monopolies of production resources

[ghotiblue]

I completely understand and agree that under normal circumstances, a monopoly cannot be formed outside of government regulation (at least not one which exploits the consumer), but I have been wondering lately about how the free market would keep large companies from monopolizing resources needed for production in a particular industry. It seems that the more limited a resource is, the easier it would be for a company to take a larger percentage of the resource as it grows, until it becomes impossible for legitimate competition to rise up. Of course, in most cases there are likely substitutes for the resource or good being produced to counter this problem, but it seems that there would be cases where a substitute would not be viable. With no regulation, what forces would keep this situation under control?

 

[Harris4LarouchePAC]

I completely understand and agree that under normal circumstances, a monopoly cannot be formed outside of government regulation (at least not one which exploits the consumer), but I have been wondering lately about how the free market would keep large companies from monopolizing resources needed for production in a particular industry. It seems that the more limited a resource is, the easier it would be for a company to take a larger percentage of the resource as it grows, until it becomes impossible for legitimate competition to rise up. Of course, in most cases there are likely substitutes for the resource or good being produced to counter this problem, but it seems that there would be cases where a substitute would not be viable. With no regulation, what forces would keep this situation under control?

I think the free marketeers would bring the "competition" word into play here. But...the competition has won...and now they whine about it.

 

[dannno]

I think the free marketeers would bring the "competition" word into play here. But...the competition has won...and now they whine about it.

No, for the fifteen millionth time... They won through government mandating that corporations can steal people's land all over the world. Usually this is done by assassinating democratically elected leaders and replacing them with puppets. See the Bilderberg threads. NOT free market. Nice try. Once again it was government that causes the problem, and you try to employ more government as a solution instead of less government.

Do you get it???? Why don't you ever respond to this argument? You LaRouche people can't debate worth shit. You're worse than Bush at ignoring questions.

 

[theoakman]

I completely understand and agree that under normal circumstances, a monopoly cannot be formed outside of government regulation (at least not one which exploits the consumer), but I have been wondering lately about how the free market would keep large companies from monopolizing resources needed for production in a particular industry. It seems that the more limited a resource is, the easier it would be for a company to take a larger percentage of the resource as it grows, until it becomes impossible for legitimate competition to rise up. Of course, in most cases there are likely substitutes for the resource or good being produced to counter this problem, but it seems that there would be cases where a substitute would not be viable. With no regulation, what forces would keep this situation under control?

you'll find that the tendency for this to happen only becomes possible through government approval of mergers and financing through easy credit via the federal reserve. Realistically, the US government was the one rubber stamping JP Morgan and Bank of America buying out all these smaller banks. Congress rubber stamped the merger of Exxon Mobile. Congress rubber stamped the merger of Merck and Schering Plough. They rubber stamped the merger of Pfizer and Wyeth. These are mergers that don't need to happen at all. The merging of large corporations that are already ridiculously large and competitors in the same industry is completely unnecessary.

You'll find that the primary reason big business has grabbed such huge market shares is simply because they enjoy tax benefits that small businesses don't. It' s rigged game where the little guy is taxed out. Wal-Mart squeezes out small retailers through subsidies from government. If you really want to prevent a monopoly, you could easily shift the tax burden asymmetrically the other way in favor of small business. As soon as that happens, you would see the market (aka the little guy) kick the shit out of big business. But regardless, I'm pretty sure that big business wouldn't stand a chance on an even playing field of equal taxes. Hell, they already get all the tax breaks and they still seem to be bankrupting themselves.

 

[Harris4LarouchePAC]

No, for the fifteen millionth time... They won through government mandating that corporations can steal people's land all over the world. Usually this is done by assassinating democratically elected leaders and replacing them with puppets. See the Bilderberg threads. NOT free market. Nice try. Once again it was government that causes the problem, and you try to employ more government as a solution instead of less government.

Do you get it???? Why don't you ever respond to this argument? You LaRouche people can't debate worth shit. You're worse than Bush at ignoring questions.

So...you're saying that subversion induced by Empire is the problem. If the government has been taken over by means of assissination etc...then you aren't really functioning as a democracy anymore are you? So how can you blame a democratic gov't for mandating stealing, when really you are running on something more like corporatism. And if you knew anything you would understand that builderberg is a part of the Order of the Garter. If you think it stops at builderberg you're not thinking. How do these people get the mass amounts of money to manipulate the markets...the countries currencies, and not just USA's. Look at the collapse of the Asian market years ago. Look at the collapse of Argentina. Free Market at its best.

A free market is that of a whore's vagina awaiting a ravishing when it comes to these sorts of people. Who will, everytime in a free market scenario...buy out the little guy...and use the mass amounts of economy for their own agenda.

Where was the builderberg group launched from? Who founded it? Yea...think a lil will you?

 

[theoakman]

So...you're saying that subversion induced by Empire is the problem. If the government has been taken over by means of assissination etc...then you aren't really functioning as a democracy anymore are you? So how can you blame a democratic gov't for mandating stealing, when really you are running on something more like corporatism. And if you knew anything you would understand that builderberg is a part of the Order of the Garter. If you think it stops at builderberg you're not thinking. How do these people get the mass amounts of money to manipulate the markets...the countries currencies, and not just USA's. Look at the collapse of the Asian market years ago. Look at the collapse of Argentina. Free Market at its best.

A free market is that of a whore's vagina awaiting a ravishing when it comes to these sorts of people. Who will, everytime in a free market scenario...buy out the little guy...and use the mass amounts of economy for their own agenda.

Where was the builderberg group launched from? Who founded it? Yea...think a lil will you?

There is no free market when the government has a monopoly on the supply of money and credit. If you want to fight monopolies, fight the most oppressive one of all, the Federal Reserve, aka the 4th arm of the US government.

 

[ghotiblue]

you'll find that the tendency for this to happen only becomes possible through government approval of mergers and financing through easy credit via the federal reserve. Realistically, the US government was the one rubber stamping JP Morgan and Bank of America buying out all these smaller banks. Congress rubber stamped the merger of Exxon Mobile. Congress rubber stamped the merger of Merck and Schering Plough. They rubber stamped the merger of Pfizer and Wyeth. These are mergers that don't need to happen at all. The merging of large corporations that are already ridiculously large and competitors in the same industry is completely unnecessary.

You'll find that the primary reason big business has grabbed such huge market shares is simply because they enjoy tax benefits that small businesses don't. It' s rigged game where the little guy is taxed out. Wal-Mart squeezes out small retailers through subsidies from government. If you really want to prevent a monopoly, you could easily shift the tax burden asymmetrically the other way in favor of small business. As soon as that happens, you would see the market (aka the little guy) kick the shit out of big business. But regardless, I'm pretty sure that big business wouldn't stand a chance on an even playing field of equal taxes. Hell, they already get all the tax breaks and they still seem to be bankrupting themselves.

This is the way I see it...

Big businesses (such as Wal-Mart) are generally more efficient due simply to their large volume of business. As a business grows, they can offer better products at lower prices than their competitors by lowering costs of production in ways that smaller businesses cannot. Now this is a benefit to both the business and consumer, so it is perfectly healthy. If the business gets greedy and tries to use their large market share to force consumers to pay higher prices, then competitors will step in and force the bigger business to get back in line with market prices or lose their market share.

Now this is all fine, except if the big business grows to a point where they control enough of the production resources to keep competition out of the industry. At that point, they can raise their prices and not be threatened by competition entering the industry. So this is my only concern with a free market. What would keep this situation from occurring?

 

[theoakman]

This is the way I see it...

Big businesses (such as Wal-Mart) are generally more efficient due simply to their large volume of business. As a business grows, they can offer better products at lower prices than their competitors by lowering costs of production in ways that smaller businesses cannot. Now this is a benefit to both the business and consumer, so it is perfectly healthy. If the business gets greedy and tries to use their large market share to force consumers to pay higher prices, then competitors will step in and force the bigger business to get back in line with market prices or lose their market share.

Now this is all fine, except if the big business grows to a point where they control enough of the production resources to keep competition out of the industry. At that point, they can raise their prices and not be threatened by competition entering the industry. So this is my only concern with a free market. What would keep this situation from occurring?

Not really the case. Wal-Mart gets multimillion dollar subsidies from governments to open stores. A lot of times, they would get incredible tax breaks to the point where they pay almost no tax. This is the primary mechanism they relied on to offer products at a lower more competitive price. A lot of times, towns would have an expiration date on the tax breaks. Wal-Mart's response at the time the tax breaks ended is typically to shut down the store and leave town for another nearby town which would offer them the same deal. It just goes to show you that Wal-Mart was willing to close up shop simply in response to having to pay the same tax as the other stores in town. You remove the tax breaks and subsidies they receive, and the game is up.

 

[ghotiblue]

Not really the case. Wal-Mart gets multimillion dollar subsidies from governments to open stores. A lot of times, they would get incredible tax breaks to the point where they pay almost no tax. This is the primary mechanism they relied on to offer products at a lower more competitive price. A lot of times, towns would have an expiration date on the tax breaks. Wal-Mart's response at the time the tax breaks ended is typically to shut down the store and leave town for another nearby town which would offer them the same deal. It just goes to show you that Wal-Mart was willing to close up shop simply in response to having to pay the same tax as the other stores in town. You remove the tax breaks and subsidies they receive, and the game is up.

But buying in large quantites is definitely cheaper (per unit) than buying in small quantities, so even without the government tax breaks, Wal-Mart would have an advantage. Additionally they have extremely efficient distribution techniques that would be difficult or impossible to recreate on a smaller scale.

I have been under the impression that it was commonly accepted that larger businesses have the ability to produce goods more efficiently, and therefore at a lower cost, but maybe that is not always the case. Regardless, if a business were to somehow monopolize an industry by taking control of a significant percentage of the resources of production, how is this combated in the free market?

 

[dannno]

But buying in large quantites is definitely cheaper (per unit) than buying in small quantities, so even without the government tax breaks, Wal-Mart would have an advantage. Additionally they have extremely efficient distribution techniques that would be difficult or impossible to recreate on a smaller scale.

I have been under the impression that it was commonly accepted that larger businesses have the ability to produce goods more efficiently, and therefore at a lower cost, but maybe that is not always the case. Regardless, if a business were to somehow monopolize an industry by taking control of a significant percentage of the resources of production, how is this combated in the free market?

Bologna. Walmart is shipping total CRAP all over the world using valuable resources like oil, they are NOT most efficient at delivering all these products to people, most of these products would be much more efficiently delivered at the local level. Their prices are low because they take advantage of cheap labor which is caused by the mandate of oil being traded in dollars, which essentially has made the dollar the reserve currency of the world driving up it's demand. This makes other competing currencies virtually worthless, so we can take advantage of their cheap labor. It is completely artificial creation of counterfeiting, it is NOT free market and Walmart is a piece of shit. And they do receive government subsidies at nearly every level, including their employees who they encourage to signup for welfare and medicare. My taxes are paying Walmart employees and I HATE Walmart!! Don't you see how F'd up that is??

 

[ghotiblue]

Bologna. Walmart is shipping total CRAP all over the world using valuable resources like oil, they are NOT most efficient at delivering all these products to people, most of these products would be much more efficiently delivered at the local level. Their prices are low because they take advantage of cheap labor which is caused by the mandate of oil being traded in dollars, which essentially has made the dollar the reserve currency of the world driving up it's demand. This makes other competing currencies virtually worthless, so we can take advantage of their cheap labor. It is completely artificial creation of counterfeiting, it is NOT free market and Walmart is a piece of shit. And they do receive government subsidies at nearly every level, including their employees who they encourage to signup for welfare and medicare. My taxes are paying Walmart employees and I HATE Walmart!! Don't you see how F'd up that is??

So I guess you disagree with this article on the Mises site, then? The article even states, "In a free market, large suppliers of nearly everything will drive most small suppliers out of business." I just happened to run across this while looking into Wal-Mart a little more.

 

[dannno]

So...you're saying that subversion induced by Empire is the problem. If the government has been taken over by means of assissination etc...then you aren't really functioning as a democracy anymore are you?

No, but sometimes they function under the illusion of Democracy, kind of like us.

So how can you blame a democratic gov't for mandating stealing, when really you are running on something more like corporatism.

Yes, but what you have to realize is that it is our banking system that lead to corporatism. That is why Ron Paul is fighting for an honest monetary policy. Without the banking system we have where banks can legally counterfeit, these problems we are discussing cannot exist!


“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.” — Thomas Jefferson

And if you knew anything you would understand that builderberg is a part of the Order of the Garter. If you think it stops at builderberg you're not thinking. How do these people get the mass amounts of money to manipulate the markets...the countries currencies, and not just USA's. Look at the collapse of the Asian market years ago. Look at the collapse of Argentina. Free Market at its best.

Stop calling things that aren't free market free market!! You have a terrible definition of free market. Free market cannot occur unless you have an honest monetary system. Do you know what that is??

A free market is that of a whore's vagina awaiting a ravishing when it comes to these sorts of people. Who will, everytime in a free market scenario...buy out the little guy...and use the mass amounts of economy for their own agenda.

Where was the builderberg group launched from? Who founded it? Yea...think a lil will you?

Again, not free market. You think that everything that occurs is free market, you obviously don't have the first clue what that actually means!!

 

[dannno]

So I guess you disagree with this article on the Mises site, then? The article even states, "In a free market, large suppliers of nearly everything will drive most small suppliers out of business." I just happened to run across this while looking into Wal-Mart a little more.

Yes, I disagree with it to the extent that shipping those items long distances adds to the price of the goods, so at some point it is more efficient to produce locally. That is because it costs more for a product as you ship it further from it's source. Please re-read my post while considering this new information, you completely missed the point. The point has to do with WalMart not operating under a free market.. it is in fact a highly manipulated market, and to call it a free market is completely ignorant.

 

[dannno]

We have a private banking cartel legally allowed to counterfeit money, and you LaRouche people don't seem to have a problem with this?? I don't fucking understand... I totally would have been on board with LaRouche many years ago, but I would have turned my back on him the instant I found out about how our banking system functions!! It is criminal, it's not free market, it goes against our Constitution, it causes nearly ALL of life's problems.. it's the biggest scam ever run, and it's right in your face and you don't see it!! wtF?

 

[ghotiblue]

Yes, I disagree with it to the extent that shipping those items long distances adds to the price of the goods, so at some point it is more efficient to produce locally. That is because it costs more for a product as you ship it further from it's source. Please re-read my post while considering this new information, you completely missed the point. The point has to do with WalMart not operating under a free market.. it is in fact a highly manipulated market, and to call it a free market is completely ignorant.

I never claimed that Wal-Mart operates under a free market. The original question is not about Wal-Mart at all, but rather a hypothetical question about how the market would respond to a business with a market share large enough to keep would-be competitors from entering the market, due to limited resources. I don't think this situation is entirely impossible, and am still waiting to hear why a free market either would not allow this to happen, or how it would resolve the problem if it were to occur. I am 100% behind free markets and Austrian Economics, I just want to know what solutions have been proposed for this. Are there any books that specifically deal with monopolies in the free market?

 

[theoakman]

So I guess you disagree with this article on the Mises site, then? The article even states, "In a free market, large suppliers of nearly everything will drive most small suppliers out of business." I just happened to run across this while looking into Wal-Mart a little more.

Yes, I completely disagree with it. It gave no mention of preferential treatment Wal-Mart gets with respect to taxes. If McDonald's has to pay no taxes while Burger King next door has to pay taxes, McDonald's is going to win, regardless of the quality and business model. It's just that simple. Wal-Mart does not compete in a free market environment. They are the beneficiaries of government giveaways. It's like playing in the NBA finals with Tim Donaghy as the ref. The game is rigged and you stand no chance of winning because the ref isn't on your side.

 

[theoakman]

I never claimed that Wal-Mart operates under a free market. The original question is not about Wal-Mart at all, but rather a hypothetical question about how the market would respond to a business with a market share large enough to keep would-be competitors from entering the market, due to limited resources. I don't think this situation is entirely impossible, and am still waiting to hear why a free market either would not allow this to happen, or how it would resolve the problem if it were to occur. I am 100% behind free markets and Austrian Economics, I just want to know what solutions have been proposed for this. Are there any books that specifically deal with monopolies in the free market?

Wal Mart is the most depressing store to visit in all of America. The day someone can get their goods from a local store with a friendly manager at the same price is the day Wal-Mart goes out of business.

 

[dannno]

I never claimed that Wal-Mart operates under a free market. The original question is not about Wal-Mart at all, but rather a hypothetical question about how the market would respond to a business with a market share large enough to keep would-be competitors from entering the market, due to limited resources. I don't think this situation is entirely impossible, and am still waiting to hear why a free market either would not allow this to happen, or how it would resolve the problem if it were to occur. I am 100% behind free markets and Austrian Economics, I just want to know what solutions have been proposed for this. Are there any books that specifically deal with monopolies in the free market?

Give me an example of a resource that is in limited supply that does not have an alternative.

For example, an alternative for petroleum as an energy source would be a list of "alternative energies", so petroleum does in fact have alternatives. It has also taken trillions of dollars, millions of lives and a global military industrial complex to even attempt to create a monopoly on this resource, and considering it has failed to do so it is a pretty bad example.

 

[ghotiblue]

Give me an example of a resource that is in limited supply that does not have an alternative.

For example, an alternative for petroleum as an energy source would be a list of "alternative energies", so petroleum does in fact have alternatives. It has also taken trillions of dollars, millions of lives and a global military industrial complex to even attempt to create a monopoly on this resource, and considering it has failed to do so it is a pretty bad example.

I honestly don't know if I can. I would have to think about it. The closest I can come off the top of my head would be an industry like the auto industry, where the entry costs are very prohibitive and an already established business would have a large advantage over any prospective competitors. This would enable them to raise prices over market prices to a certain extent, but there would be a limit. This is not exactly the same situation, but like I said, I would have to think more about it to come up with a practical example.

But the fact that I can't come up with an example is not in and of itself proof that it can't happen. Do Austrians claim that it is impossible for a resource to be limited to the point that it prohibits competition from entering the market?

 

[theoakman]

I honestly don't know if I can. I would have to think about it. The closest I can come off the top of my head would be an industry like the auto industry, where the entry costs are very prohibitive and an already established business would have a large advantage over any prospective competitors. This would enable them to raise prices over market prices to a certain extent, but there would be a limit. This is not exactly the same situation, but like I said, I would have to think more about it to come up with a practical example.

But the fact that I can't come up with an example is not in and of itself proof that it can't happen. Do Austrians claim that it is impossible for a resource to be limited to the point that it prohibits competition from entering the market?

Auto-industry was a bad example. One could have easily entered the market for new production of any type of vehicle they wanted had the government allowed the big 3 to go bankrupt. At that point, anyone looking to get factories and labor to start production on their product in the near future would have had an incredible opportunity. Instead, the government went and fucked with the program.