The Instigator
NovaLux
Pro (for)
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The Contender
LegalizedProstitute
Con (against)
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Monopolies wouldn't have Existed 1860-1900 in U.S. Without Subsidies

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Voting Style: Open Point System: 7 Point
Started: 1/26/2014 Category: Politics
Updated: 3 years ago Status: Post Voting Period
Viewed: 1,061 times Debate No: 44590
Debate Rounds (5)
Comments (2)
Votes (0)

 

NovaLux

Pro

To be sure, no real monopolies in the sense that a company owns a 100% share of the market, existed during the Gilded Age. But before the Civil War, companies with such a large share of the market where virtually nonexistent.

Pro will argue that the growth of monopolies without subsidies (mainly in the form of railroads) would be non-existent/ negligible, while Con will argue that monopolies would happen naturally without the subsidies.

Neither side can reference historical information after the 1900, but as comparing this time period to earlier U.S. is important to the issue, you can reference information before the period.

1st round for acceptance only.
LegalizedProstitute

Con

I accept, and look forward to a great debate!
Debate Round No. 1
NovaLux

Pro

For some background info I got the idea from this debate after researching arguments for another debate:
http://www.debate.org...
Not to be used in judging this debate in any way.

So whenever I ask why monopolies grew after 1860, people normally say it was lack of government oversight or the rapidly expanding technologies and markets. As for the first part, monopolies didn't exist in America before the Civil War, an era with comparatively less regulation. So that's ruled out.

And what about the rapidly expanding markets and technologies? Well, anyone can tell you this was a result of the thousands of miles of railroad track laid. Railroads that just happened to receive ridiculous subsidies from the government. An estimate for just the First Transcontinental railroad was that "Railroad executives had been given 23 million acres of land and $64 million in taxpayer money.(2)"

"Many historians have claimed that the great railroads of the late 19th and early 20th centuries could not have been built without government subsidies.(2)" While this claim may be debatable, they certainly wouldn't have been built as fast and marred by as many difficulties as the governmental railroad projects. This means no artificially fast growth of markets and changing of transportation methods that eliminated many competitors from the market. Suddenly, almost every company was at the mercy of the railroads, a government financed (even government run during the Credit Mobilier scandal) method of transportation. Every company depended on the railroads to transport new products at the same speed as their competition, or they would cease to exist.

Subsidies --> Corruption --> Subsidies -->
I think its pretty clear that the government simply giving money away to companies causes them to have a corrupt relationship, or maybe its the other way around. It's just a question of the chicken and the egg. But it leads to more subsidies, more special interest funds, etc. Many states even banned internal improvements in their constitutions because of the corruption it caused (1).

Comparative advantages --> Monopolies
Comparative advantages over other competitors in the market place is what allows one company to retain such a large share of the market. Subsidies, literally giving money/land to select companies, is a prime example of this.

So from this we can say that subsidies contribute to the growth of monopolies.

Some other comparative advantages monopolies had:

Special deals with railroads- Railroads could afford to cut special deals with select companies at the expense of others, owing to their stream of funds directly from the federal government.

Indirect subsidies- Two of the biggest monopolies in the United States, Rockefeller and Carnegie, actually gained substantial business from the government, because steel and oil were needed to construct rails and power trains.

Speculation- The two greatest panics of the Gilded Ages, those of 1873 and 1893, were in part caused by rampant speculation in railroad bonds. This greatly enriched the railroad companies while eliminating many weaker companies from business.

Corrupt Dealings- It's no secret that the growth of monopolies was helped along by corrupt dealings with politicians to buy votes and secure advantages over their competition. But this was notably absent during before the Civil War, a train of events (get it?) set in stone by a government partnership with railroad companies, which developed their own monopolies.

Really, the biggest change to the economy after 1860 was the extensive building of railroads funded by government subsidies. And suddenly, monopolies just started springing up.

Looking forward to the next round.

Sources:
1. https://mises.org...
2. http://waltercoffey.wordpress.com...
LegalizedProstitute

Con

LegalizedProstitute forfeited this round.
Debate Round No. 2
NovaLux

Pro

NovaLux forfeited this round.
LegalizedProstitute

Con

LegalizedProstitute forfeited this round.
Debate Round No. 3
NovaLux

Pro

I'm going to continue to add more general points since I forgot about last round. In the words of Ayn Rand, "There should be a separation of business and state and for the same reason there is a separation between church and state." Taking money by force from competitors (through tariffs in this case) and giving it to other, privileged, companies is the antithesis of a free-market. Government, in its very nature, supports big businesses by constricting trade and competition. Government cannot support competition, because every time it makes a regulation some businesses profit while others do not. Take for instance laws against selling raw milk, meant to protect consumer safety, but lobbied for by established dairy organizations.

These "natural monopolies" the government (often unsuccessfully) split up under anti-trust acts are only the government cleaning up its own mess. Government gives certain companies unfair advantages through the use of force, so those companies grow artificially fast and artificially large. There were large booms and busts during that period uncharacteristic of a free market economy, but not for one with government subsidies. Extend all my previous arguments.
LegalizedProstitute

Con

LegalizedProstitute forfeited this round.
Debate Round No. 4
NovaLux

Pro

Extend all my previous arguments.
It's a shame, I really wanted to debate this topic since it's an important thesis.
LegalizedProstitute

Con

LegalizedProstitute forfeited this round.
Debate Round No. 5
2 comments have been posted on this debate. Showing 1 through 2 records.
Posted by ADreamOfLiberty 3 years ago
ADreamOfLiberty
That's the damn truth, a natural monopoly shares many things in common with gremlins. Supposedly nasty but you can't ever find one.
Posted by LegalizedProstitute 3 years ago
LegalizedProstitute
I would love to accept. However, I can't, as I don't match the instigator's age, rank, etc. criteria. Would you please challenge me directly?
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