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Author Topic: Monopolies: The mistake I keep seeing here (or just ignorance)  (Read 4857 times)
Rassah
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October 13, 2011, 09:09:24 PM
 #21

I don't think any of us support the current system.

Fair point Smiley  I was responding to Rassah's assertion that the 99% are far better off without the money that has been transferred to the 1%.

My assertion is that the 99% don't have a clue what to do with the wealth, and redistributing the 1%'s wealth to the 99% will have the exact same result as giving control of a 747 to a ramdon Joe in coach.
The 99% are far better of when the people who know what they are doing are in charge, even if that 1% sometimes makes colossal mistakes (and, admittedly, who in the 99% knew about credit default swaps and could foresee the crash they caused? If none, then why do you suppose the 99% would do better?)

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October 13, 2011, 09:11:32 PM
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I don't think any of us support the current system.

Fair point Smiley  I was responding to Rassah's assertion that the 99% are far better off without the money that has been transferred to the 1%.

My assertion is that the 99% don't have a clue what to do with the wealth, and redistributing the 1%'s wealth to the 99% will have the exact same result as giving control of a 747 to a ramdon Joe in coach.
The 99% are far better of when the people who know what they are doing are in charge, even if that 1% sometimes makes colossal mistakes (and, admittedly, who in the 99% knew about credit default swaps and could for see the crash they caused?)

Slave owners used to say the same about slaves being far better off in bondage.

Seriously, people seemed to manage their money just fine in the 50s, 60s and 70s.  How did they get so stupid that it had the be funnelled to the top 1%?  Was it something in the water?

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October 13, 2011, 09:36:39 PM
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Slave owners used to say the same about slaves being far better off in bondage.

Seriously, people seemed to manage their money just fine in the 50s, 60s and 70s.  How did they get so stupid that it had the be funnelled to the top 1%?  Was it something in the water?

Slaves didn't have the option to quit, to start their own business, and to become one of the %1. Isn't 1% an income of $300,000? While that is difficult to archive, it's by far not impossible.

As for why? My guess is that thanks to technology, productivity increased exponentially, while the number of skilled employees remained about the same. As a result, the 1% who can drive wealth creang machines were able to drive them with much higher output, while the workers doing the work never increased their own unique contribution, instead just augmenting it with technology. I.e. workers are in too high numbers (high supply, same demand, same or lower price) and are easily replacable, but what they can pump towards those with unique skills has increased dramatically.

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October 13, 2011, 09:41:36 PM
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Slave owners used to say the same about slaves being far better off in bondage.

Seriously, people seemed to manage their money just fine in the 50s, 60s and 70s.  How did they get so stupid that it had the be funnelled to the top 1%?  Was it something in the water?

Slaves didn't have the option to quit, to start their own business, and to become one of the %1. Isn't 1% an income of $300,000? While that is difficult to archive, it's by far not impossible.

As for why? My guess is that thanks to technology, productivity increased exponentially, while the number of skilled employees remained about the same. As a result, the 1% who can drive wealth creang machines were able to drive them with much higher output, while the workers doing the work never increased their own unique contribution, instead just augmenting it with technology. I.e. workers are in too high numbers (high supply, same demand, same or lower price) and are easily replacable, but what they can pump towards those with unique skills has increased dramatically.

I agree on why.  There is no strange conspiracy to crush the middle class.  I was just amused at your assertion people are better off now without the money.

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October 13, 2011, 09:50:11 PM
 #25

I agree on why.  There is no strange conspiracy to crush the middle class.  I was just amused at your assertion people are better off now without the money.

Again, not my assertion. My only assertion is that people will be much worse off if their demands of having the wealth of the 99% just given to them were answered. This is why:

http://www.google.com/search?q=the+lottery+curse

I have no problem with people demanding change that allowed them to work and earn enough to become one of the 1%. I haven't seen a lot of those demands though.

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October 14, 2011, 03:24:20 PM
 #26

The level of ignorance on these forums is staggering. Hopefully someone will learn something from OP.

I completely agree that the ignorance on these forums is staggering. For example: https://bitcointalk.org/index.php?topic=25626.0

No need to get down on yourself. You'll learn some day.

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October 14, 2011, 04:17:14 PM
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The level of ignorance on these forums is staggering. Hopefully someone will learn something from OP.

I completely agree that the ignorance on these forums is staggering. For example: https://bitcointalk.org/index.php?topic=25626.0

No need to get down on yourself. You'll learn some day.

Was it you who was quoting stuff from the Heartland Institute? If so, that's already been covered in another thread.
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October 14, 2011, 04:45:47 PM
 #28

The level of ignorance on these forums is staggering. Hopefully someone will learn something from OP.

I completely agree that the ignorance on these forums is staggering. For example: https://bitcointalk.org/index.php?topic=25626.0

No need to get down on yourself. You'll learn some day.

Was it you who was quoting stuff from the Heartland Institute? If so, that's already been covered in another thread.

I think you are confused, and it wouldn't be the first time.

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October 15, 2011, 12:20:38 AM
 #29

In the many discussions about state v.s. free market on this forum, the one thing I keep running across is people claiming how if someone establishes a monopoly in a libertarian society, then everyone else in that market is screwed. Their reasoning is that anyone else trying to enter the field will get kicked out by the established monopoly. Recent example was oil companies (https://bitcointalk.org/index.php?topic=47747.msg568485#msg568485), where the claim is that starting your own oil company is now impossible, because established oil companies now have too much control over oil.

The mistake I keep seeing over and over and over (and over and over) is that people seem to think there is only one way to destroy a monopoly, which is to create a more competitive  business in the same market. There are actually two ways:

Outcompete the monopoly in their own market

OR

SUBSTITUTIONS

If a company has a monopoly on ALL soda (Coke, Sprite, 7-UP, etc) and prices go up too high, people substitute with drinking milk or juice.
If a company has a monopoly on all operating systems, people can substitute with built-in application platforms, like running Google Docs or Chrome apps on PCs regardless of the OS installed.
If a company has a monopoly on electricity (common, with public utilities being only options for running wires), people substitute by reducing power usage, buying generators, or using their own solar and wind generators.
If a company has a monopoly on cable TV, people substitute by buying satelite, or buying internet, only, and streaming TV through Hulu/Netflix.
If a company has a monopoly on oil, people can substitute by switching to natural gas, ethanol, or electric.

There once were monopolies on trains, typewriters, telephones, televisions, and a slew of other stuff, much of which we don't even use anymore. They were all killed by substitutions.
So, next time you want to bring up a point about how a monopoly you are thinking of is entrenched and can not be replaced by someone else selling the same stuff, PLEASE stop, remember the word "substitution," think, and see if there is anything else that people can use in place of that monopoly's product.


It's like you people don't live in the real world or something.


What happens when the soda monopoly starts buying up the substitutes, running ad campaigns saying their substitutes are poisoned, etc?
How low do you think the barrier of entry for "electricity generation" is? Building and buying up solar panels and generators? Oh yeah, I've got spare parts for a turbine in my garage and several thousand dollars on hand for solar panels and batteries.
Cable TV? Really? What about companies like Comcast who have local monopolies all over the US? Do you think some entrepreneur will think to themselves "There might be some money here in starting my own ISP. Since Comcast won't let me use their network without paying, I better have a lot of cash upfront to lay my own fiber and install networking gear, plus enough extra money left over to absorb lots of losses when I have to sell my service at a loss when the previous monopoly tries to leverage their existing infrastructure and capital to price me out of the market,"
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October 15, 2011, 04:57:07 AM
 #30

It's like you people don't live in the real world or something.


What happens when the soda monopoly starts buying up the substitutes, running ad campaigns saying their substitutes are poisoned, etc?
How low do you think the barrier of entry for "electricity generation" is? Building and buying up solar panels and generators? Oh yeah, I've got spare parts for a turbine in my garage and several thousand dollars on hand for solar panels and batteries.
Cable TV? Really? What about companies like Comcast who have local monopolies all over the US? Do you think some entrepreneur will think to themselves "There might be some money here in starting my own ISP. Since Comcast won't let me use their network without paying, I better have a lot of cash upfront to lay my own fiber and install networking gear, plus enough extra money left over to absorb lots of losses when I have to sell my service at a loss when the previous monopoly tries to leverage their existing infrastructure and capital to price me out of the market,"

Sorry, won't happen. Business doesn't work that way. Fantasy world.
(Plus satellite, DSL/FIOS, web over electrical wires, wifi mesh, cell/4G network)

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October 15, 2011, 05:37:31 AM
 #31

It's like you people don't live in the real world or something.


What happens when the soda monopoly starts buying up the substitutes, running ad campaigns saying their substitutes are poisoned, etc?
How low do you think the barrier of entry for "electricity generation" is? Building and buying up solar panels and generators? Oh yeah, I've got spare parts for a turbine in my garage and several thousand dollars on hand for solar panels and batteries.
Cable TV? Really? What about companies like Comcast who have local monopolies all over the US? Do you think some entrepreneur will think to themselves "There might be some money here in starting my own ISP. Since Comcast won't let me use their network without paying, I better have a lot of cash upfront to lay my own fiber and install networking gear, plus enough extra money left over to absorb lots of losses when I have to sell my service at a loss when the previous monopoly tries to leverage their existing infrastructure and capital to price me out of the market,"

Sorry, won't happen. Business doesn't work that way. Fantasy world.
(Plus satellite, DSL/FIOS, web over electrical wires, wifi mesh, cell/4G network)

Yes it does. Monopolies don't just fill up an industry and wait for another person to roll in and provide a better service. They keep expanding, branching into other industries, setting up safeguards to stomp out competition, etc until they are broken up by an antitrust hearing.

See: Standard Oil, old AT&T, United States Steel
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October 15, 2011, 06:10:55 AM
 #32

Yes it does. Monopolies don't just fill up an industry and wait for another person to roll in and provide a better service. They keep expanding, branching into other industries, setting up safeguards to stomp out competition, etc until they are broken up by an antitrust hearing.

See: Standard Oil, old AT&T, United States Steel

If that was true, there wouldn't be an entire body of studies of the subject of corporate divestiture. As I said, corporations that get too big by focusing on too many things end up too cumbersome and slow to change. They quickly lose their ability to grow and innovate because, almost as if by design, they end up being just large, stable, cash producing companies focused on doing what they are doing because it "works." Any company with a bit of venture/investor capital behind it can swoop in, try very radical and risky things, and overtake he large competitor before it knew what hit it.
See: Kodak (lost to digital), IBM (lost to generics), Microsoft (lost to Google), soon to be Apple's iPhone (quickly losing to android). Also do see Comcast (losing to FIOS, and soon ClearWire).

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October 15, 2011, 06:15:26 AM
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Yes it does. Monopolies don't just fill up an industry and wait for another person to roll in and provide a better service. They keep expanding, branching into other industries, setting up safeguards to stomp out competition, etc until they are broken up by an antitrust hearing.

See: Standard Oil, old AT&T, United States Steel

If that was true, there wouldn't be an entire body of studies of the subject of corporate divestiture. As I said, corporations that get too big by focusing on too many things end up too cumbersome and slow to change. They quickly lose their ability to grow and innovate because, almost as if by design, they end up being just large, stable, cash producing companies focused on doing what they are doing because it "works." Any company with a bit of venture/investor capital behind it can swoop in, try very radical and risky things, and overtake he large competitor before it knew what hit it.
See: Kodak (lost to digital), IBM (lost to generics), Microsoft (lost to Google), soon to be Apple's iPhone (quickly losing to android). Also do see Comcast (losing to FIOS, and soon ClearWire).

Everything you described involved a technology shift. What about commodities, where monopolies really matter? I doubt someone will invent an iron2.0. Monopolies are far more destructive when their influence allows them to soak up resources and access to them.
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October 15, 2011, 06:33:48 AM
 #34

Everything you described involved a technology shift. What about commodities, where monopolies really matter? I doubt someone will invent an iron2.0. Monopolies are far more destructive when their influence allows them to soak up resources and access to them.

Haven't you heard? It's all about carbon fiber now. Even during they hey days of iron, skill mini-mills started popping up all over, using new, much cheaper and more efficient, melting technology. Same iron, different way to process. And even when Big Iron did finally catch up and switch to the same technology, they still lost simply because they were too cumberson to control outputs, while the small mini-mills could start up production as soon as someone needed steel, and shut down immediately as soon as that need was filled. Just In Time production killed Big Iron, who ended up with a bunch of expensive but unneeded steel sitting around in its yards.
The only possible monopoly I can think of is land/real estate. But even then we still have a lot of open ocean, and if it comes to it, can dig underground.

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October 15, 2011, 09:27:15 PM
 #35

Everything you described involved a technology shift. What about commodities, where monopolies really matter? I doubt someone will invent an iron2.0. Monopolies are far more destructive when their influence allows them to soak up resources and access to them.

Haven't you heard? It's all about carbon fiber now. Even during they hey days of iron, skill mini-mills started popping up all over, using new, much cheaper and more efficient, melting technology. Same iron, different way to process. And even when Big Iron did finally catch up and switch to the same technology, they still lost simply because they were too cumberson to control outputs, while the small mini-mills could start up production as soon as someone needed steel, and shut down immediately as soon as that need was filled. Just In Time production killed Big Iron, who ended up with a bunch of expensive but unneeded steel sitting around in its yards.
The only possible monopoly I can think of is land/real estate. But even then we still have a lot of open ocean, and if it comes to it, can dig underground.

None of this changes the fact the we have a limited number of supplies on this planet (and we've somehow let corporations start buying exclusive rights to fresh water supplies), but if you think you are properly equipped to build a floating ocean fortress or a cave-lair deep under someone else's property, feel free to try.
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October 15, 2011, 09:56:59 PM
 #36

None of this changes the fact the we have a limited number of supplies on this planet (and we've somehow let corporations start buying exclusive rights to fresh water supplies), but if you think you are properly equipped to build a floating ocean fortress or a cave-lair deep under someone else's property, feel free to try.

Why are you assuming that people can not group together and pool their wealth and resources? Almost no one starts a business with just their own savings any more.

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October 15, 2011, 10:01:11 PM
 #37

None of this changes the fact the we have a limited number of supplies on this planet (and we've somehow let corporations start buying exclusive rights to fresh water supplies), but if you think you are properly equipped to build a floating ocean fortress or a cave-lair deep under someone else's property, feel free to try.

Why are you assuming that people can not group together and pool their wealth and resources? Almost no one starts a business with just their own savings any more.

What if someone already bought up all the resources and sells them to those pools of people at super-outrageous prices that prevent them from properly starting a business? Total control of an asset prevents competition, and just assuming "someone will invent something better!" does not work for all cases.

Life isn't an Ayn Rand novel
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October 16, 2011, 04:25:28 AM
 #38

None of this changes the fact the we have a limited number of supplies on this planet (and we've somehow let corporations start buying exclusive rights to fresh water supplies), but if you think you are properly equipped to build a floating ocean fortress or a cave-lair deep under someone else's property, feel free to try.

Why are you assuming that people can not group together and pool their wealth and resources? Almost no one starts a business with just their own savings any more.

What if someone already bought up all the resources and sells them to those pools of people at super-outrageous prices that prevent them from properly starting a business? Total control of an asset prevents competition, and just assuming "someone will invent something better!" does not work for all cases.

Life isn't an Ayn Rand novel

You're making the same mistape I pointed out in my OP. Take total control of an asset, someone else will create a substitute. Or people will substitute nothing for the assets, and the business will lose money until they lower the price.

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October 16, 2011, 08:32:20 PM
 #39

Standard Oil isn't a very good example.   By the time they were ordered broken up they had already lost a significant portion of market share (down to about 64% from a high of 90+%) through competition.  While a lot of their business practices were what we might consider unethical, I've never seen an example where they actually charged "predatory" prices.  In fact, in a five year period they dropped the price of kerosene by more than half. 

There are only two kinds of monopolies: coercive monopolies and efficiency monopolies.  Standard Oil may have been a mixture of both, but they were mostly an efficiency monopoly from the evidence that I've seen.  I'm not condoning any use of force or aggression they may have employed.  That should be prosecuted by law, but they shouldn't have been broken up by anti-trust action because they were out-producing and out-competing all the other firms.
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October 16, 2011, 08:38:41 PM
 #40

If my history from decades ago serves correctly, Standard Oil was the only oil company that decided to transcend state borders while the others remained stuck in their respective states due to trade restrictions by their governments.

I am not too worried by monopolies since I am forced to live with many of them everyday. It's only the nature of man.

"Dare to liberate your mind, from all things, old and new."
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