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Government-owned and government-subsidized enterprises represent monopoly, in that markets or parts of markets are reserved to their exclusive possession by means of the initiation of physical force. Government-subsidized enterprises, of course, are a category which includes all government-owned enterprises, inasmuch as the initial resources of government-owned enterprises are provided by the government and their subsequent losses are covered by the government.

The funds of all enterprises supported by the government are obtained by means of the initiation of force against the taxpayers, who certainly do not pay taxes voluntarily for such purposes. At the same time, the subsidies make possible those enterprises' possession of markets, or parts of markets, to which other suppliers are denied access. Competitors of the subsidized enterprises cannot gain their markets even if they are more efficient and offer better products, for the subsidized enterprises are enabled to sell their products at a loss, and even to give them away free of charge. Thus, government-subsidized enterprises are monopolies: their markets are reserved to them on a foundation of the initiation of force against the taxpayers, which then makes possible their ability to retain their markets despite the economic superiority of competitors.

The monopoly position of government-owned enterprises, and other government-subsidized enterprises, can be buttressed by the initiation of force against parties other than the taxpayers--above all, the initiation of force directly against competitors or potential competitors. The government-owned postal service in the United States is an example of this phenomenon. Here, in order to limit its losses, the government prohibits important categories of competition, such as the delivery of first class mail, which apparently would be highly profitable to competitors at the government's present rates. It simply declares most of the roads of the United States to be "post roads," and then prohibits the carrying of private first-class mail over the post roads. Whoever would carry such mail would be in violation of the law, and would face the threat of fines and imprisonment.

An even more important example of monopoly than the postal service, in the category of government-owned or government-subsidized enterprises, is the public education system. The total absence of tuition charges in the public elementary and secondary schools, and the substantially lower tuition charges in the public colleges and universities, which tax-financed subsidies make possible, enable the public education system to retain the far greater share of the education market despite its clear inferiority in comparison with private schools.

As the result of the subsidies the government system receives and thus its ability to charge prices below cost-indeed, no price at all - it is not sufficient that a private school or college simply be perceptibly better in order to induce customers to give it their patronage rather than the public system. To take advantage of the superiority of the private schools, students or their parents must be prepared to pay the full tuition in order to gain what is merely an improvement on what is offered in the public system for nothing or for very little. In effect, they are placed in a position in which to choose a private school or college, they must pay the full price for what, from their perspective, is not the full product, but only a qualitative increment in the full product, because they already have the basic product from the public system for nothing or for very little…

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