5 ms·

I agree, it's bullshit. Not only that, but monopolies are not a bad thing, as long as they are not government granted ones.

bumby 7y ago
What about government granted regulated monopolies like utilities?
yes_man 7y ago
A monopoly regulates supply to extract more money from the consumer than a competitive market could. What's the good parts?
- bumby 7y ago
  They can avoid unnecessary redundant infrastructure as an example. Imagine trying to dig for construction when there are 30 potential cable companies running utilities underground.
  - istjohn 7y ago
    That's why utilities like electricity and gas are tightly regulated to protect consumers.
    - bumby 7y ago
      I don't disagree but the movement has been to deregulate these exact examples. A customer can literally buy electricity from a provider one thousand miles away at a cheaper rate if they live in a deregulated area.
      - istjohn 7y ago
        But this is only possible because regulators force the local provider to allow the distant provider to use their infrastructure at a fair price.
        bumby 7y ago
        I don't think that's exactly right. Energy prices are broken down to generation and transmissions costs. The transmission costs remain regulated, but generation can charge a market price. Regulated transmission prevents other providers from creating redundant infrastructure in a deregulated environment. Deregulation is possible not because of regulated infrastructure but in spite of it. I.e. Deregulation could still exist without regulated transmission but it was deemed to be in the public interest to reduce redundant infrastructure. Incidentally, the 'public interest' has been one of the claims of moving to a deregulated market, with the thought that this would provide lower utility costs. However, this hasn't always worked out: https://fuelfix.com/blog/2016/06/08/deregulated-texas-electricity-costs-exceed-national-average/ https://fuelfix.com/blog/2016/06/08/deregulated-texas-electr...
- asark 7y ago
  Theoretical "perfect" competition eats all money that could go toward R&D, by making profits razor-thin. It's an awful way to exist that no sane person who's thought it through actually wants—assuming it could ever exist stably for any length of time, which, probably not. Going the other direction, monopolies leave the most money available for R&D. Japan famously leveraged the power of a small set of huge players—not monopolies, but very, very far from "perfect competition" markets, certainly—to drive post-WWII R&D, ensuring their continued success by delivering them a captive domestic market while pooling their excess funds with cooperation-encouraging incentives (=more money, from the government) to rapidly improve their tech and productive capabilities, aiming to become an export powerhouse. It worked. This is not meant to be a defense of monopolies, especially those not firmly under the yoke of government to ensure all that excess is captured in some way for something resembling the public good, but the situation is more complex than one might first think, and whether one may prefer a huge number of market participants or a small number could be very much situational.
JohnFen 7y ago
> monopolies are not a bad thing, as long as they are not government granted ones. I disagree. Outside of "natural monopolies", monopolies are bad things whether government-granted or not.
- btilly 7y ago
  What is a natural monopoly depends on government regulation. In particular regulations granting access from one company's system to another's can stop natural monopolies from being natural monopolies. A simple example is that the pattern of long thin property rights needed to create a railway system completely blocks anyone from creating criss-crossing railroads that would allow them to compete. But government rules forcing the initial company to allow competitors to cross or share its railways will create competition. Forced access to long distance telephone networks has the same effect.
- Findeton 7y ago
  No, they are good because they are not forced ones. Like google, anyone could use any other search engine, like I do using duckduckgo. If people use google, it's because they think it's very good and they don't find something that is so much better that they'd leave.
- mr_toad 7y ago
  Natural monopolies are just as bad if they exploit their monopoly, which they will certainly do if they’re left to their own devices.

bumby 7y ago

What about government granted regulated monopolies like utilities?

yes_man 7y ago

A monopoly regulates supply to extract more money from the consumer than a competitive market could. What's the good parts?

bumby 7y ago
They can avoid unnecessary redundant infrastructure as an example. Imagine trying to dig for construction when there are 30 potential cable companies running utilities underground.
- istjohn 7y ago
  That's why utilities like electricity and gas are tightly regulated to protect consumers.
  - bumby 7y ago
    I don't disagree but the movement has been to deregulate these exact examples. A customer can literally buy electricity from a provider one thousand miles away at a cheaper rate if they live in a deregulated area.
    - istjohn 7y ago
      But this is only possible because regulators force the local provider to allow the distant provider to use their infrastructure at a fair price.
      - bumby 7y ago
        I don't think that's exactly right. Energy prices are broken down to generation and transmissions costs. The transmission costs remain regulated, but generation can charge a market price. Regulated transmission prevents other providers from creating redundant infrastructure in a deregulated environment. Deregulation is possible not because of regulated infrastructure but in spite of it. I.e. Deregulation could still exist without regulated transmission but it was deemed to be in the public interest to reduce redundant infrastructure. Incidentally, the 'public interest' has been one of the claims of moving to a deregulated market, with the thought that this would provide lower utility costs. However, this hasn't always worked out: https://fuelfix.com/blog/2016/06/08/deregulated-texas-electricity-costs-exceed-national-average/ https://fuelfix.com/blog/2016/06/08/deregulated-texas-electr...
asark 7y ago
Theoretical "perfect" competition eats all money that could go toward R&D, by making profits razor-thin. It's an awful way to exist that no sane person who's thought it through actually wants—assuming it could ever exist stably for any length of time, which, probably not. Going the other direction, monopolies leave the most money available for R&D. Japan famously leveraged the power of a small set of huge players—not monopolies, but very, very far from "perfect competition" markets, certainly—to drive post-WWII R&D, ensuring their continued success by delivering them a captive domestic market while pooling their excess funds with cooperation-encouraging incentives (=more money, from the government) to rapidly improve their tech and productive capabilities, aiming to become an export powerhouse. It worked. This is not meant to be a defense of monopolies, especially those not firmly under the yoke of government to ensure all that excess is captured in some way for something resembling the public good, but the situation is more complex than one might first think, and whether one may prefer a huge number of market participants or a small number could be very much situational.

JohnFen 7y ago

> monopolies are not a bad thing, as long as they are not government granted ones. I disagree. Outside of "natural monopolies", monopolies are bad things whether government-granted or not.

btilly 7y ago
What is a natural monopoly depends on government regulation. In particular regulations granting access from one company's system to another's can stop natural monopolies from being natural monopolies. A simple example is that the pattern of long thin property rights needed to create a railway system completely blocks anyone from creating criss-crossing railroads that would allow them to compete. But government rules forcing the initial company to allow competitors to cross or share its railways will create competition. Forced access to long distance telephone networks has the same effect.
Findeton 7y ago
No, they are good because they are not forced ones. Like google, anyone could use any other search engine, like I do using duckduckgo. If people use google, it's because they think it's very good and they don't find something that is so much better that they'd leave.
mr_toad 7y ago
Natural monopolies are just as bad if they exploit their monopoly, which they will certainly do if they’re left to their own devices.