[Doly]

Mr Bill,

Just out of curiosity: have you ever used Linux? In other words: are you aware that producing decent software that works doesn't necessarily mean following the classic capitalist approach? That in fact, some free software is better than their commercial counterparts?

[MrBean]

$this->bbcode_second_pass_quote('MrBill', '
')I am sorry that simple concepts are incomprehensible for you. I will use smaller words.

[MrBill]

$this->bbcode_second_pass_quote('Doly', 'M')r Bill,

Just out of curiosity: have you ever used Linux? In other words: are you aware that producing decent software that works doesn't necessarily mean following the classic capitalist approach? That in fact, some free software is better than their commercial counterparts?

[MrBill]

In order for an monopoly to exist you usually need government interference or a government mandate such as a crown corporation such as EDF or the Canadian Wheat Board. Traditionally, there were certain projects like power stations, which required huge outlays and long payback periods that an monopoly was the only way to go. Or markets were protected by quasi-government service providers and marketing boards. However, times change. Capital markets are more sophisticated as is risk intermediation, so the private sector is now also able to take on large infrastructure projects. And it has been shown that marketing boards ultimately lead to less competition and higher prices for the consumer.

I seriously doubt that you will find many examples of true oligopolies on a global scale due to a) the forces of centralization vs. decentralization, b) substitution, c) competition, d) etc. There are companies that embark on large M&A binges, but mostly they end of either a) destroying value, or b) being unwound as the conglomerate ends up spitting out the bits that it cannot effectively run.

Some of the closests examples to oligopolies are those companies who backyard is fences off to competitors through government barriers, while government subsidies allow these national champions to buy up assets in other markets (again EDF comes to mind, but companies as well as Gazprom who have state backing and a docile domestic competitive environment where competition is stifled).

One can argue that Chinese backing with ultra-low interest rates and state guarantees means that Chinese national champions have an unfair advantage when competing internationally for acquistion of assets. I think the charge is fair, but there is no evidence that the Chinese are then better at managing those assets and instead may destroy value.

The answer to monopolies and oligopolies is not government interference to prevent them necessarily, although governments should exercice oversight, but free entry and exit of competitors along with no state subsidies to national players. In otherwords, you would not have to worry about Boeing and Airbus if a) the US and the EU had not subsidized them in the first place, b) because of those subsidies that other regional airplane manufacturers like Canada, Brazil and Germany could not compete with the size of subsidies (Bombarier, Embraer, Dornier Fairchild) were subsidized) that the US and the EU gave out, and c) these subsidies raised the barriers to entry for new competitors.

But far from demonstrating that capitalism leads to oligopolies and monopolies it is clear that mainly government intervention and subsidies lead to these behaviors, of which France and EDF are possibly the best examples of the worst type of anti-competitive behavior.

[rogerhb]

$this->bbcode_second_pass_quote('MrBill', 'N')o, I am told by Mr. Bean and Mr. Rogers that Miscrosoft has no competitors?

[MrBill]

$this->bbcode_second_pass_quote('rogerhb', '')$this->bbcode_second_pass_quote('MrBill', 'N')o, I am told by Mr. Bean and Mr. Rogers that Miscrosoft has no competitors?

[rogerhb]

How about a IT nice analogy for the energy crisis:

How long would it take the world to switch from Windows to Linux?

Here again it's a case of supporting infrastructure, ie software, data storage standards, available applications, development, transition phases, etc. It wouldn't need any hardware changes so from a 10,000ft view it's trivial, but not from a real implementation point of view.

[MrBean]

$this->bbcode_second_pass_quote('MrBill', 'I')n order for an monopoly to exist you usually need government interference or a government mandate such as a crown corporation such as EDF or the Canadian Wheat Board. Traditionally, there were certain projects like power stations, which required huge outlays and long payback periods that an monopoly was the only way to go. Or markets were protected by quasi-government service providers and marketing boards. However, times change. Capital markets are more sophisticated as is risk intermediation, so the private sector is now also able to take on large infrastructure projects. And it has been shown that marketing boards ultimately lead to less competition and higher prices for the consumer.

I seriously doubt that you will find many examples of true oligopolies on a global scale due to a) the forces of centralization vs. decentralization, b) substitution, c) competition, d) etc. There are companies that embark on large M&A binges, but mostly they end of either a) destroying value, or b) being unwound as the conglomerate ends up spitting out the bits that it cannot effectively run.

Some of the closests examples to oligopolies are those companies who backyard is fences off to competitors through government barriers, while government subsidies allow these national champions to buy up assets in other markets (again EDF comes to mind, but companies as well as Gazprom who have state backing and a docile domestic competitive environment where competition is stifled).

One can argue that Chinese backing with ultra-low interest rates and state guarantees means that Chinese national champions have an unfair advantage when competing internationally for acquistion of assets. I think the charge is fair, but there is no evidence that the Chinese are then better at managing those assets and instead may destroy value.

The answer to monopolies and oligopolies is not government interference to prevent them necessarily, although governments should exercice oversight, but free entry and exit of competitors along with no state subsidies to national players. In otherwords, you would not have to worry about Boeing and Airbus if a) the US and the EU had not subsidized them in the first place, b) because of those subsidies that other regional airplane manufacturers like Canada, Brazil and Germany could not compete with the size of subsidies (Bombarier, Embraer, Dornier Fairchild) were subsidized) that the US and the EU gave out, and c) these subsidies raised the barriers to entry for new competitors.

But far from demonstrating that capitalism leads to oligopolies and monopolies it is clear that mainly government intervention and subsidies lead to these behaviors, of which France and EDF are possibly the best examples of the worst type of anti-competitive behavior.

[MrBean]

Let's make important distinction here: even though MS may think and claim it is economically competing against open source GNU-licensed products, Linux etc. (which were and are being produced best descriped by libertarian socialist collective means), these products from hardly can compete economically (ideologically perhaps) against MS or others, as they are not anyones property and are distributed freely.

[rogerhb]

The term "Corporation" has a very different meaning in the UK to the US. It normally referred to a public service. The UK equivalent would be the old "Limited Company" (eg "Ltd") or now "Public Limited Company" (PLC).

[rogerhb]

$this->bbcode_second_pass_quote('MrBean', 'L')et's make important distinction here: even though MS may think and claim it is economically competing against open source GNU-licensed products, Linux etc. (which were and are being produced best descriped by libertarian socialist collective means), these products from hardly can compete economically (ideologically perhaps) against MS or others, as they are not anyones property and are distributed freely.

[jaws]

Microsoft is not a monopoly. It has a huge market share but even a 100% market share does not make you a monopoly. Microsoft, because it has a non-depreciating product, is always competing with itself! It must always improve its line of software otherwise no one will upgrade and its income flow will disappear.

Linux is not socialism. It is cooperative software. It's useless to the non-expert, that's why Apple had to use a proprietary front-end to make Unix work for the laymen. A private company must respond to the needs of its clients to stay in business. Linux programmers have no interest in doing so, they respond only to their own needs. That's why Linux is not a serious challenge to Microsoft.

[rogerhb]

$this->bbcode_second_pass_quote('jaws', 'T')hat's why Linux is not a serious challenge to Microsoft.

[jaws]

$this->bbcode_second_pass_quote('ElijahJones', 'T')hat is the limb I am talking about, there is a huge amount of inertia in the oil infrastructure that keeps us chugging along. If that infrastructure is monolithic in application we are shot. In fact most of America's infrastructure is crumbling, we just can pave the roads fast enough. We have reached a level where it will be hard for us to get bigger because we can't maintain what we have. Call it a Tainterism if you like, its true.

[CARVER]

We all like to be free to do what we want. But we don't want others to be free to do what they want, because then they might do something that we don't want. If we are all free to do what we want, our collective behavior might turn into something that none of us want. For example I want to make a profit by selling US$, but I don't want the economy to collapse. As long as not everyone is going to try to sell their dollars then there is no problem with my behavior of selling dollars. However if enough people take the same position as I do, we could trigger a dollar crash and severly damage the economy, which is what none of us want. But since we act simultaneously and without knowing what the others will do, we just go ahead with our behavior. So how could we prevent that? We could get a government to control our behavior to prevent that our individual behaviors collectively hurt us more then they do us good. To make sure that we stick to the rules set by the government they need a way to reward and punish us. But such powers give room to corruption.

In the short term a free market without government intervention sounds great, lot's of freedom. However if that freedom in the long term results in something that all of us don't want, then it is not so great, and realising that, we might be willing to give up some of our freedoms to make sure that we do not hurt our society without intending to do so. (If that would also be possible without government intervention then please tell me how).

But whatever system we use, it is important that all 'players' learn how to best behave in such a system. That should be mandatory. If you don't teach people that in schools, then you can probably take advantage of them in the short term, but that is likely going to give problems in the long term (when they start breaking the rules and resort to crime). Take credit cards for example. In itself it is not a bad thing, that just depends on how people behave, how they use it. It's very easy to for people to behave stupid with it and the credit card company can then easily take advantage of that stupid behavior. The more people that act stupid, the more the company profits. Untill those people get so desperate and start acting really stupid and bomb your company for example.

And that is the problem. There is no way of knowing how people will behave, so there is no way of knowing how far one can go to take advantage of them without getting hurt in some way. Due to all the variables and interactions it is too complex to predict accurately. So don't pretend that you can guarantee that the economy will be fine, because people will become complacent, and later angry when things don't go like you predicted. Who's fault that is, doesn't matter, it's just something all parties should try to prevent, so it's good to remind people that it could go differently. Just like our predictions about the effects of PO, we can't say with certainty how things will turn out. But we can speculate about possible scenarios and try to reason how we could best prepare for those. We usually only tell what we think is the most likely scenario, but sometimes the unlikely scenarios are important as well. A scenario with a 1% chance of happening is not by definition less important to your decision making than a scenario that has say a 30% chance of happening, because the 1% chance scenario might have such huge consequences that it might be well worth it to take into account when making your decisions. Therefore I don't think it is smart to only focus on/tell the most likely scenario. (You might be able to find investments that do well/are useful in multiple scenarios.)

[ohanian]

$this->bbcode_second_pass_quote('CARVER', 'W')e all like to be free to do what we want. But we don't want others to be free to do what they want, because then they might do something that we don't want. If we are all free to do what we want, our collective behavior might turn into something that none of us want.

[rogerhb]

We know that economics is not a religion because

(a) you can still do cartoons about it

(b) we have not rounded up the economist or non-economists and shot them

(c) religions have as a goal a way to promote the betterment of society

(d) there aren't laws about having to respect somebodies economic opinion

[CARVER]

$this->bbcode_second_pass_quote('ohanian', 'I') can make a lot of money if I screw someone in my community. The more people I screw, the more money I make. But if I screw too many people in my community, my community collapses and I be screwed myself!!! So what is the solution?

The solution is , of course, to screw someone in somebody's else community. If their community collapses, I'm still safe because my community has not collapse and my wealth is still usable.

[jaws]

For Carver and Ohanian, I have to explain how wealth comes to be. There are two ways to acquire wealth. You can acquire wealth by creating something valuable to someone else and receiving wealth in exchange. The other way is through invasion, theft, or raiding.

If you make money on the free market by speculating not only are you not "screwing" anybody, you are doing them a favor! You have correctly identified what people will need in the future, and this allows you to obtain large quantities of wealth as a consequence of your actions.

However the reason you can speculate against the dollar is because the U.S. government is stealing from its people through inflation. What you are doing by speculating against the dollar is stealing back from the U.S. government and restoring the justice of the market.