Microsoft also has competitors and it will be interesting to see how long it can maintain its position of dominance. However, in this case there is the element that Microsoft enjoys the effects of network externalities. The more people use Microsoft the more valuable it becomes ....

Or, as someone once said, no IT manager was ever fired for buying Microsoft...

I doubt it since that's simply hogwash and I think Joyner's smarter than to try and pass it off as an argument. GM is not big due to government intervention. Nor AIG. Fanny Mae and Freddy Mac, alright.

You are being too simplistic. It isn't just whether or not it is government control/sponsorship as will Fannie and Freddie, but that there might be other laws, regulations, and such that provide effective barriers to entry allowing the firms to become dominant in their industry and prevent competitors from entering allowing for larger sized firms. Now maybe that is just a load of baloney, but you havne't demonstrated that it is baloney.

Absolutely which is why we rather need to take a hold of the current popular animosity to break the back of high finance since any other time the pols will shield them.

You'll fail utterly since it is the relationship between government and the financial sector, not just one sector by itself.

Oh, I thought we were talking about reality. You know that place where monopoly always occurs without government regulation and intervention? That place. Blue skies. You've heard of it I presume.

Name a non-governmental monopoly--i.e. has 100% control of the industry and sets prices without fear of competition. No, Microsoft doesn't work. No Wal-Mart doesn't work.

Seriously you don't expect anyone to believe that garbage, right? Monopolies occur anytime you let capitalism run un-shepherded because inevitably one competitor gains an advantage and leverages that advantage to crush his rivals.

Limit pricing can work, but it is precarious in that market conditions change, so even if a firm can disuade entrants at time T, they can't ensure lack of entry at time T+n. And that fear of entrants and competition limits the power of monopolies. Look at OPEC, a cartel that tries to act very much like a monopoly, they couldn't maintain their grip.

Standard Oil, Microsoft, Ma Bell, Walmart, and on and on and on. None of them brought about by government action by a market that was allowed to operate on autopilot.

None of these, save for maybe Ma Bell, were actually monopolies. None have 100% of the market, price setting powers for their products are limited (e.g. Standard Oil made money off of railroads which likely have cost structure that make them natural monopolies--i.e. once it achieved a certain size Standard was able to take advantage of the railroads cost structure to expand its own business and limit entry of competitors). Further, it is doubtful that Standard's monopoly position would have held for long as other companies were starting up that were based on the Standard Oil format--vertically integrated companies--that would offer a compeititve challenge to Standard and be somewhat immune to Standard's tactics for forcing out competitiors.

Walmart has significant competition from Costco, Target, and other stores as well. That one is just a case of "Big is bad" when it isn't even clear Walmart is "too big to fail".

Microsoft also has competitors and it will be interesting to see how long it can maintain its position of dominance. However, in this case there is the element that Microsoft enjoys the effects of network externalities. The more people use Microsoft the more valuable it becomes since the system is obviously compatible with itself. However there are rivals and to the extent that these rivals can become compatible with Microsoft systems it weakens the advantage of network externalities at least in terms maintaining a dominant position.

And in all cases it wasn't too much competition that lead to monopolies, but too little.

Markets do not work perfectly. That's no great insight. But you went to a position that was more childish than those you were criticizing.......

Wo-wo-wo Them's fight'n words. Duffer!? You are talkin' to a former plus 1, and a current 4 handicapper.....

Tlaloc, do you ever find it necessary, or even helpful, to connect your responses to what other have said?

Depends on how serious and thoughtful the thing I am replying to was. In your case you made an asinine statement devoid of merit and believed only by those with a fetishist love of economic theory above empirical fact. Therefore I felt free to simply give you the stinging glove of mockery and move on. At best it would snap you out of the inanity you had apparently internalized, perhaps allowing you to grow into a fully realized human being instead of a shallow caricature. At worst, well at least it didn't validate said inanity.

(Once again, the response matches the statement eliciting a response)

Missed that one by a mile Tlaloc. James isn't making the point your are addressing above. He is arguing that these institutions are as big as they are due to government actions

I doubt it since that's simply hogwash and I think Joyner's smarter than to try and pass it off as an argument. GM is not big due to government intervention. Nor AIG. Fanny Mae and Freddy Mac, alright.

Don't forget there is a rather insidious and incestuous relationship between government and high finance.

Absolutely which is why we rather need to take a hold of the current popular animosity to break the back of high finance since any other time the pols will shield them.

Complete and utter bollocks. The only case where you can get a monopoly via an unregulated market process is a natural monopoly and the criteria for that are rather stringent.

Oh, I thought we were talking about reality. You know that place where monopoly always occurs without government regulation and intervention? That place. Blue skies. You've heard of it I presume.

Seriously you don't expect anyone to believe that garbage, right? Monopolies occur anytime you let capitalism run un-shepherded because inevitably one competitor gains an advantage and leverages that advantage to crush his rivals. Standard Oil, Microsoft, Ma Bell, Walmart, and on and on and on. None of them brought about by government action by a market that was allowed to operate on autopilot.

Don't forget there is a rather insidious and incestuous relationship between government and high finance. If you look at the main people who'd be involved in the "fix" they all have some sort of connection to the finance sector. This goes for both parties. It isn't a partisan problem, it is just a problem.

I think maybe it is the problem that will always vex a democratic, captialist society. Money is power, and power gravitates to power. Goethe titled of one of his books Electivie Affinities, a now abandoned scientific term for the tendency of certain substances to bind with some substances in preference to others. Money and government have an elective affinity for each other. That's the crux.

I don;t think that necessarily follows. If we choose to live in an organized society, and to date we have, then it is fair for us to recognize those things that are threats to that society and act to mitigate that threat. That may mean developing armed forces to discourage a militant enemy. It may mean environmental laws to prevent poisoning of our resources such that we our health is threatened. It might also mean recognizing internal groups with sufficient position and power to destroy the social system and moving to reduce their power or eject them from their positions.

That argument has nothing to do with the government having too much power. It merely recognizes a shared desire and a step needed to keep that desire possible.

Missed that one by a mile Tlaloc. James isn't making the point your are addressing above. He is arguing that these institutions are as big as they are due to government actions, now that we've seen that such action was bad we are going to give the government even more power to, ostensibly, fix it. Question is, can the government fix it, or will they make it worse.

Don't forget there is a rather insidious and incestuous relationship between government and high finance. If you look at the main people who'd be involved in the "fix" they all have some sort of connection to the finance sector. This goes for both parties. It isn't a partisan problem, it is just a problem.

Uh...yeah. The end point of unregulated capitalism is monopoly, which by definition is not very diverse.

Complete and utter bollocks. The only case where you can get a monopoly via an unregulated market process is a natural monopoly and the criteria for that are rather stringent. Wal-Mart, for example, is not a natural monopoly. To get a monopoly where the conditions do not hold for a natural monopoly is via government fiat.

Take a look at the NIRA during the recovery after the Great Depression (1934). That was an attempt to end "excessive competition" that was believed to be the cause of the Great Depression. Its goal was to cartelize (create a monopoly with seperate firms) to push up prices and wages. Net effect of such a policy would be to reduce output and increase unemployment. The higher prices are achieved by reducing output and the higher wages would induce people not in the labor force to return looking for work, but since output is being reduced there is less demand for labor, hence and excess supply and unemployment.

So, no, more regulation does not have to promote diversity and competition does not promote monopoly. Competition is the antithesis of monopoly.

Anti-trust laws are designed to ensure competition. Size is not necessarily anti-competitive in itself (though in some cases it might be).

Quite correct. IANAL, but I recall there was a SCOTUS case where part of the decision is that merely being big is not sufficient in regards to triggering anti-trust laws and breaking a company up. If a firm has 100% of the market, but sets price such that Price = Marginal Cost that firm is acting exactly like a competitive firm, so there is no need to break it up.

The problem arises in that when you have a natural monopoly Price = Marginal Cost is often not sufficient to cover total costs at that level of output. This is where the state intervenes and you get regulated monopolies. The current flavor of regulation is to try and preserve the price signal effect of the Price = Marginal Cost relationship, but scale up the price so that total costs are recovered.

I'm not sure how one would go about imposing those size limits in our society without engaging in the kind of things that would make Charles and Drew, and most of us pretty damn uncomfortable.

I'm not so sure there are that many of us left who care if people like charles and drew are comfortable. Their way was tried in the 80s and it was a disaster. It was tried again in the Bush year. Yep, disaster again.

So really I don't care if the people who didn't learn either the first or the second times that their notions of economics are spectacularly wrong get discomforted by the adults fixing yet another of their messes. I'm guessing that for the time being there are enough people that agree with me on that.

Competitive destruction. Economies of scale lead to ever larger operations. However, at some point the sheer size of the institution limits the ability to act quickly and repsond to change, especially as the turf wars within the bureacracy start to heat up between the suddenly vested interests.

I am reminded of A bit of Fry and Laurie:

"I don't believe in market forces. I used to, of course, when I was a child, but like everybody else, when I grew older, I discovered it was all made up."

Your child like view of the world is sort of charming, charles, presuming of course you disabuse yourself of these fantasies before you reach a voting age.

I'm not sure how one would go about imposing those size limits in our society...

Anti-trust laws?

Anti-trust laws are designed to ensure competition. Size is not necessarily anti-competitive in itself (though in some cases it might be). And besides, none of the recipients of TARP funds, eg, were accused of anticompetitive behavior. Indeed, from what I've read, the big banks are fiercely competitive. Ditto the big auto companies. Anticompetitive behavior is not the problem, I think, in the modern era, or at least, as not a big a problem as it once was.

And thanks, Charles.