Is it okay for the government to bust up monopolies?

[Philosophy Explorer]

Google Standard Oil to see a piece of American history.

Standard Oil back then was one of the most hated companies around due to their business practices. The public outcry was great so the US government finally broke it up into smaller companies.

Some argue that due to the scale of size, the public derives an economic benefit from monopolies. But many do fear monopolies.

What do you think?

PhilX

[Terrapin Station]

Ideally, I wouldn't have an economy structured anything like our economy. But that's not going to happen any time soon. So under a scenario like present economies, I'd rather not have monopolies decided by a pro or anti monopoly principle. I'd rather have it be a judgment call regarding whether the business' practices are beneficial versus detrimental (to the citizenry who are affected by that business' practices), whether it would be more beneficial to sustain or break up a particular monopoly.

[Melchior]

No. Monopolies cannot occur if competition is unfettered.

[Philosophy Explorer]

No. Monopolies cannot occur if competition is unfettered.

That's if. That's why I said to read up on Standard Oil who made sure their competition was restrained.

PhilX

[bobevenson]

No. Monopolies cannot occur if competition is unfettered.

Sorry, but a power plant has a monopoly on electricity, and it's not practical for competition to come into the picture. If such a power plant decided to triple the price of electricity due to its monopolistic position, the government should be able to force its sale to another company willing to sell electricity at a lower rate. This is AEP theory.

[Hobbes' Choice]

No. Monopolies cannot occur if competition is unfettered.

Sorry, but a power plant has a monopoly on electricity, and it's not practical for competition to come into the picture. If such a power plant decided to triple the price of electricity due to its monopolistic position, the government should be able to force its sale to another company willing to sell electricity at a lower rate. This is AEP theory.

Weird since this is utterly at odds with most of the shit you put out.
How is a government hobbled by your ridiculous rules and inability to licence and gather taxes able to enact monopoly law?

[Hobbes' Choice]

No. Monopolies cannot occur if competition is unfettered.

What an utter croc of shit.
It is exactly unfettered competition that allows monopolies to occur and the big fish eat the small one, and are able to control the market.

[Hobbes' Choice]

Ideally, I wouldn't have an economy structured anything like our economy. But that's not going to happen any time soon. So under a scenario like present economies, I'd rather not have monopolies decided by a pro or anti monopoly principle. I'd rather have it be a judgment call regarding whether the business' practices are beneficial versus detrimental (to the citizenry who are affected by that business' practices), whether it would be more beneficial to sustain or break up a particular monopoly.

You have just contradicted yourself.

[Terrapin Station]

Ideally, I wouldn't have an economy structured anything like our economy. But that's not going to happen any time soon. So under a scenario like present economies, I'd rather not have monopolies decided by a pro or anti monopoly principle. I'd rather have it be a judgment call regarding whether the business' practices are beneficial versus detrimental (to the citizenry who are affected by that business' practices), whether it would be more beneficial to sustain or break up a particular monopoly.

You have just contradicted yourself.

What was P in the contradiction (so that I was stating P & not-P)?

[bobevenson]

No. Monopolies cannot occur if competition is unfettered.

Sorry, but a power plant has a monopoly on electricity, and it's not practical for competition to come into the picture. If such a power plant decided to triple the price of electricity due to its monopolistic position, the government should be able to force its sale to another company willing to sell electricity at a lower rate. This is AEP theory.

Weird since this is utterly at odds with most of the shit you put out.
How is a government hobbled by your ridiculous rules and inability to licence and gather taxes able to enact monopoly law?

Please, stop talking like the village idiot. I don't know how to address your gobbledygook.

[Hobbes' Choice]

Ideally, I wouldn't have an economy structured anything like our economy. But that's not going to happen any time soon. So under a scenario like present economies, I'd rather not have monopolies decided by a pro or anti monopoly principle. I'd rather have it be a judgment call regarding whether the business' practices are beneficial versus detrimental (to the citizenry who are affected by that business' practices), whether it would be more beneficial to sustain or break up a particular monopoly.

You have just contradicted yourself.

What was P in the contradiction (so that I was stating P & not-P)?

Having and at the same time not having an anti-monopoly policy. You two case scenario is one and the same. There are no good cases for monopolies.
Maybe you have some examples.

[FlashDangerpants]

Some argue that due to the scale of size, the public derives an economic benefit from monopolies. But many do fear monopolies.

There is more than one type of monopoly. Standard Oil represented a specific type by cornering the oil market and using their position to bankrupt all the competitors (except Shell iirc). After gaining full control of one market, they jacked up prices in markets there in order to fund prices that would bankrupt competitors elsewhere.
The combination or market manipulation to bust competitors with exploitation of their dominance to rip of consumers made the anti-trust actions against them inevitable.

Google & Microsoft have a different type of monopoly. They both developed network effects. Their core products attracted consumer, the available pool of consumers attracted <software partners / advertisers /etc> which attracted more consumers which attracted more of the <etc>. Both have purchased potential rivals just to get their technology (often to bury it). Both have done some shady stuff to exploit their consumers, push competitors out of markets and so on. But on the whole you get a shit ton of free stuff from them as a consumer, and if they were removed from the market a new platform would emerge of equal dominance because network effects make that happen.
Trying very hard to break these monopolies is probably a waste of effort - but regulation to prevent serious abuses is always needed, because the market cannot provide that unless the abuse is soooo bad that all the consumers abandon the platform. Ultimately these companies tend to lose out to some new platform anyway.

Another type of monopoly is one you only get to hold when nobody feels the need to compete. This happened recently to the Chinese. There is a set of substances called Rare Earth Metals. The thing is that the "rare" refers to their electrical behaviour and other unusual characteristics, they are actually abundant. Producing them is a disgusting business though. It involves putting tons of slag from aluminium foundries through a filthy process with vicious chemicals that results in tremendous quantities of poisonous effluent. So only a country with pitifully negligent environmental controls can produce them cheaply. China cornered the market in these metals a few years ago and then imposed export controls. This immediately caused a small investment boom in other countries that have no technical difficulty in producing them, and China's monopoly was only maintained by abandoning the actual plan to exploit it for gain. (I think that all the money which piled into non Chinese rare earths also went down the drain).
These monopolies that cannot be exploited are probably of the least concern. Although the people of Afghanistan should be worried, a report years ago claimed they held billions of $$$ of rare earth minerals. That's probably only true if they are prepared to destroy a lot of countryside while ripping it out of the ground. If the earths are to be sourced cleanly, then the entire rest of the world can do that more cheaply than they can.

Another relatively benign monopoly occurs everywhere in telecoms. You get a new technology that costs billions to roll out (CDMA, 3G, 4G... 5G?, LTE) and you have 10 or more companies bidding for expensive bandwidth that only 5 of them can have. Then one of them commits to pile up a shit ton of debt in order to build out a spiffy network - concentrating on large population centres to begin with, they pay a little over the odds to get in there first. All the high paying early adopters go with the heavily indebted front runner and that guy gets a larger share of the market for his trouble. A second big player will then load up with a little less debt to push out a second network with that tech (which has gotten a bit cheaper and the second mover usually holds a larger share of the market, plus they save more cash by going slower). This one goes to the major cities, plus other places the first cannot afford to expand into too quickly. Hopefully a third company will roll out a network. Everyone else rents off those three guys.
The nature of finance and debt means that nobody will build a 4th national network - nobody will lend them the money. Regulators cannot do shit about that. But they do tend to try and have 3 telcos in every wireless market (sullenly accepting that one of them might not bother with the current fastest tech). 3 appears in this case to be a magic number of sorts.
If regulators didn't do that, one by one, markets would get dominated by a single telco, 2 at most. The advantage accrued by the initial big investment outweighs the burden of the debt because it imposes higher repayment rates on anyone who wants to invest later (their investment is riskier, that has to be priced).
Trying to break them up into more than 3 heavily invested networks seems to be implausible, it risks forcing companies to bankrupt themselves and reduce competition, or it makes technological upgrades simply not happen. If the wireless telecoms industry ever stops producing speedy new shit, that would stop being true very quickly.

As an aside, the Mexican telecoms market was dominated by a single company for decades of course, but I wouldn't rule out an element of political corruption involved there, which I guess is technically a different thing. But we should bear in mind that is another classic way of establishing a monopoly with big rents. Probably we can all agree that those should be broken up.

But there are desirable monopolies. At least some would argue that much. You can think of a police force as a sort of company that has the state for a a shareholder and provides lawn n order for a service. I probably wouldn't open that firm up to much competition for its basic services (the side orders are more of a left-right issue that I don't care about) because it is hard enough to prevent the current owners from abusing it. I used the cops to illustrate that point not because it is the ideal subject, but because I can't imagine anyone at all wanting to privatise that power. Whether that same logic applies to other businesses like trains, post offices and hospitals is an issue for others to flame each other about on the according to the usual boring divisions of left and right. In either case, there is some level of activity which is structured in the way companies are to some extent, and which deals in stuff that should be held in monopoly.

Where the whole thing really falls apart is where competition is not between well run companies eating the lunch of badly run companies (which is how consumers benefit from competition). the best example is airlines. In some people's theory, if all monopolies are bad, then more competitors must be better. But the truth is the world contains far, far too many airlines. There should probably be about 10, maybe 20 tops (unlike regional telecoms, the ideal number is impossible to guess because the market has been so thoroughly distorted everywhere).

[Melchior]

Some argue that due to the scale of size, the public derives an economic benefit from monopolies. But many do fear monopolies.

There is more than one type of monopoly. Standard Oil represented a specific type by cornering the oil market and using their position to bankrupt all the competitors (except Shell iirc). After gaining full control of one market, they jacked up prices in markets there in order to fund prices that would bankrupt competitors elsewhere.
The combination or market manipulation to bust competitors with exploitation of their dominance to rip of consumers made the anti-trust actions against them inevitable.

Google & Microsoft have a different type of monopoly. They both developed network effects. Their core products attracted consumer, the available pool of consumers attracted <software partners / advertisers /etc> which attracted more consumers which attracted more of the <etc>. Both have purchased potential rivals just to get their technology (often to bury it). Both have done some shady stuff to exploit their consumers, push competitors out of markets and so on. But on the whole you get a shit ton of free stuff from them as a consumer, and if they were removed from the market a new platform would emerge of equal dominance because network effects make that happen.
Trying very hard to break these monopolies is probably a waste of effort - but regulation to prevent serious abuses is always needed, because the market cannot provide that unless the abuse is soooo bad that all the consumers abandon the platform. Ultimately these companies tend to lose out to some new platform anyway.

Another type of monopoly is one you only get to hold when nobody feels the need to compete. This happened recently to the Chinese. There is a set of substances called Rare Earth Metals. The thing is that the "rare" refers to their electrical behaviour and other unusual characteristics, they are actually abundant. Producing them is a disgusting business though. It involves putting tons of slag from aluminium foundries through a filthy process with vicious chemicals that results in tremendous quantities of poisonous effluent. So only a country with pitifully negligent environmental controls can produce them cheaply. China cornered the market in these metals a few years ago and then imposed export controls. This immediately caused a small investment boom in other countries that have no technical difficulty in producing them, and China's monopoly was only maintained by abandoning the actual plan to exploit it for gain. (I think that all the money which piled into non Chinese rare earths also went down the drain).
These monopolies that cannot be exploited are probably of the least concern. Although the people of Afghanistan should be worried, a report years ago claimed they held billions of $$$ of rare earth minerals. That's probably only true if they are prepared to destroy a lot of countryside while ripping it out of the ground. If the earths are to be sourced cleanly, then the entire rest of the world can do that more cheaply than they can.

Another relatively benign monopoly occurs everywhere in telecoms. You get a new technology that costs billions to roll out (CDMA, 3G, 4G... 5G?, LTE) and you have 10 or more companies bidding for expensive bandwidth that only 5 of them can have. Then one of them commits to pile up a shit ton of debt in order to build out a spiffy network - concentrating on large population centres to begin with, they pay a little over the odds to get in there first. All the high paying early adopters go with the heavily indebted front runner and that guy gets a larger share of the market for his trouble. A second big player will then load up with a little less debt to push out a second network with that tech (which has gotten a bit cheaper and the second mover usually holds a larger share of the market, plus they save more cash by going slower). This one goes to the major cities, plus other places the first cannot afford to expand into too quickly. Hopefully a third company will roll out a network. Everyone else rents off those three guys.
The nature of finance and debt means that nobody will build a 4th national network - nobody will lend them the money. Regulators cannot do shit about that. But they do tend to try and have 3 telcos in every wireless market (sullenly accepting that one of them might not bother with the current fastest tech). 3 appears in this case to be a magic number of sorts.
If regulators didn't do that, one by one, markets would get dominated by a single telco, 2 at most. The advantage accrued by the initial big investment outweighs the burden of the debt because it imposes higher repayment rates on anyone who wants to invest later (their investment is riskier, that has to be priced).
Trying to break them up into more than 3 heavily invested networks seems to be implausible, it risks forcing companies to bankrupt themselves and reduce competition, or it makes technological upgrades simply not happen. If the wireless telecoms industry ever stops producing speedy new shit, that would stop being true very quickly.

As an aside, the Mexican telecoms market was dominated by a single company for decades of course, but I wouldn't rule out an element of political corruption involved there, which I guess is technically a different thing. But we should bear in mind that is another classic way of establishing a monopoly with big rents. Probably we can all agree that those should be broken up.

But there are desirable monopolies. At least some would argue that much. You can think of a police force as a sort of company that has the state for a a shareholder and provides lawn n order for a service. I probably wouldn't open that firm up to much competition for its basic services (the side orders are more of a left-right issue that I don't care about) because it is hard enough to prevent the current owners from abusing it. I used the cops to illustrate that point not because it is the ideal subject, but because I can't imagine anyone at all wanting to privatise that power. Whether that same logic applies to other businesses like trains, post offices and hospitals is an issue for others to flame each other about on the according to the usual boring divisions of left and right. In either case, there is some level of activity which is structured in the way companies are to some extent, and which deals in stuff that should be held in monopoly.

Where the whole thing really falls apart is where competition is not between well run companies eating the lunch of badly run companies (which is how consumers benefit from competition). the best example is airlines. In some people's theory, if all monopolies are bad, then more competitors must be better. But the truth is the world contains far, far too many airlines. There should probably be about 10, maybe 20 tops (unlike regional telecoms, the ideal number is impossible to guess because the market has been so thoroughly distorted everywhere).

Remember Kodak?

[Terrapin Station]

Having and at the same time not having an anti-monopoly policy. You two case scenario is one and the same. There are no good cases for monopolies.
Maybe you have some examples.

But I didn't say that "I would have an anti-monopoly policy & I would not have an anti-monopoly policy." I said, "I'd rather not have monopolies decided by a pro or anti monopoly principle. I'd rather have it be a judgment call . . ."

I don't believe that monopolies are detrimental in principle. It would depend on the situation. So let's decide based on the particular situation rather than taking a principled approach. In general, I'm not a fan of principle-oriented approaches to such things, including for ethics. Principle-oriented approaches tend to lead us to ridiculous posititions instead in my opinion.

[Hobbes' Choice]

Having and at the same time not having an anti-monopoly policy. You two case scenario is one and the same. There are no good cases for monopolies.
Maybe you have some examples.

But I didn't say that "I would have an anti-monopoly policy & I would not have an anti-monopoly policy." I said, "I'd rather not have monopolies decided by a pro or anti monopoly principle. I'd rather have it be a judgment call . . ."

I don't believe that monopolies are detrimental in principle. It would depend on the situation. So let's decide based on the particular situation rather than taking a principled approach. In general, I'm not a fan of principle-oriented approaches to such things, including for ethics. Principle-oriented approaches tend to lead us to ridiculous posititions instead in my opinion.

I know what you said. I think you are probably wrong.

Monopolies are detrimental in principle and in deed.
Have you got an example where this is not the case?