Rare that I appreciate an opinion piece from the NYT

[Pine Barrens Mafia]

But this guy knocked it out of the park.

 

https://www.nytimes.com/2018/11/25/opinion/monopolies-in-the-us.html

Edited November 29, 2018 by Joe in Winslow

[Azalin]

None of the companies or corporations he mentions are monopolies. It sounds to me like the author dislikes huge corporations and is trying to characterize them as monopolies. 

[TakeYouToTasker]

13 minutes ago, Azalin said:

None of the companies or corporations he mentions are monopolies. It sounds to me like the author dislikes huge corporations and is trying to characterize them as monopolies. 

 

Also important to note (I've made this point before, but it's worth doing again):  monopolies are created, almost exclusively, by the government.

 

Monopolies are created through the state action of legal preference, or capital barriers imposed by regulation, not through free markets.  Monopolists are political entrepreneurs who garner market share by enticing government to subsidize their specific business within their industry, or their specific industry within the larger economy; or, conversely, to pass legislation which directly or indirectly harmed competing interests.

Edited November 29, 2018 by TakeYouToTasker

[TPS]

6 minutes ago, TakeYouToTasker said:

 

Also important to note (I've made this point before, but it's worth doing again):  monopolies are created, almost exclusively, by the government.

 

Monopolies are created through the state action of legal preference, or capital barriers imposed by regulation, not through free markets.  Those you refer to as "robber barons" were largely political entrepreneurs who garnered market share by enticing government to subsidize their specific business within their industry, or their specific industry within the larger economy; or, conversely, to pass legislation which directly or indirectly harmed competing interests.

That belief completely ignores the nature of production and capitalism. Economic concentration occurs as production becomes more capital intensive from technological change. The more capital intensive production, the break even point occurs at higher and higher levels of production.  In most industries, technological change leads to handful of firms in the market.  Related to this, big capitalist hate competition--they want to control their prices because Price competition is too destructive.  Mergers to reduce competition eventually lead to a situation where one or two firms dominate the industry.   That is the natural result of "free market capitalism."  Sometimes a new technology will disrupt an industry, but eventually it will end up as a non-competitive market again. 

 

And those big capitalists do a great job of convincing the populace that the "free market" system still exists...

[GG]

Rule of Three is common in highly capital intensive industries.   You'd figure economists would have learned over the 150 year old history of this phenomenon.  Lesser competitors either wither away or get acquired in the consolidation.  

 

Any government intervention results in a worse outcome for the consumer. 

 

Leonhardt's example of companies' currently dominating the information economy is not example of monopolistic behavior, but the reluctance of customers to use alternate platforms.  

Edited November 29, 2018 by GG

[TakeYouToTasker]

2 minutes ago, TPS said:

That belief completely ignores the nature of production and capitalism. Economic concentration occurs as production becomes more capital intensive from technological change. The more capital intensive production, the break even point occurs at higher and higher levels of production.  In most industries, technological change leads to handful of firms in the market.  Related to this, big capitalist hate competition--they want to control their prices because Price competition is too destructive.  Mergers to reduce competition eventually lead to a situation where one or two firms dominate the industry.   That is the natural result of "free market capitalism."  Sometimes a new technology will disrupt an industry, but eventually it will end up as a non-competitive market again. 

 

That's not a result of capitalism at all.  It's a direct result of capital barriers to market entry created by regulation.  There's a reason industry loves regulation:  it's a guarantee of market share.  This directly leads to instances of predatory oligopoly.

 

And those big capitalists do a great job of convincing the populace that the "free market" system still exists...

 

Again, they aren't capitalists.  They are political entrepreneurs, and yes, they do a remarkable job of convincing the populace that we have a capitalist system when we have anything but.

[leh-nerd skin-erd]

15 minutes ago, TakeYouToTasker said:

 

That's not a result of capitalism at all.  It's a direct result of capital barriers to market entry created by regulation.  There's a reason industry loves regulation:  it's a guarantee of market share.  This directly leads to instances of predatory oligopoly.

 

 

 

 

Again, they aren't capitalists.  They are political entrepreneurs, and yes, they do a remarkable job of convincing the populace that we have a capitalist system when we have anything but.

I'd point to Uber and Lyft as a recent example of government intervention. Taxi =fees, insurance, inspections, medallions, disclosure to pick up passenger A and deliver him to location X.  

 

With Uber, that which revolutionized the quick hit transportation gig...= little regulation, little oversight and a whole lot less money to play in the game...all while delivering passenger A and delivering him to location X.

 

The separate & distinct argument that the taxi experience largely sucks aside...it's all about the way the government pulls the levers. 

 

It's all about the haves and have nots, and if the government casts a benevolent gaze you way, you soon sit on piles of money. 

[Pine Barrens Mafia]

12 hours ago, TakeYouToTasker said:

 

Again, they aren't capitalists.  They are political entrepreneurs, and yes, they do a remarkable job of convincing the populace that we have a capitalist system when we have anything but.

Exactly. And this is why I actually agree with the left on one issue: We need campaign finance reform. No donations over a thousand dollars and NO corporate donations. Period. Also, lobbyists need to be banned, and violators imprisoned.

 

 

Edited November 30, 2018 by Joe in Winslow

[Tiberius]

16 hours ago, Azalin said:

None of the companies or corporations he mentions are monopolies. It sounds to me like the author dislikes huge corporations and is trying to characterize them as monopolies. 

He never shows cause. Why are they bad? He claims wages would increase? Ok. 

[TPS]

19 hours ago, TakeYouToTasker said:

 

That's not a result of capitalism at all.  It's a direct result of capital barriers to market entry created by regulation.  There's a reason industry loves regulation:  it's a guarantee of market share.  This directly leads to instances of predatory oligopoly.

 

 

 

 

Again, they aren't capitalists.  They are political entrepreneurs, and yes, they do a remarkable job of convincing the populace that we have a capitalist system when we have anything but.

Corporations became large before they used regulations to stymie competition.  Once huge companies become the norm, economic power begets political power. The Robber Barons owned politicians much like corporate lobbying does today.  In fact, last century large capitalists banded together with the largest financiers to ensure their competitive positions--it was a mutually beneficial relationship:  If you control credit, then you control market entry and competition.  It had nothing to do with government...

 

19 hours ago, GG said:

Rule of Three is common in highly capital intensive industries.   You'd figure economists would have learned over the 150 year old history of this phenomenon.  Lesser competitors either wither away or get acquired in the consolidation.  

 

Any government intervention results in a worse outcome for the consumer. 

 

Leonhardt's example of companies' currently dominating the information economy is not example of monopolistic behavior, but the reluctance of customers to use alternate platforms.  

I'm sure the "rule of 3" had nothing to do with anti-trust policy....which seems to no longer be in existence...

[keepthefaith]

The writer missed the most obvious duopoly and one where price collusion is out in the open for all to see.  UPS/Fedex package delivery.  They draw up the map into zones using the same methodology.  Price their services identically down to the pound, zip code and box size.  Offer identical services and the kicker, they raise their prices every year by the same percentage like clockwork. It is the poster child for anti-trust price fixing.

Edited November 30, 2018 by keepthefaith

[billsfan89]

21 hours ago, Azalin said:

None of the companies or corporations he mentions are monopolies. It sounds to me like the author dislikes huge corporations and is trying to characterize them as monopolies. 

 

Monopoly was a strong term that is not technically accurate, but I think the general sentiment that across a wide variety of industries the market is being more and more consolidated into one or two entities that own a significant majority of the market is true. I don't think large companies in an industry in and of its self is a problem but in certain areas there are mergers and purchases that are allowed that shouldn't be allowed. In other areas there have been regulations since the 1990's that have been stripped that would have prevented the conglomeration of certain industries. Large companies holding 60+% of the market space can quickly become a problem if they become too big to compete against. 

8 minutes ago, keepthefaith said:

The writer missed the most obvious duopoly and one where price collusion is out in the open for all to see.  UPS/Fedex package delivery.  They draw up the map into zones using the same methodology.  Price their services identically down to the pound, zip code and box size.  Offer identical services and the kicker, they raise their prices every year by the same percentage like clockwork. It is the poster child for anti-trust price fixing.

 

Does the USPS follow a similar methodology? I find the USPS to have in general better pricing than UPS or Fedex in most cases anyway. Just interested to hear if you know. 

[whatdrought]

2 minutes ago, keepthefaith said:

The writer missed the most obvious duopoly and one where price collusion is out in the open for all to see.  UPS/Fedex package delivery.  They draw up the map into zones using the same methodology.  Price their services identically down to the pound, zip code and box size.  Offer identical services and the kicker, they raise their prices every year by the same percentage like clockwork. It is the poster child for anti-trust price fixing.

 

There's no such thing as a duopoly. That's the exact opposite of a monopoly. What you're describing is two competing businesses in one market... Unless you can prove that UPS and Fedex work in unison to create these standards, then you're just representing how companies react to competition. 

 

More to the point, the elephant in the room in all of this is that the largest monopoly is the government run monopoly of the USPS which greatly affects these two companies. 

[GG]

1 hour ago, TPS said:

Corporations became large before they used regulations to stymie competition.  Once huge companies become the norm, economic power begets political power. The Robber Barons owned politicians much like corporate lobbying does today.  In fact, last century large capitalists banded together with the largest financiers to ensure their competitive positions--it was a mutually beneficial relationship:  If you control credit, then you control market entry and competition.  It had nothing to do with government...

 

I'm sure the "rule of 3" had nothing to do with anti-trust policy....which seems to no longer be in existence...

 

Rule of Three is the natural outgrowth of global and highly capitalized industries.  Antitrust policy has nothing to do with the basic facts that a company that cannot invest or attract investment in its growth is going to get acquired or will go out of business.   Anti-trust regulation should only be focused on companies that actually cause consumer harm as a result of their size, not just because they are big.  Funny how the proclamations of companies being too big usually come from two parties that control US politics.

 

 

Edited November 30, 2018 by GG

[keepthefaith]

3 minutes ago, whatdrought said:

 

There's no such thing as a duopoly. That's the exact opposite of a monopoly. What you're describing is two competing businesses in one market... Unless you can prove that UPS and Fedex work in unison to create these standards, then you're just representing how companies react to competition. 

 

More to the point, the elephant in the room in all of this is that the largest monopoly is the government run monopoly of the USPS which greatly affects these two companies. 

Duopoly is a real term.  Yes, they work in unison by their actions.  Probably just a wink between the 2 CEOs at a golf outing at this point.  Literally 15 years in a row of identical price increases, aligned price schedules and identical surcharges on many things. 

 

USPS is certainly a shipper but they don't compete with UPS/Fedex on larger packages.

[whatdrought]

4 minutes ago, keepthefaith said:

Duopoly is a real term.  Yes, they work in unison by their actions.  Probably just a wink between the 2 CEOs at a golf outing at this point.  Literally 15 years in a row of identical price increases, aligned price schedules and identical surcharges on many things. 

 

USPS is certainly a shipper but they don't compete with UPS/Fedex on larger packages.

 

I don't care it its a term. It's not how monopoly works. 

 

Prove it. 

 

Prices being commiserate does not prove a monopoly. the main missing ingredient is market limitation. If it's impossible for any other company to compete in the parcel game, then you have grounds to say its a monopoly. 

 

This argument is the same as saying that because most SUV's run about the same price, there is a monopoly between all car dealers who sell SUV's.

[GG]

18 minutes ago, keepthefaith said:

Duopoly is a real term.  Yes, they work in unison by their actions.  Probably just a wink between the 2 CEOs at a golf outing at this point.  Literally 15 years in a row of identical price increases, aligned price schedules and identical surcharges on many things. 

 

USPS is certainly a shipper but they don't compete with UPS/Fedex on larger packages.

 

There's nothing wrong with duopolistic pricing strategies as long as the companies don't collude to fix the prices or have some other side agreements to split the market.  The main reason for pricing in a duopoly to be in lock step is that they usually find the right combination of pricing that allows them to earn a decent profit, but keep it at a low enough level to prevent new competitors from coming in.

[keepthefaith]

22 minutes ago, whatdrought said:

 

I don't care it its a term. It's not how monopoly works. 

 

Prove it. 

 

Prices being commiserate does not prove a monopoly. the main missing ingredient is market limitation. If it's impossible for any other company to compete in the parcel game, then you have grounds to say its a monopoly. 

 

This argument is the same as saying that because most SUV's run about the same price, there is a monopoly between all car dealers who sell SUV's.

 

The writer uses the term "monopoly" but the data the writer submits is more about market domination rather than monopolies.  A Duopoly is market domination by 2 companies.  That's what I'm talking about.  Further, I'm accusing Fedex and UPS of pricing collusion in violation of this statute.

 

From the link:

"Price fixing is an agreement (written, verbal, or inferred from conduct) among competitors that raises, lowers, or stabilizes prices or competitive terms. Generally, the antitrust laws require that each company establish prices and other terms on its own, without agreeing with a competitor."

 

https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/dealings-competitors/price-fixing

 

Further, I've accused both companies across from my desk on at least 6 occasions of being guilty of this which I truly believe has helped me in my annual negotiations with them.  They don't like the conversation and have clearly been coached up by corporate on addressing it and yes they both have plenty of lobby power in Washington.

 

 

8 minutes ago, GG said:

 

There's nothing wrong with duopolistic pricing strategies as long as the companies don't collude to fix the prices or have some other side agreements to split the market.  The main reason for pricing in a duopoly to be in lock step is that they usually find the right combination of pricing that allows them to earn a decent profit, but keep it at a low enough level to prevent new competitors from coming in.

 

"Inferred from conduct".  That's what they're doing. 

Edited November 30, 2018 by keepthefaith

[whatdrought]

Just now, keepthefaith said:

 

The writer uses the term "monopoly" but the data the writer submits is more about market domination rather than monopolies.  A Duopoly is market domination by 2 companies.  That's what I'm talking about.  Further, I'm accusing Fedex and UPS of pricing collusion in violation of this statute.

 

From the link:

"Price fixing is an agreement (written, verbal, or inferred from conduct) among competitors that raises, lowers, or stabilizes prices or competitive terms. Generally, the antitrust laws require that each company establish prices and other terms on its own, without agreeing with a competitor."

 

https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/dealings-competitors/price-fixing

 

Further, I've accused both companies across from my desk on at least 6 occasions of being guilty of this which I truly believe has helped me in my annual negotiations with them.  They don't like the conversation and have clearly been coached up by corporate on addressing it and yes they both have plenty of lobby power in Washington.

 

do you have any evidence? Because again, you're seemingly simply equating market trends as collusion. 

[GG]

3 minutes ago, keepthefaith said:

 

The writer uses the term "monopoly" but the data the writer submits is more about market domination rather than monopolies.  A Duopoly is market domination by 2 companies.  That's what I'm talking about.  Further, I'm accusing Fedex and UPS of pricing collusion in violation of this statute.

 

From the link:

"Price fixing is an agreement (written, verbal, or inferred from conduct) among competitors that raises, lowers, or stabilizes prices or competitive terms. Generally, the antitrust laws require that each company establish prices and other terms on its own, without agreeing with a competitor."

 

https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/dealings-competitors/price-fixing

 

Further, I've accused both companies across from my desk on at least 6 occasions of being guilty of this which I truly believe has helped me in my annual negotiations with them.  They don't like the conversation and have clearly been coached up by corporate on addressing it and yes they both have plenty of lobby power in Washington.

 

 

 

"Inferred from conduct".  That's what they're doing. 

 

Pricing finds its own equilibrium and once it's set than they generally move in lockstep.   That's not anti-competitive behavior, nor is there lasting consumer harm.  If one company jacks up prices to juice its profit, the competitor will gladly keep prices low to grow share, knowing that the price "gouger's" investors will hammer it for losing share.  If both companies jack up prices to juice profit, that will introduce an environment for another competitive entry.  That's why the Rule of Three is vital, because the 3rd, the weakest, competitor keeps the two leaders' behavior honest.