From: Smigrodzki, Rafal (SmigrodzkiR@MSX.UPMC.EDU)
Date: Sat Jun 16 2001 - 23:22:38 MDT
John Clark wrote:
free markets
Smigrodzki, Rafal Wrote:
>I As soon as one (or a small number) of participants gains some =
advantage (by hard work or by luck), it improves it's ability do survive =
>and grow - it can weather downturns better, spend more money on =
research,
It seems to me you're making a case for monopolies not against them, =
growth is good, so is hard work, and so is research.=20
### At some point growth stops being good - if there is just one huge
company remaining after a free market shakeout, it becomes a de facto
government. Free market dies, and cartels, labor unions, guilds proliferate.
Free market is metastable and needs to be protected from its own success.
> kill or buy the competitors.
Governments kill, companies don't.
###Yes, companies kill too - whenever they can get away with it. Size
matters, whether you call it, say, the Hudson Bay Company or the government.
>It can become a monopoly and without a bigger bully to keep it in =
check, hardly anything can stop it.
That's not what history shows. Look at the corporate giants of 25 =
years ago. A&P was by far the largest retailer on planet earth, today I =
think they still exist someplace but I wouldn't swear to it. Where is =
Eastern Airlines or Pan American or Control Data or RCA or Studebaker or =
Packard?
### Were any of these monopolies? Only in a very limited sense, and still
vulnerable to competition. Standard Oil, AT&T, and now Microsoft are true
monopolies, for differing resons: Standard Oil owned too much of the oil
fields, refineries, and distribution chain to be threatened by almost
anybody, AT&T had the physical monopoly on the phone network, Microsoft owns
a programming standard - such entities can successfully limit competition
not by offering better products at lower prices but by other means, to the
detriment of everybody else.
And yes, even monopolies can die sometimes on their own - through hubris or
stupidity.
> It sounds ridiculous now, but just a few years ago many said =
>that IBM should be prevented from entering the PC market because it =
>would completely dominate it, they said the same thing about ATT.
### The PC market succeded because it became a non proprietary standard. If
IBM could own that standard, it would have slowed down the pace of
development (they tried with the Micro Channel, didn't they?).
> Many =
of the giants of today like Microsoft, Amgen, MCI, Sprint, Oracle, =
Wal-Mart, Intel, Compaq, Dell, Sun and Cisco were tiny or non existent =
25 years ago. On the other hand we have the same damn governments we had =
25 years ago.
#### There are many countries where the exact opposite is true - the local
cabal changes every 5 years, but the company running the mines (and the
whole country), stays.
>Progressive - this would mean that almost all humans and most =
small businesses would be taxed mildly, while large entities with huge =
>annual transactions would be penalized, so that pure growth is size =
would be no longer so useful in dealing with competitors.
You'd be punishing cleverness. And how could a mom and pop company =
make a jetliner, or a 5 billion dollar state of the art semiconductor =
foundry?
#### Our present taxes punish cleverness - I am taxed whenever I make money,
but not when I lose it (ever filled an income tax form?). The government
wants me to pay them when I buy a lawn mover for myself but makes it tax
deductible when I buy it for my tenant (it's a "business expense"). They
want me to pay them more money if I paint my house (because it makes the
house more valuable) but it's OK to invest in real estate on Mars and lose
it all. There is an enormous amount of distortion of economic decisions and
waste as a result of the present tax system. A universal transaction tax
would be neutral in that respect, and the progressive part of it would only
penalize growth of very large entities.
A jetliner could be made by a large network of semi-independent contractors,
under the quality control system of a brand name, which would buy results of
R&D from yet other groups of contractors. At least I think it could. It
might be much more flexible, just like the Taiwanese PC makers working with
some US firms outcompeted IBM. This system would also obviate the need for
labor unions to balance the power of employers - since the number of
employers would be much larger, they would not be able to control workers
like the robber barons in late 19th century (who provided the impetus for
the formation of labor unions and further decline of the free market in some
industries).
I love free market so much that I am willing to accept a government, so that
the market won't destoy itself by ever more mergers and acquisitions.
Rafal Smigrodzki MD-PhD
Dept Neurology University of Pittsburgh
smigrodzkir@msx.upmc.edu
This archive was generated by hypermail 2.1.5 : Sat Nov 02 2002 - 08:08:09 MST