Every new market you introduced your product in brought along with it a layer of bureaucracy and middle management, which left you more bloated and unwieldy.
This allowed smaller,local companies to have an agility and responsiveness advantage even if they offered the same service at a higher fee.
Computers and the internet have made the process of expanding a lot smoother with instant inventory management, communication etc.
Not sure what government can do to stop this. The more power you give to the government, the more lobbyists and corruption it will result in. And even if they do manage to sign some legislation, there will be workarounds and loopholes.
I am struggling to even think of rules that would efficiently limit the growth of Amazon,Google etc. Cap their market share somehow? Tax companies which have more than x% of market share at an exorbitant rate?
I am old enough to remember when whole IT industry used to be in the shadow of Microsoft (and IBM before that). Nobody could see a solution out of it! The government even tried to fix the problem and failed.
Ten years later, Microsoft is becoming a nice player in the industry, not even mentioned when in "largest sharks in IT" lists. The invisible hand of the free market at work...
Free markets are not the only source of Invisible Hand. There's a growing mountain of actual evidence that regulations also often come with Invisible Hands that are larger than the hands of free markets. Take the environment [1], for example. There's no amount of Invisible Hand that offsets pollution that kills people. The Porter Hypothesis [2] is the name of the invisible hand inside the debate on environmental policy.
[1] https://www.epa.gov/sites/production/files/2017-08/documents...
We win as consumers because of all the tremendous value and products those damn corporations keep creating. Like smaller, faster and cheaper computers and whatnot.
We also win as citizens because those corporations buy stuff, create jobs and pay taxes (as much as asked from them and not more!).
And we can also win as Lords by simply buying some shares and owning those evil corporations...
No "invisible hand" there, more like someone yelling loudly at them.
You know what worked? Some good, old fashioned competition. And that raised up naturally, through free market.
Secondly, these competitors could only exist due to government internvention. What do you do when the government no longer "meddles" and the big guys start sending in Pinkertons?
They had to change some things in the European market, them not doing anything at all is completely bogus.
I'm not delusional enough to think the fines were high impact though.
Big Cos will always lobby governments to add rules and regulation to raise the barrier of entry on their market and thus reduce competition.
They, in fact, buy their monopoly from the government.
Solution? Take away the government's ability to grant monopolies.
If there are sufficiently few rules and an lack of power in the government to enforce (Korea, Japan, Italy), giants may use corruption or organised crime to achieve this.
Less powerful governments are rarely a good solution to protect the small man. The right solution is to build checks and balances between the different wings of the government that make it difficult to "capture" all wings.
Not sure about Italy, but the economies of Korea and Japan were orchestrated by (or in very overt collaboration with) their gov't. In case of Korea, they instituted import-substitute-industry model that prevented foreign competitions (by policies of gov't) so their domestic industry had chance to grow and compete and a few chosen companies were given favorable contracts/loans/grants; likewise in Japan their model was better known as "Japan Inc." to describe their alliance between business and gov't interests. It wasn't an "lack of power" that resulted in the structure that we now see in both countries -- they are the intended products of explicit gov't policies.
Or are you campaigning for the abolition of patents as a concept?
See software, where patents are mostly used to destroy competition.
However in heavily regulated markets, with huge barriers of entry, like pharma, they may be necessary. But again, that's the result of government intervention, so more intervention is the solution.
At the least, I am in favor of gradually reducing patent terms while measuring the effect on the innovation in that market.
Sometimes, sure. But far from exclusively. Monopolies arise naturally in unregulated markets.
The free market has a natural solution to monopolies, it's called competition - startups.
That’s like saying that natural selection is the solution to hereditary diseases. Not so comforting for those suffering now.
Because the alternative, govt intervention, in the long term is much more expensive: it corrupts the market and impedes the natural mechanisms from working. Interventions beget interventions.
This leads to heavily regulated markets, where the biggest players buy themselves monopolies. Exactly what we were running away from. :)
By which you mean that time is a price you think we ought to pay. I mean, we do actually have options.
Because the alternative, govt intervention, in the long term is much more expensive: it corrupts the market and impedes the natural mechanisms from working. Interventions beget interventions.
I struggle to come up with any example anywhere, where this is true.
This leads to heavily regulated markets, where the biggest players buy themselves monopolies
I don’t see how that follows from your previous paragraph. But never mind, I get what you are trying to say, and I agree that there are plenty of examples all over the world of regulation that has the effect you describe. Sometimes simply because it’s bad regulation. But other times because it’s a worthwhile trade off. I bet you don’t mind the pharmaceutical industry being regulated. Or how about the aircraft industry. Even taxi medallions serve(d) a purpose.
As to how natural monopolies arise, Wikipedia has a good article: https://en.m.wikipedia.org/wiki/Natural_monopoly
Wow, that sure make me think we can have a fruitful discussion.
because I don't know of any monopoly that didn't benefit from gov't subsidies or explicit protectionist policies.
Two points:
- What you don't know, is a lot. The inclination to believe that since you don't know of it, it must not exist or – to put it differently – that what you know is all there is to know, is called the Dunning-Kruger effect. It's a sign that you actually don't know much at all.
- Just because a monopoly benefits from certain regulations, it doesn't necessarily mean that those benefits was what helped create the monopoly. All companies benefit from regulation at times. They don't all become monopolies.
But you tell me: What in your mind caused At&T to become a monopoly?
First: I'm pretty sure what you meant to say was I employed a logical fallacy called appeal to ignorance to make my case, not the DK effect -- which is more about lack of self-awareness. Having studied econ and math in college, I kinda know what I don't know. I don't go around making boldly, unsubstantiated claims hoping others won't notice it, like your comments have shown.
Second: if you have to cite a Wiki article to demonstrate your knowledge of economic history in general, you probably don't know jack squat about monopolies, much less AT&T's corporate history. There are actually few good borderline cases that could at least help start an intelligent debate on your unsubstantiated claims about monopolies in unregulated space, but you have clearly no idea what they are. And I highly suspect that you are competent enough to have such a debate. AT&T is probably the worst case study to demonstrate (or destroy) your point.
thx for playing, but it's never advisable to wrestle with pigs. we both get dirty, the pigz like it.
So, in your mind what caused AT&T to become a monopoly for so long?
I’m pretty sure you’ve got it wrong.
Firstly, AT&T was already a monopoly by 1913. The Kingsbury Commitment[1], which is what I’m guessing you’re referring to, was in essence an agreement between AT&T and the government by which the government would tolerate the monopolistic status of the company in exchange for some minor concessions. While this didn’t hinder AT&T much, it also didn’t help them.
The way AT&T became a monopoly to begin with is quite simple, and basically a textbook example of how a natural monopoly arises: Early and continued investment in a business which has large fixed cost requirements (that is the cost to build out infrastructure), but tiny marginal cost (the cost of serving one more customer). Unchecked, this eventually builds up to an insurmountable barrier of entry for new players. At the same time incumbent players are highly incentivized to merge or acquire each other, because the value of their combined networks is greater than the sum of them.
Without government intervention, AT&T would have stayed a monopoly for as long as its infrastructure remained relevant. Which it still largely is.
[1] UNNATURAL MONOPOLY: CRITICAL MOMENTS IN THE DEVELOPMENT OF THE BELL SYSTEM MONOPOLY https://object.cato.org/sites/cato.org/files/serials/files/c...
Please provide proof that markets never fail and indeed that the ideal Free Market exists. Take the time, I'll wait...
But please look around you. Every great thing around me was created by a free(-ish) market: this PC, my car, my job, the materials in my home, the heating engine, the food I get in the restaurant, the entertainment on my TV, everything.
Then every crappy experience in my existence has something to do with the government: state hospitals, infrastructure, the DMV and other bureaucratic institutions, my and my children's schools.
I tend to judge systems by their results and so far the free market seems to produce much better results.
I don't think anybody can argue for a world without governments, but not to the point at which they stifle the free market. And I am afraid that is the direction we are generally taking.
In fact, overall, it seems like you value as "great" everything around you that don't implies interacting directly with other humans, and as "crappy" about everything that does.
So if the free market purpose is to value antisocial products while making every social bonds look crappy, well, I'm not so sure I love it.
My best absolute best experiences are with people and involve no markets nor governments: family, friends and professional peers.
Our education system preparing our kids for future is still basically the same as our grand-grand-parents was.
Just imagine where our hospitals and schools could be if not crippled by government..
I agree that things like fast computers are nice side effects of allowing capitalism to go to work in some arenas, but, in others, you definitely need government to reduce the pernicious effect of unadulterated profit motive.
It's appealing to think to yourself "hey, I make pretty good money, why shouldn't I be able to use that to buy a higher-than average education for my kid?" This is fine--hire a tutor. But taking your tax dollars to a for-profit selective academy that most don't have the option of using contributes to the degradation of public schools that you helplessly claim to be an unavoidable consequence of their being government-run.
Institutions meant to serve all only work when everyone contributes to them. Private, unregulated healthcare and education, by design, only serves those with money. Since health and education are, in the long run, how we generate personal wealth, this scheme is sure to accelerate the widening of inequality.
Reality disagrees. Pretty much everywhere where private schools and hospitals are allowed at least to some degree, they provide better value and results for everyone, including the very poor: https://www.economist.com/news/briefing/21660063-where-gover...
Hospitals the same. In my country (eastern Europe) the difference between state hospital and private hospital is like difference between two centuries. The beauty of free market is that it lowers the costs for everyone. So the poor will always have "less luxury" at given time period, but in absolute terms will be much better of with free market then with state services. In eastern post-communist Europe, this is evident on every step.
We have for profit hospitals and they are a terrible thing overall! We also have for profit prisons which are also a terrible thing.
We're a long way from there. And free market brought us all the way here.
Yes, govt made the highways. Did not really repair them afterwards (at least around here) but it was definitely a good thing.
However, when judging by the bottom line, the number of good products created by govts is incredibly small compared to the amazing breadth and diversity coming from the open markets.
That logically makes me trust the market system overall and to prefer a small, limited government role.
But I am afraid we are moving into quite the opposite direction...
I just believe that as a general strategy, we should be continuously attempting to reduce govt power and involvement while allowing the free markets to work.
I am worried that we are doing the opposite, where our current response to pretty much any issue is more govt regulation/intervention instead. A middle way would be great.
Sure, I can agree with that. But what if the lack of government power is what is preventing free markets from working? Things like anti-monopoly legislation. I mean, I'll give you that the reason these things exist is because private companies use the government to enforce their monopoly. But how do you plan on opposing that without using some sort of anti-trust action?
Practically the ONLY power able to stop monopolies from forming is the government. In absence of the government's ability to "meddle", businesses can and will cut deals with big competitors and squelch smaller ones through anti competitive practices to dominate