CameronPoe wrote:
An environment where every new market entrant is gobbled up immediately by the incumbent monopoly so it can maintain free reign over the price of a particular product (the price of which would necessarily decrease if a competitor existed).
How on earth can something just be "gobbled up"? As I said earlier, what is really happening to drive these people out of business is their prices are being seriously undercut because the big business has the capital to run without a profit for the sole purpose of running the other business into the ground. What happens to the price though? It goes down. What happens when they raise the price ridiculously high? Prime time for someone else to step in and force their prices down again. Someone is always looking to get an edge in, and that either forces the big business to keep prices relatively low in order to nip competition in the butt, or continuously change their pricing whenever a new threat pops up.
There is always effectively a competitor, either directly or indirectly. If not, wait ten minutes.
CameronPoe wrote:
FM - as you well know there are currently no alternatives and there won't be for 30 to 40 years. As such, we are getting sucked dry for as much as they think we can handle: making hay while the sun shines.
We are
willing being sucked dry. No one is being forced to buy gas, and high prices are in fact effecting how much gas people are buying. It is forcing people to look at more fuel efficient cars and other modes of transportation. What do you think would happen if gas was at $10 a gallon? Besides rioting, you think people would consume the same amount of gas they do now? How would revenue be going for OPEC? I can't think of a better example of relatively unrestricted capitalism at work.
CameronPoe wrote:
So you're saying that free market capitalism is working because black markets have developed? That fundamentally exposes the fact the supply-demand system has broken down! Economics 101.
First of all, I am not saying that capitalism is working because of a black market, only that the black market skews the example. Without the black market the industry would be completely different, and there is a good chance that for example linux would be significantly popular, enough to force change in Microsoft's policy.
So no, the system has not broken down, the law has been broken and that is screwing with the market.
CameronPoe wrote:
Not when each cunning businessman/woman can be edged out instantly before they've even secure an entrepeneurial loan when the incumbent monopoly gobbles them up - as Microsoft have long done, as have other corporations. Your second point is irrelevant - I'm not talking about promoting weak business - mergers generally involve a massive and successful company buying a smaller successful company - there is no 'weak business' about it: all that is happening is that a reduction in the level of competition is taking place.
They aren't so cunning then. You act like entrepreneurs and their investors are a bunch of idiots. If there is a legitimate opening they will pounce, with folders of business models they tote around to angel investors. One fails? Ten behind him.
It is exactly weak business. Unless it is a merger of equals, in which case it is only elimination of competition, one company is superior to the other. Why is that company bigger? How do they have the resources to acquire the other company? Weak is a relative term, it does not mean sickly, it means not as strong.
Agent_Dung_Bomb wrote:
Maniac, you have to remember that we already went through a bout with monopolies in the early part of the 20th century, and it hurt America. It didn't make it better, and thus the reason for laws regarding monopolies.
As I said earlier, I specified that we are in a time where Western industries are not limited by raw materials. I suppose the only counter example to that as Uzique indirectly supplied is unskilled labor. The oil and steel industries at the time were radically different to industries now, then both those raw materials were in such high demand with so little capital in other parties in the rest of the country ready to invest in increasing output that it was hindering the growth of the nation. In today's time that's just not the case.
Agent_Dung_Bomb wrote:
Now lets talk about something you have missed. Competition drives innovation. Without competition a company will not spend the time and money to improve a product of which they are the only supplier. They will get lazy. And for this reason Cam is right. A monopoly isn't going to allow any new competition, they will buy it up or force it out by undercutting their pricing. A monopoly would also take their monopolistic power and do whatever they can to control the resources that it needs for its products, thus disrupting the ability of competition, even if not bought up, to even be able to buy the materials necessary.
Stagnant industries drive innovation. When people see that there has not been movement in an industry for years and it is ripe for the picking, it makes it that much easier to convince people to give them a shot at developing the next big thing. The investors will get so much higher returns on a product that is in a league of its own. Developing in competitive environments requires nothing more than frequent baby steps, safe additions that will keep people hanging on for more. Companies are too quick to take the safe route and not step out on the edge when billions are on the line.
It works both ways.
Uzique wrote:
This happens today of course and the 'third world' is exploited and used as a labour-intensive sweatshop continent- but the important thing is that this occurs under government-stimulated economical conditions and has large amounts of government intervention. Case in point: America competing with Japan in terms of industrialising during the course of the 20th century. If America had gone through this period without any government intervention and involvement in the macro-economy, Japan would have undoubtedly emerged as the economic and vastly advanced superpower. Japan industrialised and sold commodities/new hi-tech industry directly through the corporations to the consumer, whereas America invested huge amounts of public spending in the Pentagon budget and development of the military-industrial complex- with any additional 'useful' goods being tossed towards the corporations for public consumption. Remember that key difference and consider how it would have gone if 'free market capitalism' was fully encouraged.
No one ever, EVER expects a truly free market. A truly free market doesn't even have a governing body, I suppose some anarchists might advocate one. Having a government that pours money into things like the DoD and NASA that are generally beneficial to the country as a whole does not mean the government has to abandon free market principles in commercial cases. Taxes are necessities that should be going somewhere beneficial, but that doesn't mean the government should big business or the consumer how to spend the rest of their money.
Uzique wrote:
Free market capitalism is just a dream- it's a theory. It's just a theological foundation taught to economic students and business grads because it is a concrete part of the 'science' and institution. I very much doubt any modern-day economist sees the absolute form of free market capitalism as a viable or even relevant part of modern day business. In short: free market capitalism lowers the standard of living for everybody in the economy and state.
It's the basic form behind every economic transaction in the Western world. Everything else is just twists we have added, very important twists of course, but you can't say the fundamentals of basketball are irrelevant as soon as someone learned how to dunk.
Uzique wrote:
My example of price elasticity of demand is the idea that there are certain 'inelastic' products that will always have a consistent demand regardless of the price and quantity available. In other words the consumer's demand for the product will not change no matter how high the business hikes the prices (thus your whole point about supply and demand being the regulating force of free-market capitalism has a flaw). An example of a highly inelastic product in economic terms is oil/gas. Or cigarettes. Or alcohol even. Here in Britain (as well as worldwide) the changes to price to alcohol, cigarettes and fuel often has little to no influence on the demand for said product. Britain's government even recognises this and continually adds pennies to taxation of alcohol and cigarettes because they see it as a reliable and relatively easy way of gaining more tax-money and funding.
Only because you are staying within your "elastic" range of the product. As you said you are dealing with pennies on the dollar. Free market capitalism doesn't pretend to get up and do its shit at the drop of a hat, it'll get up when it damn well feels like it. Double the price of any of those things and see what the demand is.
In today's society very few things are truly valuable. Food, water, shelter...there are so many sources of any of these that people only have to pay what they are (reasonably) wiling to pay. Water in the desert? Yeah, you could charge for that. $10 bottle of water in the suburban jungle? Not so much.
Uzique wrote:
I would also argue that the reason 'fuel efficient' cars are flying out the showrooms nowadays is because of a media-driven campaign and a social-moral situation. The price of gas in America is relatively low in comparison with many other world countries and in my honest opinion the whole 'eco car' thing is just another gimmick being marketed and sold to sensationalist goons that buy into such crap. The technology for hybrid engines and gas-powered cars (as well as many other innovative technologies) has existed for many years but the actual cars only start selling on the forecourts when it becomes a political agenda and a media-promoted campaign. I really don't think that 'high' prices of gas are directly benefiting the eco-car markets in a way that is worth noting. Of course you're welcome to disagree... this is just my own cynical view of said subject tongue.
Americans are not used to paying high gas prices, and we don't like it. If you have x dollars built into a budget for gas, then all of a sudden you're exceeding that by 50% in six months, then another 50% in another six months....well people are going to look for alternatives to keep the rest of their lifestyle as it is as much as possible. Elsewhere people are used to paying that much for gas, they have it worked out that way. Cultural thing.
Uzique wrote:
A free market regulates and guides itself but it is this fact which makes it 'dangerous' and negative to all within it. It promotes social darwinism and that is an ideology that should never be taken seriously or involved in modern-day proceedings... America is already far too close to such a system in certain respects.
Here is what I believe is truly the root of your argument, that social darwinism is bad. Social darwinism should be promoted at every turn,
especially in a country looking to produce the best and brightest. If you want to live in a country invested with mediocrity and satisfaction with the status quo, awesome, have a ball. I would rather live in a country that challenges me and those around me to excel in my every aspect, to push me to lead a life worth living or risk living none at all.
It would also be great if you could make sure to state your opinions about my country as opinions, not facts.