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> see if competition takes care of the "problem". We have seen: for industries with big capital requirements or heavy regulatory frameworks (enacted for everyo
by toyg 3y ago
> see if competition takes care of the "problem".
We have seen: for industries with big capital requirements or heavy regulatory frameworks (enacted for everyone's safety), it just doesn't.
- jntvjnvutnuvt 3y agoWhich industries with big capital requirements don't have competitors?
- Hamcha 3y agoIn the US: ISP & Healthcare
- jntvjnvutnuvt 3y agoMost Americans have access to AT&T, Verizon and T Mobile. They also have a choice of insurance plans and healthcare providers.
- MSFT_Edging 3y agoBut will their choice of health insurance provider be accepted at the hospital an ambulance took them to? Who knows but for that person, its time to play bankruptcy roulette.
- jntvjnvutnuvt 3y agoMany healthcare plans cover emergency out of network hospitals.
- behringer 3y agoSpinning that roulette wheel I see.
- MSFT_Edging 3y agoLove when people prove the point while trying to refute it.
- happymellon 3y agoMany, and not all? What a wild system you have.
- pkaye 3y agoDidn't the no surprises act change that for emergency issues? The insurer has to cover it as in plan.
- dj_gitmo 3y ago> AT&T, Verizon and T Mobile. These are mobile providers. For home internet with a physical connection you usually don't have a choice and it is not outlandish to consider them a "natural monopoly" like you would electricity and water.
- danudey 3y agoAnd in cases where there are competitors, they'll often have similar prices for similar offerings, with equally poor service or reliability. After all, if you're Time Warner, you could compete with Verizon by improving your infrastructure or lowering your prices, but that would spur them on to do the same thing, and then it's a race to the bottom where "everybody loses" (by which I mean consumers win a bit more and corporations win a bit less). If you instead take the gentleman's agreement to not make any substantial changes, then you both get to gouge customers for poor service as much as you want, keeping profits high without having to do any work to maintain it. Sure, you might lose some customers to your competitor, but they also lose customers to you and everyone is happy (except the customers).
- xboxnolifes 3y agoMost Americans have access to one "high-speed" (50Mbps+) provider, and then maybe one low-speed (<15MBps) provider, and maybe one dish option. It's not competition if the product isn't comparable.
- zdw 3y agoAnything with a natural monopoly. Utilities (water, electric, telephony/cable/data services) or where having two of something makes no sense given physical limitations (Transportation sector, etc.)
- jntvjnvutnuvt 3y agoYou're right but the person is talking in the context of competition and how competition doesn't reduce profit margins "for industries with big capital requirements."
- codedokode 3y agoSocial networks, search engines.
- JimtheCoder 3y agoThose have low capital requirements, but their moat is the network effect.... I can buy a script to build a Facebook clone from an Indian Dev for like $50.
- Silhouette 3y agoBanking! If there are meaningful competitors then that implies there is meaningful competition. But many financial services firms have been making huge windfall profits by creating a wide interest rate spread even though they would still be (very) profitable with much lower spreads and their customers have a clear incentive to go with a competitor offering a better interest rate. So clearly there is not effective competition in this market.
- jntvjnvutnuvt 3y agoWell, there are thousands of banks in the US alone that offer mortgages and loans.
- cmmeur01 3y agoAnd that number has been steadily trending down with mergers and acquisitions.
- Silhouette 3y agoAnd are they offering them at competitive rates or are they all mysteriously making enormous profits despite the "competition"? Because in much of Europe it's definitely the latter that is happening. There are lots of banks but evidently they are not really competitors.
- gwright 3y agoIrrespective of the the benefits and/or feasibility of competition to bring prices down, the larger problem with this ad-hoc windfall profit tax is that it is ad-hoc. This is changing the rules after the game has started. The article reports the effort as a "surprise tax".
- Silhouette 3y agoThis is changing the rules after the game has started. The point is that a windfall is also - by definition - a favourable change in the rules after the game has started. The moral question here should be a simple one. Did the investors in the banks know (or at least reasonably expect) that they would make these profits when they decided to make their investment? If they didn't and they invested anyway then there's a reasonable argument for a windfall tax as long as it only claws back gains they had no reasonable expectation of making and did nothing useful to earn.
- ilyt 3y agoCompanies made ad-hoc profits on pretending it's the inflation and raising the prices while having rising profits. I have zero problems with ad-hoc tax on that. Frankly I think taxing some part of revenue instead of just income on big companies would be beneficial, no more "investing" in making market harder to newcomers (or outright buying them out) and getting tax cut on that.
- xmonkee 3y agoits not a “game”. Its the people of Italy legislating whats best for the people of Italy. This is what government is. You are pre-supposing a capitalist framework where private enterprise should compete with the people. You could alternatively think of private enterprises being allowed to exist at the pleasure of the people. And that is the way it should be. People are real, companies are fiction.
- gwright 3y agoJust because it was accomplished via a "legislative process" doesn't automatically make it a good idea. Surprise laws are a bad idea in any economic system IMHO. It isn't even a "capitalist" issue.