Tired of RP Supporters' Economic BS

[aravoth]

There is no quantifiable proof that leaving a market to fend for itself will not ultimately result in the same exact outcome.

what

 

[Kade]

what

Since a free market has never existed in theory, there is no proof that a free market would not end with powerful pure oligopolies.

This country is arguably run by corporations...which, in theory, is just an exercise of power. The government and corporations have free reign, and the only open markets for businesses in this country is food and entertainment.

 

[micahnelson]

There is no quantifiable proof that leaving a market to fend for itself will not ultimately result in the same exact outcome.

Lets assume the exact same thing did happen, the attempt at regulating pulled time and money out of the engine of society to comply with regulations. Certainly an industry could put resources to better use for society as a whole.


Discussing a free market is very difficult when we are dealing with government spending. Since the money is virtually limitless, and most people support government programs, there is no demand to cut costs. It is the same problem as having a nation of uneducated consumers. The true market price of things can't be measured when the lion's share of the spending power is in the hands of a small group of men with almost unlimited funds.

$339 Million for one F22?

$6 Billion for levy repair in New Orleans? Thats the entire yearly budget of the state of RI. Where is that money going, do they care?

Can't have a free market when one entity has unlimited funds, pretty soon all the goods and services will be marketed to them.

 

[Kade]

Anyway, since people have stopped responding, I'll lay my position out... (for the first time).

I believe that there is no scientific evidence to back up the claims of the Austrian schools. Most of the arguments are made with verbal logic, and not

I demonstrated an argument/debate that got way out of hand simply because I tried to define a monopoly (and free market) outside of the acceptable range required for Austrian theory to survive. This debate spiraled out of control because I dared to touch a few of the strings holding it up, namely, verbal nonsense.

This is why a linguist can smoke any Austrian in a matter of two sentences... as evidenced by Chomsky's beat-down sessions.

For a respectful libertarian who might be looking to know more about Austrian Economic theory and it's flaws, I point you towards a piece by a professor of economics at George Mason:

http://www.gmu.edu/departments/economics/bcaplan/whyaust.htm

 

[yongrel]

Since a free market has never existed in theory, there is no proof that a free market would not end with powerful pure oligopolies.

This country is arguably run by corporations...which, in theory, is just an exercise of power. The government and corporations have free reign, and the only open markets for businesses in this country is food and entertainment.

To most Austrians, economics is not an empirical science which lives on proofs and evidence, but is rather a purely logical science. Ludwig von Mises, who pioneered this concept, termed it praxeology.

One can reasonably and logically arrive at all Austrian economic concepts from the indisputable notion that humans act using limited means to achieve desires and goals.

As von Mises said:

As thinking and acting men, we grasp the concept of action. In grasping this concept we simultaneously grasp the closely correlated concepts of value, wealth, exchange, price, and cost. They are all necessarily implied in the concept of action, and together with them the concepts of valuing, scale of value and importance, scarcity and abundance, advantage and disadvantage, success, profit, and loss. The logical unfolding of all these concepts and categories in systematic derivation from the fundamental category of action and the demonstration of the necessary relations among them constitutes the first task of our science. The part that deals with the elementary theory of value and price serves as the starting point in its exposition. There can be no doubt whatever concerning the aprioristic character of these disciplines.

To put simply, one doesn't need proof in economics, only logic. When debating someone whose avatar is von Mises, you might have some difficulty if you insist exclusively on proof.

 

[krazy kaju]

Alright, in this case I agree with you.

If there were no real entry costs to entering into a market, when one entity does perform better, thus, gaining more profit from the market, what prevents them from purchasing the other enterprises?

Just curious.

First off, did you notice that I responded on the last page to your sources about salt monopolies? Just wondering.

Anyways, there are really two answers to this. The first one is that even if a company purchased all the other companies in the world, stifling competition, it would still live under the fear of competition. If they ever raise prices unfairly or become inefficient, other people will see potential profits.

For example, small businesses might begin to spring up to compete with the larger, inefficient (or cheating) business. The common counter-claim by anti-trust advocates is that the larger business could run a deficit for a while to run off all the small businesses.

Even in the above case, rich entrepreneurs might see a chance to profit more and either invest in the smaller businesses or use their own capital to form their own competing business. Whenever there is a chance to profit off of something, competitors will rise out of the woodwork.

The second answer refers to economies of scale. If we assumed the entire world practiced free trade and free markets, no company would ever be able to gain even close to 100% market share. Really, 10% market share would be an amazing feat.

The reason for this would be that at a certain point, as the company expands, it becomes too bureaucratic and too inefficient to be able to effectively compete. At that point, it becomes profitable for other well established companies to compete with it at its "home turf."

Let's say, for example that Company A gains a monopoly over the entire San Francisco Bay Area. As it tries to expand its operations to the entirety of California, it simply becomes too large and too bureaucratic. At that point, companies in Nevada, Oregon, Arizona, etc. see a profit in expanding their operations there. Also, as stated before, smaller businesses might begin to spring up as waste raises prices, which allows smaller businesses to compete better against Company A. So Company B, Company C, and Company D from three surrounding states might begin to compete with Company A while a couple smaller businesses spring up in the Bay Area and elsewhere in California that also compete with Company A.

What you have is true capitalism: a system that is dynamic and that always heads in the direction of equilibrium. Companies that become too large are either forced to shrink or to go bankrupt. Companies that charge unfair prices are out competed by neighboring companies or by smaller, rising businesses.

 

[TastyWheat]

Thanks for the info, but if what you say is true then a lot more people than us confuse the gold standard with the gold exchange standard.

I disagree with your 2nd item though. I'll admit the system confuses me as it is, but how does physical gold differ from physical cash? Banks can't create physical money and they don't mail out cash everytime there is a transfer so there's is probably more credit money than fiat money in circulation anyway.

 

[Kade]

Can't have a free market when one entity has unlimited funds, pretty soon all the goods and services will be marketed to them.

This country was a tabula rasa, and the lack of proper regulation has given us corporate overlords, most of which are so tentacled in conservative folds, that "free enterprise" has become one giant slopping piece of propaganda.


Austrians do not understand the modern economy. In this day and age, every piece of available evidence shows us that in countries with higher taxation and higher welfare spending, poverty rates are lower, median income is higher, there is strong international competitiveness, trade balances are stronger, and there are larger budget surpluses.

I am not a communist. I am not that much of a socialist. I don't think that the evidence is anything more than just fact... it does not sway my feelings and support for the free market. What it does is illustrate that this debate has been waged between competing masters, with very little in the way of decent recourse... the most open democracies are the most healthy right now, by any standard, and that is where I look first.

 

[Kade]

First off, did you notice that I responded on the last page to your sources about salt monopolies? Just wondering.

I did notice you responding, and I appreciate it. The taxation for the Salt Monopolies was ultimately an attempt to stop the original monopolies created by the feudal powers... which I don't really count as "government"... sometimes governments are created as a result of a monopoly.

The rest of your post I have to read further before I reply.

 

[Kade]

I will be back... in the meantime, Caplan's link:

Why Am I Not An Austrian Economist

 

[krazy kaju]

Anyway, since people have stopped responding, I'll lay my position out... (for the first time).

I believe that there is no scientific evidence to back up the claims of the Austrian schools. Most of the arguments are made with verbal logic, and not

I demonstrated an argument/debate that got way out of hand simply because I tried to define a monopoly (and free market) outside of the acceptable range required for Austrian theory to survive. This debate spiraled out of control because I dared to touch a few of the strings holding it up, namely, verbal nonsense.

This is why a linguist can smoke any Austrian in a matter of two sentences... as evidenced by Chomsky's beat-down sessions.

For a respectful libertarian who might be looking to know more about Austrian Economic theory and it's flaws, I point you towards a piece by a professor of economics at George Mason:

http://www.gmu.edu/departments/economics/bcaplan/whyaust.htm

Actually, you were running around playing games claiming that we were making definitions which made free markets and monopolies not compatible at all.

That is not true. If you have the reading comprehension skills of a first grader, you would've seen that I responded several times to the myth that a business can grow into a force that is able to dominate a market.

As for your statements that the Austrian school is disproven by empiricism, those claims are false. We have seen time and time again government actions fail just as Austrians have predicted they will. Countries with more welfare and higher minimum wages have more unemployment, regulations and taxes reduce competition, credit expansion via central banks have caused incalculable damage (which no other school predicted), socialism cannot exist prosperously, etc.

All of the ideas and predictions of Carl Menger, Eugen Bohm-Bawerk, Ludwig von Mises, FA Hayek, Murray Rothbard, and others have been proven right time and time again. Is there some room for improvement? I don't know. Personally, I think that maybe both the neoclassical and the Austrian schools could gain if only there wasn't such a great intellectual divide between them.

You have to understand the Caplan isn't really criticizing anything relevant to our debate about monopolies.

 

[Kade]

Actually, you were running around playing games claiming that we were making definitions which made free markets and monopolies not compatible at all.

That is not true. If you have the reading comprehension skills of a first grader, you would've seen that I responded several times to the myth that a business can grow into a force that is able to dominate a market.

Why do you keep going here?

 

[krazy kaju]

Why do you keep repeating the same things ad nauseum, even if they've already been dealt with?

 

[Kade]

Why do you keep repeating the same things ad nauseum, even if they've already been dealt with?

I haven't actually... .if anything I showed that you cannot work without absurd logical constructs.

I will be back to deal with your insults in a little bit, fear not.

 

[krazy kaju]

Kade, I've responded to every single one of your points and you continue with the same "but there has never been a free market waaaaaaaaaaah" or "but what if they can control prices waaaaaaaaah..." even if I responded to those critiques before in this very thread in response to you.

Instead of complaining about the same things over and over again, can't you debate the other things I'm putting forth? The reason this thread has practically gone nowhere for numerous pages was precisely your refusal to read what I'm posting and then you posting the same critique ad nauseum.

 

[Paul.Bearer.of.Injustice]

Let's say, for example that Company A gains a monopoly over the entire San Francisco Bay Area. As it tries to expand its operations to the entirety of California, it simply becomes too large and too bureaucratic. At that point, companies in Nevada, Oregon, Arizona, etc. see a profit in expanding their operations there. Also, as stated before, smaller businesses might begin to spring up as waste raises prices, which allows smaller businesses to compete better against Company A. So Company B, Company C, and Company D from three surrounding states might begin to compete with Company A while a couple smaller businesses spring up in the Bay Area and elsewhere in California that also compete with Company A.

So from the point of view of your hypothetical San Franciscan, free-market monopolies exist. At least until the point B,C, and D come to the rescue.

Also, are piracy and smuggling intentionally left out? I would think it would have a more immediate and dramatic effect on a burgeoning free-market monopoly, unless by definition piracy is not a part of a free-market.

 

[ARealConservative]

So from the point of view of your hypothetical San Franciscan, free-market monopolies exist. At least until the point B,C, and D come to the rescue.

you only have 1 gas station in x miles of your home.

 

[aravoth]

How can a business grow to a monopoly in a true free market? If there are no costly regulations that bury small businesess before they even begin, how can one grow to such proportions that it attains a monopoly? There wouldn't be any government interference, no subsidies, no such thing as government sponsered "no-bid contracts". So the only way a business could possibly make it to the top is by being the best competitor, not by exploiting taxpayers.

But in order to do that it would have to compete with the gargantuan amount of rivals there would be. The reason I think there would be a lot of competition is because if busineses didn't have to pay the government a ton of money every year, and the regulations where non existant, a person could literally open a business for less than a hundred bucks, and expand it very, very fast. The expansion would of course lead to increased production, which would lead to increased employment across the board. Millions of companies would all be doing this at the exact same time. The larger companies couldn't pinch out the smaller ones very easily, becuase in a free market economy, property rights would have to be respected, so no commercial districts would get taken by eminent domain to "enhance the economic vitality of the region", only to have a big chain shopping mall put up where a few small family own clothing businesses used to be. I've seen it done before. We've all seen water supplies get polluted, and none of us can do anything about it, becuase "regulations" allow it to happen.

I just don't understand how regulations protect individual rights, nor do I understand how it helps to perpetuate business. All I have ever seen is abuse of Government Regulations by major coporations and large companies. In fact, I'm convinced that those large entities love regulation, and could not exist, nor could they ever have gotten where they are today without them.

The way I see it, Government is the monopoly. And it maintains it's monoply by granting special favors and enahncing "regulations" for the betterment of "the little guy". But in reality Small businesses are driven out by bigger ones because of those regulations, the "little" guy's drinking water, and air is legally polluted. It seizes "Suzie's Custom Tailoring shop" through eminent domain to "improve" the economic vitality of the area, only to plop a Big Box store in it's place.And why does it do all these things? To grant no-bid contracts, and reap enormous profits to whatever companies gave them the most campaign donations. Government puts the economic prosperity of an entire nation into it's hands, when it should be in the hands of every individual.

I am part of the market, as is every single person on the planet. I don't need to be regulated, nor do I need to be governed. And I believe that no one else does either. Not that I believe the human race is enlightened or anything like that, but I do believe the government sure as hell isn't enlightend. It is, after all, Governments that start wars, Governments that restrict business, Governments that slaughter millions of people every single year through wars, starvation, genocide. It is Governments that Create "classes" by destroying money, and keep the poor exactly where they are at so that thier "promises" to help them can be repeated year after year, garunteeing them votes.

Anyway, thats how I feel about it. But again, I still don't see how a monopoly can exist in a free market.

 

[rockandrollsouls]

How can a business grow to a monopoly in a true free market? If there are no costly regulations that bury small businesess before they even begin, how can one grow to such proportions that it attains a monopoly? There wouldn't be any government interference, no subsidies, no such thing as government sponsered "no-bid contracts". So the only way a business could possibly make it to the top is by being the best competitor, not by exploiting taxpayers.

But in order to do that it would have to compete with the gargantuan amount of rivals there would be. The reason I think there would be a lot of competition is because if busineses didn't have to pay the government a ton of money every year, and the regulations where non existant, a person could literally open a business for less than a hundred bucks, and expand it very, very fast. The expansion would of course lead to increased production, which would lead to increased employment across the board. Millions of companies would all be doing this at the exact same time. The larger companies couldn't pinch out the smaller ones very easily, becuase in a free market economy, property rights would have to be respected, so no commercial districts would get taken by eminent domain to "enhance the economic vitality of the region", only to have a big chain shopping mall put up where a few small family own clothing businesses used to be. I've seen it done before. We've all seen water supplies get polluted, and none of us can do anything about it, becuase "regulations" allow it to happen.

I just don't understand how regulations protect individual rights, nor do I understand how it helps to perpetuate business. All I have ever seen is abuse of Government Regulations by major coporations and large companies. In fact, I'm convinced that those large entities love regulation, and could not exist, nor could they ever have gotten where they are today without them.

The way I see it, Government is the monopoly. And it maintains it's monoply by granting special favors and enahncing "regulations" for the betterment of "the little guy". But in reality Small businesses are driven out by bigger ones because of those regulations, the "little" guy's drinking water, and air is legally polluted. It seizes "Suzie's Custom Tailoring shop" through eminent domain to "improve" the economic vitality of the area, only to plop a Big Box store in it's place.And why does it do all these things? To grant no-bid contracts, and reap enormous profits to whatever companies gave them the most campaign donations. Government puts the economic prosperity of an entire nation into it's hands, when it should be in the hands of every individual.

I am part of the market, as is every single person on the planet. I don't need to be regulated, nor do I need to be governed. And I believe that no one else does either. Not that I believe the human race is enlightened or anything like that, but I do believe the government sure as hell isn't enlightend. It is, after all, Governments that start wars, Governments that restrict business, Governments that slaughter millions of people every single year through wars, starvation, genocide. It is Governments that Create "classes" by destroying money, and keep the poor exactly where they are at so that thier "promises" to help them can be repeated year after year, garunteeing them votes.

Anyway, thats how I feel about it. But again, I still don't see how a monopoly can exist in a free market.

Agreed. However, in the worst case scenario, I believe an oligopoly could exist.

 

[aravoth]

Agreed. However, in the worst case scenario, I believe an oligopoly could exist.

Not 100% sure on the definition of "oligopoly", But isn't when companies "set the market"? Like All gas companies agreeing amoungst each other that none of them will ever sell gasoline cheaper than 5$ a gallon?

If so, wouldn't some rambunchous business owner cut the market out from beneath them all by selling it for 2$ a gallon? He could totally corner the entire market for a while doing that, until someone else droppped to 1.99 a gallon, then a gas war would ensue.

I'm probably way off, but if thats the case, I'd undercut everyone.