For discussions sake, sysco and only sysco sells carrots to every restaurant I’ve ever eaten at. But, if they charge any price above marginal cost, they lose all their customers. There are no barriers to entering the carrot market, and their carrots are the same as all the others. Not a monopoly.
You’ve already conceded the carrot thing, so I’m not being a hard on, but you must understand that there are equilibriums for these things. If Sysco makes economic profits selling carrots, others will join in the fun until economic profits equal zero once again. It’s not a big deal that there’s only one seller for carrots, because they have no market power.
Ah, so we DO have the same definition of ‘hates’. Ok, that makes it easy…you are simply wrong. Competition is indelibly a part of nature. It’s all about competition. A species driving out another because they are in the same ecological niche to the point of extinction is the essence of competition to the knife…or to the tooth, claw or sucker. All aspects of nature are bound up in a competition, both inter-species and intra-species. Competition for mates, competition for resources, competition for life itself.
‘Business’ must be pretty bad and inefficient then since this rarely happens. A given company might (for a time) drive out an individual competitor and perhaps even destroy them, but the nature of business in the real world (as opposed to whatever you are using as a gauge) is that new competition would invariably spring back up. What businesses attempt to do is increase their market share, not destroy all competitors in some sort of communist philosophy end game where There Can Be Only One!!
Okay, let’s focus on carrots. Currently there are a variety of barriers to entering the well established carrot industry, that has only a few major players.
First, you need land, a lot of it. But when it comes time to buy, you’ll find that the larger guys buy up land they don’t need to make sure you can’t compete. It’s better for them to own unused land, then to face price competition from a new player.
Next, you’ll need financial backing, but you’re small player. The big banks are going to look at you and their potential profits, then look at the handful of giants and those potential profits, and then laugh at you. well, not directly at you, what they’ll do is give you a significantly worse interest rate. There is another issue here, that the banks need the big companies to succeed in order to make profit. You cutting into the carrot industry hurts them, why would they want that?
So, you’ve got some crappy land with a bad loan, but you’re ready to grow carrots, that requires seed. The seed comes from just a few (or probably just Monsanto) companies. The big guys buy by the ton and get a great rate, you however are stuck paying just below retail.
But that’s fine, you’re growing carrots, good for you. I could get into the jokes about US health care and benefit options but that’s for another thread.
Okay, so you’ve grown and harvested your carrots, now what? You need a distributor and a retailer (aka either Sysco or US Foods). They are buying and selling tons of carrots, but you’ve only got a bushel, why would they bother with you? They need large scale steady supply, which you can’t offer since you just own the one little farm.
Power gets concentrated into the hands of just a few (rule of 3s). We could quibble about how there are thousands of people competing for the remaining 0.01% of market share, but what’s the point?
A couple companies grow all the carrots, from a few seeds, and sell to a couple of distributors, that will relabel it 8 different ways. So you can feel good when you go in and choose between all those different brands.
No, not quite a monopoly, but how close do you need to be?
ETA As far as carrots go, you don’t really get any choice. It’s all been made for you, packaged, and presented in one of two grocery stores, both owned by the same guy.
I’m honestly at a point now where I don’t know how I can proceed any further in this thread. I don’t want to break the spirit of Great Debates by arguing against the poster instead of the poster’s argument, but emacknight is honestly arguing from a stance of such profound ignorance about the operation of free markets that I genuinely don’t know that it is possible to debate the matter any further. I honestly hope at least some leftists out there realize how ludicrous incorrect it is to say the natural end result of a free market is a bunch of monopolies. However, moving on…
All I can really do is ask this question, if it is emacknight’s argument that free markets are bad, then what is the alternative? Please be very specific.
This slipped a bit under my radar but I thought I’d address it now. I was not under the impression this thread was supposed to be about the narrow political position of the “Contract for America.” I simply thought the OP was wanting to debate the more general concept of the free market as the most powerful instrument of material and social progress. I really think that even if that wasn’t the explicit intentions of the OP, the OP was truly not worded as a debate on a specific agenda, but on a general idea:
Western union is an example of a natural monopoly. These are a special case. For example, Western Union was able to buy up land cheap or make deals for stringing its telegraph lines. Competitors had to face a situation where everyone knew the value of the land, and prices went up accordingly, making competition cost-prohibitive. Modern examples are cable companies and power grids. There is definitely a regulatory role for government here as far as I’m concerned. But again, note that this is a special case.
These are similar cases, but it’s not clear that either company actually had a functioning monopoly, and their prices did not reflect monopoly power. Standard Oil never tried to monopolize oil exploration or production - the only charges leveled revolved around trying to set up monopolistic deals with railroads, which again puts it in the category of natural monopoly. But note that the railroads themselves had monopoly power only because the U.S. government granted them monopolistic right of ways.
Also, it didn’t work. Standard Oil began losing market share long before it was broken up, and by the time of its breakup it had already lost 30% of the market it had controlled.
Again, these are cases that revolve around control of distribution that itself was was natural monopoly of sorts, or in some cases a government-enforced monopoly. I have no problem with some regulation in this area.
Just how are these monopolies? Not only do they compete against other entertainment, they compete against other professional sports leagues. If you mean that they are monopolies in the sense that they’re the only national baseball and football leagues, well that’s silly. It’s like saying that NIKE is a monopoly because no one else can make NIKE shoes. Both of these leagues offer an entertainment product within the confines of a heavily competitive entertainment market.
However, I should point out that both of them maintain their competitive positions partially on the backs of taxpayer dollars, and are given free stadiums or land grants which gives them a major advantage over other sports.
Bad example. DeBeers specifically gains monopoly status through collusion with various governments. It’s exactly the kind of evil government/business marriage I was talking about. For example, when man-made diamonds were created a few years ago using identical processes that produced identical diamonds to natural ones, DeBeers managed to get laws passed requiring those diamonds to be specially marked for ‘consumer protection’. DeBeers then embarked on a campaign to discredit those diamonds.
Microsoft is not, and has never been a monopoly. There have always been plenty of alternatives to Microsoft products, and right now Microsoft’s market share is under attack from numerous sources.
Monsanto’s ‘monopoly’ is merely a due to its owning the patents on the processes it has developed. That’s like saying Segway has a monopoly on Segways because they own the patent on the design of the Segway.
Now your examples start to get silly. You’re trying to define a ‘monopoly’ as “anything big”. Anheuser-Busch has numerous competitors for all its products.
Huh. That’s funny, because I’ve never drank any of their beers on a regular basis, and I’ve had no trouble finding alternatives. This is just a ridiculous example.
I think you’re stretching because you realized that in the history of the market, you can only find a handful of real monopolies, and all of them gained that status through special circumstances. Monopolization is clearly not a general tendency of free markets.
Do you know when there was REALLY a lack of airline competition? When the GOVERNMENT regulated the airlines. Deregulation of the airline market resulted in an explosion of competition, followed by a dramatic reduction in the price of airline travel and a rapid increase in airline safety.
This example undermines your whole point and reinforces mine.
And today how many remain? Next year, when the name changes are final, how many US carriers will there be?
The answer will be 3 dominating 90% of air traffic, with a handful of smaller ones feeding off the scraps, hoping to get bought out. New airlines will struggle to get gates, and be forced into little satellite terminals. They won’t be large enough to show up on Hotwire/Priceline type searches. And at that point, how much choice will there be?
And here, watch me hand wave the way you do: obviously there are not going to be historical examples of pure monopolies because historically we’ve never had a purely free market. tada, hand waving is fun.
BTW Microsoft had over 90% market share, are you really going to be so obtuse as to dismiss that as a monopoly? Because it isn’t 100%?
Slightly specifically: the alternative to a free market system is a hybrid one that recognizes society can be better off if government takes on some of the responsibility by removing the choices that aren’t actually choices. (my thread on the subject)
More specifically: fire, police, military/defense, education, health care, garbage collection, old age pension, employment insurance, to name a few. All situations where the “opt out” concept fails (see Cranick for a more detailed look)
Now my question back to you: is the government ever justified in breaking up or otherwise disruption a near-monopoly? Along those lines, should we have anti-competition legislation? And by this I mean, should the government interfere with the natural functioning of the free market?
Alaska Air
America West
American Airlines
Continental Airlines
Delta Air Lines
Frontier
Jet Blue
Northwest Airlines
Southwest Airlines
United Airlines
USAir
Major Cargo Airlines:
DHL
Federal Express
UPS
Regional and Commuter Airlines:
AirTran
Allegiant Air
Atlantic Southeast Airlines
Baltia Air Lines
BigSky Airlines
California Pacific Airlines
Comair
GO!
Great Lakes Airlines
GulfStream International
Hawaiian Airlines
Interstate Jet
Jet America
Mesa Air
Midwest Express
Mokulele Airlines
North American Airlines
Pen Air
Primaris Airlines
Shoreline Aviation
Shuttle America
SkyValue
Southeast Airlines
Spirit Airlines
Sun Country
USA 300 Airlines
US Helicopter
Virgin America
World Airways
This doesn’t count the hundreds or thousands of smaller commercial aviation outfits that do charters, business aviation, and other air operations.
Would you like me to continue on with all the foreign airlines that operate inside the United States and directly compete with the American airlines? Or have I made my point?
A little hint from the legal profession: Never ask your witness a question unless you already know the answer. Lest your argument look foolish.
Combining Delta and Northwest, and combining United and Continental leaves you with:
Alaska Air
America West
American Airlines
Continental / United Airlines
Delta / Northwest Air Lines
Frontier
Jet Blue
Southwest Airlines
USAir
That would still be NINE major airlines, and TWENTY NINE regional airlines. You don’t know what you’re talking about.
Are you just making this up as you go along? Do you have any idea how many airlines operate out of airports in the U.S.? I just listed the ones that have headquarters in the U.S. Foreign Airlines have a major presence at all large U.S. airports. They’re not ‘fighting for scraps’. There’s no monopoly power here whatsoever. Air Canada and WestJet have dedicated blocks of gates at several U.S. airports, for example.
Now, let’s talk about what happened when the government regulated air travel. It gave a monopoly to Pan-American for international flights. There were only four domestic airlines: TWA, United, American, and Eastern. That’s it. They were all assigned routes and given monopolies over regions.
Let’s review what opponents of deregulation said would happen if the airlines were deregulated. First, the justification for regulation was to force airlines to fly into smaller communities in exchange for being given lucrative major routes. So opponents of deregulation said that in a free market, no one would serve the smaller communities and airlines would only fly the profitable routes. The same arguments are made for regulated industries today.
In addition, opponents of deregulation said that in a free market cutthroat competition would lead to corner-cutting and a loss of safety. Without the government controlling flight operations, competitive pressures would cause airlines to take risks and the accident rate would skyrocket. After all, the market can’t possibly police itself - the public is unable to judge something as technical as safety of something as complex as an airliner. Right?
The last argument made was that eventually competition would lead to airlines crowding each other out, eventually resulting in a monopoly. The same argument you’re trying to make.
None of that happened. But do you know who actually opposed deregulation the most? The Airlines. They had a sweet deal, and they knew it. So they lobbied long and hard to keep their industry highly regulated. This is what happens when business gets into bed with government. Real collusion takes place, and rich and powerful people fleece the public while convincing everyone they’re on the side of the angels.
In the end, airline deregulation led to a collapse in ticket prices (a 30% decline in constant dollars after deregulation), an increase in competition, an increase in access to local communities, and a better safety record. The exact opposite of what all the pro-regulation people said would happen.
You’d think they’d have learned their lesson.
What the hell? You just invented an argument, put it in my mouth, and then refuted it in a snotty manner. This is exactly what I meant when I said debate on this board has gone into the crapper. If you want to engage in sophistry, at least try to be a little more clever about it.
You need to do some book learning about what a monopoly is. If a company has a 90% market share, but it has to operate within a competitive market, then it’s not a coercive monopoly, which is the kind we’re talking about here. Sheer size is not the issue - the issue is whether it has the capability to use its size to avoid competition and price its products above a competitive rate.
Well done, now show their percentage of market share. Show how SkyValue compares to Delta/United/USAir/Jetblue.
Go on, look up SkyValue, what’s their operating capacity, how’s their revenue? I’ll wait.
I can’t wait. SkyValue was a seasonal carrier that operated in the winter, with one plane to 5 destinations, and is now defunct. Delta has 360 planes.
Take a look next at international travel. Thousands of carriers, and what did they do? Team up. International travel is dominated by 4 major “teams.”
The list of US breweries is even longer than airlines, but like I said, 3 control over 80% of the market.
Lots of colas on the market, 500 soft drinks manufacturers and bottling companies, just two dominate Coke and Pepsi. Most of those beverages in the corner store, 3 coolers full, are produced by just 2 companies.
Four Companies Control 94.8% Market Share of the Domestic Cigarette Industry in the United States
Similar stats for health insurance, fast food, sneakers.
The trend is away from competition, towards monopoly power, with the most likely outcome an oligopoly 3. Why don’t we see more monopolies, rule true honest to goodness monopolies, because we have laws to prevent it. Which is to say, we have never, nor will ever, have a free market.
Like I said with the carrot example, once there is market dominance of a select few, new barriers to entry are created, limiting competition.
I see the answer to my question was yes. So of the 10% remaining market share, how many operating systems were there?
Well?
The answer is 2. For a total of three operating systems. Well, I guess we could say 12 if you want to define 9 different Windows O/S, two MAC O/S and Linux.
God damn this is a stupid fucking example.:rolleyes:
What is the ideal number of bridges? One? Ten? Should they pave over the entire river?
An oligopoly is not necessarily a bad thing so long as there isn’t collusion between the members of the olgoply (again, that is the role of government and anti-trust legislation). Not that it really matters as cartels are inherently unstable because of the tendency of the members to cheat. But I digress.
For most capital intensive industries or industries with large network externalities, economies of scale and the need for compatibility naturally lend them to consolidate into a small number of large players. While there is still competition to drive down prices for the consumer, it can result in fewer choices. However, in a free market economy, that also provides opportunities for small players to fill in niche roles.
Yes, we get it that there needs to be government. I have not seen anyone arguing otherwise. We are debating about the role of government and regulation. It is not the place of government to decide which businesses should succeed or fail or who should and should not be allowed to enter the market.
Free trade sounds good until you realize it is a one way street. The Prez is going to try to get India to open up their markets. Walmart wants in. American companies want to sell there. But they protect their local companies and jobs. China protects their industries and jobs. We don’t because a lot of short term money can be made by our execs by turning over our technology and patents .
Autos made in India will have an open market here. But they will restrict our autos. That is what free trade is across the globe.
Not long ago I might have believed that… Now, looking into my crystal ball, I’m not so sure it couldn’t happen at some point in the future. With an unregulated, unconstrained free market, it seems possible to me.
“Monsanto: The Seed Monopoly That Caused Genetically Modified Food To Start Showing Up On Nearly Every Dinner Table In The United States”
Fun question: how consistent with free market principles is a patent- something designed to give exclusive rights to one firm?
Yes, there are always some barriers, but they come in degrees. Sure, a firm is able to make an economic profit in the short run, making use of whatever advantages they have. But in the long run, profits are normal. If barriers are low, the firm’s economic profit will entice new competitors. If barriers are substantial, competitors will copy the leading firm’s techniques.
Of course, this doesn’t hold in monopolistic market structures. Barriers could be substantial or products too differentiated to copy. But that doesn’t mean Microsoft is going to start monopolizing carrots. It doesn’t even mean Sysco is going to start monopolizing carrots. Their monopoly might be the package, not the carrot.
Nah. Instead, I’ll point out that you intentionally drew a comparison between a major airline and a regional airline. There’s a reason why I put them in separate categories. This is dishonest debating, and you do it all the time.
It’s like you suddenly seizing on the ‘ecology’ angle because you think you’ve found some kind of zinger there. I only brought up an ecosystem as an example of a complex adaptive system that exhibits properties of emergent order. That’s where the analogy ends. At no point did I say say that an economy functions exactly the same as an ecology. Notice I also mentioned ant hills as an example of emergent order, but humans aren’t ants, are they? Although I’ll grant that the lady in my elevator the other day was doing her best to leave a giant stinky pheromone trail behind her…
The idea that air travel is a monopoly is completely, hopelessly destroyed by Sam’s post. He demonstrated beyond any reasonable opposition that there is more choice in airlines now than there used to be, and indeed that the choices are quite substantial - nine major airlines, dozens of regional airlines, plus competition from foreign airlines on international flights. (There would be competition from foreign airlines on domestic flights, too… but the government won’t allow it.) and you’re arguing that some airlines are bigger than others?
So you included a now defunct airline in your list of examples, but I’m dishonest?
You brought up the ecology example, but you’re the only one allowed to use it?
The point of my post was to show how after deregulation there were lots of airlines, fast forward and eventually we arrive at market dominance by a select few. A few years from now, the larger will continue to either buy or partner with smaller, and we’ll have even fewer.
Right now McDonalds is the single largest purchaser of beef in the US. That means they pick what cows get raised.
4 meet packing companies control more than 80% of the US market.
When Microsoft had Windows on 90% of computers, they dictated how software evolved. If you wanted to make money writing software, it needed to be compatible with Windows.