Common BUT WRONG Statements against "Monopolies"
(This post is in response to Bret Z's comment on an earlier post, thanks for the inspiration Bret....)
Sherman Anti-Trust Law was created specifically to destroy competitive markets.
Anti-Trust law was not born from a desire by the people to create a fair system; it was born from a desire by unsuccessful competitors to create an unfair system favoring themselves, using political means instead of competitive means to compete. The nature of the Sherman Anti-Trust act, both orginally as well as its use today, was and is born from the democratic complaints of competitors which could and can not compete with a particular successful company. The phrase "anti-competitive behavior" is a veil under which the anti-competitive competitors use to convince the masses they were just in using politics to quell their competitor. So, in fact, the real nature of the beginnings of Sherman Anti-Trust were born from anti-competitive competitors of the supposed "monopolies" of the day. The competitors simply didn't feel like competing anymore, so they went to their politicians for help. We can see this today, France and China create havoc for Google so that their local search engines (who likely contribute bundles to capmpaign funds whereas Google does not) gain a political advantage when their actual businesses begin to lose and they are too lazy to adjust to a strong competitor.
FUTURE POST: We will delve into the political specifics in US history of how Sherman Anti-Trust was passed, and the motivations of those during that time period.
Sherman Anti-Trust restricts good businesses directly, by tying their hands. No customer is forced to pay a company, customers and suppliers are "shaking hands" every time they transact. If you do not wish to pay a monopoly of bottled water $4 per bottle, you can simply find an alternative source of water, such as drilling a well, going to your local creek and siphoning, or drinking tap water. Even for the most basic of human survival products, there is ALWAYS an alternative. High gasoline prices? Take a train, carpool, buy an electric car, move closer to work, WALK.
Great Companies don't use force because they don't need it.
Sometimes it is said "monopolies" destroy competition. "Destroy" implies the "monopolies" are attacking competitors by force. This is incorrect, there are far more examples of labor groups using violence than managements of companies using violence-- read your history from more than one source. Companies referred to as "monopolies" get to their position of strength by being the BEST competitor, favorable for customers whom always have the ability to buy from somewhere else. Furthermore, if you must pay a higher price at a competitor but don't like the monopoly power, this is your choice. Why should one man pay taxes to provide another man a free ride? Why should a customer of the monopoly finance your choice to take business to the #2 or #11 competitor? YOU HAVE FREE WILL.
Personally, I buy more expensive organic food, should I sue Tyson because they make cheap chicken and force them to take better care of their animals? Perhaps there's a moral argument there, but in terms of Anti-Trust, you can always shop elsewhere, Tyson isn't forcing you to do anything. Successful competitors don't force you to buy their products, you buy them because they are cheap or convenient, and because that company has invested in a highly efficient network of supply which no competitor can match competitively.
High margins for large companies is earned, earned from their investment in creating low prices and value for customers. Should a company charge too high a margin, it invites competition which can exploit the large company's mispricings.
Bottom Line: No consumer in a free market is forced to do anything.
Sherman Anti-Trust is the "force" you speak. When they break up companies, they FORCE them to break up. there is your force.
Companies do not create shortages, governments do.
Right now there's a shortage of gasoline in Long Island? Do you know why they can't get gasoline? Because gas stations aren't allowed to raise prices when supply is low. If they were allowed to raise prices until supplies level out, the market would correct the price imbalance, and you'd see every privateer in Pennsylvania and Connecticut making gasoline shipment runs across borders, literally getting paid to reduce the shortages in Long Island. The market corrects MUCH faster than any anti-gauging laws.
Ever wonder why it's so easy to get cannabis in this country? it's because no matter how much the government restricts or penalizes drugs, the demand always gets satisfied anyway, by the black market if it must. Keep studying history and you will find so many examples of free and black markets correcting supply imbalances you cannot possibly write them all down.
Cartels never work,
and this has been proven over and over again throughout history.
Even with the best laid plans to form a cartel, at some point it becomes too profitable to break the cartel and lower prices to gain volume advantage. Cartels are impossible.
Orbitz is a perfect example, as is OPEC. Orbitz is a cartel of airlines trying to compete with the likes of Expedia and Priceline-- it failed. OPEC not only does not control prices, but when it tries, it breeds offshore competition. Why do you think a place like Venezuela can become such a big supplier, or Alaska? It's because shortage breeds new competition for those trying to artificially raise prices. Go ahead and raise prices OPEC, that just helps Canadian oil shale companies sell more oil and finance more wells so the US will depend less on oil shipped across teh earth!
Competition is not an ideal; it is a result of unforced non-violent open markets.
There is no such thing as "perfectly competitive". The beauty of free markets is there is ALWAYS imbalances which create busts and opportunity. One day Western Union has a lock on all communications, the next day Alexander Graham Bell is highly motivated to create the next great telecom company. AT&T didn't need to be broken up, the internet was going to break it up anyway.
FUTURE POST: when companies have unusually high market share, there is not only a good reason for this result, but a benefit to society in more ways than one.
(This post is in response to Bret Z's comment on an earlier post, thanks for the inspiration Bret....)
Sherman Anti-Trust Law was created specifically to destroy competitive markets.
Anti-Trust law was not born from a desire by the people to create a fair system; it was born from a desire by unsuccessful competitors to create an unfair system favoring themselves, using political means instead of competitive means to compete. The nature of the Sherman Anti-Trust act, both orginally as well as its use today, was and is born from the democratic complaints of competitors which could and can not compete with a particular successful company. The phrase "anti-competitive behavior" is a veil under which the anti-competitive competitors use to convince the masses they were just in using politics to quell their competitor. So, in fact, the real nature of the beginnings of Sherman Anti-Trust were born from anti-competitive competitors of the supposed "monopolies" of the day. The competitors simply didn't feel like competing anymore, so they went to their politicians for help. We can see this today, France and China create havoc for Google so that their local search engines (who likely contribute bundles to capmpaign funds whereas Google does not) gain a political advantage when their actual businesses begin to lose and they are too lazy to adjust to a strong competitor.
FUTURE POST: We will delve into the political specifics in US history of how Sherman Anti-Trust was passed, and the motivations of those during that time period.
Sherman Anti-Trust restricts good businesses directly, by tying their hands. No customer is forced to pay a company, customers and suppliers are "shaking hands" every time they transact. If you do not wish to pay a monopoly of bottled water $4 per bottle, you can simply find an alternative source of water, such as drilling a well, going to your local creek and siphoning, or drinking tap water. Even for the most basic of human survival products, there is ALWAYS an alternative. High gasoline prices? Take a train, carpool, buy an electric car, move closer to work, WALK.
Great Companies don't use force because they don't need it.
Sometimes it is said "monopolies" destroy competition. "Destroy" implies the "monopolies" are attacking competitors by force. This is incorrect, there are far more examples of labor groups using violence than managements of companies using violence-- read your history from more than one source. Companies referred to as "monopolies" get to their position of strength by being the BEST competitor, favorable for customers whom always have the ability to buy from somewhere else. Furthermore, if you must pay a higher price at a competitor but don't like the monopoly power, this is your choice. Why should one man pay taxes to provide another man a free ride? Why should a customer of the monopoly finance your choice to take business to the #2 or #11 competitor? YOU HAVE FREE WILL.
Personally, I buy more expensive organic food, should I sue Tyson because they make cheap chicken and force them to take better care of their animals? Perhaps there's a moral argument there, but in terms of Anti-Trust, you can always shop elsewhere, Tyson isn't forcing you to do anything. Successful competitors don't force you to buy their products, you buy them because they are cheap or convenient, and because that company has invested in a highly efficient network of supply which no competitor can match competitively.
High margins for large companies is earned, earned from their investment in creating low prices and value for customers. Should a company charge too high a margin, it invites competition which can exploit the large company's mispricings.
Bottom Line: No consumer in a free market is forced to do anything.
Sherman Anti-Trust is the "force" you speak. When they break up companies, they FORCE them to break up. there is your force.
Companies do not create shortages, governments do.
Right now there's a shortage of gasoline in Long Island? Do you know why they can't get gasoline? Because gas stations aren't allowed to raise prices when supply is low. If they were allowed to raise prices until supplies level out, the market would correct the price imbalance, and you'd see every privateer in Pennsylvania and Connecticut making gasoline shipment runs across borders, literally getting paid to reduce the shortages in Long Island. The market corrects MUCH faster than any anti-gauging laws.
Ever wonder why it's so easy to get cannabis in this country? it's because no matter how much the government restricts or penalizes drugs, the demand always gets satisfied anyway, by the black market if it must. Keep studying history and you will find so many examples of free and black markets correcting supply imbalances you cannot possibly write them all down.
Cartels never work,
and this has been proven over and over again throughout history.
Even with the best laid plans to form a cartel, at some point it becomes too profitable to break the cartel and lower prices to gain volume advantage. Cartels are impossible.
Orbitz is a perfect example, as is OPEC. Orbitz is a cartel of airlines trying to compete with the likes of Expedia and Priceline-- it failed. OPEC not only does not control prices, but when it tries, it breeds offshore competition. Why do you think a place like Venezuela can become such a big supplier, or Alaska? It's because shortage breeds new competition for those trying to artificially raise prices. Go ahead and raise prices OPEC, that just helps Canadian oil shale companies sell more oil and finance more wells so the US will depend less on oil shipped across teh earth!
Competition is not an ideal; it is a result of unforced non-violent open markets.
There is no such thing as "perfectly competitive". The beauty of free markets is there is ALWAYS imbalances which create busts and opportunity. One day Western Union has a lock on all communications, the next day Alexander Graham Bell is highly motivated to create the next great telecom company. AT&T didn't need to be broken up, the internet was going to break it up anyway.
FUTURE POST: when companies have unusually high market share, there is not only a good reason for this result, but a benefit to society in more ways than one.
posted by Q at 12:45
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