capitlism and monoplies

[blu]

One thing that has always prevented me from being able to support full blown capitalism is monopolies. I have googled about the idea, read a bunch of different sources, many on mises.org, but none of the answers are satisfactory to me.

The idea that in a free market that if a company isn't doing what consumers like they can find another company just doesn't work with monopolies and there are plenty of them around now. In many areas there is only one real broadband provider, lots of times comcast, and if you have trouble with them or don't like their high prices or them throttling bandwith for games and torrents (even legitimate ones), there is nothing to do but revert to dialup. is there really how it should be? Similarly, documents came out showing that the big phone companies all schemed together to raise the price on text messages, which is a complete ripoff, to the same price range as each other so that consumers were stuck with the high price and couldn't go anywhere else. How is the free market in this case good to the consumer? there are other cases like this with car insurance companies keeping their prices inflated and within 5% of each other since they know you need car insurance and have to buy it no matter what (unless you live in a city).

basically the above is IMO the flaw of allowing monopolies to run wild, it also kills the ability for small businesses to start in these areas since big companies can sell for so much cheaper b/c of bulk sale, already having the power over that sector of the market, and being able to operate at a loss for a short time easier than a small business.

Also, if monopolies are to be controlled who should step in? Only someone bigger than the monopolies (some government) and someone who actually cares about that sector of the market being fair (some government, for example ford wouldn't jump in to stop microsoft, why does it care?) has the funds and ability to regulate those companies.

 

[KittenKoder]

The strange fact that is often overlooked is that monopolies cannot exist without the government controlling who can and cannot have a business.

 

[blu]

The strange fact that is often overlooked is that monopolies cannot exist without the government controlling who can and cannot have a business.

not sure I get this...

 

[Rocanten]

see E. Chemberlain "Theory of Monopolistic Competition".

Monopolies are a very big problem in market economy. We, in Russia, know what it is very well (we have many monopolies, mostly in energy sector). So it is the reality and we have to live with this.

 

[KittenKoder]

The strange fact that is often overlooked is that monopolies cannot exist without the government controlling who can and cannot have a business.

not sure I get this...

We'll take my favorite example: Microsucks

Many will tell you that I think they are the "devil" ... which I do talk like that but that's not my problem with them really. They got where they were by producing one of the better operating systems, MS-DOS. However they didn't become powerful until they acquired government contracts. Until these contracts were strengthened by government regulations there were a ton of small software companies that were competing in the market quite well, one such was Egg Head, a promising small company that was producing a lot of educational software for all age ranges and grades. Microsucks then pushed a government contract and got their software to be used exclusively in public schools. Egg Head software of course was not compatible with the MS stuff so students stopped buying them and started buying the MS ones simply because they had it in their school. If the government had not had the power to push these contracts for Microsucks then Egg Head, I believe, would still be a strong company instead of being driven out of business.

This is but one such example of how Microsucks used government regulations to push out other businesses, as we have seen their OS is falling apart, each release is more of a mess than the previous one, yet because of their contracts and government backing they maintain a strangle hold on the industry. Notice that Apple's Macintosh computers are only known as personal computers, they have very little presence in the business world. Also notice that most people fear Linux, even though they are using it everytime they visit a website. It's not because these are inferior, it's simply because Microsucks has been abusing their strength in the government.

 

[blu]

The strange fact that is often overlooked is that monopolies cannot exist without the government controlling who can and cannot have a business.

not sure I get this...

We'll take my favorite example: Microsucks

Many will tell you that I think they are the "devil" ... which I do talk like that but that's not my problem with them really. They got where they were by producing one of the better operating systems, MS-DOS. However they didn't become powerful until they acquired government contracts. Until these contracts were strengthened by government regulations there were a ton of small software companies that were competing in the market quite well, one such was Egg Head, a promising small company that was producing a lot of educational software for all age ranges and grades. Microsucks then pushed a government contract and got their software to be used exclusively in public schools. Egg Head software of course was not compatible with the MS stuff so students stopped buying them and started buying the MS ones simply because they had it in their school. If the government had not had the power to push these contracts for Microsucks then Egg Head, I believe, would still be a strong company instead of being driven out of business.

This is but one such example of how Microsucks used government regulations to push out other businesses, as we have seen their OS is falling apart, each release is more of a mess than the previous one, yet because of their contracts and government backing they maintain a strangle hold on the industry. Notice that Apple's Macintosh computers are only known as personal computers, they have very little presence in the business world. Also notice that most people fear Linux, even though they are using it everytime they visit a website. It's not because these are inferior, it's simply because Microsucks has been abusing their strength in the government.

ah yes, then I agree... it is good to see that the UK is coming down hard on them though. this also shows that if there was no government intervention in the market, in this case by controlling schools and being able to choose what software goes on the them, that MS would not have this stronghold. It also makes it impossible since smaller business won't have any gov contacts or the power ($$ and time) to invest in getting these things done.

on an international scale, full governments have moved to open source solutions because of cost, and more paranoid ones because fears that MS is backdooring internationalized versions of the OS due to differences vs the english one, and past history with the NSA and MS.

 

[KittenKoder]

not sure I get this...

We'll take my favorite example: Microsucks

Many will tell you that I think they are the "devil" ... which I do talk like that but that's not my problem with them really. They got where they were by producing one of the better operating systems, MS-DOS. However they didn't become powerful until they acquired government contracts. Until these contracts were strengthened by government regulations there were a ton of small software companies that were competing in the market quite well, one such was Egg Head, a promising small company that was producing a lot of educational software for all age ranges and grades. Microsucks then pushed a government contract and got their software to be used exclusively in public schools. Egg Head software of course was not compatible with the MS stuff so students stopped buying them and started buying the MS ones simply because they had it in their school. If the government had not had the power to push these contracts for Microsucks then Egg Head, I believe, would still be a strong company instead of being driven out of business.

This is but one such example of how Microsucks used government regulations to push out other businesses, as we have seen their OS is falling apart, each release is more of a mess than the previous one, yet because of their contracts and government backing they maintain a strangle hold on the industry. Notice that Apple's Macintosh computers are only known as personal computers, they have very little presence in the business world. Also notice that most people fear Linux, even though they are using it everytime they visit a website. It's not because these are inferior, it's simply because Microsucks has been abusing their strength in the government.

ah yes, then I agree... it is good to see that the UK is coming down hard on them though. this also shows that if there was no government intervention in the market, in this case by controlling schools and being able to choose what software goes on the them, that MS would not have this stronghold. It also makes it impossible since smaller business won't have any gov contacts or the power ($$ and time) to invest in getting these things done.

on an international scale, full governments have moved to open source solutions because of cost, and more paranoid ones because fears that MS is backdooring internationalized versions of the OS due to differences vs the english one, and past history with the NSA and MS.

The government intervention should be at the people's discretion though, and they should not be the mobster style politicians we have in the US now. The simple fact of the matter is that the more complicated the system is, the more corrupt it will become. In reality a business is only as strong as one of two things, the quality and price of their product, or the government regulations that prevent competition. In the US we have seen a huge decline in the quality of products and a very high increase to their prices the more regulations enacted. Another good example is Wal Mart, while people bad mouth them all the time the reality is that they fill a void caused by smaller businesses regulated to the point of bankruptcy, yet all those who don't like Wal Mart scream for more regulation, well, Wal Mart can afford to follow any regulation tossed at them already, the businesses they replace are those who cannot afford to work within the regulations that already exist.

Most people say "follow the money" but stop at the person they want to blame, never really looking at the top, which in the US is the government really. There is no one else higher than them here now, and they keep trying to take even more power each day.

 

[KittenKoder]

Oh, and I know about the governments moving to Open Source now. It makes me happy when they do.

 

[edthecynic]

The strange fact that is often overlooked is that monopolies cannot exist without the government controlling who can and cannot have a business.

not sure I get this...

We'll take my favorite example: Microsucks

Many will tell you that I think they are the "devil" ... which I do talk like that but that's not my problem with them really. They got where they were by producing one of the better operating systems, MS-DOS. However they didn't become powerful until they acquired government contracts. Until these contracts were strengthened by government regulations there were a ton of small software companies that were competing in the market quite well, one such was Egg Head, a promising small company that was producing a lot of educational software for all age ranges and grades. Microsucks then pushed a government contract and got their software to be used exclusively in public schools. Egg Head software of course was not compatible with the MS stuff so students stopped buying them and started buying the MS ones simply because they had it in their school. If the government had not had the power to push these contracts for Microsucks then Egg Head, I believe, would still be a strong company instead of being driven out of business.

This is but one such example of how Microsucks used government regulations to push out other businesses, as we have seen their OS is falling apart, each release is more of a mess than the previous one, yet because of their contracts and government backing they maintain a strangle hold on the industry. Notice that Apple's Macintosh computers are only known as personal computers, they have very little presence in the business world. Also notice that most people fear Linux, even though they are using it everytime they visit a website. It's not because these are inferior, it's simply because Microsucks has been abusing their strength in the government.

What a load of BALONEY!

You hate MS and the American government so they have become your scapegoats for everything.

In the 1980s Apple dominated the education and printing markets and those two markets were the main reason Apple was able to survive against the MS monopoly until the iPod came along.

As I recall, egghead's decline was due to it being easily hacked.

http://en.wikipedia.org/wiki/Apple_Inc.The Macintosh initially sold well, but follow-up sales were not strong.[35] This was because of the again high price tag, as well as limited software titles. The machine's fortunes changed with the introduction of the LaserWriter, the first PostScript laser printer to be offered at a reasonable price point, and PageMaker, an early desktop publishing package. The Mac was particularly powerful in this market due to its advanced graphics capabilities, which were already necessarily built-in to create the intuitive[36] Macintosh GUI. It has been suggested that the combination of these three products was responsible for the creation of the desktop publishing market.
In 1985, a power struggle developed between Jobs and CEO John Sculley, who had been hired two years prior .[37] Apple's board of directors sided with Sculley and Jobs was removed from his managerial duties.[35] Jobs resigned from Apple and founded NeXT Inc. the same year.[38]
Apple's sustained growth during the early 1980s was in great part due to its leadership in the education sector, attributed to an implementation of the LOGO Programming Language by Logo Computer Systems Inc., (LCSI), for the Apple II platform. The success of Apple and LOGO in the education environment provided Apple with a broad base of loyal users around the world. The drive into education was accentuated in California by a momentous agreement concluded between Steve Jobs and Jim Baroux of LCSI, agreeing with the donation of one Apple II and one Apple LOGO software package to each public school in the state. The arrangement, (eventually replicated in Texas), established a strong and pervasive presence for Apple in all schools throughout California, that ignited the acquisition of Apple IIs in schools across the country. The conquest of education became critical to Apple's acceptance in the home, as parents supported children’s continued learning experience after school.

 

[KittenKoder]

Ed, Wicrapedia is not a reliable source.

 

[edthecynic]

Ed, Wicrapedia is not a reliable source.

All of those facts are sourced.

Macs also dominated music and we musicians who used them back then were very very thankful for the education and printing markets keeping the company alive against the MS monopoly.

 

[Paulie]

One thing that has always prevented me from being able to support full blown capitalism is monopolies. I have googled about the idea, read a bunch of different sources, many on mises.org, but none of the answers are satisfactory to me.

The idea that in a free market that if a company isn't doing what consumers like they can find another company just doesn't work with monopolies and there are plenty of them around now. In many areas there is only one real broadband provider, lots of times comcast, and if you have trouble with them or don't like their high prices or them throttling bandwith for games and torrents (even legitimate ones), there is nothing to do but revert to dialup. is there really how it should be? Similarly, documents came out showing that the big phone companies all schemed together to raise the price on text messages, which is a complete ripoff, to the same price range as each other so that consumers were stuck with the high price and couldn't go anywhere else. How is the free market in this case good to the consumer? there are other cases like this with car insurance companies keeping their prices inflated and within 5% of each other since they know you need car insurance and have to buy it no matter what (unless you live in a city).

basically the above is IMO the flaw of allowing monopolies to run wild, it also kills the ability for small businesses to start in these areas since big companies can sell for so much cheaper b/c of bulk sale, already having the power over that sector of the market, and being able to operate at a loss for a short time easier than a small business.

Also, if monopolies are to be controlled who should step in? Only someone bigger than the monopolies (some government) and someone who actually cares about that sector of the market being fair (some government, for example ford wouldn't jump in to stop microsoft, why does it care?) has the funds and ability to regulate those companies.

Let me respond to your example of the text message price increase..

First of all, who really NEEDS text messages? No one. Everyone can survive and live a favorable lifestyle without the use of texting. So in this case, consumers could simply boycott it altogether. As soon as those companies noticed the huge reduction in revenues, they would immediately lower prices, because a company's number one purpose is to make a profit. If revenues are down from lack of consumer text message use, then profits go down, and the company initiates a change.

The example of monopolies and the stranglehold that big business could have in a free market only really applies to necessities. I think of oil companies in that regard. Or anyone who deals in food. There are certain ways that we can be monopolized when it comes to those kinds of products, but even then, there are ways to fight back. We grow our own produce whenever possible, we buy a chicken and a rooster and obtain our own eggs, we buy a cow and get our own milk. I know it sounds a bit ridiculous on the surface, but it's a way that we can fight back. When the oil companies are monopolizing, we drive less and bike more. Last year, a lot of people cut back on driving and we saw the price of oil come back down to reality. Investors that were speculating saw less demand, which was a signal to them to exit their positions.

There are ways to fight back in the free market. You just have to use your head and think comprehensively.

I also like Kittenkoder's example of regulation. Big business can financially afford to adapt to increases in regulation in a specific sector. Small businesses that can barely even afford to keep staff, can not. Often times, regulatory legislation is written by lobbyists for big business. There's a vested interest in big business to regulate business sectors, because they KNOW that the small mom and pops can't afford to keep up. They'd rather pay their fair share in regulatory costs, and maintain majority market share, then have to compete with many smaller stores.

This has nothing to do with hating government. This is common sense. Perhaps the liberals argue against these ideas so much because they LOVE government TOO much and don't think critically?

 

[Toro]

It is a flaw of doctrinaire free marketers' reasoning that monopolies cannot exist in a truly free market. Of course they can. Market power can be used to throttle and destroy competition.

Over very long periods of time, technological change will render monopolies obsolete. However, until that happens, companies can extract enormous monopolistic rents from consumers, transferring wealth from consumers to shareholders in the monopoly.

On the other hand, there is no evidence nor reason to believe that a free market is prone to monopolies, as some on the Left argue. Innovation is a powerful force and destroys monopolies over time.

 

[blu]

Let me respond to your example of the text message price increase..

First of all, who really NEEDS text messages? No one. Everyone can survive and live a favorable lifestyle without the use of texting. So in this case, consumers could simply boycott it altogether. As soon as those companies noticed the huge reduction in revenues, they would immediately lower prices, because a company's number one purpose is to make a profit. If revenues are down from lack of consumer text message use, then profits go down, and the company initiates a change.

The example of monopolies and the stranglehold that big business could have in a free market only really applies to necessities. I think of oil companies in that regard. Or anyone who deals in food. There are certain ways that we can be monopolized when it comes to those kinds of products, but even then, there are ways to fight back. We grow our own produce whenever possible, we buy a chicken and a rooster and obtain our own eggs, we buy a cow and get our own milk. I know it sounds a bit ridiculous on the surface, but it's a way that we can fight back. When the oil companies are monopolizing, we drive less and bike more. Last year, a lot of people cut back on driving and we saw the price of oil come back down to reality. Investors that were speculating saw less demand, which was a signal to them to exit their positions.

There are ways to fight back in the free market. You just have to use your head and think comprehensively.

I also like Kittenkoder's example of regulation. Big business can financially afford to adapt to increases in regulation in a specific sector. Small businesses that can barely even afford to keep staff, can not. Often times, regulatory legislation is written by lobbyists for big business. There's a vested interest in big business to regulate business sectors, because they KNOW that the small mom and pops can't afford to keep up. They'd rather pay their fair share in regulatory costs, and maintain majority market share, then have to compete with many smaller stores.

This has nothing to do with hating government. This is common sense. Perhaps the liberals argue against these ideas so much because they LOVE government TOO much and don't think critically?

I know text messages aren't necesities, it was just one example of price fixing across multiple companies. But about riding bikes, how many people do you think this is really a possibility for? People who live in suburbs and work in cities have no choice but to drive in. The best you could do is carpool, but thats still only going to take fractions off.... Even If everyone who could ride bikes did, it still wouldn't have enough of impact to seriously change long term prices. I also think the drop back down from the crazy high gas prices had to do with the downturn in the economy in general and they knew people couldn't keep up with the prices. If they could jack prices back up they would in a second and the games OPEC played over this past summer shows that. About growing food... You can do that because I assume you live in a rural area.. what about people in the city living in condos or apartments? They can't just grow food or raise animals, unless they tend to a farm after their 9-5 which is unlikely and would be a bit ridiculous for that to happen. Again, the overall impact of such actions, even if everyone who could do it did, would not be enough to force a monoply to change core policy.



Also, about regulation, I think that if the government only jumped in to regulate monoplies, then the power you get through lobbyists and such wouldn't even exist. I believe that keeping the market free until someone dominates a sector by removing consumer choice and the ability for small business to start in it impossible. I know this will unfairly hamper big business but as stated before, a small company with 20 employees will never compete against a place with billions in bankroll.

i think if things continue the way they are, there will be one big company for every major industry, and as was shown in the past year, the idea of 'the bank' (singular bank for all) isn't that far off.

 

[Paulie]

There's never going to be a solution to anything that EVERYONE can contribute to.

If every single person that had the ability to ride a bike to their various destinations did so, it certainly WOULD affect gasoline demand enough so that prices would drop. Just looking at seasonal gas price changes is enough to indicate such a thing. Slightly less demand from less summer travel typically brings with it lower gas prices in the fall and winter months.

As for growing food, do you realize just how many people have a yard that can sustain a vegetable garden at least for some time during the year? Again, these were just examples. It would only work if everyone who was capable, did their part.

I'm just showing you a way in which we as consumers CAN fight back against monpolistic practices. It would take serious dedication and discipline, but it's certainly possible.

It's better than just pussing out and blaming free markets. If you really want things to change, you have to be willing to get off your ass and rally your community and beyond. It's been done before, and it can be done again.

 

[Polk]

The strange fact that is often overlooked is that monopolies cannot exist without the government controlling who can and cannot have a business.

not sure I get this...

You don't get it because it's utter nonsense.

 

[Polk]

Also notice that most people fear Linux, even though they are using it everytime they visit a website. It's not because these are inferior, it's simply because Microsucks has been abusing their strength in the government.

That fear has nothing to do with Microsoft and everything to do with consumers wanting ease of use.

 

[Polk]

It is a flaw of doctrinaire free marketers' reasoning that monopolies cannot exist in a truly free market. Of course they can. Market power can be used to throttle and destroy competition.

Over very long periods of time, technological change will render monopolies obsolete. However, until that happens, companies can extract enormous monopolistic rents from consumers, transferring wealth from consumers to shareholders in the monopoly.

Agreed.

On the other hand, there is no evidence nor reason to believe that a free market is prone to monopolies, as some on the Left argue. Innovation is a powerful force and destroys monopolies over time.

To be fair, I don't think it's generally being argued that all markets are prone to monopoly (I sure there are people arguing that, and those people are foolish), but that certain types of markets are prone to monopoly.

 

[blu]

Also notice that most people fear Linux, even though they are using it everytime they visit a website. It's not because these are inferior, it's simply because Microsucks has been abusing their strength in the government.

That fear has nothing to do with Microsoft and everything to do with consumers wanting ease of use.

it also has to do with MS using its $$ and influence to push lies onto people about Linux. see this recently:

Microsoft 'indoctrinates' Best Buy workers with anti-Linux 'lies' -- DailyFinance
Microsoft: Yep, we teach Best Buy to trash Linux -- DailyFinance

saying many applications don't work even though they could be run in Wine or an alternative could be used. Also, especially with ubuntu, linux *is* easy to use now and it will do everything for you, but MS's propaganda machine is still running strong.

 

[Toro]

To be fair, I don't think it's generally being argued that all markets are prone to monopoly (I sure there are people arguing that, and those people are foolish), but that certain types of markets are prone to monopoly.

Generally, industries which require enormous capital expenditures up front are more prone to being monopolized. However, technology can dramatically change industrial structure. It was once thought that telecommunications was a natural monopoly. That clearly is no longer the case.

Also, companies whose products become the industry standard are more liable to become monopolies. But eventually, they too will succumb to technology. I would be surprised if Microsoft exists in its current form 20 years from now.