Refer back to the original post. I'm using a concept of organization that aurorasparrow implicitly proposed. If you don't understand, maybe you should've waited a bit before sticking your head in
I'll guess that you meant the distribution of food, shelter, and education, and other such necessities. Historically as governments became more intrusive, they did establish control over those things that aurorasparrow mentioned, especially education, which was usually a way of training scribes to write down all the king's various conquests. I'll agree that direct government organization of said commodities is a generally bad idea by both free-market principles and common sense. However, it is perfectly possible for a government to indirectly manage such things in very limited aspects under the aegis of "things that a government has the national reach to do and private organizations do not", such as setting standards. Things like the Pure Food and Drug Act were absolutely necessary when they were created and are still relevant now because of the inertia (or occasionally outright screaming and dragging of heels) with which a capitalistic system adjusts itself to consumer needs. When people are dying from carelessly prepared meat and have no other option to choose from due to monopolistic practices among in the meatpacking industry, the power and reach of a government becomes necessary to fulfill the desires and needs of the people, something that capitalism should do, by the idea of businesses being selected for customer satisfaction, but at which it often fails miserably.
Quote from msun »
The only "true" monopolies (monopolies that require state power to be broken) are born of state power.
"Monopolies" can only be maintained through continued mutual benefit to the consumer, especially in regards to necessary goods. Look through your examples of "naturally occurring monopolies" and you'll see that all of them were either protected by the state (railroads, oil, sugar, utilities) or were created by the state (post office, licensing arrangements, major league sports).
Refer to above example. Once a monopoly is achieved, even without state aid, it can do just about whatever the hell it wants because there is, by definition, no competition to have to woo customers away from. This would be the point where a government steps in
I will definitely concede that the state does create some monopolies and that this oversteps the bounds of what it should do in the economic arena. In the minds of the politicians who facilitated the railroad and utility monopolies, though, they made sense because the nature of those particular services makes them tend towards monopoly. It does no one any good to have a vast network of railroads with different gauges and schedules (in fact, this problem existed before the US government aided in standardization). The same applies to utilities. Sugar is a somewhat different case, but there was also a political impetus to help the sugar and fruit companies because they coincided with US imperial interests in the Pacific (particularly Hawai'i) and Central America. This doesn't make any of these monopolies right, but it does explain why certain ones tend to come into existence.
I disagree that oil was a state-supported monopoly back in the days of Rockefeller. If anything, the government fought that particular monopoly tooth and nail, precisely to try to preserve the free market that you value. A free market, like most human creations, tends to let power concentrate into a corporate system that develops all the characteristic flaws of an obese government and, I feel, displays the same essential problem that causes you to dislike the principle of a state - corporations run amok have the power to coerce you into doing something that you do not want to do, not though force but by denying any other choice. Under this standard, I think that the necessity of a government to oppose this sort of economic situation is obvious. Not that a government does much good when it's probably literally in bed with said corporate interests, but the real world is supposed to be a place that we make live up to our expectations, no?
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Read up on some economics other than the Keynesian crap you've been spoon-fed and you'll see that all four of those things can be handled quite well without government guidance.
How about you provide some answers then? A monopoly having to sell it goods at a buyable price does not signal a functioning market. De Beers is a good example. Or what if a monopoly was achieved on water? It sounds ridiculous, but right now most of the world's oil is owned by a very small group of people, and oil is almost as important.
Look at today. How much of our foreign and domestic policy are shaped by oil interests?
Stop confusing the readers. This is a question of government organization, not of government existence. Government can provide security without organization.
Uh, no, it can't. Government is organization by definition.
Reread my quote. "Relatively" "As a feature of government"
It's not that hard to understand my point.
Relatively as in since hunters and gatherers? How far back are you going with this?
And how do you expect there to enforce property laws without a government?
I've never said anything about being Anarchist. I've raised numerous points that cover much of what you are saying. The only issue I have against you is that you believe that government organization is a good thing.
It's not. Frankly, I agree with most of the other stuff you're saying. Don't characterize and go after what you think I believe.
We're obviously meaning two different things when we use the term government organization.
To me, it means the use of government power to benefit the people. This can go anywhere from the barest trappings of government to pure socialism.
I think you're reading WAY too much into my "organize our lives" quote. I meant it in the sense that we have taxes, follow laws, etc.
Perhaps you could simply say so, next time.
How about you provide some answers then? A monopoly having to sell it goods at a buyable price does not signal a functioning market. De Beers is a good example. Or what if a monopoly was achieved on water? It sounds ridiculous, but right now most of the world's oil is owned by a very small group of people, and oil is almost as important.
Look at today. How much of our foreign and domestic policy are shaped by oil interests?
See, the problem with your scenarios is that they involve an intrusive government by context.
No monopoly on water or oil could ever develop in a free market.
Uh, no, it can't. Government is organization by definition.
Not the organization you implied.
Relatively as in since hunters and gatherers? How far back are you going with this?
And how do you expect there to enforce property laws without a government?
1. Relatively, as in however long government property has existed in human civilization
2. See 1.
3. You enforce property laws through mutual consent. It's the very premsie of anarchism, and it's been shown to work in small groups of willing individuals.
We're obviously meaning two different things when we use the term government organization.
You clarified your position very clearly in your original post.
To me, it means the use of government power to benefit the people. This can go anywhere from the barest trappings of government to pure socialism.
What government power isn't used to help people, to some extent? It's a uselessly broad definition of organization and raises a bunch of new questions that I don't have time to answer. I'll get back to you and Teshav--- later.
The only "true" monopolies (monopolies that require state power to be broken) are born of state power.
Capitalist monopolies can only exist under state power for the simple reason that capitalism can only exist under the state. Corporation charters are granted to them by the state, and the corporation as an economical entity is so bloated, bureaucratic, inefficient and dependent on state largesses that it couldn't survive in a free market.
Under a free market, where the state had not pushed the free peasants to join the urban proletariat, where artificial barriers of entry weren't kept in place to prevent the small property owners from competing, wage labour would roughly disappear because profit (the equivalent of taxation of the produce of one's labor by a capitalist boss) would be impossible. Nobody would work for another human being for the 'privilege' of having all their production taken from them and being paid a pittance wage in exchange if people weren't granted land grabs and capital from the state which allowed them to deny other people's the right to work.
One recognizes a free market by the fact that it is not capitalist, but socialist. That is, the means of production are owned by the workers (not the state! statism is a later corruption of socialist ideas). Socialism has no need for the state.
Capitalist monopolies can only exist under state power for the simple reason that capitalism can only exist under the state. Corporation charters are granted to them by the state, and the corporation as an economical entity is so bloated, bureaucratic, inefficient and dependent on state largesses that it couldn't survive in a free market.
Well, I thought you were going to make the sensible point that one of historical purposes of a state has been to ensure the rights of property, for better or worse, which encourages the development of capitalism. Then, of course, you made an unsubstantiated assertion which is, to my view, untrue. As I've pointed out several times, corporations have come into existence without any sort of state aid, and in many cases the state fought against corporate power, particularly in the US.
I am not going to quote the rest of that post. Any assertion of what happens or would have happened without that nasty, interfering state influence is usually unverified by history and has no basis in fact. Never mind that your description of state interference is greatly overinflated and, in some cases, just plain wrong. States didn't push peasants to become an urban proletariat, they moved of their own accord because of many problems, including overpopulation and lack of economic potential.
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And angels know the rest.
SPARROW:
See, the problem with your scenarios is that they involve an intrusive government by context.
No monopoly on water or oil could ever develop in a free market.
I don't see why not. Money can buy anything.
1. Relatively, as in however long government property has existed in human civilization
2. See 1.
3. You enforce property laws through mutual consent. It's the very premsie of anarchism, and it's been shown to work in small groups of willing individuals.
The line between civilization and government is getting thinner and thinner in this debate. When did the line cross between people working together and a government?
And ANYTHING can work with small groups of willing individuals. Which is why I'm in favor of small local governments.
What government power isn't used to help people, to some extent? It's a uselessly broad definition of organization and raises a bunch of new questions that I don't have time to answer. I'll get back to you and Teshav--- later.
Uh.. Monarchies? Oligarchies? The world has pretty much always been people in power oppressing the populace and the populace fighting for their rights. America isn't as free as it should be because those in power are still trying to keep us down; not as down as dictators did because they can't, but down nonetheless. These are the descendants of your kings and sultans, and its one of the consequences of power.
Quote from xdarkangelx »
Capitalist monopolies can only exist under state power for the simple reason that capitalism can only exist under the state. Corporation charters are granted to them by the state, and the corporation as an economical entity is so bloated, bureaucratic, inefficient and dependent on state largesses that it couldn't survive in a free market.
So you're saying if the government stopped supporting Nike or Wal-Mart they'd collapse under their own weight? They're better run than our government.
A corporation is just a group of people all dedicated to making money. I don't see how the lack of a state removes this. Pirates are a form of corporation.
Under a free market, where the state had not pushed the free peasants to join the urban proletariat, where artificial barriers of entry weren't kept in place to prevent the small property owners from competing, wage labour would roughly disappear because profit (the equivalent of taxation of the produce of one's labor by a capitalist boss) would be impossible. Nobody would work for another human being for the 'privilege' of having all their production taken from them and being paid a pittance wage in exchange if people weren't granted land grabs and capital from the state which allowed them to deny other people's the right to work.
You're making the same mistake every Marxist does; pretending that the exploitation of labor is not a function of the market itself. People in power are going to write the rules to benefit them, and people with market power are going to abuse it.
If nobody had market power, then there wouldn't be any exploitation. but that goes without saying.
And the idea that all labour is equal is ridiculous. If I'm a smarter, better farmer than my neighbor, I'm going to do better than him, boss or not.
One recognizes a free market by the fact that it is not capitalist, but socialist. That is, the means of production are owned by the workers (not the state! statism is a later corruption of socialist ideas). Socialism has no need for the state.
Can you give me your definition of socialism? Because I've always taken it to mean command economies.
Exactly. The more of a market that a company has locked up (and therefore, more profits), the more advantageous it is to move on the market. The very fact that monopolies bring grotesque profits means that any meaningful monopoly cannot develop under a free market. It's impossible to muscle out competition - it's been proved again and again in book after book, and it's why corporations turn instead to state power to enforce their hold on the competition. It's why Wal-Mart pushes for a higher minimum wage: it's because they can afford the wage increases, while Mom and Pops can't.
Uh.. Monarchies? Oligarchies? The world has pretty much always been people in power oppressing the populace and the populace fighting for their rights. America isn't as free as it should be because those in power are still trying to keep us down; not as down as dictators did because they can't, but down nonetheless. These are the descendants of your kings and sultans, and its one of the consequences of power.
And yet, every monarchy and oligarchy has the *stated* purpose of benefiting their populace.
Also, you're making a unjustified claim in saying that democracy has the same (albeit less extreme) power complex as dictatorships and the like. Any proof on that?
XDarkAngelX: That's a load of crock. Labor is paid less than their value because someone else is supplying the land and the capital needed for the production of goods.
Exploitation theory is a joke.
Things like the Pure Food and Drug Act were absolutely necessary when they were created and are still relevant now because of the inertia (or occasionally outright screaming and dragging of heels) with which a capitalistic system adjusts itself to consumer needs. When people are dying from carelessly prepared meat and have no other option to choose from due to monopolistic practices among in the meatpacking industry, the power and reach of a government becomes necessary to fulfill the desires and needs of the people, something that capitalism should do, by the idea of businesses being selected for customer satisfaction, but at which it often fails miserably.
I would respond by saying that there has been no reason to doubt that free market economies on the small scale somehow fail in the larger scale. As businesses grow, government must be there to rein in corruption, falsification, and fraud, but such atrocities as the meatpacking industry generally resulted from a pro-business governmental environment through special interest lobbies, all of which should not exist in a government dedicated to keeping the markets free.
Refer to above example. Once a monopoly is achieved, even without state aid, it can do just about whatever the hell it wants because there is, by definition, no competition to have to woo customers away from. This would be the point where a government steps in
My point is that it is simply impossible for a "bad" monopoly to develop without state interference. The firm must continue to provide the best product to remain in existence. Arguments like barriers of entry, economy of scale, etc. don't work because the monopoly must take advantage of those benefits in order to truly drive away competition, and that, in itself, serves the consumer.
This doesn't make any of these monopolies right, but it does explain why certain ones tend to come into existence.
Obviously. You could also say that welfare, social security, all of our socialist policy leftovers from the Great Depression are still dragging our country further down through the muck.
If anything, the government fought that particular monopoly tooth and nail, precisely to try to preserve the free market that you value.
It fought it after it became a monopoly. You can bet your ass that government will fight Wal-Mart if it gets much bigger, but government was the one that facilitated its progress. Remember, this was the time where you could literally buy a Senate seat.
A free market, like most human creations, tends to let power concentrate into a corporate system that develops all the characteristic flaws of an obese government and, I feel, displays the same essential problem that causes you to dislike the principle of a state - corporations run amok have the power to coerce you into doing something that you do not want to do, not though force but by denying any other choice.
There is a key difference between the use of coercion and the power of corporations, as you have so eloquently put forth.
Coercion is a zero-sum game. But corporations, to deny you any other choice, must expend more resources than is worth the trouble.
As I've pointed out several times, corporations have come into existence without any sort of state aid, and in many cases the state fought against corporate power, particularly in the US.
Oh please. If there's a place where the state definitly did not fight against corporate power, it's the US. Contrary to say, Europe or Canada, who both had state socialist parties in power at some point in time, the USA had what? The right-wing reactionary FDR and his New Deal?
As for the economic troubles that forced the peasants to join the urban proletariat, they were state created through land monopolies. A man cannot be self-sufficient if he has to work for a landlord. The forced alternative between starving or joining the urban proletariat did not come from the sky, it was *planned this way*.
Quote from msun641 »
XDarkAngelX: That's a load of crock. Labor is paid less than their value because someone else is supplying the land and the capital needed for the production of goods.
And of course that land just poofed out into existence in the hand of the large land owners, who produced it out of their intensive labor. It was never, say, taken by force by feudal lords from the hands of the European village communes by primitive accumulation, or taken from the hands of Native Americans by state-sponsored companies like the Hudson Bay Company or colonists under the orders of foreign empires.
The Libertarian's idea of a free market is basically "Okay, no state interference starting... NOW!". It's just *coincidence*, mind you, that most of them come from families that benefitted largely from state largesses and unfettered capitalism. The idea is that the bully who threatened you for your lunch money decided to stop bullying you, so now everything is pish-posh and all is well? Hardly.
Without reparation from past state interference, the market cannot be free. The rights of land and capital ownership of most large corporations and wealthy capitalists will allow them to continue forcing us to work for them for a pittance, and these rights were granted to them by state interference in the first place. The state holds the gun and the capitalists own the bag, and the Libertarians claim that this means the state alone is criminal. Hah!
This necessary reparation takes many forms in socialist theories. Latin American socialists have called for land reform, for instance. As well, American Blacks (not necessarily socialists) have long asked for reparation for descendants of African slaves brought to America. But what we need is full on expropriation. It is our collective labor which built this country, so it is our collective wealth.
Quote from aurorasparrow »
So you're saying if the government stopped supporting Nike or Wal-Mart they'd collapse under their own weight? They're better run than our government.
Let me laugh. Have you seen what private companies do with things like education, healthcare or energy? It's a joke. Privatized healthcare in the USA is the pits compared to single-payer like Canada or Europe. California deregulation of the energy market, remember that one? LOL.
Wal-Mart only exists because of large scale subsidies granted to them by the state through the creation of large interstate road networks, which is the only way their business model can work. Or how about the railroad projects that Canada made to annex the Western provinces? Large monopolies could not have existed without the railroad, and this railroad was mostly paid by taxpayers.
Nike couldn't possibly sell you 0.89$ shoes for a hundred bucks if they didn't get incentives from Third World states who bribe them with the best possible deals so they'd use their factories, by violently repressing labor unions. Not to mention the USA government dumping food surpluses under the name 'foreign aid', surpluses which are only available because of subsidies to large agribusinesses, and who completly destroy the local Third World viability of peasant agriculture, thus forcing the displacement of small farmers to the new Third World urban proletariat *plus* discriminates against small USA farmers who have to sell under cost to compete with highly subsidized agribusiness ventures.
Quote from aurorasparrow »
A corporation is just a group of people all dedicated to making money.
No. A corporation is a single legal person, according to the state's laws. Also, the persons who own a corporation (more formally known as a *limited liability* corporation) are not considered liable for debts incured by that fictional, legal person, they are not considered liable for crimes this person may commit, and so on. This is part of how the state provides competitive benefits to large capital owners. Your average man on the street can't start a large corporation to protect his assets, he'll probably start a standard business venture and have much more liability as a person.
Okay, I gotta ask. Where the **** are you getting this ****?
And of course that land just poofed out into existence in the hand of the large land owners, who produced it out of their intensive labor. It was never, say, taken by force by feudal lords from the hands of the European village communes by primitive accumulation, or taken from the hands of Native Americans by state-sponsored companies like the Hudson Bay Company or colonists under the orders of foreign empires.
Oh, please. Show me the actual land owners that were forced out of their holdings and I'll be the first in line to protest their loss.
The Libertarian's idea of a free market is basically "Okay, no state interference starting... NOW!". It's just *coincidence*, mind you, that most of them come from families that benefitted largely from state largesses and unfettered capitalism. The idea is that the bully who threatened you for your lunch money decided to stop bullying you, so now everything is pish-posh and all is well? Hardly.
The libertarian believes that even further redistribution, even in the interest of "fairness," is counterproductive. And if you look at the history of redistribution, you'd see that that is the case.
Without reparation from past state interference, the market cannot be free. The rights of land and capital ownership of most large corporations and wealthy capitalists will allow them to continue forcing us to work for them for a pittance, and these rights were granted to them by state interference in the first place. The state holds the gun and the capitalists own the bag, and the Libertarians claim that this means the state alone is criminal. Hah!
The capitalist has done nothing wrong. He has neither forced nor cheated any he has dealt with (and if he has, he is in the wrong). The state should be held accountable for their actions, but are you to be faulted in making the most out of an opportunity?
This necessary reparation takes many forms in socialist theories. Latin American socialists have called for land reform, for instance. As well, American Blacks (not necessarily socialists) have long asked for reparation for descendants of African slaves brought to America. But what we need is full on expropriation. It is our collective labor which built this country, so it is our collective wealth.
What happens then? There is no possible way to run an economy efficiently on a concept of collective wealth.
Also:
Let me laugh. Have you seen what private companies do with things like education, healthcare or energy? It's a joke. Privatized healthcare in the USA is the pits compared to single-payer like Canada or Europe. California deregulation of the energy market, remember that one? LOL.
This type of nonsense has got to stop. The only reason private healthcare is so bad in the US is because they are allowed to work with the government to develop guidelines, resulting in a bureaucratic mess that insurance companies feed upon. The answer is less government regulation, not more.
Canada as the model health care system, with its fleeing doctors, six month waiting periods, and substandard care? Give me a break.
Exactly. The more of a market that a company has locked up (and therefore, more profits), the more advantageous it is to move on the market. The very fact that monopolies bring grotesque profits means that any meaningful monopoly cannot develop under a free market. It's impossible to muscle out competition - it's been proved again and again in book after book, and it's why corporations turn instead to state power to enforce their hold on the competition.
Monopolies certainly can - and do - form in a free market. Corporations turn to the state to protect their monopolies because it is the cheapest way to do so, not because it is the only way. Absent government protections, monopolies can maintain power by exerting pressure on resource suppliers and consumers (in a variety of forms) to choke off competition. The example you raised of Wal-Mart pushing for a higher wage is an example of this, though it can be done without the state (by offering higher wages accross the board than competitors, by "dumping" products on the market leading to a lower price at which smaller companies cannot continue to operate in the long term, etc).
Quote from msun641 »
There is a key difference between the use of coercion and the power of corporations. Coercion is a zero-sum game. But corporations, to deny you any other choice, must expend more resources than is worth the trouble.
Any amount of resources is "worth it" if you secure greater returns in the long run by keeping an entire market for yourself.
I agree with many of your other points, but to pretend that monopolies are solely the result of the state is folly.
Quote from XDarkAngelX »
:The Libertarian's idea of a free market is basically "Okay, no state interference starting... NOW!". It's just *coincidence*, mind you, that most of them come from families that benefitted largely from state largesses and unfettered capitalism. The idea is that the bully who threatened you for your lunch money decided to stop bullying you, so now everything is pish-posh and all is well? Hardly.
Quote from msun641 »
The libertarian believes that even further redistribution, even in the interest of "fairness," is counterproductive. And if you look at the history of redistribution, you'd see that that is the case.
Quite right about libertarians beliefs, but quite wrong in fact. Any respectable development economist will tell you that land reform and effective oversight of the financial sector are common ingredients to successful development. There are exceptions and there are myriad ways to accomplish either, but East Asia's development patterns are a case study in the difference that governmental oversight makes in guiding a country through the takeoff phase.
The amount of good ideas in this discussion is sensational. Unfortunately, the amount of ideology present is stifling it. There is a difference, you know.
Quote from XDarkAngelX »
Without reparation from past state interference, the market cannot be free. The rights of land and capital ownership of most large corporations and wealthy capitalists will allow them to continue forcing us to work for them for a pittance, and these rights were granted to them by state interference in the first place. The state holds the gun and the capitalists own the bag, and the Libertarians claim that this means the state alone is criminal. Hah!
Quote from msun641 »
The capitalist has done nothing wrong. He has neither forced nor cheated any he has dealt with (and if he has, he is in the wrong). The state should be held accountable for their actions, but are you to be faulted in making the most out of an opportunity?
These two statements are probably the best examples that I could find of sheer ideological rhetoric. It's no better from either direction.
Quote from XDarkAngelX »
And of course that land just poofed out into existence in the hand of the large land owners, who produced it out of their intensive labor. It was never, say, taken by force by feudal lords from the hands of the European village communes by primitive accumulation, or taken from the hands of Native Americans by state-sponsored companies like the Hudson Bay Company or colonists under the orders of foreign empires.
The first part is a typical after-the-fact distortion by ideological readings of history. Feudal lords gained control over their lands not by taking it by force from the peasants but rather because they were the only people with enough force to defend those supposedly communal villages from marauding invaders after all Roman government broke down. The French nobility, who constituted the prototypical feudal system, were defined and given power by the fact that they fought. Did their powers eventually grow far beyond the original bargain of liberty for safety? Yes, but that is simply the nature of government when it has a monopoly on force. The point is that the villagers wanted that monopoly, at least at first.
In the second case, you are quite right that those greedy imperialists grabbed all of the Americas from its rightful owners. Colonization in North America is probably one of the best examples of an agricultural state with a "modern" idea of property enslaving or eliminating hunter-gathers with a fairly egalitarian social structure. In this case your ideology is correct. It is not, however, applicable to every case, because history is far too idiosyncratic to conform to a specialized plan of how it should work.
Oh, please. Show me the actual land owners that were forced out of their holdings and I'll be the first in line to protest their loss.
Not every society conforms to a notion of property that falls under the capitalist model. Just because the Native Americans didn't own their lands in the Western sense of the word doesn't mean that they were not cheated out of those lands or deprived of them by force, something that a good libertarian would never do according to the right to property.
This necessary reparation takes many forms in socialist theories. Latin American socialists have called for land reform, for instance. As well, American Blacks (not necessarily socialists) have long asked for reparation for descendants of African slaves brought to America. But what we need is full on expropriation. It is our collective labor which built this country, so it is our collective wealth.
Latin American socialists are quite right to call for land reform in many cases, as their area of the world was run like an anachronistically feudal empire for a long time and that problem has lasted into the modern day in many countries. If those countries had governments and economies that worked properly, they could be some of the richest in the world, what with the incredible natural wealth of much of the area.
African-American reparations is a tricky subject, because like the actual execution of land reform, they are attempted solution to a social and economic problem that was years in the making. I personally disagree with the idea because I feel that the black community would be better served with programs to help them achieve the true economic equality that has always been their due than with what is, essentially, guilt handouts that will make other minorities rightfully angry. Of course, the execution of such a program is just as difficult as anything else.
Your third point is, to my eyes, sheer rhetoric. Were you working away in the steel mills in the the 1890s or a road crew in the 1940's? And for that matter, the nation that those people you identify yourself with built up is your wealth. You were lucky enough to be born here, and whatever you or your ideology may say about the quality of life in this country, it's certainly better than being massacred in the Sudan.
What happens then? There is no possible way to run an economy efficiently on a concept of collective wealth.
Nobody said anything about collective wealth. Land redistribution, when the historical circumstances call for it and it is properly executed, is one way to try and purge an economy of feudal influences. That horrid phantom of communism could only be summoned down on sensible land reform by an overworked ideological hatred of such things.
Let me laugh. Have you seen what private companies do with things like education, healthcare or energy? It's a joke. Privatized healthcare in the USA is the pits compared to single-payer like Canada or Europe. California deregulation of the energy market, remember that one? LOL.
More overgeneralizations. Yes, deregulation in California was a disaster and I should know, seeing as I grew up with it. Public education, however, is an even worse disaster (as I should also know - this is the county of Los Angeles speaking) and is at least half the fault of the teachers' union, that most venerable of socialist institutions. Nationwide educational standards? Yes, otherwise those poor children in the Bible Belt would be stuck thinking the Earth was made in six days and the West Hollywood kids, heaven knows, would think from the smoke of some cosmic pile of burning pot. An ossified school organization and a militantly anti-change teacher's lobby? Hell no. The answer, as usual, lies somewhere in the middle. And for your information, some of the new charter schools around here are doing an excellent job.
This type of nonsense has got to stop. The only reason private healthcare is so bad in the US is because they are allowed to work with the government to develop guidelines, resulting in a bureaucratic mess that insurance companies feed upon. The answer is less government regulation, not more.
The only reason that we have such a mess is that we have a badly applied compromise system between the "socialist monopoly" of Medicare and associates and the private health care companies. As with education, some national standards are necessary to prevent profit-oriented companies from gouging customers and to ensure a standard of care. You are correct though, that those government health care programs need to be reformed out of existence - the challenge it doing it in such a way that we don't leave even more people behind in the process. It's another collection of historical circumstances that are tricky to defuse because they were necessary when created but are now part of the problem.
Praise for CorpusColawesome, for he hath provided a blessedly ideology-free post full of sensible realism.
EDIT:
Loss leaders have only ever been good ways to lose money, if that's what you're referring to.
The point is that if you have money to lose, it is to your advantage to use that advantage to drive other customers out of business. Placing long-term profit over short-term benefits is almost always a good idea, however unfortunately applied it may be in this particular case.
Exactly. The more of a market that a company has locked up (and therefore, more profits), the more advantageous it is to move on the market. The very fact that monopolies bring grotesque profits means that any meaningful monopoly cannot develop under a free market. It's impossible to muscle out competition - it's been proved again and again in book after book, and it's why corporations turn instead to state power to enforce their hold on the competition. It's why Wal-Mart pushes for a higher minimum wage: it's because they can afford the wage increases, while Mom and Pops can't.
Standard Oil, the first and biggest monopoly, simply burned down the factories of people who wouldn't sell their companies to him. He also sold oil at below cost to drive competitors out of business, then raised the prices again. In markets with large barriers to entry, monopoly or oligopoly is the rule rather than the exception.
And yet, every monarchy and oligarchy has the *stated* purpose of benefiting their populace.
Well, yeah. "I'm your god, and I'm benevolent to you as long as you pledge eternal allegiance to me."
Also, you're making a unjustified claim in saying that democracy has the same (albeit less extreme) power complex as dictatorships and the like. Any proof on that?
Have you LOOKED at our Congress lately? Rather, at any point in the last 100 years?
Power corrupts. Its a fact of life.
I would respond by saying that there has been no reason to doubt that free market economies on the small scale somehow fail in the larger scale. As businesses grow, government must be there to rein in corruption, falsification, and fraud, but such atrocities as the meatpacking industry generally resulted from a pro-business governmental environment through special interest lobbies, all of which should not exist in a government dedicated to keeping the markets free.
Do you think that if the government simply let the markets run free the factories would not do terrible things to our meat?
Honestly, the food we eat today isn't much healthier.
My point is that it is simply impossible for a "bad" monopoly to develop without state interference. The firm must continue to provide the best product to remain in existence. Arguments like barriers of entry, economy of scale, etc. don't work because the monopoly must take advantage of those benefits in order to truly drive away competition, and that, in itself, serves the consumer.
How does taking advantage of barriers to entry benefit the consumer?
And any savings from economies of scale don't necessarily get passed along to the consumer. There's no need for it.
Obviously. You could also say that welfare, social security, all of our socialist policy leftovers from the Great Depression are still dragging our country further down through the muck.
It fought it after it became a monopoly. You can bet your ass that government will fight Wal-Mart if it gets much bigger, but government was the one that facilitated its progress. Remember, this was the time where you could literally buy a Senate seat.
There is a key difference between the use of coercion and the power of corporations, as you have so eloquently put forth.
We've broken up near-monopolies in recent history (Microsoft, AT&T). Do things feel any different?
Coercion is a zero-sum game. But corporations, to deny you any other choice, must expend more resources than is worth the trouble.
Oh, monopoly profits are definitely worth the trouble. Ask De Beers.
And of course that land just poofed out into existence in the hand of the large land owners, who produced it out of their intensive labor. It was never, say, taken by force by feudal lords from the hands of the European village communes by primitive accumulation, or taken from the hands of Native Americans by state-sponsored companies like the Hudson Bay Company or colonists under the orders of foreign empires.
The Libertarian's idea of a free market is basically "Okay, no state interference starting... NOW!". It's just *coincidence*, mind you, that most of them come from families that benefitted largely from state largesses and unfettered capitalism. The idea is that the bully who threatened you for your lunch money decided to stop bullying you, so now everything is pish-posh and all is well? Hardly.
Without reparation from past state interference, the market cannot be free. The rights of land and capital ownership of most large corporations and wealthy capitalists will allow them to continue forcing us to work for them for a pittance, and these rights were granted to them by state interference in the first place. The state holds the gun and the capitalists own the bag, and the Libertarians claim that this means the state alone is criminal. Hah!
This necessary reparation takes many forms in socialist theories. Latin American socialists have called for land reform, for instance. As well, American Blacks (not necessarily socialists) have long asked for reparation for descendants of African slaves brought to America. But what we need is full on expropriation. It is our collective labor which built this country, so it is our collective wealth.
Good luck distributing that wealth man. I bet you do it way more efficiently than the market.
I think you're overplaying the state's role in the creation of big corporations. McDonald's, Microsoft, Starbucks, Wal-Mart etc. are all businesses that did extremely well without initial help from the government. And even in their current financial position, I'm not sure that Starbucks has lobbyists.
In fact, can you name me a company that is successful ONLY because of state intervention? And don't say Halliburton or Blackwater.
I don't see what a lot of these companies have to be sorry for. They develop a good product at a price that people demand. Maybe some of their business practices are shady, but they definitely didn't build their empire off the tears of orphans.
And even if they did, I'd like to see you find a way to stop them.
Let me laugh. Have you seen what private companies do with things like education, healthcare or energy? It's a joke. Privatized healthcare in the USA is the pits compared to single-payer like Canada or Europe. California deregulation of the energy market, remember that one? LOL.
Have you seen what the STATE does with education and healthcare? Its completely despicable.
And California deregulation was a huge corruption scandal.
The point is that if you have money to lose, it is to your advantage to use that advantage to drive other customers out of business. Placing long-term profit over short-term benefits is almost always a good idea, however unfortunately applied it may be in this particular case.
You meant "other sellers", no doubt...(and nobody really has money to "lose") but anyways, yes, more long-term over short-term profit is desirable. However, when you drive a competitor out of business, their resources don't vanish. They sell them - often even at a lower price in order to recoup what they can, inducing somebody else to try. Additionally, sustaining a strong monopoly demands constant innovation through all pathways and (dare I say it) constant vigilance, for if you let something slip by or are complacent, others can get in; JC Penney ignored Sam Walton, and paid for it.
Um, yes. Oops. Though that was an interestingly meaningful slip.
Quote from Einsteinmonkey »
(and nobody really has money to "lose")
I disagree. Any large corporation with money to spare also has money to lose if it can convince its stockholders and its board that losing money would be in its best interest in the not-too long term.
Quote from Einsteinmonkey »
yes, more long-term over short-term profit is desirable. However, when you drive a competitor out of business, their resources don't vanish. They sell them - often even at a lower price in order to recoup what they can, inducing somebody else to try.
You're certainly right, although large corporations nowadays tend to try to swallow their opponents rather than crushing them to prevent exactly that. If you can, again, afford to waste money to ensure that no one else snags your rival's assets, that's another long term benefit ensured.
Quote from Einsteinmonkey »
Additionally, sustaining a strong monopoly demands constant innovation through all pathways and (dare I say it) constant vigilance, for if you let something slip by or are complacent, others can get in; JC Penney ignored Sam Walton, and paid for it.
True, but I would argue that JC Penney was in a business less prone to monopoly because it provides, essentially, a service rather than a product. Wal-Mart and its ilk don't actually make much of anything they sell, they just find the cheapest version of everything and use their relative efficiency and their huge market penetration to turn a profit from selling it. In a business where you actually make something, particularly a business with a supply of raw materials that are limited (oil, for a predictable example), monopolies are much easier to create and hold.
Quote from aurorasparrow »
Standard Oil, the first and biggest monopoly, simply burned down the factories of people who wouldn't sell their companies to him. He also sold oil at below cost to drive competitors out of business, then raised the prices again. In markets with large barriers to entry, monopoly or oligopoly is the rule rather than the exception.
Precisely my point. Standard is the first and best prototype for monopolies in general. Although I don't believe that Rockefeller actually burned down refineries. Supreme efficiency and a very underhanded way of securing his transportation networks tended to be his order of the day.
Quote from aurorasparrow »
Power corrupts. Its a fact of life.
Therefore, rather than being fashionably disgusted with government and developing utopian theories, we intelligent young people really should get into government as fast as we can clean out the corrupt old fogies. Then when we're all slaves to special interests in our old age, our children can boot us out of office before we do any serious harm. Honestly, people, if you have a brain in your head, then please go try to run the country and redeem the political profession instead of sitting around making great pronouncements.
Quote from aurorasparrow »
I don't see what a lot of these companies have to be sorry for. They develop a good product at a price that people demand. Maybe some of their business practices are shady, but they definitely didn't build their empire off the tears of orphans.
No, McDonald's just built theirs on the expanding waistlines of a third of the population. Let's not even get into Microsoft. *smashes keyboard*
You are right that from a realistic perspective, most big corporations are just good at what they do in that they know how to make a profit off something that people want. The question of whether or not people should want the product (and how much advertising has to do with said desire) does not, largely, belong to the government, and especially not to the federal government. The bleeding-heart liberal in me does contend that in certain matters of national importance, the government should intervene. I'll proffer the example of the environment and let the philosophical vultures descend upon my head. Really, though, I don't object to a large government on principle so much as because ours often doesn't do good for its people and rarely does it well.
I disagree. Any large corporation with money to spare also has money to lose if it can convince its stockholders and its board that losing money would be in its best interest in the not-too long term.
You're certainly right, although large corporations nowadays tend to try to swallow their opponents rather than crushing them to prevent exactly that. If you can, again, afford to waste money to ensure that no one else snags your rival's assets, that's another long term benefit ensured.
That isn't exactly "losing"/"wasting" money, though. It would be a strategic and beneficial use of money given the constraints.
True, but I would argue that JC Penney was in a business less prone to monopoly because it provides, essentially, a service rather than a product. Wal-Mart and its ilk don't actually make much of anything they sell, they just find the cheapest version of everything and use their relative efficiency and their huge market penetration to turn a profit from selling it. In a business where you actually make something, particularly a business with a supply of raw materials that are limited (oil, for a predictable example), monopolies are much easier to create and hold.
In which case we may have technical monopolies, also called natural monopolies for a reason.
Monopolies certainly can - and do - form in a free market. Corporations turn to the state to protect their monopolies because it is the cheapest way to do so, not because it is the only way. Absent government protections, monopolies can maintain power by exerting pressure on resource suppliers and consumers (in a variety of forms) to choke off competition. The example you raised of Wal-Mart pushing for a higher wage is an example of this, though it can be done without the state (by offering higher wages accross the board than competitors, by "dumping" products on the market leading to a lower price at which smaller companies cannot continue to operate in the long term, etc).
You've given quite a few ways that monopolies can maintain a stranglehold over their competition. You've gone on to state (imply) that these practices must be worth it, because a monopoly is able to maximize profit without fear of competition.
First of all, maximum profit in many industries just isn't high enough to warrant any large scale cut-throat competition to the point of profit loss in the short-term. Obtaining a monopoly on yachts means relatively little in a free market, because of the variety of close substitutes for that particular luxury good.
Second, simply driving out your competitors does almost nothing in the way of creating a monopoly. Your competitor may simply idle his factories, cut costs and production in the short term, go after niche markets, etc. This forces more and more of your resources into taking away his markets. It's been proven that it is simply resource-inefficient to go after your competition, as opposed to funding R/D, investing in more capital, etc.
I agree with many of your other points, but to pretend that monopolies are solely the result of the state is folly.
It was a concept introduced by Rothbard, and many economists do consider it folly, but you'll have to have stronger arguments than the obvious: "monopolies can charge whatever they want, unlimited profits LOL FTW!"
Any respectable development economist will tell you that land reform and effective oversight of the financial sector are common ingredients to successful development. There are exceptions and there are myriad ways to accomplish either, but East Asia's development patterns are a case study in the difference that governmental oversight makes in guiding a country through the takeoff phase.
I'm not going to question the awesome effects government can have in stimulating the economy, but I am going to add that government action to increase industry leaves many people behind. We have no idea what true free market development looks like, but I'd wager that it provides much of the same benefits without quite so much of the uneven development that exists in China or India.
TESHE-BLAH:
These two statements are probably the best examples that I could find of sheer ideological rhetoric. It's no better from either direction.
Ideological rhetoric deserves no better.
Not every society conforms to a notion of property that falls under the capitalist model. Just because the Native Americans didn't own their lands in the Western sense of the word doesn't mean that they were not cheated out of those lands or deprived of them by force, something that a good libertarian would never do according to the right to property.
It's punishing the children for the sins of the father. I'm not arguing this from a libertarian standpoint.
Land redistribution, when the historical circumstances call for it and it is properly executed, is one way to try and purge an economy of feudal influences. That horrid phantom of communism could only be summoned down on sensible land reform by an overworked ideological hatred of such things.
I'm not saying you can't go and stage a revolution if you want to. Just that the government should oppose it. And the new government should be more free-market oriented.
SPARROW:
Standard Oil, the first and biggest monopoly, simply burned down the factories of people who wouldn't sell their companies to him. He also sold oil at below cost to drive competitors out of business, then raised the prices again. In markets with large barriers to entry, monopoly or oligopoly is the rule rather than the exception.
The government turned a blind eye to the practices of Standard Oil. A free market government would have prevented its heinous deviations from mutually beneficial exchange.
Power corrupts. Its a fact of life.
Must it corrupt in the same way, no matter what type of power? I have to disagree with you.
Do you think that if the government simply let the markets run free the factories would not do terrible things to our meat?
Honestly, the food we eat today isn't much healthier.
That's precisely because the government got into the business of setting standards. There should be complete transparency in our industry, or at least the absence of any fraud. The details have to be worked out, but it would be a far better use of our bureaucratic time to force the meat factories to be honest than the force the meat packers to make "good" meat.
How does taking advantage of barriers to entry benefit the consumer?
Because it means the company is providing a product at a lower price. And if it raises prices to the point they were before a barrier of entry was established, other competitors can move in.
And any savings from economies of scale don't necessarily get passed along to the consumer. There's no need for it.
No, but even if the savings are 1 cent, it still benefits the economy and the consumer in so many different ways.
Even if the savings stay in the company, those profits go to capital development, investment, research, etc.
It's making the economy more efficient.
We've broken up near-monopolies in recent history (Microsoft, AT&T). Do things feel any different?
We're not any more free-market, if that's what you mean.
Oh, monopoly profits are definitely worth the trouble. Ask De Beers.
De Beers was supported by an Apartheid government that insisted on keeping the racial status quo intact. De Beers is a dreadful example to pull up in defense of the development of "free market monopolies," which I still contend do not exist.
TESH:
You're certainly right, although large corporations nowadays tend to try to swallow their opponents rather than crushing them to prevent exactly that. If you can, again, afford to waste money to ensure that no one else snags your rival's assets, that's another long term benefit ensured.
Here's an interesting thought: if any company has the potential for monopoly (and therefore "infinite profit," as you've implied), how can any company justify a sale to another? It's value is effectively "infinity" times % chance it becomes a monopoly, which is... infinite wealth.
First of all, maximum profit in many industries just isn't high enough to warrant any large scale cut-throat competition to the point of profit loss in the short-term. Obtaining a monopoly on yachts means relatively little in a free market, because of the variety of close substitutes for that particular luxury good.
True enough. However, in industries with fewer substitutes and/or more inelastic demand and/or location-derrived production advantages, it can be worth it.
Quote from msun641 »
Second, simply driving out your competitors does almost nothing in the way of creating a monopoly. Your competitor may simply idle his factories, cut costs and production in the short term, go after niche markets, etc. This forces more and more of your resources into taking away his markets. It's been proven that it is simply resource-inefficient to go after your competition, as opposed to funding R/D, investing in more capital, etc.
Leaving factories idle and cutting production in the short term is only viable if you plan to begin operation again in the long term and can afford to incur the losses of rent on your factories and machinery. If you know that once you start producing again, your competitor will once again drive you out of business (even at a loss to themselves), you have no incentive to keep said factories and machines. The mere threat of a larger competitor driving you out of business is enough to keep competition down as it attaches an unacceptable level of risk to what will - at best - become a modest enterprise of operating in a titan's shadow.
Quote from msun641 »
I'm not going to question the awesome effects government can have in stimulating the economy, but I am going to add that government action to increase industry leaves many people behind. We have no idea what true free market development looks like, but I'd wager that it provides much of the same benefits without quite so much of the uneven development that exists in China or India.
We will never know what "true" free-market development (nor "true" government-led development, for that matter) looks like, but we can study how they have been applied so far. Government-led development definitely has its problems, but the same problems often exist in worse measure in countries subjected to rapid liberalization by market fundamentalists. The results of the neoliberal project have been anything but impressive; there have been a few successes, but many disasters. Argentina was a prise pupil through the 90's, and it eventually went through one of the worst economic crises in memory. Nevermind what happened when free-market policies were implemented in Russia, or the role that excessive, premature liberalization had in economic crises in SE Asia and Latin America. No one is denying the power of the market as the best model for society, but government has a crucial role to play. As you noted, it may be the case that none of these countries implemented true free market reform, but I would argue that the 1980s and 1990s saw as close to total free-market development policies as we will ever see given their poor results and the resulting backlash against (and now skepticism towards) liberalization in developing countries.
Leaving factories idle and cutting production in the short term is only viable if you plan to begin operation again in the long term and can afford to incur the losses of rent on your factories and machinery. If you know that once you start producing again, your competitor will once again drive you out of business (even at a loss to themselves), you have no incentive to keep said factories and machines. The mere threat of a larger competitor driving you out of business is enough to keep competition down as it attaches an unacceptable level of risk to what will - at best - become a modest enterprise of operating in a titan's shadow.
If you are unable to maintain the factories, then you sell to someone who can. Because if the profit margins are really as high as you think a monopoly would entail, there are huge opportunities in the making, and even the presence of a single idle factory means that the "monopoly" must cut prices in all locations to force the factory out of business. Even in ancient times, but especially in today's global economy, there can be no big bad wolf.
Argentina was a prise pupil through the 90's, and it eventually went through one of the worst economic crises in memory. Nevermind what happened when free-market policies were implemented in Russia, or the role that excessive, premature liberalization had in economic crises in SE Asia and Latin America. No one is denying the power of the market as the best model for society, but government has a crucial role to play. As you noted, it may be the case that none of these countries implemented true free market reform, but I would argue that the 1980s and 1990s saw as close to total free-market development policies as we will ever see given their poor results and the resulting backlash against (and now skepticism towards) liberalization in developing countries.
I would argue that in most of these cases, government pursued foreign investment with downright zeal. You can't mix up pro-business and pro-individual government policy; although socialists like to paint them with the same brush (much like I sometimes do in the cases of China or Russia), they lead to vastly different outcomes.
Look to Hong Kong, the world's leader in free market reform, and you'll see they're doing quite well. But that's not the point, because there are no clear cut cases in the real world. We rely on simple, axiomatic truths for our most basic economic knowledge, and that knowledge leads us to the free market policies that are so widely espoused today.
Here's an interesting thought: if any company has the potential for monopoly (and therefore "infinite profit," as you've implied), how can any company justify a sale to another? It's value is effectively "infinity" times % chance it becomes a monopoly, which is... infinite wealth.
Profit is not infinite. Even if you captured the entire market for diamonds and there was no consumer surplus, you still would not have infinity dollars.
If you are unable to maintain the factories, then you sell to someone who can. Because if the profit margins are really as high as you think a monopoly would entail, there are huge opportunities in the making, and even the presence of a single idle factory means that the "monopoly" must cut prices in all locations to force the factory out of business. Even in ancient times, but especially in today's global economy, there can be no big bad wolf.
The monopoly has a lot to lose when competitors emerge, but there is no incentive for competitors to emerge. After all, they're not going to be making monopoly profits. They're going to make some profit, then get run out of business. And any entrepreneur with business sense will realize that and not invest in the company.
I would argue that in most of these cases, government pursued foreign investment with downright zeal. You can't mix up pro-business and pro-individual government policy; although socialists like to paint them with the same brush (much like I sometimes do in the cases of China or Russia), they lead to vastly different outcomes.
Of course they would. What kind of leader would not want free money? The problem, of course, is how the money is spend once its sent off.
Look to Hong Kong, the world's leader in free market reform, and you'll see they're doing quite well. But that's not the point, because there are no clear cut cases in the real world. We rely on simple, axiomatic truths for our most basic economic knowledge, and that knowledge leads us to the free market policies that are so widely espoused today.
Hong Kong was also sheltered by the British, the #1 power in the world at that time. If you look at the successful stories of development: Hong Kong, Japan, Korea, etc. you tend to see that they received massive amounts of investment from the West, because the West had an interest in making them economically viable. Sadly, for most countries the interest is in exploiting them. Third world countries now reject offers of loans from the WTO because they have a track record of worsening countries rather than helping them.
Free market reform in developing countries today, while good, can also be ruinous. An example would be the call for trade liberalization in third world countries. While stated as a policy that would help them export products, its really a way for more advanced countries to unload products there, stifling the creation of domestic industry and keeping them dependent on selling primary goods. And just as we have been saying about America, freeing a market where a small minority holds most of the wealth isn't really freeing it at all.
McDonald's, Microsoft, Starbucks, Wal-Mart etc. are all businesses that did extremely well without initial help from the government.
Microsoft's fortune is entirely based on government intervention, whether the invention of the computer and the Internet (both government projects paid for with taxpayers funds, thus legitimatly our collective property), to their entire business model being based on the government protectionist concept called Intellectual Property Rights (which runs directly counter to the private property rights of their customers to do what they please with the medium they bought), to the fact that the vast majority of their profits comes from government contracts and sales to government agencies. Like most of the military-industrial complex companies, for that matter, Microsoft almost entirely runs off taxpayers funds earmarked for 'defense'.
Wal-Mart's business model can only exist because of municipal government urbanists who deliberatly, through direct governmental intervention, favorise car culture, provide incentives and subsidies so it will bring 'jobs' to their town, etc etc. Similarly with all the various franchises who receive grants from municipal government to bring their business to towns, thus favoring them on the market compared to local businesses.
All of these companies also receive generous tax reductions (i.e. subsidies) so that they pay minimal or even NO taxes each year, contrary to smaller capitalist ventures who have to pay a premium to compete because of taxation.
Microsoft's fortune is entirely based on government intervention, whether the invention of the computer and the Internet (both government projects paid for with taxpayers funds, thus legitimatly our collective property), to their entire business model being based on the government protectionist concept called Intellectual Property Rights (which runs directly counter to the private property rights of their customers to do what they please with the medium they bought), to the fact that the vast majority of their profits comes from government contracts and sales to government agencies. Like most of the military-industrial complex companies, for that matter, Microsoft almost entirely runs off taxpayers funds earmarked for 'defense'.
So you would abolish Intellectual Property Rights? Its not a new idea, but if people could legally reproduce software no business would produce it anymore. Look at the music industry right now; not that I support the RIAA, but that's the direction that we would be headed in except that music is far cheaper to produce.
I'm not saying its undoable; Linux is testament to that. But I believe people have at least some right to their inventions and artwork, and giving them that right gives them incentive to produce it. The lifespan of this right should be much shorter, however. Much shorter.
Wal-Mart's business model can only exist because of municipal government urbanists who deliberatly, through direct governmental intervention, favorise car culture, provide incentives and subsidies so it will bring 'jobs' to their town, etc etc. Similarly with all the various franchises who receive grants from municipal government to bring their business to towns, thus favoring them on the market compared to local businesses.
The chain store may benefit from government policy, but its still a very good working model. It's just an expansion of successful local business.
All of these companies also receive generous tax reductions (i.e. subsidies) so that they pay minimal or even NO taxes each year, contrary to smaller capitalist ventures who have to pay a premium to compete because of taxation.
You're taking the advantages that these companies get from government and treating it like they're the only advantages they have. And are you speaking about companies all over the world? Because we buy their products too.
I don't see how reparations would work. "Wal-Mart ran my store out of business, I want reparations." "This road legislation made it easy to drive to IKEA and ran me out of business, I want reparations." "McDonald's made me fat, I want reparations." How are you supposed to deal with this? There are consequences to policy and they are almost never completely fair.
I also don't see how you can have private land but communal ownership. To whom go the farmer's crops, if not himself?
The monopoly has a lot to lose when competitors emerge, but there is no incentive for competitors to emerge. After all, they're not going to be making monopoly profits. They're going to make some profit, then get run out of business. And any entrepreneur with business sense will realize that and not invest in the company.
The problem with that logic is that it implies that competition will simply cease the first time a monopoly hurts its short run profits in favor of the long run. It basically says that a potential monopoly must tend towards policies that hurt the short run in favor of the long run as long as there are competitors in the field, when driving all competitors out of the market doesn't guarantee any such profits.
Furthermore, the entrepreneur is smart, and realizes that by keeping holdings in a variety of companies that are ready to act upon a "monopoly's" indiscretion, natural industry profitability can be achieved.
Of course they would. What kind of leader would not want free money? The problem, of course, is how the money is spend once its sent off.
This doesn't make sense to me.
Foreign investment isn't "free." By "pursuing," I meant that governments were sweetening the deals, creating a whole new class of the wealthy with little regard to free market mechanisms.
Hong Kong was also sheltered by the British, the #1 power in the world at that time. If you look at the successful stories of development: Hong Kong, Japan, Korea, etc. you tend to see that they received massive amounts of investment from the West, because the West had an interest in making them economically viable. Sadly, for most countries the interest is in exploiting them. Third world countries now reject offers of loans from the WTO because they have a track record of worsening countries rather than helping them.
Why did the money and the support help in Hong Kong and not in Africa? Why did the support help in relatively free markets and not in relatively unfree markets? You can't deny the general benefits of free market capitalism; they are all but axiomatic truth. I need no examples to prove that.
Free market reform in developing countries today, while good, can also be ruinous. An example would be the call for trade liberalization in third world countries. While stated as a policy that would help them export products, its really a way for more advanced countries to unload products there, stifling the creation of domestic industry and keeping them dependent on selling primary goods. And just as we have been saying about America, freeing a market where a small minority holds most of the wealth isn't really freeing it at all.
How do you suppose they are "forcing" and "keeping" these people selling primary goods? Why can't the people just build factories? Because factories are running more efficiently elsewhere. Primary goods have to be made somewhere, and as the people gain wealth from the trade of primary goods, eventually, other industries can come into play.
Freeing a market where a small minority holds the wealth makes that small minority accountable for their wealth. It makes them make wise decisions with that wealth, such as investing it in companies that will eventually get that money back to the masses.
Foreign investment isn't "free." By "pursuing," I meant that governments were sweetening the deals, creating a whole new class of the wealthy with little regard to free market mechanisms.
Actually, the beneficiaries were not a "whole new class" of wealthy but rather those who were already wealthy or politically connected. And this process is exactly why we are arguing that freeing markets in countries with large initial inequality is far from a sure bet to improve the situation.
Quote from msun641 »
Freeing a market where a small minority holds the wealth makes that small minority accountable for their wealth. It makes them make wise decisions with that wealth, such as investing it in companies that will eventually get that money back to the masses.
The wealthy elite do not invest in domestic companies for the good of their countrymen. If you are part of a small elite in an unstable country, you get what you can in to foreign banks and protect yourself from local retribution (at the hands of the masses) by putting money in to staying politically connected and hiring armed guards and living in secure compounds. This allows you to continue to benefit by virtue of your political connections, and the cycle goes on. So in effect the wealthy do make wise decisions - and the wisest decision is usually to leave the country, or (failing that) to get your money out of the country.
Quote from msun641 »
Why did the money and the support help in Hong Kong and not in Africa? Why did the support help in relatively free markets and not in relatively unfree markets? You can't deny the general benefits of free market capitalism; they are all but axiomatic truth. I need no examples to prove that.
The money and the support helped in Hong Kong because of the institutions built up there; in Africa, these institutions have not developed. It is the building and maintaining of these institutions that readies a country for takeoff along the path of development. No one is denying the general benefits of free-market capitalism. My point is that economics is more than a mathematical system of supply and demand, prices and quantities. There are crucial roles for the state to play in economics. Neoliberal economics makes a number of unrealistic assumptions and ignores empirical evidence indicating that policies derived from its own models are ineffective. It is a faith-based school of thought which - as well-meaning as it is - has done tremendous harm to many developing countries.
Actually, the beneficiaries were not a "whole new class" of wealthy but rather those who were already wealthy or politically connected. And this process is exactly why we are arguing that freeing markets in countries with large initial inequality is far from a sure bet to improve the situation.
I'm saying that government action either helps a specific group of people at the cost of everyone else (in this case, the wealthy), or it "creates" wealth at the cost of everyone else.
Freeing the market has nothing to do with that; all it does is give everyone more choice.
The wealthy elite do not invest in domestic companies for the good of their countrymen. If you are part of a small elite in an unstable country, you get what you can in to foreign banks and protect yourself from local retribution (at the hands of the masses) by putting money in to staying politically connected and hiring armed guards and living in secure compounds. This allows you to continue to benefit by virtue of your political connections, and the cycle goes on. So in effect the wealthy do make wise decisions - and the wisest decision is usually to leave the country, or (failing that) to get your money out of the country.
Of course the elite don't invest for the good of someone else; it is contrary to the spirit of capitalism. However, the elite have money and property invested somewhere. And you can bet that that somewhere is a better place for it than any government could decide.
The money and the support helped in Hong Kong because of the institutions built up there; in Africa, these institutions have not developed. It is the building and maintaining of these institutions that readies a country for takeoff along the path of development. No one is denying the general benefits of free-market capitalism. My point is that economics is more than a mathematical system of supply and demand, prices and quantities. There are crucial roles for the state to play in economics. Neoliberal economics makes a number of unrealistic assumptions and ignores empirical evidence indicating that policies derived from its own models are ineffective. It is a faith-based school of thought which - as well-meaning as it is - has done tremendous harm to many developing countries.
You cannot take a theory and analyze it based on distorted attempts to use it to a dictator's advantage. Of course the socialist governments in Venezuela and Cuba will point to the failures of the "market-based" economies of early Latin America.
It means nothing. This isn't a faith-based science, unless you take mathematics to be faith-based, as well. There is simply no substantial argument arguing against the application of economic principles in the real world; economics is the real world.
Economics does not depend on unrealistic assumptions, and it certainly does not ignore empirical evidence.
And those that advocate government interference are guilty of precisely that.
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I'll guess that you meant the distribution of food, shelter, and education, and other such necessities. Historically as governments became more intrusive, they did establish control over those things that aurorasparrow mentioned, especially education, which was usually a way of training scribes to write down all the king's various conquests. I'll agree that direct government organization of said commodities is a generally bad idea by both free-market principles and common sense. However, it is perfectly possible for a government to indirectly manage such things in very limited aspects under the aegis of "things that a government has the national reach to do and private organizations do not", such as setting standards. Things like the Pure Food and Drug Act were absolutely necessary when they were created and are still relevant now because of the inertia (or occasionally outright screaming and dragging of heels) with which a capitalistic system adjusts itself to consumer needs. When people are dying from carelessly prepared meat and have no other option to choose from due to monopolistic practices among in the meatpacking industry, the power and reach of a government becomes necessary to fulfill the desires and needs of the people, something that capitalism should do, by the idea of businesses being selected for customer satisfaction, but at which it often fails miserably.
Refer to above example. Once a monopoly is achieved, even without state aid, it can do just about whatever the hell it wants because there is, by definition, no competition to have to woo customers away from. This would be the point where a government steps in
I will definitely concede that the state does create some monopolies and that this oversteps the bounds of what it should do in the economic arena. In the minds of the politicians who facilitated the railroad and utility monopolies, though, they made sense because the nature of those particular services makes them tend towards monopoly. It does no one any good to have a vast network of railroads with different gauges and schedules (in fact, this problem existed before the US government aided in standardization). The same applies to utilities. Sugar is a somewhat different case, but there was also a political impetus to help the sugar and fruit companies because they coincided with US imperial interests in the Pacific (particularly Hawai'i) and Central America. This doesn't make any of these monopolies right, but it does explain why certain ones tend to come into existence.
I disagree that oil was a state-supported monopoly back in the days of Rockefeller. If anything, the government fought that particular monopoly tooth and nail, precisely to try to preserve the free market that you value. A free market, like most human creations, tends to let power concentrate into a corporate system that develops all the characteristic flaws of an obese government and, I feel, displays the same essential problem that causes you to dislike the principle of a state - corporations run amok have the power to coerce you into doing something that you do not want to do, not though force but by denying any other choice. Under this standard, I think that the necessity of a government to oppose this sort of economic situation is obvious. Not that a government does much good when it's probably literally in bed with said corporate interests, but the real world is supposed to be a place that we make live up to our expectations, no?
That, wearing on your breast,
You, unsuspecting, wear me too -
And angels know the rest.
How about you provide some answers then? A monopoly having to sell it goods at a buyable price does not signal a functioning market. De Beers is a good example. Or what if a monopoly was achieved on water? It sounds ridiculous, but right now most of the world's oil is owned by a very small group of people, and oil is almost as important.
Look at today. How much of our foreign and domestic policy are shaped by oil interests?
Uh, no, it can't. Government is organization by definition.
Relatively as in since hunters and gatherers? How far back are you going with this?
And how do you expect there to enforce property laws without a government?
We're obviously meaning two different things when we use the term government organization.
To me, it means the use of government power to benefit the people. This can go anywhere from the barest trappings of government to pure socialism.
4th place at CCC&G Pro Tour
Chances of bad hands (<2 or >4 land):
21: 28.9%
22: 27.5%
23: 26.3%
24: 25.5%
25: 25.1%
26: 25.3%
Perhaps you could simply say so, next time.
See, the problem with your scenarios is that they involve an intrusive government by context.
No monopoly on water or oil could ever develop in a free market.
Not the organization you implied.
1. Relatively, as in however long government property has existed in human civilization
2. See 1.
3. You enforce property laws through mutual consent. It's the very premsie of anarchism, and it's been shown to work in small groups of willing individuals.
You clarified your position very clearly in your original post.
What government power isn't used to help people, to some extent? It's a uselessly broad definition of organization and raises a bunch of new questions that I don't have time to answer. I'll get back to you and Teshav--- later.
Capitalist monopolies can only exist under state power for the simple reason that capitalism can only exist under the state. Corporation charters are granted to them by the state, and the corporation as an economical entity is so bloated, bureaucratic, inefficient and dependent on state largesses that it couldn't survive in a free market.
Under a free market, where the state had not pushed the free peasants to join the urban proletariat, where artificial barriers of entry weren't kept in place to prevent the small property owners from competing, wage labour would roughly disappear because profit (the equivalent of taxation of the produce of one's labor by a capitalist boss) would be impossible. Nobody would work for another human being for the 'privilege' of having all their production taken from them and being paid a pittance wage in exchange if people weren't granted land grabs and capital from the state which allowed them to deny other people's the right to work.
One recognizes a free market by the fact that it is not capitalist, but socialist. That is, the means of production are owned by the workers (not the state! statism is a later corruption of socialist ideas). Socialism has no need for the state.
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Well, I thought you were going to make the sensible point that one of historical purposes of a state has been to ensure the rights of property, for better or worse, which encourages the development of capitalism. Then, of course, you made an unsubstantiated assertion which is, to my view, untrue. As I've pointed out several times, corporations have come into existence without any sort of state aid, and in many cases the state fought against corporate power, particularly in the US.
I am not going to quote the rest of that post. Any assertion of what happens or would have happened without that nasty, interfering state influence is usually unverified by history and has no basis in fact. Never mind that your description of state interference is greatly overinflated and, in some cases, just plain wrong. States didn't push peasants to become an urban proletariat, they moved of their own accord because of many problems, including overpopulation and lack of economic potential.
That, wearing on your breast,
You, unsuspecting, wear me too -
And angels know the rest.
I don't see why not. Money can buy anything.
The line between civilization and government is getting thinner and thinner in this debate. When did the line cross between people working together and a government?
And ANYTHING can work with small groups of willing individuals. Which is why I'm in favor of small local governments.
Uh.. Monarchies? Oligarchies? The world has pretty much always been people in power oppressing the populace and the populace fighting for their rights. America isn't as free as it should be because those in power are still trying to keep us down; not as down as dictators did because they can't, but down nonetheless. These are the descendants of your kings and sultans, and its one of the consequences of power.
So you're saying if the government stopped supporting Nike or Wal-Mart they'd collapse under their own weight? They're better run than our government.
A corporation is just a group of people all dedicated to making money. I don't see how the lack of a state removes this. Pirates are a form of corporation.
You're making the same mistake every Marxist does; pretending that the exploitation of labor is not a function of the market itself. People in power are going to write the rules to benefit them, and people with market power are going to abuse it.
If nobody had market power, then there wouldn't be any exploitation. but that goes without saying.
And the idea that all labour is equal is ridiculous. If I'm a smarter, better farmer than my neighbor, I'm going to do better than him, boss or not.
Can you give me your definition of socialism? Because I've always taken it to mean command economies.
4th place at CCC&G Pro Tour
Chances of bad hands (<2 or >4 land):
21: 28.9%
22: 27.5%
23: 26.3%
24: 25.5%
25: 25.1%
26: 25.3%
And yet, every monarchy and oligarchy has the *stated* purpose of benefiting their populace.
Also, you're making a unjustified claim in saying that democracy has the same (albeit less extreme) power complex as dictatorships and the like. Any proof on that?
XDarkAngelX: That's a load of crock. Labor is paid less than their value because someone else is supplying the land and the capital needed for the production of goods.
Exploitation theory is a joke.
I would respond by saying that there has been no reason to doubt that free market economies on the small scale somehow fail in the larger scale. As businesses grow, government must be there to rein in corruption, falsification, and fraud, but such atrocities as the meatpacking industry generally resulted from a pro-business governmental environment through special interest lobbies, all of which should not exist in a government dedicated to keeping the markets free.
My point is that it is simply impossible for a "bad" monopoly to develop without state interference. The firm must continue to provide the best product to remain in existence. Arguments like barriers of entry, economy of scale, etc. don't work because the monopoly must take advantage of those benefits in order to truly drive away competition, and that, in itself, serves the consumer.
Obviously. You could also say that welfare, social security, all of our socialist policy leftovers from the Great Depression are still dragging our country further down through the muck.
It fought it after it became a monopoly. You can bet your ass that government will fight Wal-Mart if it gets much bigger, but government was the one that facilitated its progress. Remember, this was the time where you could literally buy a Senate seat.
There is a key difference between the use of coercion and the power of corporations, as you have so eloquently put forth.
Coercion is a zero-sum game. But corporations, to deny you any other choice, must expend more resources than is worth the trouble.
Oh please. If there's a place where the state definitly did not fight against corporate power, it's the US. Contrary to say, Europe or Canada, who both had state socialist parties in power at some point in time, the USA had what? The right-wing reactionary FDR and his New Deal?
As for the economic troubles that forced the peasants to join the urban proletariat, they were state created through land monopolies. A man cannot be self-sufficient if he has to work for a landlord. The forced alternative between starving or joining the urban proletariat did not come from the sky, it was *planned this way*.
And of course that land just poofed out into existence in the hand of the large land owners, who produced it out of their intensive labor. It was never, say, taken by force by feudal lords from the hands of the European village communes by primitive accumulation, or taken from the hands of Native Americans by state-sponsored companies like the Hudson Bay Company or colonists under the orders of foreign empires.
The Libertarian's idea of a free market is basically "Okay, no state interference starting... NOW!". It's just *coincidence*, mind you, that most of them come from families that benefitted largely from state largesses and unfettered capitalism. The idea is that the bully who threatened you for your lunch money decided to stop bullying you, so now everything is pish-posh and all is well? Hardly.
Without reparation from past state interference, the market cannot be free. The rights of land and capital ownership of most large corporations and wealthy capitalists will allow them to continue forcing us to work for them for a pittance, and these rights were granted to them by state interference in the first place. The state holds the gun and the capitalists own the bag, and the Libertarians claim that this means the state alone is criminal. Hah!
This necessary reparation takes many forms in socialist theories. Latin American socialists have called for land reform, for instance. As well, American Blacks (not necessarily socialists) have long asked for reparation for descendants of African slaves brought to America. But what we need is full on expropriation. It is our collective labor which built this country, so it is our collective wealth.
Let me laugh. Have you seen what private companies do with things like education, healthcare or energy? It's a joke. Privatized healthcare in the USA is the pits compared to single-payer like Canada or Europe. California deregulation of the energy market, remember that one? LOL.
Wal-Mart only exists because of large scale subsidies granted to them by the state through the creation of large interstate road networks, which is the only way their business model can work. Or how about the railroad projects that Canada made to annex the Western provinces? Large monopolies could not have existed without the railroad, and this railroad was mostly paid by taxpayers.
Nike couldn't possibly sell you 0.89$ shoes for a hundred bucks if they didn't get incentives from Third World states who bribe them with the best possible deals so they'd use their factories, by violently repressing labor unions. Not to mention the USA government dumping food surpluses under the name 'foreign aid', surpluses which are only available because of subsidies to large agribusinesses, and who completly destroy the local Third World viability of peasant agriculture, thus forcing the displacement of small farmers to the new Third World urban proletariat *plus* discriminates against small USA farmers who have to sell under cost to compete with highly subsidized agribusiness ventures.
No. A corporation is a single legal person, according to the state's laws. Also, the persons who own a corporation (more formally known as a *limited liability* corporation) are not considered liable for debts incured by that fictional, legal person, they are not considered liable for crimes this person may commit, and so on. This is part of how the state provides competitive benefits to large capital owners. Your average man on the street can't start a large corporation to protect his assets, he'll probably start a standard business venture and have much more liability as a person.
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Okay, I gotta ask. Where the **** are you getting this ****?
Oh, please. Show me the actual land owners that were forced out of their holdings and I'll be the first in line to protest their loss.
The libertarian believes that even further redistribution, even in the interest of "fairness," is counterproductive. And if you look at the history of redistribution, you'd see that that is the case.
The capitalist has done nothing wrong. He has neither forced nor cheated any he has dealt with (and if he has, he is in the wrong). The state should be held accountable for their actions, but are you to be faulted in making the most out of an opportunity?
What happens then? There is no possible way to run an economy efficiently on a concept of collective wealth.
Also:
This type of nonsense has got to stop. The only reason private healthcare is so bad in the US is because they are allowed to work with the government to develop guidelines, resulting in a bureaucratic mess that insurance companies feed upon. The answer is less government regulation, not more.
Canada as the model health care system, with its fleeing doctors, six month waiting periods, and substandard care? Give me a break.
Monopolies certainly can - and do - form in a free market. Corporations turn to the state to protect their monopolies because it is the cheapest way to do so, not because it is the only way. Absent government protections, monopolies can maintain power by exerting pressure on resource suppliers and consumers (in a variety of forms) to choke off competition. The example you raised of Wal-Mart pushing for a higher wage is an example of this, though it can be done without the state (by offering higher wages accross the board than competitors, by "dumping" products on the market leading to a lower price at which smaller companies cannot continue to operate in the long term, etc).
Any amount of resources is "worth it" if you secure greater returns in the long run by keeping an entire market for yourself.
I agree with many of your other points, but to pretend that monopolies are solely the result of the state is folly.
Quite right about libertarians beliefs, but quite wrong in fact. Any respectable development economist will tell you that land reform and effective oversight of the financial sector are common ingredients to successful development. There are exceptions and there are myriad ways to accomplish either, but East Asia's development patterns are a case study in the difference that governmental oversight makes in guiding a country through the takeoff phase.
Loss leaders have only ever been good ways to lose money, if that's what you're referring to.
These two statements are probably the best examples that I could find of sheer ideological rhetoric. It's no better from either direction.
The first part is a typical after-the-fact distortion by ideological readings of history. Feudal lords gained control over their lands not by taking it by force from the peasants but rather because they were the only people with enough force to defend those supposedly communal villages from marauding invaders after all Roman government broke down. The French nobility, who constituted the prototypical feudal system, were defined and given power by the fact that they fought. Did their powers eventually grow far beyond the original bargain of liberty for safety? Yes, but that is simply the nature of government when it has a monopoly on force. The point is that the villagers wanted that monopoly, at least at first.
In the second case, you are quite right that those greedy imperialists grabbed all of the Americas from its rightful owners. Colonization in North America is probably one of the best examples of an agricultural state with a "modern" idea of property enslaving or eliminating hunter-gathers with a fairly egalitarian social structure. In this case your ideology is correct. It is not, however, applicable to every case, because history is far too idiosyncratic to conform to a specialized plan of how it should work.
Not every society conforms to a notion of property that falls under the capitalist model. Just because the Native Americans didn't own their lands in the Western sense of the word doesn't mean that they were not cheated out of those lands or deprived of them by force, something that a good libertarian would never do according to the right to property.
Latin American socialists are quite right to call for land reform in many cases, as their area of the world was run like an anachronistically feudal empire for a long time and that problem has lasted into the modern day in many countries. If those countries had governments and economies that worked properly, they could be some of the richest in the world, what with the incredible natural wealth of much of the area.
African-American reparations is a tricky subject, because like the actual execution of land reform, they are attempted solution to a social and economic problem that was years in the making. I personally disagree with the idea because I feel that the black community would be better served with programs to help them achieve the true economic equality that has always been their due than with what is, essentially, guilt handouts that will make other minorities rightfully angry. Of course, the execution of such a program is just as difficult as anything else.
Your third point is, to my eyes, sheer rhetoric. Were you working away in the steel mills in the the 1890s or a road crew in the 1940's? And for that matter, the nation that those people you identify yourself with built up is your wealth. You were lucky enough to be born here, and whatever you or your ideology may say about the quality of life in this country, it's certainly better than being massacred in the Sudan.
Nobody said anything about collective wealth. Land redistribution, when the historical circumstances call for it and it is properly executed, is one way to try and purge an economy of feudal influences. That horrid phantom of communism could only be summoned down on sensible land reform by an overworked ideological hatred of such things.
More overgeneralizations. Yes, deregulation in California was a disaster and I should know, seeing as I grew up with it. Public education, however, is an even worse disaster (as I should also know - this is the county of Los Angeles speaking) and is at least half the fault of the teachers' union, that most venerable of socialist institutions. Nationwide educational standards? Yes, otherwise those poor children in the Bible Belt would be stuck thinking the Earth was made in six days and the West Hollywood kids, heaven knows, would think from the smoke of some cosmic pile of burning pot. An ossified school organization and a militantly anti-change teacher's lobby? Hell no. The answer, as usual, lies somewhere in the middle. And for your information, some of the new charter schools around here are doing an excellent job.
The only reason that we have such a mess is that we have a badly applied compromise system between the "socialist monopoly" of Medicare and associates and the private health care companies. As with education, some national standards are necessary to prevent profit-oriented companies from gouging customers and to ensure a standard of care. You are correct though, that those government health care programs need to be reformed out of existence - the challenge it doing it in such a way that we don't leave even more people behind in the process. It's another collection of historical circumstances that are tricky to defuse because they were necessary when created but are now part of the problem.
Praise for CorpusColawesome, for he hath provided a blessedly ideology-free post full of sensible realism.
EDIT:
The point is that if you have money to lose, it is to your advantage to use that advantage to drive other customers out of business. Placing long-term profit over short-term benefits is almost always a good idea, however unfortunately applied it may be in this particular case.
That, wearing on your breast,
You, unsuspecting, wear me too -
And angels know the rest.
Standard Oil, the first and biggest monopoly, simply burned down the factories of people who wouldn't sell their companies to him. He also sold oil at below cost to drive competitors out of business, then raised the prices again. In markets with large barriers to entry, monopoly or oligopoly is the rule rather than the exception.
Well, yeah. "I'm your god, and I'm benevolent to you as long as you pledge eternal allegiance to me."
Have you LOOKED at our Congress lately? Rather, at any point in the last 100 years?
Power corrupts. Its a fact of life.
Do you think that if the government simply let the markets run free the factories would not do terrible things to our meat?
Honestly, the food we eat today isn't much healthier.
How does taking advantage of barriers to entry benefit the consumer?
And any savings from economies of scale don't necessarily get passed along to the consumer. There's no need for it.
We've broken up near-monopolies in recent history (Microsoft, AT&T). Do things feel any different?
Oh, monopoly profits are definitely worth the trouble. Ask De Beers.
Good luck distributing that wealth man. I bet you do it way more efficiently than the market.
I think you're overplaying the state's role in the creation of big corporations. McDonald's, Microsoft, Starbucks, Wal-Mart etc. are all businesses that did extremely well without initial help from the government. And even in their current financial position, I'm not sure that Starbucks has lobbyists.
In fact, can you name me a company that is successful ONLY because of state intervention? And don't say Halliburton or Blackwater.
I don't see what a lot of these companies have to be sorry for. They develop a good product at a price that people demand. Maybe some of their business practices are shady, but they definitely didn't build their empire off the tears of orphans.
And even if they did, I'd like to see you find a way to stop them.
Have you seen what the STATE does with education and healthcare? Its completely despicable.
And California deregulation was a huge corruption scandal.
4th place at CCC&G Pro Tour
Chances of bad hands (<2 or >4 land):
21: 28.9%
22: 27.5%
23: 26.3%
24: 25.5%
25: 25.1%
26: 25.3%
You meant "other sellers", no doubt...(and nobody really has money to "lose") but anyways, yes, more long-term over short-term profit is desirable. However, when you drive a competitor out of business, their resources don't vanish. They sell them - often even at a lower price in order to recoup what they can, inducing somebody else to try. Additionally, sustaining a strong monopoly demands constant innovation through all pathways and (dare I say it) constant vigilance, for if you let something slip by or are complacent, others can get in; JC Penney ignored Sam Walton, and paid for it.
Um, yes. Oops. Though that was an interestingly meaningful slip.
I disagree. Any large corporation with money to spare also has money to lose if it can convince its stockholders and its board that losing money would be in its best interest in the not-too long term.
You're certainly right, although large corporations nowadays tend to try to swallow their opponents rather than crushing them to prevent exactly that. If you can, again, afford to waste money to ensure that no one else snags your rival's assets, that's another long term benefit ensured.
True, but I would argue that JC Penney was in a business less prone to monopoly because it provides, essentially, a service rather than a product. Wal-Mart and its ilk don't actually make much of anything they sell, they just find the cheapest version of everything and use their relative efficiency and their huge market penetration to turn a profit from selling it. In a business where you actually make something, particularly a business with a supply of raw materials that are limited (oil, for a predictable example), monopolies are much easier to create and hold.
Precisely my point. Standard is the first and best prototype for monopolies in general. Although I don't believe that Rockefeller actually burned down refineries. Supreme efficiency and a very underhanded way of securing his transportation networks tended to be his order of the day.
Therefore, rather than being fashionably disgusted with government and developing utopian theories, we intelligent young people really should get into government as fast as we can clean out the corrupt old fogies. Then when we're all slaves to special interests in our old age, our children can boot us out of office before we do any serious harm. Honestly, people, if you have a brain in your head, then please go try to run the country and redeem the political profession instead of sitting around making great pronouncements.
No, McDonald's just built theirs on the expanding waistlines of a third of the population. Let's not even get into Microsoft. *smashes keyboard*
You are right that from a realistic perspective, most big corporations are just good at what they do in that they know how to make a profit off something that people want. The question of whether or not people should want the product (and how much advertising has to do with said desire) does not, largely, belong to the government, and especially not to the federal government. The bleeding-heart liberal in me does contend that in certain matters of national importance, the government should intervene. I'll proffer the example of the environment and let the philosophical vultures descend upon my head. Really, though, I don't object to a large government on principle so much as because ours often doesn't do good for its people and rarely does it well.
That, wearing on your breast,
You, unsuspecting, wear me too -
And angels know the rest.
That isn't exactly "losing"/"wasting" money, though. It would be a strategic and beneficial use of money given the constraints.
In which case we may have technical monopolies, also called natural monopolies for a reason.
You've given quite a few ways that monopolies can maintain a stranglehold over their competition. You've gone on to state (imply) that these practices must be worth it, because a monopoly is able to maximize profit without fear of competition.
First of all, maximum profit in many industries just isn't high enough to warrant any large scale cut-throat competition to the point of profit loss in the short-term. Obtaining a monopoly on yachts means relatively little in a free market, because of the variety of close substitutes for that particular luxury good.
Second, simply driving out your competitors does almost nothing in the way of creating a monopoly. Your competitor may simply idle his factories, cut costs and production in the short term, go after niche markets, etc. This forces more and more of your resources into taking away his markets. It's been proven that it is simply resource-inefficient to go after your competition, as opposed to funding R/D, investing in more capital, etc.
It was a concept introduced by Rothbard, and many economists do consider it folly, but you'll have to have stronger arguments than the obvious: "monopolies can charge whatever they want, unlimited profits LOL FTW!"
I'm not going to question the awesome effects government can have in stimulating the economy, but I am going to add that government action to increase industry leaves many people behind. We have no idea what true free market development looks like, but I'd wager that it provides much of the same benefits without quite so much of the uneven development that exists in China or India.
TESHE-BLAH:
Ideological rhetoric deserves no better.
It's punishing the children for the sins of the father. I'm not arguing this from a libertarian standpoint.
I'm not saying you can't go and stage a revolution if you want to. Just that the government should oppose it. And the new government should be more free-market oriented.
SPARROW:
The government turned a blind eye to the practices of Standard Oil. A free market government would have prevented its heinous deviations from mutually beneficial exchange.
Must it corrupt in the same way, no matter what type of power? I have to disagree with you.
That's precisely because the government got into the business of setting standards. There should be complete transparency in our industry, or at least the absence of any fraud. The details have to be worked out, but it would be a far better use of our bureaucratic time to force the meat factories to be honest than the force the meat packers to make "good" meat.
Because it means the company is providing a product at a lower price. And if it raises prices to the point they were before a barrier of entry was established, other competitors can move in.
No, but even if the savings are 1 cent, it still benefits the economy and the consumer in so many different ways.
Even if the savings stay in the company, those profits go to capital development, investment, research, etc.
It's making the economy more efficient.
We're not any more free-market, if that's what you mean.
De Beers was supported by an Apartheid government that insisted on keeping the racial status quo intact. De Beers is a dreadful example to pull up in defense of the development of "free market monopolies," which I still contend do not exist.
TESH:
Here's an interesting thought: if any company has the potential for monopoly (and therefore "infinite profit," as you've implied), how can any company justify a sale to another? It's value is effectively "infinity" times % chance it becomes a monopoly, which is... infinite wealth.
True enough. However, in industries with fewer substitutes and/or more inelastic demand and/or location-derrived production advantages, it can be worth it.
Leaving factories idle and cutting production in the short term is only viable if you plan to begin operation again in the long term and can afford to incur the losses of rent on your factories and machinery. If you know that once you start producing again, your competitor will once again drive you out of business (even at a loss to themselves), you have no incentive to keep said factories and machines. The mere threat of a larger competitor driving you out of business is enough to keep competition down as it attaches an unacceptable level of risk to what will - at best - become a modest enterprise of operating in a titan's shadow.
We will never know what "true" free-market development (nor "true" government-led development, for that matter) looks like, but we can study how they have been applied so far. Government-led development definitely has its problems, but the same problems often exist in worse measure in countries subjected to rapid liberalization by market fundamentalists. The results of the neoliberal project have been anything but impressive; there have been a few successes, but many disasters. Argentina was a prise pupil through the 90's, and it eventually went through one of the worst economic crises in memory. Nevermind what happened when free-market policies were implemented in Russia, or the role that excessive, premature liberalization had in economic crises in SE Asia and Latin America. No one is denying the power of the market as the best model for society, but government has a crucial role to play. As you noted, it may be the case that none of these countries implemented true free market reform, but I would argue that the 1980s and 1990s saw as close to total free-market development policies as we will ever see given their poor results and the resulting backlash against (and now skepticism towards) liberalization in developing countries.
If you are unable to maintain the factories, then you sell to someone who can. Because if the profit margins are really as high as you think a monopoly would entail, there are huge opportunities in the making, and even the presence of a single idle factory means that the "monopoly" must cut prices in all locations to force the factory out of business. Even in ancient times, but especially in today's global economy, there can be no big bad wolf.
I would argue that in most of these cases, government pursued foreign investment with downright zeal. You can't mix up pro-business and pro-individual government policy; although socialists like to paint them with the same brush (much like I sometimes do in the cases of China or Russia), they lead to vastly different outcomes.
Look to Hong Kong, the world's leader in free market reform, and you'll see they're doing quite well. But that's not the point, because there are no clear cut cases in the real world. We rely on simple, axiomatic truths for our most basic economic knowledge, and that knowledge leads us to the free market policies that are so widely espoused today.
Profit is not infinite. Even if you captured the entire market for diamonds and there was no consumer surplus, you still would not have infinity dollars.
The monopoly has a lot to lose when competitors emerge, but there is no incentive for competitors to emerge. After all, they're not going to be making monopoly profits. They're going to make some profit, then get run out of business. And any entrepreneur with business sense will realize that and not invest in the company.
Of course they would. What kind of leader would not want free money? The problem, of course, is how the money is spend once its sent off.
Hong Kong was also sheltered by the British, the #1 power in the world at that time. If you look at the successful stories of development: Hong Kong, Japan, Korea, etc. you tend to see that they received massive amounts of investment from the West, because the West had an interest in making them economically viable. Sadly, for most countries the interest is in exploiting them. Third world countries now reject offers of loans from the WTO because they have a track record of worsening countries rather than helping them.
Free market reform in developing countries today, while good, can also be ruinous. An example would be the call for trade liberalization in third world countries. While stated as a policy that would help them export products, its really a way for more advanced countries to unload products there, stifling the creation of domestic industry and keeping them dependent on selling primary goods. And just as we have been saying about America, freeing a market where a small minority holds most of the wealth isn't really freeing it at all.
4th place at CCC&G Pro Tour
Chances of bad hands (<2 or >4 land):
21: 28.9%
22: 27.5%
23: 26.3%
24: 25.5%
25: 25.1%
26: 25.3%
Microsoft's fortune is entirely based on government intervention, whether the invention of the computer and the Internet (both government projects paid for with taxpayers funds, thus legitimatly our collective property), to their entire business model being based on the government protectionist concept called Intellectual Property Rights (which runs directly counter to the private property rights of their customers to do what they please with the medium they bought), to the fact that the vast majority of their profits comes from government contracts and sales to government agencies. Like most of the military-industrial complex companies, for that matter, Microsoft almost entirely runs off taxpayers funds earmarked for 'defense'.
Wal-Mart's business model can only exist because of municipal government urbanists who deliberatly, through direct governmental intervention, favorise car culture, provide incentives and subsidies so it will bring 'jobs' to their town, etc etc. Similarly with all the various franchises who receive grants from municipal government to bring their business to towns, thus favoring them on the market compared to local businesses.
All of these companies also receive generous tax reductions (i.e. subsidies) so that they pay minimal or even NO taxes each year, contrary to smaller capitalist ventures who have to pay a premium to compete because of taxation.
Netdecking is Rightdecking
My latest data-driven Magic the Gathering strategy article
(TLDR: Analysis of the Valakut matchups. UB rising in the rankings. Aggro correspondingly taking a dive.)
So you would abolish Intellectual Property Rights? Its not a new idea, but if people could legally reproduce software no business would produce it anymore. Look at the music industry right now; not that I support the RIAA, but that's the direction that we would be headed in except that music is far cheaper to produce.
I'm not saying its undoable; Linux is testament to that. But I believe people have at least some right to their inventions and artwork, and giving them that right gives them incentive to produce it. The lifespan of this right should be much shorter, however. Much shorter.
The chain store may benefit from government policy, but its still a very good working model. It's just an expansion of successful local business.
You're taking the advantages that these companies get from government and treating it like they're the only advantages they have. And are you speaking about companies all over the world? Because we buy their products too.
I don't see how reparations would work. "Wal-Mart ran my store out of business, I want reparations." "This road legislation made it easy to drive to IKEA and ran me out of business, I want reparations." "McDonald's made me fat, I want reparations." How are you supposed to deal with this? There are consequences to policy and they are almost never completely fair.
I also don't see how you can have private land but communal ownership. To whom go the farmer's crops, if not himself?
4th place at CCC&G Pro Tour
Chances of bad hands (<2 or >4 land):
21: 28.9%
22: 27.5%
23: 26.3%
24: 25.5%
25: 25.1%
26: 25.3%
The problem with that logic is that it implies that competition will simply cease the first time a monopoly hurts its short run profits in favor of the long run. It basically says that a potential monopoly must tend towards policies that hurt the short run in favor of the long run as long as there are competitors in the field, when driving all competitors out of the market doesn't guarantee any such profits.
Furthermore, the entrepreneur is smart, and realizes that by keeping holdings in a variety of companies that are ready to act upon a "monopoly's" indiscretion, natural industry profitability can be achieved.
This doesn't make sense to me.
Foreign investment isn't "free." By "pursuing," I meant that governments were sweetening the deals, creating a whole new class of the wealthy with little regard to free market mechanisms.
Why did the money and the support help in Hong Kong and not in Africa? Why did the support help in relatively free markets and not in relatively unfree markets? You can't deny the general benefits of free market capitalism; they are all but axiomatic truth. I need no examples to prove that.
How do you suppose they are "forcing" and "keeping" these people selling primary goods? Why can't the people just build factories? Because factories are running more efficiently elsewhere. Primary goods have to be made somewhere, and as the people gain wealth from the trade of primary goods, eventually, other industries can come into play.
Freeing a market where a small minority holds the wealth makes that small minority accountable for their wealth. It makes them make wise decisions with that wealth, such as investing it in companies that will eventually get that money back to the masses.
Actually, the beneficiaries were not a "whole new class" of wealthy but rather those who were already wealthy or politically connected. And this process is exactly why we are arguing that freeing markets in countries with large initial inequality is far from a sure bet to improve the situation.
The wealthy elite do not invest in domestic companies for the good of their countrymen. If you are part of a small elite in an unstable country, you get what you can in to foreign banks and protect yourself from local retribution (at the hands of the masses) by putting money in to staying politically connected and hiring armed guards and living in secure compounds. This allows you to continue to benefit by virtue of your political connections, and the cycle goes on. So in effect the wealthy do make wise decisions - and the wisest decision is usually to leave the country, or (failing that) to get your money out of the country.
The money and the support helped in Hong Kong because of the institutions built up there; in Africa, these institutions have not developed. It is the building and maintaining of these institutions that readies a country for takeoff along the path of development. No one is denying the general benefits of free-market capitalism. My point is that economics is more than a mathematical system of supply and demand, prices and quantities. There are crucial roles for the state to play in economics. Neoliberal economics makes a number of unrealistic assumptions and ignores empirical evidence indicating that policies derived from its own models are ineffective. It is a faith-based school of thought which - as well-meaning as it is - has done tremendous harm to many developing countries.
I'm saying that government action either helps a specific group of people at the cost of everyone else (in this case, the wealthy), or it "creates" wealth at the cost of everyone else.
Freeing the market has nothing to do with that; all it does is give everyone more choice.
Of course the elite don't invest for the good of someone else; it is contrary to the spirit of capitalism. However, the elite have money and property invested somewhere. And you can bet that that somewhere is a better place for it than any government could decide.
You cannot take a theory and analyze it based on distorted attempts to use it to a dictator's advantage. Of course the socialist governments in Venezuela and Cuba will point to the failures of the "market-based" economies of early Latin America.
It means nothing. This isn't a faith-based science, unless you take mathematics to be faith-based, as well. There is simply no substantial argument arguing against the application of economic principles in the real world; economics is the real world.
Economics does not depend on unrealistic assumptions, and it certainly does not ignore empirical evidence.
And those that advocate government interference are guilty of precisely that.