Saturday Morning Cartoons - #3

In another video produced by John Sutherland for Harding college, we examine the profit motive and the effect it has on the lives of those operating in a free market. If you take just one lesson from the video, let it be that profit motive is a positive force, Adam Smith's Invisible Hand.



If you take two lessons from the video, let the second be this: competition prevents monopoly, thus only when competition is prevented can one occur. When Fudso and Sudso form a cartel to fix prices, they do so with the intent of limiting competition, because they're no longer competing with one another. But because the market was unregulated, little barrier existed to market entry and a competitor soon arose to undercut them.

In the presence of market regulation, the barriers to market entry are higher. Sometimes insurmountable. It prevents market entry of new firms, and monopolies occur as a result. So, though our government claims to protect its citizens against monopoly through anti-trust laws, it is only through interference of our government that it occurs in the first place.