Corporatism - The New Aristocracy

[Gilby]

If Intel has an agreement with Dell Computers that they will provide processors for them to make computers with only under the condition that they do not buy any processors from anybody else then Dell basically has a choice to either use only Intel or only somebody else. Since Dell is the number one producer of manufactured computers, it is nearly impossible for another company to achieve any significant market share of the processing market.

You're kidding, right? If there was such an Intel/Dell deal that resulted in price gouging, don't you think one of the hundreds of other computer manufacturers would be able to compete price-wise for the sales? I have two computers running in this room, and one is an AMD and one is Intel. The choice was based on several factors, but the main one was price per quality. At the time the AMD was bought, the price for it was cheaper for the needed requirements than Intel was. Now it has flipped for the time being (for servers). Though I've leased some Dells, none of the computers/servers I've purchased have ever been Dells, so I wonder how you can claim that Dell has such a monopoly. Unfourtunately, Intel won based on supply for me in the past, instead of performance per price. The AMD was the better choice, but the supply was scarce for me to choose to get that at the time (backordered). Even though most of my purchases have been Intel, I love AMD, as the competition keeps Intel innovating, and together they provide more and more innovations at lower costs to myself. As someone who has a big expense in servers, it means more efficiency for my business. So even though Intel has a large percentage of the market share, every little bit of competition makes it better for all of us.

That means less competition and Intel can charge higher prices for their processors and consumers pay more. If Intel makes the same deal with everybody they sell to, then nobody else can make money producing CPUs. They are using their market clout to prevent new competition.

B.S.

 

[Gilby]

Where do I go to get gasoline that is not provided by the Chevron/Exxon/Mobile/BP oligopoly? Or health care not provided by an HMO or Blue Shield?

Those my be the limited choices, but why, right now, in our corporatism society, is that the only options? Government! Again, monopolies are government creations. Regulations prevent new entrants in the market and help the big corporations that are already established.

If you are an employee, the corporation claims more authority over you than the US government. Of course you can quit, but people with huge mortgages, bills and families find that hard to do.

If you are an employee, you've accepted the contract. The individual is still free to choose.

You can leave a country, and yes, alternative governments do arise...

Yeah, but if I did that, this government still claims to own the fruits of my labor for 10 years.

 

[Brian4Liberty]

Those my be the limited choices, but why, right now, in our corporatism society, is that the only options? Government! Again, monopolies are government creations. Regulations prevent new entrants in the market and help the big corporations that are already established.

Government is to blame for all of the mergers in big oil? I'm not buying that.

Granted, restrictive regulation, especially in gasoline refining, does aid the gasoline oligopoly. But this again is an example of the Companies working in partnership with the government. It is the lobbying of the Corporations that results in the legislation, the government doesn't come up with it out of thin air.

If you are an employee, you've accepted the contract. The individual is still free to choose.

There's that theoretical idealism again. Sorry, it's nice on paper, but real people in the real world have employers, and when the labor market is flooded via legal and illegal immigration, workers don't have many choices. You can be manipulated and forced into any contract. Indentured servitude, debt bondage, and "wage slavery" are all contracts that people "accepted".

As for the solution to the abuse of workers, that's simple. Increase the supply of workers, all workers are devalued. Stop the flood of new workers, and workers will have more freedom of choice. It's supply and demand, no matter how much everyone wants to ignore it.

 

[JosephTheLibertarian]

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.

Bam. The incentive to switch to an alternative energy source

 

[Zippyjuan]

Again, monopolies are government creations.

Are you suggesting that if the government did not try to regulate momoplies via things like the anti-trust act that they would disappear and new ones not form? I would disagree. I would also add that a company does not have to be an absolute monopoly to be able to control a market and reap higher profits than it would in a more competitive situation.

 

[ThePieSwindler]

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.



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.




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



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.



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.


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

I think the poster mises has responded fairly enough about Standard Oil itself. Although ill say a little more. Standard oil did indeed provide lower prices, but they never provided them at a loss; rather, they provided them because Rockefeller made his oil refining business incredibly efficient and was meticulous about cutting costs and increasing production. Rockefeller never reached "monopolistic prices", and Standard oil's market share had already declined somewhat by the time of public outcry, so it seems this method of "cutting prices to a loss" was never employed. Rockefeller's success led his competitors, who simply were never able to reach the level of Rockefeller because they did not take advantage of economies of scale, and did not conduct a rigorously efficient business the way Rockefeller did. Interestingly enough, Rockefeller also paid his employees higher wages than the competition - this being due to the fact that because he had taken advantage of economies of scale, he had marginal costs far below the market price, and could actually pay high wages and still turn a good profit. Rockefeller was simply superior than his competitors at the, and vastly so. If one actually looks at his record in running Standard Oil, youll find that he did it on merit, and not with dreams of monopolization or exploitation. Antitrust was a product of public opinion and of the claims of various competititors.

Please cite some sources to your claims, especially if you're going to be inflammatory about it, otherwise you're really just trying to defend an ideological position and not reality. Also, thank you for making some basic (false) assumptions about my education. Yes, ive taken economics classes, and i know a decent amount about the discipline. As far as my quip about government schools, it was more a joke/Niel Boortz allusion, although even with the statement "remember what you learned about robber-barons" supports my point about how people are educated on the Gilded Age - i go to a public university and attended public high school, although i certainly don't like the way education is currently administered at the secondary school level. But thats neither here nor there. By "provided by the government", i mean the franchise monopolies that government set up in the late 19th century, such as the shipping monopolies that Funny that you call me dumber than a box of rocks, yet you don't even respond to my comment with a relevant retort, and then proceed to spout off incorrect and unsubstantiated falsities. And "Excel sucks balls" is certainly not a substantiated arguement for anti-trust. I actually happen to think Excel is a decent product, and ive used plenty of free parallels that aren't as useful at all.


Please, next time before you spout off inflammatory remarks, try to have your facts straight.

 

[ThePieSwindler]

Are you suggesting that if the government did not try to regulate momoplies via things like the anti-trust act that they would disappear and new ones not form? I would disagree. I would also add that a company does not have to be an absolute monopoly to be able to control a market and reap higher profits than it would in a more competitive situation.

Again, these proclaimation that antitrust has prevented monopolies are based on false assumptions. The peak market share of Standard Oil, the paragon of the monopolization arguement, was 88%, and it was in decline at the time of the Sherman antitrust legislation.

 

[ThePieSwindler]

Now that's ironic.

I love how Rothbardian purists talk about this mythical anarcho-capitalist theoretical paradise that has never existed, ever. Not even close. Reminds me of communist purists.

Accountable to shareholders? First, shareholders have no say other than to sell their shares. All other talk about shareholder rights and activism is just more fantasy. Corporations are totalitarian dictatorships. But somehow just because it isn't called "government", it's all good in the eyes of some. It doesn't matter if you label it a powerful "government", "corporation" or "religion", it's all the same. Power corrupts.

With mutual funds, index funds and retirement trusts, most people don't even know what stocks they own. Sure, corporations may be held accountable to these super-shareholders, but those super-shareholders are nothing more than other huge corporate entities, who have been proven not to have the best interests of the small investors.

America has certainly represented one of the best examples of open and competive markets, but to put on blinders and ignore corruption, abuse of power, oligopolies, collusion and totalitarianism because it isn't labeled "government" is overly idealistic, and will lead to more concentration of power and abuse.

What? I'm hardly an idealogue or an anarcho capitalist - government provides law and order, which is a valuable service, and is one of the primary reasons why our financial system is so sound and why our economy is generally stable and prosperous when compared with 99.9% of economies, present and historical. I'm not talking about some ideal, im actually criticizing the ideal put forth by the poster im responding to - i'm actually talking in realistic terms when i say that setting prices below marginal cost (i.e. at a loss) would not happen in business, and one of the reasons i cited was that it would piss off peolpe who hold equity in the company. If a company operates at at a real loss for each unit of production, it will be leaked, and there will be a massive windfall, probably in the form of share-dumping, and it would only be exacerbated when it comes time to report earnings. I know i would no longer invest in a company that was operating at a severe loss for an extended period of time, and most if not all mutual fund managers will eliminate a high-loss corporation from the fund's portfolio, since it is their job to return a high yield for their investors. The total equity of the company would fall so much that any gained market share would probably be lost quickly, and the value of the company would actually go down, and there would be no money to reinvest in growth, and the company would have to return to raising prices above marginal costs... in this timeframe, one has to assume that every other single competitor goes bankrupt for the idea of the natural monopoly based on price-fixing to work. There is such thing as monopolistic price-setting, but it is not precluded by below-cost price fixing. THAT is the real fantasy.


Could a natural monopoly, by the economic definition, ever occur? I wouldnt go as far as many libertarians say it could NEVER, EVER, by the laws of economics, happen. It certainly good with the right conditions, perhaps. What i am challenging is both microeconomic fallacies, and historicial inaccuracy by designating certain companies, such as Standard Oil, as monopolies, or even monopolistic in practice. There has not been a natural monopoly (by the real definition, not the political bitch-fest one) in the (short) history of market capitalism, but that doesnt mean its a matter of induction, whereby it will "never happen" because it hasn't before; simply, it hasn't, and just making up some scenario of how a firm could gain a monopoly is an exercise in futility, especially when riddled with flaws in the economic reasoning.

I will say that natural resources pose a unique problem, but generally the choice is between large multinational corporations, or even larger state-owned/controlled entities - lots of small petroleum companies would probably just jack prices up futher, since the refining process is already at almost maximum-efficiency by each of the big oil companies, due mainly to their large size and economies of scale (and scope), thus size and consolidation are beneficial to consumers in the industry.

 

[Fayt]

Ok, why the hell does this topic have so many posts? Does anyone actually sit with an idea before posting, or just react and post immediately? Dear god...

 

[ThePieSwindler]

Ok, why the hell does this topic have so many posts? Does anyone actually sit with an idea before posting, or just react and post immediately? Dear god...

Wait... so.. do you want peoples thoughts or not? Too many posts is a bad thing?

Its a debate, man.

 

[Tdcci]

Ok, why the hell does this topic have so many posts?

The thread starter is challenging Ron Paul's economic platform and dramatizing it with scary words like "Corporatism" and "Aristocracy".

 

[Fayt]

Wait... so.. do you want peoples thoughts or not? Too many posts is a bad thing?

Its a debate, man.

I'd much rather people thought about it for a little and responded instead of a reactionary type post. I posted and 5 minutes later it took off, lol. But it's all good I suppose...

The thread starter is challenging Ron Paul's economic platform and dramatizing it with scary words like "Corporatism" and "Aristocracy".

I am the thread starter... lol

 

[foofighter20x]

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.

You need to read about Herbert Henry Dow and how he busted a free-market cartel (you'd call it a monopoly... monopolies are only created by the government).

 

[foofighter20x]

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

I'm sorry, but this is just a ridiculous statement.

How the hell do you think the transcontinental railroad was builit? It certainly wasn't done by private industry.

For someone citing their history texts, you seem to be rather myopic about the objective lessons--i.e. you're missing the forest for the trees. Read up on Credit Mobilier and the scandal that ensued from it, because all of that happened before the emergence of the "robber barrons" and shoots you "governtment provided nothing" carnard in the forehead.

 

[INeedATherapist]

You need to read about Herbert Henry Dow and how he busted a free-market cartel (you'd call it a monopoly... monopolies are only created by the government).

Ahahahaha... That was one of the funniest stories I've ever read! [Wikipedia: Herbert Henry Dow: Breaking a monopoly]

 

[Zippyjuan]

You need to read about Herbert Henry Dow and how he busted a free-market cartel (you'd call it a monopoly... monopolies are only created by the government).

Thanks for the tip. An interesting case- and a brilliant sollution!

That would be difficult to apply in the oil market today though. Known oil reserves are prett well divided up already. One could not buy oil from say Mexico and sell it for less than the Saudis do. (well, maybe Hugo Chavez would sell you some). The oil companies also control the distribution and outlets (gas stations). You would have to come up with an alternative product that you could supply at a lower price than oil. Utilities are often considered to be natural monopolies due to the high cost of entry by other would- be energy sellers. Their monopolistic power does not come from government regulation but from economic barriers to entry along with the physical barrriers of a limited supply of oil in the world to be dug up. The members of OPEC collude on what levels of oil to produce and in turn what price that oil will fetch. There are non- OPEC oil producers, but they follow OPEC pricing and do not have enough production to effect world supplies by much.

 

[nickcoons]

The oil companies also control the distribution and outlets (gas stations). You would have to come up with an alternative product that you could supply at a lower price than oil.

So far, all of the arguments outlining the difficulty of competing with oil have assumed that you can only compete against oil with cheaper oil. I'm glad it's been pointed out that competing with oil can be done by a product that is nothing like oil, it simply needs to accomplish the same task that oil does. Solar, hydrogen, wind, etc., can all compete with oil and are not bound by the limitations of an oil supply nor by exclusive ownership of oil fields.

Utilities are often considered to be natural monopolies due to the high cost of entry by other would- be energy sellers. Their monopolistic power does not come from government regulation but from economic barriers to entry along with the physical barrriers of a limited supply of oil in the world to be dug up.

Actually, many utilities are monopolistic because of government regulation. Large phone companies, before they were broken apart, existed only because the government gave them (and no one else) permission to exist. It wasn't that it was too expensive for others to run cable around the country, it's that the government wouldn't let them. They secured this privilege for a small handful of companies to the exclusion of others.

Energy utility companies often enjoy this same exclusive grant by government for the delivery of their services as well.

 

[Paul10]

By "provided by the government", i mean the franchise monopolies that government set up in the late 19th century, such as the shipping monopolies that Funny that you call me dumber than a box of rocks, yet you don't even respond to my comment with a relevant retort, and then proceed to spout off incorrect and unsubstantiated falsities.

I was exaggerating when I said Rockefeller had 100% but sources say he had 90% at his peak. He could have easily done monopoly tactics at that time. Rockefeller only started to go down because of natural gas (don't see how he couldn't have followed with his fortune) but that's not the point. If they were allowed to go 100 years more like this, they'd easily control the market. The Gilded Age was just the start and I agree at the time, Rockefeller and the other robber barons were providing it cheap. It's kind of like Wally World. He may not have done predatory pricing at his peak. Books only say he had a monopoly so it's not being specific.

How the hell do you think the transcontinental railroad was builit? It certainly wasn't done by private industry.

Of course the government can favor companies but they can also separate them. So, how can the railroads be done in a efficient way if private companies don't need to get chartered? Not like any other company can compete otherwise you'd need more tracks going the same route. Btw, who's the one that stepped in to stop the outrageous railroad shipping rates because it was cloaked with public interest?

Energy utility companies often enjoy this same exclusive grant by government for the delivery of their services as well.

That's because it's more efficient to have 1 provider. The infrastructure needed is immense and the cost of adding 1 more customer is like none. It's a natural monopoly. The government regulates them.

The government has done some stupid things. No argument there. For example, making hemp illegal. This helped DuPont get away from competition. Hemp has a lot of uses.

 

[nickcoons]

That's because it's more efficient to have 1 provider. The infrastructure needed is immense and the cost of adding 1 more customer is like none. It's a natural monopoly. The government regulates them.

First you're arguing that monopolies are bad and should be broken up, and then you argue that they are necessary and more efficient. Which is it?

It is no more efficient to have one provider of electricity than it is to have one provider of internet.. this is why, without regulation, I have 20 choices of internet providers and they have to compete for my business with good service and low prices.

 

[JosephTheLibertarian]

Web hosting is unregulated and there is no monopoly. I own a web hosting business.