7 ms·

All "free market" ideals require no/low barriers to entry in order for the market to be "self regulating". Said absence of barriers to entry almost never exists

All "free market" ideals require no/low barriers to entry in order for the market to be "self regulating". Said absence of barriers to entry almost never exists, hence the idea of completely free markets is completely naive - you need regulation. Markets also cannot account for externalities. If those externalities are something you care about (e.g. the environment you live in) - you need regulation. Economies of scale abound in most markets, and this tends towards monopolies and regulatory capture. If you don't want monopolies, because you value your freedom as a consumer - you need regulation. This is very basic economics - I wish it was more widely taught.

Rainbooow 10mo ago
Is it really basic economics that free market leads to monopolies? I thought this is not something where there is a strong consensus about ; free market advocates will actually argue that this is regulation that leads to monopolies.
- hliyan 10mo ago
  Yes, there's an entire body of work, starting with Ayn Rand, that vehemently argues that government interference in the economy is what leads to monopolies.
  - throwaway132448 10mo ago
    There are entire bodies of work that argue against the heliocentric nature of the solar system - that doesn't make them credible or relevant.
    - Eddy_Viscosity2 10mo ago
      and that the earth is flat.
    - oneeyedpigeon 10mo ago
      The person you're replying to was using an example to show how there isn't consensus, they weren't saying they agree with Ayn Rand. In fact, given their tone, if I had to make I guess, I'd say they disagree with her take.
      - throwaway132448 10mo ago
        I think we've been far too generous in the last decade with whose opinion is relevant to whether there is a meaningful "consensus" on a matter or not. Hence why I say that Ayn Rand is to economics as geocentrists are to astronomy - they're simply not relevant to a definition of consensus that has any value to me.
        oneeyedpigeon 10mo ago
        My opinion of Ayn Rand is no more flattering than yours, but I accept that she has quite a few powerful 'followers'. I wouldn't be surprised if quite a few of the current administration were big Ayn Rand fans. Their opinions may be absurd but, sadly, they are also relevant.
- throwaway132448 10mo ago
  I didn't say that free markets lead to monopolies: I qualified that with the need for economies of scale. Those may not exist - but look at most of the markets you interact with in your daily life and try and find the ones that don't. I'm not aware of how regulation of competitive markets would lead to monopoly. Are you referring to "regulation" in the form of state-endorsed/controlled monopolies? Those usually exist in situations where barriers to entry and economies of scale are so high that the state is simply "getting ahead" of the inevitable monopoly (e.g. national infrastructure). Of course, corruption could also be what you mean by "regulation" that leads to monopolies, but all of this is predicate on the absence of corruption or cartels. If that's not the case you can throw all your assumption out of the window anyway.
  - munksbeer 10mo ago
    > I'm not aware of how regulation of competitive markets would lead to monopoly. It depends what you mean by regulation, right? Many industries have extremely onerous and costly regulation which creates barriers for new entrants to those markets.
    - throwaway132448 10mo ago
      Yes onerous regulation can definitely hurt the competitiveness of a market, it is just another barrier to entry.
  - Eddy_Viscosity2 10mo ago
    > I'm not aware of how regulation of competitive markets would lead to monopoly Competitive markets will always tend toward monopoly because that is the state at which the highest profits can be extracted. Regulation can, in some cases, help push it a bit faster in that direction by making barriers to enter the market even more onerous and expensive thus limiting or even eliminating new competitors. This allows the existing large competitors to either continue to knock out or buy up smaller ones, and the few remaining large ones to either merge to a single entity or settle into a state of non-competitive action (effectively collusion) where the market then either is or behaves as a monopoly.
- ndsipa_pomu 10mo ago
  Depends on what you call a "free market". The usual understanding is that a free market relies on the participants having sufficient information and being able to trade freely. However, the necessary information is usually hidden by sellers so that buyers can't make a "rational" decision in what to purchase (see The Market for Lemons: https://en.wikipedia.org/wiki/The_Market_for_Lemons https://en.wikipedia.org/wiki/The_Market_for_Lemons). Trading freely is compromised as well as markets will almost always favour the larger purchaser and so there's an incentive for companies to become every larger in order to consolidate power and profits. So, it's not so much that free markets lead to monopolies, but our bastardised version of free markets that lead to monopolies. Also, free market advocates are rarely advocates of actually free markets, but instead advocates of asymmetric markets that favour the large incumbents.
- ninalanyon 10mo ago
  Of course they lead to monopolies. If you start with a large number of equally capable suppliers and one somehow gains an edge then that one will be more profitable than the rest allowing it to invest and reduce its costs. This makes it even more competitive and provides a positive feedback loop. Eventually its competitors go bankrupt or get bought out by it. Regulation can certainly exacerbate the problem, for instance rules that have a fixed annual cost or where the costs do not increase in line with volume favour larger concerns. The idea that a totally free market can exist is a fantasy based on assumptions that simply cannot hold water. Regulation is necessary in order to prevent the powerful from abusing the weak. The fact that there are poor regulations does not invalidate the concept.
  - Jensson 10mo ago
    But that isn't happening though, you have local specialists everywhere that global giants still can't outcompete. Amazon is only dominant in USA and so on, they mostly just dominate a regulatory environment and can't compete well outside of it.
    - esseph 10mo ago
      Amazon does a lot these days, are you talking about their ground satellite terminal service? Grocery Service? What about Online Pharmacy? Do you need to buy a car? Would you like some satellite internet? Do you need a k8s cluster, they'll even handle lifecycle management for you. They also seem well on their way toward seriously hurting the USPS, FedEx, and UPS, and will be outpacing the entire US Postal Service in total volume as of 2028. Would you like to watch a movie or buy an album? Health insurance? I'm of course talking about maybe 1/50th of the services they offer these days, it is extensive. "competing"
      - lossolo 10mo ago
        I'm not aware of any country besides the US in which Amazon dominates in anything.
        9mo ago
- layla5alive 9mo ago
  Try playing the Monolopy board game, you'll answer your own question.
bsenftner 10mo ago
It more basic than that, it is what used to be considered common sense. The United States has screwed basic education, effective communications is not even taught - the seed of common sense, and has been producing intellectually crippled wage slaves for that last 40+ years. It's going to require a culture revolution to pull out of this nose civilization-wide dive, and that revolution is not going to happen in the USA.
- verzali 10mo ago
  I have really noticed that over the past year or two. A worrying number of Americans seem to lack even basic knowledge of the world outside America or even have the ability to think seriously about the long term consequences of decisions. That's not saying all Americans are this way - far from it - but it does seem that a critical mass has been reached. Things like Trump are only symptoms of this, and I cannot see any realistic way the situation can be salvaged.
  - bsenftner 10mo ago
    Add to that, few Americans know history beyond the American History (propaganda) they were taught in elementary school and have little to no interest in history at all, and if they do it's battles and war and glory nonsense. Few Americans can even conceive of the concept of their location in history. Far too many 'mericans think the Earth is Biblical's aged to be around 6K years... A critical number of them too, enough to keep abject morons in government offices.
  - ycombinary 9mo ago
    [dead]
  - venndeezl 9mo ago
    Thoughts and prayers are cranked to 11 in the US but Dunning-Kruger is cranked to 12, cognitive dissonance is at 10. Rhetorically people express the same fake optimism but are too dumb to realize that's all they are doing.
logicchains 10mo ago
>Markets also cannot account for externalities. If those externalities are something you care about (e.g. the environment you live in) - you need regulation. Markets account for externalities via ownership and torts. This was gutted in the 1800s in the US where a judge ruled people couldn't sue for the impact of environmental pollution, in the name of the "greater good" of industrialization.
- pnut 10mo ago
  Rule of law and precedent are considered quaint and optional now. But this centuries-old decision not encapsulated as a constutional amendment is binding? Nope.
- throwaway132448 10mo ago
  I'd disagree with the framing of this: The ownership and torts _were_ the regulation. I'm using a narrow definition of "market" that really only concerns supply and demand (because this is what "free market" ideals all revolve around).

Rainbooow 10mo ago

Is it really basic economics that free market leads to monopolies? I thought this is not something where there is a strong consensus about ; free market advocates will actually argue that this is regulation that leads to monopolies.

hliyan 10mo ago
Yes, there's an entire body of work, starting with Ayn Rand, that vehemently argues that government interference in the economy is what leads to monopolies.
- throwaway132448 10mo ago
  There are entire bodies of work that argue against the heliocentric nature of the solar system - that doesn't make them credible or relevant.
  - Eddy_Viscosity2 10mo ago
    and that the earth is flat.
  - oneeyedpigeon 10mo ago
    The person you're replying to was using an example to show how there isn't consensus, they weren't saying they agree with Ayn Rand. In fact, given their tone, if I had to make I guess, I'd say they disagree with her take.
    - throwaway132448 10mo ago
      I think we've been far too generous in the last decade with whose opinion is relevant to whether there is a meaningful "consensus" on a matter or not. Hence why I say that Ayn Rand is to economics as geocentrists are to astronomy - they're simply not relevant to a definition of consensus that has any value to me.
      - oneeyedpigeon 10mo ago
        My opinion of Ayn Rand is no more flattering than yours, but I accept that she has quite a few powerful 'followers'. I wouldn't be surprised if quite a few of the current administration were big Ayn Rand fans. Their opinions may be absurd but, sadly, they are also relevant.
throwaway132448 10mo ago
I didn't say that free markets lead to monopolies: I qualified that with the need for economies of scale. Those may not exist - but look at most of the markets you interact with in your daily life and try and find the ones that don't. I'm not aware of how regulation of competitive markets would lead to monopoly. Are you referring to "regulation" in the form of state-endorsed/controlled monopolies? Those usually exist in situations where barriers to entry and economies of scale are so high that the state is simply "getting ahead" of the inevitable monopoly (e.g. national infrastructure). Of course, corruption could also be what you mean by "regulation" that leads to monopolies, but all of this is predicate on the absence of corruption or cartels. If that's not the case you can throw all your assumption out of the window anyway.
- munksbeer 10mo ago
  > I'm not aware of how regulation of competitive markets would lead to monopoly. It depends what you mean by regulation, right? Many industries have extremely onerous and costly regulation which creates barriers for new entrants to those markets.
  - throwaway132448 10mo ago
    Yes onerous regulation can definitely hurt the competitiveness of a market, it is just another barrier to entry.
- Eddy_Viscosity2 10mo ago
  > I'm not aware of how regulation of competitive markets would lead to monopoly Competitive markets will always tend toward monopoly because that is the state at which the highest profits can be extracted. Regulation can, in some cases, help push it a bit faster in that direction by making barriers to enter the market even more onerous and expensive thus limiting or even eliminating new competitors. This allows the existing large competitors to either continue to knock out or buy up smaller ones, and the few remaining large ones to either merge to a single entity or settle into a state of non-competitive action (effectively collusion) where the market then either is or behaves as a monopoly.
ndsipa_pomu 10mo ago
Depends on what you call a "free market". The usual understanding is that a free market relies on the participants having sufficient information and being able to trade freely. However, the necessary information is usually hidden by sellers so that buyers can't make a "rational" decision in what to purchase (see The Market for Lemons: https://en.wikipedia.org/wiki/The_Market_for_Lemons https://en.wikipedia.org/wiki/The_Market_for_Lemons). Trading freely is compromised as well as markets will almost always favour the larger purchaser and so there's an incentive for companies to become every larger in order to consolidate power and profits. So, it's not so much that free markets lead to monopolies, but our bastardised version of free markets that lead to monopolies. Also, free market advocates are rarely advocates of actually free markets, but instead advocates of asymmetric markets that favour the large incumbents.
ninalanyon 10mo ago
Of course they lead to monopolies. If you start with a large number of equally capable suppliers and one somehow gains an edge then that one will be more profitable than the rest allowing it to invest and reduce its costs. This makes it even more competitive and provides a positive feedback loop. Eventually its competitors go bankrupt or get bought out by it. Regulation can certainly exacerbate the problem, for instance rules that have a fixed annual cost or where the costs do not increase in line with volume favour larger concerns. The idea that a totally free market can exist is a fantasy based on assumptions that simply cannot hold water. Regulation is necessary in order to prevent the powerful from abusing the weak. The fact that there are poor regulations does not invalidate the concept.
- Jensson 10mo ago
  But that isn't happening though, you have local specialists everywhere that global giants still can't outcompete. Amazon is only dominant in USA and so on, they mostly just dominate a regulatory environment and can't compete well outside of it.
  - esseph 10mo ago
    Amazon does a lot these days, are you talking about their ground satellite terminal service? Grocery Service? What about Online Pharmacy? Do you need to buy a car? Would you like some satellite internet? Do you need a k8s cluster, they'll even handle lifecycle management for you. They also seem well on their way toward seriously hurting the USPS, FedEx, and UPS, and will be outpacing the entire US Postal Service in total volume as of 2028. Would you like to watch a movie or buy an album? Health insurance? I'm of course talking about maybe 1/50th of the services they offer these days, it is extensive. "competing"
    - lossolo 10mo ago
      I'm not aware of any country besides the US in which Amazon dominates in anything.
      - 9mo ago
layla5alive 9mo ago
Try playing the Monolopy board game, you'll answer your own question.

bsenftner 10mo ago

It more basic than that, it is what used to be considered common sense. The United States has screwed basic education, effective communications is not even taught - the seed of common sense, and has been producing intellectually crippled wage slaves for that last 40+ years. It's going to require a culture revolution to pull out of this nose civilization-wide dive, and that revolution is not going to happen in the USA.

verzali 10mo ago
I have really noticed that over the past year or two. A worrying number of Americans seem to lack even basic knowledge of the world outside America or even have the ability to think seriously about the long term consequences of decisions. That's not saying all Americans are this way - far from it - but it does seem that a critical mass has been reached. Things like Trump are only symptoms of this, and I cannot see any realistic way the situation can be salvaged.
- bsenftner 10mo ago
  Add to that, few Americans know history beyond the American History (propaganda) they were taught in elementary school and have little to no interest in history at all, and if they do it's battles and war and glory nonsense. Few Americans can even conceive of the concept of their location in history. Far too many 'mericans think the Earth is Biblical's aged to be around 6K years... A critical number of them too, enough to keep abject morons in government offices.
- ycombinary 9mo ago
  [dead]
- venndeezl 9mo ago
  Thoughts and prayers are cranked to 11 in the US but Dunning-Kruger is cranked to 12, cognitive dissonance is at 10. Rhetorically people express the same fake optimism but are too dumb to realize that's all they are doing.

logicchains 10mo ago

>Markets also cannot account for externalities. If those externalities are something you care about (e.g. the environment you live in) - you need regulation. Markets account for externalities via ownership and torts. This was gutted in the 1800s in the US where a judge ruled people couldn't sue for the impact of environmental pollution, in the name of the "greater good" of industrialization.

pnut 10mo ago
Rule of law and precedent are considered quaint and optional now. But this centuries-old decision not encapsulated as a constutional amendment is binding? Nope.
throwaway132448 10mo ago
I'd disagree with the framing of this: The ownership and torts _were_ the regulation. I'm using a narrow definition of "market" that really only concerns supply and demand (because this is what "free market" ideals all revolve around).