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There is a theory that all above market profits are generated by government granted monopolies. So, for instance, software is protected by patents, oil and gas

There is a theory that all above market profits are generated by government granted monopolies. So, for instance, software is protected by patents, oil and gas is protected by mineral rights, drugs are protected by patent law, entertainment is protected by IP rights, and so on. In so far as there is competition, it often arises when the rent-seeking motivates people to disrupt the government protection by making it useless. In software, people have lived with that since the beginning because it moves so fast. But even in slow moving fields like energy, we see new tech rendering the old protections less important. I am not saying society has not paid a steep price for rent seeking behavior but that it has been part and parcel of all capitalism forever, and not unique to the American experience.

devoply 9y ago
Lots of innovation in tech happened despite patents because of ideologues like Stallman and the gpl/open source movement which left lots of software which could be used to disrupt monopoly. Not because it moves fast. If people were playing that game companies like Google would not exist or at least be much much slower in growth and what they have been able to accomplish.
jbooth 9y ago
That theory falls under the Econ 101 fallacy -- assuming perfect information dispersal, instant job-switching, instant production ramping.. "First, let's assume the cow is a sphere".
- arcanus 9y ago
  > "First, let's assume the cow is a sphere". It is worse than that, because at least physics is validated by experimental data. Much of (macro in particular) Economics is a set of axioms that are seldom predictive.
  - pm90 9y ago
    And yet, people swear by them as though they have the same validity as physics. I never really understood that mentality.
    - sfifs 9y ago
      That's because they're what people _believe_ - their politics - an act of faith not dissimilar from religion. The set of econ axioms people espouse demonstrates their own world view - what they stand for. In a previous age, these would be moral principles and social norms - now it's political beliefs.
      - pm90 9y ago
        This is an interesting point, and I've been giving this a great deal of thought. The United States is surprisingly religious for a developed Western Nation, and my theory is that if people can be brainwashed into accepting things "on faith", then that can be extended to other things as well, such as facts. Maybe that can explain the huge numbers of climate change deniers, anti-abortionists and other anti-intellectuals in the US?
      - specialist 9y ago
        Beliefs ~= identity. Cite "Democracy for Realists".
    - sadfjhsdf66 9y ago
      Because the monopolies have exerted pressure on public education, including universities, to churn out advocates for the corporations bottom line. With no basis in reality, we've brainwashed people to believe the bottom lines of the elite are to be protected. That's the outcome sought of our educational system. It fascinates me how, on the one hand, we complain about how lazy people are. How much inducement the proles need. "Oh they're just lazy. Push em harder." If we need to push people that hard, perhaps "economy of effort" is built into the species. It's a weird cognitive dissonance. "They want something for nothing! But I want to maintain my elite status built upon your efforts!" But that challenges the basis of elite power. If we all quit producing for them, they lose. So we're "induced to produce" under the constraints they define: no food, shelter, healthcare.
  - theseatoms 9y ago
    Yes. Macroeconomics is secular theology. The global economy is so vast and interconnected that basically none of the theory can be scientifically tested.
    - HarryHirsch 9y ago
      Apparently at Renaissance Technologies they love hiring astronomers because as an astronomer you are used to modelling systems that are completely beyond human scale based on data from observations that cannot be repeated. No one would argue that astronomy isn't a science. Traditional university macroeconomics is a different beast. Comparison with astrology is apt.
      - candiodari 9y ago
        It might have something to do with that the education for being an astronomer starts with years of postgraduate pure mathematics ...
- pdkl95 9y ago
  > "First, let's assume the cow is a sphere". "There is a story that has been going around about a physicist, a chemist, and an economist who were stranded on a desert island with no implements and a can of food. The physicist and the chemist each devised an ingenious mechanism for getting the can open; the economist merely said, 'Assume we have a can opener'!"[1] Yanis Varoufakis, after the drama surrounding his (very) brief term as Greek's Minister of Finance describes[2] the problem simply and plainly: "Understanding economics well impedes an understanding the economy." His continued explanation why [ibid] might be the ultimate example of how easy it is to sell bullshit as long as you dress it up properly with the trappings of math/stat/logic. [1] https://en.wikipedia.org/wiki/Assume_a_can_opener https://en.wikipedia.org/wiki/Assume_a_can_opener [2] https://www.youtube.com/watch?v=L5AUAIzciLE#t=1355 https://www.youtube.com/watch?v=L5AUAIzciLE#t=1355
spacelizard 9y ago
The goal of a capitalistic government is still unfortunately to have a wholly predictable economy. There is competition, but only until a winner is declared, i.e. a monopoly is granted. After this the rents that the winner charges can be raised and lowered freely, but in a controlled manner, in order to manage where and when the value is actually generated. This gets weird with software businesses as these companies tend to insulate from losses relatively well. This coupled with the fact that in some markets there is no way to generate additional value without a huge public investment happening upstream (utilities) is why a lot of VC goes so crazy for it. Keeping the cash flowing is the only way to avoid being taxed profusely – All you can do in some situations is raise rents and spend hastily, for better or for worse.
23443463453 9y ago
That perspective is whole ignorant of the consequences of not having a mechanism for protecting people's outputs and value. Are you incented to work if someone else gets paid for that work? Why would you think that is any different with regard to patents, copyrights, and trademarks, etc. I get that there are abuses and even grotesque distortions, but that theory is fully and clearly false. Yes, you should have protection, no you should not have abusive protecting as it exists right now in basically every single field and sector. No, you should not be allowed to lease mineral rights and then just sit on them for free. No you should not be able to copyright something essentially forever. No, patents should not even be awarded for basic inevitable things that a corporations simply had the financial ability to copyright first. No, you should not be able to keep exponential gains from the value and environment a society created without also paying exponential taxes to compensate and contribute due to that success. But there has to be a fundamental right and ability to keep the value from what one has earned and created. That may seem an anathema to the recent generation infested by communism and ideologically subverted by islam, but the alternative is the collapse of society.
BFatts 9y ago
Software isn't protected by patents - it's just IP laws as well. You can't patent software in general. Maybe the look and feel of your product, but not the functionality.
- function_seven 9y ago
  Maybe it ought to be this way, but it's clearly not. MP3, GIF, patent trolls, and the Eastern District of Texas are all well-known examples of software patents.
- cestith 9y ago
  In the US methods of doing things can be patented. That includes software. Look up MP3, LZW compression, or perhaps IBM's 2100 algorithm patents over the fifteen years from 2001 to 2016. It's being narrowed, but it still exists. Until rather recently many courts would recognize "do well understood process X, but on a computer" as patentable. http://blogs.gartner.com/doug-laney/patents-for-algorithms-have-increased-30x-the-past-fifteen-years/ http://blogs.gartner.com/doug-laney/patents-for-algorithms-h... https://news.ycombinator.com/item?id=8310084 https://news.ycombinator.com/item?id=8310084 http://www.legalmatch.com/law-library/article/what-cant-be-patented.html http://www.legalmatch.com/law-library/article/what-cant-be-p...
  - candiodari 9y ago
    Maybe it's just me, but as far as my experience goes, the App store and Google Play, and to a much lesser extent Steam have done much, much more killing my ability to make a profit on software than patents ever have.

devoply 9y ago

Lots of innovation in tech happened despite patents because of ideologues like Stallman and the gpl/open source movement which left lots of software which could be used to disrupt monopoly. Not because it moves fast. If people were playing that game companies like Google would not exist or at least be much much slower in growth and what they have been able to accomplish.

jbooth 9y ago

That theory falls under the Econ 101 fallacy -- assuming perfect information dispersal, instant job-switching, instant production ramping.. "First, let's assume the cow is a sphere".

arcanus 9y ago
> "First, let's assume the cow is a sphere". It is worse than that, because at least physics is validated by experimental data. Much of (macro in particular) Economics is a set of axioms that are seldom predictive.
- pm90 9y ago
  And yet, people swear by them as though they have the same validity as physics. I never really understood that mentality.
  - sfifs 9y ago
    That's because they're what people _believe_ - their politics - an act of faith not dissimilar from religion. The set of econ axioms people espouse demonstrates their own world view - what they stand for. In a previous age, these would be moral principles and social norms - now it's political beliefs.
    - pm90 9y ago
      This is an interesting point, and I've been giving this a great deal of thought. The United States is surprisingly religious for a developed Western Nation, and my theory is that if people can be brainwashed into accepting things "on faith", then that can be extended to other things as well, such as facts. Maybe that can explain the huge numbers of climate change deniers, anti-abortionists and other anti-intellectuals in the US?
    - specialist 9y ago
      Beliefs ~= identity. Cite "Democracy for Realists".
  - sadfjhsdf66 9y ago
    Because the monopolies have exerted pressure on public education, including universities, to churn out advocates for the corporations bottom line. With no basis in reality, we've brainwashed people to believe the bottom lines of the elite are to be protected. That's the outcome sought of our educational system. It fascinates me how, on the one hand, we complain about how lazy people are. How much inducement the proles need. "Oh they're just lazy. Push em harder." If we need to push people that hard, perhaps "economy of effort" is built into the species. It's a weird cognitive dissonance. "They want something for nothing! But I want to maintain my elite status built upon your efforts!" But that challenges the basis of elite power. If we all quit producing for them, they lose. So we're "induced to produce" under the constraints they define: no food, shelter, healthcare.
- theseatoms 9y ago
  Yes. Macroeconomics is secular theology. The global economy is so vast and interconnected that basically none of the theory can be scientifically tested.
  - HarryHirsch 9y ago
    Apparently at Renaissance Technologies they love hiring astronomers because as an astronomer you are used to modelling systems that are completely beyond human scale based on data from observations that cannot be repeated. No one would argue that astronomy isn't a science. Traditional university macroeconomics is a different beast. Comparison with astrology is apt.
    - candiodari 9y ago
      It might have something to do with that the education for being an astronomer starts with years of postgraduate pure mathematics ...
pdkl95 9y ago
> "First, let's assume the cow is a sphere". "There is a story that has been going around about a physicist, a chemist, and an economist who were stranded on a desert island with no implements and a can of food. The physicist and the chemist each devised an ingenious mechanism for getting the can open; the economist merely said, 'Assume we have a can opener'!"[1] Yanis Varoufakis, after the drama surrounding his (very) brief term as Greek's Minister of Finance describes[2] the problem simply and plainly: "Understanding economics well impedes an understanding the economy." His continued explanation why [ibid] might be the ultimate example of how easy it is to sell bullshit as long as you dress it up properly with the trappings of math/stat/logic. [1] https://en.wikipedia.org/wiki/Assume_a_can_opener https://en.wikipedia.org/wiki/Assume_a_can_opener [2] https://www.youtube.com/watch?v=L5AUAIzciLE#t=1355 https://www.youtube.com/watch?v=L5AUAIzciLE#t=1355

spacelizard 9y ago

The goal of a capitalistic government is still unfortunately to have a wholly predictable economy. There is competition, but only until a winner is declared, i.e. a monopoly is granted. After this the rents that the winner charges can be raised and lowered freely, but in a controlled manner, in order to manage where and when the value is actually generated. This gets weird with software businesses as these companies tend to insulate from losses relatively well. This coupled with the fact that in some markets there is no way to generate additional value without a huge public investment happening upstream (utilities) is why a lot of VC goes so crazy for it. Keeping the cash flowing is the only way to avoid being taxed profusely – All you can do in some situations is raise rents and spend hastily, for better or for worse.

23443463453 9y ago

That perspective is whole ignorant of the consequences of not having a mechanism for protecting people's outputs and value. Are you incented to work if someone else gets paid for that work? Why would you think that is any different with regard to patents, copyrights, and trademarks, etc. I get that there are abuses and even grotesque distortions, but that theory is fully and clearly false. Yes, you should have protection, no you should not have abusive protecting as it exists right now in basically every single field and sector. No, you should not be allowed to lease mineral rights and then just sit on them for free. No you should not be able to copyright something essentially forever. No, patents should not even be awarded for basic inevitable things that a corporations simply had the financial ability to copyright first. No, you should not be able to keep exponential gains from the value and environment a society created without also paying exponential taxes to compensate and contribute due to that success. But there has to be a fundamental right and ability to keep the value from what one has earned and created. That may seem an anathema to the recent generation infested by communism and ideologically subverted by islam, but the alternative is the collapse of society.

BFatts 9y ago

Software isn't protected by patents - it's just IP laws as well. You can't patent software in general. Maybe the look and feel of your product, but not the functionality.

function_seven 9y ago
Maybe it ought to be this way, but it's clearly not. MP3, GIF, patent trolls, and the Eastern District of Texas are all well-known examples of software patents.
cestith 9y ago
In the US methods of doing things can be patented. That includes software. Look up MP3, LZW compression, or perhaps IBM's 2100 algorithm patents over the fifteen years from 2001 to 2016. It's being narrowed, but it still exists. Until rather recently many courts would recognize "do well understood process X, but on a computer" as patentable. http://blogs.gartner.com/doug-laney/patents-for-algorithms-have-increased-30x-the-past-fifteen-years/ http://blogs.gartner.com/doug-laney/patents-for-algorithms-h... https://news.ycombinator.com/item?id=8310084 https://news.ycombinator.com/item?id=8310084 http://www.legalmatch.com/law-library/article/what-cant-be-patented.html http://www.legalmatch.com/law-library/article/what-cant-be-p...
- candiodari 9y ago
  Maybe it's just me, but as far as my experience goes, the App store and Google Play, and to a much lesser extent Steam have done much, much more killing my ability to make a profit on software than patents ever have.