From: "Brown, R Ken" <brownrk1@texaco.com>
Date: Fri, 2 Oct 1998 05:30:13 +0800
To: Cypherpunks <petro@playboy.com>
Subject: RE: GPL & commercial software, the critical distinction (fwd)
Message-ID: <896C7C3540C3D111AB9F00805FA78CE2013F8476@MSX11002>
MIME-Version: 1.0
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> Petro[SMTP:petro@playboy.com] wrote: 
> Sent: 	01 October 1998 21:23
> 
>>I'm afraid sir, that your ingonorance is showing.  Pick up any college
>>(hell, high school) ecomonics textbook.  Certain types of businesses are
>>inheritly advantagious to monopolies.  The electric company is the classic
> >>example- their is no cost effective way for an electric company to
> supply
> >>power to a given area unless it is a monopoly.  Certain types of
> businesses
> >>are suited to certain types of competition, and, unregulated, monopolies
> >>are exactly what you get.  This was exactly the situation that occured
> at
> >>the turn of the century and it happened because regulation was
> >>non-existant!  Your statement is wonderfully trite but I see no evidence
> to
> >>support it.
> 
>	I'd suggest you go back to school and think a bit.In most places
>the "Electric Company" is a goverment sponsored and deligated monopoly.
>Competition is prohibited by REGULATION. This also occurs with Gas, Water,
>Telephone, especially Non-commercial, cable, and in some places Garbage
>disposal.

Nonsense. Most of those businesses became monopolies - or local monopolies -
in the relatively unregulated 1880-1914 period.  In some of them - like rail
or oil in the USA - governments introduced regulation to *force*
competition.  In UK over the last 30 years government  has  used a thing
called the "Monopolies and Mergers Commission" to investigate & (very
occasionally) break up monopolies or cartels. Government introduced
regulation to stop BT selling some products in order to allow competion to
grow. Recently government has forcibly broken up gas supply monopolies in
this country.  

I don't believe there are that many natural monopolies  Where there *are*
natural monopolies it is because the entry cost is higher than any likely
profit. Obvious case is water. It would cost you a hell of a lot to
guarantee water supply to my street in London without using the existing
infrastructure. Probably hundreds of millions of pounds.  I pay less than a
hundred pounds a year for my water. Natural monopoly.

What happens much more often is that one company becomes dominant and then
uses money to undersell rivals. Or even buy them up. Maybe even pay more for
them  It seems to be a common personality characteristic of people who run
big companies that they want to run even bigger ones. The worst enemy of
small business is big business. Now, if you wanted to say that in most
countries big business and government had their hands in each others pockets
I'd agree with you. But sometimes governments realise that monopolies are
bad - or the voters tell them that monopolies are bad - and they introduce
regulation to enforce competition.

Some other problems  - in some businesses (like oil)  the capital investment
required is so large that although there is no natural monopoly the players
ahve to be big. It might even be that there are some business (long-distance
airlcraft?) where the natural number of players in the world market is 1  -
there just aren't enough customers to justify 2 companies making the
investment (which is maybe why European governments stepped in to create
Airbus). 

Garbage (what we call rubbish over here) collection  is different again.
It's not at all a nutural monopoly and there is nothing stopping anyone
offering to do it as a business. But it is a natural for social ownership,
not private ownership. The trouble with rubbish is that I want  my
*neighbour's* rubbish to be collected as well as my own. I can pay for mine,
but what if he can't pay for his? (Like what if he is an unemployable
alcoholic, with severe Tourette's syndrome who stands on street corners for
sometimes 24 hours at a stretch, singing old soul and gospel songs,  yelling
and screaming at anyone who comes close,  and drinking can after can of
cheap beer to calm himself down enough so he can get some sleep?). I don't
want his rubbish on my street. The easiest way to arrange that is for the
majority who want rubbish collection to band together to pay for it for
everybody. And the easiest way to arrange that is through tax and local
government.

Same applies to education - I might be able to pay for my daughter to go to
school but we want everybody else's kids to go to school as well because my
life is better if they do. So we pay for it through tax.

If I don't watch out this will turn into a list of the 6 reasons why, even
though private business is nearly always more efficient,  *some* enterprises
need to be publically owned. 

Ken Brown (usual disclaimer - nothing to do with my employers)


> --
> petro@playboy.com----for work related issues. I don't speak for Playboy.
> petro@bounty.org-----for everthing else.      They wouldn't like that.
>                                               They REALLY
> Economic speech IS political speech.          wouldn't like that.
>