The quality of debate on these issues has markedly deteriorated in the past few months. Reductio ad absurdum arguments applied to caricatures of ‘conservative’ philosophy are now the rule of the day.
emacknight makes the argument above that if you think the government should lessen its interference in some markets then you should be in favor of slavery. That’s not even a sophomoric argument - it’s just an attempt at a cheap shot that ignores pretty much everything anyone has said about the roots of conservative belief. But that kind of nonsense is becoming the rule around here.
Are you kidding? You can’t see the fundamental difference between working to gain power through government and working to gain power within a market economy?
Let me explain it to you: The difference is that government’s mechanism is force. Government has been given the exclusive right to use guns to compel people to do its bidding.
If a market is competitive, the only way to gain wealth and power is to provide customers with what they want. And other people have an opportunity to compete against you. There’s a commercial debate that takes place between competing suppliers, and consumers decide who wins. It’s an iterative process that constantly evolves.
When government makes a decision, it’s done by a group of powerful people, who then pass a law which forces everyone to comply. Debate is closed, alternatives are never tried, and the new way of doing things becomes fixed in stone by fiat.
That’s the difference between top-down central command by force, vs the iterative trial-and-error and bargaining of free people that takes place in a functioning market. It is a profound difference.
The fact that we put a check on government through the democratic process may stop it from becoming tyrannical, but it doesn’t change the essential nature of government power or centralized decision-making imposed on the public through force.
And so I don’t get accused of being an anarchist again, Let me point out that I keep using terms like, “A competitive market” and “a well functioning market” I’m not talking about monopolies or a powerful man controlling access to the only road out of town. Government has a role to play in preventing that kind of stuff. But the vast majority of market transactions take place in a competitive atmosphere where true choice exists.
The eminations become ever more shrill, don’t they?
Sam…I know I sound like broken record, but
They. Don’t. Want. A. Choice.
They don’t want the freedom to choose for themselves, and live with the consequences of those choices, in a free market. They are terrified of that personal accountability. That should have been clear in the Libertarian/Fringe thread from over a year ago.
They want to run into the arms of a Savior - A Benevolent Dictator, so to speak - who will wrap his arms around them, tell them that he will take of them, and that everything will be alright.
You are essentially cherry picking the bad parts of government (rule by force), and the good parts of a free market (everyone votes with their wallets), and then declaring victory.
You’re giving the impression that if the government uses force to restrict my freedom it’s a bad thing, but if the free market uses force to restrict my freedom it’s all fine and dandy.
So consider this: In a free market, there is competition, and that drives prices down, an improves efficiency.
But as you describe, evolution seeks to eliminate competition, it’s the basis of the study of ecology. In a system of limited resources, the one with even a slight advantage will drive the others to extinction. And thus the birth of the monopoly. It is the natural end point of the free market.
One guy builds a bridge, it’s the only way across the river so he makes a lot of profit. Seeing this, another guy builds a bridge to also make some profit, then a few more. Now there are five bridges competing. For the consumer that’s great, more options and lower prices. But for the bridge owner that sucks.
The one with the ability to under cut will drive down prices until someone folds, or if he has enough capital will simply buy out another bridge. Having two bridges gives considerable more power, and eventually he buys a third, then a fourth. Now one small mom and pop bridge is trying to compete against a Goliath that owns bridges all over the US. Eventually he’s driven out of business leaving just one company controlling all the bridges.
Now with capital and resources the company sets out to buy up land in strategic places to make sure no one else can build a bridge to compete.
What are you talking about? I’m pointing out the essential difference between them.
At no point did I say that. In what way does a well-functioning, competitive market force you to do something?
Explain then why so few markets behave this way. And if your answer is because government stops them, you’re wrong. Anti-trust action is very rare compared to the number of actors in the market.
The truth of the matter is that it’s very hard to attain a monopoly. Or rather, it’s hard to maintain a monopoly and then exploit it. If someone gains a monopoly on a market simply because they’re the best, and all the consumers want their product, there’s nothing wrong with that. The iPad currently has a near-monopoly on the tablet market.
But such monopolies rarely last, because it’s exceedingly hard to hold on to market share. Not long ago, people worried that Microsoft was monopolizing the home computer market. It sure doesn’t look like that any more, does it? Once upon a time, IBM had a huge share of the mainframe computer market, and had invested so much money and was so technologically farther along than their competition that people were worried IBM would own the computer market forever. But they made a couple of mistakes, and almost overnight companies like DEC and Data General popped up and started eating their lunch.
Your horror scenario just has no basis in fact.
You’ve just described the process of markets driving towards marginal profitability. This is a good thing. It’s why businesses average only 3-5% profit over the long term. Competition brings choice, which forces competition, which drives down profit, which stimulates innovation. You just described one of the best features of the market.
I’m sure you can quote some real-world examples of this, right?
Okay, moving out of fantasy land and into the real world, here’s what actually happens:
Companies grow large. They start acquiring other companies. They try to drive out their competitors by buying them up. Their competitors then hold out for lots of money. If the big company buys them, it takes a hit to its bottom line. Then it finds out that owning and running someone else’s company after the principals have gone and taken local knowledge with them isn’t as easy as it seems.
In the meantime, their sheer size starts to become a liability - bureaucracy grows, information is hard to transmit throughout the firm, internal tensions and conflicts start eating into efficiency. The company becomes less agile, less able to adapt to changing market conditions. Management changeovers change the vision of the company, and there is internal dissention. Key people leave. The weight of past mistakes create an increasing burden. Eventually, the company winds up being slaughtered by some hot new startup with a vision and with lots of energy and with the flexibility to react to changing conditions faster than the behemoth can. Eventually, the old, big company either goes through a transformation, shedding business units and reinventing itself, or it dies.
This is highly unlikely. But do you know what is very likely, and what happens all the time? The company will have a hard time competing, so it goes to the federal government and demands tax breaks, or tariffs on its competitors, or laws that are supposedly for the public good but really are designed to punish competitors.
In the worst case, the company gets special land grants or easements or monopoly power from the government. Then it can really screw over the public.
And if it’s the government trying to do what a company does, it always has the option of simply declaring competition to be illegal. In Canada, no matter how crappy the local hospital is, I cannot set up a private hospital. I’ll be thrown in jail if I try.
People like you invent all sorts of wild scenarios for how markets will create monopolies and lead to robber-barons who fleece the public, while ignoring the plain fact that this almost never happens. But you’ll champion government as an alternative, despite the fact that the thing you’re worried about happens all the time when government is involved.
You all know the free market is composed of a billion different markets? The market for bridges isn’t the same as the market for carrots. There will never be carrot monopolies, or carrot robber-barons, absent weirdo science fiction scenarios.
I find it incredible that a resident of an industrialized society would think that free markets must inevitably end up in monopolies. We have an embarassment of choice in almost every conceivable market that ISN’T regulated by the government.
Less Specific:
Anheuser-Busch has a market share in the United States of 50.9%, and was recently bought up by Belgian-Brazilian beer giant InBev.
Of the thousands of beers available in the US, 3 companies represent 80% of the market share. Once a company is larger enough, they have power and control. They can dictate store space, advertising time, etc.
Just to name a few. Notice how a few years ago there were a lot of airlines, then Delta took over North West, now United Airlines and Continental Airlines are merging.
I’ll concede the carrot market to you. But have you considered Del Monte and their pineapple dominance? Food distribution in the US is dominated by Sysco and US Foods. Consider the nature of farming in the US, a few large companies growing everything we eat. As I said above, Monsanto is responsible for 70-100% of seeds.
So if 90% of carrots are grown from Monsanto Brand Super Carrots™ would that be a carrot monopoly?
A grocery store with millions of items is represented by just a few brands. If anything, there is simply the illusion of choice. In Canada, Best Buy bought Future Shop, but runs them both as fake competition. So in any given box store strip mall it looks like you have two, but it’s the same company.
Walk into a convenience store and it looks like you have unlimited choice for beverages, but it’s just two companies, Coke and Pepsi. Go into a liquor store in an unregulated state and the cooler space is dominated by the big three, with a wee little section for those weird little microbrews.
The free market, like nature, hates competition, and seeks to eliminate it.
Speaking of Sysco foods: they supply about 50% of restaurants in the US. And 50% of their sales are Sysco labeled products (mostly prepared foods).
So you look down the street and see lots of restaurants and think lots of choice, isn’t the free market great, look at all that choice. But essentially 25% of the food sold is a Sysco brand product.
That’s just from the food service point of view, step back and you realize that most of those restaurants are owned by a handful of companies.
It’s even funnier when you realize that ethnic restaurants have fewer options for suppliers, so they all use just one called Asian Foods.
That’s right out of my ecology text book: when resources are scarce, a species with even the slightest advantage will drive the other to extinction. Animals don’t like competing for resources any more than companies do. So they engage in anti-competitive behaviour where ever possible. Killing, scaring, marking territory. Making an area acidic/toxic. Leaching nutrients out of soil, not because it needs it, but because other species do.
Nature, and the free market, are not kind. That whole mothering thing was a brilliant rebranding effort, done by one of just three marketing companies.
It’s also right out of my economics text book: see rule of 3’s and the emergence of oligopoly.
**Sam Stone **brought up the analogy to nature, I was just tying it all together–businesses hate competition, and seek to eliminate it. There is an analogous process in nature, in which individual species hate competition and seek to eliminate it. I’m sorry that went over your head.
Perhaps hate is the wrong word, how about abhors. I’m pretty sure nature is still allowed to abhor things.
ETA I see we’re now reduced to quibbling over the use of the word hate. Good show, way to bring your A-game.
