellectual Activist Robert W. Tracinski said in an article,

They were forced to sell off many of their power plants. Any power they still
generated on their own had to be sold on the open market at prevailing prices –
with no special discounts for themselves. The result is that power distributors,
like Pacific Gas and Electric (PG&E) and Southern California Edison, were
made utterly dependant on the prices charged by independent generators. They
couldn’t fall back on their own, less-expensive supply.[7]

The other detrimental aspect of AB 1890 was to restrict long term contracts. This section of the bill would not allow a company to negotiate certain contracts which are vital to their organization. These long term contracts allow for the companies to lock-in a price agreement to protect themselves from sudden price changes in their industry. This however is perceived to give them ‘market power’ so it is not allowed. The last of the important intrusions into the business sector AB 1890 allowed for was to cap the price power distributors could charge. This is because under the anti-trust theory of ‘perfect’ competition, prices will always go down. The end result was that when prices spiked power distributors were unable to raise prices and this caused a shortage in the supply of energy, which resulted in the rolling blackouts and the scaring of the American public with thoughts of their biggest money makers having to ‘shut down.’

The lesson here is that anti-trust legislation doesn’t always have to be specifically used in order to affect all types of industries. It is the ideologies behind anti-trust legislation which need to be refuted.[8]

MICROSOFT AND MARKET SHARE

In the majority of anti-trust cases a few terms are used loosely, such as what constitutes a monopoly and what a company’s market share really is. For example in the Microsoft case at the turn of the century Microsoft’s market was defined as “that for computer operating systems for stand-alone personal computers using microchips of the kind manufactured by Intel.”[9] This narrowly defined market share completely left out any relevant competitors such as the operating systems used by Apple as well as other operating system competitors produced by; Sun Microsystems or the Linux system for stand-alone computers. The companies who have effectively defined Microsoft’s market share this way were able to prove that Microsoft had a dominant market share and thusly a monopoly power. In order to fully understand the Microsoft case it’s vital to know the history of the governments ‘assault on Microsoft.’

Beginning in 1990 the Federal Trade Commission began to investigate Microsoft, but did not file any charges. Because the FTC is charged with ‘policing’ so-called unfair practices this investigation helped lead to the subsequent anti-trust laws Microsoft had to deal with in later years. It was later found by the Justice Department that because Microsoft ‘per processor licensing fee had a 2 year lease on it this discouraged the manufacturers of PC’s from installing competitive software, which lead to the ‘unfair’ harm on rival software companies. Instead of dealing with a long legal debate Microsoft decided to shorten its 2 year leases to 1 year.

Almost immediately thereafter Microsoft was under new anti-trust litigation for tying its products. Microsoft was not accused of increasing prices or for reducing output, they were explicitly accused of the exact opposite.

The anti-trust lawsuit, however, did not accuse Microsoft of jacking up prices
unconscionably, in the classic manner of monopoly theory. Rather, Microsoft had
added an Internet browser to its Windows operating system free of charge,
undermining rival browser producer Netscape.[10]

Yet somehow the anti-trust enthusiasts claimed this harmed consumers because it harmed competition. The fact is, what Microsoft had done was succeed at beating out its rivals and was therefore condemned for their actions. Competition can be defined as “the effort of two or more parties acting independently to secure the business of a third party by offering the most favorable terms”[11] Microsoft was not engaging in any evil business practices by offering their customers to purchase their product which would include a free internet browser on top of their other services; the only ones harmed would be internet browser companies such as Netscape, who helped initiate the suit. The Microsoft lawsuit was a blatant protectionist attempt. In 1998 however, the lawsuit was found in favor of Microsoft. Afterwards, the Department of Justice and twenty states filed an anti-trust suit against Microsoft. The reason for their lawsuit was that the ‘aggrieved’ claimed Microsoft had an unfair monopoly in operating systems. Again, this unfair monopoly was using the loose and narrowly defined market for Microsoft, and a loose definition of monopoly. To determine whether or not Microsoft actually had any real monopoly it is necessary to properly define what a monopoly is. In reality a perfect monopoly would have a complete control of all supply of a product in a well defined market which had strong legal barriers to entry.[12]

A couple facts, even in their narrowly defined market Microsoft only had 90 percent of the operating system licensing for PC’s. There were also no legal barriers to entry and there were several rather large operating system competitors. The problem is, many proponents of anti-trust claim that a monopoly is any company that has a 70 percent market share; again this depends on how the market is defined. In an article by Professor Thomas Sowell he showed the ‘economic’ reality of market share. Explaining that during the time of the trial the city of Munich had ‘replaced Microsoft Windows with a Linux operating system in 14,000 of its computers.”[13] This showed that Microsoft was most definitely under pressure from competitors and did not have any relevant monopoly.

The use of these ‘murky’ and ever shifting definitions are where anti-trust legislation gets most of its power. Under the Sherman Act a ‘monopoly’ is not illegal per se, it is ‘monopolization that is made illegal. So even if a company is producing a superior product, is cutting costs, reducing prices, and increasing output they can be prosecuting under anti-trust legislation. What needs to be found out is whether or not the company achieved their monopoly through free enterprise ingenuity and business foresight, or through scrupulous business practices such as receiving special government franchises, patents, and subsidies. When looking at Microsoft it is apparent that the company achieved its market share through aggressive innovation and by promoting their standardized operating system that included various other applications. These applications included; file sharing, fax utilities, network support and more. These applications were previously purchased separately, which cost consumers more. Microsoft had effectively integrated all of these services into a ‘bundle’ package which consumers obviously enjoyed. This was the real source of any of Microsoft’s power, and did not exclude others from coming into the market and innovating their own operating systems, which is what now is occurring.

So in the end by defining the market share so narrowly and having such a shifty definition of monopoly we have allowed one of America’s most innovative companies to be greatly harmed. The effective allocation of resources was once again forced to flow to less efficient venues. Instead of allowing Microsoft to offer a superior, cheaper product through free trade, anti-trust laws have forced consumers to continue to purchase their web browsers separately, in effect costing them not only cash but resources which could have shifted to more useful avenues.

CONCLUSION

If our goal as an economy is the most efficient allocation of scarce resources which have alternative uses, then the only way to allow for such efficiency is to ensure that those in our economy who are risking their capital, time, and energy are free to do whatsoever they can to increase productivity, reduce costs, reduce prices and also increase output which will moreover allow these companies to effectively compete in an open and free market. As long as there is no interference into the marketplace from the government, and the only thing the government is allowed to do is protect individual rights, through ensuring fraud is punished and patents are protected. Then if this is our goal it is important to not only refute anti-trust legislation but the ideology behind them.

Business practices such as; price collusion, price discrimination, mergers, tying and others allows for companies to stay on the ‘competitive’ edge. It does not lead to some coercive monopoly where a company is able to ‘force’ out other companies and ensure there are no new entrants into their market. The only organization which has a monopoly on force is the government, and only through government power are monopolies ever possible.

By allowing anti-trust legislation to continue we condemn business men to being guilty for the mere fact that they are in business. As philosopher Ayn Rand summarized:

Under the [U.S.] antitrust laws, a man becomes a criminal from the moment he
goes into business… if he charges prices some bureaucrats judge as too high, he
can be prosecuted for… ‘intent to monopolize’; if he charges prices [too low],
he can be prosecuted for ‘unfair competition’ or ‘restraint of trade’; and if he
charges the same price as his competitors he can be prosecuted for ‘collusion’
or ‘conspiracy’[14]

Any corporation that is allowed to produce freely will inevitably act in their own best interest, and their best interest will be the best interest of their customers. Since a company can only offer products better and cheaper than the competition there can be no way to force any individuals to purchase their product and help continue them on the way to monopoly prices. The shoulders’ on which all our lives depend, the producers, are under constant attack and we must as free people protect these individuals who give us so many life enhancing and life saving products and services. The Henry Fords, John D. Rockefellers, Andrew Carnegies, Bill Gates’ and more are not to be lauded as evil greedy businessmen, but to be rewarded and applauded for their business ingenuity and innovativeness.

ENDNOTES

[1] Armentano Dominick T. Antitrust and Monopoly: Anatomy of a Policy Failure [Book]. - New York : John Wiley & Sons, Inc, 1982. Pgs 100-103

[2] Armentano Dominick T. Antitrust and Monopoly: Anatomy of a Policy Failure. Pg 104

[3] Armentano Dominick T. Antitrust and Monopoly: Anatomy of a Policy Failure. Pg 111

[4] Greenspan Alan Antitrust pg 72

[5] Armentano Dominick T. Antitrust: The Case for Repeal. Pg 72

[6] Paul Ron and Armentano Dominick Anti-Trust and monopoly [Interview]. - Jul 13, 1983.
[7] Tracinski Robert W. Capitalism Magazine [Online] // Capitalism Magazine. - Jan 22nd, 2001. - Oct 14th, 2008. - http://www.capmag.com/article.asp?ID=159.
[8] Cunha Mark Da Capitalism Magazine [Online]. - June 10th, 2001. - Oct 14th, 2008. http://www.capmag.com/article.asp?ID=922
[9] Sowell Thomas Basic Economics: a Common Sense Guide to the Economy 3rd edition [Book]. - New York : Basic Books, 2007. Pg 156
[10] Sowell Thomas Basic Economics: a Common Sense Guide to the Economy 3rd edition Pg 156

[11] Armentano Dominick T. Antitrust and Monopoly: Anatomy of a Policy Failure. Pg 14

[12] Armentano Dominick T. Antitrust: The Case for Repeal

[13] Sowell Thomas Capitalism Magazine [Online] // Capitalism Magazine. - June 28th, 2003. - Dec 13th, 2007. - http://www.capmag.com/article.asp?ID=2892.
[14] Rand Ayn America's Persecuted Minorty: Big Business [Book Section] // Capitalism: The Unknown Ideal. - New York : Signet, 1961

Anti-Trust Part One

There are a set of laws in America that are believed to increase productivity and efficiency in the economy. These laws are called anti-trust laws, and they include; The Sherman Act, The Clayton Act, The Federal Trade Act and many more. The ideologies and their subsequent laws have subjugated our best producers to irrelevant and counterproductive practices. Alan Greenspan in 1961 called the anti-trust laws “reminiscent of Alice’s Wonderland: everything seemingly is, yet apparently isn’t, simultaneously. It is a world in which competition is lauded as the basic axiom and guiding principle, yet ‘too much’ competition is condemned as ‘cutthroat.’”[1]

Anti-trust in essence is a set of laws to ensure that competition is kept on a more even keel. That there can be no business which comes to power and ‘monopolizes’ any industry i.e. has complete control over said industry. Anti-trust legislation derives much of its intellectual power from a few ideas. One being the idea of ‘pure’ or ‘perfect’ competition; this is the idea that the best and most efficient market is one in which there are many sellers of a product all who make no real profit and who have absolutely no effect on the market price. Economists for over a hundred years have been building models off of this idea, coming to conclusions based off faulty assumptions. Some of the assumptions used, by economists, are noted in Dr. Armentano’s book Antitrust and Monopoly: “The model begins by assuming that a substantial number of small firms already exist in some relevant market, and that they are already producing homogeneous products.”[2] As was said earlier these atomistic firms have no control over the market price since the products are all homogenous (the products are the same in the eyes of the consumers). This also means that although in the short run some economic profits are possible, under these assumptions in the long run what is called “normal” profits will occur. Normal profits means marginal revenue will equal marginal costs and there will be no real profits made in an industry because entry and exit into this particular industry is open and easy.

The idea of a ‘pure’ competitive market is not what most economists believe is absolutely necessary. They do not think that the market needs to be so extremely competitive, in this sense, but simply that they use this idea as a benchmark to determine efficiency. They claim we need certain regulatory policies to help us bring in a more ‘purely’ competitive market.

Another area these legislations get their power from, which also derives from the ‘pure’ competition idea, is the idea that such things as mergers (vertical), tying agreements, gouging, product differentiation, advertising, price discrimination and more are all considered detrimental to a free and pure competitive market. Anti-trust laws are set out to destroy these business practices.

The Sherman act of 1890, which is the first industrial policy in America, had an effect on American businesses which is almost impossible to fully perceive. The way in which the law is stated and implemented is all but impossible to actually follow within the guidelines, in other words, the Sherman Anti-trust Act is absolutely arbitrary. To quote section two of the Sherman Act “Monopolizing trade a felony.”:

Every person who shall monopolize or attempt to monopolize, or combine to
conspire with any other person or persons, to monopolize any part of the trade
or commerce among the several states, or with foreign nations, shall be deemed
guilty of a felony. (Emphasis mine)[3]

As Greenspan said in his essay:

No one will ever know what new products, processes, machines, and cost-saving
mergers failed to come into existence, killed by the Sherman Act before they
were born. No one can ever compute the price that all of us have paid for that
Act which, by inducing less effective use of capital, has kept our standard of
living lower than would otherwise have been possible.[4]

By implementing this law America has subjected the producers to the whim of any judiciary or politician who wishes to ‘make an example’ of those who they perceive are being greedy or unethical in some manner.

The Clayton Act of 1914 specifically stopped tying agreements and mergers that would allow a company to attain a ‘majority’ of the market. A tying agreement is when one company leases or sells a product with the sole agreement that the purchaser shall buy or lease some other product sold by the producer. Mergers, usually either horizontal or vertical, are also condemned. Vertical mergers occur when a manufacturer of some product purchases the distribution centers for its products such as the retail stores that sell it. One of the largest and best known of this type of merger was the Standard Oil Company which had in effect owned almost everything needed to produce and distribute their product, kerosene.

Proponents of anti-trust legislation explain that horizontal agreements; such as joint ventures, price agreements and horizontal mergers, are a root cause for economic inefficiency which can reduce output and increase price. Generally this is taken into effect using what is called the ‘rule of reason’ in which the courts decide the probable social costs possibly being lost if the merger is not allowed. The social costs can be very high; these mergers can bring about substantial cost savings in production and distribution, also in industrial research and product development. Also they may come up with entirely new products and services that might otherwise not be possible.

HISTORY

The idea that there was a need for the government to interfere in the market in order to ensure there was this ideal type of competition, mainly started after the Civil War. The railroads played a big hand in the coming of anti-trust legislation and over one hundred and forty years of government interference in the business sector. In the eastern United States before the civil war the railroads had to deal with heavy competition. This not only included other railroads but also other forms of transportation, including barges, riverboats, and wagons. In the 1860’s there was an outcry to move the railroads to the west, and therefore connect California to the rest of the country. The railroads however, did not see enough profit in building all that was needed to make the move to California, especially not simply for ‘the public interest.’ This brought about the government subsidizing the railroads and in essence giving them the edge they needed to become a monopoly. During the time between 1863 and 1867 the Federal government granted the railroads close to one hundred million acres of public lands, and these lands granted were given to specific individually owned railroads, which gave that particular company the ability to break away from the competition of the other railroads, as well as the other forms of transportation.[5]

These government aided railroad companies in the west were able to act like a ‘true’ monopoly in the very textbook sense of the word. Again, this arbitrary power they had accrued was made possible exclusively because of the government interference into the transportation industry. As the west grew however, it opened up the transportation field to more competition, which the railroads had a hard time dealing with. This is where an “Ominous turning point had taken place in our economic history: the Interstate Commerce Act of 1887”[6] This act in effect allowed the government to all but fully control the railroad industry. It is still thought to this day that these regulations were necessary because of the obvious monopoly the railroads had, but the reality is that the monopoly the railroads were able to attain came directly from government interventionist policies. This then lead to the belief that the government had to continue to regulate the business industry. These same beliefs eventually led to Americans fear of the formidable “trusts.” A trust is a legal entity that owns several smaller companies each with their own duties in the larger trust. The most formidable and well known of these was the Standard Oil Trust ran by John D. Rockefeller.

THE MYTH OF THE STANDARD OIL MONOPOLY

The majority of the myth of the greedy and monopolistic company Standard Oil actually stemmed from a woman named Ida Tarbell a journalist in the early 20th century. Ms. Tarbell perpetuated the myth that before Rockefeller came on to the scene the petroleum industry was a perfectly competitive market and the men involved all enjoyed great and prosperous lives. Ms. Tarbell tells with vivid detail of the men, using many real names, which had been involved and had enjoyed with confidence their achievements, and she exclaims that these men looked forward to the future of their industry with eagerness and joy, then, as Tarbell explains it:

…Suddenly, at the very heyday of this confidence, a big hand [Rockefeller’s]
reached out from nobody knew where, to steal their conquest and throttle their
future. The suddenness and the blackness of the assault on their business
stirred to the bottom their manhood and their sense of fair play.[7]

This view propelled the hatred for large trusts and especially Standard Oil. This is still believed mostly true to this day. As philosopher Alex Epstein explains in his article Vindicating Capitalism: The Real History of the Standard Oil Company. “Pick a modern history or economics book at random and you are likely to see some variant of the Lloyd/Tarbell narrative being taken for granted.”[8]

Standard Oil was accused of many things including; predatory pricing, receiving special rebates from railroads, collusion, and more. As the story continues these ‘predatory’ and ‘anti-competitive’ practices forced companies to sell their holdings to Standard Oil or risk losing everything. It was almost as if Rockefeller was holding a gun to their heads. This idea has convinced the majority of people that in a openly free market it is possible for a corporation to come into existence that will take over all else and become a ‘coercive’ monopoly, similar to the power a government has.

Ron Chernow author of the popular Rockefeller biography Titan; says, “[Rockefeller] had taught the American public an important but paradoxical lesson: Free markets, if left completely to their own devices can wind up terribly unfree.”[9]

As Epstein explains this is “the logic behind antitrust law, in which government uses its political power to forcibly stop what it regards as ‘anticompetitive’ uses of economic power.”[10]

This standard story of the Standard Oil Company is completely false, Standard did not ever have a monopoly, the company was still subject to the laws of supply and demand, and the railroad rebates they received were not evil business practices but the product of extremely good foresight and ingenuity. Moreover, Rockefeller’s Standard Oil revolutionized the way business was conducted and led the way to the ever increasingly high standard of living American’s today enjoy.

Before Standard came on the scene most people had to light their houses with sperm whale oil, which was very expensive, usually only the rich could afford such things. The majority of the world had to stop any productive activities once it got dark. Once petroleum was discovered to have certain properties to allow for long lasting light, mainly kerosene, it allowed for a whole new world to open up. People now had easier access to light and could enjoy such activities as reading at night, among other amusements, especially in the winter season.

At the beginning of the petroleum industry the process of refining and distributing kerosene was, as expected, very crude. The refiners had used, for storage, expensive barrels costing upwards of $2.50 a barrel; they would then load them onto barges, wagons or railroads, each having to make numerous stops, since the majority of these refiners could only produce a few barrels at a time. Along the way to their destination, these barrels would often fall off, leak, and even explode. Even after finally making it into the homes of customers the kerosene would still explode and kill many people, this was a huge problem in the 1860’s and even 70’s. This problem is actually the reason Rockefeller named his company ‘Standard Oil.’[11] These early refiners also were very inefficient in the distillation of crude oil. Usually using only a small fraction of the actual oil, the fraction was usually kerosene, and the rest was thrown away.

Rockefeller came on the scene and almost immediately began cleaning up the mess that was the petroleum industry. Some of the major accomplishments are diametrically opposed to the rhetoric most hear on the subject of Standard Oil. For one, Standard did not restrict output nor did it stop any new competition from entering the market. A little known fact is that Standard’s market share in petroleum refining declined from “roughly 85 percent in 1890 to 64 percent in 1911. In 1911, at least 147 refining companies were competing with Standard, including such large [vertically integrated] firms Gulf, Texaco, Union, Pure, Associated Oil and Gas, and Shell.”[12] It is interesting to note that when the anti-trust case against Standard was initiated in 1911 all this was going on. Yet Standard was still forced to break up their holdings and was put at a large disadvantage with their competitors, at no real fault of their own. Another important fact to note was that instead of the popular myth that Standard had achieved a monopoly power and thusly began to raise prices, it did the exact opposite. Standard had lowered costs and consequently lowered prices, “Prices for kerosene fell from 30 cents a gallon in 1869 to 9 cents in 1880, 7.4 cents in 1890, and 5.9 cents in 1897.”[13]

What happened to Standard is very logical when looked at in a historical setting. There was a large shift in two areas which affected Standard. One was the invention and mass production of the light bulb and the subsequent electricity boom. This had a large impact on Standard Oil mainly because the company’s main revenue source, kerosene, was becoming more and more obsolete. The second source of a shift away from Standard Oil was the different uses for crude oil, Standard had a hard time keeping up with; this of course was the use of gasoline. What all this shows is that anti-trust legislation was not the cause of Standard’s decline, but the open and free market was.

If one is to try and study Standard it is important to first understand what Standard oil specifically did to improve upon the industry. When Rockefeller first invested in the refining of oil in 1863 he did not set up shanty refineries as did most people at the time, he instead invested and created the largest refinery in Cleveland: Excelsior Works. Almost immediately Rockefeller was improving the distillation process and was soon producing more than 505 barrels a day in opposition to most refiners at the time who were only producing around 5 barrels a day. He also bought land for his refinery in a place where he would be able to ship his oil by land and sea, which would come in handy later on when Rockefeller was negotiating with the railroads.

Probably one of the most important characteristics of Rockefeller was his keen accounting skills. He was able to drastically cut costs throughout his whole reign at the helm of Standard Oil. One way in which he accomplished this was by cutting costs of transporting oil in barrels. Instead of relying on the ‘unreliable’ barrel makers he simply began making his own barrels, this helped drop his costs for barrels from $2.50 to under $1 a barrel. He also hired and trained his own purchasing agents, “which eliminated the need for paying ‘jobbers’ (purchasing middleman)”[14]

All in all, Rockefeller’s Standard Oil Company did not monopolize nor destroy any industry. He in fact revolutionized the industry, cut costs, increased output, and drastically reduced prices; he also invented the idea of companies investing in research and development. For this he was punished and forced to break apart a business he spent a lifetime building. The impact of anti-trust laws on Standard Oil was very drastic, but unfortunately not the only time it has happened. It has happened repeatedly and dramatically throughout the history of anti-trust legislation. As was shown above Standard did indeed vertically integrate its operations, but this was not a ploy that was worthy of condemnation, but was worthy of praise. Standard achieved rebates from railroads not through so-called ‘scrupulous’ business practices, but through ingenious foresight and great business sense. In essence it was not any wrongdoing that Standard was condemned but in its efficiency.

Another famous anti-trust case, the Alcoa case of 1945, also illustrates the wrongdoing of these set of laws and the damage that occurs to businessmen’s lives.

In Part Two I will briefly go over other famous cases such as the Acloa case of 1945, The Borden Case, and some of the reaons behind California 2001 Energy crisis, including some other rather mushy problems these ideals incur.

ENDNOTES
[1] Greenspan Alan Antitrust [Book Section] // Capitalism: The Unknown Ideal / book auth. Rand Ayn. - New York : Signet, 1967. Pg 63
[2] Armentano Dominick T. Antitrust and Monopoly: Anatomy of a Policy Failure [Book]. - New York : John Wiley & Sons, Inc, 1982. Pg 15

[3] Anthony D. Becker Ph.D. The Antitrust Case Browser [Online]. - April 16th, 2004. - Sept 9th, 2008. - http://www.stolaf.edu/people/becker/antitrust/index.htm.
[4] Greenspan Alan Antitrust. Pg 71

[5] Greenspan Alan Antitrust. Pg 64-65

[6] Greenspan Alan Antitrust Pg 65

[7] Tarbell Ida THE HISTORY OF THE STANDARD OIL COMPANY [Online]. - 1904. - Oct 10th, 2008. - http://www.history.rochester.edu/fuels/tarbell/MAIN.HTM. Pgs 36-37
[8] Epstein Alex Vindicating Capitalism: The Real history of the Standard Oil Company [Journal] // The Objective Standard. - 2008. - pp. 29-65.
[9] Chernow Ron Titan [Book]. - Vintage : Random House, 2004. Pg 297
[10] Epstein Alex Vindicating Capitalism: The Real history of the Standard Oil Company

[11] Epstein Alex Vindicating Capitalism: The Real history of the Standard Oil Company
[12] Armentano Dominick T. Antitrust: The Case for Repeal [Book]. - Auburn : Ludwig Von Mises Institute, 1999. Pgs 40-43
[13] Armentano Dominick T. Antitrust: The Case for Repeal. Pg 41

[14] Epstein Alex Vindicating Capitalism: The Real history of the Standard Oil Company

[15] Armentano Dominick T. Antitrust and Monopoly: Anatomy of a Policy Failure [Book]. - New York : John Wiley & Sons, Inc, 1982. Pgs 100-103

[16] Armentano Dominick T. Antitrust and Monopoly: Anatomy of a Policy Failure. Pg 104

[17] Armentano Dominick T. Antitrust and Monopoly: Anatomy of a Policy Failure. Pg 111

[18] Greenspan Alan Antitrust pg 72

[19] Armentano Dominick T. Antitrust: The Case for Repeal. Pg 72

[20] Paul Ron and Armentano Dominick Anti-Trust and monopoly [Interview]. - Jul 13, 1983.
[21] Tracinski Robert W. Capitalism Magazine [Online] // Capitalism Magazine. - Jan 22nd, 2001. - Oct 14th, 2008. - http://www.capmag.com/article.asp?ID=159.
[22] Cunha Mark Da Capitalism Magazine [Online]. - June 10th, 2001. - Oct 14th, 2008. http://www.capmag.com/article.asp?ID=922
[23] Sowell Thomas Basic Economics: a Common Sense Guide to the Economy 3rd edition [Book]. - New York : Basic Books, 2007. Pg 156
[24] Sowell Thomas Basic Economics: a Common Sense Guide to the Economy 3rd edition Pg 156

[25] Armentano Dominick T. Antitrust and Monopoly: Anatomy of a Policy Failure. Pg 14

[26] Armentano Dominick T. Antitrust: The Case for Repeal

[27] Sowell Thomas Capitalism Magazine [Online] // Capitalism Magazine. - June 28th, 2003. - Dec 13th, 2007. - http://www.capmag.com/article.asp?ID=2892.
[28] Rand Ayn America's Persecuted Minorty: Big Business [Book Section] // Capitalism: The Unknown Ideal. - New York : Signet, 1961

Gun Control Facts and Fallacies

Talking facts often lead to heated and unfounded debates among those who wish to enforce their lifestyles upon others. Gun control zealots often spout the rhetoric that because England has stricter gun control laws and lower murder rates than The United States, the gun laws obviously are the difference. However, one can easily compare Germany to Switzerland and discover that gun ownership is three times as high in Switzerland, yet the Swiss have a much lower murder rate. This is true in many other countries as well: Israel, New Zealand and Finland, for example. Rural Areas in the United States have higher rates of gun ownership, and lower murder rates. And, for the country as a whole, gun ownership doubled in the late 20th century followed by a decreasing murder rate. Stricter gun laws create more death. This is a simple fact, based upon dozens of empirical studies. These facts are rarely commentated on in the media, however.

The fallacious arguments continue. The media and anti-gun advocates argue guns serve only one purpose, to kill. This is true, but there is also a reason guns are considered “the great equalizer.” Many gun control advocates claim the atrocious shootings of Columbine, Virginia Tech, and more are caused by a lack of gun control laws. Once again this comes in direct conflict with facts and logic. It is gun free zones where American’s are the least safe. All of the following areas were gun free zones where the only person with a gun was the shooter: New York City Pizza shop (employee shot 15 times, two officers killed), The Amish West Nickel Mines School in Pennsylvania (5 children murdered), Columbine (killing 13 and injuring 23), Virginia Tech (32 killed and many injured), and finally Luby’s Cafeteria in Killeen, Texas where Dr. Suzanne Gratia Hupp complied with the gun free zone law and placed her gun in her glove compartment before entering the restaurant (23 murdered, 20 injured –Dr. Hupp had to watch her parents being murdered, fully aware her gun was sitting in her glove compartment). These horrific tales are merely the beginning, and if American’s do not begin to understand the concept and morality behind the rights to “Life, Liberty and the Pursuit of Happiness,” we shall be doomed to repeat our past mistakes.

But, what about the children? Many people for and against gun laws explain their biggest problem with the debate is the fact that many children die in gun related incidents. To most this sounds like a great reason to ban guns, yet those willing to see facts will understand the illogic. Most children killed by guns are not merely toddlers who happened upon a loaded weapon lying around. The majority of those ‘children’ are members of teenage criminal gangs who purposefully terminate each other. Unfortunately, there are some children who do in fact die by gun related incidents, but fewer than die in bathtubs. I doubt anyone will advocate banning baths, or fire, knives, chairs, swimming pools, electric cords, or the biggest killer of children: vehicles.

Having a gun in the house will increase a family’s chance of being harmed is one of the most popular gun related dogmas. The reasoning behind this idea is that if a criminal breaks in and sees you holding a gun he is more likely to attack. Once again factual research tells us the exact opposite is true. People who have not resisted have gotten hurt twice as often as people who resisted with a firearm. Of course, those who resisted without a firearm got hurt the most.

People who are in favor of gun control laws because they believe stricter laws leads to less gun related deaths are not the problem. These individuals will easily be swayed once they read some facts on the matter. The problem lies with those who advocate and have the power to ignore such facts. Many books and studies have been released and are available to the public, yet the vast majority of people perpetuate the fallacious arguments. Books such as Pointblank by Gary Kleck, Gun and Violence by Joyce Lee Malcolm, and one of the most researched books, More Guns, Less Crimes by John lott; Mr. Lott analyzed 18 years of crime data from all 3,054 U.S. counties, and he discovered that there was nothing more decisive in lowering violent crime rates than the passage of ‘right-to-carry’ gun laws. In Counties with populations of 200,000 or more, the concealed-carry laws lead to an average drop in murder rates of 13 percent. Sadly, these facts are rarely discussed in gun control advocate circles. When John Lott attempted to give some of his initial studies to a gun control advocacy group, she refused. After the book was published, ABC contacted the leader of that group to garner her comments; she said the study was flawed. When Lott later phoned her to ask how she could say the study was flawed when she refused to even look at the study, she hung up. People who base their reasoning on unsound logic must deny all facts or their so-called ‘logic’ will crumble like a house of cards.

The evidence on the other side is just plain silly. One of the most cited studies was done in the New England Journal of Medicine back in ’93. This article claimed that guns in the home increase the risk of violence and death. The way they ‘discovered’ this was based on comparing people who were killed in their homes with a sample of similar people in the general population. Those who were killed at home owned guns more often than the others. This is equivalent to the fallacy of judging hospitals by their death rates. People who go into hospitals are more likely to die than people who don’t go to hospitals. Does this mean hospitals are dangerous? Or could it mean that people who go to hospitals already have health risks? Death rates are higher in world-class medical facilities than in the local county hospital, but the reason for this is people go to those hospitals with worse ailments than those who go to county hospitals. It is just as fallacious to assume that people with guns in their homes were in no more danger initially than those who do not have guns in their homes. Some of these people with guns in their houses were criminals to begin with and were killed by the police.

These facts continue on endlessly. Criminals are more likely to back off if they see a potential victim is carrying a weapon. Many school shootings were stopped by a person with a gun, schools such as: Edinboro, Pa., Appalachian Law School and Peal, Miss. Yet, only 1 percent of news stories pointed out the fact that the killers were stopped by a person with a gun. In one incident (Appalachian Law School in Grundy Va.,) an off duty Sherriff/law student got his gun out of his car and pointed it at the perpetrator who then raised his hands and dropped the gun. Fellow students then tackled the suspect. Upon a search of all the news stories reported it is almost always stated that the gunmen was merely ‘tackled by students,’ with no mention of the sheriff student. The idiocy behind believing a group of students simply ‘tackled’ an armed gunman is too much for words. One last fact worthy of mention is only 12 percent of bad guys purchase firearms from gun stores or pawn shops; according to the U.S. Department of Justice.

2nd Amendment rights are under attack. People here on campus, and all over the world, espouse the belief that we must increase gun control laws. Leaving guns in the hands of civilians is a dangerous undertaking they say. The majority of the population believes in the fallacy that ordinary people are too careless to own guns, and we’d be far better off leaving all weapons in the hands of professionals paid by the government. Herein lies our greatest danger. When a government has nothing to fear from its people, its people will be defenseless against their government.

Look to history for proof. The main tool for subjugating both slaves and free blacks in the South was disarmament. In Florida, patrols would search blacks’ homes for weapons and would confiscate them and punish the owners. In contrast, the North allowed blacks to own guns and they were able to sometimes defend themselves against racial mob violence. There are many atrocities throughout history which showcase the error in allowing government to control all weaponry: Stalin’s mass murders, the killing fields of Cambodia, the Holocaust, to name a few. Imagine a few hundred Jewish fighters in the Warsaw Ghetto holding off the Wehrmacht for almost a month with merely a handful of weapons. Then imagine 6 million Jews armed with rifles being herded into cattle cars; not likely.

Fortunately for us, our framers were intelligent enough to embed our right to defend ourselves in our Constitution. It may be hard to believe now that someday our government will force us to comply with their wishes, however, a free people can only make that mistake once. We must never forget the words of one of our greatest fore-fathers Benjamin Franklin when he said “Any society that would give up a little liberty to gain a little security will deserve neither and lose both.”

OIL VS Alternative Energy

Many claims are made by politicians, however most people would agree that very few are actually upheld. A lot of what a politician says, especially during an election period, is what people want to hear. This all makes sense from a politician’s standpoint, given their incentives and restraints. However, it is very dangerous to continue to take any politician just on their word. Studies and facts need to be taken into account. For example, a politician who proclaims they will bring down our dependency on foreign oil, while at the same time fight global warming by curbing c02 emissions, must change their stance when facts and reality will not coincide with such claims. The question we must ask ourselves is how a politician could possibly accomplish such a feat and how this agenda affects each of us.

On one hand, if we are attempting to decrease our foreign oil dependency it makes sense to increase America’s refining and drilling capabilities. This is not very plausible given the incentives and constraints which are given to American explorers and refiners of oil. So the solution for a politician is rather complex. A politician will have a hard time convincing extremist environmentalists, and many in the general public, that freeing up the energy market would actually create an increase of America’s energy supply and drop the price of gas and other products affected by oil. What a politician does instead of this is go for the oldest and most trusted of allies, blame. Pointing fingers at all the people who seem to be villains by merit of their actions, such as the greed of corporate CEOs. Politicians claim that while these companies are getting rich the constituents of a particular politician are being hit where it hurts them the most, their pocket books. Politicians point fingers at these CEOs and exclaim that these companies’ profits are too extreme to be mere ‘economics.’ In their minds, Americans having to pay ever increasing amounts of money at the pump, while oil companies make record breaking profits is simply unacceptable.

Many will claim that we must invest in alternative energy. While there is nothing wrong with individuals spending their own time and effort on a new type of energy, it is highly immoral to make taxpayers pick up a bill for someone’s political agenda. Many people claim this is the best way to secure our future. It is praiseworthy for those who wish to invent new ways to convert nature’s resources into energy. However, it is not praiseworthy to spend billions of dollars on futile endeavors not worth their weight in paper. The idea that crippling oil companies and forcing alternative energy to the forefront of our current economy is reminiscent of the broken window fallacy made famous in Henry Hazlitt’s Economics in One Lesson. The fallacy is when one claims that by the destruction of property, we actually create wealth. Its claim is that if a hoodlum were to throw a rock and break the window of a baker, it is not a bad thing, because now the baker, upon replacing his window for one hundred dollars will allow the man fixing his window to buy a new suit, which will give money to the tailor and so on. The fallacy is that the shopkeeper must now spend his hundred dollars on a new window, instead of on new shoes for himself, or new equipment (capital) to help his business. This misallocation of resources is the fallacy. And, it is no different than allowing the government to hinder oil companies from doing their job, while at the same time, giving millions or billions in subsidies to alternative energy advocates. We are simply rerouting precious resources. Confiscating hard earned money from taxpayers and handing the money to whomever has the most political pull at that moment.

An oil company is like any other company. It provides a product to a customer and asks for money in return; trading value for value. There is no gun involved. Therefore, there is no force. Men and women are free to purchase the product or not. There is no denying our need for energy, as individuals and as a society. The discovery and subsequent success of oil is due to its value to each of us as individuals, not because the company forced people to buy its product.

The claim that oil companies are cartels or monopolies is also a myth. The idea here is that these oil companies collude with each other to force us to purchase their products and force out any competition. The basis for this argument is that capitalism will inevitably lead to collusion or monopoly of some sort. Oil companies, like any individual, act in a self interested manner. If an oil executive decides it is in his best interest to collude with other oil companies in order to increase the demand for their product, it is their right to do so. The oil executive will soon discover, however, why such endeavors have failed throughout the history of capitalism.

The failure will begin simply. As all the oil companies in collusion raise prices above market level, some of the colluders will realize the opportunity for undercutting their fellow conspirators and making a profit. Once again, greed comes to the rescue. Each company will realize the opportunity and work to seize it. Businesses do not make money by simply raising prices; they make money by lowering prices, making the product available to more people, and by increasing output, quality and more. To understand this more just simply look to history. Standard Oil was accused of price collusion, predatory pricing and much more. The facts tell another story however. In 1869 the price of kerosene was 30 cents a gallon, and 28 years later the price decreased to 5.9 cents. People paying 30 cents in 1869 probably did not complain as prices began regularly dropping. Another classic example in more recent history is the Aluminum Company of America (ALCOA). This company was able to gain and hold an actual monopoly. Did they raise prices? No. In fact, it lowered its prices dramatically. ALCOA was the only producer of ‘primary’ aluminum in America (there were foreign competitors). In 1887, aluminum was 5 dollars a pound and by 1941 it was 15 cents a pound. The reason ALCOA would drop prices when they had a monopoly, rather than increase, is simple; substitutions. ALCOA knew that if they were to raise prices their customers would simply purchase substitutes such as wood.

In a free market, would people have alternatives to oil if oil became a monopoly? Yes. If the market was free and open, and oil companies began to collude to increase prices, people would begin looking into alternative forms of energy. They would not need government to confiscate money from the population and feed it to alternative energy, because people would be motivated by profit. As prices rose above market level, investors would shift their money from oil to alternative energy, thusly creating true wealth. Economic fact: money flows to its most valued uses.

Although this scenario is possible it is actually unlikely. Oil companies would not increase prices, as ALCOA did not raise prices, because they know economics: raising prices above market level will bring in more competition that will drive down price. By freeing the oil companies, we would solve all problems. Oil companies would compete with one another by reducing prices and increasing quality. The end product would eventually be a cheaper and cleaner burning fuel.

These facts don’t stop oil executives from being attacked for making a profit. During this previous summer when the price of gas rose to 4 dollars a gallon, senators dragged oil executives to Capitol Hill in order to investigate ‘bad’ business practices. Senator Patrick Leahy claimed they wanted to identify the causes of the rising prices of oil. The problem was oil executives were not in charge of the price of oil, the market was, as is determined by supply and demand. Notice these executives were condemned for making large profits during this time and considered greedy and evil, but also notice that as prices dropped to almost 1 dollar a gallon across the country, there was no congressional hearing to praise these individuals for their hard work; nor, was there much in the media about the benevolence of these executives. This makes sense given politicians’ and the media’s incentives to be elected and receive high ratings. For nothing gets officials elected faster – or higher ratings - than enormous problems in our country.

So, what does the government do to help the problem? Create more problems. Refining and distributing oil involves millions of interactions. The government impedes these interactions every step of the way. I will very briefly outline three major aspects of oil and how government interferes.

DRILLING

America has large sections of its underground oil off limits to oil explorers, such as the Alaskan National Wildlife Reserve and our coasts. This causes the U.S. to have to purchase more of its oil from outside of the country. If these sections were to be freed up to allow for oil exploration there would be a larger supply of world oil to help with the ever increasing global demand. This past summer saw huge profits for oil companies. These profits did not go directly into the executive’s pockets. The vast majority was reinvested into the oil industry. These oil companies were able to purchase new drilling equipment and more efficient rigs to transport their product more safely, among other investments.

REFINING

There have not been any new refineries built in America in over three decades. Inevitably, this causes much inefficiency in the older refineries still in existence. The reason for these inefficiencies is that the government has passed so many environmental laws, thereby making new refineries uneconomical, leading to the extinction of many old refineries. From 1990 to 2004, 50 out of 194 refineries were shut down. These regulations have caused the current refineries to produce at full capacity, due to high demand. This limits the contingency for catastrophe. Which make it nearly impossible to shift from one oil sector to another. When the government interferes with supply and demand the result is always the same. The oil companies are then unable to offset certain sectors during a time of crisis, the net effect is a spike in price. As full producing refineries are shut down due to unforeseen externalities, the only way supply and demand can correct themselves is through an increase in the price of oil.

Another unfortunate byproduct of a government that creates restraints (rather than incentives to build new refineries) is that there has been an overall decline in the actual capacity refineries can handle. While capacity has declined demand has increased. What this all equates to is a country that has less ability to create more supply as demand increases. When any problems occur where more oil is needed, we must turn to foreign supply.

DEMAND

As China and India have grown exponentially, it is obvious that global demand for oil will increase accordingly. As companies begin to adjust to the new demand, the price of oil will increase. In a free market, oil companies will simply increase output to make a higher profit by decreasing prices and meeting the new demand. In a market that is shackled by government, meeting consumer needs is much harder than in a free market.

Fortunately, American consumers are making smarter choices. For the first time in decades, trucks have lost their spot as the number one vehicle sold in America. This will trigger a decrease in oil consumption at home.

Profits allow oil companies to reinvest in the drilling and refining of oil, so long as the government doesn’t get in their way. Oil Companies receive a bad rap whenever something unwanted happens in the economy. However, the fact remains that American oil companies remain the most efficient oil producers in the world, despite the regulations and restraints imposed by the government. It is time for American voters to implore congress to step aside so that the professionals can do their jobs.

The Importance of Speculation to the Economy

What is speculation? And does an economy need or benefit by having individuals speculate? These are two important questions that need to be answered in order to understand the vital role speculators play in a dynamic economy. First, the question what is speculation? The definition I am referring to here is "engagement in business transactions involving considerable risk but offering the chance of large gains." However, everyone 'speculates' even in very small ways. Some of us make sure to fill up this week when we think gas is going to go up next week. Sometimes we succeed and gas does indeed go up next week which in effect saves us money. But, sometimes we fail, and gas actually goes down next week. If we were to have waited a week to fill up we might have saved a little bit of money. This is the basis of what speculation is. Now the important question is "does an economy need or benefit by having individuals speculate?" Here is where it gets a little bit more in depth.

Many people, professional and non professional alike, invest in things such as company stocks. When someone buys a stock of a new up and coming corporation they are hoping the stock will increase in value, giving the investor a good return on their investment. As an example, among many, is the internet company Amazon.com which rose in price for years before the company actually made any real profits. The idea for speculators in this example is to buy Amazon.com stock early in the hopes that the stock will go up, whether or not Amazon.com actually makes any profits or not. This allows the initial investors to make a profit.

Businesses speculate all the time as well. To take pharmaceutical companies as an example; a pharmaceutical company can spend millions of dollars developing a new drug all in the hopes that they can one day go out and sell that drug to the general public and make a profit. These companies never have a guarantee they will make anything back, they just have a hope and a good enough knowledge in their areas of expertise to make an educated guess. Something many people don't realize about pharmaceutical companies is they often fail to create or find anything of significance in their research. This is all failed speculation, but once there is something that is found, this is where the profits come in. Once a company develops a new drug and is able to pass all the regulations it is time to start production and make a profit. In the case of pharmaceutical companies they have a bottom line which they have to sell a certain amount of this drug at a certain price to make a profit and thus make their hard work, and all their failures, worthwhile. This is speculation at its best.

There are numerous other examples in every industry. A more easy and fun one to understand is movies. Every movie costs a certain amount to make. These costs are things like 'speculating' that a script one company purchases is going to be a hit. Movie studios also speculate by paying a big star lots of money in the hopes they will draw a big enough audience to make their enormous salaries worthwhile. To use some recent examples of failed speculation in the movie industry, let us use two recent movies, The Love Guru and The Happening. The Love Guru starring Mike Myers, Jessica Alba and Justin Timberlake, is a movie about a man named Pitka who is an American raised outside of his country by gurus. Pitka Returns to the States in order to break into the self-help business. His first challenge: to settle the romantic troubles and subsequent professional skids of a star hockey player whose wife left him for a rival athlete. Although Mike Myers has a large fan base now, a plot like this is not what people were looking for in this now very volatile movie industry. The Love Guru cost 62 million dollars to make. In three weeks at the box office it grossed a mere $29 million and some change. Rendering it almost impossible for any Justin Timberlake fans to ignore the fact that each and every single movie he has been in has completely flopped. Now a completely unrelated movie that shows the overall decline of a rather interesting individual's ability to make a great and interesting movie is M. Night Shyamalan in his latest movie The Happening. This movie which cost over $60 million to make grossed in 4 weeks only 62 million with huge declines every week. While this movie technically made a profit, movie executives are going to be rather edgy about signing any 60-80 million dollar contracts with Mr. Shyamalan in the future. Track records can be very important in speculation.

As is hopefully very clear by now, speculation is something that the average Joe can involve himself in as well as professional speculators. A professional speculators main role is in relieving other people from having to speculate as part of their regular economic activity. Put differently risk is inherent in all aspects of human life. Speculation is one way of having some people specialize in bearing these risks, for a price.

At this point it is very important to understand the difference between speculations and gambling, which is what many individuals like to consider speculation. Gambling simply creates a risk that would otherwise not exist, such as Russian roulette. These games are usually conducted to either profit or just simply to show off one's own skill or lack of fear. Economic speculation differs in that it deals with inherent risks in such a way as to minimize it and to leave it to be borne by whoever is best equipped to bear it. In other words it deals with risks that are a fact of life so to speak, and speculation allows these risks to be shouldered by men and women who are experts in dealing with such things.

To quote Thomas Sowell in his book Basic Economics where Mr. Sowell gives an example of commodity speculators and their importance to the market, using wheat.

"When a commodity speculator offers to buy wheat that has not yet been planted, that makes it easier for a farmer to plant wheat, without having to wonder what the market price will be like later, at harvest time. A futures contract guarantees the seller a specified price in advance, regardless of what the market price may turn out to be at the time of delivery."

What this does in essence is to separate farming from speculation, or mining from speculation etc. It allows the farmer to concentrate on what he does best, farming, while allowing a speculator to concentrate on what he does best, speculate. Each can benefit from the other. Let us say this farmer, who has to deal with wheat from all over the world, plants crops in the hopes of being able to sell his crop at $150 a bushel. Now with the market having such vast ups and downs which depend on everything from war and famine to drought, it is hard for one farmer to be sure what he may be able to gain from this season of harvesting. Instead of worrying about it, this farmer may decide to sell his crops to a speculator for $90 a bushel and guarantee a profit. Some may believe that the speculator is profiting off of the farmer, but they ignore the fact that now the farmer has a guaranteed profit whether or not he would have actually made a profit. Let's say the price of wheat actually goes down because of bumper crops all over the world, and now it is trading at $30 dollars a bushel. If the farmer had not 'purchased' the speculators services he would have lost $20 dollars a bushel (assuming it cost the farmer $50 dollars a bushel to plant and grow the wheat) and is possibly forced to sell his farm, thus leading to less wheat being produced the next year.

A rather important aspect and cost of speculating besides the money itself is also worry. Some individuals are simply not cut out for industries which have such an enormous amount of volatility in them. When a farmers livelihood hangs in the balance, as is shown in the above example of selling wheat at $90 dollars a bushel, may appeal to a farmer who knows he now doesn't have to worry about what might happen if the price drops and he loses money. In other words he leaves the future risk in the hands of the professional speculators, and the professional speculators leave the planting and harvesting of crops in the hands of farmers.

It is important to understand that without profit there would be no one willing to bear such a heavy burden, that of risk. It is because profits can be so high that many people begin careers in speculation, while at the same time it is because of the high risk nature of the industry that many people also stay away.

Just like any other industry speculators have to compete with other speculators, so this brings up the question of whether or not the service rendered is worth the price charged. Farmers are able to on a one on one basis decide if the price is worth it or not. If the farmer believes the price will go up he has every opportunity to bear the cost himself and take that chance. However, since every speculator must bid against other speculators, which is no different than each farmer competing with every other farmer. Competition, as always, determines the prices speculators are able to charge for their services. If that profit exceeds what it takes to entice investors to risk their money in this volatile field, more investments will flow into this segment of the market until competition drives profits down to a level that just compensates the expenses, efforts, and risks. It is easy to actually understand this frantic competition when looking at commodity exchanges between people shouting in a large room on Wall Street or other similar places. Some farmers do indeed speculate in their own crops which gives them more control over their financial future. But, the majority of farmers are going to try and make sure they are guaranteed a profit, and therefore sell to speculators. In the end it is up to the farmer whether they believe the service is worth the price being charged.

The major debate of our current presidential election is now Gas Prices. One scapegoat is the speculators, it is easy to see the evil of a speculator, since they work purely for profit, and profit is evil. However, In order for a speculator to actually affect the oil market in any significant way he or she would have to purchase extreme amounts of oil and keep it off the market, thus driving the price up, and sell later at a higher price. Since there is no evidence of this happening, nor will there ever be just because it's not economically viable, this is pure "speculation," and bad speculation at that, speculation without any evidence or analytical proof. If we think about it there is only one group that is actually 'hording' oil and keeping it off the market for the future. That group is the government, especially the United States government with reserves of oil in excess of one billion barrels of oil.

As far as greed goes, editor of The Intellectual Activist Paul Blair states:
"The idea that speculation is causing higher prices just boils down to the idea that prices are going up because certain greedy people want them to go up. But if people could raise prices just by wishing, why weren't prices already skyrocketing ten years ago? Why aren't they always skyrocketing in every market? Why don't the speculative short sellers greedily lower the prices simply by wishing them to go lower?" (http://www.capmag.com/article.asp?ID=5224)

Lastly, in an article by economist Walter Williams titled "in defense of Oil and gas speculators," Mr. Williams eloquently explains the importance of speculation using corn futures.
"Say that today's price of corn is $7 a bushel. I have a hunch that because of Midwest flooding, higher demand due to droughts and war in other parts of the world, that in may 2009, corn will sell for $12 a bushel. I stand to make a lot of money by buying corn now for $7 a bushel, holding it, and in may 2009 selling it for $12 a bushel. If many speculators share my hunch and buy more corn now, today's price, sometimes called the spot price, is going to rise let's say to $10 a bushel."

The way this effects the economy is in a very positive long term way. Mr. Williams goes on to explain that if the government were to outlaw the corn futures market or make them more costly, then this might cause the spot price to be lower, possibly bringing it all the way back down to $7 a bushel. The question to ask is this; "What happens in May 2009?"

Let's say all the horrible things that we hoped would not happen, did indeed happen. Midwest flooding caused an enormous dip in supply, and demand goes up because of war and drought in far off places in the world. Since congress outlawed or made it more costly to trade in corn futures the (May 2009) prices are going to be much higher since there will be much less corn on the market and more of a demand. The important thing to remember is that if congress had not interfered people would have used less corn now (because of higher current prices), which would allow there to be more corn in the future (May 2009). This illustrates the most important aspect of speculation, the allocation of resources over time. Congress in essence allowed Americans to ignore the future.

This is the very core of the importance in speculating. It is of vital importance to take the future into consideration when consuming today. This is the entire reason for prices, higher prices help to curb demand and also increase incentives to bring up supply. This is exactly what is happening with oil right now, as demand is increasing (India, china) Americans and others worldwide are curbing their consumption. At the same time, oil companies are increasing investment into more drilling and better refining techniques.

The oil problem the world is currently undergoing is the same economic principle that has always affecting the world, supply and demand. The answer is to have less government intervention, not more. Allow the market to work the way it was intended, without politicians interfering.

What would lower the long-term price of oil is for Congress to permit exploration for the estimated billions upon billions of barrels of oil domestically available, not to mention the estimated trillion-plus barrels of shale oil in Wyoming, Colorado and Utah. Some politicians pooh-pooh calls for drilling saying it would take five or ten years to recover the oil. I guarantee you we would begin to see a reduction in today's prices even if it took five to ten years for us to get the first barrel. Put yourself in the place of an OPEC member knowing there would be a greater supply of U.S. oil in five or ten years, hence maybe driving oil prices lower to say $40 a barrel. What will you want to do now while oil is $130 a barrel? You would want to sell as much oil now and OPEC's collective efforts to do so would put downward pressures on current oil prices. Right now the U.S. Congress is OPEC's staunchest ally. (Mr. Williams, http://www.capmag.com/article.asp?ID=5221)

An overview of Socialized Healthcare

CURRENT PROBLEMS IN THE MEDICAL INDUSTRY
America has produced the most advanced medical technology the world has ever seen. All around us there are more and more advancements each year. Already there are things like ‘clot buster’ drugs which have helped patients to survive heart attacks, which in the past would have killed them. There are new forms of keyhole surgery to help patients with appendicitis, allowing them to be treated and discharged in 24 hour or less, in the past this could have taken at least a week. America has improved tremendously in the advancement of cancer treatment, allowing bicyclist Lance Armstrong to live through a testicular cancer which would have killed him had he lived 40 years ago. (Zinzer and Hsieh)
The problem lies in many Americans getting access to this health care, and deciding what the best way to distribute the care is. With health insurance getting higher and higher, and medical costs are soaring. Medicines are becoming too expensive to buy and Medicare is not covering many of the elderly enough to pay for their health costs. Geri Barbera, a 79 year old grandmother, had to dip into her and her husband’s savings as well as sell their truck just to be able to afford the extra costs in medicine she needed for her husband’s treatments, Alzheimer’s, and prescription medicine. (Barbera) One of the many things that compound this problem of Americans not having access to the treatment they need is a decline of medical doctors and overall medical care.
Decline of Medical Doctors
Currently there is a problem with burn out in doctors, including many doctors not wanting to see patients who are now on Medicaid and Medicare. The American Medical Association’s survey indicates a massive 90% of doctors turning down patients who are on Medicaid, making the shortage of doctors available to those people even higher, while at the same time 99% will see anyone on private insurance. Lin Zinser a 20 year litigator in the medical and business field, and Paul Hsieh A medical doctor in Denver Colorado and co founder of Freedom and Individual Rights in Medicine foundation (FIRM) wrote an article titled Moral Health Care vs. Universal Health Care. They had this to say about a decrease in doctors.
“According to a recent survey of doctors, 30 to 40 percent of practicing physicians would not choose to enter the medical profession if they were deciding on a career again, and an even higher percentage would not encourage their children to pursue a medical career.” (Zinzer and Hsieh)
Health Care Spending
Right now the money spent on health care in America is totaling around 17% of our entire economy, which according to many economists like Walter Williams, will increase to at least 20 percent by 2019. Also in the report by Zinser and Hsieh on health care, “annual spending [is] consistently growing faster than the overall economy… because of skyrocketing health care costs, the U.S. federal Medicare trust fund is expected to go bankrupt in 2019… potentially leaving millions of elderly American’s without health insurance coverage.” (Zinzer and Hsieh)


Main Proposed Solutions
The two proposals in America are to make all Americans purchase insurance through government mandates, and those who are unable to purchase their own insurance will receive subsidies from the government. Or the other proposal is to have a ‘single-payer’ system in which the government is the only insurance company, and all private insurance companies are to be utterly wiped out. According to the executive director of Americans for Free Choice in Medicine and author Richard E. Ralston in his article titled Free-Market Health Insurance is Not the Enemy, “Insurance companies do not pay all of every claim, but neither does Medicare. Yet history indicates that Medicare and Medicaid spending is out of control.” (Ralston). There are many problems in our current system; however the concept that what we currently have is a ‘free market’ is vastly mistaken.
BACKGROUND: HISTORY OF OUR CURRENT MEDICAL INDUSTRY
There are many misconceptions of the medical industry, such as the difference between ‘cost’ and ‘price’, the difference between ‘health care’ and ‘health insurance.’ First, is the difference between price and cost. Prices pay for costs, yet if someone were to ask a politician they might hear them say “I will bring down the cost of medical care.” This according to author and economist Thomas Sowell simply means, “… A quick fix that will win votes at the next election, regardless of what the repercussions are.” Because prices cover costs, if the prices a doctor charges does not cover the cost this will always lead to a decline in supply and in the quality of the service and or products. In Dr. Sowell’s article The Cost of Medical Care he says “the average medical student graduates with a debt of more than $100,000. The cost per doctor running an office is more than $100 an hour. The average cost of developing a new pharmaceutical drug is $800 million. These are among some of the costs of medical care.” (Sowell)
Secondly is the difference between health care and health insurance. Health insurance helps to pay for catastrophic health care costs, such as cancer, diabetes, heart attacks and other problems that cause long hospital stays and extreme prices. In the past when someone were injured they would simply go to the doctor and pay cash for service, or the hospital would put them on a payment plan. Those who could not afford even the payment plan had the option to use some of the many charitable organizations. What America has now is the idea that health insurance should cover the cost of all their medical needs, including normal checkups with their doctors. Again this misses the point of insurance, which is designed to spread risk. Most people would not say their house insurance should cover everything from lawn mowing services to fixing shingles and painting their fence. Home owners insurance merely protects against catastrophic incidents such as hurricanes, floods, fires. Health insurance is the same thing.
Government Interference in the Health Insurance Industry
There are many regulations, mandates, and unequal taxation of health insurance companies that give the appearance of a free market but which in actuality is far from it. Insurance companies are taxed on the premiums they collect but are in many cases also ordered to set aside a certain amount of reserves to cover future claims.

BLUE CROSS AND BLUE SHIELD
One problem happened when during the great depression some of these insurance companies were exempt from these tax laws. They were called; Blue Cross and Blue Shield. These two organizations successfully lobbied the government to be considered ‘non-profit’ and thus exempt from many of the tax laws. The two ‘Blue’ companies offered community rating which allowed everyone in the same community to pay the same premium, based off of that particular community.
These two organizations which by the 1950’s became the biggest providers of health insurance in America wanted mainly to provide steady income for doctors and cover all expenses of medical treatments even the routine, which in the past had never been done. The problem occurred when the blues were able to get special privileges from the government in the form of their nonprofit status. This in turn harmed other insurance companies and turned health insurance into a ‘pay for all’ expense rather than a service which covered costs that would normally bankrupt a family. Eventually more and more insurance companies began to offer similar packages to their customers in order to compete with the two blue companies.
According to Zinser and Hsieh, “this new model [for health insurance companies] was a disaster in the making. In addition to minimizing incentives for insured customers to comparison shop for medical services, it also minimized incentives for doctors and hospitals to compete on price.” (Zinzer and Hsieh) Unfortunately this model did not come about by free market thinking it was a direct result of a government getting involved in the health insurance industry.
1942 STABILIZATION ACT
Another major impact on the health insurance industry was the 1942 Stabilization Act that was passed during WWII in order to freeze wages in America. The effect was that a business in order to attract new and better employees would offer health insurance coverage instead of giving a pay increase. This gave rise to the idea that it is an employee’s ‘right’ to have health insurance provided by their employers, which simply is not the case. Businesses do not cover an individual employee’s home insurance or their car insurance or other such things. This Stabilization Act was followed quickly by the IRS decreeing that health insurance premiums paid by employers are not taxable income. Another thing they decreed was that these premiums were a legitimate cost of doing business and can be deducted from the employer’s taxable income. (Zinzer and Hsieh)
This led to the major problem of employees not knowing the ‘cost’ of their health insurance and therefore to increase many employees anger at having some of that cost shifted towards them. Also these acts caused an enormous explosion in employer purchased health care, rather than individually purchased health care.
STATE AND FEDERAL MANDATES
There are over 1,900 different state and federal mandates across America which increases the cost of insurance for two main reasons. First are the mandates, usually from special interests groups like Parkinson’s advocates. These advocates lobby the government to then force insurance companies to cover Parkinson’s for all customers. This mandate leads to higher costs, as the insurance company is forced to take into account people who will need this type of coverage, whether an individual customer needs to be covered for Parkinson’s or not.
Second are the guaranteed issue laws, which force insurance companies to take on a new customer with previous ailments allowing people to wait till they are sick in order to get insurance coverage. Insurance companies must than increase the prices of their policies to their pre-existing clients and to new clients. A guaranteed issue law is equivalent to passing a law allowing someone to purchase home owners insurance for fire after their house burns down.

Government Interference in the Medical Industry
Many of the laws that have been passed cause doctors to pay fines and sometimes even jail time for things other than malpractice, such as simply making a mistake on their documentation of patient’s records. Programs like Medicaid and Medicare also have lead to a tremendous overcrowding in emergency rooms. Many of the people who go to ERs do not have critical problems but since they are covered under Medicare or Medicaid they go for ‘free.’ This makes it harder for those with serious problems to get the care they need when they need it.
EMERGENCY MEDICAL TREATMENT AND LABOR ACT OF 1985 (EMTALA)
The EMTALA law requires a hospital which accepts Medicare or Medicaid patients to accept anyone within two hundred feet of an emergency room, whether the person can pay for treatment or not. If a doctor or hospital fails to comply with this law they are subject to fines up to $50,000 for each infraction. To give an example, this would be like forcing grocery stores to allow anyone within two hundred feet to get any amount of food they say they need. A law like this would bankrupt most grocery stores. According to the American College of Emergency Physicians, from 1993 to 2003, while the U.S. Population grew by 12 percent, emergency room visits grew by 27 percent – from 90 million to 114 million visits. In the same period, however, 425 emergency rooms closed (14 percent of the ERs that existed in 1993), along with 703 hospitals and nearly 200,000 beds. (Zinzer and Hsieh)

HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPAA)
This is an act that was passed in 1996 which requires by law that all doctors and any institute that provides medical services to fill out enormous amounts of paperwork saying they acknowledge their patients right to medical privacy. Dr. Reinhardt a retired surgeon in Pueblo Colorado said this about HIPAA “Every doctor needs to plan for the possibility of several fines every year.” (Reinhardt) Physicians must also have their own ‘specialized’ insurance that covers millions of dollars for fees and fines. This cost is than shifted to their patients.
Laws such as HIPAA merely turn Doctors into criminals for a simple error in paperwork. Penalties can range anywhere from $100 all the way up to $25,000 per year. Doctors are also able to be prosecuted for these errors, again this has nothing to do with actual malpractice but simply a failure to disclose or fill out all the proper paperwork. In the report done by Zinser and Hsieh a doctor told one of the authors that emergency room doctors are constantly breaking the HIPAA laws simply because it would be unethical to do otherwise.
“Complying with HIPPA… Would delay emergency medical treatment, keep families from understanding their loved-one’s condition, and preclude the crucial sharing of knowledge between family members and doctors about the history and condition of the patient.” (Zinzer and Hsieh)
The laws HIPAA enforce are the same things doctors have been acknowledging without these laws anyway, these laws simply add to the paperwork a doctor must fill out. This additional paperwork just takes away time a doctor should spend on saving lives.
DISCUSSION: ECONOMIC IMPACTS OF SOCIALIZING MEDICINE
There are several negative economical impacts socialized medicine has had on other countries. First, are the immense waiting lists many individuals are subjugated to in order to ration the medical services to everyone. Another problem that arises in these countries is the exodus of doctors and an overall decline of the medical care provided by the doctors in the system. Lastly is the loss of innovation, most countries currently and have always relied heavily on the innovativeness of America.
Waiting lists
Many advocates of socialized medicine in America point out the fact that America is the only industrialized country without a ‘single-payer’ system. One thing these advocates do not discuss is the enormous waiting lists these other countries must comply with. A major problem happens when people who normally would not go to see a doctor are now allowed to see one for ‘free’, at the expense of the taxpayer. People begin seeing doctors in droves for any ache or pain they might have, whether they would normally see a doctor or not.
In an article written by author and professor of economics Walter Williams Free Health Care in Canada? Dr. Williams quoted several sources from the Fraser Institute, a Vancouver based think tank. Showing some of the waiting lists Canada has to deal with. “The average time a patient waited between referral from a general practitioner to treatment rose from 16.5 weeks in 2001-02 to 17.7 weeks in 2003.” The research found that Saskatchewan had the longest wait time with thirty weeks, and Ontario was the shortest at fourteen weeks. As far as Diagnostic procedures; Computer Tomography (CT), Magnetic Resonance Imaging (MRI), and Ultrasound, ranged anywhere from two to twenty four weeks. (Williams, Walter E. Williams)
Exodus of Doctors
Another problem industrialized countries with socialized medicine are having is a decline in medical doctors, as well as low enrollment for medical schools. A study conducted by the Canadian Medical Association Journal showed an exodus of thousands of doctors leaving Canada. The study shows over the past 30 years 19,000 Canadian trained physicians left Canada for America. In 2006 there were 8,162 physicians who left Canada for America, “That figure accounts for about one in nine Canadian-trained physicians, which is equivalent to having two average-sized Canadians medical schools dedicated entirely to producing physicians for the United States.” (Arvantes) Two medical schools may not sound like a lot; however Canada only has 17 medical schools.
This decline in medical doctors and enrollment is a direct result of a human being not being willing to dedicate a lifetime to the perfection of a craft, than to be told how they are to operate and who they are allowed to see. A doctor is no different than any other individual who wishes to provide a service and or product and be compensated for said product/service.
Loss of Innovation
One of the most important attributes of America is its ability to create new products for itself and the world. This is shown in every aspect of Americans daily life. From telephones, cars, planes, televisions, computers, internet and more it is this ability to be innovative that has allowed America to remain the most powerful country in history. This innovation remains because of one fact, America allows individuals the freedom to create new products and then sell them however they see fit. In other words America allows for incentives, and very powerful incentives. Dr Reinhardt, although an advocate of a ‘single-payer’ health system in America, admitted America is by far the most innovative country in the world in the medical field. (Reinhardt)
CONCLUSIONS AND RECOMMENDATIONS
The research in this report was extracted from; lead economists, authors, statistical data from World Health Organization and the Fraser institute, as well as individuals in the current American Health industry, and has lead to the following conclusions on Socialized Medicine in America.
Conclusions
1. The current system in America is far from an actual free market, and many of the problems America is now facing are a direct result of the thousands of mandates and regulations both the health insurance industry and the medical industry are subject to in America.
2. Countries around the world currently under a form of socialized medicine have many problems of their own, such as the waiting lists, exodus of doctors, and an overall decline in the quality of medical services.
3. Some of our current government programs like Medicaid and Medicare will go bankrupt, without changes, by 2019.
4. The majority of the world depends on America for new life saving procedures and medicines. With a loss of incentives to create these new innovations, America is at risk of losing its ability to keep innovation going in this industry.
Recommendations
1. From the research and findings of this report it is recommended that the solution to the health care problems in America is not more government intervention, but less. It would however be a grave mistake to simply eradicate any and all government programs immediately. The best solutions are to start slowly, with for example the repealing of EMTALA. This can allow doctors and hospitals to set their own terms for garnering payment for their services.
2. Eliminate any type of special treatments certain companies might get, such as allowing ‘The Blues’ companies to have non-profit status. Repealing acts such as HIPAA can be done immediately, since these laws do nothing but add to the useless paperwork doctors and hospitals must do and adds tremendously to the amount of money they must pay out for malpractice suits.
3. The things that need to be done are to eradicate any and all government interference in the medical industry. As was mentioned before it has been this government interference that has caused the high costs of insurance and medical services we now have. To add more would only compound the problem.
















Works Cited
Arvantes, James. Canadian Physician Exodus Benefits United States, Hurts Canada . 2 May 2007. 18th April 2008 .
Barbera, Geri. Interview. Kirk Barbera. 18th March 2008.
Ralston, Richard E. Capitalst Magazine. 5 February 2008. 10 February 2008 .
Reinhardt, Eric. Interview. Kirk Barbera. 8th April 2008.
Sowell, Thomas. Capitalism Magazine. 4 May 2004. 21 February 2008 .
Stossel, John. Capitlalist Magazine. 10 August 2007. 2 March 2008 .
Williams, Walter. "Walter E. Williams." 21 July 2004. George Mason University. 18th Jan 2008 .
—. "Walter E. Williams ." 1 July 2004. George Mason University. January 2008.
Zinzer, Lin and Paul Hsieh. The Objective Standard. 2007-08. 1 March 2008 .