4 ms·

I have yet to hear of a natural, malevolent monopoly that formed without some kind of government protection to keep out competition (a.k.a. rent seeking), in th

I have yet to hear of a natural, malevolent monopoly that formed without some kind of government protection to keep out competition (a.k.a. rent seeking), in the forms of direct government contracts, complex startup-averse regulations, government LICENSING, etc.

dataangel 9y ago
I have yet to hear how businesses with network effects, high barrier to entry, and control of rare resources don't inevitably become monopolies. Everything you're citing is just one form of those. Look at Facebook or Google, did government regs really help them become so huge?
- lend000 9y ago
  Perhaps this will be interesting to you: http://www.aei.org/publication/charts-of-the-day-creative-destruction-in-the-sp500-index/ http://www.aei.org/publication/charts-of-the-day-creative-de... Dominant players get displaced all the time. Famous examples you've likely heard of include Kodak, Yahoo, and Sears. As for Google and Facebook -- people like the products. Consumers are happy. The people on HN concerned about privacy and wasted time advocate tools which have little traction in the market - things like DuckDuckGo (great tool btw.) Why? Because consumers don't care. If FB started charging $100/month for account access tomorrow, you'd better believe they'd be out of business pretty fast (so they won't). How is that a malevolent monopoly? But eventually, even they will make enough mistakes and be overtaken by more innovative companies, as difficult as that may be to consider right now.
b4lancesh33t 9y ago
Microsoft would seem to be one counterexample.
- lend000 9y ago
  How so? Not a malevolent monopoly in any sense. I still do not understand the antitrust case to be some sort of proof of monopoly -- the court settled for them making public the implementation of certain API's, and allowed them to continue shipping IE with their OS (as they should -- how else would people download a web browser? Force everyone to buy one at the store and install them via CD?) EDIT: incredible how many downvotes I've received on this thread, as I continue waiting for that example :)...
  - alphaalpha101 9y ago
    Microsoft was incredibly malevolent. They fought very dirtily to try to destroy any competitors they had. They had an enormous monopoly. All private monopolies are malevolent.
  - dTal 9y ago
    What exactly constitutes "malevolence", in your view? The disadvantages of monopolies are inherent and extend far beyond mere price gouging. Your argument seems to be that if a monopolistic company doesn't innovate (at the same pace they would if they had stiff competition) then some nimble upstart will easily overtake them. But that's not how the world works. If the incumbent has all the patents and all the money, nimble upstarts can be combatted in all sorts of ways beyond "fair" competition - they can buy them (as Facebook does to all upstart social networks that gain a foothold), sue them unfairly and bleed them dry (as Creative did to Audigy), or use their market position to change the rules faster than a competitor can keep up (Microsoft's "embrace, extend, extinguish" strategy). Of course, if you won't accept any example of monopoly that involves unfair government privilege, you neglect the fact of regulatory capture - once a company gets to a certain size, it can often buy its way into an unfair advantage (this is the usual order of things, rather than government arbitrarily picking a company and then it becoming a monopoly).
    - lend000 9y ago
      Malevolence as would be described by the CONSUMER (low quality and/or high prices). Something like Comcast, a successful business whose customers typically hate it, and which is deeply entrenched as a 'utility' due to its foothold in local municipalities. > If the incumbent has all the patents Is that not a form of government licensing? > sue them unfairly and bleed them dry (as Creative did to Audigy) Is that not exploiting flaws in the governing system? Wouldn't the best solution be to fix the flaws, rather than create a workaround to attempt to fix abuses of more fundamental problems? > you neglect the fact of regulatory capture - once a company gets to a certain size, it can often buy its way into an unfair advantage I don't neglect that at all -- that is the problem to solve. Obviously, humans are not perfect so no government will ever be, but we should strive to solve more fundamental problems than to layer our legal system in thousands of pages of bandaids, which have done nothing to solve the Comcasts of the world. Do you disagree?
maxxxxx 9y ago
Standard Oil?
- lend000 9y ago
  "Standard's actions and secret[14] transport deals helped its kerosene price to drop from 58 to 26 cents from 1865 to 1870. Competitors disliked the company's business practices, but consumers liked the lower prices." - Wikipedia Not a malevolent monopoly in any sense. Once they had gained the dominant industry position, sure, they could have price gouged for a short time, but without government protection, my claim is that they would have lost their position. They knew that, so they didn't.
  - rrrrrrrwwww13 9y ago
    Are you seriously using an example from 150 years ago to prove your point?
    - lend000 9y ago
      Have any substance to add? You're wrong, by the way; I actually refuted the previous poster, who was trying to use an example from 150 years ago to prove a point.

dataangel 9y ago

I have yet to hear how businesses with network effects, high barrier to entry, and control of rare resources don't inevitably become monopolies. Everything you're citing is just one form of those. Look at Facebook or Google, did government regs really help them become so huge?

lend000 9y ago
Perhaps this will be interesting to you: http://www.aei.org/publication/charts-of-the-day-creative-destruction-in-the-sp500-index/ http://www.aei.org/publication/charts-of-the-day-creative-de... Dominant players get displaced all the time. Famous examples you've likely heard of include Kodak, Yahoo, and Sears. As for Google and Facebook -- people like the products. Consumers are happy. The people on HN concerned about privacy and wasted time advocate tools which have little traction in the market - things like DuckDuckGo (great tool btw.) Why? Because consumers don't care. If FB started charging $100/month for account access tomorrow, you'd better believe they'd be out of business pretty fast (so they won't). How is that a malevolent monopoly? But eventually, even they will make enough mistakes and be overtaken by more innovative companies, as difficult as that may be to consider right now.

b4lancesh33t 9y ago

Microsoft would seem to be one counterexample.

lend000 9y ago
How so? Not a malevolent monopoly in any sense. I still do not understand the antitrust case to be some sort of proof of monopoly -- the court settled for them making public the implementation of certain API's, and allowed them to continue shipping IE with their OS (as they should -- how else would people download a web browser? Force everyone to buy one at the store and install them via CD?) EDIT: incredible how many downvotes I've received on this thread, as I continue waiting for that example :)...
- alphaalpha101 9y ago
  Microsoft was incredibly malevolent. They fought very dirtily to try to destroy any competitors they had. They had an enormous monopoly. All private monopolies are malevolent.
- dTal 9y ago
  What exactly constitutes "malevolence", in your view? The disadvantages of monopolies are inherent and extend far beyond mere price gouging. Your argument seems to be that if a monopolistic company doesn't innovate (at the same pace they would if they had stiff competition) then some nimble upstart will easily overtake them. But that's not how the world works. If the incumbent has all the patents and all the money, nimble upstarts can be combatted in all sorts of ways beyond "fair" competition - they can buy them (as Facebook does to all upstart social networks that gain a foothold), sue them unfairly and bleed them dry (as Creative did to Audigy), or use their market position to change the rules faster than a competitor can keep up (Microsoft's "embrace, extend, extinguish" strategy). Of course, if you won't accept any example of monopoly that involves unfair government privilege, you neglect the fact of regulatory capture - once a company gets to a certain size, it can often buy its way into an unfair advantage (this is the usual order of things, rather than government arbitrarily picking a company and then it becoming a monopoly).
  - lend000 9y ago
    Malevolence as would be described by the CONSUMER (low quality and/or high prices). Something like Comcast, a successful business whose customers typically hate it, and which is deeply entrenched as a 'utility' due to its foothold in local municipalities. > If the incumbent has all the patents Is that not a form of government licensing? > sue them unfairly and bleed them dry (as Creative did to Audigy) Is that not exploiting flaws in the governing system? Wouldn't the best solution be to fix the flaws, rather than create a workaround to attempt to fix abuses of more fundamental problems? > you neglect the fact of regulatory capture - once a company gets to a certain size, it can often buy its way into an unfair advantage I don't neglect that at all -- that is the problem to solve. Obviously, humans are not perfect so no government will ever be, but we should strive to solve more fundamental problems than to layer our legal system in thousands of pages of bandaids, which have done nothing to solve the Comcasts of the world. Do you disagree?

maxxxxx 9y ago

Standard Oil?

lend000 9y ago
"Standard's actions and secret[14] transport deals helped its kerosene price to drop from 58 to 26 cents from 1865 to 1870. Competitors disliked the company's business practices, but consumers liked the lower prices." - Wikipedia Not a malevolent monopoly in any sense. Once they had gained the dominant industry position, sure, they could have price gouged for a short time, but without government protection, my claim is that they would have lost their position. They knew that, so they didn't.
- rrrrrrrwwww13 9y ago
  Are you seriously using an example from 150 years ago to prove your point?
  - lend000 9y ago
    Have any substance to add? You're wrong, by the way; I actually refuted the previous poster, who was trying to use an example from 150 years ago to prove a point.