From: Smigrodzki, Rafal (SmigrodzkiR@MSX.UPMC.EDU)
Date: Sun Jun 17 2001 - 00:51:31 MDT
Daniel Ust wrote:
>> competitors. It can become a monopoly and without a bigger bully
>In other words, a bigger monopoly!
Yes, a power monopoly that under the right circumstances can be controlled
in non-violent ways by all the voters in a democracy (or the draftees in a
demarchy). This is much better than a government controlled by a few power
groups.
>As for the rest of your post... I disagree with most of what you say. The
>term "monopoly" is much abused. It's problematic, since the conventional
>definition of controlling a market can make anything as it currently exists
>into a monopoly. For example, I control my labor, ergo I have a monopoly
on
>my labor. A guy who owns a house with an acre of land has a monopoly on
>that. I have a monopoly on my CD collection. Etc.
Your monopolies have almost no economic impact on anybody's life, except
your own, that's why there is hardly any need to limit them. The guy who
owns the water mains to your house could make you pay, and could destroy a
competitor trying to build another line quite easily - just temporarily
lower prices below profit level until the other guy goes bankrupt. That's
why "natural monopolies" are so heavily controlled by the state.
>Your idea about taxation is flawed for several reasons. One, a lot of
large
>financial entities are made of small units even individuals working
>together. Mutual funds are an example of such.
What do you mean?
> What you would be doing, in
>effect, is keeping these smaller units from working together. The largest
>corporations are, after all, made up of individuals being funded by other
>individuals.
Corporations are legal entities using hired labor in a coordinated fashion.
The little constituent units (salarymen, cubicle dwellers) do not make
decisions for themselves except when they choose to be hired or fired.
Otherwise they do what they are told to do, and the larger the corporation,
the less choices there are for humans and other corporations.
>Also, preventing the growth of larger units would seem to be a
destabilizing
>thing. Sometimes a larger unit is better suited to weather storms and
>invest in economies of scale and scope. Sometimes coordination on that
>level is needed and this would _not_ happen between smaller sized units.
>(See, e.g., Frederic Sautet's _An Entrepreneurial Theory of the Firm_.) In
>essence, your notion would prevent that type of coordination by taxing it
>out of existence. By disallowing certain things or making them more
costly,
>your create more problems...
I agree you have a point here. What comes to my mind as a possible solution
is the idea of reinsurance used by insurance companies to spread the risk,
and the formation of research consortiums, or investment consortiums - these
would hopefully avoid the problems you mention. But I agree, this could be a
showstopper.
>Then the smaller units would be less stable and would run to the government
>for more aid. The system would eventually evolve into a bloated welfare
>state.
Not necessarily. Corporations ask for government help not when they are in
trouble but whenever they feel they can get it for free. If small units
fail, you can just tell them to go take a hike, but if Chrysler is in
trouble, politicians will print some money to pull it out.
>Back to problem creation. You seem to smuggle in the notion that the free
>market, which is merely all the minds on it coordinating their activities,
>is arbitrary, while a tax or a government is not. Why?
No, definitely not. The free market is not arbitrary, just unstable. At some
point a it all too frequently stops being free - in medieval cities it was
the formation of merchant guilds, then it was railway magnates, nowadays it
can be a diamond cartel. At that point a tax might the lesser evil.
If the individual
>participants want to coordinate in a way you find reprehensible, trying to
>force them to behave otherwise seems even more arbitrary to me. By what
>standard do you judge your goals or policies any less so?
The standard is relatively simple - reducing the size and increasing the
number of market participants allows for more choices to exist and make our
lives better. Imagine if all car makers in the world united and upped prices
- they would make a lot of money quickly. Anybody trying to make cars would
need to spend a few billion dollars to start, and would be vulnerable - the
monopoly would then temporarily reduce prices, just long enough undercut the
competitor and bring it into the fold. Soon nobody would try to commercially
compete with the giant and your car would be a clunky and expensive gas
guzzler (a truly reprehensible car), just like a Ford before the Japanese
taught Americans how to make cars.
>Finally, why not apply your reasoning to government? If preventing large
>units from forming in the market is bad, what about in politics? Are you
>willing to go all the way here? Toward secession or anarchism? Or does
>your principle only apply to markets and not to governments? And if so,
why
>only to the former and not the latter?
Governments, in contrast to corporations, can be to some extent directly
controlled by large segments of the population. Even the, God forbid, World
Government, could be controlled by people like you and me. But, if you ever
lived in one of those small one-factory towns in the middle of nowhere,
you'd know that the only way of voting against the factory boss is with you
feet, by going away. If you have somehwere to go to.
Rafal Smigrodzki MD-PhD
Dept Neurology University of Pittsburgh
smigrodzkir@msx.upmc.edu
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