Sorry for not replying sooner, I really appreciate the issues which you're
raising, I don't claim to know everything and even where I disagree I like
to see the rebuttal so I can try to point out it's flaws.

On 10/25/2014 12:47 AM, Chris Pacia wrote:
> Caleb,
>
> I think part of the problem we (libetarians) have is that we /do/ see
> mergers, acquisitions, cartels, etc all around us and there is a
> definite sense in which the market is consolidating and leading to
> monopoly. So many conclude that markets themselves must lead to monopoly.
>
> There are a couple considerations here, however.
>
> 1) In some instances the merging of two smaller firms into a larger one
> may be more economically efficient due to economies of scale. It could
> be a case of the market moving from incorrectly sized firms (given
> consumer preferences for choice and price) to firms that are correctly
> sized. Such a move shouldn't be considered a bad thing since it is
> welfare enhancing and still leaves room for competitors to emerge and
> try to do things better.



Of course it's possible...

I think the most common case of mergers and acquisitions are more military
in nature. Just as it's worthwhile for a country to pour resources into
invading a neighbor, it's worthwhile for a business to dump money into
sabotaging it's competitor until they acquiesce because in the long term,
higher fees can be extorted.

Theoretically the government should step in and catch these things but
we can't expect a static government to outsmart a dynamic market :)



>
> 2) There are more government regulations on the books than an individual
> could read in his lifetime. The end result is to erect rather large
> barriers to entry, protect incumbent firms, and make it legally
> impossible to compete. How much of the consolidation and monopoly is
> caused by government? My guess is most of it. And it's unfortunate
> because the default assumption people make is that it's the market not
> the regulations.


This is a hell of a problem, without government there is no way to make
property private can be no market. With government it is very difficult
to prevent the market itself from becoming private property. Barriers of
entry are simply the fences which wall off parcels of the marketplace and
convert them into private property.


>
> Back in the day economists defined monopoly, not as a single firm in an
> industry or by some herfindahl index but rather it was 'a grant of legal
> privilege handed out by the government'. The reason was they knew that
> if the industry was free there is nothing the incumbent firm could do to
> keep out competition. Any so called barriers to entry (start up capital,
> advertising, research, etc) also have to be navigated by the first firm
> in the industry. If the first firm can overcome those barriers, then so
> can subsequent firms.
>
> I my opinion the education establishment really pushes the narrative
> that markets lead to monopoly without the government saving us from it.
> I learned that in public school. I suppose you did as well. It's even to
> the point where it is a "well known fact" that prior to anti-trust in
> the late 19th century, that free markets were creating monopoly all over
> the place.


mmm when I was in public school, I was a radical of a conservative,
I don't remember much like this except a few half-hearted attempts on the
part of some socialist English teachers.

But you know habeas corpus, where is the great anarchist society?
I can point to a handful of social democracies which are "pretty ok" given
what a failure the socialist system is supposed to be but this land of
the market is nowhere to be found.


>
> The problem is that narrative is 100% false. If you take a look at the
> prices and output of the industries that were allegedly monopolized in
> the 19th century, you find that output was expanding and prices were
> falling almost across the board. Harley indicative of monopoly. What was
> happening was #1 above. The market was moving from less efficient,
> unmechanized modes of production, to mechanized production, which
> obviously has larger economies of scale. So the number of firms was
> going down, but so were prices while output expanded. That's how markets
> work. People with either a lack of knowledge of economics, or a
> political agenda have wrongly interpreted that period as a period of
> monopoly run amok.


This is very interesting, barring a threshold where these forces reverse,
this analysis suggests that the most efficient market is a market with
only one producer. Marx would be proud.

This actually gave me some pause.

But I think we must draw a line and say 'no' to some kinds of efficiency.
Surely Microsoft can turn out a usable Operating System far more
efficiently than 100,000 little hacker hacking on 600 different Linux
distributions but dammit I don't want that efficiency. I want variety
and experimentation.

The other question which this brings up: If we trust the market and the
market says communism, is it ok for one person to own the world? What
about 2? Or 30 families? What is the minimum number of people controlling
the world where draw a line and say "I am a human being and this is not
ok, even if the market thinks it's more efficient"?


Thanks,
Caleb



>
> Anti-trust largely came about, not as a response to monopoly, but rather
> inefficient businessmen complaining that they were being out-competed by
> larger mechanized firms. It was a rent-seeking measure not an
> anti-monopoly measure as we are told.
>
> Here's a journal article on the topic:
> http://mason.gmu.edu/~trustici/LAW108/The%20Origins%20of%20Antitrust-%20An%20Interest%20Group%20Perspective.pdf
>
>
>
> On 10/22/2014 02:29 PM, Caleb James DeLisle wrote:
>> On 10/21/2014 10:18 PM, Chris Pacia wrote:
>>>> tl;dr wealth and power are interchangeable, wealth/power pools
>>>> up in certain lucky and industrious individuals, without
>>>> redistributing it, democracies devolve into oligarchies and then
>>>> eventually into monarchy or chaos. The US is in the oligarchy
>>>> phase.
>>> This likely does apply to democracies since those with access to power
>>> to use it to their advantage. Some gain at the expense of others. But
>>> for your indictment of libertarianism to stick you need to show that
>>> pure free market would do the same thing. How? What are the causal
>>> mechanisms?
>> 2 good questions, is there a historical record of monopolization of
>> free markets and if so, why.
>>
>>> Despite public schools doing their best to indoctrinate the
>>> belief that free markets lead to wealth consolidation from which we need
>>> the government to save us, there is really nothing in economics
>>> supporting this claim and economic theory and the bulk of economic
>>> history disprove it.
>>>
>> I'm not sure how you define The Free Market, some definitions bear
>> a resemblance to the physicist's "weightless vacuum", an unattainable
>> state which may not may not do much for explaining things but
>> certainly protects The Economist's beautiful model from a fickle and
>> unforgiving reality.
>> If we imagine The Free Market as something concrete like the local
>> bazaar, we run into a dependency on The State's monopoly of violence
>> to prevent Bad Harry (the antisocial .01%) from shooting you and
>> taking your goods rather than paying, or more realistically,
>> establishing his own "state" and charging you sales tax.
>>
>>
>> To what history are you referring? It seems to me that history has
>> been a long story of thugs uniting to form gangs, warlords then
>> states while professionals united to form guilds, corporations and
>> then eventually oligopolies and monopolies.
>>
>>
>> Thanks,
>> Caleb
>>
>>
>>>
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