Firms that are monopolistic are less competitive, larger, and slower growing. Reducing monopolistic tendencies increases capital growth, competition, and reduces average firm size. This is well understood economics.
Monopolies arent' some hypercompetitive ultra capitalist battlespace, they're fat and happy, and the most impactful teams they employ are lobbyists and policy folks in DC. Look at like, comcast and what they did with the FCC.
Those attributes stem from them being a monopoly, they don't create it in the first place. He's questioning the implication that being less competitive and slower growing would allow you to obtain more of a monopoly.
The large, lumbering not-yet-a-monopoly has no method to increasing market share other than buying smaller competitors; thus leading to monopolization.
Yes, regulatory capture is a problem, but it's somewhat ludicrous to make a blanket statement like "government is the tool used to suppress competition". It's one tool in the toolbox, perhaps a significant one, but hardly the only one.
Health care is another example. The government empowers the AMA to strictly control the number of seats in medical school, thereby restricting the supply of doctors and competition.
Licensing, permits, etc, are all ways to limit and prevent competition.
I could ask any surfer on the beach right now and even they'd be able to identify that you've now entered a kind of argumentation where, if government is at all involved, government is the problem, no matter how it's involved.
"The AMA strictly controls the number of seats, and the government has a medical licensing process, therefore the AMA's actions are the government's fault."
Again, I do not deny that governments have been used as a tool for monopolies to form, but it is dubious that they are the only tool used by bad actors, nor is regulatory capture the only method for anticompetitive behavior.
You didn't, but your phrasing certainly implied it. "The government is the tool used to suppress competition" is a very stark statement. Next time, say "a" or "one of the" tools.
A simple alternative ingredient could be that firing (read "punishing") employees on a small scale has a large chilling effect. Relaxing labor laws/job security may have a much larger long term effect. If I ask for a raise, will I get fired first either way?
You need government to build an ISP in the first place. No private company would be able to negotiate with that many land owners to build out fiber on a large scale.
And once a company does build a network, absent government regulation requiring them to let other companies use it, the existing infrastructure is an enormous barrier to entry.
Telephone lines were almost always built following existing public roads or private railroads (that were built with government assistance and government land grants) even in the early days.
There is no history of a successful, large scale infrastructure project built without government assistance. Either directly or due to the fact that much of it was built on government land.
(unless maybe you consider some case where private infrastructure was built in one large area controlled by a small group of owners, but that's basically just a government by another name and doesn't apply to modern America.)
railroads were given the go-ahead by the federal government back when they were built, because the federal government granted the land to both sides of the rails to the rail builders (if they built it).
It's hard to argue that the railroad builders were not given "assistance" (the granting of land).
Those were all local municipalities, responsive to their electorate - if the surfers in a community wanted Google fiber huts, they could elect councils who would allow them.
I think it's reasonable that people should have local control over their city environs, even if it means a multinational like Google can't come in and build new infrastructure. It's not a "will of the people, unless Google wants to build fiber huts everywhere" kind of society. Maybe they should just go surfing instead.
>Those were all local municipalities, responsive to their electorate - if the surfers in a community wanted Google fiber huts, they could elect councils who would allow them
This is an idealistic line of thinking, but as a practical matter, is completely untrue. Essentially 0% of America understand their county commissioners' stance on ISP competition, myself included. No one campaigns on those things.
It's a lot like saying that electorates are responsible for police violence because sheriffs are elected officials after all.
> The government is the tool used to suppress competition.
Oh? Network effects don't exist? Economies of scale don't exist? Dumping doesn't exist? Branding doesn't exist? The only kind of moat in existence is regulatory capture?
Regulatory capture is real, but it's one of many tools that suppress competition. I can think of one single solitary competitive analysis I've been party to where we decided it was the largest factor.
If only fixing anticompetitive markets were as easy as "drowning the government in a bathtub" we'd have solved this problem ages ago.
"the tool" meaning it was the first tool they reached for, not the only tool.
For example, if I said "Star Wars" was "the movie" to see in 1977, I obviously did not mean it was the only movie.
If I meant it was the only tool, I would have written "the only tool".
If you need to insert the words "only", "always", "never", "100%" into my words in order to argue, you should reconsider the strength of your argument.
Nah, I heard what you said and you said what you meant.
Even so, I'm happy to engage with your new argument: that regulatory capture is the first tool companies reach for to unfairly suppress competition. That's still wrong. Regulatory capture is slow, unwieldy, and opportunistic. The first tool a company reaches for is typically either M&A or dumping.
When WhatsApp was getting popular, did Facebook respond by crafting legislation with a plausibly deniable dual purpose, cultivating connections with campaign contributions and a held-open revolving door, wait for a wave of public sentiment that could carry their law up the priority list, through congress, and onto the books, and then sit back and pray that the resulting wind blowing at their backs and in WhatsApp's face would tip the balance enough to keep them on the throne? No, of course not! Facebook bought WhatsApp. Where there were two competitors, a free market exchange happened, and then there was one competitor. See also: banks. Yeah, they need FTC approval, but the free-er the M&A market, the easier it is for competitors to just merge together, and the more anti-competitive the result.
As for dumping, you'll often hear people blame legislation for the big ISP monopolies we have. Certainly there are no shortage of legislative failures in this space, yet it's not illegal to start an ISP. If you set out to create an ISP of your own, you'll probably be able to find a municipality willing to deal with you. The actual trouble will appear when you start selling your service. Your first few customers will gladly switch in order to take advantage of the better deal you're offering, but once the regional ISP monopoly notices the churn, suddenly you'll find that all of your prospective customers recently received a promotional discount from the monopoly and are no longer interested in your service. Then you go out of business, and customer rates go back up. It wasn't a law that kept you out of the market, it was the fact that your competitor had a larger war chest.
In both cases, more market freedom = less competition. Certainly, regulatory capture also exists and is also a problem, and in that case more market freedom = more competition. In some cases, it's even more complicated: economies of scale create genuine value by amortizing costs across volume, but they also create an anticompetitve moat. They have good aspects and bad aspects that are inextricably linked and inseparable from each other.
Still, focusing exclusively on regulatory capture will lead you to misdiagnose most markets. The cure will appear obvious, but where your diagnosis is incorrect, it won't work.
Government has funds, land, resources and tons of attention. A competent business man should be able to forge large numbers of jobs out of this. If done on sufficient scale elaborate services and infrastructure can be build that gives corporations a huge advantage. These jobs can remove people from the labor pool and create a kind of cabin in the woods "exit" strategy that will eventually drive up wages and the value of training/education.
The situation is far more nuanced. If you said instead "The government can be a tool used to suppress competition," I think most would agree with you.
The distinction is that there are plenty of other tools companies can use to suppress competition, and Government also can be used as a tool to encourage competition.
A strict black and white view point that more government = less competition is absurd.
This is self-contradictory.