The Duopolists

The two major parties, as Judge Richard Posner writes, “exert virtually complete control over American government.”  They are what economists call a duopoly.  Does the duopoly do a reasonable job of presenting candidates the people want?  Is there any hope of electing a candidate favored by a majority of the American people?  To find out you would have to have a ballot line for None of the Above and see how well it does.  We had a flawed proxy in 1992, when 19 percent of the vote went to Ross Perot.  During the campaign Perot had withdrawn once from the race under strange circumstances.  Presumably, few of his voters really wanted him to become president, so his 19-percent vote was a desperate protest.  A pure None of the Above line would not carry the baggage of a strange individual.  None of the Above may have won in 1992, 1996, 2000, and 2004.  Of course, None of the Above cannot govern.  If he won, we would have to have another election.

Financial duopolists share a market, and both enjoy profits in excess of those available in a competitive system.  They cooperate with each other rather than compete.  They have no incentive to cut prices significantly since, if one starts to do so, the other will respond, and both will lose profit.  Each would like to take a few points of market share from the other, but neither wants to put the other out of business.  And, of course,...

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