Monopoly

[Wiccan_Child]

I reject the notion that the company that makes the most money for its shareholders is the "best" company. One does not need to have the most profitable business in a particular market to sell shares successfully. Of course, having the highest dividends helps, which is why we have regulation in the first place - to reign in the stupidities of capitalism.

I reject the notion that selling shares is the measure of a 'good' business. At the end of the day, it comes down to two things: how much money they make for themselves, and how much value for money they offer for the customers. Shares are just a means to an end.

Because the fact that a customer prefers one company over another only reflects on the aspects of that company that the customer cares about. The majority of the time, the customer doesn't think poorly about companies with poor ecological impact, unsustainable practices, the sacrificing of long-term growth via reinvestment for superficial, high immediate dividends, exploitation of labor, etc.

True, but other people do. If a supermarket giant is using illegal practices, then there are international laws to combat that. As you said, the customers only care about themselves, so it is up to others to monitor businesses. Companies with a monopoly are not the only ones that can be unethical, so it seems like a moot point.

The "customer knows best" philosophy only ensures quality of product, convenience, and low price - the things the customer is directly affected by in the short term - and even that relies on competition to guarantee that the customer is able to switch away from the company that sells an inelastic good if they decide to drop quality and cut costs after cornering the market.

If a large chain begins to drop its quality, then customers will go to other, smaller businesses to maintain quality. The customer is not so stupid that she cannot recognise value for money.
As an example, there are two bakeries pretty much next door to each other at my local high-street. When the cheaper one dropped its quality, everyone switched to the more expensive one with impressive speed.

Undercutting the competition at the expense of quality is not always a profitable strategy. That said, large companies can afford to maintain quality at a smaller profit margin, since they make so much money from other products. So if they can offer the same quality goods at a cheaper price, how is that not a good thing?

 

[DeathMagus]

I reject the notion that selling shares is the measure of a 'good' business. At the end of the day, it comes down to two things: how much money they make for themselves, and how much value for money they offer for the customers. Shares are just a means to an end.

I agree with you that shares sold are not a measure of a good business. I disagree with you that value of product and profits are the sole indicators of good business.

True, but other people do. If a supermarket giant is using illegal practices, then there are international laws to combat that. As you said, the customers only care about themselves, so it is up to others to monitor businesses. Companies with a monopoly are not the only ones that can be unethical, so it seems like a moot point.

Indeed - we rely on regulation to promote "good business" that customers are unlikely to promote with their purchasing power. Anti-trust law is just another form of regulation, which is good at preventing several types of problems. We could allow monopolies to spring up spontaneously, but we'd have to invest more resources regulating those problems ourselves.

If a large chain begins to drop its quality, then customers will go to other, smaller businesses to maintain quality. The customer is not so stupid that she cannot recognise value for money.

Assuming an alternative exists. This is not the case when a monopoly exists.

As an example, there are two bakeries pretty much next door to each other at my local high-street. When the cheaper one dropped its quality, everyone switched to the more expensive one with impressive speed.

Exactly. You seem to be arguing my point...

Undercutting the competition at the expense of quality is not always a profitable strategy.

True. However, once the competition has been adequately squelched (by whatever means), and once the company with the monopoly has created adequate barriers to entry, there is nothing to prevent them from dropping quality or increasing prices.

That said, large companies can afford to maintain quality at a smaller profit margin, since they make so much money from other products. So if they can offer the same quality goods at a cheaper price, how is that not a good thing?

No one objects to offering quality goods at a lower price point. The objection is to the amount of power a monopoly wields, and the difficulty inherent in regulating all the things competition naturally keeps in check.

 

[Blackmarch]

They're not inherently a bad thing, and are required in some instances (such as certain utilities). Monopolies are much more susceptible to exploitation, though, so careful monitoring is necessary.

I agree... it really depends on the situation.

 

[AirForceTeacher]

Is it immoral to have a monopoly? Is it moral to punish a company for having a monopoly?

(blind post)I think it matters how your monopoly occurs and certainly how you use it. If you invernt something before anyone else, and you have the best manufacturing process and you end up with a virtual monopoly due to your product's popularity and your competitors inability to make something people prefer, then your should be judged not on the fact of your monopoly, but on your actions alone.

 

[Philip22]

I am not too sure it there is a simple yes or no answer to your question. Are monopolies fair to the consumer ... no , I don't think so. And I think you have to look at the details. I think alot of companies become Monopolies through unethical business practices .. case in point.., ENRON and if you dont believe me go and watch the movie " the smartest men in the room" All they where interested in was making as much money as possible as quickly as possible at whatever cost to other people and companies. And ENRON is not alone, I am sure that there are many more companies out there doing the same thing.., they just have not been caught yet. or have paid people off too look the other way.

 

[Nathan45]

Why is it moral to punish a company for being the best at what it does?

the free market only really works with competition. if there is no competition, you can't just let them charge whatever they want.

...

Here's how i view economics: i sortof see economic policy as similar to gardening. Here's an analogy: The free market is like plants, they do what they do: they grow, they expand. Nobody really knows how, it's some rather complicated chemistry there in the inside of the plant. But if you leave them alone, they'll turn into a festering jungle after a while. The government is like a gardener. It's not a plant and it doesn't know how to grow like one.

The government needs to temper the garden in such a way as to promote growth. Get rid of weeds (companies making money through fraud or anything else that's illegal), and generally provide good management for all of the plants so that whatever the free market produces naturally grows into a nice garden rather than a festering jungle.

in any case, having monopolies is not healthy, cause they can just charge whatever they want, which hurts the economy. And certain industries have very steep entrance requirements, so even if they aren't breaking anti-trust laws they could still have a monopoly. They need to be heavily regulated or broken up... for the good of the garden, so to speak.

Note that i don't blame the corporations for becoming monopolies... corporations do what they do, their goal is to make money. I'd blame them if they did anything illegal to become a monopoly, but being a monopoly doesn't necessarily indicate that they did anything wrong. But just because they didn't do anything wrong doesn't mean that they shouldn't be broken up... having unregulated monopolies is simply bad economics, so they need to be either regulated heavily or broken up.

 

[Chesterton]

The government is like a gardener.

Yikes, what an image. I think I'm gonna have nightmares tonight!

 

[Nathan45]

Yikes, what an image. I think I'm gonna have nightmares tonight!

I should probably also mention that the government found a rather thick shrub today and had to bust out the chainsaw.

 

[Wiccan_Child]

I should probably also mention that the government found a rather thick shrub today and had to bust out the chainsaw.

Did they find that shrub in someone else's garden?

 

[Robbie_James_Francis]

Why?

Because, when individuals do not have direct control over an organisation (i.e. it's not the government or state-controlled) the only way I can see of assuring real choice is through competition. Preferably, we should nationalise as much as possible, but until that happens competition seems to me the only way we can have some sort of control over the companies and organisations we need on a daily basis.

For example, if there was only one gas and electric company they could make their prices absurd but we would have no choice but to pay. If they were state-owned we could vote people in or out depending on how they set the prices. If they were private, we have no such choice and are forced to fork up regardless.

Is that necessarily what all shareholders think about?

Not necessarily, but they only have a vested interest in profit, whereas government (in theory) has a vested interest in doing what we the people want, because we are their employers.

 

[Philip22]

For example, if there was only one gas and electric company they could make their prices absurd but we would have no choice but to pay. If they were state-owned we could vote people in or out depending on how they set the prices. If they were private, we have no such choice and are forced to fork up regardless.quote]


Yes, I agree , case in point ... ENRON , look at how became a monopoly(somewhat) they tried to manipulate Watch the movie " the smartest men in the room" and you will see what scum these people where/are

Monopolies are never good for the consumer, despite what some might say. One thing only motivates them....GREED