I recently watched the movie Tucker: The Man and His Dream, and regardless of the normal film analysis, it does an expert job at describing how disorderly and stifling direct state action and the resulting cartels are.
From economic theory, cartels can form in a fully free market. These are a result of entrepreneurs that have succeeded and have decided to cooperate to preevent future competition. Where this theory diverges from the orthodox teaching of cartels is how long they last and how they dissolve. Under orthodox economics, these cartels could last forever and have to be destroyed by state action, and after that happens, free competition finally returns to “the market” and consumers are better off. In reality, however, these cartels would be subjected to extreme pressures to dissolve. Innovation is continuous, meaning either all parties have to adopt innovations at an equal rate to stay ahead of their competitions but not also burden the cartel, or the cartel must dissolve due to an imbalance of productivity, profit, or a preponderance of superior competition.
Public policy, however, ignores this entirely. This fact of reality is entirely too inconvenient to lawmakers, politicians, and established industry. As we see in the movie, all of these forces coalesce to destroy new entrepreneurs. The politicians gain better political standing in doing so, and by seeking this consolidation in political power, they end up strengethening cartels by necessity. In the movie, the “Big Three” are protected and, in all honesty, entirely one entity with the senator, who signifies the power of the state. It is this entity that ends up issuing the subpoena for Tucker, confiscating his plant, and utterly ruining his company and reputation for the unforgivable crime of daring to go against the established motor companies. This is by design of the political system. Under the guise of protecting the public and facilitating competition, the state ends up knowingly promoting the opposite, which should be a great concern to all.
In a free market, Tucker’s idea could have brought affordable and stylish motor safety to the population. The movie goes through great lengths to emphasize the great innovations of Tucker, everything from better motor design to a crash on the testing track that served to emphasize the safety and durability of the car. In a free market, this would have been available to the public, and as a result, the investors could have also profited and used that money to satisfy their wants and even invest in further innovation and invention. Tucker could have used the success of his car to further his own innovative career in a similar manner.
Instead, due to the regulated market, Tucker is destroyed. The media apparatus (another entity basically of the state due to war measures) destroys him due to the deep connections between media and politics and media and established corporations. The legal system breaches its own codes and statutes to bring down Tucker. The Big Three engage in corporate sabotage. The state with its cadres of politicans get to redistribute property and means of production to their friends by legislative and executive fiat. Not only does this destroy Tucker and everything elaborated upon in the prior paragraph, but now there are a whole host of consequences to deal with. The public-private partnership was strengthened due to Truman’s actions (which would lead to such great policies as nationalizing the country’s steel or had already led to the splendid, sane decision of U.S. v. Alcoa). This partnership would attempt to freeze entrepreneurship, innovation, and by extension the public behavior and culture into place, paralyzing it in the immediate postwar.
This is all history, one may think, but this would be too good to be true. The events described in the movie would be commonplace today, simply with more regulations and up-to-date technologies. If one were to try to innovate like Tucker, one would be subjected to much more bloated IP laws, a much more armed and tyrannical bureaucracy, a legal system hostile to native and actual public interests (Tucker would no longer be targeted as a mere potential competitor, but also because he believed in the old American ideals and values and lived a normal, traditional life), a social media conglomerate intent on slandering him, and a media system entirely owned by a few families that also happen to be familially related to most of the state. We are undoubtably worse off as a result.