One thing I have noticed while researching Port Hedland is how much BHP Billiton, the world's largest miner, depended on Government support to get where it is today. This is from Helen Hughes's The Australian Iron and Steel Industry 1848-1902 (1964, p.192):
The Broken Hill Proprietary’s monopoly position has inevitably influenced its decision making, not in the direction of unduly high prices or profits as the proponents of [sic] nationalization feared, but rather in its failure to promote an adequate rate of growth, its failure to take risks and to show enterprise. Yet in this respect the company has been far from unique in the Australian setting; rather it has shown a reliance on government support and a reluctance to leave the safe havens of the domestic market which is a heritage of a hundred years of government assistance and tariff protection.
Even as the Commonwealth Government put an embargo on iron ore exports from 1938 BHP showed no concern, given that their position was safe: they had ample reserves thanks to monopoly licencing from the State Government, their existing export contracts for iron ore and pig iron were not affected and – most importantly – all potential export competitors had been eliminated overnight. The BHP case is just another in the long list of reasons why business should never be relied upon to defend free markets. They will always look for an opportunity to jump into bed with Government if the institutional structure allows it no matter how badly it hurts everyone else; they will only defend competition and the market place when it suits their interests.
The desire for further government protection of any private enterprise – or lack of protest when it is proposed – is especially true when the corporation in question is already dependent on the State for preserving its position by artificially restricting competition, such as BHP was. For this is the only way a monopolist can maintain their market position over time without being so efficient as to deter competition; as Baumol (1982, p.14) demonstrated, even for natural monopolies once you factor time into the equation, "the heroes are the (unidentified) potential entrants who exercise discipline over the incumbent, and who do so most effectively when entry is free".
The policy implications of this are clear: "when entry and exit are completely free, efficient incumbent monopolists and oligopolists may in fact be able to prevent entry. But they can do so only by behaving virtuously, that is, by offering to consumers the benefits which competition would otherwise bring. For every deviation from good behaviour instantly makes them vulnerable to hit-and-run entry".
Whenever the Government goes around proclaiming that they have the support of "business", it would be wise to first look at why "business" is supportive before blindly assuming it is good for the economy as too many pundits do.