From: Matthew James Gering <mgering@ecosystems.net>
Date: Mon, 5 Oct 1998 01:02:23 +0800
To: "Cypherpunks (E-mail)" <cypherpunks@cyberpass.net>
Subject: Capitalism and Monopolies (was RE: GPL & commercial software, the critical distinction)
Message-ID: <33CCFE438B9DD01192E800A024C84A193A7A15@mossbay.chaffeyhomes.com>
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Jim Choate wrote:
> Only after the early 1890's when the situation got so bad 
> they had to do something. Prior to that there was no federal 
> intervention in railroad operations per se 

Completely false. Traffic to/from the West coast did not warrant the
capital investment in transcontinental railway, so the government make
*exclusive* lands grants to specific railroads to extend the railways to
the West coast (100M acres between 1863-7) . Those subsidies created the
monopolies, the source of coercive power over Western farmers. Protest
against this arbitrary power was blamed on the market instead of the
government subsidies, and resulted in the Interstate Commerce Act of
1887, and the Sherman Act of 1890. 

I should have stated government "distortions" instead of "regulation."
That includes subsidies.

> And every drop of mineral rights in this country is owned 
> by oil companies or the US government as a result of the 
> conflicts that took place from the late 1800's to the 
> early 1900's.

The placement (ownership) of these rights, their value, restrictions and
enforcement are the result of a free market? No, government
intervention.

> Actualy the local and state regulators did that back in the 
> late 50's and early 60's the federals had no hand in it.

Did anyone ever state monopolies result from federal regulations?
Government distortion/intervention, that can come at any level. Acts of
force or coercion can create a monopolistic situation, free trade
cannot.

> Bullshit math. The interactions are nowhere near as simple as 
> you state. The big company has the resources to outlast the 
> smaller company in any industry that can monopolize (an issue
> you seem to miss, not all industries can monopolize)

So what is the discriminating factor(s) distinguishing industries that
can and cannot be monopolized?

Don't forget capital markets; a free fluid capital market can and will
support a smaller competitor if potential long term profits will support
it. I will qualify that we do not have a very free capital market, it
currently favors larger businesses. The answer is to deregulate the
capital market. Even with our heavily regulated capital markets this
works often.

> Examples please where a small firm dukes it out (sic) on 
> equal terms with a larger one...

Equality is about freedom of action, not status or result. Amazon vs
Barnes & Noble, Yahoo vs NBC, Red Hat vs Microsoft, etc.

I see the egalitarian perversion of "equality" polluting arguments
against free market capitalism. Equal states and "game" like fairness
and handicapping is not ideal, Freedom is ideal.

> > In one of those nordic countries, I think Finland, the phone
> > system was never made a public enterprise or state regulated
> > monopoly, but most other things were.
> 
> Then how does it operate? Who owns the switches and wires? 
> Either it's a public utility or it's some sort of private
> enterprise (though it may by under contract to the government).

However buys and installs the switches and wires. There is no artificial
barriers such as right-of-way restrictions, exclusive franchise,
utilities commission, or nationalization. There are many competing
telecom companies, all the way to local loop.

> > There is no "natural monopoly" that is not somewhere a
> 
> A 'natural' monoploy, to my mind, is a company that operates 
> in an industry that can be saturated.

That's a perverted definition of 'natural' monopoly. A 'natural'
monopoly involves something where all or none must benefit (e.g.
military defense) or something based on a severely scarce resource (e.g.
real estate to your house).

Market saturation is a natural effect of free competition, the number of
firms it takes is irrelevant, and competition is not barred by
artificial restraint, only profit. If a firm abuses its position
competition can and will capitalize on the opportunity. A coercive
monopoly is one that is immune to market constraints (supply and demand)
-- that requires artificial barriers.

> The VCR industry is a great example of a 'natural' monopoly. 

You must be joking. I could enter the video recording/playback equipment
market tomorrow with sufficient capitalization and turn good profits in
5 years. I didn't say VCR because that is terribly myopic, the market
demand is the function not the technology. Technology and innovation is
a natural destabilizer to monopoly positions.

	Matt