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How ‘Monopoly’ Perpetuates Myths About Capitalism

The classic board game models the Left's view of the economy.

by
Walter Hudson

Bio

August 7, 2013 - 8:00 am
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Is the real economy like the board game Monopoly? We can pick out particular similarities, such as the instance cited above. The game’s banker does issue an unlimited amount of paper money which has no inherent value. For the most part, however, the comparison falls flat.

Last year, two leftist authors used the board game as an analogy for “the danger of raw, unfettered capitalism.” Published at Truthout, Thom Hartmann and Sam Sacks paint a dramatic picture of how the cannibalistic final rounds of a Monopoly game model both the recession of 2008 and a larger economic collapse yet to come. They argue that a high concentration of wealth in the hands of a few initiates an economic collapse as an endless quest for profit drains consumers and ultimately deprives even the rich, ending the game. They write:

But let’s assume the Monopoly game doesn’t end there. Let’s assume the broke players keep rolling the dice and keep going around the board. They essentially keep living their lives desperate and broke, using their credit cards and home lines of credit to stay in the game. Maybe they end up in jail. If they’re lucky, they land on Baltic Avenue and can afford to stay a night in the slums.

Meanwhile, the oligarch who owns everything can no longer collect any income. The other players can’t afford to pay rent, they can’t pay utilities, and they can’t ride on the railroads. Eventually, without consumers spending money, the Monopoly oligarch goes broke, too. His properties and businesses disappear and suddenly everyone is broke!

That’s what Monopoly’s version of economic collapse looks like. And it’s very similar to what global economic collapse in the real world looks like, too.

Their analysis proves worth reading in its entirety, if only to fully demonstrate its error. Their argument rests upon premises which fall apart when tested.

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Top Rated Comments   
America has many nice big highways. Other countries only have a few. Obviously we have too many roads and are depriving the rest of the world. Our road greed is evil.

/sarc
49 weeks ago
49 weeks ago Link To Comment
Zero sum is the stupidest idea. If value were only distributed and never created new, would we not all still be living in caves, fighting over who gets to use the sharp rock?
49 weeks ago
49 weeks ago Link To Comment
I can't tell you how many professors I had to verbally redress for saying the economy is a zero sum game (mid 80's). They were almost adolescent in their beliefs. They never had any real arguments so they would just rope a dope with me by saying "that's interesting" or "valid point", and then move to another subject.
49 weeks ago
49 weeks ago Link To Comment
All Comments   (31)
All Comments   (31)
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"Consumers are compelled into transactions by chance and issued a strictly limited income. Once the preset amount of wealth has been claimed, no more can be created."

Exactly. In the real world someone who could only afford to live on Connecticutt Avenue would stay on Connecticutt Avenue. They wouldn't be forced to move into Park Place where they couldn't afford to live - unless maybe some government program coerced a mortgage company into giving them a loan they couldn't pay back.

Monopoly can help teach kids about money management and barganing skills. Other than that it is a game and nothing more.

49 weeks ago
49 weeks ago Link To Comment
No coercive monopoly has ever existed that was not caused by government intervention...
There two types of monopoly, natural and coercive. A natural monopoly is a gold mine on one's property. If there are no other veins on other's properties, it's a natural monopoly. No one is prohibited from owning one, it's just not available.
All the monopolies cited here are caused by gov't intervetion - power, water, telecom, cable, rights-of-way, frequencies divisions, etc.

Back in the 70's IBM was sued by the gov't because they had over 84% of the computer marketshare. Actually, they had 100% of the IBM-compatible market. There were others attempting to sell against Big Blue, but their machines were not upgradeable; i.e., one had to re-program for each new and faster model. The BUNCH (Bouroughs, Univac, NCR, CDC, and Honeywell)(even RCA tried and failed with an ALMOST compatible machine) offered inferior non-upradeable products vs. IBM's 360/370 and they were not compatible with either IBM or anyone else, and the market attested to it; yet the gov't sought to break up the company, because it was too successful. IBM was not a coercive monopoly, because the customers bought by choice the better product.

Government has no place in the market.




49 weeks ago
49 weeks ago Link To Comment
The government has a very important place in the free market: as an umpire making sure everyone plays by the rules, not penalizing one player or team because they play too well. The most important of those rules is that one player can get nothing from another unless they come to an agreement, which usually involves giving something in return they find a fair exchange.
49 weeks ago
49 weeks ago Link To Comment
Played many multiple-day, long running games of Monopoly as a boy in the 50's in upstate NY on a neighbors screened in porch when the weather was bad. I have said for 50 years that the lesson I learned was not from the game itself but from the fact that when on more players got hopelessly behind, someone would sneak in and tip the board over and scatter all the ownership cards and stacks of money.

In those situations where monopoly is possible and the government does not do its job to prevent them, someone will eventually rise up and kick the board to the ground. That's what revolutions are all about.

This restraint of monopoly, protection against foreign invasion and maintaining rule of law are the only legitimate tasks of government. When they don't prevent monopolies - but in fact encourage them in crony capitalist dances and in their own grasping for power - then someone will eventually knock over the board. That's where we are headed in America.
49 weeks ago
49 weeks ago Link To Comment
Those lefties sure are a bunch of loony tones. I'd call this an example of their poverty of analytical skills.

Mr. Monopoly, the guy in the top hat and spats, was a real businessman. He was Samuel Insull and ran the electric utilities in Chicago and other Midwestern cities. FDR called him out by name in the '32 election saying Insull was partially to blame for the Depression and was going to jail. FDR's DoJ trumped up some charges against Insull but a Chicago jury said not guilty.

He took his money and moved to Paris where he died of a sudden heart attack while waiting for a subway.
49 weeks ago
49 weeks ago Link To Comment
Without government regulation a monopolies would eventually emerge. It is the only logical conclusion. At that point capitalism would collapse. There is a reason we have anti monopoly laws in place.
49 weeks ago
49 weeks ago Link To Comment
Having a lions share of the market should not be illegal. It happens when someone markets a better product. Sometimes the economics of supply make 2 businesses doing the same thing in the same place impractical, such as water and electric utilities.

Tactics to discourage competition, to create, maintain, or expand a monopoly, should be illegal.
49 weeks ago
49 weeks ago Link To Comment
LOL, what a maroon.
49 weeks ago
49 weeks ago Link To Comment
nonsense.
49 weeks ago
49 weeks ago Link To Comment
No. monopolies only happen via government involvement, not through lack of it.

Let's look at AT&T, for example. They had the monopoly. It was given to them by the government. How about the TV monopolies of ABC, NBC, and CBS? Granted to them by the government. Cable TV is that way, today. Power companies are that way. There are good reasons for it, in theory, because these things require public right-of-way to be built, and how many of these things must we allow to be built, to allow competition?

Sarbanes-Oxley was created to restrict the entrepreneur, in order to protect the big tech companies. It's always the government providing the monopoly.

Do you know why private enterprise will never create a monopoly? Because people die. Very often, the heirs are not up to the job of filling Daddy's shoes. They run the company into the ground with all their "new" ideas, and end up selling out or going broke. Or they simply maintain through a bureaucratic , corporate system which stagnates.

You cannot create something greater than yourself. It takes a great man to build something big, and they are very rare beasts. Water seeks its own level, and so does a business. A business is only as big as its owner... and owners die.
49 weeks ago
49 weeks ago Link To Comment
There are such things as natural monopolies. There is only one best (for a given set of parameters such as time, economy, distance, etc) route from point A to point B. There are only so many cables that can be strung through utility right-of-ways. And a given set of frequencies can only carry so much information.

In these situations market forces will result in the creation and maintenance of monopolies. In those cases the best outcome is for the monopoly to be controlled by the consumers. In other words, a representative government.

Even in cases where no natural monopoly exists an effective monopoly can. One major failing of textbook captialism is the assumtion that capital can be converted from one form to another without cost. In the real world a potentital competitor to a monopoly (or near-monopoly) would face the power of that monopoly. Yes, a monopoly can only sell at a loss for so long, but it's a bit like the Texas Ranger staring down a riot. He can only shoot 6 people, but nobody on the other side wants to be one of those six.

Your claim that monopolies can't last because of human mortality is trivially disproven by the longevity of monarchies.
49 weeks ago
49 weeks ago Link To Comment
I did say that there are good reasons for some monopolies, didn't I? Like a right-of-way? So, you say that such a monopoly should be controlled by the consumers in the form of a... waaaiiiit for it... representative GOVERNMENT. The government then makes it official and protects the monopoly.

And... Monarchies ARE government. Geez!

You thought you were disproving what I said, and all you did was flesh out the proof. lol
49 weeks ago
49 weeks ago Link To Comment
"There are such things as natural monopolies."

No, there aren't, and I am willing to bet that the natural monopolies you think exist are utilities. Who grants utilities the power to operate?

"Your claim that monopolies can't last because of human mortality is trivially disproven by the longevity of monarchies."

Except that a monarchy and monopoly are not even in the same realm.
49 weeks ago
49 weeks ago Link To Comment
You're suffering from a causal reversal. Governments license utilities because they are a natural monopoly. Well, not quite, but they are close enough. Once a utility line is run to your home the costs of a competitor running a second line increase dramatically. Not only are customers unwilling to have multiple power lines (say) running to their house, but the problem of interfacing them is non-trivial.

Then there's the trunk infrastructure. There is only one best route for transmission lines, aqueducts, or sewer pipes. There is only one best location for transformers, repeaters, or pumping stations. That means whoever gets the route first is going to have a monopoly until the prices rise high enough to support a decent ROI on the sub-optimal routes.

My point about monarchies was to demonstrate that monopolies (in this case of political power, but it applies as well to economic power) can and do survive the death of their creator.
49 weeks ago
49 weeks ago Link To Comment
"Governments license utilities because they are a natural monopoly."

LOL. I love it when I can predict the future. Now, only if this worked when I'm investing.
48 weeks ago
48 weeks ago Link To Comment
Well, there are, depending on how you define things.
Locations are specific- if you define a certain product or service as unique or essential to that location, you can monopolize it.

If a product is only available at one location, controlling that location creates a monopoly.

The funny thing is that there is a really good reason why Monopoly demonstrates "Leftist Myths about Capitalism".

That is precisely what it was originally designed to do!

Monopoly makes capitalism look "greedy" because Monopoly is a game designed to make capitalism look "greedy".

Looking to Monopoly for economic insight is like looking to Chutes and Ladders for tips on how to build a playground.


49 weeks ago
49 weeks ago Link To Comment
There are no monarchies left on the planet. Most are there because the people want a tourist attraction. All those countries are run by a parliament that is elected by the people. Monarchies have no direct influence on their countries, set no policy and make no decisions.
49 weeks ago
49 weeks ago Link To Comment
King Abdullah of Saudi Arabia and the Sultan of Brunei may take issue with that assertion. But just because a a king or queen is a constitutional monarch doesn't mean they are impotent figureheads. Your implication smacks of very petty and petulant derision.
49 weeks ago
49 weeks ago Link To Comment
I can't tell you how many professors I had to verbally redress for saying the economy is a zero sum game (mid 80's). They were almost adolescent in their beliefs. They never had any real arguments so they would just rope a dope with me by saying "that's interesting" or "valid point", and then move to another subject.
49 weeks ago
49 weeks ago Link To Comment
America has many nice big highways. Other countries only have a few. Obviously we have too many roads and are depriving the rest of the world. Our road greed is evil.

/sarc
49 weeks ago
49 weeks ago Link To Comment
Zero sum is the stupidest idea. If value were only distributed and never created new, would we not all still be living in caves, fighting over who gets to use the sharp rock?
49 weeks ago
49 weeks ago Link To Comment
Agree with what has been written here below, also...don't forget about the dredges that skip paying rent, destroy my property and leave them a mess. These guys are the ones belieing the progressive, entitlement hype...lazy buggars all.

THe giggest "money baggers" I have notice tend to be born into wealth or easily made and donae heavily to the cause, ala Al Gore or Babs Streisand.
49 weeks ago
49 weeks ago Link To Comment
Got so upset, started creative spelling, sheesh!
49 weeks ago
49 weeks ago Link To Comment
And there's another myth that's somewhat related to this... What I call the "Scrooge McDuck" fallacy.

The Left firmly believes that all the money that the rich folks have just sits in their personal vault, doing absolutely nothing. If only they could appropriate that idle wealth, they could put it to good use for their favorite causes, and since the wealthy weren't using it they just won't miss it. The reality is that even the very wealthy simply do not have much cash just laying around in the vault downstairs. It's mostly in various forms of investments.

I try to imagine what would happen to the world if the Left got its way about what they call "excess wealth." If everybody was limited to total assets of (say) $500,000 and if you had more than that the government would just confiscate it and spread it around to those less fortunate. When I think about that, the vision is not pretty at all. We all become Zimbabwe.
50 weeks ago
50 weeks ago Link To Comment
Whenever leftists bring up the "obscene" profits of oil companies or all the money that wealthy people have, I bring up the huge endowment of Harvard. This confuses them. I point out that all that money does very little to help the poor since it is mostly rich kids who go there. Either they insist that the money is Harvard's to do with as they please (after which I say that the same is true of other people's wealth) or they grudgingly admit I have a point.
49 weeks ago
49 weeks ago Link To Comment
I have about $200 Trillion Zimbabwe. It is worth about $2 US. How's that for inflation?
49 weeks ago
49 weeks ago Link To Comment
"Meanwhile, the oligarch who owns everything can no longer collect any income."

That they wrote the above as a critique of "unfettered capitalism" goes to show they don't understand economics at all.

Also, one would assume that players in real life would continue to work to earn their income.
50 weeks ago
50 weeks ago Link To Comment
Players in real life:

*Aren't required to pay every house and hotel, just because they showed up.
*Have changing income potentials, so they could get a second job, or a spouse with a second income, or they could get a higher-paying job.
*Don't all purchase their own properties for which they charge rent.
*Have the ability to budget their money for known time periods, and aren't typically subject to random and specious charges between paychecks.

The list goes on, but yes, the authors of that article lack a basic ability to apply concepts consistently in different circumstances. But we're the ones who're "backwards" and "narrow-minded".
50 weeks ago
50 weeks ago Link To Comment
"A free market would look nothing like Monopoly. Transactions would never be compelled. Wealth creation would not be capped. And competitors could freely enter and exit the market. The “game” would continue as long as people continued pursuing their values and creating wealth. A free market economy would not be limited to a predefined pool of resources, but propelled by the unlimited resource of the human mind."

Landlords would be required to lower rent once they'd priced everyone out of the market. It's a fool who charges rent so high his lessor cannot afford to eat, not a Capitalist. The Capitalist doesn't want to take what you have, he wants to provide a product or service you find useful and to be rewarded for doing so.

When we say the Market will police itself, we're talking about all the individual choices by consumers and producers every day. If someone charges a ridiculous amount for a home, I'll go to someone else. When that home sits idle (producing no income for the owner) for a long enough period of time, the owner will lower his asking price, or he will be saddled with useless property. If he does this often enough in his life, it doesn't matter how much money he started with, HE WILL GO BROKE.

Capitalism is simply the word that defines a condition where "people are free to trade with each other uncoerced." That's is. It's not a "fake system". It's not an "artificial construct". It's simply what happens when there's no one to interfere with you and I coming to an agreement on an exchange.
50 weeks ago
50 weeks ago Link To Comment
I agree with what you're saying but there are still some unfortunate side effects to capitalism which are not easily accepted.

Consider what happened in Bangladesh a few months ago. An entrepreneur in the textile business had expanded his factory by building up on an existing property. The government (?) engineers had said he could build up until he hit five storeys but he built until he was at seven storeys. Apparently, the building wasn't strong enough to support all that weight and eventually collapsed, killing around 1100 people.

It was certainly not in the businessman's interest to kill his employees. As a human being, I have to believe he would have grave regrets about that simply because it's obviously wrong. As an entrepreneur, collapsing his own building and killing so many employees obviously exposes him to all sorts of avoidable costs, like having to build a new building, finding new employees and training them. He also literally killed some of his potential market since his own employees would surely buy some of his production. And, of course, the legal consequences of being culpable in the deaths of all those people are staggering.

Despite that, he went ahead and built the factory too high and killed many people.
I don't know what penalties he faces for his actions/negligence but I have to assume they are severe. (Perhaps he can escape those consequences with political pull or a well-placed bribe; the Third World is like that sometimes.)

I suspect the government is culpable too in that they didn't enforce the height restriction for his building and didn't detect that the building was starting to crack or didn't do anything about it if they did detect it. But since governments tend to look after themselves, I'll be surprised to see the government punish its own employees. At best, a few low-level types may be thrown under the bus.

Do we just have to accept such things as an inevitable but unfortunate consequence of life? Is there ANYTHING in capitalism that protects innocents like these factory workers? For that matter, is there anything in SOCIALISM that truly protects workers against horrors like this?
49 weeks ago
49 weeks ago Link To Comment
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