World Futures: Monopoly – Part One

 
By ANDY ANDREWS
Los Alamos World Futures Institute
 
Monopoly refers to a condition or circumstance when a specific person or entity is the only supplier of something that people need, require or want.
 
It deals with controlling something in a society defined as a group of people. And it is also a board game.
To get a better feel for what a monopoly is, consider a totally unrealistic example called drinking water and evaluate it in the context of U.S. currency (dollars) and the world population of 7.7 billion people. Assume that you own all of the drinking water in the world and that every person is dependent on you for his or her daily supply. Per guidance from my doctor, every individual needs to consume 64 ounces of liquid every day, liquid referring to something that is water based. Also assume that all liquids available are based on drinking water, that is consumable water.
Sixty-four ounces is one half gallon, making the requirement for drinking water 3.85 billion gallons a day. In Los Alamos the price for a gallon of tap water, which is drinkable, is $0.00529 per gallon or just over 5 mils. Keep in mind that gasoline at the gas station is priced to the mil.
Recently checking at the grocery store, a gallon of drinking water, in a plastic bottle, was priced at $0.99. Drinking water also was in one half liter bottles, sold in 24 bottle packages costing between $3 and $5. Using a $4 value and that 24 bottles of 500 ml equals 3.16874 gallons, the price is $1.26232742 per gallon.
Go back to your monopoly and the world population needing 3.85 billion gallons of drinking water per day. At the various prices cited, your revenue income per day and per year would be:
Type                   Dollars Per Day    Dollars Per Year
County               20.3665 million     7.434 billion
Gallon Bottles    3.8115 billion        1.593 trillion
1/2 Liter Bottles  4.8599 billion       1.774 trillion
 
Obviously, you would become really rich almost instantly. Of course, this is a silly example because you cannot, as an individual, control all of the drinking water. Further, it ignores the fact that the numbers reflect the cost to consumers (revenues to you) but not the cost of acquisition, processing and distribution (your costs). Yet on a small geographic scale, one of the numbers reflects the cost per gallon of water in a monopoly.
The County of Los Alamos delivers potable water to all of the facilities in the county. It owns the very costly infrastructure of distribution. As an individual you cannot compete with the county for the distribution of potable (drinkable) water unless you can make a really large investment or you have a different or unique aspect to offer. In the case of drinkable water, it is in the packaging.
Using the numbers cited, a half-liter bottle of water costs $0.167. The same amount of water from the county costs $0.00069, but you must provide the container and fill it from the tap. If all your water intake comes from the tap (county) versus half-liter bottles, the cost per day would be $0.000\2645 (county) versus $0.64 (bottled). Per year this equates to $0.97 (county) versus $233.60 (bottled).
As stated, this example is totally unrealistic on a global scale, yet a monopoly exists on a local scale. The county has a monopoly on water distribution. Or does it? You can buy water at the grocery store. What about electricity? If you are in the county, you probably buy it and have it delivered by the county. Of course you could go solar, but would you totally disconnect from the county system? You could buy batteries at the store or have a fossil fuel powered generator. Are you ready to do it all yourself?
Historically, one can find many examples of government intervention to create or limit monopolies. For example, in England in 1266, under King Henry III, the prices of bread and ale were fixed in correspondence to the price of corn. Moving forward in time one can find other monopolies such as salt, coal, petroleum, steel and diamonds. Were these really monopolies? Not if the definition of monopoly includes “only supplier of a particular commodity.”
In exploring monopolies as we move into the future, a mental concept of monopoly versus perfect competition is useful. I cannot prove it but it is my belief that the differences between perfect competition and a perfect monopoly can be represented by a bell curve or Gaussian distribution. This is neither provable, nor measurable nor real, but it does provide an image to be contemplated.
In the United Sates you can receive from the government a copyright on something you write. This is a time-limited monopoly. Where does it fit on the distribution curve of total freedom versus total control? And how do you define “total”?
Until next time…
 
Los Alamos World Futures Institute website is LAWorldFutures.org. Feedback, volunteers and donations (501.c.3) are welcome. Email andy.andrews@laworldfutures.org or email bob.nolen@laworldfutures.org. Previously published columns can be found at www.ladailypost.com or www.laworldfutures.org.
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