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Cory Doctorow disagrees (1) that the consumer welfare theory of monopolies is valid and (2) that monopolies which dominate industries are economically desirable
by vngzs 3y ago
Cory Doctorow disagrees (1) that the consumer welfare theory of monopolies is valid and (2) that monopolies which dominate industries are economically desirable [0]. I found it interesting to realize that most modern antitrust theory - that consumer harm is the only reasonable basis for government intervention in monopolies - appears to lack historical basis in the law. For instance, the consumer welfare standard severely downplays the importance of free and fair competition among businesses as a means for class advancement.
> This is the “consumer welfare” standard, a theory as economically bankrupt as it is historically unsupportable. Let’s be clear here: The plain language of America’s antitrust laws make it very clear that Congress wanted to block monopolies because it worried about the concentration of corporate power, not just the abuse of that power. This is inarguable: Think of John Sherman stalking the floor of the Senate, railing against autocrats of trade, declaiming that “we should not endure a King over the production, transportation, and sale of the necessaries of life.” These are not the statements of a man who liked most monopolies and merely sought to restrain the occasional monopolist who lost sight of his duty to make life better for the public.
[0]: https://archive.ph/aTv47 https://archive.ph/aTv47
- panarky 3y agoThe internet provider for my home is a true monopoly. I have no other choice. I can't click around in my browser, or futz with the cables in the walls and choose a competitive internet provider. I live in an area with moderate population density, so there could be more competition, but the local municipality negotiated exclusive rights for one provider. My provider knows it, they probably paid handsomely for the exclusive rights, and that's why they charge $95 a month for unreliable and slow service. When my uncle had a heart attack, he wasn't in a position to shop ambulances, emergency departments, surgeons, cardiologists or anesthesiologists. As with internet providers, emergency healthcare is not a competitive market, and that's reflected in extortionate pricing. It seems like reducing consumer harm should be the primary objective of regulators.
- eropple 3y ago> It seems like reducing consumer harm should be the primary objective of regulators. You're not wrong, but the definition of "consumer harm" used in practice hinges on short-termism and is price-centered right now. "This won't raise prices...for now, at least" is, by itself, an alarmingly strong argument in this arena, irrespective of market health or sustainability of competition. The Biden administration has made some steps to counter that, we'll see if it's really a thing.
- lazide 3y agoPersonally I’d love it if companies like Comcast, AT&T, Wells Fargo, BofA, et. al would need to compete enough that they stop being extractive and manipulative assholes at a minimum. Or at least stop being periodic criminal enterprises. Perhaps even fair and honest market participants? I guess I need to cut back on the heroin.
- sokoloff 3y agohttps://www.starlink.com/ https://www.starlink.com/ is not available where you are?
- azinman2 3y agoIt’s unreliable with cloud coverage, adds latency, and may not match bandwidth with good offerings (for example my uncapped 1GBPS symmetric fiber for $60/mo thru Sonic). It also is run by Musk which can be a turnoff for many.
- TehShrike 3y agoI'm using Starlink in Nebraska. It is reliable with cloud coverage. I have only lost connectivity for 5-10 minutes during the fiercest part of the worst thunderstorms.
- panarky 3y agoIn my testing about four months ago, Starlink had between one and seven outages per day lasting more than 10 minutes each. It was not reliable, and it's even more costly than the local monopoly. My reply wasn't asking for help to find an internet service provider. There are actual monopolists extracting monopoly rents right this minute. They're causing genuine consumer harm right now, so stopping this harm should be the priority of regulators. Where there is no ability to access competitive offerings, these actual monopolists are a different league of economic pathology from markets where consumers can access competition by clicking around in their browsers.
- BlueTemplar 3y agoYes, Doctorow's article talks in the end about the exceptional nature of universal computing which means that competition is always an option. But yours isn't a hard case of monopoly either, the main thing preventing you from creating a competing ISP is your local laws, which are failing antitrust to the point one wonders how they ever came to be ?!? (We also shouldn't discount the importance of network effects.)
- 3y ago
- paulddraper 3y ago> I have no other choice There are approximately ~1 gazllion wireless internet providers where I live.
- eropple 3y ago1) Great! You don't live where the previous poster does, apparently. 2) For many people, wireless and wireline internet providers are not substitutable.
- paulddraper 3y ago#2 what is it about those people that make it that way?
- eropple 3y agoLatency. Bandwidth. The critical components of a network connection. You couldn’t get me to put up with 5G latencies because I play multiplayer video games and you couldn’t get me to put up with 5G bandwidth because I need to ship hundreds-of-gigabytes video files around and I’m not putting up with sub-gigabit upload speeds.
- paulddraper 3y agoMy goodness man :D Just be glad you weren't around 15 years ago
- eropple 3y agoI had symmetrical gigabit FiOS in 2010. (I still have it today.) Even if I didn't have symmetric gigabit, I also was working with 720p and 1080p video up until about 2013 and not 6K. Requirements shift over time.
- moneywoes 3y agowhy doesn't your provider charge $200 a month then? any other examples of local monopolies
- katbyte 3y agoBecause people would be unable to afford/pay it
- BurningFrog 3y agoThe time to shop for emergency services is obviously before you need them. typically though some kind of insurance. Maybe that is not legally possible where you are, but there is nothing inherent about emergency services resulting in extortionate pricing.
- KerrAvon 3y agoWhere in the world are you that you get to choose your emergency services provider? Certainly not the USA.
- BlueTemplar 3y agoWhile discussion is specifically about the USA, it's worth noting that for each of these two problems, there exist plenty of places in the world that don't have one or even both of them.
- BurningFrog 3y agoI'm talking about how societies can be organized, not claiming that US society in October 2023 is organized that way.
- secabeen 3y ago> I found it interesting to realize that most modern antitrust theory - that consumer harm is the only reasonable basis for government intervention in monopolies - appears to lack historical basis in the law. For instance, the consumer welfare standard severely downplays the importance of free and fair competition among businesses as a means for class advancement. This feel similar to the myth of shareholder primacy. In both cases, the "agreed on standard" has little to no basis in the law, but happens to enrich the powerful and well connected over the little man. https://corpgov.law.harvard.edu/2019/08/22/so-long-to-shareholder-primacy/ https://corpgov.law.harvard.edu/2019/08/22/so-long-to-shareh...
- paulddraper 3y ago> myth of shareholder primacy FWIW that's just logic. Whether it's de jure or de facto, the owners of something will own it to their interests.
- brigadier132 3y agoYep, why would anyone own anything that negatively impacts them. If you had 100 dollars would you invest it into a company where the CEO could just take the entire company hostage and potentially make you lose your entire investment?
- campbel 3y agoOwnership guarantees some legal rights, but it doesn't mean that all value is yours to consume. Employees, partners and customers are all going to fight for the value that is created and will use whatever leverage they have to get it.
- paulddraper 3y agoOf course owners don't get all of the value. Otherwise, there wouldn't be employees or customers. Everyone shares. Company actions maximize company value. Employee actions maximize employee value. Customer actions maximize customer value.
- hn_throwaway_99 3y agoWas really glad the article you linked mentioned Robert Bork, because it's important to realize (a) this shift to the consumer-welfare standard is relatively new in US jurisprudence, like since the late 70s, and (b) if you consider, like I do, that Robert Bork was a Grade-A Turd for numerous reasons (can start by looking into the Saturday Night Massacre), you can see how this reading of the law is well in-tune with lots of other shitty ideas from Bork. For more info: https://en.wikipedia.org/wiki/The_Antitrust_Paradox https://en.wikipedia.org/wiki/The_Antitrust_Paradox
- cataphract 3y agoIt's well known that the consumer welfare focus only started in the late 70s, thanks in big part to Robert Bork's (the one whose SCOTUS nomination famously failed) "The Antitrust Paradox".
- mooreds 3y agoIf you are interested in a book length version of this argument, I'd recommend Goliath by Matt Stoller: https://www.simonandschuster.com/books/Goliath/Matt-Stoller/9781501182891 https://www.simonandschuster.com/books/Goliath/Matt-Stoller/...
- RecycledEle 3y agoOnly on HN do I read something like this. You are smarter than me. Thank you for allowing me to be here on HN.
- tshaddox 3y agoThe theory that consumer harm is the only reasonable basis for government intervention in monopolies seems pretty silly on its face, since many cases of customer harm would be impossible to predict because the counterfactual is by definition unknowable. The whole point (according to Textbook Free Market Econ 101) is that competitors would try to find new ways of producing existing things for cheaper and producing new things that are better than existing things.
- gruez 3y ago[deleted]
- colinsane 3y agothis is silly. antitrust came from the Standard Oil days. the name itself is in reference to Standard's novel approach of using a trust as the root of its organizational hierarchy. notoriously, Standard Oil dominated the market by vertically integrating for efficiency, and then telling any competitor in the geographical area they were about to expand into "either merge with us on really shitty terms, or we'll sell at-cost until we kill your business (because at-cost for us is in-the-red for you)." Standard Oil would be labeled "pro consumer" by today's crowd: cheap prices, and highly standardized products that you could rely on wherever you travel (like McDonald's or Starbucks is today). the notion that antitrust can be boiled down to "consumer harm" is new. the history isn't vague, and thereby neither is the "theory". the legislation, i'm not sure about, but since it's rooted in those two things and vagaries are easily cleared up by consulting the former.