Bootleggers and Baptist

Sometimes moralists align with monopolists to protect their markets.

A few years ago, Mississippi was a “dry” state. Every so often someone would propose that they go “wet” and allow people to buy liquor at the store. At that time, preachers would rail against the evils of alcoholism, aided and abetted by moonshiners and bootleggers. Those folks had a vested interest in keeping whiskey out of the stores and in their `stills. Monopolists always want higher barriers to entry.

We can see the same principles at work today. Cigarette companies align with health groups to oppose e-cigarettes. Large banks team up with Treasury officials to support proposals to regulate systemic risk. Energy companies support a carbon tax or cap-and-trade regulation.

In many cases, people with a moral cause ally themselves with vested interests to support anti-competitive measures. But we should be wary in these cases. Because competition keeps us strong. And moral arguments should be judged on their own merits. And eventually, Mississippi went “wet.”

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-04T18:40:17+00:00 June 19th, 2009|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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