There's a flaw in deregulating corporations

[Xhin]

I, like almost everyone at this board, agree that government-imposed regulation harms the market. Deregulating the banks would prevent recessions, deregulating the medical industry would make health care less expensive, etc. Consumers should rely on personal responsibility rather than government intervention.

The problem I see is what happens when a national/international corporation out-competes local businesses to the point of them having a monopoly over the market, or conspire with other corporations towards price-fixing, etc. When this happens, you can no longer make the argument "Well they should shop somewhere else", or "Well, they should work somewhere else" because that "somewhere else" has been out-competed by a larger corporation.

I can't see a way around this other than the government regulating large corporations. Any help?

[The Gold Standard]

There is no flaw. If government regulations don't exist to restrict entry into an industry then there will always be competition, unless the monopoly just continues to serve the customer with the lowest prices and best service forever, which I can't see anyone complaining about, even if it keeps the competition at bay.

[narrowphoenix]

In a TRUE free market economy there is no such thing as a monopoly. Only the government creates monopolies. As long as there are little/no regulations competition with always come about.

[anaconda]

In a TRUE free market economy there is no such thing as a monopoly.

Why not? What about Microsoft?

[Demigod]

Why not? What about Microsoft?

what about it?

They defeated all of their competitors with a better product.

[anaconda]

what about it?

They defeated all of their competitors with a better product.

My point exactly. So aren't monopolies possible in a free market?

[Black Flag]

My point exactly. So aren't monopolies possible in a free market?

First, I'm sure you will agree to the reason why monopolies are bad.
They can control the price and push it higher which will tend to make the goods they supply overpriced and poorer quality and you, the customer, has no recourse to avoid this.


So how can a monopoly occur in a free market?

The company would have to price their product so low while maintaining the highest quality while at the same time capable of supplying sufficient quantities to fill the demand so that no other competitor has a chance.

The competitor couldn't compete on price.
The competitor couldn't compete on quality.
The competitor couldn't compete on delivery.

But what do you have?

You have the cheapest good of the highest quality always available!

And this would be something you want to make against the law?????????

But let's go into why a monopoly is IMPOSSIBLE in a free market.

For a company to have the cheapest price for its good, while maintain the highest quality, and managing to supply all the demand requires all of its suppliers to supply the cheapest, best and abundant inputs!

You would need the cheapest labor, but they would need to be the best, and abundant to fill all the jobs necessary to build this good.
You would need the all the guys who build the parts to your product to sell the cheapest, yet the best, yet always able to supply their goods.

In other words, for a free-market monopoly in one good requires all the goods within the marketplace to be provided by free-market monopolies

Well, that is impossible - and thus, it is impossible to have a free market monopoly.

There is always some imperfection in the production, organization, structure, supply, labor, management, finance, etc. in every company that can be exploited by a competitor to the competitor's advantage.

Humans are imperfect, and a free market monopoly demands perfection, thus such a thing - a free market monopoly is the dream of every company ... the golden ring that all companies would love to attain but in a free market, monopolies sit beside the leprechaun's treasure at the end of a rainbow.


PS:
We are talking about market monopolies - not local monopolies.

Local monopolies can exist temporarily because -usually- the supply constraint is very high for any other competitor.

As long as this constraint is not artificial - that is enforced by government writ - this constraint will be naturally repaired by free market forces, which then will undermine the local monopoly and it will stop being such.

[Black Flag]

Why not? What about Microsoft?

Microsoft is no monopoly.
Ever heard of Linux?
Ever heard of Apple?
Ever heard of IBM?
Ever heard of Lotus? Novell? SAP? Peoplesoft? Oracle?

...and you think they have a monopoly?

[anaconda]

Microsoft is no monopoly.
Ever heard of Linux?
Ever heard of Apple?
Ever heard of IBM?
Ever heard of Lotus? Novell? SAP? Peoplesoft? Oracle?

...and you think they have a monopoly?

What percentage of the market do they have for desktop operating systems? Maybe 90%? They were certainly big enough to be hounded by the justice department.

[Black Flag]

What percentage of the market do they have for desktop operating systems? Maybe 90%? They were certainly big enough to be hounded by the justice department.

First, monopolies are not defined by their market share - that changes hourly!

What the "un"justice dept. may or may not understand about what is a monopoly is moot.

They are not economists, but lawyers who enforce a law created by lawyers who were "paid off" to help another bunch of business men to attack another group of business men.

[specsaregood]

What percentage of the market do they have for desktop operating systems? Maybe 90%? They were certainly big enough to be hounded by the justice department.

I seem to recall reading that the honchos at MS weren't in the habit of making political donations or lobby prior to the justice department lawsuits. They do now. Came off to me as one big shakedown. I know google took that lesson to heart.

[fisharmor]

What percentage of the market do they have for desktop operating systems? Maybe 90%? They were certainly big enough to be hounded by the justice department.

As stated, 90% is not a monopoly.
Also, I don't really agree with the premise of this thread (that large corporations are able to run small businesses out of business), but it's kind of hard to escape the idea that the only reason MS manages to hang on to its market share is because it's a large corporation.

If it was possible to get a media player on Linux that had all the necessary codecs already installed (without getting into jackassery like compiling from source, anyway), maybe Linux would have more market share.
If MS hadn't slithered their way into Netflix and had them using an MS product to show online videos, which doesn't exist on other OSes (besides mac), then maybe Linux would have a larger market share.
If developers of desktop applications didn't generally start with Windows and, even if it's possible to go cross-platform, still completely ignore other OSes, then maybe Linux would have a larger market share.
If MS didn't hand dicta to hardware suppliers that they're going to sell a copy of Windows with every new machine or they aren't going to sell Windows at all, then maybe Linux would have a larger market share.

All of these are directly caused by the fact that Microsoft has the largest market share, the largest profit margin, and the largest war chest.
It's hard not to see Wal-Mart the same way: we're the biggest and we're going to push everyone around and stay biggest.

[Black Flag]

Like Gold and Narrow have said, there is no such thing as a monopoly in a Free Market.

The myth that corporate size dominates is disproven by Wallmart being beaten by swifter, fleeter, better servicing locals. Size creates necessary bureaucracy and middle management that drains their advantages not found in local companies,.

[heavenlyboy34]

Corporations themselves don't pose much of a threat. It's when they buy influence in the government that they pose a threat. Here's an interesting paper on the subject: http://papers.ssrn.com/sol3/papers.c...ract_id=873507
Abstract: Organizational law empowers firms to hold assets and enter contracts as entities that are legally distinct from their owners and managers. Legal scholars and economists have commented extensively on one form of this partitioning between firms and owners: namely, the rule of limited liability that insulates firm owners from business debts. But a less-noticed form of legal partitioning, which we call "entity shielding," is both economically and historically more significant than limited liability. While limited liability shields owners' personal assets from a firm's creditors, entity shielding protects firm assets from the owners' personal creditors (and from creditors of other business ventures), thus reserving those assets for the firm's creditors. Entity shielding creates important economic benefits, including a lower cost of credit for firm owners, reduced bankruptcy administration costs, enhanced stability, and the possibility of a market in shares. But entity shielding also imposes costs by requiring specialized legal and business institutions and inviting opportunism vis-a-vis both personal and business creditors. The changing balance of these benefits and costs helps explain the evolution of legal entities across time and societies. To both illustrate and test this proposition, we describe the development of entity shielding in four historical epochs: ancient Rome, the Italian Middle Ages, England of the 17th-19th centuries, and the United States from the 19th century to the present.

IIRC, c4ss.org has some stuff on this subject as well. Not sure about mises.org.

[MJU1983]

Corporations are an effect of "state" power.

[kylejack]

I, like almost everyone at this board, agree that government-imposed regulation harms the market. Deregulating the banks would prevent recessions, deregulating the medical industry would make health care less expensive, etc. Consumers should rely on personal responsibility rather than government intervention.

The problem I see is what happens when a national/international corporation out-competes local businesses to the point of them having a monopoly over the market, or conspire with other corporations towards price-fixing, etc. When this happens, you can no longer make the argument "Well they should shop somewhere else", or "Well, they should work somewhere else" because that "somewhere else" has been out-competed by a larger corporation.

I can't see a way around this other than the government regulating large corporations. Any help?

It's actually quite the opposite. Government grants corporations major advantages over small business, like extremely low tax rates, subsidies, etc.

[MJU1983]

SC State Senator, Tom Davis dropping some knowledge on a Think Progress reporter:



And a classic Alan Grayson vs Citi CEO exchange:

[kylejack]

And a classic Alan Grayson vs Citi CEO exchange:

I was really disappointed when he got voted out. He wasn't perfect, but damn, he really knew how to squeeze the balls of these guys better than anyone.

[JohnLVT]

Corporations were introduced to rig the free-market. They are unnatural and should be dismantled. They are are dangerous and not wrth the bother offer no value to society and the world in general.

[MJU1983]

OP, this video should blow your mind.

[ZzzImAsleep]

OP, this video should blow your mind.

nice. One of the best videos ive watched in a long time.

[specsaregood]

I have on occasion pondered how large these large corporations would be if not for the federal reserve and the easy credit policies. Would they have had the cash to expand and squeeze out the competition? I kinda doubt it...

[heavenlyboy34]

I have on occasion pondered how large these large corporations would be if not for the federal reserve and the easy credit policies. Would they have had the cash to expand and squeeze out the competition? I kinda doubt it...

I doubt it too. This reminds me a bit of the quote in your sig. Fords are made of mostly Mexican steel, IIRC.

[Simple]

This is the best answer I have seen, allow fraud laws to be enforced against the people who commit crimes, not against the legal entities.

[angelatc]

This is the best answer I have seen, allow fraud laws to be enforced against the people who commit crimes, not against the legal entities.

I've seen lots of executives being led away in handcuffs, yet the liberals keep telling me it doesn't happen.

[Black Flag]

I've seen lots of executives being led away in handcuffs, yet the liberals keep telling me it doesn't happen.

Doesn't happen enough.

[kylejack]

I've seen lots of executives being led away in handcuffs, yet the liberals keep telling me it doesn't happen.

Not too many from the mortgage crisis.

[soulcyon]

The problem is with Corporations - they are an unfair advantage in the free-market system. Get rid of corporations, then you have no need for regulations, a free-market capitalistic system is more successful than corporatism.

[awake]

I, like almost everyone at this board, agree that government-imposed regulation harms the market. Deregulating the banks would prevent recessions, deregulating the medical industry would make health care less expensive, etc. Consumers should rely on personal responsibility rather than government intervention.

The problem I see is what happens when a national/international corporation out-competes local businesses to the point of them having a monopoly over the market, or conspire with other corporations towards price-fixing, etc. When this happens, you can no longer make the argument "Well they should shop somewhere else", or "Well, they should work somewhere else" because that "somewhere else" has been out-competed by a larger corporation.

I can't see a way around this other than the government regulating large corporations. Any help?

Monopoly can only exist with government issuing it (itself being a monoply). Corporations, like individuals, seek government to deliver this power in various forms for their own benefit. It is power to use violence to crush your competitors completely ignoring the fact that competition is entirely legal and moral.

[Steven Douglas]

I have no problem with corporations or any other collective - as long as they are treated as such, distinguished from real people, and never conflated with individuals, or granted rights as if they were people.

In my mind, this is a similar principle to competing currencies. Corporations, as fictions of the state, really can be controlled, regulated, and even taxed out of existence. There is nothing wrong with that in my mind. But that should NEVER apply to people.

One of the most aggravating problems people face in this regard is when they attack a law - a statute, regulation or even constitutional provision - and the courts will uphold the law on the basis that it could apply to corporations and other privileged entities.

There is one law that would do the trick, and end the problem once and for all. Declare once and for all, as a matter of law (preferably Constitutional) that individuals, who live and pursue their interests as a matter of right, are specifically PRECLUDED from being included in laws governing corporations. NO MIXING OF PEOPLE AND OTHER ENTITIES.

If the legislature wants to pass a law that applies to both individuals and corporations, it must do it TWICE. One law for one set of books reserved for privileged entities, another law for another set of books for people who have rights, and never the twain shall meet, be conflated, or confused one with the other.

That ends the playing games by all three branches of government, and gives the courts no fudge room in that regard - and no assumption of "implied consent" on behalf of people who are treated as corporate entities, having unknowingly waived rights, based on innocent behavior (got a license where one was not required as a matter of right).

Meanwhile, it would remove HUMAN SHIELDS from corporations and other entities that walk all the deliberately blurred lines and masquerade as people - with "rights".

If you did that, corporations would be at a natural disadvantage at all times. You can tax a corporation, which acts on privilege, at the pleasure of the state, out of existence. Not a real person, who acts as a matter of right, and not privilege. Whole different ballgame with them, and very, very narrow set of rules that could be applied - if they are the ONLY entities to which those particular laws may apply.



OH...and by the way...this is VERY easy to implement. Just clone the books to begin with. Duplicate them. One is reserved for the People, the other for OTHERS.

That opens up the books for Real Persons Only for new court challenges. That particular set of books would naturally erode by itself. Only the Corporate (OTHER/PRIVILEGED) set of laws would pretty much remain as they are.