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Issue 3 and Coercive Monopolies
Sunday, November 05, 2006 "[T]his is how our economic system works. The reward is going to the people who risk the capital." Fred Nance, Greater Cleveland Partnership as quoted in the Plain Dealer Memorandum TO: Fred Nance FROM: Ed Morrison SUBJECT: Issue 3 and Coercive Monopolies Issue 3 grants casino monopolies to both Forest City and Jacobs Entertainment. (Click here for a detailed policy analysis.) "In economics, a government-granted monopoly (also called a "de jure monopoly") is a form of coercive monopoly in (which) a government grants exclusive privilege to a private individual or firm to be the sole provider of a good or service; potential competitors are excluded from the market by law, regulation, or other mechanisms of government enforcement." Source Wikipedia The coercive monopoly created by Issue 3 translates into a windfall for the nine owners designated in the amendment. According to the Columbus Dispatch: "Charles J. Ruma, whose Beulah Park racetrack in Grove City made $778,000 last year, would reap most of an average $30 million annual windfall from slot machines if state Issue 3 passes." Source: Coumbus Dispatch, Sunday October 15. Granting coercive monopolies is how non-market economies -- e.g., the former Soviet Union, China before its 1979 reforms started -- operate. History has proven this approach to be inefficient. Further, the extensive intrusion of politics into markets tends to promote a climate of corruption. (Former Louisiana governor Edwin Edwards is now serving time for his role in allocating casino licenses in Louisiana. Source: Tyler Bridges, Bad Bet on the Bayou: The Rise of Gambling in Louisiana and the Fall of Governor Edwin Edwards .) Why is the GCP sanctioning this approach when it comes to casinos for Ohio? I had thought the GCP was supposed to be promoting free markets and a climate of innovation in Northeast Ohio. posted by Ed |
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Here's another quote from the same PD article:
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"A Nautica casino with 3,500 slots would double the number of slots and table games that Jacobs Entertainment operated last year at five casinos in Colorado and Nevada, and at truck-stop plazas in Louisiana, records showed. The company, which carries heavy debt, reported $252 million in revenue last year." Going into heavy debt is what Fred equates with risking capital. I call it being foolhardy, and we shouldn't bail out companies who go into debt and then rely on political gangsterism and public-relations-firm lies to get them constitutional amendments to bail themselves out, in perpetuity. We shouldn't risk our own capital as a people with the slots operators, and the capital of our future generations. I was just in one of those truck-stop slots places last week, and it was empty except for one skinny slots junkie playing for some kind of weird neon deliverance, and it was really depressing. Coffee was free. |
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