A company would be retarded to get inovlved in such as situation unless they formed a racket. The tasks performed by the Coast Guard, Police, and Fire Departments are inefficient by nature.

5/28/2007 10:13:00 PM

Quote :

"Why does the gov't have to protect and rescue the fishing fleet? Let the market work. LEt private rescue companies start-up. Let the fishing fleets purchase their own protection. Why do we have to pay for it? Why is gov't always the answer???"

Because the government, out of necessity, fills the holes left by the free market. So, let me ask you something: What private rescue company is going to rescue a family of four trapped in the ocean, if that company knows full well that that family can't afford to pay the rescue fee? So, in other words, a private rescue company will only save those that can afford their services.

The free market is good for a lot of things. Looking out for the common good is not always one of them.

5/28/2007 10:50:30 PM

Quote :

"What private rescue company is going to rescue a family of four trapped in the ocean,"

AAA helps stranded motorists for a annual fee. Private ambulance services transport life-threatening cases every day. Casual boaters could set up service contracts with private nautical firms for an array of services. And the rest of us who do not own a boat can save taxes.

If that's too progressive for you, then keep letting the C.G. rescue the "families of four." But let large commercial ventures such as fishing fleets and cruise lines provide their own rescue services. Why should my tax money go to help Princess Cruise Lines keep their costs down by using the C.G. when their ships get into trouble?

And I'd be careful about jumping to the conclusion that government is better at looking out for the common good. Politician's often trample the 'Individual Good' in the name of the Common Good.

5/28/2007 11:34:59 PM

Quote :

"And I'd be careful about jumping to the conclusion that government is better at looking out for the common good. "

That's a wonderful job of mangling what I said, which was:

Quote :

"The free market is good for a lot of things. Looking out for the common good is not always one of them."

I'm not against the privatization of certain services currently offered by the government. It is however simple-minded and ignorant to believe that the free market can solve all our problems. Free markets lead to monopolies like Standard Oil and US Steel. It lead to the systematic exploitation of the workforce. It wasn't until anti-trust legislation was passed by the government that this issue was resolved.

Oh and I think it's a good idea to have service contracts for AAA-like assistance for private boaters. It's always a good thing to allow people to buy their own protection. You know, like healthcare? Except of course if you can't afford it, like many Americans today. I guess then that poor people just won't be able to use the ocean at all. A shame really...

Lastly, the Coast Guard is out on the ocean regardless. I don't see the harm in radio-ing them for help to search for a missing boat every now and then. It seems like a good use of multi-tasking to do such things while they're protecting our country.

5/29/2007 12:04:50 AM

Quote :

" It is however simple-minded and ignorant to believe that the free market can solve all our problems."

I agree to a degree that some, very few, things are better handled by gov't. The problem is that way too many things that should be handled by the private sector are handled by gov't.

Quote :

"Free markets lead to monopolies"

Can't agree with you here, though. Government intervention in the market leads to monopolies.

Rockefeller brought his Standard Oil to a leadership position by offering a better and less expensive product. He got sweet deals from the railroads and bribed political leaders to use gov't power in his favor.

But still, the free market-not antitrust officials- prevented Standard from becoming a sole monopoly. Competition was quickly entering the market ...Associated Oil & Gas (1901), Gulf (1907) and Texaco (1902). By 1908, there were over 120 indpendent refineries. Standard's market share went from 34% in 1898 to 11% by 1906.

The anti-trust case agaisnt Standard wasn't confirmed until 1911, long after competition made the point moot.

The main problem with US capitalism is gov't meddling in the name of fairness. It took centuries for mankind to get government seperated from religion, hopefully someday we can get it seperated from the economy.

Quote :

"I don't see the harm in radio-ing them for help to search for a missing boat every now and then"

That's fine. But the C.G. is saddled with many other non-rescuing mundane chores that could be done by private initiative. That would save us taxes and free them up to save those "families of four"

[Edited on May 29, 2007 at 2:02 AM. Reason : .]

5/29/2007 2:01:56 AM

First, Standard Oil still had a 64% market share of refined oil products in the US in 1911, down from 94% in 1904. The 11% you cited was the percentage of exploration and pumped oil, which Rockafeller elected not to try and monopolize (possibly because he retired in 1897).

http://en.wikipedia.org/wiki/Standard_Oil

Quote :

"By 1890, Standard Oil controlled 88% of the refined oil flows in the United States. In 1904 when the lawsuit began it controlled 91% of production and 85% of final sales. Most of its output was kerosene, of which 55% was exported around the world. In terms of cost efficiency, Standard's plants were about the same as competitors. After 1900 it did not try to force competitors out of business by underpricing them. [7] Beyond question, the federal Commissioner of Corporations concluded, the dominant position in the refining industry was due "to unfair practices, to abuse of the control of pipe-lines, to railroad discriminations, and to unfair methods of competition."[8] Gradually, its market share fell to 64% by 1911. Standard did not try to monopolize the exploration and pumping of oil (its share in 1911 was 11%). John D. Rockefeller in 1897 had completely retired from the Standard Oil Company of New Jersey, though he continued to own a large fraction of its shares. Vice-president John D. Archbold then took a large part in the running of the firm."

The government broke up Standard Oil in 34 separate companies, but more importantly, nowhere in this article does it state that competition was responsible for Standard Oil's decline in its market share. Instead the article states that "After 1900 it did not try to force competitors out of business by underpricing them." Effectively, the company ceased it's undercutting competitors, so Standard Oil's reduction in market share was its own doing. Given that anti-trust cases against Standard Oil began in 1890 and picked steam around 1900, this decision could likely be due to mounting political pressure.


Additionally:

Quote :

"The government identified four illegal patterns: 1) secret and semi-secret railroad rates; (2) discriminations in the open arrangement of rates; (3) discriminations in classification and rules of shipment; (4) discriminations in the treatment of private tank cars."

In short, the monopoly was created by manipulation of government regulations, shady business practices, and deliberately forcing out competition. This didn't occur due to government interference. This occurred to to the laissez-faire economic policy of the time. The birth of anti-trust laws came about in response to the monopolization taking place in the US.

Did you pay attention in US History in high school?

The government, however inefficient and corrupt, is a necessary player in economics. I'm always surprised to hear people rail on the government for corruption when its equally prevalent in the private sector. The difference is that the government has some semblance of accountability through elections. Private sector companies aren't directly accountable to the public, and delivering a quality product is only part of what "good business entails."



[Edited on May 29, 2007 at 12:54 PM. Reason : e]

5/29/2007 12:30:21 PM

The Wikipedia article you refer to is full of slanted agenda. The comments on it are telling...

Quote :

" I would like to submit a neutrality dispute for this article, on the grounds that it portrays Standard Oil basically as an evil corporation out to destroy other businesses. This is an encyclopedia; its job is to give information, not preach public opinion. RichardSagers 07:50, 19 March 2006 (UTC)"

Let's see what a different expert says...

Quote :

"Monopoly by D. T. Armentano I have been teaching economics at the university level for twenty-five years. Easily the most often-asked questions relate to monopolies. The questions are often put in the following form: "In an economy free of governmental regulation, wouldn't a firm or group of firms obtain a monopoly over some vital resource or product? And won't the monopoly then exercise its power by raising prices?" The issues most often revolve around the oil industry and the famous Standard Oil Company antitrust case. The history of Standard Oil, students frequently tell me, proves that monopolies exist in free markets — and that they do raise prices arbitrarily — and that this is precisely why we need antitrust laws. Are monopolies truly an inherent problem in a free market? And do we need antitrust laws to combat them? The clearest definition of monopoly is one seller, with the law prohibiting competitors from entering the market. Local telephone and cable-television companies are examples — they are usually provided a monopoly by their local governmental officials — that is, they are made the only provider of the service in a certain locale — and competition is prohibited by the local governing body. Obviously, this is not a monopoly arising in a free market since it is the government not the market that is dictating the number of suppliers. The best way to get competition in these types of activities is to remove the legal restrictions on market entry — which, by the way, is happening in some cable-television markets, which has resulted in a decrease in prices. Some domestic firms are monopolies or new-monopolies because our government restricts foreign firms from competing against them. Again, these monopolies are artificial — that is, caused by government — and can be eliminated by ending all tariffs and import restrictions. Some business organizations spend years, even decades, earning consumer support. They produce innovative products which find favor with consumers; and they price their products correctly. The result is that they earn a significant share of the market. Competitors and left-wing university professors are prone to call such firms "monopolies." But they are mistaken — the market-share positions that these firms earn are entirely a consequence of efficient firm management and consumer satisfaction. And nothing is more deserving of praise than a business that is able to increase its market share in a free and open market. Ah, but won't firms that have earned high market share use their "power" to restrict output thereby raising prices? They might attempt to do that. But that sort of behavior will quickly attract competitors from both within and without the industry. Thus, the result will be that consumers will increasingly turn to other suppliers. Indeed, nothing will encourage competition more than a dominant firm acting "dumb." Therefore, dominant firms are far more Rely to attempt to lower their costs and prices in order to maintain their market positions. And that of course, is precisely the sort of competitive behavior we consumers want! But can't firms collude and fix prices in free markets? The answer again is — they are free to try. Certainly there have been numerous instances of firms attempting to "stabilize" markets through price-fixing agreements. But most credible college professors will inform their students that historically such attempts have been abject failures. For while there are incentives to fix prices, there are even stronger incentives to cheat on price-fixing agreements — that is, incentives to continue competing for higher revenues. Most of the classic antitrust conspiracies have had little effect on market prices. The myth that firms historically have succeeded in fixing prices is exactly that — a myth. Let's go back to the Standard Oil "monopoly." Haven't we been taught that Standard Oil monopolized in restraint of trade? Isn't this the prime example that is provided in support of antitrust laws? The little-known truth is that when the government took Standard Oil to court in 1907, Standard Oil's market share had been declining for a decade. Far from being a "monopoly," Standard's share of petroleum refining was approximately 64% at the time of trial. Moreover, there were at least 147 other domestic oil-refining competitors in the market — and some of these were large, vertically integrated firms such as Texaco, Gulf Oil, and Sun. Kerosene outputs had expanded enormously (contrary to usual monopolistic conduct); and prices for kerosene had fallen from more than $2 per gallon in the early 1860s to approximately six cents per gallon at the time of the trial. So much for the myth of the Standard Oil "monopoly." Should people be concerned about monopolies? Of course they should. But we must understand the true source and causes of monopolies — governmental barriers to free and open competition. The solution to the monopoly problem, then, lies not in antitrust laws (which should be repealed) but in the repeal of all governmental barriers to free and open trade. Dominick Armentano is professor of economics at the University of Hartford and is the author of The Myths of Antitrust and Antitrust and Monopoly. "

Quote :

"The government, however inefficient and corrupt, is a necessary player in economics. I'm always surprised to hear people rail on the government for corruption when its equally prevalent in the private sector. The difference is that the government has some semblance of accountability through elections. Private sector companies aren't directly accountable to the public, and delivering a quality product is only part of what "good business entails.""

Gov't has no business interfering in the economy in the name of fairness, price gouging, restraint of trade, inside trading or any of the other "feelgood" reasons. And private companies are indeed accountable to their customers..without happy customers..you are toast.

Look at Walmart's decreasing business rate. Who would've ever thought it could ever happen?

Monopolies can only happen when there is a collusion between gov't and a business. A free market is the best regulator of the economy.

5/29/2007 1:14:06 PM

btw, there already is a private company that assists stranded boaters


works kinda like AAA

5/29/2007 1:25:27 PM

EarthDogg once again provides the unintentional comic relief.

1) It's great to know that the free market will stamp out unfair business practices 20 years after a near total national monopoly is formed.

2) Roosevelt had started trustbusting prior to 1904. You can't tell me that TR's very public trustbusting activities didn't persuade Standard Oil to ease up on its monopolizing ways.

3) You need to cite the "34% in 1898 to 11% by 1906" source. A) Standard Oil was a holding company-- it owned majority shares in many oil companies that didn't go by the name "Standard Oil." I can see how this could lead one to believe (if they wanted to) that "Standard Oil" only had a small share of the market B) You're probably just full of shit, as Erios has suggested.

5/30/2007 12:08:39 AM

Obama was just on Letterman

5/30/2007 12:26:23 AM

Quote :

"And private companies are indeed accountable to their customers..without happy customers..you are toast. "

or captive customers.

5/30/2007 12:59:08 AM

^^^^^ Interesting article. It makes sense, but I'd be interested in seeing how other economists would respond to it.

^^^ I don't think he's full of shit. I do however contest the assumption that 100% privatization (or to the extent feasible) of services provided by the government is in the public's interest.

More importantly, I cannot understate my objection to EarthDogg's statement that government interference deserves all or even a majority of the blame for creating monopolies. 100% laissez faire policies have historically created the social injustice from which socialism arose. Socialism was a reaction to free markets and their impacts on public life.

Specifically, free markets can and have historically exploited their labor force. Black slaves were exploited by the cotton industry until the government outlawed slavery. Children were exploited by factories until child labor laws were passed. Women were exploited via lower comparable wages by a patriarchal society until government law stated such practices were illegal. The list goes on...

The key is that private businesses are in fact accountable to the public, but only to the extent that the public is aware of their practices. In this day and age, information is much more accessible to the masses. As a result you can make the argument that businesses are more or less forced to behave ethically.

Private businesses however are loyal only to one thing - the bottom line. History proves that, if a business can get away with murder in the pursuit of profits, it typically does. True, history also shows that these companies often accomplish this by abusing government laws.

However, trying to claim that, in most situations of unethical business practices, the government had a primary role in carrying it out is not only bold.... it's flat out wrong.

6/1/2007 8:25:01 AM

^
It seems you have two issues here.. one of which is the proposal that businesses are essential ammoral and need gov't regulation to restrict their evil means.

The other issue is that of monopoly.

My claim is that no monopoly can occur without some degree of gov't involvement. That doesn't mean that gov't is the sole source. A monopoly comes about from the collusion of one or more businesses and the gov't.

For instance, one way that members of a industry use gov't to keep competitors from entering their market is through licensing. It's an age-old tactic that has been very effective.

The industry, wanting to keep the market to themselves, announces that dangerous things could happen if anyone was allowed to practice their trade without proper training or credentials. We need a way to make sure the public is safe.

So they reccommend that the gov't require entrants to the industry be tested or accredited before they can set up shop. And since the gov't isn't an expert in the field, who better to do that testing than the established members of the industry. So they get to decide who gets to compete with them. What could be better?

This pratice is used by a wide variety of industries including doctors, lawyers, taxi cab companies, florists, and hair braiders. New York city has an official directory with 73 pages of occupations that require certification including VCR repairing and snow shovelling.

In 1997, two men set up a casket selling company in Tenn. They were charging $800 for a casket that funeral homes were charging $3200 for. The Board of Funeral Direcots and Embalmers, a state agency ordered them to cease and desist on the grounds that they didn't hold a valid funeral director license.

This is iditiotic. Are you required to buy a car from a mechanic? If you;re just selling caskets, why do you have to know how to embalm someone? Of course the state claimed that a defective casket once buried could harm the environment. But the company in question was purchasing their caskets from the same manufacturers as the licensed funeral homes.

I stand by my claim that any and all monopolies cannot exist without some degree of gov't involvement.

6/1/2007 11:10:47 AM

Quote :

"It seems you have two issues here.. "

I don't.

Quote :

"one of which is the proposal that businesses are essentially ammoral and need gov't regulation to restrict their evil means."

I'm not that cynical, and besides that's just depressing.

My point is that if private business has the opportunity to "exploit the public for monetary gain with little or no fear of reprisal," then somebody with appropriately low moral scruples will eventually come along and seize said opportunity. History is littered with examples, and I already named a few.

In effect, it's the minority of corruptable businesses that force us to address economic regulations. It's true that public knowledge of such contemptable practices can help flush out the "bad eggs," but that's far from a reliable method of monitoring the free market.

Consider law enforcement as an example. Why do we need the government involved in fight crime? We can take care of ourselves, and besides anyone who does commit crimes will be exposed and punished by an angry mob accordingly. Yeah, it makes no sense. Why should we assume people will follow the law? In turn, why should we assume business will always have the best interests of the people in mind?

As a result, I assert that government regulation of the free market is a necessity. You've got your work cut out for you if you care to argue this point...


Now, on to monopolies....

Quote :

"My claim is that no monopoly can occur without some degree of gov't involvement. "

I agree, and this completely coincides with my position. I objected to the sentiment that "government interference deserves all or even a majority of the blame for creating monopolies." You're offering a clarification, not a rebuttal, with this statement.

Quote :

"For instance, one way that members of a industry use gov't to keep competitors from entering their market is through licensing... The industry, wanting to keep the market to themselves, announces that dangerous things could happen if anyone was allowed to practice their trade without proper training or credentials... So they reccommend that the gov't require entrants to the industry be tested or accredited before they can set up shop. And since the gov't isn't an expert in the field, who better to do that testing than the established members of the industry. "

So let me get this straight. Private industry executives get together and hoodwink government officials into writing bad legislation. This new legislation allow the execs to create monopolies.

And for some reason, the government is the one that's the bad guy?

When a thief masterminds a plot to rob a house, who's more to blame: the thief himself, or the low-level thug driving the get-a-way car who wasn't aware of what was going on. Seems like you're throwing the wrong party under the bus here.


As I stated, government regulations are a necessity in the free market. Obviously these regulations can be abused. The best we can do then is to do our best to purge out the "bad eggs" as we find them, b/c complete de-regulation isn't an option.

Governments are not responsible for monopolies. People are responsible for monopolies. The government is typically the fall-guy. They aren't the ones concocting these things in the first place.

The source of the corruption is the businesses themselves, and that is precisely where the responsibility for monopolies, and their abuses, should rest.

6/1/2007 1:06:11 PM

Quote :

"Why do we need the government involved in fighting crime? "

That is one of gov't's responsibilites..to fight crime. No argument there.

Quote :

"And for some reason, the government is the one that's the bad guy?"

Gov't does protect its own self-created monopolies such as First Class Mail delivery...but by and large businesses are the source..I'll give you that.

But companies can only conjole, bribe, and influence the gov't into passing laws and regulations that would benefit them. But Gov't can put us in jail or kill us...that is why they are the ones to be feared more. Gov't shouldn't be given so much power and control over the economy that it can be bribed and corrupted by businesses and use its police powers to squash competition and growth.

Taxi and limo companies are notorious for using gov't to protect themselves. They use the regulatory system to prevent small start-ups from getting established. Why does the gov't even need the power to regulate how many taxi cab companies a city can have? Let the market decide. Don't even give that power to politicians and bureaucrats.

Business will always seek to use whatever means it can to meet its goals. They usually stop at illegality for fear of prosecution. But if the gov't is allowed to meddle in the economy, business will try to get that meddling turned into their favor. We need to reign in Gov't power & influence over the economy so it stops being the target of lobbyists.

6/1/2007 11:45:04 PM

6/16/2007 10:48:43 AM