Freedomain Radio

Hey,

I am familiar with Stef's YT video about Robber Barons (http://www.youtube.com/watch?v=TbgP0O4VBz8) as well as his section in Everyday Anarchy about Robber Barons, however I still have a few questions and/or doubts:

FWIW, my US History professor was lecturing about the Robber Baron period. He was specifically talking about each "big business" such as oil, steel, railroads, etc. As he was talking about this period, and the first introduction of government regulation (Sherman Anti-Trust Act, there may be prior legislation that slips my mind), I was keeping in mind the free market, FDR, and the like. However, my professor made one specific reference that left me really thinking... He said that one specific railroad "operator/owner" had a basic monopoly on the market (around 90% of the market) and charged say... $10 for tickets on his railway. Based on Stef's video, a competitor should undercut the price and they would be golden, correct? Well thats exactly what competitors did, they charged say... $7 a ticket (around the floor price where this company would still make profit). The $10 ticket company which had already been established and made a lot of money in this industry saw this new competitor at $7 and were alarmed. In response, they cut their tickets down to $5/$4. Of course this ticket price lead to a loss of money for the "monopoly" however the new competitor ($7) would lose customers to the monopoly and could not lower their prices anymore or they would be bankrupt. It turned out they went bankrupt anyway since no one would buy their $7 tickets when an equally efficient rail line was operating at a cheaper price. The "monopoly" would then buy up the bankrupt competitor and then raise their ticket prices back up to $10 to make back the money they lost.

I'm not sure exactly how this fits into Stef's ideas on Robber Barons. I'm not even sure if this is historically accurate (I didn't do an extensive background check on this instance). The professor made many references to diaries and biographies of these "Robber Barons" so I'm assuming the information was extracted from there. I'm also not sure exactly who practiced this exact method, but I know it was in the railroad industry. Even if this never actually happened (since Stef uses non-historical perspectives in the YT video), wouldn't it work in theory?

I'm just bringing up this instance because it seemingly contradicts or infringes upon the proposed ideas in Stef's YT video and book. If it doesn't, please let me know where this fits in!

Thanks!

Many of the railroad companies received subsidies and land grants from various governments. Some didn't.

Also watch this:

Well I'd love to see the evidence and specifics regarding the case your professor summarized, because often the devil is in the details. But even if it is a genuine case, it would be one small case of successful monopolization via voluntary means against a mountain of evidence for state-backed cartelization. Keep in mind also that the fact that something undesireable can happen by voluntary, market mechanism is not a logical justification for a state-based solution to it. Laissez-faire markets are far from perfect, and, as libertarians, we should not fall into the trap of protesting that every single state-based approach to problems is necessarily ineffective or corrupt... but should point out that there are ways to deal with these problems through voluntary means - that there are REAL solutions to be had without resorting to coercion and the risk of regulatory-capture, calculation problems, corruption, and the unintended consequences that predictably comes with government "solutions."

There is a wonderful book that you can probably find somewhere on the internet as a downloadable pdf called The Triumph of Conservatism, by Gabriel Kolko. Strangely, despite the fact that his book serves as solid evidence for libertarian positions, Kolko identifies as a socialist. Yet, his book is an extravagantly detailed and well-researched account of the relationship between big government and big business during the Progressive Era, and vividly articulates how many of the so-called Progressive reforms that became popular at the time were actually lobbied for by big business to their benefit. The beginning of the book explains with evidence how big businesses not only were failing to establish the cartels over industry that they presumed to be of "great benefit to the American people," but were also outright losing market share. I highly recommend it as a companion piece for your professor's lectures.

If there ever were a truly free-market 'monopoly', it would be the best thing possible anyway. Else someone else would be doing the job better.

This accusation was made about Standard Oil too.  From memory what actually happened when they tried that was that the competitors would point out that every $1 they spend matching the low prices cost SO $9, so all the had to do was get credit, run at a loss and wait for SO to offer way over the odds for the property to stop the losses.  If they exhausted the credit the people who buy at the bankruptcy sale could do the same thing.  Eventually the guy losing 9x as much has to cave.