8 ms·

Those with wealth will always try to capture the system - whether its formal or informal. The natural state of any business is to try and become a monopoly beca

by sfifs 9y ago

Those with wealth will always try to capture the system - whether its formal or informal. The natural state of any business is to try and become a monopoly because that maximizes rent taking ability - NOT competition. Practically the ONLY power able to stop monopolies from forming is the government. In absence of the government's ability to "meddle", businesses can and will cut deals with big competitors and squelch smaller ones through anti competitive practices to dominate

nickpp 9y ago
Monopolies are granted by governments. The free market has a natural solution to monopolies, it's called competition - startups. Big Cos will always lobby governments to add rules and regulation to raise the barrier of entry on their market and thus reduce competition. They, in fact, buy their monopoly from the government. Solution? Take away the government's ability to grant monopolies.
- pjc50 9y ago
  This is a reductionist view that ignores economies of scale, real barriers to entry, the actual requirement for regulation for most markets to function, not to mention basic safety. Or are you campaigning for the abolition of patents as a concept?
  - nickpp 9y ago
    I am, in fact, skeptical on the ability of patents to stimulate innovation. I think that in a free market the prospective profits should be enough. See software, where patents are mostly used to destroy competition. However in heavily regulated markets, with huge barriers of entry, like pharma, they may be necessary. But again, that's the result of government intervention, so more intervention is the solution. At the least, I am in favor of gradually reducing patent terms while measuring the effect on the innovation in that market.
- sfifs 9y ago
  In any free market, the giant incumbent will either buy out or copy and squelch startups that threaten them unless restricted by anti trust. Witness how Facebook treats competition in the social space. Or how Oracle treats the database space. Or how Microsoft funded Apple's survival and Intel ensured AMDs. If there are sufficiently few rules and an lack of power in the government to enforce (Korea, Japan, Italy), giants may use corruption or organised crime to achieve this. Less powerful governments are rarely a good solution to protect the small man. The right solution is to build checks and balances between the different wings of the government that make it difficult to "capture" all wings.
  - tooltalk 9y ago
    I think the companies you cited are not very good examples of monopolies or monopolistic behaviors: I've always viewed FaceBook as a fad, just like MySpace that once dominated the social space. Or is there any particular behavior that you find out of ordinary? As for Oracle, while their product has dominated the database (and niche CRM) market, FaceBook, Microsoft use their own or other non-Oracle products. In fact, I have seen more companies using noSQL, Postgresql/MySQL (and its variants) in recent years. Having worked in the wall street tech since late 1990's, I remember how everyone moved from Sybase to Oracle and MS SQL, and now to distributed DBs like Cassandra, etc. Apple faltered because of many bad decisions the company made in the 90's and Apple's revival was Steve Jobs's doing, not Microsoft's funding -- though Gates's decision to support MS Office certainly helped. Not sure about Italy, but the economies of Korea and Japan were orchestrated by (or in very overt collaboration with) their gov't. In case of Korea, they instituted import-substitute-industry model that prevented foreign competitions (by policies of gov't) so their domestic industry had chance to grow and compete and a few chosen companies were given favorable contracts/loans/grants; likewise in Japan their model was better known as "Japan Inc." to describe their alliance between business and gov't interests. It wasn't an "lack of power" that resulted in the structure that we now see in both countries -- they are the intended products of explicit gov't policies.
- ajuc 9y ago
  https://en.wikipedia.org/wiki/Natural_monopoly https://en.wikipedia.org/wiki/Natural_monopoly
- eecc 9y ago
  "The free market has a natural solution to monopolies, it's called competition - startups." Please provide proof that markets never fail and indeed that the ideal Free Market exists. Take the time, I'll wait...
  - nickpp 9y ago
    Sorry, I can't. I am a working man, not a philosopher. But please look around you. Every great thing around me was created by a free(-ish) market: this PC, my car, my job, the materials in my home, the heating engine, the food I get in the restaurant, the entertainment on my TV, everything. Then every crappy experience in my existence has something to do with the government: state hospitals, infrastructure, the DMV and other bureaucratic institutions, my and my children's schools. I tend to judge systems by their results and so far the free market seems to produce much better results. I don't think anybody can argue for a world without governments, but not to the point at which they stifle the free market. And I am afraid that is the direction we are generally taking.
    - zajd 9y ago
      You really think the PC is a good example of something "created by a free market" not the result of the govt pouring millions into R&D in the decades previous?
      - nickpp 9y ago
        Nobody's denying the contribution of the govt $$$ to the creation of the PC. But I've seen computers build by governments. They were slow, huge, power hungry, expensive behemoths. They sucked. We're a long way from there. And free market brought us all the way here.
        zajd 9y ago
        What about the internet? The highway system?
- adamlett 9y ago
  Monopolies are granted by governments Sometimes, sure. But far from exclusively. Monopolies arise naturally in unregulated markets. The free market has a natural solution to monopolies, it's called competition - startups. That’s like saying that natural selection is the solution to hereditary diseases. Not so comforting for those suffering now.
  - nickpp 9y ago
    You're right there, free markets take while to break monopolies. Time is a price we have to pay. Because the alternative, govt intervention, in the long term is much more expensive: it corrupts the market and impedes the natural mechanisms from working. Interventions beget interventions. This leads to heavily regulated markets, where the biggest players buy themselves monopolies. Exactly what we were running away from. :)
    - adamlett 9y ago
      Time is a price we have to pay. By which you mean that time is a price you think we ought to pay. I mean, we do actually have options. Because the alternative, govt intervention, in the long term is much more expensive: it corrupts the market and impedes the natural mechanisms from working. Interventions beget interventions. I struggle to come up with any example anywhere, where this is true. This leads to heavily regulated markets, where the biggest players buy themselves monopolies I don’t see how that follows from your previous paragraph. But never mind, I get what you are trying to say, and I agree that there are plenty of examples all over the world of regulation that has the effect you describe. Sometimes simply because it’s bad regulation. But other times because it’s a worthwhile trade off. I bet you don’t mind the pharmaceutical industry being regulated. Or how about the aircraft industry. Even taxi medallions serve(d) a purpose.
  - tooltalk 9y ago
    Do you have any examples of monopolies arise naturally in unregulated market?
    - 9y ago
schalab 9y ago
There used to be a lot of natural factors which worked against monopolies. Every new market you introduced your product in brought along with it a layer of bureaucracy and middle management, which left you more bloated and unwieldy. This allowed smaller,local companies to have an agility and responsiveness advantage even if they offered the same service at a higher fee. Computers and the internet have made the process of expanding a lot smoother with instant inventory management, communication etc. Not sure what government can do to stop this. The more power you give to the government, the more lobbyists and corruption it will result in. And even if they do manage to sign some legislation, there will be workarounds and loopholes. I am struggling to even think of rules that would efficiently limit the growth of Amazon,Google etc. Cap their market share somehow? Tax companies which have more than x% of market share at an exorbitant rate?
- nickpp 9y ago
  You raise some good points. But I strongly believe in the innovative solutions brought forth by the free markets. It's not called "the invisible hand" for nothing. I am old enough to remember when whole IT industry used to be in the shadow of Microsoft (and IBM before that). Nobody could see a solution out of it! The government even tried to fix the problem and failed. Ten years later, Microsoft is becoming a nice player in the industry, not even mentioned when in "largest sharks in IT" lists. The invisible hand of the free market at work...
  - gyaru 9y ago
    I really can't understand if you're being ironic or not, but I hope you are because Microsoft has been under fire for a long time for their behaviour and even fined for it in the past. No "invisible hand" there, more like someone yelling loudly at them.
    - urza 9y ago
      Do you really believe the fines Microsoft was ordered to pay had any effect on the direction of the company? It was on a level of mosquito bite for them. What really forced them to change in last few years is the changing landscape of the whole IT ecosystem. Their market shares dropping, because there are viable alternatives, new kinds and classes of products, the whole opensource movement etc etc. So yes, the invisible hand of market, rather then some silly fines by government.

by sfifs 9y ago

nickpp 9y ago

Monopolies are granted by governments. The free market has a natural solution to monopolies, it's called competition - startups. Big Cos will always lobby governments to add rules and regulation to raise the barrier of entry on their market and thus reduce competition. They, in fact, buy their monopoly from the government. Solution? Take away the government's ability to grant monopolies.

pjc50 9y ago
This is a reductionist view that ignores economies of scale, real barriers to entry, the actual requirement for regulation for most markets to function, not to mention basic safety. Or are you campaigning for the abolition of patents as a concept?
- nickpp 9y ago
  I am, in fact, skeptical on the ability of patents to stimulate innovation. I think that in a free market the prospective profits should be enough. See software, where patents are mostly used to destroy competition. However in heavily regulated markets, with huge barriers of entry, like pharma, they may be necessary. But again, that's the result of government intervention, so more intervention is the solution. At the least, I am in favor of gradually reducing patent terms while measuring the effect on the innovation in that market.
sfifs 9y ago
In any free market, the giant incumbent will either buy out or copy and squelch startups that threaten them unless restricted by anti trust. Witness how Facebook treats competition in the social space. Or how Oracle treats the database space. Or how Microsoft funded Apple's survival and Intel ensured AMDs. If there are sufficiently few rules and an lack of power in the government to enforce (Korea, Japan, Italy), giants may use corruption or organised crime to achieve this. Less powerful governments are rarely a good solution to protect the small man. The right solution is to build checks and balances between the different wings of the government that make it difficult to "capture" all wings.
- tooltalk 9y ago
  I think the companies you cited are not very good examples of monopolies or monopolistic behaviors: I've always viewed FaceBook as a fad, just like MySpace that once dominated the social space. Or is there any particular behavior that you find out of ordinary? As for Oracle, while their product has dominated the database (and niche CRM) market, FaceBook, Microsoft use their own or other non-Oracle products. In fact, I have seen more companies using noSQL, Postgresql/MySQL (and its variants) in recent years. Having worked in the wall street tech since late 1990's, I remember how everyone moved from Sybase to Oracle and MS SQL, and now to distributed DBs like Cassandra, etc. Apple faltered because of many bad decisions the company made in the 90's and Apple's revival was Steve Jobs's doing, not Microsoft's funding -- though Gates's decision to support MS Office certainly helped. Not sure about Italy, but the economies of Korea and Japan were orchestrated by (or in very overt collaboration with) their gov't. In case of Korea, they instituted import-substitute-industry model that prevented foreign competitions (by policies of gov't) so their domestic industry had chance to grow and compete and a few chosen companies were given favorable contracts/loans/grants; likewise in Japan their model was better known as "Japan Inc." to describe their alliance between business and gov't interests. It wasn't an "lack of power" that resulted in the structure that we now see in both countries -- they are the intended products of explicit gov't policies.
ajuc 9y ago
https://en.wikipedia.org/wiki/Natural_monopoly https://en.wikipedia.org/wiki/Natural_monopoly
eecc 9y ago
"The free market has a natural solution to monopolies, it's called competition - startups." Please provide proof that markets never fail and indeed that the ideal Free Market exists. Take the time, I'll wait...
- nickpp 9y ago
  Sorry, I can't. I am a working man, not a philosopher. But please look around you. Every great thing around me was created by a free(-ish) market: this PC, my car, my job, the materials in my home, the heating engine, the food I get in the restaurant, the entertainment on my TV, everything. Then every crappy experience in my existence has something to do with the government: state hospitals, infrastructure, the DMV and other bureaucratic institutions, my and my children's schools. I tend to judge systems by their results and so far the free market seems to produce much better results. I don't think anybody can argue for a world without governments, but not to the point at which they stifle the free market. And I am afraid that is the direction we are generally taking.
  - zajd 9y ago
    You really think the PC is a good example of something "created by a free market" not the result of the govt pouring millions into R&D in the decades previous?
    - nickpp 9y ago
      Nobody's denying the contribution of the govt $$$ to the creation of the PC. But I've seen computers build by governments. They were slow, huge, power hungry, expensive behemoths. They sucked. We're a long way from there. And free market brought us all the way here.
      - zajd 9y ago
        What about the internet? The highway system?
adamlett 9y ago
Monopolies are granted by governments Sometimes, sure. But far from exclusively. Monopolies arise naturally in unregulated markets. The free market has a natural solution to monopolies, it's called competition - startups. That’s like saying that natural selection is the solution to hereditary diseases. Not so comforting for those suffering now.
- nickpp 9y ago
  You're right there, free markets take while to break monopolies. Time is a price we have to pay. Because the alternative, govt intervention, in the long term is much more expensive: it corrupts the market and impedes the natural mechanisms from working. Interventions beget interventions. This leads to heavily regulated markets, where the biggest players buy themselves monopolies. Exactly what we were running away from. :)
  - adamlett 9y ago
    Time is a price we have to pay. By which you mean that time is a price you think we ought to pay. I mean, we do actually have options. Because the alternative, govt intervention, in the long term is much more expensive: it corrupts the market and impedes the natural mechanisms from working. Interventions beget interventions. I struggle to come up with any example anywhere, where this is true. This leads to heavily regulated markets, where the biggest players buy themselves monopolies I don’t see how that follows from your previous paragraph. But never mind, I get what you are trying to say, and I agree that there are plenty of examples all over the world of regulation that has the effect you describe. Sometimes simply because it’s bad regulation. But other times because it’s a worthwhile trade off. I bet you don’t mind the pharmaceutical industry being regulated. Or how about the aircraft industry. Even taxi medallions serve(d) a purpose.
- tooltalk 9y ago
  Do you have any examples of monopolies arise naturally in unregulated market?
  - 9y ago

schalab 9y ago

There used to be a lot of natural factors which worked against monopolies. Every new market you introduced your product in brought along with it a layer of bureaucracy and middle management, which left you more bloated and unwieldy. This allowed smaller,local companies to have an agility and responsiveness advantage even if they offered the same service at a higher fee. Computers and the internet have made the process of expanding a lot smoother with instant inventory management, communication etc. Not sure what government can do to stop this. The more power you give to the government, the more lobbyists and corruption it will result in. And even if they do manage to sign some legislation, there will be workarounds and loopholes. I am struggling to even think of rules that would efficiently limit the growth of Amazon,Google etc. Cap their market share somehow? Tax companies which have more than x% of market share at an exorbitant rate?

nickpp 9y ago
You raise some good points. But I strongly believe in the innovative solutions brought forth by the free markets. It's not called "the invisible hand" for nothing. I am old enough to remember when whole IT industry used to be in the shadow of Microsoft (and IBM before that). Nobody could see a solution out of it! The government even tried to fix the problem and failed. Ten years later, Microsoft is becoming a nice player in the industry, not even mentioned when in "largest sharks in IT" lists. The invisible hand of the free market at work...
- gyaru 9y ago
  I really can't understand if you're being ironic or not, but I hope you are because Microsoft has been under fire for a long time for their behaviour and even fined for it in the past. No "invisible hand" there, more like someone yelling loudly at them.
  - urza 9y ago
    Do you really believe the fines Microsoft was ordered to pay had any effect on the direction of the company? It was on a level of mosquito bite for them. What really forced them to change in last few years is the changing landscape of the whole IT ecosystem. Their market shares dropping, because there are viable alternatives, new kinds and classes of products, the whole opensource movement etc etc. So yes, the invisible hand of market, rather then some silly fines by government.