HIGHLAND, UT | 8 May 2008| Government-supported monopolies don’t let go. They develop a certain addiction to the paternal support they receive. England is learning this first-hand with their state-run Royal Mail that was deregulated in 2006 and is now on the verge of collapse. In a Guardian story dated May 6, 2008, Terry Macallister reports the following.

“There is now a substantial threat to Royal Mail’s financial stability and, therefore, the universal service. We have come to the conclusion, based on evidence submitted so far, that the status quo is not tenable. It will not deliver our shared vision for the postal sector…”

Mcallister is quoting an “interim review produced for business secretary John Hutton.” The story does not present any solutions, either from the interim report or from the reporter. However, the general slant to the story indicated that going back to pre-2006 operations was desired. This is a typical response from those coming off the doll and trying to make ends meet on their own.

 Key Points

• Government assistance always dulls the senses to quality, whether in an individual on welfare or companies on “corporate welfare” or government-run companies. Benjamin Franklin declared: “Compassion which smothers the instinct to strive and excel is counter-productive” (Skousen, p. 219).
• Government-run companies can charge much less than other entities because they receive tax assistance from the government. This distorts the adherence to Principle 9: Profit is the tool of validation.
• When an industry is deregulated, like England’s Royal Mail, it often goes through withdrawals because it is instantly forced to rely upon Principle 9, but doesn’t know how to.
• When a company goes through these withdrawals, the solution is never to go back on the doll, but rather to keep pushing forward with unregulated business. This may cause the failure of the originally government supported company. But if the industry is one in demand, others will rise to take its place. Sometimes it is an industry that has very little demand, such as America’s mass transportation systems. These entities run on the public doll almost exclusively. They charge such low fares that they cannot cover costs. Plus, the majority of the population does not use mass transportation because of the tradition with the automobile, it is much more flexible for the driver’s schedule and represents a degree of freedom that America is not willing to relinquish. If American mass transportation were to be deregulated, low demand would cause the extinction of the industry. This is as it should be. The efficiency of the market dictates that if demand is too low, supply will disappear as those who would supply the good or service would move on to more profitable endeavors.
• As in business, so in individual life. Families that have been on welfare tend to stay on welfare for many generations. When individuals begin to recognize the principles that lead to true prosperity and attempt to follow those principles, they can often feel the same fear as England is feeling with their beloved Royal Mail. The desire is to go back to that sense of security under the government’s ample arm.
• The question is really one of fear vs. faith. Those who have faith in themselves and in the economy of mankind will separate their enterprises from government control and assistance. Those who allow fear to dominate their minds, will return to the good ol’ days. In the case of the Royal mail, it’s when the government took care of the mail for them.

Conclusion

Government subsidies in any form are addictive to the recipient. This is a world-wide problem, both for individuals and for businesses. Only when people decide to be responsible for their lives and the direction of their prosperity will they begin to overcome this addiction. The Royal Mail is faced with this challenge right now. Whether England grows in freedom or returns to its former less free days will depend upon the fear/faith factor of their national psyche. Here in America, we are faced with similar challenges from many industries. Our degree of freedom is likewise impacted by whether the government will withdraw itself from business.

Action Steps

1. Establish your own fear/faith level. Resolve to operate your affairs based on faith rather than fear.
2. If you are on any sort of government assistance, explore solutions that enable you to leave that behind. Start with a question reminiscent of Kiyosaki’s Rich Dad’s advice: don’t say, “I can’t afford it;” say, “How can I afford it?”
3. When things get scary, recommit yourself to a life of self-reliance and faith.
4. Associate with FreeCapitalists and learn self-reliance with and from them.

MRFC Principles: (2, 4, 9, 12)

Resources

Terry Mcallister, “Post competition ‘of no significant benefit’ to consumers or small firms” The Guardian, May 6, 2008.

W. Cleon Skousen, The Making of America, NCCS, 1985.

Robert Kiyosaki, Rich Dad, Poor Dad, Warner Business Books, 1997.