6 ms·

Basically anything that historically falls under common carrier regs. None of this debate is new. We saw it with railroads. Natural monopolies need counterbala

Basically anything that historically falls under common carrier regs. None of this debate is new. We saw it with railroads. Natural monopolies need counterbalancing regulation. This isn't even remotely a controversial statement in economics.

dragonwriter 6y ago
> Natural monopolies need counterbalancing regulation. This isn't even remotely a controversial statement in economics. Unless your argument is that the Austrian and Chicago schools of economics doesn't actually exist, this is quite wrong, since the Austrian school denies the existence of natural monopoly and argues that harmful monopoly can only exist as a product of government regulation, and the Chicago school likewise holds that absent regulation, monopoly is a transient condition, not a stable one; both favor removing regulations that they see as stabilizing harmful monopolies, rather than regulating to manage naturally-formed-and-self-stabilizing monopolies, which they don't acknowledge the existence of. Now, I think the Chicago/Austrian positions on monopolies are wrong, but you really can't reasonably deny that this is a fundamental area of controversy.
- jasonwatkinspdx 6y ago
  Yes. I am entirely comfortable in saying that the economic consensus is strongly against the Austrian and Chicago perspectives. Both of these schools value prior ideology over empirical data. It's a "debate" on forums like this, but not even remotely so amongst the economists I talk to.
  - dragonwriter 6y ago
    > Both of these schools value prior ideology over empirical data. Austrian overtly so, Chicago less so, but, yes, its another issue that "is economics an empirical science" is also a controversial position in economics. > but not even remotely so amongst the economists I talk to. That's a very different claim than your original one. That last qualifier does quite a bit of work.
    - jasonwatkinspdx 6y ago
      Yeah, it does the work of every actual credentialed economist I know has nothing but utter contempt for praxeology. As should be. As should you, if you cared enough.
- nine_k 6y ago
  The problem is that a monopoly may naturally be disrupted in decades, while people want an improvement during their precious only lifetimes. A temporary regulation could possibly help, but making it temporary is the hard part. And if it lingers, the inefficiencies it creates let some companies become incumbents, and, with some luck, even monopolies.
  - p1necone 6y ago
    I'm more inclined to think that under a completely unregulated free market a monopoly today would instead be more likely to turn into a de-facto nation state over the course of decades. But this is purely speculation (not entirely unprompted by reading speculative fiction). Is there any evidence that unregulated free markets actually tend towards competition, rather than consolidation?
    - SkyMarshal 6y ago
      >I'm more inclined to think that under a completely unregulated free market a monopoly today would instead be more likely to turn into a de-facto nation state over the course of decades Based on recent experience this does appear possible, that some monopolies have gotten savvy enough to become long-running nation-state-like entities if left unregulated. We know from the science of complex systems that one characteristic non-linear dynamic systems, like markets or national economies, is that the critical resources of the system tend to concentrate and consolidate over time. We’ve witnessed this over the past several decades with the deregulation of the US banking industry, its subsequent concentration and consolidation. Libertarians like to believe that such economic problems are self-correcting, that eventually such concentrations of wealth and economic power will either asymptotically collapse, or become ossified and be supplanted by something newer and innovative. Either way there’s a reset. But I don’t think either is inevitable, in all domains. What we’ve actually observed with the banking system is that: 1) powerful monopolies/oligopolies use their resources to capture the actual government and regulators, and use those entities to shape favorable laws, and to bail out the monopolies when they collapse, preventing the reset, and 2) even if the collapse and reset occurs, it causes far more damage and misery to the rest of the economy and society than to the people responsible for causing it. All else equal I’d rather live in a society that simply prevents those extreme cycles by making natural monopolies into well-regulated public utilities. Public utilities in the US have worked very well for a century, they’re a far more desirable economic arrangement for 99% of society.
- p1necone 6y ago
  "the Austrian school denies the existence of natural monopoly and argues that harmful monopoly can only exist as a product of government regulation" This sounds prima facie absurd to me. Are they just throwing phrases out of Ayn Rand novels on paper and calling it science?
  - ip26 6y ago
    I say this only half-sarcastically, the Austrian school seems to start at their desired solution & worked backwards from there. They similarly deny the existence of externalities- although depending on who you read the justification varies widely.
    - sudosysgen 6y ago
      It's not even sarcastic. The Austrian school literally starts with assumptions that basically imply their solutions, that people always act in their best interest and so on, and reject any kind of empirical test of their theory. At all. The Austrian school assumes that these bases are absolutely and completely true, and then posit that all economic truths can be derived thereof and cannot be impacted negatively or positively by empirical evidence.
      - beaunative 6y ago
        I'd say that's treating econmics as pure math rather than science.
        sudosysgen 6y ago
        No, no it's not. It's treating economics as some bastardized version of philosophy, not math. Mathematical axioms are based on the principle that you cannot imagine an alternative axiomatic system, I can easily imagine a different axiomatic system for economics, and that the axioms cannot be empirically contradicted. And I can actually justify it empirically.
        6y ago
- sudosysgen 6y ago
  Given the fact that the Austrian school literally rejects the scientific method, I think that it indeed barely qualifies as economics. The Chicago argument on this matter is pretty generally rejected.
- nickik 6y ago
  Austrian economics doesn't actually deny the existance of natural monopoly. That is simply a wrong headed reading of Austrians by people who hate it. If anything it says, natural monopolies exists, but some of the regulation designed to fight it, can be more harmful. Austrians also try to not narrow down market so much, that monopolies are everywhere. Is Tom Hanks a monopoly on Tom Hanks, sure but does that matter. Is the market acting? Entertainment? Just saying 'its a natural monopoly, therefore government need to come in with some strong handed specific regulation' is often a bad approach that can stop other mechanism from functioning. For example, locking in natural monopolies forever, even when future technologies means that monopoly would have been broken.
kanox 6y ago
ISPs are NOT a natural monopoly, you can have multiple sets of wires going to every building. This is the situation in my part of Europe and my internet is pretty damn fast. Treating ISPs as a monopoly is fundamentally wrong.
- wtallis 6y ago
  Multiple sets of wires going to every building is feasible and perhaps even reasonable when we're talking about an apartment building. But digging multiple trenches along suburban and rural roads and driveways leading to single-family homes is very wasteful. It's usually prohibitively expensive for the second company that wants to come into town, and is basically guaranteed to be a negative ROI for the third company that tries to lay fiber to customers who already have two incumbent options. In the US, Google Fiber has had limited success entering a handful of carefully-picked markets where the incumbent options are rotting copper POTS wires vs coax that can only compete on downstream bandwidth. In some of those markets, the incumbent phone companies have replaced some of their copper with fiber, but a third residential fiber option is still unheard-of. That may not fit the strictest definition of natural monopoly, but it's pretty close: in areas where both Google Fiber and eg. AT&T fiber are competing against coax, it would not be surprising to see one of the two fiber ISPs give up. We've already seen Google give up on bundling TV service, and both Google and AT&T are very reserved about further expansions.
  - zaarn 6y ago
    Also in Europe the owner of a cable to a build is required to rent it out to other providers at cost. So if DTAG builds a cable to my apartment complex, then I can later go an buy a DSL from Vodafone, despite the line begin DTAG. Since it's at cost, Vodafone has no further costs than what they would pay if they put down the line themselves, they even save some since they typically delegate support to DTAG technicians for on-site issues.
    - q3k 6y ago
      (FWIW this is called Local Loop Unbundling [1]) [1] - https://en.wikipedia.org/wiki/Local-loop_unbundling https://en.wikipedia.org/wiki/Local-loop_unbundling

dragonwriter 6y ago

> Natural monopolies need counterbalancing regulation. This isn't even remotely a controversial statement in economics. Unless your argument is that the Austrian and Chicago schools of economics doesn't actually exist, this is quite wrong, since the Austrian school denies the existence of natural monopoly and argues that harmful monopoly can only exist as a product of government regulation, and the Chicago school likewise holds that absent regulation, monopoly is a transient condition, not a stable one; both favor removing regulations that they see as stabilizing harmful monopolies, rather than regulating to manage naturally-formed-and-self-stabilizing monopolies, which they don't acknowledge the existence of. Now, I think the Chicago/Austrian positions on monopolies are wrong, but you really can't reasonably deny that this is a fundamental area of controversy.

jasonwatkinspdx 6y ago
Yes. I am entirely comfortable in saying that the economic consensus is strongly against the Austrian and Chicago perspectives. Both of these schools value prior ideology over empirical data. It's a "debate" on forums like this, but not even remotely so amongst the economists I talk to.
- dragonwriter 6y ago
  > Both of these schools value prior ideology over empirical data. Austrian overtly so, Chicago less so, but, yes, its another issue that "is economics an empirical science" is also a controversial position in economics. > but not even remotely so amongst the economists I talk to. That's a very different claim than your original one. That last qualifier does quite a bit of work.
  - jasonwatkinspdx 6y ago
    Yeah, it does the work of every actual credentialed economist I know has nothing but utter contempt for praxeology. As should be. As should you, if you cared enough.
nine_k 6y ago
The problem is that a monopoly may naturally be disrupted in decades, while people want an improvement during their precious only lifetimes. A temporary regulation could possibly help, but making it temporary is the hard part. And if it lingers, the inefficiencies it creates let some companies become incumbents, and, with some luck, even monopolies.
- p1necone 6y ago
  I'm more inclined to think that under a completely unregulated free market a monopoly today would instead be more likely to turn into a de-facto nation state over the course of decades. But this is purely speculation (not entirely unprompted by reading speculative fiction). Is there any evidence that unregulated free markets actually tend towards competition, rather than consolidation?
  - SkyMarshal 6y ago
    >I'm more inclined to think that under a completely unregulated free market a monopoly today would instead be more likely to turn into a de-facto nation state over the course of decades Based on recent experience this does appear possible, that some monopolies have gotten savvy enough to become long-running nation-state-like entities if left unregulated. We know from the science of complex systems that one characteristic non-linear dynamic systems, like markets or national economies, is that the critical resources of the system tend to concentrate and consolidate over time. We’ve witnessed this over the past several decades with the deregulation of the US banking industry, its subsequent concentration and consolidation. Libertarians like to believe that such economic problems are self-correcting, that eventually such concentrations of wealth and economic power will either asymptotically collapse, or become ossified and be supplanted by something newer and innovative. Either way there’s a reset. But I don’t think either is inevitable, in all domains. What we’ve actually observed with the banking system is that: 1) powerful monopolies/oligopolies use their resources to capture the actual government and regulators, and use those entities to shape favorable laws, and to bail out the monopolies when they collapse, preventing the reset, and 2) even if the collapse and reset occurs, it causes far more damage and misery to the rest of the economy and society than to the people responsible for causing it. All else equal I’d rather live in a society that simply prevents those extreme cycles by making natural monopolies into well-regulated public utilities. Public utilities in the US have worked very well for a century, they’re a far more desirable economic arrangement for 99% of society.
p1necone 6y ago
"the Austrian school denies the existence of natural monopoly and argues that harmful monopoly can only exist as a product of government regulation" This sounds prima facie absurd to me. Are they just throwing phrases out of Ayn Rand novels on paper and calling it science?
- ip26 6y ago
  I say this only half-sarcastically, the Austrian school seems to start at their desired solution & worked backwards from there. They similarly deny the existence of externalities- although depending on who you read the justification varies widely.
  - sudosysgen 6y ago
    It's not even sarcastic. The Austrian school literally starts with assumptions that basically imply their solutions, that people always act in their best interest and so on, and reject any kind of empirical test of their theory. At all. The Austrian school assumes that these bases are absolutely and completely true, and then posit that all economic truths can be derived thereof and cannot be impacted negatively or positively by empirical evidence.
    - beaunative 6y ago
      I'd say that's treating econmics as pure math rather than science.
      - sudosysgen 6y ago
        No, no it's not. It's treating economics as some bastardized version of philosophy, not math. Mathematical axioms are based on the principle that you cannot imagine an alternative axiomatic system, I can easily imagine a different axiomatic system for economics, and that the axioms cannot be empirically contradicted. And I can actually justify it empirically.
        6y ago
sudosysgen 6y ago
Given the fact that the Austrian school literally rejects the scientific method, I think that it indeed barely qualifies as economics. The Chicago argument on this matter is pretty generally rejected.
nickik 6y ago
Austrian economics doesn't actually deny the existance of natural monopoly. That is simply a wrong headed reading of Austrians by people who hate it. If anything it says, natural monopolies exists, but some of the regulation designed to fight it, can be more harmful. Austrians also try to not narrow down market so much, that monopolies are everywhere. Is Tom Hanks a monopoly on Tom Hanks, sure but does that matter. Is the market acting? Entertainment? Just saying 'its a natural monopoly, therefore government need to come in with some strong handed specific regulation' is often a bad approach that can stop other mechanism from functioning. For example, locking in natural monopolies forever, even when future technologies means that monopoly would have been broken.

kanox 6y ago

ISPs are NOT a natural monopoly, you can have multiple sets of wires going to every building. This is the situation in my part of Europe and my internet is pretty damn fast. Treating ISPs as a monopoly is fundamentally wrong.

wtallis 6y ago
Multiple sets of wires going to every building is feasible and perhaps even reasonable when we're talking about an apartment building. But digging multiple trenches along suburban and rural roads and driveways leading to single-family homes is very wasteful. It's usually prohibitively expensive for the second company that wants to come into town, and is basically guaranteed to be a negative ROI for the third company that tries to lay fiber to customers who already have two incumbent options. In the US, Google Fiber has had limited success entering a handful of carefully-picked markets where the incumbent options are rotting copper POTS wires vs coax that can only compete on downstream bandwidth. In some of those markets, the incumbent phone companies have replaced some of their copper with fiber, but a third residential fiber option is still unheard-of. That may not fit the strictest definition of natural monopoly, but it's pretty close: in areas where both Google Fiber and eg. AT&T fiber are competing against coax, it would not be surprising to see one of the two fiber ISPs give up. We've already seen Google give up on bundling TV service, and both Google and AT&T are very reserved about further expansions.
- zaarn 6y ago
  Also in Europe the owner of a cable to a build is required to rent it out to other providers at cost. So if DTAG builds a cable to my apartment complex, then I can later go an buy a DSL from Vodafone, despite the line begin DTAG. Since it's at cost, Vodafone has no further costs than what they would pay if they put down the line themselves, they even save some since they typically delegate support to DTAG technicians for on-site issues.
  - q3k 6y ago
    (FWIW this is called Local Loop Unbundling [1]) [1] - https://en.wikipedia.org/wiki/Local-loop_unbundling https://en.wikipedia.org/wiki/Local-loop_unbundling