Corporatism - The New Aristocracy

[Fayt]

I recently was talking with my brother who has been diverging from Ron Paul's views lately, and I wanted to see what he had to say on some issues. So we got to talking about the education system and health care, and Ron's goal to get government out of it, which would then subsidize them into private sectors.

After hearing Ron's message, I thought getting government out of our lives would be great. However, after this talk with my brother, I think we have the whole situation could possibly misconstrued, and here's why.

If you think back to when there was the aristocracy system, power was held within those individuals, and the people were left without a voice. You couldn't simply go and petition the aristocracy, this didn't happen. Now take corporations today. We have no say in what goes on with the corporations, you can't petition a corporation, and in a free market society, this is how it's done. However, you CAN petition the government, and this is where I think people get confused.

The government is made up of elected officials that represent WE THE PEOPLE. This is OUR government. Which means, having government run education is having the people run education. Having the government run health care is having the people run health care. We need to stop seeing government as this evil body and realize that this idea is twisted, it is our government, not someone else's.

Now, I understand that right now, putting government in charge of something like health care just isn't feasible, because the people have become separate from their government, and the government itself is so embedded with corporations. But subsidizing education and health care doesn't seem to be the answer either, as we have no say in what goes on within the corporate world. We'd be powerless, and this whole movement is about empowerment, which is what we NEED, but empowerment of the people to get back to a government run by the people.

Any thoughts on this would be welcome.

 

[Tdcci]

Corporations are an entity created by the government, and they can only operate with a charter from the government. Corporations are only bad things when the government gives them monopoly status (like the situation with the Federal Reserve)

 

[Paul10]

Corporations are an entity created by the government, and they can only operate with a charter from the government. Corporations are only bad things when the government gives them monopoly status (like the situation with the Federal Reserve)

This is totally false. Remember the robber baron days? The government didn't do anything to help Rockefeller or Carnegie. They let them take over the industries. If the government doesn't regulate companies (preventing them from merging or doing other monopolistic actions like colluding) then we'll get monopolies. Monopolies aren't efficient. They drive prices up while keeping supply low.

 

[Gilby]

Monopolies aren't efficient. They drive prices up while keeping supply low.

And in a free market, efficiency is king. Without efficiency, another organization will come in and compete. No monopoly.

As to the original post, our say in corporations is that we do not have to participate in any of their offerings. Corporations don't clai authority over us, government do and they shouldn't.

 

[Paul10]

And in a free market, efficiency is king. Without efficiency, another organization will come in and compete. No monopoly.

That doesn't happen. Why do you think Teddy broke up the corporations? Do you actually think someone could have competed with Standard Oil? Now that's rich.

As to the original post, our say in corporations is that we do not have to participate in any of their offerings. Corporations don't clai authority over us, government do and they shouldn't.

If the government wasn't regulating the companies, it'd be just mergers forming 1 big company. Less companies also equals a chance to collude. Guess who would stop it? The government!

 

[Signzit]

someone in your family should pick-up a history book and read between the lines for the truth.

You'll have to read between the lines as it is a Government/Corporatist publication.

Think of it like this: We live in a big Toilet. When you're young and strong you can hang-on the the edge of the bowl when there's a great flush. Later as you get older your grip is not as good and you get flushed.

My brother may be like yours, he's, "hooray for me, I'll get mine and just move your money out of the US". He says, "my money is not in US Dollars, what do I care"?

What about your country? I ask him! He says, 'There are no Countries left, only Corporations and profits'. I must say, I did not know, THE UNITED STATES OF AMERICA was a corporation.

We have two Governments, one is a Country the other is a Corporation. In the Corporation, "We The People" are nothing more than " Bonded Units of production"; in the Country we are even less than that, as we have no representation in that Government.

 

[Gilby]

Do you actually think someone could have competed with Standard Oil?

So you think nobody could've competed with Standard Oil. If that is the case, then why could nobody compete?

 

[Zippyjuan]

Free markets require the ability of new entities to enter the market. All fields have some sort of barriers to entry. Businesses like oil companies, health care (hospitals, pharmacies, etc), auto manufacturing have extremely high costs to get started. There are very few areas that can be considered open to free entry of competing companies. (honesyly- I can't think of any right now). Removing restrictions on companies allows them to abuse their positions of market share control and gives them more power over the consumer.

 

[Zippyjuan]

So you think nobody could've competed with Standard Oil. If that is the case, then why could nobody compete?

If you want to compete with Standard Oil, you need your own oil reserves. You have to have the money to go out and find them, tap them. and process them. Then Standard Oil is so large that they could afford to price their product below your costs- even if it was at a loss to themselves- to protect their market position. You could not hope to compete.

 

[ThePieSwindler]

This is totally false. Remember the robber baron days? The government didn't do anything to help Rockefeller or Carnegie. They let them take over the industries. If the government doesn't regulate companies (preventing them from merging or doing other monopolistic actions like colluding) then we'll get monopolies. Monopolies aren't efficient. They drive prices up while keeping supply low.

Ah, someone who has learned well the material from government schools. First, i dont think anyone here "remembers' the "Robber Baron" days; they happened around the turn of the century. Second, Rockefeller and Carnegie hardly had monopolies; they had massive market share because they came up with ingenious methods of making oil refining/steelmaking more efficient, low cost, and high quality. They did have competition, and had they not been such brilliant businessmen, they'd not have done so well. Of course, with the "American System" of protectionism and subsidies for government-favored industries, it was pretty hard for foreign competition to play a role as well. Heres a little excerpt about what Vanderbilt had to face in the form of government-granted monopoly (since monopolies always exist by government strongarm, and natural monopolies, while plausible, are given a disproportionate amount of criticism when it is government that is the perpetrator)

For example, the great steamship entrepreneur Cornelius Vanderbilt competed with government-subsidized political entrepreneurs for much of his career. In fact, he got his start in business by competing — illegally — against a state-sanctioned steamship monopoly operated by Robert Fulton. In 1807, the New York state legislature had granted Fulton a legal, thirty-year monopoly on steamboat traffic in New York — a classic example of mercantilism.[37] In 1817, however, a young Cornelius Vanderbilt was hired by New Jersey businessman Thomas Gibbons to defy the monopoly and run steamboats in New York. Vanderbilt worked in direct competition with Fulton, charging lower rates as his boats raced from Elizabeth, New Jersey, to New York City; to underscore the challenge to Fulton's monopoly, Vanderbilt flew a flag on his boats that read NEW JERSEY MUST BE FREE. Slowly he was breaking down the Fulton monopoly, which the US Supreme Court finally ended in 1824, ruling in Gibbons v. Ogden that only the federal government, not the states, could regulate interstate trade under the Commerce Clause of the Constitution.[38]

These "Robber Barons" made these industries vastly superior to anything previously provided by government.

The key to keeping corporations honest IS less government, freedom of competition (especially on a world stage), free trade (allowing for comparatie advantage to naturally work its course), and free flow of capital and labor. Regulations are little more than government setting an arbitrary standard, and using its monopoly of force to make corporations comply with ridiculous benchmarks. Take the EU and its constant battle with Microsoft, most of it having to do with how Microsoft bundles their products... and now look how we have to pay even MORE for MS office 2007 seperated from Windows Vista. People who spout your line of reasoning have obviously never actually studied or worked in business and finance economics. Of course, a majority of Americans probably think the CEO of Exxon sets the prices at the pump depending on how he is feeling that day.

 

[Gilby]

If you want to compete with Standard Oil, you need your own oil reserves. You have to have the money to go out and find them, tap them. and process them.

So, to summarize this, it's more efficient for Standard Oil to continue to deplete their oil reserves, or they are more efficient at finding them. No problem with that.

Then Standard Oil is so large that they could afford to price their product below your costs- even if it was at a loss to themselves- to protect their market position. You could not hope to compete.

Lower prices. That's bad for the consumer? Meanwhile, the new entrant can keep their oil reserves available for future use when the market price makes it efficient to use their oil reserves. Standard Oil will continue to have this competition waiting in the background, and they can't operate at a loss forever.

Free markets require the ability of new entities to enter the market. All fields have some sort of barriers to entry. Businesses like oil companies, health care (hospitals, pharmacies, etc), auto manufacturing have extremely high costs to get started. There are very few areas that can be considered open to free entry of competing companies. (honesyly- I can't think of any right now).

Free entry is a matter of liberty, not price. To understand the concept, you should think of free as in free speech, not as in free beer.

 

[ThePieSwindler]

If you want to compete with Standard Oil, you need your own oil reserves. You have to have the money to go out and find them, tap them. and process them. Then Standard Oil is so large that they could afford to price their product below your costs- even if it was at a loss to themselves- to protect their market position. You could not hope to compete.

This is a nice little theoretical arguement but is not representative of reality, especially today. Besides, this sort of behavior would get a corporation in ALOT of trouble with shareholders for intentionally taking losses with "promises" to make it up later. With an entire lost year of revenue, theres less capital to reinvest, and the business actually declines. One would need a sort of a priori monopoly to be able to price fix in the way you describe - it couldnt be used as a means of gaining monopoly if there is serious competition otherwise. Selling everything at a loss for the period of time it would take to theoretically get the market share you are talking about would do more harm than good for a business.

Standard Oil was NOT a monopoly, they did NOT price fix. Most of the lobbying against them was OTHER, lesser corporatons, often government subsidized, trying to get them "broken up". Its all well and good to argue (in a simplistic manner) what WOULD happen were Standard Oil a big evil monopolist corporation, but its simply a red herring from the facts. Standard Oil had a majority of Market share, much the way Microsoft does in its primary industry today, because consumers are pleased. Now in microsoft's case, even when consumers arent always pleased, they tend to still buy Microsoft because they are "familiar" with it, but there are certainly available alternatives.

Anyways, even without ridiculous amounts of anti-trust today, there is far too much competition, foreign and domestic, for any sort of so-called" natural monopolization" to occur. If anything, government regulations make it hard for would-be entrepreneurs to start up competing business.

 

[Paul10]

Ah, someone who has learned well the material from government schools. First, i dont think anyone here "remembers' the "Robber Baron" days; they happened around the turn of the century.

Uh, that's not what I mean. Neither did it imply that. It just means remember what you learned about the robber barons. That's it.

Second, Rockefeller and Carnegie hardly had monopolies

I'm guessing you've never taken a basic economics course. Even PRIVATE schools would tell you they were monopolies. Of course they did. They were allowed to drive prices up for less supply because they got more money that way.

These "Robber Barons" made these industries vastly superior to anything previously provided by government.

What do you mean "provided by the government"? Nothing was provided by the government those days.

and now look how we have to pay even MORE for MS office 2007 seperated from Windows Vista. People who spout your line of reasoning have obviously never actually studied or worked in business and finance economics. Of course, a majority of Americans probably think the CEO of Exxon sets the prices at the pump depending on how he is feeling that day.

Bud, you are dumber than a box of rocks. If Microsoft wanted to play fair, they'd open their secrets up (which they said they would) so others can compete with BETTER products. Microsoft Excel sucks balls.

Standard Oil was NOT a monopoly, they did NOT price fix. Most of the lobbying against them was OTHER, lesser corporatons, often government subsidized, trying to get them "broken up".

Of course Standard Oil would operate where it would get the most revenue. Since it has no competitors, they're willing to sell less of the product in turn for more money. In those days Congress was against Standard Oil but did nothing. Who cares if they had to lobby (waste a puny amount of resources) to stop the monopoly.

So, to summarize this, it's more efficient for Standard Oil to continue to deplete their oil reserves, or they are more efficient at finding them. No problem with that.

It's not efficient since the supply is less and there's no competition. You learn that in the first economics class you take.

Standard Oil had a majority of Market share, much the way Microsoft does in its primary industry today, because consumers are pleased.

Microsoft doesn't have the market share that Standard Oil had i.e. 100%.

 

[Zippyjuan]

Companies do sell things below their cost in the desire for market share. Look at cell phones. "Free Phone". The phone is not free to produce. Video game consoles like the XBox 360 or PS3 cost more than they sell for. They hope to make up the revenue one of two ways- either getting rid of competition and then rising their prices higher or selling something else at a higher price such as the service contracts for the phones or the games for the consoles. The same thing was happening with the HD DVD wars. Toshiba sold players below cost and threw in free movies to gain market share but after Sony paid some of the movie studios to only issue movies on their BluRay format instead of HD DVD, then HD DVD could no longer compete and will stop promoting HD DVD.

There used to be one phone company in the US- ATT. The government ordered it broken up and opened the market to more competition and today you have numerous choices.

 

[Gilby]

It's not efficient since the supply is less and there's no competition. You learn that in the first economics class you take.

Hello. The claim was that there was competition which resulted in Standard Oil undercutting at a loss. The higher supply in the marketplace caused the lower prices.

 

[Gilby]

Companies do sell things below their cost in the desire for market share.

Did you make a point about this? Or were you making my point that they can't keep doing it if it's not efficient to do so? Your cell phone is an example of a contract where you would have to pay for it in some phone, as are your other examples.

There used to be one phone company in the US- ATT. The government ordered it broken up and opened the market to more competition and today you have numerous choices.

Classic government created monopoly.

 

[Paul10]

Hello. The claim was that there was competition which resulted in Standard Oil undercutting at a loss. The higher supply in the marketplace caused the lower prices.

Hello, Rockefeller only sold for a low price till they became a monopoly. He drove everyone else out by buying them all and did horizontal and vertical integration.

 

[Zippyjuan]

It got seriously side tracked, but the point I was originally trying to make is that there are barriers to entry into almost every field of enterprise. A true free market can only exist where there are no barriers to entry into the field. Some barriers are physical (getting the rights to explore for and develop a new oil field for example) or the economic costs of creating the infrastructure to create your product and get it to market (say building a fully equiped hospital) or legal (again the oil example of requiring permits to seek oil on public or private properties or access to the airwaves for a cell phone company). An established business has advantages over a new comer.

If the price of avocados goes through the roof, can farmers convert their fields over to avocados? It can take several years to get the trees to maturity and achieve adequate levels of production- and what if the price falls again in the mean time? We will not see an increase in the level of production of avocados right away. It is far easier to reduce production than it is to increase it. Stop harvesting or planting new trees. Same for housing. There is a long delay between the price of houses increasing and getting an increase in the supply of houses built so the prices can drop or stablize long before the supply of housing can react.

 

[Gilby]

It got seriously side tracked, but the point I was originally trying to make is that there are barriers to entry into almost every field of enterprise. A true free market can only exist where there are no barriers to entry into the field. Some barriers are physical (getting the rights to explore for and develop a new oil field for example) or the economic costs of creating the infrastructure to create your product and get it to market (say building a fully equiped hospital) or legal (again the oil example of requiring permits to seek oil on public or private properties or access to the airwaves for a cell phone company). An established business has advantages over a new comer.

And why shouldn't they, they invested a lot in building their company and they have a proven track record. But, if someone else comes along and can do it better, the resources will come to get it going. Only if the market demands pull those resources to other more efficient uses, would it be hard to get off ground. And yes, you need to think long term.

 

[Zippyjuan]

I know of no country in the world with truely free markets. Barriers to entry reduce the chances of somebody with a better way of doing things of even getting a chance to try. If a smaller company does get a niche established, they are often eventually bought out by the larger company. Monoplies or oligoplies will not disappear if government gets out of the picture. Removing government may remove some barriars to entry, but there are others and that may also remove supports that actually help smaller alternative businesses get started such as loans from the Small Business Administration.

Just a question- should the US retain such laws as the Sherman Anti- Trust act to prevent companies from coluding to restrict competition in their fields- or is that seen as government medling in free markets? Or is it a free market if the companies can colude to restrict competition?