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» Hatrack River Forum » Active Forums » Books, Films, Food and Culture » Monopolies Are Inherently Evil And Here's Why

   
Author Topic: Monopolies Are Inherently Evil And Here's Why
Blayne Bradley
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http://gameoverthinker.blogspot.com/2010/10/episode-41-revolution.html

*Nods*

I split my shopping between Steam, GamersGate and Impulse and sometimes EBGames or Futureshop.

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Samprimary
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I'm gonna skip the game overthinker since I never make it through his blather sessions anyway. I guess he is aptly named though!

Here's a couple of questions about monopolies:

- Do you think that absolutely no industries became more productive and beneficial overall for society due to what was, essentially, a type of monopoly?

- Do you think that it is possible that monopolies aren't inherently evil, just typically bad enough in many industries and avenues of commerce that they require regulation and breakup?

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El JT de Spang
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Monopolies are bad in a capitalist/free market economy. They don't necessarily need to be in other economies.
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Blayne Bradley
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Even in Socialist command economy models monopolies were generally bad long term, the only well performing part of the Soviet Economy was its arms industry, why? Because they're wasn't only one arms manufacturers and research and design bureau but several, each was supposed to cover a particular purpose but they ended up having broader skills and thus could compete not only with each other but with the West. I doubt Russian planes would have been AS good with only Mig without Sukhoi.

The strength of a laissez faire open market economy is its diversity, the competition to drive prices downwards and quality upwards giving people more choice and thus more power to influence companies and firms to give out a good product, allowing personal preference to decide between cheap and reliable or expensive but really well crafted high quality product with all inbetweens weeded out to give the consumer the power in the exchange.

A monopoly doesn't allow this, there's no incentive for a company with a monopoly to do better, instead they'll use their affluence to perpetuate their monopoly instead of making a good product except for the rare exceptions where CEOs and management have a pang of conscience and mandate a better product.

The only times where a monopoly is at least acceptable is when there's heavy government regulation to mandate targets and to insure fairness and that they can't just abuse it, HydroQuebec is a monopoly, which means its prices and services are set to whatever the government mandates them at because the company has no incentive to meet consumer expectations, on the other hand for something with as much national importance as a power grid and infrastructure I can see that its a question of a trade off and why having a common set of standards would be easier and more convenient with one company.

But on the other other hand this falls apart when compared to the history of Internet Service Providers, when Bell had the monopoly there was incomplete coverage, terrible bandwidth, shoddy service, it is only with videotron that I have never had my bandwidth throttled for torrenting, only with videotron have I had decent service and outagges are completely rare, and I live in a middle of nowhere swamp.

It is only when there was competition against Bell to provide internet service across quebec did the quality and infrastructure of Quebec outside of government mandate and investment improve by significant margins.

So I really can't see a situation where a monopoly is the inherently better choice, I can see it as an acceptable compromise... But not as inherently better.

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Bokonon
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Monopolies can be seen as necessary when the barrier to entry (and IMO, maintain one's market presence) is too large to allow for much competition in the same geographical location.
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Sterling
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I get more worried when monopolies are a) for-profit and b) dealing in a necessary or inescapable commodity- food production, phone service, utilities, gasoline.

Still, there is certainly something troubling in a near-monopoly on the retail end with multiple producers trying to get their product out the same pipe on that near-monopoly retailer's terms.

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Lisa
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Monopolies that aren't enforced by government fiat are ordinarily a very good thing. They can only become monopolies by providing better goods or services than anyone else. And when they stop doing so, competitors step in so that it isn't a monopoly any more.

The problem is when you get government meddling. Declaring utilities to be monopolies so that competitors are barred from entry is the classic case. Ironically, government enforced monopolies (the bad kind, like Ma Bell) are legal, while monopolies of success (like ALCOA) are illegal.

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airmanfour
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I'm pretty sure monopolies are always bad. This guy explains why in a succinct and only a little bit annoying way.

I've never heard of an example where a monopoly eliminates their contribution to dead weight loss, but I'm open to correction.

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Blayne Bradley
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quote:
Originally posted by Lisa:
Monopolies that aren't enforced by government fiat are ordinarily a very good thing. They can only become monopolies by providing better goods or services than anyone else. And when they stop doing so, competitors step in so that it isn't a monopoly any more.

The problem is when you get government meddling. Declaring utilities to be monopolies so that competitors are barred from entry is the classic case. Ironically, government enforced monopolies (the bad kind, like Ma Bell) are legal, while monopolies of success (like ALCOA) are illegal.

Nearly all of the classic cases of trusts and monopolies have only been broken up not by a more energetic competitor but by government intervention, such as the Trust Lawsuits by Teddy Roosevelt.

Because once you have a monopoly it's very nearly impossible to break out of it because, being monopolies they can buy up any industry that could try to outcompete them.

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The Rabbit
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quote:
They can only become monopolies by providing better goods or services than anyone else.
You mean like Microsoft? [Razz]
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Phanto
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MiG = =)
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Glenn Arnold
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quote:
They can only become monopolies by providing better goods or services than anyone else.
Oil is oil.

Steel is steel.

The monopolies of the 1800's were not about producing better goods or services, it was about underhanded manipulation of commodity markets to put your competition out of business and force employees to work for less than the cost of living, thus making them permanently beholden to the employer.

Ma Bell wasn't actually a terribly bad monopoly, on the whole, but technology had outgrown it, and it was time to break it up.

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Dan_Frank
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quote:
Originally posted by Glenn Arnold:
quote:
They can only become monopolies by providing better goods or services than anyone else.
Oil is oil.

Steel is steel.

Though the price of said oil and steel can vary from company to company. When someone sells you the same thing for less, most people would call that a "better" good, despite the physical good being the same. And when they sell you a higher quality good for cheaper... watch out!
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Samprimary
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quote:
Originally posted by Dan_Frank:
quote:
Originally posted by Glenn Arnold:
quote:
They can only become monopolies by providing better goods or services than anyone else.
Oil is oil.

Steel is steel.

Though the price of said oil and steel can vary from company to company.
And a very large company working on monopoly/monopsony in a given field can most definitely afford to price bomb competitors out in terms of long-term strategy, and most certainly did, and it most certainly is an operational technique for consolidating power.

People who really desire a free market don't like these things. They want an unregulated market to be, well, the best. And some will go to great lengths to convince themselves that the thorny issue of monopolies is only merely another example of government being bad. As Seth Finkelstein noted, they can never admit even one instance of government intervention doing good overall for society as opposed to the effects of the market. This isn't a matter of preference, it's absolutely crucial to the function of the ideology. If they ever do that, then it's an admission that social engineering can work, the market can fail, and it's just a matter of figuring out what is the proper mixture to have the best society.

And, hey. Some anti-monopoly regulation is part of that mixture.

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