Comments for entry "Stickiopolies" at Dilbert.com Blog

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SunAMCDTE_Rndnd

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Comment from tkwelge

ThuAMCDTE_Rthth

And every business is a stickiopoly at some level. I don't see how the mere existence of such a thing necessitates the initiation of force. I could actually see forced portability making monopolization easier, for example, as it would allow one mega bank to edge out the competition even faster. The only true solution is to remove government enforced barriers to entry.

Comment from tkwelge

ThuAMCDTE_Rthth

In fact, in the complete absence of bankin regulation, there would be totalbanking competition, with each individual being a potential issuer of notes. The banking industry would exist in a state of perfect competition. Government enforced competition is always a complete joke.

Comment from tkwelge

ThuAMCDTE_Rthth

Wow, regardless of your foolish downvotes, "free markets" does not equal "no rules.". In fact, private property and contract law creates all sorts of rules to be followed.

Comment from tkwelge

ThuAMCDTE_Rthth

Every example of regulation expansion in response to crisis that you can point to during the classical period was actually a means to provide legitimacy to risky banking practices, while most of the effort went to removing any downside risk to bankers first rather than consumers. If a risky banking practice is bad, then banks should go out of business and avoid taking such risks without adequate reserves or capital on hand. Now there are no lessons learned in the banking industry precisely because there is less downside risk. Instead of allowing banking failures and the market to reinforce strict and safe banking practices, we have spent the last 100 years creating a corporatist chimera that depends upon the political and military power of the US government. Central banking is a weapon, not a tool.

Comment from tkwelge

ThuAMCDTE_Rthth

But that's just it, we don't need overconfidence in the banking system either. Under the original system, with bank runs and no bail outs or FDIC, there was greater due diligence and less risk taking. The government has essentially subsidized a risky business model while telling everyone it is safe for a hundred years. Why do you take it for granted that we need a debt laden economy in the first place? People will develop trust in the banking system as soon as they establish that they are trustworthy. The truth is that we don't need the debt as much as modern economists believe. Low inflation/high savings economies worked quite well during the industrial revolution.

Comment from Kingfisher

WedPMCDTE_Rthth

-tkwelge I understand your rebuttal, the banking failures in the 1800s did not have nearly the same calamities of the post-fed world, but it showed that fractional reserve banking plus an under-regulated market did little to instil confidence in the growing financial system. In any market, there has to be trust. For ordinary products, a violation of that trust means that a producer goes out of business, but in banking, it often meant that people's savings were lost as well, which was an intollerable condition for an industry that is meant to produce trust itself. Hence regulations were tightened to avoid future problems and restore the trust in banks. The fact that crashes continued just shows that letting the banks regulate themselves is a bad idea. Canada has OSFI - a much stricter regulating body - and one independant of the banks - even the central bank. And Canada has much much fewer bank failures.

Comment from meblackstone

WedPMCDTE_Rthth

The comparison to private ownership of roads has real word examples. What's been shown is that even with the government handling licensures, the ROI is abominable. Deregulation of electricity in Texas has led to higher prices and more brownouts. And don't get me started on the railroads. There's a funtional monopoly given the cost of entry, eminent domain issues in creating competition, etc. The correctable inefficiencies in land bulk transport are horrendous, and hurt the ability to compete. I still can't figure out why my shipment from San Antonio to Houston had to pass through Detroit.

Comment from vurnun3

WedAMCDTE_Rthth

Ya, and in addition - its also hard for customers whom have had problems at other banks - whom made ones own problems worse , to switch banks also [indeed much harder]. There is however at least two finance insititutions that I will stay away from at all costs now. One is wells fargo, and the other is capitol one [And there will be another added to that list if I cant settle with them as well - but we shall see] Cap one for jacking up interests rates and for jacking people out of their monies, and wells fargo for rediculous interest rates, that amount to loan sharking. The best solution we could implweiment at the moment, would be a boycott - and simply pressure government to not bail the little monsters out next time - let capitalism consume these org's into non-existance and let the market forces obliterate these rotten critters.

Comment from tkwelge

WedAMCDTE_Rthth

> However, forcing customers to use the OS provided browser (or microsoft software) is. At which point the EU went into the issue and forced microsoft to open up its OS. Or Intel doing a special deal for a special customer, like inserting a certain conditional jump and not telling anybody about it. Or granting iexplorer privileged access to Win8 APIs and denying it to non-microsoft browsers. This is just a mess created by government. Without Intellectual Property, which is an abomination against the entire concept of property, their would have been many more competing OSs each with a small chunk of market share.

Comment from tkwelge

WedAMCDTE_Rthth

>The crashes of the the 1800s proved that in the banking industry, free competition is not practical, so regulation is necessary. This is completely false. The 1800's never experienced any crashes on the level of the current recession or the great depression from 1840 to 1913. The period after the return to the gold standard in 1879 until 1892, when the world became afraid that the US would pay its bills in silver, was incredibly stable and prosperous. The period from 1840 to 1859 was also quite stable after the calamitous 30's when the 2nd central bank was closed. The 30's were mostly calamitous due to credit expansion in Mexico and new gold discoveries that flooded the banks with new specie. After that, the system was stable and prosperous until the civil war. The banking system of the 1800's was also not full free banking, since branch banking was prohibited, leading to centralization and less diversification, and the entire system after the civil war was centered around "National Banks" in New York city. Here's some growth data: US 1840 to 1859 1879 to 1891 1913 to 2010 Real GDP per capita 1.93% 2.80% 2.00% The years listed top to bottom correspond to the percentages (annualized growth rates) going left to right in order. Here's the 1840 to 1913 period as a whole: US 1840 to 1913 Real GDP per capita 1.67% So yes, the economy arguably grew more slowly before the progressive era, but it definitely experienced similar growth, with much more stable prices and no great depression style events. The population was also low skilled with little education and grew at more than twice the rate it does today, with much of the population living as subsistence farmers. The two periods aren't directly comparable for a number of reasons, but it is fair to say that the experience with the banking industry in the US hardly "proves" that free banking doesn't work. Besides we have more successful examples of true free banking to choose from, such as in Scotland and Sweden.

Comment from tkwelge

WedAMCDTE_Rthth

>"Free market" is about as efficient as "free road traffic". Take down the signs, abolish driving licences and all is well, eh? NO, markets still have rules based resulting from natural bottom up cultural prohibitions against the initiation of force and property rights. If a private road owner owned the road, surely he/she would require some sort of licensing for road users, and would provide access to such a service at lower cost and higher efficiency than the government owned roadway system.

Comment from tkwelge

WedAMCDTE_Rthth

>The problem with "free" markets is that the players consider cheating, colluding, manipulation, lies and lobbying a legitimate means of getting market share or profits. Naturally you and I are immune to that, just like about 95% of all drivers are better than average. But this is the point where makets become non-efficient because efficient markets require that no participant has an information advantage and that no collusion takes place. Free market collusion has none of the benefits of government supported collusion. Cartels always break down in the free market, and have always sought government support to continue existing. There is no such thing as a perfectly efficient market. There is simply the absence of the initiation of force vs the implementation of the initiation of force. Efficiency is based on billions of subjective factors that are perceived by billions of people who's perceptions are always changing. Neoclassical economists are simply technocrats playing with sandcastles.

Comment from tkwelge

WedAMCDTE_Rthth

Rothbard tears apart adam smith in an article entitled, "The Adam Smith Myth." And I really hate it when people declare that one example of government force succeeding as an argument that the government is somehow legitimate or necessary or even a net positive. It's kind of like when people defended Mussolini by arguing, "But now the trains run on time!" (Yes, I know its apocryphal but the analogy still stands). Before portability, I don't remember anybody with a cell phone ever being chained to a company because they couldn't change their number. I think you are just exaggerating to make a point, Scott... It's kind of like when people declare that removing Glass Steagal was THE cause of the last crisis. People always tend to exaggerate whatever they think to be more important, and I suppose that is just a natural human failing we will have to live with.

Comment from Kingfisher

TuePMCDTE_Rthth

EMU- "It is worrisome to me that today's young people, brought up in our left-leaning public educational system, seem to know much, much more about Karl Marx' theories than they do about Adam Smith's. With the spectacular failures of Mr. Marx' theories and the spectacular successes of Mr. Smith's, this is even more problematic." I am reading Wealth of Nations for the first time (I've never read Marx). It seems to me that Smith would have applauded the form of Capitalism espoused by the American Founding Fathers, but he would have been horrified by the 'capitalism' found in many places today. For example, In the first book he talks about how the Government of the United Kingdom is far superior to that of the Dutch East India Company, because the UK government has protections for consumers and workers, which generally tends to a prosperous nation, while the governments of the East Indias has no such protections, and the resulting collusion to drive down wages and drive up prices has reduced the population to a level of poverty such that most had already died of starvation, in spite of the Indias having a climate much better suited to production.

Comment from Kingfisher

TuePMCDTE_Rthth

EMU, I like your reasoning. If I can add to it, I'd say that unchecked monopolies are no different from the worst forms of communism, where the entirity of the production is controled by a group of oligarchs with no reason to benefit either employees or consumers, except to maintain an exploitable population. So a government must use whatever means necessary to prevent these monopolies from forming. In most cases this is accomplished by forcibly restricting monopolistic activities, and by encouraging new competitors to continually enter the industry. Where competition is not possible or practical (infrastructure or utilities), then government must either manage the industry as a social program, or regulate it for the protection of consumers. The crashes of the the 1800s proved that in the banking industry, free competition is not practical, so regulation is necessary.

Comment from meblackstone

TuePMCDTE_Rthth

First, I think the second one communicates the "honesty just gets in the way of profits". With verbal communication, body language can communicate emotion, but on a panel, options are more limited. Second, while smaller local banks can work, and are my preference, the pain of changing had me limited to banks with near national footprints when I was relocating frequently. Not to mention changing banks frequently gets you noticed by certain federal agencies. When you also work with hazardous chemicals....lets just say that's not a fun conversation even when they're professional and reasonable. This leads to a large portion of the population functioning in a defacto oligopoly. And I realize a number of people here are fanatical "government is bad", but when it comes to standards, a national program is best and necessary for competition. I have a bank I like back in Texas. 2 whole branches. But there's alot they can't do for me now that I've moved to another state. Something not mentioned is the effect of the current banking system on the poor (yes, I know it's all their fault). While I pay nothing due to mortgages and various accounts, the maintenance fees and costs are brutal to those at the poverty line, assuming they can even get an account. Apartments will no longer take cash. They essentially get charged to pay their bills. Yes, there is a cost to the bank to manage those accounts, but there's still got to be a better way.

Comment from EMU

TueAMCDTE_Rthth

Addendum: Why does e-n-t-i-t-i-e-s gets !$%*!$'ed up?