4 ms·

Again, both monopolies and the government can be problematic. It isn't necessarily one or the other.

by tabeth 9y ago

curiousgeorgio 9y ago
If governments didn't create those problems, those problems wouldn't exist, so the blame should be placed at the cause rather than on the consequence. The disagreement stems from a difference in understanding of what companies are and what their responsibilities should be. Some people mistakenly believe companies should serve society out of a sense of moral obligation, regardless of profits. It's a nice idea in theory, but that's not how a free and fair market operates. History has shown that companies serve society best when profit incentives are left to the market. If consumers care about intangible contributions to society (or "goodwill") such as helping local communities, reducing environmental impact, etc., then profits from consumers' buying choices will naturally end up in the hands of companies that perform best in those areas. If other qualities are more desirable to consumers, the companies that deliver those qualities will capture more market share. In other words, companies should be held to the law (which ideally exists to protect individual property rights, not much more). Beyond that, we as consumers have direct influence on which companies survive or fail based on the votes of our dollars. As soon as governments try to intervene and force different social benefits than those demanded by consumers, things get worse. The core profit-seeking incentives for companies remain in effect, but they now have incentives to work around regulation in the most efficient ways possible. As regulation tends to favor some companies more than others (as a result of ever-present loopholes and lobbying - or to put it differently, the government's unavoidable tendency to follow money and choose winners), those legislative efforts usually end up only making the situation worse.
- ubernostrum 9y ago
  So... If there is a problem, its cause is government, no matter what the problem is and no matter what empirical observation says about the cause. And... In a "free" market, it is impossible for a monopoly to develop. And... There is no middle ground between laissez-faire utopia, and North Korea. You certainly seem like a rigorous and intellectually honest interlocutor.
  - curiousgeorgio 9y ago
    If we're talking about intellectual honesty, please refrain from putting words in my mouth. I didn't say any of those things.
    - joshuamorton 9y ago
      As another reader, it certainly does appear that you said that monopolies can only be caused by government action.
      - mmirate 9y ago
        Lots of imprecision here. While they did claim that monopolies today are mostly caused by government action, and they did claim that lots of problems are caused by government ... they didn't claim that all problems are inevitably caused by government. Nor did they claim that monopolies cannot have non-government causes as well as government causes. (If a company has a perfect enough reputation+pricing+etc. that nobody thinks it worthwhile to compete with that company ... then so be it!) Hence their further claim that words were being put into their mouth.
  - logfromblammo 9y ago
    In a "free" market, a natural monopoly business will fluctuate between periods where zero companies exist, where one company exists as an incumbent monopolist, and where one or more challenger companies exist that are all frantically trying to unseat the incumbent before going out of business. Monopolies will develop, but they will also occasionally fail and exit. The reason why governments elevate single companies in a natural monopoly line of business to de jure monopolies is that those periods where zero companies exist could be disastrous to the functioning of other businesses. If all the local water companies go bust, the toilets stop flushing. In a free market, if Comcast is the local ISP monopolist, it cannot stop anyone from investing in an entirely new fiber network. If you have the money to do so, you can walk into town, lay fiber, undercut Comcast on monthly service costs, and drive them to either try to compete or lose all customers. If they compete, it is a war of attrition, and the company that runs out of money first loses (if the local telecoms business is indeed a natural monopoly, which is debatable). If they lose all customers, you are the new monopoly, and you now have the option to reduce service quality and raise prices. As long as the threat of potential competition exists, a monopolist has to operate by monopolistic competition instead of secure monopoly. It is a completely different microeconomics calculation for determining price and output. Generally speaking, the price is lower and output higher than for secure monopoly, but still higher price and lower output than the market-clearing price of perfect competition. In short, rather than charging as much as you can for as little as you can produce, you have to produce as much as is necessary so that no competitor can establish a competitive foothold by targeting your unserved or under-served customers, and set prices accordingly. So there are real differences between the monopolies produced by the free market, and those protected by government.
- deleted 9y ago
  [deleted]

Again, both monopolies and the government can be problematic. It isn't necessarily one or the other.

by tabeth 9y ago

Again, both monopolies and the government can be problematic. It isn't necessarily one or the other.

If governments didn't create those problems, those problems wouldn't exist, so the blame should be placed at the cause rather than on the consequence. The disagreement stems from a difference in understanding of what companies are and what their responsibilities should be. Some people mistakenly believe companies should serve society out of a sense of moral obligation, regardless of profits. It's a nice idea in theory, but that's not how a free and fair market operates. History has shown that companies serve society best when profit incentives are left to the market. If consumers care about intangible contributions to society (or "goodwill") such as helping local communities, reducing environmental impact, etc., then profits from consumers' buying choices will naturally end up in the hands of companies that perform best in those areas. If other qualities are more desirable to consumers, the companies that deliver those qualities will capture more market share. In other words, companies should be held to the law (which ideally exists to protect individual property rights, not much more). Beyond that, we as consumers have direct influence on which companies survive or fail based on the votes of our dollars. As soon as governments try to intervene and force different social benefits than those demanded by consumers, things get worse. The core profit-seeking incentives for companies remain in effect, but they now have incentives to work around regulation in the most efficient ways possible. As regulation tends to favor some companies more than others (as a result of ever-present loopholes and lobbying - or to put it differently, the government's unavoidable tendency to follow money and choose winners), those legislative efforts usually end up only making the situation worse.

ubernostrum 9y ago
So... If there is a problem, its cause is government, no matter what the problem is and no matter what empirical observation says about the cause. And... In a "free" market, it is impossible for a monopoly to develop. And... There is no middle ground between laissez-faire utopia, and North Korea. You certainly seem like a rigorous and intellectually honest interlocutor.
- curiousgeorgio 9y ago
  If we're talking about intellectual honesty, please refrain from putting words in my mouth. I didn't say any of those things.
  - joshuamorton 9y ago
    As another reader, it certainly does appear that you said that monopolies can only be caused by government action.
    - mmirate 9y ago
      Lots of imprecision here. While they did claim that monopolies today are mostly caused by government action, and they did claim that lots of problems are caused by government ... they didn't claim that all problems are inevitably caused by government. Nor did they claim that monopolies cannot have non-government causes as well as government causes. (If a company has a perfect enough reputation+pricing+etc. that nobody thinks it worthwhile to compete with that company ... then so be it!) Hence their further claim that words were being put into their mouth.
- logfromblammo 9y ago
  In a "free" market, a natural monopoly business will fluctuate between periods where zero companies exist, where one company exists as an incumbent monopolist, and where one or more challenger companies exist that are all frantically trying to unseat the incumbent before going out of business. Monopolies will develop, but they will also occasionally fail and exit. The reason why governments elevate single companies in a natural monopoly line of business to de jure monopolies is that those periods where zero companies exist could be disastrous to the functioning of other businesses. If all the local water companies go bust, the toilets stop flushing. In a free market, if Comcast is the local ISP monopolist, it cannot stop anyone from investing in an entirely new fiber network. If you have the money to do so, you can walk into town, lay fiber, undercut Comcast on monthly service costs, and drive them to either try to compete or lose all customers. If they compete, it is a war of attrition, and the company that runs out of money first loses (if the local telecoms business is indeed a natural monopoly, which is debatable). If they lose all customers, you are the new monopoly, and you now have the option to reduce service quality and raise prices. As long as the threat of potential competition exists, a monopolist has to operate by monopolistic competition instead of secure monopoly. It is a completely different microeconomics calculation for determining price and output. Generally speaking, the price is lower and output higher than for secure monopoly, but still higher price and lower output than the market-clearing price of perfect competition. In short, rather than charging as much as you can for as little as you can produce, you have to produce as much as is necessary so that no competitor can establish a competitive foothold by targeting your unserved or under-served customers, and set prices accordingly. So there are real differences between the monopolies produced by the free market, and those protected by government.
deleted 9y ago
[deleted]