Discussion questions for academic study

Cartels should be illegal. In a perfectly functioning economy, prices should be determined by supply and demand. A cartel allows firms to break that relationship and set their own prices. It could be argued that most goods either have alternate suppliers (such as the non-OPEC oil producers) or substitutes, the presence of either reducing the power of the cartel to set prices. With some goods, the cartel serves to protect itself from strong influences, such as is the case of OPEC (Gibson, 2010). However, there are certain goods that are difficult to produce and distribute, and those goods are subject to undue influence from cartels.

The question of whether government should have any policies to break cartels is rooted in the question of the role of government in the economy. Essentially, in a free market society the role of government should be only to moderate to the degree that the market for a good is distorted. As cartels distort markets, the government does have a mandate to put in place regulations to limit the power of cartels or to eliminate cartel behavior. Currently, this takes place more with laws than with economic policies (for example the body of antitrust law), but these laws are grounded in the desire of government to ensure markets are as free as possible.

2. Microsoft is not a monopoly. There are a number of competitors for its core operating system, including Apple and Linux. While the latter may be poorly marketed and require a steep learning curve, certainly the former does not. The Leegin v. PSKS ruling allows firms to set minimum selling prices, but there are many other tactics that can be used by manufacturers in order to increase their profits, such as bundling and exclusive distribution agreements.

Microsoft is still subject to the same market forces as every other company in its operating sectors. If it sets prices for its products, consumers have the right to choose alternate products. Indeed, consumer dissatisfaction with elements of Microsoft's products has created opportunities for competition, and Microsoft faces few segments without strong competition.

3. The United States should not pass a law that assures all workers a wage above the poverty level. Wages are largely determined by supply and demand, such that minimum wage work is reserved exclusively for those with few employment assets. Workers can increase their own value in the workplace by improving their work assets, through education, effort or tenure.

In addition, the U.S. economy would not necessarily benefit. A higher national minimum wage would distort the market for labor in some states that currently face conditions leading to lower wages. This disruption of the market could reduce demand for labor and could also result in a less efficient market. In addition, increases in production costs are often passed on to consumers. While the minimum wage worker may earn more, inflation will increase, essentially transferring wealth from all consumers to a small group of workers. This does not imply the creation of new wealth, only a redistribution of it in a manner that increases economic inefficiency. In addition, a higher minimum wage entices workers into the job market to the detriment of other workers, and many minimum wage earners are young singles living at home, so the social goals of a higher minimum wage are largely unmet (Garfield, 1996).

4. An athlete can earn $1 million for their work, the same as any other worker. The athlete is generating a product -- performance for the employer, who sells competition and entertainment. As such, the athlete has economic value and should be compensated in line with that economic value.