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Thread: The perceived superiority of the private sector...

  1. #51
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    Quote Originally Posted by Claudius the God View Post
    One of the things that creates market imbalances is that pure capitalism is a race to gain a monopoly position. Without the government intruding, a capitalist economy will result in monopoly power in each sector.
    And there seems to be broad agreement that monopoly power results in anti-competitive, coercive tactics and aren't to be tolerated.

    We are seeing it today in many sectors that once had many dueling competitors without any of them having more than a 40 or 50% market share. We allow this to happen to reward shareholders which is nothing but a sales pitch to reward officers of the companies, board members and the few who hold all the stock. Even within the mutual fund industry, the fund managers and their associates make most of the money. When we let companies like Pepsi buy every food company in site, we lose competition. cisco is almost a monopoly within the USA for routers even though Juniper is hanging in there. Apple is fast becoming a monopoly for phones, google for search engines, Amazon for shopping, EBAY for auctions, the list goes on and on and on. While our traditional sense of a monopoly is one company owning a market, the reality is that once a company gets over 50 or 60% of the market, they are the monopoly within that market insofar as limiting competition.
    What are they doing that limits competition? It's important to differentiate competing well vs. cheating. Offering a good or service that more people prefer is not the same as limiting competition. Arguably, offering a good or service that is cheaper than the competition is not the same as limiting competition. This is why the allegations of Walmart being monopolistic never really stuck, because offering goods or services for cheaper than the competition can manage is not monopolistic. Monopoly power is associated with pushing prices higher than competitors would be able and willing to sell it but they are unable to offer or sell because of other barriers put in place by the monopolist. That is what needs to be harshly regulated.

    As this plays out, millions of jobs are destroyed, each time a merger or acquisition is approved, one company loses half the workforce almost immediately, soon after, another 25% leave and then finally the ones left endure usually with less pay and more workload.
    Remember that we agree that monopoly power and cartel tactics require austere regulation. With that said I don't think we should just get lazy with accusations of companies having or using monopoly power just because they're large and successful and have bought up other companies and that in so doing jobs were eliminated. Being emotional about that doesn't mean a company has done anything wrong or requires regulation or lawsuits. Maybe that is the case, maybe it's not. I agree that the intent of antitrust laws needs to be thoughtfully examined and updated as needed for effectiveness particularly in the age of conglomerates and hyper-consolidation that we seem to be in.

  2. #52
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    Quote Originally Posted by splansing View Post
    I remember reading about pharma mergers that led to 300,000 lost jobs, literally half of the workforce getting dumped within a couple years of each merger. They were always sold as these wonderful synergistic things that would carry us all to nirvana, but in the end the mergers meant one company paid off the ownership of another to acquire its drugs, and pretty much fired everybody. And so one less company will exist to pursue its own strategy, which might have led to different approaches, different ideas. Just employing different people might have meant research that uncovered something new. And the competition between those two companies is ended permanently.

    This rush to monopoly will happen on its own, but it's actually worse than that, because as the monopolies and cartels rise, their economic power distorts politics in their favor like a black hole.
    Medicine is not a typical private good, given the way it's paid for, and that is why typical "free market" private sector mechanisms will not work for this example. It requires public management because of the way the public has decided the public should be entitled to it, often irrespective of its cost to the end consumer. That along with intellectual property laws are what enables the monopolistic features that prevail in this industry.

  3. #53
    Veteran Member MaryAnne's Avatar
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    Quote Originally Posted by Claudius the God View Post
    I am impressed, you know your Adam Smith. The term "invisible hand" occurs just once or twice in his work, he casually mentioned it but it became a mantra for the right wing especially the Randians like Greenspan. There is no "invisible hand" as we all know it.
    We can all see what Greenspan's," Invisible hand," did to the US economy. Greenspan fought Clinton every step of the way,including his ignorant statement that it would not be good to pay off the debt too quickly.

    BTW,Greenspan actually admitted he was wrong,after the crash!
    Thanks from labrea

  4. #54
    Junior Member Claudius the God's Avatar
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    Quote Originally Posted by Neomalthusian View Post
    And there seems to be broad agreement that monopoly power results in anti-competitive, coercive tactics and aren't to be tolerated.



    What are they doing that limits competition? It's important to differentiate competing well vs. cheating. Offering a good or service that more people prefer is not the same as limiting competition. Arguably, offering a good or service that is cheaper than the competition is not the same as limiting competition. This is why the allegations of Walmart being monopolistic never really stuck, because offering goods or services for cheaper than the competition can manage is not monopolistic. Monopoly power is associated with pushing prices higher than competitors would be able and willing to sell it but they are unable to offer or sell because of other barriers put in place by the monopolist. That is what needs to be harshly regulated.



    Remember that we agree that monopoly power and cartel tactics require austere regulation. With that said I don't think we should just get lazy with accusations of companies having or using monopoly power just because they're large and successful and have bought up other companies and that in so doing jobs were eliminated. Being emotional about that doesn't mean a company has done anything wrong or requires regulation or lawsuits. Maybe that is the case, maybe it's not. I agree that the intent of antitrust laws needs to be thoughtfully examined and updated as needed for effectiveness particularly in the age of conglomerates and hyper-consolidation that we seem to be in.
    What happens is that once you become a leader in a technical market such as networking, you have the ability to acquire start ups and competitors which consolidates your power. That is the genius of cisco, Chambers made several key acquisitions in the mid-90s that created the monster cisco is today. In networking as in computing or software, there is a strong tendency for customers to keep buying from the incumbent even if that company does not have the "best" product in the field. As various niches in the market get gobbled up by the "gorillas", fewer niches remain for others to fill. Profits for the gorilla (cisco is the gorilla of networking, has been since around 1994) keep going up, the stickiness of cisco to the customer becomes so great that the power in the relationship shifts from the customer to cisco, witness SmartNet fees today.
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  5. #55
    Veteran Member PACE's Avatar
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    Quote Originally Posted by Claudius the God View Post
    What happens is that once you become a leader in a technical market such as networking, you have the ability to acquire start ups and competitors which consolidates your power. That is the genius of cisco, Chambers made several key acquisitions in the mid-90s that created the monster cisco is today. In networking as in computing or software, there is a strong tendency for customers to keep buying from the incumbent even if that company does not have the "best" product in the field. As various niches in the market get gobbled up by the "gorillas", fewer niches remain for others to fill. Profits for the gorilla (cisco is the gorilla of networking, has been since around 1994) keep going up, the stickiness of cisco to the customer becomes so great that the power in the relationship shifts from the customer to cisco, witness SmartNet fees today.
    hmm, tech is typical wary of consolidation giants, so to keep Cisco honest:

    https://www.cbtnuggets.com/blog/2017...co-vs-juniper/

    Juniper is the closest competitor to Cisco, in tech, the biggest fear is one or two bad quarters can cripple a whole industry.

    Take litho equipment:

    https://semiengineering.com/why-euv-is-so-difficult/

    ASML's Extreme Ultra Violet systems has chip makers worried, as the running costs are quite high, so they still bank on Nikon, as a bulwark to defray any debilitating effects if the EUV market doesn't produce, as expected.

    As evidenced by this:

    Nikon sues ASML, Zeiss over immersion lithography

    What appears to be a patent infringement is actually a leveling agent to make sure that a giant like ASML with the backing of Zeiss does not obliterate the competition to the point of risk for the industry

    But there are signs things are improving:

    https://medium.com/@ASMLcompany/more...y-d7438d051960

    The question is availability, how reliable is the equipment?

    Tech has been burned before, so the financial profile you show, is indicative of a pattern for Cisco, but it is not the pattern for the industry in general
    Thanks from MaryAnne

  6. #56
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    Quote Originally Posted by Claudius the God View Post
    What happens is that once you become a leader in a technical market such as networking, you have the ability to acquire start ups and competitors which consolidates your power. That is the genius of cisco, Chambers made several key acquisitions in the mid-90s that created the monster cisco is today. In networking as in computing or software, there is a strong tendency for customers to keep buying from the incumbent even if that company does not have the "best" product in the field. As various niches in the market get gobbled up by the "gorillas", fewer niches remain for others to fill. Profits for the gorilla (cisco is the gorilla of networking, has been since around 1994) keep going up, the stickiness of cisco to the customer becomes so great that the power in the relationship shifts from the customer to cisco, witness SmartNet fees today.
    From the perspective of someone who worked in tech in Silicon Valley, you pretty much hit the nail on the head.
    Thanks from MaryAnne and Claudius the God

  7. #57
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    Quote Originally Posted by Claudius the God View Post
    What happens is that once you become a leader in a technical market such as networking, you have the ability to acquire start ups and competitors which consolidates your power. That is the genius of cisco, Chambers made several key acquisitions in the mid-90s that created the monster cisco is today. In networking as in computing or software, there is a strong tendency for customers to keep buying from the incumbent even if that company does not have the "best" product in the field. As various niches in the market get gobbled up by the "gorillas", fewer niches remain for others to fill. Profits for the gorilla (cisco is the gorilla of networking, has been since around 1994) keep going up, the stickiness of cisco to the customer becomes so great that the power in the relationship shifts from the customer to cisco, witness SmartNet fees today.
    I think this deserves our continued focus. There is too much generic distraction from this issue by the left wing that generalizes the problem to be about rich vs. poor, and by the right wing that assumes anything critical of private enterprise is a left wing attack on freedom and the successful. Monopoly power is problematic for everyone except the monopolists who personally benefit from it, and requires regulation.

  8. #58
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    Quote Originally Posted by Ęthelfrith View Post
    The invisible hand, despite being a minor issue for Adam Smith, is used by right wing pressure groups to suggest the market is necessarily best. However, the practical nature of privatisation suggests that underhand techniques are needed to coerce 'market solutions'. Chomsky summarised it nearly:

    "That's the standard technique of privatization: defund, make sure things don't work, people get angry, you hand it over to private capital."

    Ain't theft grand!
    While we have disagreed on a number of things, I have to say I agree with the concept that privatization is not the be all and end all to any economic woes any nation or society might be feeling.

    While there seem some things all humans might universally (universally in the context of the vast and overwhelming majority) be all for or all against (killing/murder for example), being all for or all against something seems closed minded and very limiting. I could/can never understand those who are all for or all against government, especially when they seem to contradict themselves very often by being for some things enacted, managed and administered by government, while at the same time being against all things government, often merely because it is attached to "government". The military/defense of one's nation is just one example where people generally against all things government seem to ignore how it is attached to "government" and rather than bash and complain about it, they often hold it up in reverence as the embodiment of "patriotism". This seems somewhat odd considering the military is hierarchical and does not employ democratic mechanics for policy and decision making, but perhaps it explains somewhat why, some who seem so against "a government of the people, by the people and for the people" (a republic with democratic mechanisms), the military seems to be left out of the "government" equation. The other reason may simply be that they want to be on the complimentary side of a military that defends their right to be against democratic mechanisms, even though by doing so, the military is defending those democratic mechanisms. It gets complicated because there are all kinds of reasons people join the military and some join because of insecurities about themselves and feeling a need to prove to someone or to themselves, they are "courageous". Some like the accolades and respect a uniform often draws and some like the idea that it may make them look more "patriotic" than others and something they can use to boost their ego and righteousness.

    These folks are different than those who sign up for the military with no such thoughts in their head and believing a job has to be done and as a citizen of the nation and all the benefits that brings, it is their duty to defend it for themselves, their families and all Americans and human beings, in general.

    While I will agree with "parties" on many things, I don't like the idea of groupthink for many reasons, but the main one being that it tends to rule out objectivity and replace it with subjectivity and it seems to dismiss people from having to consider things on an individual, case by case basis, within the grander scheme of things.

    There is a list of things that were done through this nation's government which benefited a great many people then and now, sadly, at the cost of some others. The Louisiana Purchase, layered on top of the underlying struggles of settlement of the new world and First People.......the Homestead Acts....in many ways intertwined with the ongoing struggle.....The purchase of Alaska (Seward's Folly).....The annexation of Hawaii and the taking in of those who annexed territory now known as the state of Texas, among other things, including funding and research partnerships as well as subsidies and credits for industries in the private sector, like oil exploration and the Human Genome Project. All the technology (the good, the bad and the ugly) that has come from looking for advantages and life saving techniques from the engagement in wars. There are many more examples....these are just a few.

    Is the government perfect or Godlike? Hell no, but it is no more vulnerable to fault than any non-government entity and is perhaps under more scrutiny in some cases than private corporations, such as the Trump Organization.

    I think if one reads history they'll find that "progress" would describe attempts to move away from past mistakes and injustices, it does not describe perfection nor a lack of vulnerability to make mistakes or hypocrisy. The same applies to the private sector.

    Taking things on a case by case or individual basis seems to reveal where some things may be better handled and more efficient by government and where they are not. I believe the founders of this nation understood that, even though they had their own personal hypocrisies and demons to overcome. In spite of the latter and all their own personal desires and opinions, they were at least able to form and gain support for the government of America, which is a mix between increasing freedoms and NOT doing so at the cost of others. Not doing so at the cost of others has always been the challenge. As population grows (imagine the population in your home and residence, growing) additional regulations are needed. Take one's own home for example. If it was designed to accommodate 4 people and suddenly the number becomes 8, certain accommodations have to be made in order to equalize the experience of living in that space. For example, if showers were 10 minutes long for the 4 people that lived in the house, when 8 people live in the house and the water heater has not been enlarged, 8 people are not going to get a daily shower with hot water, unless some rules are laid down governing how long anyone gets to take a shower OR the hot water heater is changed out for a larger one. It's NOT rocket science, just observance and relating how everyday things many people do not think about, work and that SOMEONE has to think of and manage these things on a greater scale than the notion of everyone out for themselves.

    A part of living in a society is giving up some freedoms in exchange for some others. So maybe you just can't take a pee or a dump wherever you like anymore (and you might appreciate that others cannot do the same on your doorstep), but it also might be easier for you to do your business where you don't have to use poison ivy leaves to wipe up. Many hands make light work, but many hands also have to be fed and housed.....or in the very least, thanked in some way, if not only, by returning the favor... In addition there is the advantage of variety of thought and skills. You may need something, but don't know the first thing about doing it yourself. In a society, you may find someone who can do what you want done and trade them for either your own skills or something you have earned for your own skills that equals what someone is doing for you.

    No doubt the founders of this nation were students of history and sought to avoid the pitfalls of other societies, in as much as they could, but that does not mean they did not have their own personal hypocrisies to deal with. They disliked monarchical, aristocracy, despotic governments and religious governance, yet they mostly steamrollered over the First People's of America and it was almost 100 years before they came to blows over the right of some people of any state, to own other human beings, especially for slave labor purposes. Here we are in 2017 and many of the equal rights as human beings, our nation claims to be champions of, are still being struggled over, in some instances more so than other nations, some of whom the principles behind the founding of this nation, became a model.

    While greed knows no bounds, especially when it comes to any dividing lines between government and non-government entities, there are different basic motivations when it comes to the greedy within government and the greedy outside of government. I would not say that legislators, executives and justices are bribing companies to do something for the benefit of government. I would say that private individuals and corporations are constantly looking for ways to get government to work to their advantage and it is not only cash to individuals, but voting blocks and votes that can be promised as a means of influencing those in government.

    As with so many things, organizations and any groupthink that comes along with them, eventually tend to make them too big for their britches and harmful to themselves, no less than some would like to claim of government. Labor unions were not created by communists, they were created to protect the exploitation and abuse of workers, yet some people on both sides of labor issues have wanted to insert the role of communism, for their own agendas and purposes. This led to some hurt for the original principles behind labor unions and as with too many things power in the hands of some, can destroy them, as well as what they have power over, because they abuse the power. This goes for private corporations, labor unions and governments. I don't believe is it particular to any one and I think it is a mistake to blanket blame any one of them because of the abuses of some individuals and their followers. As far as I can tell, no "sector" is free of such people and I don't believe any one sector is worse, than another, but there are different degrees of scrutiny for them, which does appear to suggest, in a limited way, there are means to remove the people that abuse any powers and privileges afforded them. In all fairness and in the interest of justice, the means to remove them is not always immediate nor are the reasons for removing them and as any ethic of reciprocity applies, arbitrary, political or greedy reasons for removing people from their position opens the door up to the removal of those who most would support, based on the ambitions and agendas of others who wish to replace others with themselves or those that support their more selfish and greedy agendas.

  9. #59
    Junior Member Claudius the God's Avatar
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    Quote Originally Posted by PACE View Post
    hmm, tech is typical wary of consolidation giants, so to keep Cisco honest:

    https://www.cbtnuggets.com/blog/2017...co-vs-juniper/

    Juniper is the closest competitor to Cisco, in tech, the biggest fear is one or two bad quarters can cripple a whole industry.

    Take litho equipment:

    https://semiengineering.com/why-euv-is-so-difficult/

    ASML's Extreme Ultra Violet systems has chip makers worried, as the running costs are quite high, so they still bank on Nikon, as a bulwark to defray any debilitating effects if the EUV market doesn't produce, as expected.

    As evidenced by this:

    Nikon sues ASML, Zeiss over immersion lithography

    What appears to be a patent infringement is actually a leveling agent to make sure that a giant like ASML with the backing of Zeiss does not obliterate the competition to the point of risk for the industry

    But there are signs things are improving:

    https://medium.com/@ASMLcompany/more...y-d7438d051960

    The question is availability, how reliable is the equipment?

    Tech has been burned before, so the financial profile you show, is indicative of a pattern for Cisco, but it is not the pattern for the industry in general
    Pace...I have been in the networking business since 83. The company I worked for in the 80s and most of the 90s went head to head against cisco when we were 20 million and they were a startup. In fact, we almost bought them back in 88. I was one of the original router sales people in the industry and have been competing against them ever since, I have tons of good friends that went over there. Today, I sell Juniper, ciena, Fuji, Adva and many others against cisco. While Juniper is the best router in the world, they are not the best router company, cisco is with Nokia/ALU in second place, Juniper is a distant third with around 7 billion in sales. Huawei copied cisco and is very strong over seas but all they have is price, they sell it for nothing after stealing IP from everyone. Cisco is about to be seriously challenged by their own clients, the large telcos of the world. They got together and formed a buying block that basically told cisco to change or die. The movement today is called SDN and it will threaten cisco going forward but they are still so strong that they can push around the clients and competitors quite easily. All they need to do is buy up every startup with code that fills in their SDN story or bury that technology so it never sees the light of day. Cisco has something like 50 or 60 billion in cash, maybe more. That buys a lot of companies, just look at their latest acquisitions, you will have never heard of them and never will now.
    Last edited by Claudius the God; 7th September 2017 at 09:26 AM.
    Thanks from labrea

  10. #60
    Junior Member Claudius the God's Avatar
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    Quote Originally Posted by StanStill View Post
    Indeed. With capitalism, the goal of competition is to kill the competition.
    This is something many people who are not in business or in corporations don't fully grasp unless they are executives or in marketing and sales. I cannot tell you how many times I was told to put our competitor out of business. That is the goal, to be the last one standing holding 100% market share. Every sales person in industry loses a deal and many of them hear the same thing when they do, how did you lose it, why did you lose it, you should never have lost it, don't lose another one, etc. Implicit in this response is the idea that you should win everything, all the time which implies that your competitor never wins, ever.
    Thanks from KnotaFrayed

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