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  #101  
Old 04-13-2012, 10:14 PM
smiling bandit smiling bandit is offline
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BTW, guys, sorry to forget this thread. I've been working and not posting much. And when my time is limited, I usually stick to Cafe and Game Room over GD. As late and uninteresting as it is:

http://www.theatlantic.com/business/...-the-1/253990/

This shows the huge swings in wealth share, and it's almost entirely due to investment-based wealth, which is a major part of "1%" wealth. I got my share, too, since I saw a big opportunity when the market crashed. You can see numerous occaisions even in that top-level chart where wealth for the most wealthy crashed suddenly and for years, and likewise you would note that a high percent of wealth being owned by the wealthiest is correlated to a high instability of that wealth.

Judging by the responses so far, I submit that you're looking at the same data I am, and taking an unwarrantedly aggressive view of it. I don't much case how wealthy the wealthiest are, as long as I get *my* share. Noting it comes with its own problems is just more reason to shrug.

Quote:
Originally Posted by Voyager
They all got wiped out also, in no small part because of the monopoly. Again, the only viable alternative these days is open source.
Microsoft didn't beat them because it was a monopoly. It became a monopoly because it beat out other competitors. likewise, it didn't win the Office Suite wars by doing it cheaper than the other guy, but by giving people what they wanted. And while completely free alternatives with similar functionality exist for both, most people aren't leaving in droves, which indicates MS offers something they want badly. Even if you believe that Windows is now a monopoly position, that doesn't explain Office, which most definitely ain't free.

The big problem with most supposed monopolies is that they must be able to maintain their pricing in the face of competition. In practice, monopolies usually can't just "cut prices below cost" to fight off some new upstart, because competition is not always, or even principally, about price, and because it then must somehow recoup the costs incurred even if it does. However, if it was a monopoly, it was already charging the optimum price before (from its point of view) and therefore can't raise prices.

This doesn't mean it can't happen, but what often occurs is that the supposed monopolist finds himself in serious trouble even if they win a price war. Witness airlines, which (sometimes) manage to drive out low cost competitors, and yet still find themselves deep in debt and hammered by market forces. And they have almost every adventage a monopolist can hope for: implicit or explicit government assistance, limited resources they can buy up and deny others, and the advantages that a cartel-like agreement must bring*.

*Airlines are not exactly a cartel, but by neccessity they act like one. You can see the safety dance they perform over prices. Whether anyone likes it or not, it's unavoidable.
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  #102  
Old 01-07-2013, 03:06 PM
CheapBastid CheapBastid is offline
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Originally Posted by smiling bandit View Post
Microsoft didn't beat them because it was a monopoly. It became a monopoly because it beat out other competitors. likewise, it didn't win the Office Suite wars by doing it cheaper than the other guy, but by giving people what they wanted. And while completely free alternatives with similar functionality exist for both, most people aren't leaving in droves, which indicates MS offers something they want badly. Even if you believe that Windows is now a monopoly position, that doesn't explain Office, which most definitely ain't free.
I'm not sure how the power of market share is being dismissed as a factor when speaking of Microsoft and Office. This power of market share has to do with monopolistic qualities, not to do with 'offering folks what they want'. I suppose it could be described as a small class of 'what they want' when business asks for 'accepted market choice' as a standard.

I'm resurrecting this thread as I've been having discussions about monopolies with friends. It seems pretty clear to me that the power of centralization, streamlining, automation, outsourcing all come with large market share. This large market share builds on itself to offer lower price, which becomes a barrier to new players in the marketplace who do not have the resources to compete.

I see arguments against monopolies focused on governmental intervention as the 'problem' but I see it as a symptom of the problem: Ccorporations will seek whatever advantage available to maximize profits as well as minimize costs and competition. Lobbying for governmental intervention is one of many methods a corporation will use.
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  #103  
Old 01-07-2013, 03:40 PM
Voyager Voyager is offline
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Quote:
Originally Posted by smiling bandit View Post

Judging by the responses so far, I submit that you're looking at the same data I am, and taking an unwarrantedly aggressive view of it. I don't much case how wealthy the wealthiest are, as long as I get *my* share. Noting it comes with its own problems is just more reason to shrug.



Microsoft didn't beat them because it was a monopoly. It became a monopoly because it beat out other competitors. likewise, it didn't win the Office Suite wars by doing it cheaper than the other guy, but by giving people what they wanted. And while completely free alternatives with similar functionality exist for both, most people aren't leaving in droves, which indicates MS offers something they want badly. Even if you believe that Windows is now a monopoly position, that doesn't explain Office, which most definitely ain't free.
Since I didn't respond back in April ...
One might make an argument that MS-DOS and Windows won by being superior in some sense. But that is a harder argument to make for Office and especially IE, which even MS admitted internally was inferior. And MS-DOS won not because it beat out the competition in the wider marketplace, but because it beat out the competition in being packaged into the first IBM PC.
Another case of this is the microprocessor. At one time the Intel Museum had an exhibit about the most important sales call ever - when they convinced IBM to go with them and not the technically superior Motorola processor. Before this, they were losing in the marketplace, even though they were first in getting one out.

Last edited by Voyager; 01-07-2013 at 03:42 PM..
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  #104  
Old 01-07-2013, 04:43 PM
msmith537 msmith537 is offline
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Originally Posted by Evil Captor View Post
I'll agree a lot of ideological conservatives did not want to bail out the banks because it was government intervention in the marketplace. And many liberals did not either, because the banks had caused the mess. But as you noted, both Democratic and Republican politicians voted to bail the banks out, because the banks own the politicians. When the interests of the nation conflict with the interests of the moneyed elite, the nation loses, every time.
Here's a question for you. This is a list of the companies that received TARP bailout funds. IOW, banks that were "too big to fail":

Citigroup
Bank of America
AIG (American International Group)
JPMorgan Chase
Wells Fargo
GMAC Financial Services (Ally)
General Motors
Goldman Sachs
Morgan Stanley
PNC Financial Services Group
U.S. Bancorp
Chrysler
Capital One Financial
Regions Financial Corporation
American Express
Bank of New York Mellon Corp
State Street Corporation
Discover Financial


Would the economy be better off if these banks were allowed to fail and hundreds of thousands of people lost their jobs? Or do you consider anyone who is an employee of a bank or financial institution to be part of the "1% moneyed elite"? Does it matter that most of the money has been paid back?
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  #105  
Old 01-07-2013, 05:33 PM
smiling bandit smiling bandit is offline
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Originally Posted by Voyager View Post
Since I didn't respond back in April ...
One might make an argument that MS-DOS and Windows won by being superior in some sense. But that is a harder argument to make for Office and especially IE, which even MS admitted internally was inferior. And MS-DOS won not because it beat out the competition in the wider marketplace, but because it beat out the competition in being packaged into the first IBM PC.
Another case of this is the microprocessor. At one time the Intel Museum had an exhibit about the most important sales call ever - when they convinced IBM to go with them and not the technically superior Motorola processor. Before this, they were losing in the marketplace, even though they were first in getting one out.
Better is a subjective term. Microsoft did not, and could not, have become huge except by offering something better for the person ultimately laying out the money. That meant the customer. And customers did indeed get something: quite often a simple, usable system that did more or less what they wanted to, and was likely to be interoperable with everyone else's system. The italicized may seem like a small factor, but in fact it's absolutely huge. Bill Gates expertly provided the customer with the one thing they valued more than any other: universality. He understood that network effects in the computer biz were huge.

While Microsoft isn't always at the bleeding edge of the technical world, it works hard to build and maintain networks that multiply the utility of its products. And yes, being available is the first, hugest step in being better than the competition, because customers will always go for a solution that can have against one they can't. And universality and availability are huge, and often created by their own perceptions - witness what happens with consoles; if they don't quickly create the perception that the console will be a success with lots of games, then nobody buys it, and nobody wants to make games for it because it lacks a customer base, etc. Look at the Xbox. Microsoft went in an kicked butt in a market they had no experience with, and in which some argued they had an inferior product. So they built advantages the competition lacked, offered a lot of developer support the competition sneered at, and focused on market segments the competition wasn't. By the second generation of competition they went from being the underdog to being the top dog, at least for the more hardcore crowd they targeted.

The problem with arguing that MS, and companies like MS, are big because they're monopolies, or are monopolies because they are big, is that it assumes its own conclusion and hence loses its explanatory power. Wal-Mart didn't start as a big company, and even today it uses the size advantages to improve its competitive edge with lower priced items, but not as the basic competitive edge itself.

Geeks like myself are often big on technical issues and fairly minute differences, but what really makes a company viable lies in the question of how it appeals strongly to a sufficient market segment to be worthwhile and viable. If it does so, then the leadership has done its job well. Maybe things will change and the company will either change with it, find a new segment, or wither. Maybe its appeal is broad and powerful enough to continue for many years to come - Wal-Mart seems to embrace more change than most. But Apple almost entirely left the computer market entirely. Microsoft is focusing more on support services and what used to be side business. K-Mart is a pale shadow of its former days when it was much bigger than Wal-Mart. Things change, and size is no protection. Either you give the customers a better deal on what they actually want, or you die.

For an example of a company that I particularly dislike, we can consider Electronic Arts, which is often considered to be one fo the big villains of the gaming world. EA does its job very poorly, but they do enough things very well to make themselves nearly unassailable. Yet they aren't a monopoly and likely will slowly get ground down. But EA isn't big because it's a monopoly, even though it owns a couple of monopolies. They had a specific strategy and used it to get big, although that strategy is now showing its limitations. Their finances are so-so at best, and they're reliant on a few annual titles. They've repeatedly made experensive acquisitions which turn out to be strategic errors, as they run each company into the ground within a few years.
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  #106  
Old 01-07-2013, 06:39 PM
BrainGlutton BrainGlutton is offline
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Originally Posted by Evil Captor View Post
For example, all the "Too Big To Fail" banks should arguably be broken up ... banks that are too big to fail are too big to govern.
ISTM they should be a whole lot easier to govern than a hard-to-keep-track-of proliferation of little-banks like we used to have.
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  #107  
Old 01-08-2013, 02:32 AM
Voyager Voyager is offline
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Originally Posted by smiling bandit View Post
Better is a subjective term. Microsoft did not, and could not, have become huge except by offering something better for the person ultimately laying out the money. That meant the customer. And customers did indeed get something: quite often a simple, usable system that did more or less what they wanted to, and was likely to be interoperable with everyone else's system. The italicized may seem like a small factor, but in fact it's absolutely huge. Bill Gates expertly provided the customer with the one thing they valued more than any other: universality. He understood that network effects in the computer biz were huge.
Oh, please. MS-DOS was interoperable only because the early PC makers copied IBM's open specs to make equipment which was pretty much identical to the IBM PCs - they were called clones at the time. Microsoft didn't really have to do anything to make them interoperable. There were lots of other computers out there then, and MS-DOS ran on none of them. IBM at the time was of course so dominant that people naturally copied.

Quote:
While Microsoft isn't always at the bleeding edge of the technical world, it works hard to build and maintain networks that multiply the utility of its products. And yes, being available is the first, hugest step in being better than the competition, because customers will always go for a solution that can have against one they can't. And universality and availability are huge, and often created by their own perceptions - witness what happens with consoles; if they don't quickly create the perception that the console will be a success with lots of games, then nobody buys it, and nobody wants to make games for it because it lacks a customer base, etc. Look at the Xbox. Microsoft went in an kicked butt in a market they had no experience with, and in which some argued they had an inferior product. So they built advantages the competition lacked, offered a lot of developer support the competition sneered at, and focused on market segments the competition wasn't. By the second generation of competition they went from being the underdog to being the top dog, at least for the more hardcore crowd they targeted.
Kicked butt? This shows that PS3 and Xbox 360 sales are almost identical. MS lost lots of money on the Xbox, but of course they could afford it. I have no opinion on which console is superior because I don't do gaming. Not since the 2600 anyhow.
It is hardly the case that technically superior solutions always win anyhow. Look at VHS versus Beta.
Another for instance - no matter whether Intel processors are superior to AMD ones, Intel will always be dominant (in that market) because even if Intel vanished, AMD does not have the fab capacity to meet demand.
Quote:
The problem with arguing that MS, and companies like MS, are big because they're monopolies, or are monopolies because they are big, is that it assumes its own conclusion and hence loses its explanatory power. Wal-Mart didn't start as a big company, and even today it uses the size advantages to improve its competitive edge with lower priced items, but not as the basic competitive edge itself.
We can look at what happens when they move into an area where they don't have a monopolistic advantage. How are they doing in the phone market? The tablet market? Not very good, right? In any case, you did not respond to my explanation of how they got to be a monopoly. And no one is disputing how they outsmarted IBM - the early MS was as nimble compared to IBM as Google is as compared to MS.

Quote:
Geeks like myself are often big on technical issues and fairly minute differences, but what really makes a company viable lies in the question of how it appeals strongly to a sufficient market segment to be worthwhile and viable. If it does so, then the leadership has done its job well. Maybe things will change and the company will either change with it, find a new segment, or wither. Maybe its appeal is broad and powerful enough to continue for many years to come - Wal-Mart seems to embrace more change than most. But Apple almost entirely left the computer market entirely. Microsoft is focusing more on support services and what used to be side business. K-Mart is a pale shadow of its former days when it was much bigger than Wal-Mart. Things change, and size is no protection. Either you give the customers a better deal on what they actually want, or you die.
If you were around when the first PCs came out, you'd know that no one bought them for the OS. It was laughingly primitive compared to UNIX. Which, by the way is far more portable than Windows will ever be. I've used it on PDP 11/70s, AT&T internal machines, Vaxen, mainframes, min-supercomputers, Sun Motorola based workstations and Sun Sparc workstations. Anyhow, based on their stock price, MS is dying also. The PC market is going to keep them going for a while, but they are increasing irrelevant. Not a sign of a company somehow bigger than their monopoly.
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  #108  
Old 01-08-2013, 02:33 AM
Voyager Voyager is offline
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Originally Posted by BrainGlutton View Post
ISTM they should be a whole lot easier to govern than a hard-to-keep-track-of proliferation of little-banks like we used to have.
It is easier to govern a bunch of marmosets than a few six hundred pound gorillas.
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  #109  
Old 01-08-2013, 04:25 AM
Kobal2 Kobal2 is offline
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Originally Posted by Voyager View Post
It is easier to govern a bunch of marmosets than a few six hundred pound gorillas.
Not to mention, the sex is fantastic.
I'm sorry, what were we talking about ?

Quote:
Originally Posted by msmith537
Would the economy be better off if these banks were allowed to fail and hundreds of thousands of people lost their jobs?
The problem with this emotional line of reasoning is that, if followed, and once a given corporation reaches a certain size/commands the magic number of employees that makes it "too big to fail", the corporation can do more or less anything it goddamn pleases without fear of consequences (at least from the government). Particularly large banking institutions, upon which many other corporations are dependent.
"Sure, we videotaped ourselves shitting on laws & regulations, laundered Mafia money, sold drugs and weapons and State secrets, and we took naked pictures of your mother... but are you really going to close us down and cost hundreds of thousands of people their jobs ? Hmmmm ?"

At some point you have to be able to say "Let the shit be cut, though the Heavens fall". And it's better for everyone if that point is "the first time they try and play silly buggers".
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  #110  
Old 01-08-2013, 09:43 AM
smiling bandit smiling bandit is offline
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Voyager, I will try to respond later. However, you're (a) personalizing something which isn't personal, (b) missing the balatantly obvious which I stated multiple times, and (c) you're confusing universality with portability. In short, you haven't actually made a response that argues anything, in part because you don't seem to understand how I undercut your argument.


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Originally Posted by Kobal2 View Post
The problem with this emotional line of reasoning is that, if followed, and once a given corporation reaches a certain size/commands the magic number of employees that makes it "too big to fail", the corporation can do more or less anything it goddamn pleases without fear of consequences (at least from the government). Particularly large banking institutions, upon which many other corporations are dependent.
Regulatory capture, as well. I'm sure, being on opposite sides of the aisle, that we have different perspectives on what causes the fundamental problem, and at least some solutions. But I agree on the issue being stated.

Last edited by smiling bandit; 01-08-2013 at 09:43 AM.. Reason: bolding
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  #111  
Old 01-08-2013, 09:52 AM
Human Action Human Action is offline
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Originally Posted by Kobal2
The problem with this emotional line of reasoning is that, if followed, and once a given corporation reaches a certain size/commands the magic number of employees that makes it "too big to fail", the corporation can do more or less anything it goddamn pleases without fear of consequences (at least from the government).
That's an example of moral hazard.

Quote:
A moral hazard is a situation where a party will have a tendency to take risks because the costs that could incur will not be felt by the party taking the risk.
Each bailout leads to the next, once it's internalized that the consequences for reckless behavior will be passed on to the taxpayer.
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  #112  
Old 01-08-2013, 11:39 AM
Evil Captor Evil Captor is offline
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That's an example of moral hazard.



Each bailout leads to the next, once it's internalized that the consequences for reckless behavior will be passed on to the taxpayer.
Or to put it more bluntly, since we KNOW some of these banks blatantly broke the law, we have left the crooks who were running them in charge. What could POSSIBLY go wrong?
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  #113  
Old 01-08-2013, 12:08 PM
Der Trihs Der Trihs is offline
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Originally Posted by Kobal2 View Post
The problem with this emotional line of reasoning is that, if followed, and once a given corporation reaches a certain size/commands the magic number of employees that makes it "too big to fail", the corporation can do more or less anything it goddamn pleases without fear of consequences (at least from the government). Particularly large banking institutions, upon which many other corporations are dependent.
"Sure, we videotaped ourselves shitting on laws & regulations, laundered Mafia money, sold drugs and weapons and State secrets, and we took naked pictures of your mother... but are you really going to close us down and cost hundreds of thousands of people their jobs ? Hmmmm ?"
"No. We are going to throw you - you personally and everyone else involved - in prison for a very long time. And take your money as well. Welcome to poverty Mr Smith."

Just because an organization is too critical to be permitted to fail doesn't mean the people in it are irreplaceable. Corporations aren't run by people who are going to sacrifice their freedom and personal wealth For The Glory Of Capitalism like some financial suicide bomber in a suit; if they know breaking the law for profit will get them seriously punished and lose them those profits, they won't. In fact the truth is the exact opposite of what you are saying; a threat to utterly destroy the corporation has little or no power if the people in charge think they will personally be left untouched, because the people who will be ruined be wrecking the corporation have no decision making power. In fact the odds are quite good that they planned to destroy the corporation themselves at some point when doing so seemed most profitable.
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  #114  
Old 01-08-2013, 12:16 PM
Human Action Human Action is offline
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Or to put it more bluntly, since we KNOW some of these banks blatantly broke the law, we have left the crooks who were running them in charge. What could POSSIBLY go wrong?
If actions are divorced from their consequences, the sole barriers to wrongdoing are internal ones. Those barriers cannot be relied on by society.

One thing that leftists and libertarians seem to be able to agree on is that the federal government's response to the financial crisis was a poor one.

I personally saw the Emergency Economic Stabilization Act as a betrayal of Republican principles; it hastened my departure from the party.
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  #115  
Old 01-08-2013, 01:42 PM
Kobal2 Kobal2 is offline
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"No. We are going to throw you - you personally and everyone else involved - in prison for a very long time. And take your money as well. Welcome to poverty Mr Smith." [...]
That would indeed be another way, possibly even a more efficient way of letting the shit be cut, yes. Not really seeing that happen either, however.

Hell, HSBC was actually indictedfor knowingly laundering multiple digit billions (with a b) of drug and terrorist money - and was fined over it. Aaaand... that's about it, really. No criminal charges whatsoever, nobody fired either. If Stuart Gulliver personally lost a cent over the whole affair, I'll eat my hat.

Besides, "everyone else involved" can amount to shutting the bank down - I recall Jim Cramer's extended interview on the Daily Show coupled with excerpts of an older, very incriminating videotape of his where he was describing textbook market manipulation and hedge fund fuckery, and was essentially saying to his interviewer "oh yeah, that's completely illegal - but come on, everyone knows and everyone's doing it because it's so easy and the SEC doesn't get it".

So what do you do when the shenanigans aren't just committed by the Chairman of the Board, or the Board of Directors, or even by senior management as a whole ; but by every last Tom, Dick and Harry with a phone and a credit line in the whole fricking shop ? Well, the obvious answer would be "at the very least don't let these people work anywhere near the financial sector ever again", but that's not what's happening.
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  #116  
Old 01-08-2013, 01:49 PM
Der Trihs Der Trihs is offline
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That would indeed be another way, possibly even a more efficient way of letting the shit be cut, yes. Not really seeing that happen either, however.
Yes. But that's not a "we can't do it" problem; that's a "we refuse to do it" problem.
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  #117  
Old 01-08-2013, 01:56 PM
smiling bandit smiling bandit is offline
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Well, the obvious answer would be "at the very least don't let these people work anywhere near the financial sector ever again", but that's not what's happening.
Well, I'm glad you want arbitrary government authority crushing all beneath it, but most people live, and want to continue to live, in the United States of America. And in that particular location, we have a small document, without which the government does not exist, which defines explicitly that it can't do something like that without actual proof and "due process of law".

And as I'm sure you may imagine, proving rot in the courts is a lot harder than proving it in public. Especially as the people you hate happen to be best friends of the all the right peopl - the people you cherish and love.
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  #118  
Old 01-08-2013, 02:25 PM
Voyager Voyager is offline
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Voyager, I will try to respond later. However, you're (a) personalizing something which isn't personal, (b) missing the balatantly obvious which I stated multiple times, and (c) you're confusing universality with portability. In short, you haven't actually made a response that argues anything, in part because you don't seem to understand how I undercut your argument.
When you respond please explain the difference. Yes, in one sense an OS running on the same processor and on motherboards built to the same standards doesn't have to be ported, strictly speaking. Yet I'm sure running Windows on a new motherboard design is something that doesn't work the first time. I'm familiar with board bring-up for non-Windows servers, and getting UNIX up is a major milestone.
And as I said the "universality" of the early PC was a function of IBM's influence, not Microsoft's.
My personalization is because I already had a PhD in computer architecture and was working in the IC and board design business when the PC came out, and so read a lot of trade journals about it. I also had a very early PC.

So I admit I don't understand how you undercut my argument. You seem to be saying that MS got its monopoly from technical expertise on their part, rather than be handed it by an admittedly clueless IBM.
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  #119  
Old 09-12-2016, 06:18 PM
CheapBastid CheapBastid is offline
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I'm resurrecting this thread as I've been having discussions about monopolies with friends. It seems pretty clear to me that the power of centralization, streamlining, automation, outsourcing all come with large market share. This large market share builds on itself to offer lower price, which becomes a barrier to new players in the marketplace who do not have the resources to compete.

I see arguments against monopolies focused on governmental intervention as the 'problem' but I see it as a symptom of the problem: Corporations will seek whatever advantage available to maximize profits as well as minimize costs and competition. Lobbying for governmental intervention is one of many methods a corporation will use.
Three years later and my questions still reverberate.

There are entrenched stances on both sides with Libertarians repeating the chestnut that Theoretical Free Markets Don't Create Monopolies, and the Socialists shouting that Regulation and Social Considerations are necessary checks to the Evils of Corporate Oligarchies.

I'll try to simplify the question:

Does Capitalism in the Wild (not in theory) naturally lead to Monopolies?
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  #120  
Old 09-12-2016, 06:41 PM
CheapBastid CheapBastid is offline
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Originally Posted by CheapBastid View Post
I'm resurrecting this thread as I've been having discussions about monopolies with friends. It seems pretty clear to me that the power of centralization, streamlining, automation, outsourcing all come with large market share. This large market share builds on itself to offer lower price, which becomes a barrier to new players in the marketplace who do not have the resources to compete.

I see arguments against monopolies focused on governmental intervention as the 'problem' but I see it as a symptom of the problem: Corporations will seek whatever advantage available to maximize profits as well as minimize costs and competition. Lobbying for governmental intervention is one of many methods a corporation will use.
Three years later and my questions still reverberate.

There are entrenched stances on both sides with Libertarians repeating the chestnut that Theoretical Free Markets Don't Create Monopolies, and the Socialists shouting that Regulation and Social Considerations are necessary checks to the Evils of Corporate Oligarchies.

I'll try to simplify the question:

Does Capitalism in the Wild (not in theory) naturally lead to Monopolies?
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  #121  
Old 09-12-2016, 08:54 PM
igor frankensteen igor frankensteen is offline
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Big subject. Complicated by more than just the fact that it's big.

Trying to understand and discuss capitalism is muddied terribly by the same thing that makes it tough to rationally and factually talk about constitutional rights: there's a ton of politics mixed into it, and a lot of it is purposely designed to confuse things.

Some things to consider:

* the problem of monopolies is not the fact of the monopoly, so much as it is the ABUSES that have so often been possible because of the monopoly. Microsoft did NOT get into trouble, as certain biased people on the right like to pretend, "because they were successful, and earned the largest market share by building a better product." They got into trouble, because they ABUSED the power that they were handed. Restraint of trade, in particular. And by the way, they didn't defeat Netscape with a superior product. They torpedoed Netscape, by sabotaging the market itself: Netscape's business model was based on selling software, just like Microsoft did at the time. But Microsoft took unfair advantage of it's overall dominance, by GIVING AWAY Internet Explorer. They could, because the bulk of their money came from Windows and Office. Netscape only HAD navigator, so this was a classic case of destroying a competitor the old fashioned way: not with a better product, but with a lesser one at an artificially low (zero) price.

* capitalism is NOT a philosophy. It's closer to being an observed mechanism that evolved and was named after it was recognized, rather than being invented. That means a number of things. First and foremost for this thread, it means that no, "capitalism" doesn't "kill competition." It's like guns. Guns don't kill people, PEOPLE KILL PEOPLE WITH GUNS. Someone above somewhere, mentioned that capitalism is just exchanging goods and services, with an agreed upon medium of exchange involved, where merchants, vendors and customers have OVERALL decision making power over what is bought and sold.

But it's never as simple as that, and there has never been (nor could there be) a true "free market system" wherein everyone comports themselves in an egalitarian and honorable fashion for any length of time. Not because "capitalism" (the exchange of goods and services by private individuals) contains "bad" elements, so much as because it doesn't inherently include necessary "good" elements. It does NOT "naturally" adjust itself, as it's most self-blinded proponents like to pretend, because it IS just a vague mechanism.

So no, capitalism doesn't invariably lead to abuses, but the fact that it is PEOPLE who are operating this mechanism, DOES mean that abuses are going to occur. Again, just like guns. Or cars. Or cheap motel rooms.

* lots of people over time, have purposely and artificially LINKED the idea of capitalism to other things, sometimes for good, sometimes for ill. Marx linked it to corporatism and imperialism, because he wanted people to oppose it. Others have linked it to patriotism and freedom, often ironically because they wanted to use it to reduce freedom and loyalty to the nation itself.
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Old 09-12-2016, 10:18 PM
Trinopus Trinopus is offline
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I'll buy that. Capitalism is a big, powerful machine, and it is all but inevitable that some jerk would use it to hurt others. The machine isn't wholly to blame...but it is a wise government that puts a few safety regulations in place.
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  #123  
Old 09-13-2016, 02:41 AM
msmith537 msmith537 is offline
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Does Capitalism in the Wild (not in theory) naturally lead to Monopolies?
I don't know what "in the wild means". But the answer is "depends". In economics, there are 5 main types of markets. Different products will naturally tend towards different market types depending on factors such as barriers to entry, economies of scale, availability of substitutes and network externalities:
-Perfect competition - lots of identical buyers and seller. Commodities like oranges or grain.
-Monopoly - single seller. Like the cable company
-Oligopoly - several main sellers. Coke/Pepsi.
-Monopolistic -Numerous but differentiated competitors. The music industry
-Monopsony - one powerful buyer. Walmart vs it's suppliers

The main danger to capitalism isn't monopolies or even collusion among oligopolies. It's companies that become "too big to fail". Essentially, they become so big in terms of tax revenues, number of people employed or economic impact that they can influence policy to stifle competition. While that may be good in the short term for employees and shareholders of the large company, in the long run it stifles advancement. It also creates a "moral hazard" where these companies can adopt bad business practices, knowing that they will be bailed out. Just letting them fail is not a great option either, as their failure can significantly harm the greater economy.
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  #124  
Old 09-13-2016, 04:30 AM
septimus septimus is online now
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Rereading this old thread I see some important points were overlooked.

Companies don't need 90% control to restrain trade. The possibility of Target building a store does not reduce WalMart's power while it is alone. It is ignorant to believe Microsoft derived its huge monopoly power from technical prowess, rather than sharp business practices. (Of course, huge profits allowed them to buy engineers.) Adam Smith didn't use the word "cartel" but he applied the term "monopoly" to a very broad class, even writing
Quote:
Originally Posted by Adam Smith in the Wealth of Nations
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible, indeed, to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies, much less to render them necessary.
Guilds and labor unions also imply monopoly power.

Monopolies need not last forever. Some would cite a company like Microsoft, whose share price has barely recovered to its 1999 peak, and say "See! Monopolies don't last forever. Competition will arise." But this ignores all the rents collected by a monopoly during the period it had monopoly power. The break-up of Standard Oil or Ma Bell are similarly cited but these just replaced monopolies with cartels (or in the case of Ma Bell, nation-wide monopolies with region-wide monopolies).

"Rent collection" is the more general problem. Smith didn't use the term "rent" AFAIK except in connection with land, but modern thinkers apply the term to a variety of unearned income. Microsoft continues to derive rent from happenstances many decades ago. The banking cartel derives huge sums from the credit-card structure America has adopted. Stiglitz' book has a chapter devoted to counter-productive "rent collection."

The government is controlled by the elite. Right-wingers express faith in unfettered markets, and blame evil government for capitalism's failings. But government must exert a powerful role (as, again, Adam Smith pointed out). The issue is: which side does government take? Government is not an evil force, as Hyperlibertarians and other right-wingers would have you believe, but is controlled by people usually the rich capitalist elite, rather than the misinformed electorate. Today, government actively helps big business cartels, while passing laws to curtail the power of labor unions.

Free-market mechanisms are imperfect. For most of us this goes without saying, but some on the right feel that free markets are a magical solution to everything that their soundness is as clear as that the sum of a triangle's angles is 180. I'll link to an amusing article one more time. (AFAIK the only Doper who has ever clicked this link is the one upthread who clicked it only after I pointed out that he obviously hadn't!)
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  #125  
Old 09-13-2016, 09:58 AM
WillFarnaby WillFarnaby is offline
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The term "monopoly" was originally used to describe a situation in which the state granted a company or individual the exclusive right to provide a good or service. Competitors were smashed using state violence.

When anti-capitalists complain about monopolies, they are not simply talking about a company that has beaten out competition and delivers an excellent product at a good price. They make claims that a large firm will begin to deliver inferior products and/or raise prices while still smashing all competition. This has never happened without state granted privileges. Indeed, even during the days of evil robber barons, the industries that were declared to be monopolized by the bureaucrats, special interests, and other political hacks were lowering prices at the same rate as competitive industries or faster.

The robber barons of cartoonish textbooks were actually great benefactors to humanity even disregarding their philanthropic efforts.
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  #126  
Old 09-13-2016, 12:49 PM
Mijin Mijin is offline
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Originally Posted by septimus View Post
Monopolies need not last forever. Some would cite a company like Microsoft, whose share price has barely recovered to its 1999 peak, and say "See! Monopolies don't last forever. Competition will arise." But this ignores all the rents collected by a monopoly during the period it had monopoly power. The break-up of Standard Oil or Ma Bell are similarly cited but these just replaced monopolies with cartels (or in the case of Ma Bell, nation-wide monopolies with region-wide monopolies).
Also, of course, if a dominant company losing its standing after 20 years supports the idea that we do not need to regulate the market, then why don't the companies that have been dominant for many decades, and have only grown bigger (e.g. through mergers) support the idea that we *do* need regulation?

Quote:
Free-market mechanisms are imperfect. For most of us this goes without saying, but some on the right feel that free markets are a magical solution to everything that their soundness is as clear as that the sum of a triangle's angles is 180.
And indeed, immediately after your post someone has dived in and said that. Apparently now to even suggest that something like a monopoly has ever happened makes one an "anti-capitalist"
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  #127  
Old 09-13-2016, 02:18 PM
WillFarnaby WillFarnaby is offline
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Also, of course, if a dominant company losing its standing after 20 years supports the idea that we do not need to regulate the market, then why don't the companies that have been dominant for many decades, and have only grown bigger (e.g. through mergers) support the idea that we *do* need regulation?



And indeed, immediately after your post someone has dived in and said that. Apparently now to even suggest that something like a monopoly has ever happened makes one an "anti-capitalist"
Large companies support regulation because it disproportionately hurts smaller competitors.

Nothing magical about it. There may be large companies on the free market, but destructive monopolies that anti-capitalists talk about are mythical. Name one please.
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  #128  
Old 09-13-2016, 03:22 PM
CheapBastid CheapBastid is offline
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There may be large companies on the free market, but destructive monopolies are mythical.
Really?

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  #129  
Old 09-13-2016, 03:50 PM
septimus septimus is online now
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Originally Posted by WillFarnaby View Post
Competitors were smashed using state violence.
Your ideas would seem slightly less cartoonish if you could resist harping on the peculiar government==violence meme.

Bars send their burly bouncer when a customer stiffs his bill or is rude to a waitress. Businesses dealing in large amounts of cash often use armed guards. But I guess these are lovable private capitalists threatening violence. I suppose you also approve of violent picket-line busting by companies being struck the free market at its finest.

But let a government demand that mail be accompanied with a postage stamp or that SocSec be withheld by an employer, and Farnaby needs to talk about violence! Don't forget the secret stockpiles of sarin and even the nuclear arsenal the U.S.A. is prepared for violence against its human slaves, and doubtless a little disappointed when citizens pay their taxes with only minimal coaxing.
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  #130  
Old 09-13-2016, 04:55 PM
s0meguy s0meguy is offline
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That's why anti-monopoly laws exist.
And why corporations buy politicians through campaign donations to prevent them from being applied.
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  #131  
Old 09-13-2016, 05:03 PM
Trinopus Trinopus is offline
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Originally Posted by WillFarnaby View Post
. . . When anti-capitalists complain about monopolies . . .
Thank you for poisoning the well. Lots of pro-capitalists complain about monopolies too.

Quote:
. . . they are not simply talking about a company that has beaten out competition and delivers an excellent product at a good price. They make claims that a large firm will begin to deliver inferior products and/or raise prices while still smashing all competition. This has never happened without state granted privileges. . . .
Tautological: corporations cannot exist without government protection. The problem has been that the government has not always protected the consumer, and has, in the past, allowed big corporations (like Standard Oil in the late 19th century) to engage in predatory practices.

So, yeah, sure, government has been part of the problem. But it would be insane to derive from that that government should be restricted from interfering. Instead, it's proof that government needs to interfere. Which is has since the Robber Baron era, to the benefit of all.

Quote:
. . . The robber barons of cartoonish textbooks were actually great benefactors to humanity even disregarding their philanthropic efforts.
Bullshit. They ruined thousands of small businesses, cast thousands of people into homelessness, created the poverty-stricken migrant worker, created the dust bowl, sold watered stock, profited from crashes and panics, and otherwise were the worst possible neighbors.
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  #132  
Old 09-14-2016, 08:31 PM
Dr. Arthias Dr. Arthias is offline
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Capitalism sows the seeds of its own destruction:

- in order to compete in a capitalist system, you need to make your product cheaper than your competitors'.
- to make your product cheaper, overseas labor is employed to build said product for less.
- exploited workers and unemployed people can't afford to buy your product.
- business fails.

So yeah, capitalism eventually kills itself because it can't see the forest for the trees. Short term gain, long term loss.

Last edited by Dr. Arthias; 09-14-2016 at 08:33 PM..
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  #133  
Old 09-14-2016, 10:20 PM
Trinopus Trinopus is offline
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That was the great insight Henry Ford had: make a product his own employees could buy. It created a giant among corporations, on that very sensible basis.
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  #134  
Old 09-14-2016, 10:43 PM
Sitnam Sitnam is offline
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Originally Posted by CheapBastid View Post
Three years later and my questions still reverberate.

There are entrenched stances on both sides with Libertarians repeating the chestnut that Theoretical Free Markets Don't Create Monopolies, and the Socialists shouting that Regulation and Social Considerations are necessary checks to the Evils of Corporate Oligarchies.

I'll try to simplify the question:

Does Capitalism in the Wild (not in theory) naturally lead to Monopolies?
It doesn't cost any money here to start a new thread topic pinpointing your area of interest. Why dredge up a zombie, other than an 'I told you so'.
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  #135  
Old 09-15-2016, 10:34 AM
XT XT is offline
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Quote:
Originally Posted by Dr. Arthias View Post
Capitalism sows the seeds of its own destruction:

- in order to compete in a capitalist system, you need to make your product cheaper than your competitors'.
- to make your product cheaper, overseas labor is employed to build said product for less.
- exploited workers and unemployed people can't afford to buy your product.
- business fails.

So yeah, capitalism eventually kills itself because it can't see the forest for the trees. Short term gain, long term loss.
You aren't holding your breath on this...hopefully. Are you? This is standards communist doctrine. It's funny to see this trotted out at this point in history, when most socialist and even the more successful communist countries have implemented at least some aspects of capitalism so that their economies don't completely collapse.
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  #136  
Old 09-15-2016, 10:43 AM
XT XT is offline
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Quote:
Originally Posted by CheapBastid View Post
Three years later and my questions still reverberate.

There are entrenched stances on both sides with Libertarians repeating the chestnut that Theoretical Free Markets Don't Create Monopolies, and the Socialists shouting that Regulation and Social Considerations are necessary checks to the Evils of Corporate Oligarchies.

I'll try to simplify the question:

Does Capitalism in the Wild (not in theory) naturally lead to Monopolies?
Instead of a drive by link why don't you list all of the natural monopolies that have ever formed? That should give us a baseline on how prevalent they are, instead of links that you don't bother to quote from that use graphs displaying the share of income of the top 1%...which really says nothing about monopolies OR capitalism but, instead resonate with its obvious target audience. From my own half-remembered econ in college, natural monopolies are very rare. Most of the things we think about as monopolies were formed not because of capitalism but because of collusion between corporations and government intervention in the markets.

And as another poster noted, why revive this thread after 3 years? Why not just start a new one if you have stuff you want to discuss?
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  #137  
Old 09-15-2016, 10:55 AM
RickJay RickJay is offline
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Originally Posted by Voyager View Post
It is hardly the case that technically superior solutions always win anyhow. Look at VHS versus Beta.
Beta wasn't better than VHS. That myth needs to die.
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  #138  
Old 09-15-2016, 10:55 AM
Jonathan Chance Jonathan Chance is offline
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The originator of Capitalism, Adam Smith, already mentioned the potential for monopolies to arise and gave his blessing to break them up. Breaking up monopolies is pro-Capitalist.

On the other hand, lots of times, the companies which get big and clobber everyone else, become too slow and behind-the-times to keep up with competition. Microsoft, for example, is still a monster, but they're on a pretty straight path downhill. One of their large competitors, Google, barely even existed a decade ago.
I know I'm late to the game on this but I want to offer a dissenting opinion on Microsoft.

For a company you regard as on 'a straight path downhill' they're showing remarkable signs of life.

Five year trend on share value: 126.99%
Earnings per share: 2.06
P/E: 27.32
Dividend: 2.55%

The firm's recent earnings beat expectation by 2.2% ($22.6 billion) EPS beat estimates by 18%.

For a firm that's going straight downhill those are pretty good numbers. Do they have competition? Sure, certainly in markets they'd like to develop such as cloud computing and mobile, but so does everyone. In the desktop operating system market they're dominant - something around 84-85% market share - and that doesn't look to change.
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  #139  
Old 09-15-2016, 10:57 AM
RickJay RickJay is offline
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Originally Posted by Trinopus View Post
That was the great insight Henry Ford had: make a product his own employees could buy. It created a giant among corporations, on that very sensible basis.
Henry Ford was beaten to this idea by decades. People had already long figured out that if you make a product affordable for the general population, you'll make more money than if you just make it for rich people.

George Eastman was doing this with cameras when Henry Ford was still a failure.
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  #140  
Old 09-15-2016, 11:44 AM
Jonathan Chance Jonathan Chance is offline
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Yeah, but Ford got the quote in Bartlett's.
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  #141  
Old 09-15-2016, 11:04 PM
Tastes of Chocolate Tastes of Chocolate is offline
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People keep mentioning cable companies as monopolies. Sure, most houses are serviced by only one cable company. But DirecTV and Dish are direct replacements for a huge percentage of those houses, and is available in places cable isn't. Now we have Netflix, Amazon, Hulu and a plethora of smaller services, all fighting for the same dollars. So capitalism is alive and well in that arena. Alternate services are being created, to take on the cable industry that was taking advantage of it's monopoly.
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  #142  
Old 09-16-2016, 03:47 AM
Mijin Mijin is offline
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Originally Posted by Tastes of Chocolate View Post
Alternate services are being created, to take on the cable industry that was taking advantage of it's monopoly.
So tacitly conceding that there was a monopoly in some areas.

But even if we thought that the market eventually breaks up monopolies, why must society sit back and wait for that to happen? Bear in mind some industries' market domination looks pretty stable after decades with little evidence of new entrants in the market.
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  #143  
Old 09-17-2016, 11:53 PM
drewder drewder is offline
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Monopolies are almost impossible to maintain without government enforcement. The more they exploit the market the more incentive there is for someone to undercut them.
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  #144  
Old 09-18-2016, 12:22 AM
Trinopus Trinopus is offline
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Yeah...but really big monopolies can withstand being undercut, and can fight right back by undercutting the would-be competitors. They can afford to lose money that way a lot longer than their smaller, more enterprising competitors can.

It doesn't take government enforcement; it just takes really deep pockets.
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  #145  
Old 09-18-2016, 01:56 AM
Mijin Mijin is offline
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Also the barriers to entry are already very high in many industries.

If you wanted to start a rival company to my current employer I reckon you'd need to find around at least $50 million and be prepared to wait 12-15 years to make a competing device / service and get it through regulation and licensing before you can start generating revenue (btw this is the medical industry we're talking about so the regulation is not spurious).

None of that makes it impossible of course; it might look like a nice investment for some person or group with a lot of surplus cash to invest. And maybe a company can start with making other products and services before gradually moving into our field.

I'm just saying it's not as simple as the market immediately rushing to fill demand.
My company makes great profits and there hasn't exactly been a flood of competitors trying to enter the market.

ETA: I'm not saying that high barriers to entry = monopoly. Or that the government should do something about my employer
I'm just saying with how high the barriers are in some industries, it can be relatively easy for an unscrupulous company to once in a while thump down a rare company that manages to make it over the hurdles.

Last edited by Mijin; 09-18-2016 at 01:59 AM..
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  #146  
Old 09-18-2016, 10:53 AM
septimus septimus is online now
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Monopolies are almost impossible to maintain without government enforcement. The more they exploit the market the more incentive there is for someone to undercut them.
What about railroads? The first rail-line built might be hugely profitable, but think of the cost to build a competing line where traffic didn't warrant it.

Consider the brand-name recognition and marketing networks of PepsiCo and CocaCola. Even 7Up is a PepsiCo product outside the U.S. Or do you claim that duopolies don't "kill competition" as monopolies do?
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  #147  
Old 09-18-2016, 06:21 PM
Kropotkin Kropotkin is offline
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That was the great insight Henry Ford had: make a product his own employees could buy. It created a giant among corporations, on that very sensible basis.
According to this article in Forbes magazine, this is not the case.

http://www.forbes.com/sites/timworst.../#6ac2d5901c96
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  #148  
Old 09-18-2016, 07:05 PM
Trinopus Trinopus is offline
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Originally Posted by Kropotkin View Post
According to this article in Forbes magazine, this is not the case.

http://www.forbes.com/sites/timworst.../#6ac2d5901c96
I can't read the article; "Adblock detected."

Anyway, I was quoting what I was taught in an Econ 101 class, a damn long time ago. At least one professor of Economics believed it to be true.
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  #149  
Old 09-19-2016, 12:13 AM
Kropotkin Kropotkin is offline
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Short version: the higher wages didn't let workers buy cars and actually saved Ford money because it reduced the huge turnover in the assembly line plants. No question it has been passed on as a story about Ford's vision but it may not be true.
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  #150  
Old 09-19-2016, 09:31 AM
RickJay RickJay is offline
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Ford definitely played up the "I pay my workers enough to by my cars" story later on, because it made him look good. One should bear in mind that if Henry Ford told the truth it was merely a coincidence; it's complete nonsense.

1. There is no contemporary account that Ford elected to pay his workers more so they could buy Ford cars. There is mounds of evidence that he paid his workers more because turnover was very high, and high turnover is bad for a manufacturer.

2. If Henry Ford ever demonstrated a willingness to pay people extra money out of the goodness of his heart, it is not very easy to find.

3. At the risk of pointing out the obvious, paying your own employees more so they can buy the products they make is silly and makes no business sense. Paying your employees more so they can buy your products is going to cost you money; there is no way around it, and of course anyone back then knew that, they knew how to do math. It would have struck people in 1908 as being just as insane as it strikes people today. You cannot make money selling products to your own employees, and if every single employee of Ford had bought some other car it would have made little difference.
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