Against Monopoly

Once again we get to watch the advance of monopoly with the planned acquisition of NBC Universal by Comcast. One needs to read the details to see the full power of the deal link here. It turns out to be about a lot more than NBC broadcasting as NBC Universal owns several more cable companies and content in addition to the NBC network. GE would retain 49 percent of the joint venture, so we will have two giants in cahoots.

"Almost one in four cable subscribers in the U.S. is a Comcast customer. NBC Universal owns cable networks such as Telemundo, MSNBC and Bravo, TV shows such as Jay Leno's, regional stations such as Washington's WRC (Channel 4), and Universal movie studios," writes the Post's Cecilia King.

She notes that the "merger will be a test for how regulators will deal with the Internet video market, which doesn't fall directly under the FCC's jurisdiction. But the agency is exploring competition in online video, and it could use the merger to implement conditions that would set guidelines for the burgeoning market."

We can now see the folly of our deficient planning and regulation of radio and TV, which has permitted the growth of such giants and the extraction of maximum revenues from the public. Video over the internet promises to break what is a monopoly on distribution but will it be allowed to happen? Don't hold your breath.

Had we the luxury of starting over, we should rather have separated the means of distribution, the pipes, from control of the content. We might also have opted for local government control of the pipes, in the process creating a bilateral monopoly to exert some control of content fees.

Now we face a new situation. In time, video over the internet might destroy the hold of the cable companies over the pipes, but the outlook isn't good with the cable companies providing internet access and the only competitor in most places being the phone company, another congenital monopolist.

Comments

John, I have to strongly disagree. The only real monopoly is that imposed by force--that is, the state and monopolies it grants and assumes--such as the post office and its monopoly on first-class mail; the monopoly copyright and patent grants; the state's own monopoly on the provision of justice and defense; and so on. To bemoan "deficient planing and regulation of radio and TV" is in effect to call for additional use by the state of its own monopoly power, to combat something that is not a genuine monopoly at all.

Anyone opposed to monopoly should never, ever, cheer on the state.

Let me add something to my comment above. It could well be argued that the firms in question have more or different market power due to state intervention in the market--corporatism, intellectual property, monopolization and regulation of the airwaves by the FCC. But such a criticism would fundamentally be one directed at the state, and would call for it to have less involvement with the market, not more. A call to completely remove from Comcast and NBC any special privileges or monopolies or protectionism granted by the state is completely justified. I did not take Bennett's post to be doing this, but rather to be appealing to the mainstream idea that a totally private monopoly (a) can exist, (b) is a bad thing, and (c) "should" be reguated by the biggest monopoly of all, the state, and (d) that the current market power of NBC and Comcast, even if distorted, is due to too little state regulation as opposed to being due to too much state intervention and regulation of private property rights.

Perhaps I don't belong in this group, Stephan. I think a monopoly of military power and the police power in the hands of the government is generally a good thing in a democracy. I can think of other examples as well, but wonder whether you would concede that point.

My fundamental difference is that I don't think government is always wrong or can seldom do right. The whole point of politics is to try to improve life for its citizens. If I believed they benefited from IP, I would be happy with it. I don't think it does, so I am opposed. Ditto with monopoly--generally, the public doesn't benefit.

How do we explain NBC and Comcast monopolies? NBC was created as one of a handful of firms given TV bandwidth at a time when the amount was severely limited. It was thought to be a good thing at the time. Comcast got the right to provide cable service in deals with local governments before it was clear that service would be provided by more than one supplier in an area. Competition was not seen as possible initially or desirable.

I suggest that competition is possible now, with the promise of TV over the web. But if Comcast-NBC is able to control the ISP allowed to service an area, forget competition. Had we been foresighted earlier, public policy might have been to prevent the pipes being controlled by the content providers. That is a monopoly I believe it would be desirable to prevent. What I am suggesting is finding a way to take back the monopolies the governments gave in the past.

I would note, in closing, that a number of countries have kept content and the pipes separate--and have much better web service than we.

John,

I agree with Stephan on this point. Let me refer you to Murray N. Rothbard's discussion of monopoly, to which he devotes an entire chapter in his book Man, Economy, and State. (I'm pretty sure its webbed at the Mises Organization's site.) Rothbard made the case that all monopolies are due to government intervention. Either government monopolizes a service, such as mail delivery, police, court, and defense services; or it grants a monopoly to a nominally private firm to provide a service by excluding competitors from providing it. Obviously intellectual monopolies are in the latter group. Libertarians argue that mail delivery and other services monopolized by the State should be privately provided with all comers competing for their provision. Historically, defense, law, and court services have been provided on the market. David Friedman has written about it (in a J. of Legal Studies article, as well as in his book The Machinery of Freedom). So have Bruno Leoni (Freedom and the Law), Bruce Benson (The Enterprise of Law), Rothbard, and others.

I also disagree that the point of politics is to improve the life of citizens living under a democracy. I think the point of it is to increase the range, pelf, and power of the State over the lives of the people it royally and high-handedly proclaims to be "its citizens." While I agree that Comcast (and other media/communication firsm) initially had some monopoly privileges, I assume you would agree that these have eroded over time, particularly with the advent of the internet, to the point that the markets they compete in are better characterized as competitive than monopolistic, with the important proviso that they are not as free as they would be in a market without any government intervention. Verizon, for example, and its predecessors once had a monopoly of land line telephony in the Northeast; yet today it struggles to compete in all of its markets against other internet providers (e.g., Earthlink, Time Warner cable), and VOIP providers (e.g., Vonage). Whenever I call Verizon's customer service, one of their customer service reps always wants to pitch me Verizon's (horrible) DSL service, which I had for a short time before switching to Time Warner cable.

Also, many libertarians have a critical or least jaundiced view of democracy. Rothbard and Friedman both shredded it. As the great Benjamin R. Tucker put it, "The population is gradually dividing into two types--Anarchists and criminals." (The quote is from memory, and might not be exactly correct.) I know which camp I'm in. How about you?

John,

I think a monopoly of military power and the police power in the hands of the government is generally a good thing in a democracy. I can think of other examples as well, but wonder whether you would concede that point.

No indeed not. The state is a criminal gang. It's terrible to give it monopoly power over such a crucial institution. For various stuff on this see Hoppe's work here, e.g. The Myth of National Defense, and Hoppe's chapter in that book.

My fundamental difference is that I don't think government is always wrong or can seldom do right.

It is aggression that is always wrong--invading people's body and borders when they have committed no crime.

The whole point of politics is to try to improve life for its citizens.

No, it's to dupe the people into believing the state is legitimate so that it can rape loot steal kill control on a mass level it could not otherwise get away with.

I suggest that competition is possible now, with the promise of TV over the web. But if Comcast-NBC is able to control the ISP allowed to service an area, forget competition. Had we been foresighted earlier, public policy might have been to prevent the pipes being controlled by the content providers. That is a monopoly I believe it would be desirable to prevent. What I am suggesting is finding a way to take back the monopolies the governments gave in the past.

If the government gives monopolies it shows they are evil; why would you trust them to be in charge of doing the right thing? And sure, remove state-granted monopolies. But if you are talking about penalizing companies who do not comply with artificial state edicts, jailing people for violating antitrust law--this is outrageously immoral -- it is wanton criminality.

I would note, in closing, that a number of countries have kept content and the pipes separate--and have much better web service than we.

I'm concerned with justice, and not willing to condone theft, imprisonment of innocent people, etc., to try to "get better web service."

The cast iron libertarians among our readers might find a lecture series on Justice of interest. It is a complete course, one of the most popular at Harvard. It is on the web here http://www.justiceharvard.org link here

I have found it engaging as it is taught by a master lecturer. Libertarian thought is taken up in the third lecture, but I would hope that in the interest of giving the opponents a hearing, you would pursue them all.

@SK: This thread brings up a distortion in your views that has troubled me a lot. I agree with John Bennet here, although maybe for non-obvious reasons. I think you (as most Randians or Libertarians I've come across) tend to over-value the power of the state to create monopoly, even incidentally via lack of foresight into all the possible forms of regulatory capture. At the same time you both under-value Democracy as a form of dispute resolution, and under-estimate other groups of humans (i.e. corporations) as a force for evil.

Speaking in economic analogy, Democracy (properly executed) is much like an economic system where every interested participant in a region affected is given a set of "vote-dollars" for every dispute resolution, in the form of an election. Every participant is given the same amount of vote-dollars (1 per issue), because accumulation of vote-dollar power is seen as unfair in election disputes. Accordingly, vote-dollars expire after each election, so that they can't be horded for later elections. Also, we use the secret ballot so that people can't try to force or coerce others to use their vote-dollars as if they belonged to the coercer. The vote-dollar exchange system is never quite perfect, but the goals are along these lines, and gradually get better when these egalitarian voting goals are kept at the center of development. In this fashion, Democratic elections can be viewed as a monetary system for egalitarian group decision making and problem resolution, in a way I view as far superior to any other "Libertarian" system of value tracking and spending, including and especially Capitalism. Capitalism is just fine where there's ready competition and definable scarcity, but it fails in a lot of other areas of human endeavor, especially where physical force and resource monopolies are concerned.

I think Democracy is especially superior in any case where a monopoly distortion arises, for ANY reason, the most common being "natural" monopolies like regional disparities in scarcities and traversal. One example is to imagine a "Libertarian" national rail system. If a rail line is made long enough, i.e. from coast to coast, there is no way for another rail line to cross it without some agreement being made, i.e. an exchange with a North-South line, or an overpass of sufficient height over all used rail cart heights. If one side tries to seek monopoly rents rather than exchanging crossing agreements in good faith, that is the effect of their natural monopoly on the earth surface at any given potential crossing point. It doesn't matter whether that "ownership" was arrived at by "Libertarian" means like homesteading or exchange, or "statist" methods like government grants, because the net effect is the same. I think Democracy becomes the overriding best system for resolving such disputes, over even "Libertarian" exchange and contract mechanisms.

Monopoly should never be allowed to run its course, but where unavoidable or unpredicted monopolies form, Democracy is the best available solution. The State, least any truly Democratic state, is never the SOLE source of monopoly. I can't think of any monopoly that doesn't involve some form of corporate or other power-group intervention, but I can think of plenty that didn't *require* state intervention. Human lust for power precedes all governments. I would agree corporate corruption of the state, or even just lack of foresight by the state, can greatly speed up the processes of monopoly formation and rent-seeking. But I also see that a lot of those problems could be cleared up by more cleanly separating the Capitalist monetary value system from the Democratic value system. Capitalism, even descended to barter, implicitly allows forms of value hording and asymmetrical power which I think Democracy should avoid.

Takey McTaker,

First, let's not equate Randians with libertarians, and let's keep the former out of the discussion. Randroids, after all, love their patent monopolies; La Rand herself thought that they were at the heart of property rights. She also referred to libertarians as "hippies of the right." And she was more or less an economic illiterate, as are some of her followers. And let's not even get started on Al Greenspan, ex-quasi-libertarian and ex-gold standard advocate. You bring up monopolies, the State, and democracy, claiming that they can exist on the market and that those sorts of monopolies are worse than any created by the State. You also end with a reference to resource monopolies. Well, can you name a business that is also a monopoly? What about Pemex? That's the Mexican state-owned oil mononpoly, in case you were wondering. As for resource monopolies, 80-85% of oil waiting to be produced lies in property claimed by various governments or government-owned oil production companies. Exxon, the world's biggest private oil producer, doesn't have anything approaching a monopoly. Let's consider another type of monopoly, the money monopoly. The Federal Reserve notes in your wallet are the product of a government monopoly, the Federal Reserve, which itself is a product of democracy. Money was privately produced before the advent of central banking; it was superior in quality, and led to far fewer economic distortions, business cycles, and banking and financial panics. (To be sure, the latter were caused by more than central banking; their causes included bad bank regulations, such as unit banking laws and compulsory deposit insurance. See Russ Roberts's recent interview of Charles Calomiris at EconTalk, and the latter's book on the history of bank regulation in the U.S.)

Your railroad example is bizarre. It would not entail monopoly rents, and there is no reason why other transportation providers couldn't cross it under whatever deal they worked out. I would also point out that in the real world, competition for transportation services is quite vigorous, and transportation companies do not earn particularly high profits. As for the State and democracy, a good definition of the former is a legalized monopoly of coercive force over an arbitrarily circumscribed geographical area. To complete the definition, the State obtains its revenue by theft, taxation and inflation. Businesses get their revenues by selling goods and services. Democracy is simply a way of electing government officials. For a good book on why govenment doesn't work well, which includes a critique of democracy, see Murray N. Rothbard, Power and Market: Government and the Economy. I would also refer you to a new article by Dwight R. Lee, "Why Businessmen Are More Honest than Preachers, Politicians, and Professors," in The Independent Review, 14 (Winter 2010).

I'm always surprised to hear Americans argue for the self-regulating free market even if it leaves them with uncompetetive monopolistic corporations. I just moved back to the USA from one of those so-called socialist old europe countries (Germany) where they have regulated market economies consisting of private and governmental players.

The result of this approach seems that corporations have been forced to remain competitive. Consumers are reaping the benefits of choice resulting in better value and quality. Companies may or may not have the same profit margins but their long-term success is more secure as they are forced to continuously address consumer needs and the strategic shifts brought on by a globalized economy and the reality of having to face energy and environmental limits. This is not to say that all things are rosy in Europe and that Europe in return cannot learn much from America. In this case though Americans have to wake up and demand a return to free market enterprise that meets consumer needs in critical markets such as telecommunications, energy, consumer products, etc.

A good example is the deregulation of the German telecommunications market which used to be controlled by a single government agency and the German energy market which was administered by regional energy monopolies. In the 1980s calling the US cost $5 per minute. Now it starts at 1/2 cent. In the 1980s you had no control over how Energy is produced. Now, you can choose an Energy provider that is cheaper, or easier to deal with, or meets your environmental concerns.

Philip,

No libertarian ever claimed that monopolies don't exist in the U.S. Look no further than Ma Bell pre telecommunications deregulation, which still retained some government regulation. Consider also state-regulated utility providers. Insurance companies are regulated by the 50 states. If an insurer wants to raise its rates, it has to go hat in hand to the state regulators, which can be expensive and time consuming, particularly for those operating in all 50 states. A Wall Street Journal article last week pointed out that 35% of workers in the U.S. are now licensed, up from 3% in the early 20th century. That's a 10-fold increase! The point is, these monopolies are created by government regulators, usually at the state level. I challenge you or anyone else to name one firm in the U.S. that has a monopoly absent any law or government regulation. You can't because there isn't one. In a free market, the government-granted monopolies would compete freely or go bankrupt freely. There's no third alternative. (Disappearing by being taken over or merging doesn't count, because its assets/liabilities would be taken over by another firm and still exist; and customers could still do business with the new owner.)

Germany and a few other European countries liberalized their economies the last ten or twenty years. France did a bit under Sarkozy also; however, see "Dirigisme de Rigueur" in The Jan. 2 issue of The Economist, which points out that Sarkozy and the French state are reverting back to normal French form. It makes for disgusting reading.

A Brit friend use to remind me daily (he's since moved back to London) about how much better European telecom companies were than American ones. They still are, as far as I know. It's an argument for allowing greater competition in the U.S., which means smashing the regulations.

Bill:

How about DeBeers?

How about Coca Cola? They have a monopoly on Coca Cola. Considering that the current formula for Coca Cola is unknown to the public, it would be difficult for someone to copy Coca Cola in any case.

There have been other monopoly producers of various products throughout history, mostly due to keeping their processing methods secret.

In a few cases, such as DeBeers, they kept a stronghold on the diamond market through their financial resources, buying diamonds when the supply seemed high enough that the price would drop.

Anon.,

I'm only a little familiar with DeBeers. My understanding is that there are other competitors for their gemstones, and that they also have some government-granted monopoly privileges, making it almost impossilble for other firms to compete in the areas of their mines. And it certainly doesn't have a monopoly of diamond trading and industrial diamond manufacturing.

This article claims that the company has five competitors. Doesn't sound like a monopoly to me.

To say that Coca-Cola has a monopoly of Coca-Cola is to empty the word "monopoly" of all meaning. Coca-Cola competes in very competitive markets for soft drinks and bottled water, to name two. Competitors include Pepsi-Cola, Jolt, Danone, Poland Spring, etc.

A company with a brand, even a strong one with significant market share, is not a monopolist. LeBron James is the sole supplier of LeBron James's basketball services, but that doesn't make him a monopolist; he compete against many other players.

Bill:

DeBeers once owned or controlled more than 90% of the world market in diamonds. Indeed, your link describes how they achieved a virtual monopoly position in the diamond market up through about 1990. Interestingly, predatory pricing, which some claim has not been successfully demonstrated, was a significant portion of their strategy. They may have five competitors now, but that was not true a decade or two ago.

As for Coca Cola, the same argument can be said for a patent. How can a patent be a monopoly when their are competitors for the product in the patent? Example, if a hybrid vehicle configuration is patented, but there are other configurations not covered by the patent that are in competition with the patented configuration, how can the patented configuration be a monopoly?

Anon,

90% of the market is not a monopoly, unless you're an FTC bureaucrat. My recollection is that FTC economists think that 70% market share is a monopoly. This is stupid. I well remember discussions of "predatory" pricing by my first economics professor, who thought Ralph Nader was the cat's meow. (He actually taught a course on "The Economics of Ralph Nader," and gushingly introduced Nader when he came to our school to speak. I didn't know any better at the time.) In his lectures, he complained that a "monopolist" would drive the price down of whatever it had a "monopoly" on, then drive its, whoops--competitors--out of business, then raise its price, being a "predator." This kind of nonsense is completely removed from economic reality. I've never seen a real world example of it.

Patents don't cover brands per se, but do cover mechanical devices and other inventions. They grant monopolies, because a would-be competitor is barred from using a copy in ways proscibed by the patent law. An example is Amazon's one-click method of buying stuff through the internet. It was a business method, not a consumer's good, relying on a certain non-branded technology. Coca-Cola never patented its secret formula, relying on trade secrecy instead to keep would-be producers of Coca-Cola at bay. Amazon's method could have been copied by anyone, as trade secrecy didn't apply to it.

Patents are monopolies, even if some things that are patented face competition. They can yield monopoly rents, but obviously some (most?) patents are economically irrelevant.

Bill:

Yes, DeBeers successfully used predatory pricing, not to drive competitors out of business, but to "encourage" them to sell through DeBeers, which maintained a nearly exclusive control of diamonds throughout much of the world for many decades. While some portions of the world were not under DeBeers control, hence the ~10%, in most of the world, DeBeers was the only source of diamonds, which would imply a monopoly for those portions of the world.

As for brand versus invention, I respectfully disagree with the thrust of your comments. Coca Cola is a brand, but it is also a formula exclusive to Coca Cola. No one has ever copied that specific formula and no one is likely to be able to do so in a way that is indistinguishable from Coca Cola, unless they get the (closedly guarded) current formula. Coca Cola has competitors for other formulations of cola, but not their specific version. Thus, Coca Cola in fact has a monopoly on their cola.

As for patents and inventions, if someone has a specific (patented or trade secret) cola (hybrid vehicle) and there are other (patented, unpatented or trade secret) colas (hybrid vehicles) in competition with the specific cola, if there is no monopoly on a specific formulation of cola because others compete in the same market and not because they have the ability to produce the specific cola, ipso facto, neither can there be a monopoly on hybrid vehicles just because you can obtain one type of hybrid vehicle only from a particular company.

"A nearly exclusive control of diamonds" is not a monopoly, again unless you're a FTCeaucrat. Even people in the 90% of the market you cite could have bought non-DeBeers diamonds, and some probably did, so I don't think your point sticks. To me, predatory pricing is a good thing to the extent it gives consumers a better deal. In any event, capitalists aren't predators, although politicians and tax collectors are.

Regarding Coca-Cola, it can't make a monopoly rent from its flagship product either in theory or in practice. To say that it has a monopoly over its cola is to empty the term monopoly of any empirical meaning. No one has a monopoly over any product or service that hasn't been granted by the State. Coca-Cola is trademarked, but this is for identification purposes, as all trademarks are (see Boldrin and Levine, _Against Intellectual Monopoly_, p. 259). They mention (_ibid._, p. 260) that if Disney were to lose its Mickey Mouse copyright, "they would have a strong temptation to trademark Mickey Mouse and so prevent the use of Mickey Mouse images." They say that reform efforts will have to figure out how to prevent trademark from substituting for copyright and patents.

The bottom line is that without State-granted privileges outlawing competition in the thing/process/creation protected, there are no monopolies.

Bill:

I may have been insufficiently clear. In many parts of the world, DeBeers held exclusive control over the distribution of diamonds; i.e., they had a monopoly. You might find it interesting that many of the areas where they did not hold exclusive control were communist countries.

I do not agree with you regarding Coca Cola. Coca Cola is the only company in the world that produces that particular formulation of Coca Cola. If you want the formulation that makes Coca Cola, you can only get it from the Coca Cola company. That makes Coca Cola a perfect match for the definition of monopoly.

Now, if you wish some other entities that are non-government sponsored monopolies, though some may be defunct, I suggest to you certain salt producers have had monopolies throughout history, major league baseball is an extremely controversial monopoly, U.S. Steel had a monopoly for a time and was successful in defeating antitrust actions by the United States, and Monsanto holds 100% of some seed markets, and has similarly encountered antitrust actions (i.e., Monsanto controls 100% of some seed markets and the very government you claim is the only way a company can become a monopoly has taken action against Monsanto to prevent continued monopolistic activities). Some people also consider Gamestop, which is the primary and in many markets the only retail re-seller of used video games, even going to the extent of buying up competitors, a monopoly.

Monsanto's monopoly derives from patents. The government giveth monopoly with one hand even as it seeketh to take it away with the other.

Anon.,

Working backwards: First, NN hit the patent nail on the head re: Monsanto. Re: U.S. Steel, it never had a complete monopoly. I don't see why MLB is a monopoly. There are, what?, 24 major league teams, plus professional baseball teams in Japan. I suspect there are more pro baseball teams than car producers; no one thinks any auto maker is a monopoly.

The monopoly salt producers of yore had patents, which at one time were given for the production of basic commodities such as salt. Several of the 13 original colonies that became the U.S. granted salt producers monopolies. Before that, there were patent-addled salt producers in England; a couple other commodities were similarly monopolized there for a while. There's a book on that subject, but I can't find the reference now.

If you think Coca-Cola has a monopoly of Coca-Cola, then presumably you think LeBron James has a "monopoly" of his services as well, but that doesn't make him a monopolist, or mean that he has a monopoly of his basketball services, any more than you have a monopoly of whatever it is you do for a living. Re: DeBeers, what government act outlawed competitors of theirs?

Bill:

Major league baseball is an entity that controls the creation of new baseball teams in North America. So Indianapolis, for instance, cannot create a pro baseball team without the permission of Major League baseball. Most assuredly a monopoly for baseball teams in North America.

Not all salt producers had "patents." Some salt producers controlled the salt flats in their area and guarded them zealously, without government support or interference, unless the government got upset with the price charged. Of course, this information is well available on numerous web sites, as you undoubtedly know. "Patents," which is a misnomer because they were actually grants of privilege rather than grants for achievement, came later.

Funny that you and NN should both mention Monsanto's patents and yet not discuss how those patents relate to anti-trust actions by the government. Further, how can Monsanto have 100% control over some seeds even with patents? Answer: only if they have obtained that control via means other than patents. Monsanto has more than a "monopoly" over Roundup Ready seed varieties.

If you think Coca Cola does not have a monopoly on the Coca Cola formula, then point out any other company other than Coca Cola that produces Coca Cola. The answer is that there is no one. Only if Coca Cola has a monopoly on Coca Cola can Toyota have a monopoly on Prius, Ford a monopoly on the hybrid Fusion, Honda the monopoly on their hybrid car. Otherwise, none of them have monopolies because they all compete in the same market for the same customers using similar, though somewhat different technology.

I don't have time to answer all your post now, but I will point out that you have confused trademarks--a form of ID--with monopoly, which is a single supplier of a good or service. Volkswagon is the sole supplier of Volkswagons but doesn't have a monopoly on the supply of cars, which is the relevant market. The same is true for Coca-Cola, which doesn't have a monopoly on the generic product cola. Btw, it's interesting that you bring up the example of cars. Did Ford earn monopoly rents last year? It last nearly $4 billion. Where were its monopoly rents? Inquiring minds wanna know.

You still haven't answered my point I raised about anyone having a monopoly of his own services. Does a janitor named Joe Janitor have a monopoly on his supply of janitorial services, which might consist of sweeping and mopping a floor, wiping tables and lamps, etc.? If not, why not?

As far as ball teams go, I think anyone could start up a pro team. I'll bet I could, not that you'd want to fork over much money to see us play. And if MLB tried to stop us, we'd sue 'em! I'll bet the denizens of Naptown (where I spent some misspent youth time) could start up a pro team. Hail to the Naptown Napsters!

Read "lost" for "last" above.

Bill:

I responded to your last post last night, but I guess I did something wrong and it got lost. So, points instead of explanation:

(1) I am not confused over trademark versus product monopoly. If a cola company has a formula that no one else can produce, then they have a monopoly on that formula. If that is not true, then Ford does not have a monopoly on hybrid technology just because it has patents since Ford competes with Honda competes with Toyota in the same market and customer space.

(2) If Joe's services are equivalent to all other janitorial services, then Joe does not have a monopoly on "janitorial services." However, Joe has a monopoly on HIS own services since no one else can command his specific services. Joe could potentially have a monopoly on his style of "janitorial services" if he performs those services in a way that no one else in his market space performs and fails to understand how he performs them (Joe has learned that vinyl floors attain a unique shine by treating them with white vinegar, followed by a mixture of bleach and pickle juice, and then using a specific brand of floor wax). Joe is in high demand because only he cleans in a way that customers like; i.e., a monopoly. Others are free to figure out how he does it, if they can, or they can invent a different way, but until they do, his technique (or version of cola or hybrid vehicle, as it were), is a monopoly.

(3) With respect to pro baseball teams, no. Major league baseball maintains an iron grip on how many teams there are and where they are located. Major league teams have to get approval to from major league baseball to move to another town. Sue away! Others have tried and died.

(4) What does "monopoly rents" have to do with Ford? Just because someone has a monopoly over something does not necessarily mean they earn monopoly rents. A monopoly holder, except in very rare circumstances, still has to compete in market space with other products that serve a similar function. Monopoly rents can only be charged to the extent that a consumer desires that specific monopoly. In fact, there are situations where a monopoly may mean that the monopoly holder can produce at a lower cost and they do so to gain a greater market share, a kind of negative monopoly rent.

Nobody & Bill:

You will find that Monsanto also has monopolies over non-patented seeds by their clever use of contracts. However, their onerous contracts have also gotten them in trouble with the government. Unsure of how all that will shake out, but I suspect that Monsanto will eventually be forced to permit competition where there is currently none.

This topic is on the radio regularly in the midwest. Do either of you live in the midwest?

Onerous contracts have one saving grace: they are not transitive. If someone gets ahold of non-patented Monsanto-derived seeds without signing a contract, the seeds have been "freed", and if they don't have Monsanto's other claim to infamy, the so-called "terminator gene", someone can start growing their own crop independently of Monsanto and can enable everyone else to do so as well. Competition arrives in town.

The worst Monsanto can do with non-patented seeds, terminator gene aside, is use contract terms such that the seeds cannot "escape" without either someone breaching their contract or someone else outright stealing seeds, e.g. off a farmer's land. In this instance, the contract would contain terms against distributing the seeds or allowing anyone else access to the seeds, so a farmer who doesn't try to defend against, and regard as trespassing, anyone coming onto his land and collecting some seeds would be a farmer in breach of his contract. Even then, sooner or later the seeds would be free by accident or by design.

Copyrights and patents however are in some sense transitive: if someone breaches copyright or patent to give me something, and I pass it on, I breach copyright or patent, unlike if they'd signed a contract but I didn't.

Monsanto can only bind with contracts the people who deal directly with Monsanto. Monsanto binds everyone with its patents.

Patents or no, Monsanto still controls the seeds. As farmers know, hybrids do not breed true without special care, and within a generation or two (seed generation, not people generation) the characteristics that made the seeds special are gone. Where do the farmers go once those characteristics are gone? Back to Monsanto. Great gig if you can get it.

There clearly is a way to propagate the seeds in a manner that preserves their characteristics -- Monsanto must use such a method. If others acquired the seeds, others could apply the same method and go into competition against Monsanto.

Nobody:

Yes, there are ways to propagate seeds that maintain their characteristics. However, since such seeds do not breed true, it requires continual tweaking of their genetics through selection and cross-breeding to keep those characteristics. In reality, it is the maintenance of those characteristics that is the only service that Monsanto really provides.

I have heard it said, though have do not know for a fact, that if we allowed corn to breed by itself it would gradual devolve back to a maize-like corn.

I should point out that there is a lot of controversy among biologists as to whether such sophisticated breeding is in our best interest because such crops are fragile and more susceptible to disease. Some farmers (a very small number - maybe they are Libertarians) have begun to rebel against this system by opting to plant hardier varieties that, though having lower yields, are sustainable without the interference of big seed companies. Of course, such crops serve only niche markets where higher prices can be charged since the yields are significantly lower than the highly modified corn you typically see in stores or goes to feed critters.

Nobody:

I have heard it said, though have do not know for a fact, that if we allowed corn to breed by itself it would gradual devolve back to a maize-like corn.

If you grow the plants in a positive-pressure greenhouse, with no other plants and no foreign pollen able to get in, then they will breed only with each other. If you pollinate each plant manually with its own pollen, you get even more certainty that the next generation will be exact clones.

Random mutations will happen, but it would take quite a long time for significant mutations to accumulate, and plants that lost any desired characteristic could be culled.

In this manner, given the seeds the plant strain can be maintained pretty darn pure with pretty low technology.

Nobody:

Sounds like an expensive way to breed corn. You would also have to either hand pollinate or hire a bee company to come to your greenhouse. I must admit that I have never seen anyone grow corn in a greenhouse. I suspect buying seed from Monsanto is probably cheaper, which is why nearly all farmers do so.

What is your problem, anonymouse? Every time I reply, instead of letting it drop you keep arguing. That is incorrect.

So maintaining a seed source involves some actual work -- so what? So does all of agriculture.

You seem to be supposing that I was suggesting that individual farmers each separately maintain a seed stock generation after generation. I was not. I was suggesting that it was possible, and therefore that a rival company to Monsanto could be created that would do this and sell the seeds, using whatever industry-standard methods, in any case where the seeds were not encumbered by either patents or a terminator gene.

Really, it's quite obvious that in such cases whatever Monsanto does to keep producing seeds, another company could also do to produce seeds of the same strain, and so the possibility of competition exists. I don't understand why you persist in arguing against something so obvious.

Nobody:

Perhaps they could. However, I provide you with this article detailing some of Monsanto's alleged behaviors.

http://coto2.wordpress.com/2009/12/23/monsantos-monopoly-exposed-in-iowa-and-copenhagen/

There is no real argument here. Monsanto has acted in a monopolistic way independent of its patents. That is a statement of fact and correct. I have no idea why you are going on and on about alternatives. If the alternatives were practical, farmers would be doing it. As one farmer said, "Farmers are addicted to Monsanto because it's easy." There you have it. Alternatives there are, but farmers have been helping Monsanto's monopoly by actively supporting it.

As for your other comment, in effect, we are in a discussion. I suppose when you are no longer interested in discussing, you will stop.

The anonymouse writes: "Perhaps they could. However,"

But should have stopped before the "however". When I say something, there is no "however", and there are no ifs, ands, or buts.

"I have no idea why you are going on and on about alternatives."

Because you keep stating or implying that maintaining these seeds independently of Monsanto is impossible, when that clearly is not true. Until you stop saying something that isn't true, I won't stop disproving what you keep saying.

"If the alternatives were practical, farmers would be doing it."

Your contention that the only alternatives are for farmers to buy from Monsanto or for farmers to maintain the seeds separately and individually is a false dichotomy. The seeds could also be maintained independently of Monsanto by one or more organizations, hypothetically. You might have overlooked this possibility before, but last time I explicitly noted it, and here you have "overlooked" it again. That can only be an intentional bit of intellectual dishonesty on your part.

Now please quit arguing with me. It's a losing proposition, and besides, you don't seem to have any substantive objection to what I've said.

Nobody:

I think we have already agreed on your single point: Farmers can buy seeds from places other than Monsanto. Yes, I already said that earlier. A few farmers do buy their seeds from other places. I also noted that most farmers buy from Monsanto because of yields and it is easier to buy from them than not buy from them. I also gave you a link indicating some of Monsanto's monopolistic behavior and the government's investigation into the behavior.

Do you have any disagreements with my summary?

You missed my point again. I wasn't saying that farmers can get seeds in general. I was saying that, in principle, seeds genetically basically the same as Monsanto's could be reproduced independently of Monsanto. In theory, someone could start up a company that propagated all of Monsanto's plant varieties that are neither patented nor saddled with a "terminator gene" (and, with more difficulty, ones with such a gene) and go head to head against Monsanto. It hasn't happened yet, but it can, and Monsanto cannot prevent it (perhaps it can delay it) by use of contract law.

That's my entire point. Either make a real effort to rebut it or stop arguing with me, please.

At last you made your point clear. I note that it really had little (nothing) to do with my point.

Yes, other companies are (finally) in the process of developing seeds that will compete with Monsanto. Predictions are that these seeds will be available in the next several years. That fact does not change Monsanto's past or current behavior and de facto situation. So, either rebut my comments or stop adding non sequitur arguments, please.

Anonymouse writes: "At last you made your point clear."

ExCUUUSE me? I made it clear right at the beginning, dummkopf, clear enough for people of normal or higher IQ anyway.

"I note that it really had little (nothing) to do with my point."

Incorrect. I do not miss points; you do, remember?

You originally said:

"You will find that Monsanto also has monopolies over non-patented seeds by their clever use of contracts."

I pointed out that a monopoly enforced only by contracts is fragile, because contracts aren't transitively binding. You are the one who then missed the point.

"Either rebut my comments or stop adding non sequitur arguments, please."

I did rebut your comments and I did not add non sequitur arguments. If anyone did, it was you.

Do not continue to argue with me, and, especially, desist from publicly accusing me of being unclear, of missing points, and of posting non sequitur arguments. I do not do those things, and now that that fact has been brought to your attention, I will consider any further remarks from you to such effect to be intentional lies rather than honest mistakes on your part and I will deal with them, and with you, accordingly. Have I made myself clear?

Nobody:

You did not make your point clear from the beginning, name caller. DO you often use name-calling to substitute for argument?

Yes, you did miss a point. I added a link that helped enumerate the other ways in which Monsanto enhanced their position in the seed market. While the article mentioned patents and contracts, other techniques were mentioned as well. If I neglected to suggest that the link explained this, then I should have.

Yes, monopoly enforced by contracts, though unusually effective in the case of Monsanto, is not the only technique used by Monsanto. So, if you missed that point, then either I was not clear or...

As for rebutting my comments, you went off on a tangent that is really irrelevant to my original point, which is that Monsanto maintains a monopoly position in the seed market with respect to some seeds. Everything else is essentially irrelevant.

As for arguing with you, the only arguments here are the ones you are creating. I tire of trying to get you back to my original point regarding Monsanto. So, if you want to continue to argue, do so by yourself. Seems like you enjoy arguing in your own little world.

I tire of responding to you, particularly since you place such high value on being obnoxious.

Anonyshit: I did make my point clear and I did not miss any point. You are a liar, and you are the name caller here; you were the first one of us to use a personal attack in this argument, three posts ago when you first started falsely accusing me of being in various ways lacking in intellect.

The technique under discussion here was contract. Your initial post made no mention of any other non-patent technique. What may or may not have been mentioned on some other web site is irrelevant; I was responding only to the substance of your own post here on this site. Suddenly mentioning that some other stuff is discussed on some other web site is just another of your many straw men.

As for tangents, I made a remark about how contracts are weaker than patents (and copyright). I did not "go off on a tangent" because I wasn't trying to address the question of whether Monsanto had, at the present time, an effective monopoly; whether that monopoly's back could be broken without government intervention (or the revocation of government-granted privileges such as patents) was of greater interest to me. That it apparently is not of interest to you is fine; but it was wrong of you to respond by writing a series of increasingly shrill attacks instead of simply ignoring it if it wasn't that aspect of the situation that you were interested in.

"Everything else is essentially irrelevant."

To you, perhaps. In which case why not ignore it?

"I tire of trying to get you back to"

I tire of you trying to push me around. I'll discuss the aspects of the situation that I find interesting. If you aren't interested in those aspects, the appropriate thing for you to do is to ignore them. It certainly is not to attack other people and try to force them to discuss the aspects you for some reason would prefer they discussed.

"I tire of responding to you"

Then don't.

"you place such high value on being obnoxious."

Another lie. You're the one being obnoxious here; it is frustrating to check this site and, every time, find yet another inexplicable rude and hostile post from you that needs to be addressed, each one a bit ruder and less subtle than the last, instead of you doing the rational thing and a) understanding what I've said, b) realizing that there is no logic in disagreeing with it, and c) therefore leaving it alone.

Making matters worse, your obnoxiousness is clearly deliberate; after the nature of the situation was pointed out to you, you went on to write another hostile missive instead of shutting up. That was incorrect behavior. You specifically chose to behave in a manner that you knew would rankle another user of the site.

Don't do it again.

Some people on this site provide the definition of jerk. Fortunately, there seems to only be one person like that.

Actually, no, there's at least one other besides you: Lonnie E. Holder.

It's nice to see that commenting has picked up again after a long lull of nearly zero activity at this site.

But could we please have comments a bit more interesting than "Comcast is such a huge company, they can buy anything they want"? It's like we have a couple of enthusiastic four-year-old children trying to contribute to an adult conversation, while most of the adults are dozing off instead of participating.

I'd almost welcome the Lonnie/Nobody flamewars back in preference to this inanity. At least they were arguing about the site's actual topic, IP, most of the time, and Nobody knew a few adult four-letter words and was unafraid to use them.

I note that Nobody Nowhere was rude in his comments to Anonymous; why he isn't banned is a mystery.

Bill Stepp writes:

I note that Nobody Nowhere was [insult deleted]; [threat deleted].

None of the nasty things that you have said or implied about me are at all true.

I don't respond well to threats.

The "anonymous" earlier in this thread was the first to resort to name-calling. And now you have resorted to uttering threats without proximate provocation. Anywhere near proximate. It's been eight months since I wrote the last of the posts you seem to be attacking -- why suddenly jump into a long-dead debate and take "anonymous"'s side in it? Let alone with a weak, ad hominem argument instead of a serious defense of his dubious claim that Monsanto's monopoly cannot be broken by private-sector action. Hell, it's been weeks since I posted any comments to this site at all!

Absolutely not, you were, as I document below. His response to this was civil too.

Nobody Nowhere wrote on 1/16 at 10:28 am.

What is your problem, anonymouse?

Your reply to his civil reply called him "anonymouse." You were the offender and it's not even a close call.

Bill attacked:

[calls me a liar]. His response to this was civil too.
Nobody Nowhere wrote on 1/16 at 10:28 am.
What is your problem, anonymouse?
Your reply to his civil reply called him "anonymouse." [false accusation deleted]

None of the nasty things that you have said or implied about me are at all true.

"Anonymouse" is not particularly derogatory.
I had explained my position such that no rational person could continue to argue against it. He continued to argue.
Frustration. I tend to get that way when someone is not merely wrong, but stubbornly wrong, refusing to admit it or even just to shut up about it after being proven wrong.

Against Monopoly

defending the right to innovate

NBC--Comcast combo will screw the public

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