24 votes

Epic Video: Monopolies are an illusion in free markets.

Excellent video explaining that monopolies can only occur when enforced by governments.


http://youtu.be/UAOJE8Bh5IY

Lots of ammunition to use against your state loving friends. :)




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i skimmed

he seems to take other peoples points, jokes, and comments, and has consolidated them all here, so i didn't see i'd learn anything new.

the concept is more true than taught in govt econ classes, but in reality the end result of competition is monopoly. not price controlling monopoly, but there are plenty of reasons someone may say own 100% of the strophome cup market. it can simply be b/c they do it so well, at such a minor profit that it doesn't make sense for people to expend the necessary resources to compete with them.

but truth be told most industries are monopolies and too big to fail b/c of govt grants, or limitations on competition.

It's the only reason. Free

It's the only reason. Free market monopolies are simply a myth. Theoretically possible but never achieved in practice. And believe they have spent a lot of money trying.

Just like all the air rushing into a corner of your room and you suffocating is theoretically possible, but so far no human has yet to die this way and so far no capitalist has achieved a monopoly without government coercion.

There are theoretically plausible arguments to be made about real estate, but even this is problematic. There is no historical evidence of this being achieved, and since all known real estate monopolies are government there is no strong reason to assume this is any different. IE we know the cause of real estate monopolies that do exist. Governments.

It borders on insane to worry about theoretical monopolies when we have real ones all around.

Could someone explain how in

Could someone explain how in industries with large barriers to entry, a monopoly is not possible? It seems to me that if entry cost is billions of dollars, it would be quite easy to maintain a monopoly. Examples off the top of my head, airlines and oil drilling.

The barriers to entry are

The barriers to entry are artifacts of government. This was the entire point of the progressive (ie fascist) movement. To create barriers to entry after industrialists lost tons of money trying to corner markets and failing. They gave up. It was impossible to create enduring monopolies in a free market. Buying government was really cheap.

The people at the time were not products of government schools, so they were suspicious. So the capitalists joined forces with the dogooders and busybodies, mainly the political movements of the newly enfranchised women. They loved the idea of using government power to 'fix' all sorts of 'social ills', all sorts of vice was targeted.

It is this unholy alliance that created our current fascist system.

If you look at when all the vice laws, ending personal freedom, started in earnest and when the government started ending the free market, ending economic freedom in earnest, it's the same period.

These interests were only aligned in one respect. They wanted to end freedom. One group for pecuniary ends, the other for saving souls from vice.

It has always been an uneasy alliance.

But what they both agreed on was that government needed the power to work it's ends. They quibbled over the ends sometimes, but the power to reach whatever goal was the first and common goal.

Of course it was predictable that once the power did exist, capital would control it. From a historical perspective the doogooders were dupes. Anymore the nonprofits, tax-frees, and foundations supposedly espousing 'doogooderness' are all fronts for capital.

They dogooders still are dupes, look at your rank and file progressive, believing government power will ever be used for their purposes of 'helping people'.

I get all that, but I chose

I get all that, but I chose "natural monopolies" as examples because the barrier to entry isn't due to government, but as a natural consequence of the type of product being offered. Oil drilling for example requires billions of infrastructure equipment before a single drop of oil can be extracted.

Actually most

of the cost is artificially imposed. I mean they know where the oil is and how to get it, but the government makes them look where they know there probably isn't oil. Taxpayer funded lawsuits from the greens, thousands of pages of federal and state regulations to comply with, etc etc.

You have brushed up against a good way to understand it though. That is essentially what government does, drives up the cost of entry, it's really all it can do if you consider the cost of violating a law granting outright monopoly or outright prohibition, which is essentially a grant of monopoly to crime cartels. Let that last sink in.

Some industries do have natural barriers to entry, but these have never been enough to secure the mythical unicorn of a free market monopoly. But a government can drive up the costs as much as needed to secure market dominance for some party.

So again, while a free market monopoly is theoretically possible, worrying about a free market monopoly in a world literally plagued by state monopolies, is like some guy pumping carbon monoxide into your room because he says it will prevent you suffocating if all the oxygen rushes into a corner, hey you'll still have some oxygen!

Don't believe that guy:)

Well the 2 industries you mentioned....

are not monopolies so the evidence is clear. But you asked why. The simple reason is that entrepreneurs can raise large amounts capital from multiple sources to overcome those barriers.

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A lot of simple-minded

A lot of simple-minded assumptions made in this video. For example, the idea of a monopolist having his underbidded product bought up and then resold for a profit is a little logically silly.

Also the example with the motor vehlices is hilarious. If there was a 100% monopoly on cars, he claims that people ewould just move closer to their jobs. Yes, because moving is so easy and cheap! In reality, if there was such a monopoly, the vehicle manufacture could charge a huge premium...not so big that it actually would be cheaper to move and change.

Plan for eliminating the national debt in 10-20 years:

Overview: http://rolexian.wordpress.com/2010/09/12/my-plan-for-reducin...

Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a

It's hardly simple minded.

He's expressing the concept of 'substitution' in a short video. If you wish to learn more on the topic read Rothbard. If you chose not to educate yourself that is fine but realize comments like this make you look like what you are, ignorant of the topic, which is not to say you are an ignorant person.

If you do not understand economics, you can never do more than vaguely sense the matrix. Once you do, you can understand the world around you and see the walls of your cage clearly.

The concept of monopoly, or the conflation of monopoly that is a pure creation of statist propaganda is the most important blinder to remove.

So long as you wear this blinder you are human livestock. This is because you cannot even see your cage. You may occasionally bump into it, and be worried, but being unable to see it you are subject to being told oh that is just a barricade for your protection.

The walls of the cage are not to keep you safe, they are there to keep you in. Economics gives you the ability to see them for what they are.

If there is enough demand,

If there is enough demand, products do get bought up quickly if underpriced and resold at a higher price. Not every customer buys it at the lowest price, either out of ignorance for some other reason, so if there's enough difference then the reseller will continue buying up a portion of the product to realize the higher market price.

On the other end of the scale, if a manufacturer is charging a huge premium, an entrepreneur can create a start up and charge a moderately large premium instead of a huge premium.

This is like scalping....

The concert owner has a monopoly on tickets. The scalper buys up tickets he believes he can sell for more and does so. TO say it won't happen is silly. Perhaps it may not happen in certain instances, and we can discuss those.

But even if we do . It is still not a valid enough reason violate the Non-Agression principle.

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Scalping is different though;

Scalping is different though; scalping is targeting a different kind of market. Scalpers make their money off people who CAN'T buy from the venue directly. In the case of the bromine, what is preventing people from buying directly from the Deutsche cartel?

Plan for eliminating the national debt in 10-20 years:

Overview: http://rolexian.wordpress.com/2010/09/12/my-plan-for-reducin...

Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a

Scalping is the SOLUTION

to the fact the musicians who complain about scalping are lazy, egotistical, and not aren't too bright.

They price their product incorrectly. If they priced their product right to begin with their would be no scalping. Scalping is just arbitrage. Arbitrage occurs for two reasons, poor pricing or government interference. All the most lucrative arbitrage comes from the latter. Set up market walls, but then allow certain connected market actors to engage in arbitrage. Wall Street is all over this.

The 'solution' to scalping is simple. Increase price or increase supply so the market clears. They could increase supply, perform more, or have cheap 'virtual concerts' all over the place to increase supply for less affluent people who would like to see a live performance among fans, but are willing to see a televised version (perhaps with live stage show or effects) for a lower price.

Although as I said, really scalping is the free market solution to bad decisions by the artists or their handlers.

Now ticketmaster.. different issue I won't go into yet:)

TwelveOhOne's picture

When Pearl Jam complained about Ticketmaster

It was back in the 90s, Pearl Jam said Ticketmaster was costing their fans too much due to their charges.

This caused me to lose a lot of respect for that band. They obviously were not businessmen, and they obviously did not understand specialization in one's field.

They are musicians. Their goal is to draw a crowd for a period of time so that other vendors can sell t-shirts and food to the crowd. Obviously also, the crowd should obtain some enjoyment from listening to the music, otherwise the crowd would depart.

I haven't really been able to listen to Pearl Jam since, without thinking how bad their thinking is, which ruins the music. I had fond memories of playing the original Doom, listening to the lyrics "the dead lay in pools of maroon below", and thinking about those monsters that I could see from above, but couldn't go underneath where I was (e.g., it was 2.5D, not the full 3D that Quake became).

Anyway, I am relating: the experience of Pearl Jam decrying Ticketmaster was traumatic enough that I don't want to experience Pearl Jam any more.

What is your take on Ticketmaster?

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I struggled with TicketMaster too

Short answer is, even given the crooked banking system which means no one operates in anything like a free market, TM is really not free market operation. TM is an abuser of government protection. I'm heading out to dinner or I'd lay it out for you, but maybe this is better.

Your mission, should you choose to accept it:)

Ciphre out the mechanisms that support it and the removal of which would likely doom it if we had a free market.

Why is it silly?

as to your 2nd point, he is suggesting if 5% of people move and go without cars, then the profits for charging 5% extra and allowing room for compeition are wiped out.

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Ford has a monopoly on the Taurus

...

And the govt has a 'monopoly'

And the govt has a 'monopoly' on crappy education.

I love this video...

It just covers everything perfectly.

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scawarren's picture

Me too so thank you, SC :)

Me too so thank you, SC :)

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