Monopolist or Competitor

The difference between a monopolist and competitor is quite simple.

The monopolist cannot compete in a free market.

This is why I have always classed AT&T and Verizon as monopolists. They do not compete in free markets. They compete only in closed markets, markets with a very limited number of scaled competitors, high barriers to entry, where outrageous overhead and executive salaries are not just tolerated but encouraged. Every past effort by these companies to enter competitive markets, whether in computing or services or international, has failed.

The same is true for Carlos Slim, the Mexican monopolist whose Internet model, through TelMex, we have spent this decade importing. The Slim monopoly has done more than anything else to retard Mexico’s international competitiveness in this decade. The giant sucking sound which has lured Mexicans to America in droves, yet kept the country from competing in the manufacturing marketplace, owes a lot to Carlos Slim.

Here’s more proof, as if proof were needed. CompUSA, the computer retailer he bought just 7 years ago, is being dissolved.

I have fond memories of this company from 20 years ago, when it opened
one of its earliest operations in Atlanta. Actually it was in Norcross,
on Jimmy Carter Blvd. Soft Warehouse was its name, and it offered
pallets of gear, as well as very smart people. It was a wonder. Prices
were half what they were elsewhere.

After it became CompUSA the good people disappeared. Even before Slim
bought the company it was just another computer retailer, just another
Fry’s wannabe, doing things half as well, with twice the overhead.

Slim drove it completely into the ground. He missed the opportunity in
services pursued by BestBuy and Circuit City. He missed the chance at
scaled savings offered by Fry’s. He missed the Internet. The company’s
offerings in all these areas were weak, second-rate.

"We made a mistake with management" was Slim’s excuse. But choosing
managers was Slim’s responsibility. The fact is he lacks the capability
of hiring people who can succeed in a competitive market. It is an
alien concept to him.

The fact that our telecom marketplace is becoming dominated by men like
Carlos Slim should be a great danger signal to our politicians and our
economy. But right now no one hears it.