Libertarianism

[guartz]

Plus you have to mention Game Theory and how unlikely collusion actually is. It's much easier and more efficient to bribe the political structure to gain advantage then enter a collusion, which brings me to an interesting question. Why bring up Oligopolies in a reply to me when you know I was specifically talking about anarcho-capitalism?

[BaneTheBrawler]

Thanks for proving to everyone who reads this thread how much of an idiot you are.

Please enlighten me. I've been convinced of my errors before on this board.

[Pirian]

Plus you have to mention Game Theory and how unlikely collusion actually is. It's much easier and more efficient to bribe the political structure to gain advantage then enter a collusion, which brings me to an interesting question. Why bring up Oligopolies in a reply to me when you know I was specifically talking about anarcho-capitalism?

What? Collusion is very easy, and there are tons of examples of it in the past 100 years. Also, the bribing of the political structure is all accounted for in the costs of setting up and policing your own collusion. If the opportunity is there, then it is just another cost of doing business, and the Chicago view of Oligopoly theory (this is what I was forgetting to mention earlier) states that businesses will take advantage of this if the benefit outweighs the cost. This is very relevant unless I'm missing something, which is entirely possible.

Edit: If governments put in place penalties that are severe enough then it will bring that cost/benefit ratio to the point where the cost of collusion is such that it cost too much to even set up, let alone police. Without the government putting these penalties in place then you have major collusion taking place, as was seen between 1907-1911 in the steel industry with the Gary Dinners

Edit2: Also, you don't have to invoke Game Theory ideas for this. I'll admit that it certainly makes explaining it easier, but GT was mistakenly brought in by Cadsaune when he brought up Cournot for some reason

[guartz]

I still don't understand where you are going with this Pirian, the tons of examples are all tacit collusion I'm sure, but bribing politicians and policing your own collusion you must be talking about explicit collusion, which is a very different animal. One is subject to Nash's game theory, and the other only happens in virtual dictatorships. i.e (China, post-soviet Russia, etc) which as you may suspect, making an argument for government penalties a moot point.

Also, in a stateless society it's extremely unlikely for corporations to become what we now know as "Big Business" because of the lacking of the legal protectionism like corporate veil, for example, speaking of total or near market dominance is near impossible.

[guartz]

Please enlighten me. I've been convinced of my errors before on this board.

Because monopolies happen only in a few ways. One of the ways is when the Government gives exclusive license to only one company to do business. Like the fucking East India Company, you know, one of the reasons American revolution happened? Oh but no, that was just correlation! The exclusive charter rights and the force of the entire British navy are actually irrelevant.

Argh the trolls... the trolls!!

[BaneTheBrawler]

What are the other circumstances that can give rise to a monopoly? Because stating that one such circumstance relies on government acceptance doesn't really have any effect on the argument that removing government control would not remove corruption/bad behavior, hence correlation != causation.

In any case, I'm not actually talking about monopolies. Just large companies that do what they want and get away with it.

[Pirian]

I still don't understand where you are going with this Pirian, the tons of examples are all tacit collusion I'm sure, but bribing politicians and policing your own collusion you must be talking about explicit collusion, which is a very different animal. One is subject to Nash's game theory, and the other only happens in virtual dictatorships. i.e (China, post-soviet Russia, etc) which as you may suspect, making an argument for government penalties a moot point.

Also, in a stateless society it's extremely unlikely for corporations to become what we now know as "Big Business" because of the lacking of the legal protectionism like corporate veil, for example, speaking of total or near market dominance is near impossible.

Explicit collusion doesn't happen anymore because of the stringent laws in place. They all got knocked with the introduction of the Sherman Antitrust Act of 1890, and the subsequent 1914 Clayton Antitrust Act. One example of this is the 1911 American Tobacco case. Another obvious one was the Standard Oil case of 1911.

To get more recent, we do have to look outside the US, but not very far. The OPEC cartel is a the most obvious example of collusion today, but that's, like you said, mostly based out of oppressive regimes, and while I think they still make up like ~40% of the oil in the market, it's nowhere near the ~70% they had in the 70's.


As for it being extremely unlikely for corporations to become big in a stateless society, I think it's unlikely for major development of any kind to happen in a stateless society. You need organization, sense of security, and freedom of thought that people moved toward a common goal give if you if you want to make progress in society. There is a reason that human advancement happened in China, Mesopotamia, and Europe before anywhere else. For better or worse, without this you end up in a situation like Africa or North America, where you have groups of tribal people living relatively simple lives and not making any notable advances.

[hey]

As for it being extremely unlikely for corporations to become big in a stateless society, I think it's unlikely for major development of any kind to happen in a stateless society. You need organization, sense of security, and freedom of thought that people moved toward a common goal give if you if you want to make progress in society. There is a reason that human advancement happened in China, Mesopotamia, and Europe before anywhere else. For better or worse, without this you end up in a situation like Africa or North America, where you have groups of tribal people living relatively simple lives and not making any notable advances.

A notable difference though is that we are far more advanced than that already. Surely society wouldn't suddenly collapse. Or would it? I wouldn't rule out the possibility, but it does not seem likely to me.

[Pirian]

A notable difference though is that we are far more advanced than that already. Surely society wouldn't suddenly collapse. Or would it? I wouldn't rule out the possibility, but it does not seem likely to me.

I think it's impossible to say whether or not it would collapse partially or completely. I would certainly maintain that human progress would come to a screeching halt, though. Mostly, humans are scared and paranoid creatures that gladly give away their freedom when faced with fear and uncertainty.



edit: Actually, I take that back. I think society would certainly collapse, and it is then just an argument about whether it is a sudden collapse, or a gradual one. Our short history on this Earth is littered with the rise and fall of once great societies. Many of them making groundbreaking advances that were only to be lost with the fall of that society which birthed it.

[Yugl]

Explicit collusion doesn't happen anymore because of the stringent laws in place. They all got knocked with the introduction of the Sherman Antitrust Act of 1890, and the subsequent 1914 Clayton Antitrust Act. One example of this is the 1911 American Tobacco case. Another obvious one was the Standard Oil case of 1911.

To get more recent, we do have to look outside the US, but not very far. The OPEC cartel is a the most obvious example of collusion today, but that's, like you said, mostly based out of oppressive regimes, and while I think they still make up like ~40% of the oil in the market, it's nowhere near the ~70% they had in the 70's.


As for it being extremely unlikely for corporations to become big in a stateless society, I think it's unlikely for major development of any kind to happen in a stateless society. You need organization, sense of security, and freedom of thought that people moved toward a common goal give if you if you want to make progress in society. There is a reason that human advancement happened in China, Mesopotamia, and Europe before anywhere else. For better or worse, without this you end up in a situation like Africa or North America, where you have groups of tribal people living relatively simple lives and not making any notable advances.

I was waiting for someone to bring this up. You rock... for now.

[guartz]

Explicit collusion doesn't happen anymore because of the stringent laws in place. They all got knocked with the introduction of the Sherman Antitrust Act of 1890, and the subsequent 1914 Clayton Antitrust Act. One example of this is the 1911 American Tobacco case. Another obvious one was the Standard Oil case of 1911.

Your examples are not of explicit collusion but of businesses being more efficient and dominant in the marketplace to the benefit of consumer. A better example would have been United States v. Freight Association which was blatant and explicit price fixing...but that example is poor too, because the intent of the price fixing was to lower prices.

Hmm. Here is a good question, in that time period, did any Trust that was broken up by Sherman Antitrust act was proven to actually be harmful to consumers? I mean sure, the competition was falling left and right, but consumers usually made out pretty good, right? Am I wrong? I could be.

[Pirian]

Your examples are not of explicit collusion but of businesses being more efficient and dominant in the marketplace to the benefit of consumer. A better example would have been United States v. Freight Association which was blatant and explicit price fixing...but that example is poor too, because the intent of the price fixing was to lower prices.

Hmm. Here is a good question, in that time period, did any Trust that was broken up by Sherman Antitrust act was proven to actually be harmful to consumers? I mean sure, the competition was falling left and right, but consumers usually made out pretty good, right? Am I wrong? I could be.

I'm not sure what grounds you make the statements in your first sentence. Also, for the 2nd example, that stated intent by the cartel, but of course that's what they're going to say. They were fixing prices with each other so they didn't have to compete (which would have resulted in lower prices).

Every case that I've studied the consumer has come out better, but that's the point. Monopolies are able to charge the vertical correspondence on the demand curve of where marginal revenue equals marginal cost. This is where the absolute most profit is made with the lowest quantity and producer surplus is maximized, so this where every firm wants to price. This minimizes consumer surplus, and ends up with a lot of dead weight loss, though, which is seen as a "drag" on society. Breaking them up forces them into competition, and drives price toward the point where price equals marginal cost. This is the point where producer surplus is minimized and consumer surplus is maximized, but most importantly to not, dead weight loss is reduced to 0. In short, the consumer receives all the benefit, and there is no drag on society. Now, it's important to note that this only happens in perfect competition markets, and the antitrust laws are not trying to drive these firms towards that. Rather, they are trying to reduce the drag on society caused by monopolies, and this happens to raise consumer surplus.

There are none that I can think of where it was proven to be harmful to the consumer. I have studied every major case since the Sherman act, but my memory is far from perfect, but I think if there was then there would have been a point made to show it as a major example of how NOT to break up a trust. I would like to add that there have been recent cases (think Microsoft 2001) where there should have been more done, but politics and loud-mouth judges got in the way, and a very good case can be made to say that the consumer could have been much better off if the had Microsoft been broken up.

[SwampdonkeyPLD]

and a very good case can be made to say that the consumer could have been much better off if the had Microsoft been broken up.

As it stands now, consumers have free access to alternatives. That's where I got stumped by your assertion. Educate me.

[Pirian]

As it stands now, consumers have free access to alternatives. That's where I got stumped by your assertion. Educate me.

Yes, "as it stands now". Remember, we're talking about 10+ years ago. Microsoft as it existed then (1998) had 90%+ of the operating systems market, and they used that market power in creating/marketing software. Microsoft WAS found guilty of this, and Judge Thomas Jackson ordered Microsoft be broken up into two companies, one to produce the operating system, and another to produce other software. If this had happened then it would have removed the conflict of interest that Microsoft the operating system manufacturer had in tailoring its OS to the other software that it was also designing. This is essentially a textbook explanation, but this forum is full of tech guys that would likely corroborate and expand upon this better than I can. I'm not sure who specifically to ask, though <.<; Maybe Ragns?

I would say that while we have free access to alternatives now, I would argue that it took much longer than it could have. Even a year is a lifetime in the tech world, and I'd wager it set free development as we know it back at least 5 years, if not more.

Your examples are not of explicit collusion but of businesses being more efficient and dominant in the marketplace to the benefit of consumer. A better example would have been United States v. Freight Association which was blatant and explicit price fixing...but that example is poor too, because the intent of the price fixing was to lower prices.

Alright, I'm back home and can better state the specifics of the Standard Oil and American Tobacco cases.

Standard Oil was found guilty of the following things, none of which were to the benefit of the consumer, but rather to keep Standard Oil as the dominant oil refiner in the US with a market share of 90%:
1)Actively took control of oil pipelines with the sole purpose to shut down oil supplies to competitors (as in, they had no plans to use it. They bought it so others couldn't use it).
2)Obtained freight rebates from railroads on not only its own shipments but its competitors shipments as well (basically, they told the railroads that if they were going to ship Standard Oil products, then they would have to pay Standard Oil in order to ship the products of competitors to Standard Oil)
3)Used localized price cutting to drive its more stubborn competitors out of the market (predatory pricing)

American Tobacco was found guilty of the following things, none of which were to the benefit of the consumer, but rather to keep American Tobacco as the dominant force in the US tobacco industry with a market share of 95%:
1)In 1890 the 5 major players in the industry merged, creating American Tobacco, which accounted for 95% of the domestic market. Almost immediately, they closed 1 of the 5 branches.
2)American Tobacco's regular use of "fighting brands" in the chewing tobacco market. ("fighting brands" are brands specifically used to undercut specific competitor brands no matter the short term cost with the intent to buy the struggling competitor or simply put them out of business in order to gain long term market power.)
3)In the buying of Leaf Tobacco, they would buy up all available supply no matter the intent to us, and often simply so their competitors couldn't.

[guartz]

Standard Oil was found guilty of the following things, none of which were to the benefit of the consumer, but rather to keep Standard Oil as the dominant oil refiner in the US with a market share of 90%:
1)Actively took control of oil pipelines with the sole purpose to shut down oil supplies to competitors (as in, they had no plans to use it. They bought it so others couldn't use it).
2)Obtained freight rebates from railroads on not only its own shipments but its competitors shipments as well (basically, they told the railroads that if they were going to ship Standard Oil products, then they would have to pay Standard Oil in order to ship the products of competitors to Standard Oil)
3)Used localized price cutting to drive its more stubborn competitors out of the market (predatory pricing)

American Tobacco was found guilty of the following things, none of which were to the benefit of the consumer, but rather to keep American Tobacco as the dominant force in the US tobacco industry with a market share of 95%:
1)In 1890 the 5 major players in the industry merged, creating American Tobacco, which accounted for 95% of the domestic market. Almost immediately, they closed 1 of the 5 branches.
2)American Tobacco's regular use of "fighting brands" in the chewing tobacco market. ("fighting brands" are brands specifically used to undercut specific competitor brands no matter the short term cost with the intent to buy the struggling competitor or simply put them out of business in order to gain long term market power.)
3)In the buying of Leaf Tobacco, they would buy up all available supply no matter the intent to us, and often simply so their competitors couldn't.

yes but none of these actions harmed the consumers.

"I ascribe the success of the Standard to its consistent policy to make the volume of its business large through the merits and cheapness of its products. It has spared no expense in finding, securing, and utilizing the best and cheapest methods of manufacture. It has sought for the best superintendents and workmen and paid the best wages. It has not hesitated to sacrifice old machinery and old plants for new and better ones. It has placed its manufactories at the points where they could supply markets at the least expense. It has not only sought markets for its principal products, but for all possible by-products, sparing no expense in introducing them to the public. It has not hesitated to invest millions of dollars in methods of cheapening the gathering and distribution of oils by pipe lines, special cars, tank steamers, and tank wagons. It has erected tank stations at every important railroad station to cheapen the storage and delivery of its products. It has spared no expense in forcing its products into the markets of the world among people civilized and uncivilized. It has had faith in American oil, and has brought together millions of money for the purpose of making it what it is, and holding its markets against the competition of Russia and all the many countries which are producers of oil and competitors against American oil." -Rockerfella

Why have a law that punishes successful industries when they cause no harm to society?

[Pirian]

Honestly, if you don't think that each and every one of the numbered items harm the consumer then we are really at an impasse. They do, and I have explained why with my initial explanation:

Spoiler: show

Every case that I've studied the consumer has come out better, but that's the point. Monopolies are able to charge the vertical correspondence on the demand curve of where marginal revenue equals marginal cost. This is where the absolute most profit is made with the lowest quantity and producer surplus is maximized, so this where every firm wants to price. This minimizes consumer surplus, and ends up with a lot of dead weight loss, though, which is seen as a "drag" on society. Breaking them up forces them into competition, and drives price toward the point where price equals marginal cost. This is the point where producer surplus is minimized and consumer surplus is maximized, but most importantly to not, dead weight loss is reduced to 0. In short, the consumer receives all the benefit, and there is no drag on society. Now, it's important to note that this only happens in perfect competition markets, and the antitrust laws are not trying to drive these firms towards that. Rather, they are trying to reduce the drag on society caused by monopolies, and this happens to raise consumer surplus.

which follows in line with economic theory. This is why it hurts the consumer.

[guartz]

It's just perhaps I don't understand your explanation, can you explain it to me like I'm five?

[Pirian]

I'm not sure where to begin. Uhh, lets start with the ideas of consumer surplus, producer surplus and deadweight loss. Do you know/understand these ideas and their significance?

ie. this graph
http://palmersdeliandmarket.com/Palm...s-graph-i1.png

[Pirian]

This is the graph that people are use to thinking about when they think economics "supply and demand":

http://tutor2u.net/economics/revisio...p_image001.gif

In it we can easily see the downward sloping demand curve, and that supply curve is upward sloping. Essentially, it is showing an even split where consumers get half of the surplus and producers get half of the surplus. This ONLY happens in perfect competition markets. In order for the consumer to gain anymore surplus, the firm has to take a loss, and so it would go out of business instead. In order for the producer to gain anymore surplus, the consumer must take a loss, but the loss to gain is not 1:1. The total amount of "surplus" is constant, but the difference in what the producer gains and what the consumer loses is called "deadweight loss". Deadweight loss is "lost" surplus and society is worse off because of it. Of course, producers want to maximize their surplus, so they work towards monopolization, which grants them the highest possible producer surplus, but it also produces the highest possible deadweight loss

edit: ehh, that graph is kind of hard to read on this forums black setting. The shaded upper triangle is the consumer surplus, and the bottom triangle is producer surplus. Another way of saying that is everything under the demand curve and over the equilibrium price/quantity line is consumer surplus, and everything under the line is producer surplus

[hey]

edit: ehh, that graph is kind of hard to read on this forums black setting.

Anyone who hasn't learned to drag such images into a new tab by now should probably switch to the inferior, but compatible with transparent images skin.