Power is a zero-sum game. We all live in the same space, exist in the same media ecosystem, and have the same number of hours in the day. The media consumed by the public, the structure of our cities, the investments we make in science, the sources we use for energy, the laws we pass and the way they are interpreted, stewardship of our environment, and the degree to which our tax money is used to drop bombs on civilians are ALL zero-sum.
I am so sick of the pretense that GDP growth means inequality is somehow illusory. Yes, TVs used to be expensive and now they are cheap. Big whoop.
There are a lot of zero-sum things that are being chased by money, and maybe even the most sought after ones. Like political power, sexual partners, and chasing the top % of credentials for your offspring to position them with better access to zero sum things.
I think you have it backwards. Regulation is what enables monopolies. There is no monopoly for any of the major industries like cow herding or cellular telephone service in Somalia despite almost no effective regulation. There is not even a monopoly of pirates despite them willing to use violence to try and enforce a monopoly.
If you look at the history of the US, for instance, railroad regulation was brought forth largely by the railroads because they found it impossible to form a cartel to keep up prices (due to "secret" discounting) so instead they created regulation that outlawed the kind of discounting that breaks cartels apart. A similar thing happened in banking where the banks asked for a central bank to cartelize the interest ranks to stabilize their oligopoly. And the same in pharma industry -- big pharma loves high regulatory barriers because it keeps competitors out.
A large portion of the regulation in the US was brought about as regulatory capture by corporations to increase the monopolizing effects and destroy the free market.
That's patently false. AT&T was a monopoly and they were broken up by antitrust regulation. The absolute most you can say is that some regulations enable monopoly. I contend that we simply should pass the good kind of regulations instead.
Monopoly is enabled by market forces such as economies of scale. Monopolization is a natural market process which happens on its own unless it is actively prevented.
> big pharma loves high regulatory barriers because it keeps competitors out
The FDA, for all the flaws of its current incarnation, is the archetype of necessary regulation. Pre-FDA, the free market did nothing whatsoever to prevent nauseating practices like the adulteration of milk with powdered plaster, lead, and cow brains. The history there is fun but quite gross.
> Somalia
What is notable about Somalia is not its lack of regulation, but the fact that it is perhaps THE least stable country on the planet. It is not the basis for any useful comparison here.
>That's patently false. AT&T was a monopoly and they were broken up by antitrust regulation.
This is patently false in the context of the reply you have made -- after the invention of the telephone more and more and eventually hundreds of telephone services popped up. Then in 1918 (circa WWI), the government effectively quasi-nationalized AT&T by controlling it via a commission and the postmaster general and then AT&T leveraged politicians to create "universal telephone service" provided by AT&T and regulate competitors out of the market while using regulatory capture to use commissions to regulate rates, effectively creating a cartel that drove competitors out of business via regulation.
the whole idea of a "natural market process" here is absolute and utter hogwash. The majority of the market was AT&T competitor up until the regulators stepped in and turned it into an unnatural monopoly enforced by regulatory capture.
>The FDA, for all the flaws of its current incarnation, is the archetype of necessary regulation. Pre-FDA, the free market did nothing whatsoever to prevent nauseating practices like the adulteration of milk with powdered plaster, lead, and cow brains. The history there is fun but quite gross.
You're now arguing why we need regulation rather than whether they create monopolies or not. I see this as a complete red herring, although an interesting topic, that there are some counterpoints to.
> What is notable about Somalia is not its lack of regulation, but the fact that it is perhaps THE least stable country on the planet. It is not the basis for any useful comparison here.
What is notable is that the whole thesis is without regulation it turns into this monopolized hellscape and every inspection of that theory turns out to be false, and sometimes even the opposite.
Anyway, what regulation is responsible for Walmart and Amazon putting local retailers out of business?
> the government effectively quasi-nationalized AT&T
After a big merger put AT&T in charge of the majority of telephone lines in the US, the company used its control over infrastructure to drive its competitors out of business and increase its portfolio. The Justice Department tried to break up AT&T but failed; it was in the settlement of this case that AT&T was first federally regulated in 1913. Yes, AT&T's monopoly grew between 1913 and 1982, but your causality is backwards. They regulated it because it was already a monopoly.
>Anyway, what regulation is responsible for Walmart and Amazon putting local retailers out of business?
Walmart + Amazon combined are only ~16% of the retail business. They're not monopolies. The fact they put a small minority of businesses out of business does not mean they're a monopoly. This is likely part efficiencies and also part regulatory capture via the insane zoning/building regulations in this country and tax breaks that can favor large corporations.
> After a big merger put AT&T in charge of the majority of telephone lines in the US, the company used its control over infrastructure to drive its competitors out of business and increase its portfolio. The Justice Department tried to break up AT&T but failed; it was in the settlement of this case that AT&T was first federally regulated in 1913. Yes, AT&T's monopoly grew between 1913 and 1982, but your causality is backwards. They regulated it because it was already a monopoly.
... It was not already a monopoly. Hundreds of phone companies emerged and by shortly before your noted date of "regulation" those competitors held the majority market share. It became a "monopoly" after the government literally quasi-nationalized them (AT&T) to the point the fucking Postmaster General was basically in charge of it, they became intertwined with regulators, and then the drive for "universal telephone service" and regulatory commissions ensured the regulatory compliance pushed exactly into AT&Ts business model. AT&T intertwined lawmakers even brought in economics quacks to talk up natural monopolies to argue for policies to create the regulations that made AT&T a monopoly. So you have it backwards -- the regulated it from a minority market holder to an unnatural monopoly and lawmakers created this monopoly under the auspices they essentially needed to legislate a "natural" (misnomer) monopoly into existence.
> Walmart + Amazon combined are only ~16% of the retail business.
of ALL RETAIL? That includes groceries! That's huge! Anyway, Amazon is >40% of e-commerce & Walmart is >10%. Together they control more than half of all online commerce. That's definitely monopolistic.
> It was not already a monopoly. […] shortly before your noted date of "regulation" those competitors held the majority market share
From Wikipedia: "AT&T controlled over 80% of the U.S. telephone system market by 1907 and Theodore Newton Vail rejoined the company as its President. Vail negotiated with competitors, charging them fees for connecting to AT&T's long-distance network. These practices led the Justice Department to attempt to breakup AT&T, but a settlement was reached through the Kingsbury Commitment on December 13, 1913. It brought federal oversight into AT&T and led its Bell System monopoly to become federally regulated."
They had an 80% market share pre-regulation. Yes, it was already a monopoly.
>They had an 80% market share pre-regulation. Yes, it was already a monopoly.
Absolute and utter hogwash -- a straight up lie. You must be using a very liberal version of 'control.'
After seventeen years of monopoly*, the United States had a limited telephone system of 270,000 phones concentrated in the centers of the cities, with service generally unavailable in the outlying areas. After thirteen years of competition**, the United States had an extensive system of six million telephones, almost evenly divided between Bell and the independents, with service available practically anywhere in the country.[1]
* My note, under the government imposed patent monopoly period -- Bell's patent expired in the 1894 which started the "years of competition." **13 years of competition marks 1907.
That is, by 1907, the market had dropped from a patent imposed monopoly to half-and-half, and getting shredded further by competition (that is until regulation in 1913, when AT&T started to pick up market share again). This 80% quote is total fiction unless you're using some weasel version of 'control.' The monopolies were all government imposed -- first by the patent and then later by regulation ('universal telephone service' reguluation and commissions and franchises, also ~nationalization and government intervention circa WWI).
Also of interesting note -- to look at the ownership of telephones before and after the Kingsbury committment. They had been falling off a cliff after the patent expired, but then ramped up at pretty much the same time as the Kingsbury Commitment (minima at 1910, with what looks to be 5 year granularity).[2]
>of ALL RETAIL? That includes groceries! That's huge! Anyway, Amazon is >40% of e-commerce & Walmart is >10%. Together they control more than half of all online commerce. That's definitely monopolistic.
And 100% of business with an Amazon logo on it! Amazon has 40% of e-commerce, walmart has 6%, even together they are a minority. Even with all the efficiencies of Amazon logistics they still together can't break half of the market. And even if they did, their margins are so razor thin that they could not engage in monopolistic behavior, as the second they raise prices they can again be eaten alive by the other 54% or one another.
This is not a personal opinion of mine, it is pretty much established science. I think only think-tank backed sources would claim the opposite.
One should understand the phenomenon as a common pattern of dynamics in unregulated markets. Not every snapshot will showcase an end state of monopolist dominated markets.
You bring up a valid point though. Regulatory capture is a indeed a weapon in the hands of anti-competitive players to prevent incumbents. Good policy usually applies differently to different strata: the small players are exempt from certain rules, or have to deal with less stringent ones than big players do, to prevent killing the market. At the risk of sounding like an llm: it is not just about policy, it is about good policy.
This is a crude but misguided attempt to bypass what I say which was "effective regulation." FGS only controls a minority of Somalia -- most of it is controlled by Somaliland, Puntland, Al-Shabaab, directly by xeer (customary) law, or only FGS hanging on by a thread.
Even in cases where FGS is in control -- even then xeer law on property rights and law often supersede written law of FGS. For instance, on occasion Somali population has straight up killed FGS soldiers/police and Somalian government has deferred to xeer courts and said "welp that is fine." Xeer law in particular has a very liberal free-market view on inter-familial entrepreneurism (although with a lot of intrafamilial and tribal dues which hinder it in practice) which is at odds with what outside law has tried to impose upon it.
NCA has rather limited influence in somalia, and definitely not of the sort that could break up a monopoly if one existed.
The food industry is filled with regional monopolies.
> cellular telephone service in Somalia
Ah yes, excellent example, all you have to do is completely destabilize your nation and you too can have free market capitalism.
Investors love monopolies, they fix prices and profits so their investments are not at risk. Investors hate too much competition, it lowers profits and puts their investments at risk.
Free markets need investors. Investors hate free markets. I hope you see the problem here.
As a socialist, I would argue those are both inevitable outcomes of capitalism.
First market forces incentivize consolidation (which imo killed off the vibrant early internet...), then a few players got really powerful.
Once you have that much money and power, and given the inevitable corruptability of politicians, it makes sense to try and use that money to try and manipulate market rules in your favor.
The evolution of the internet has been an in-vitro demonstration of capitalism failure modes and as somebody who liked the internet, that's very unfortunate.
OK. We were told creative destruction is good, if some companies exit the market and are replaced by others that offer better value then resources are being allocated more efficiently, no?
It does appear that people prefer the convenience of internet shopping, though I also see that other firms still successfully apply the catalog model in specific markets, eg Harbor Freight which does this for construction tools.
People don't voluntarily lose money. Understand that and the world will way more understandable.
But nobody is arguing that they do. Rather, I'm saying that if some companies lose money on selling clothes and exit the market, there's nothing wrong with that.
Any name brand would rather send their unsold clothes to a landfill in India rather than allow their wealthy customers to see poor people wearing the clothes.
It's very very easy to spend much less on clothes. Buying a new handbag every 6 months vs maintaining a bag for 20 years isn't that much different in terms of effort, but one is unbelievably more expensive.
That is a slightly different scenario than taking cheap "fast fashion waste", compressing it into bales, shoving it into shipping containers, transporting/dumping it and flooding local countries/markets.
(And many of these large shipments do not end-up as donations by the time they get to their destination, but are actually sold by weight and then resold again)
But yes - distribution/logistics of donated goods needed to those who need them should be a "solved problem", but unfortunately it is not - regulations could help. (In countries/regions where governments actually WANT to regulate and then subsequently FOLLOW the regulations rather than cancel, ignore or throw them out entirely... Pretty sure everyone knows which country I am referring too...)
Man it would really make my day if all the homeless people started walking around in Prada and Gucci. That would probably be just thing to kill off these brands for good.
How would we tell if the homeless started wearing Balenciaga though? Most of that trash already looks like it was lifted off the back of a homeless person (and one who is hard on his clothes)!
Some perspectives would say that they serve no real purpose other than performative wealth display and distribution. They appeal to everyone at fundamental psychological levels to "fit in" with a popular trend or "in group".
Their actual quality is often no better than other manufactured goods. It is their perceived quality and style that are the entire reason their brands exist.
(and... I can admit that certain "luxury brands" are definitely appealing to me personally, even if they make little "logical sense" to own - maybe not clothing so much, but... watches...)
Perhaps not but in the context of this discussion and legislation it is pertinent question to ask, perhaps not of you specifically but of the wider audience.
Brand value particularly for commodity products is usually just a form of information asymmetry between consumers and suppliers, and creates economic inefficiency since it diverts expenditure from other products that can materially improve lives. It also allows enshittification to happen since it creates inertia (brand loyalty) to switching, and the positive brand image sticks around for longer than the actual good quality products.
Parliament froze it when Trump started threatening Greenland.
reply