Competition was never about protecting consumers.

I became suspect of the “competition protects consumer” narrative way back in 1987. In the spring of that year I started work part-time at a gas station. On the first day my manager explained to me how the gas station determined its gas prices. I told him I was under the impression that the station used some type of mathematical pricing formula ala what I learned in college as an economics major. “Bless” his heart. I can still see the look on his face when I laid that “what I learned in the classroom” nonsense on him. “No”, he said. “That’s not how you do it. What you do is each morning look across the street and see what the other station is charging and then change our prices to reflect theirs.”

It was a rude awakening for a 23-year old: that the theoretical stuff you learned as an undergrad was so much nonsense. That consumers of gas station fuel were being taken on a roller coaster ride of gas pricing based on what the gas station across the street was charging.

Of course, there are other factors that contribute to the changes in gasoline prices at the pump; the supply of oil, the price of a barrel of oil, decisions by oil supplying cartels, i.e. OPEC, the barriers to entering the local retail gas market, and regulations against price gouging. If local regulations allowed more retail gas operations to enter the market, in theory prices should fall. And if antitrust rules are enforced, retailers would be prohibited from acting in concert to raise prices. For the past 130 years this alleged consumer centric view of competition has dominated economic and legal thinking. As Americans left the farm and moved to the city, their self-reliance values were replaced by consumerist values. Americans became targets for a progressive philosophy that replaced self-reliance with the narrative of government protection. Trusts, large monopoly firms, had to be broken up to ensure that the emerging consumer class was not taken advantage of via high prices or low quality of services. “Competition” was to be the rallying cry.

But is competition as we know it today realistic or just a coopting of a term for political gain? What are firms really competing for and who does the promotion of competition actually benefit? In a corporate-capitalist system, analysis of any economic issue should begin with a question concerning the preferences of those holding capital. The entrepreneur and investor choose an activity that may result in increasing the amount of capital they hold at the end of the day. For the investor in particular she is concerned not primarily with consumer choice but with the ability of her capital to be placed and optimized in as many markets via as many opportunities as possible.

For the holder of capital, real competition is synonymous to the wealthy person in the Book of Matthew who gave his serfs a certain amount of talents and required that each one of them maximize returns on those talents. He wanted them to compete with each other like an episode from “The Highlander” with the victor receiving a portion of the returns in exchange for the labor they expended in generating those returns.

And the consumer’s role in this vendor competition? Simply, the consumer’s role is to be “coined.” Once the consumer gave up their willingness to be self-reliant, he put himself at the mercy of the entrepreneur and the investor. The consumer protection narrative is designed to ensure his comfort with exchanging personal and economic liberty with the convenience of having his needs provided by the capitalist. The illusion of choice makes him available for exploitation in the vendor competition scenario. The greater the number of consumers available for exploitation, the greater the opportunity for the entrepreneur to demonstrate to capital that it has the ability to maximize returns on and to capital. For the investor, this means that the larger the number of consumers, the more the market can be segmented and greater segmentation creates greater opportunities for creating monopolies within sub-markets. A monopoly structure leads, per microeconomic theory, to opportunities to increase prices. Contrary to the progressive narrative that a competitive market structure is the most desirable, a monopoly market structure is the ideal for entrepreneur and investor.

Consumer protection is valid only to the extent that it makes a buyer available for entrepreneur and investor exploitation. To limit the level of exploitation, the consumer should pursue self-reliance in as many areas of economic life as possible. It will require embracing more inconvenience in return for more peace and liberty.

My simple take on what a city is

People move to Atlanta for various reasons. An individual may be a recent college graduate that received their first job offer from a company located here. Others are moving here to start a new business or expand an existing one. Some are leaving a traumatic experience that occurred in another city, like death in the family or divorce hoping that Atlanta provides a platform for a new life. Others simply like the weather and the city’s southern charm.

Whatever the reason, I think continued success here needs to be based on a couple realities about cities in general and Atlanta is particular. While we tend to look at a city from a perspective of what can this city do for me, we should round out our perspectives by asking what does this city expect from me? What is its role? To whom do the benefits of a city truly flow?

I admit that my connection to Atlanta is far from emotional. The city doesn’t feed an emotional need for me. While I would not want to live in a town with one traffic light and no movie theater, I don’t rely on a place for happiness.

What I appreciate and do need from a city is its ability to function as a hub for trade. A city should foster an environment that drives thought. It should have the infrastructure that provides an adequate platform for the exchange of ideas. It should, as a community or society, provide a safe environment for exchanging information. Since people are the primary source of information, people should feel safe and secure moving about and engaging with each other.

City governments promote themselves as suppliers of protection and infrastructure for its city’s residents. City governments exercise a near monopoly over protection services, organizing and regulating violence in order to meet their marketing message. I won’t get in to how individuals can and should compete with government to provide these services for themselves, but for now bear in mind that individuals can, but government does its best to dissuade the individual from doing so.

To stay viable as a service provider to taxpayers, city governments are expected to create public policy that supports the city’s function as a trading post in the digital age. For example, reviewing and approving broadband provider requests to use public rights-of-way to lay cable or construct and deploy cell towers in an expedited fashion provides information entrepreneurs increased assurance that they can conduct commerce in the city. It also provides broadband providers assurance that they can maintain returns on their capital while meeting their customers needs.

The city’s other function is that of a tax collector for its investors i.e. bond holders, members and employees of government, income-transfer beneficiaries. It aims to turn every resident into a tax-generating event, whether through the payment of sales taxes, property taxes, or business licenses. By providing infrastructure i.e. cell towers, streets, airports, the city contributes to the increase in the number of information seekers and information providers that trade in its jurisdiction, leading to an increase in entities that pay taxes and the amount of taxes collected.

How does knowing this contribute to your success in Atlanta or any other city? You can best guess the value you are bringing to Atlanta’s table when you understand what is being traded in the city, the information that is being demanded. You can best structure your labor or entrepreneurial activities to meet those trading needs. You become an asset.

Unfortunately, the State will wish to extract a significant portion of your success via income taxes. We’ll save that for another discussion.