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Comment by saosebastiao | Hacker News Reader

This is entirely false, and there are stacks of economic literature spanning a 200 year timeframe and covering every economic ideology that have explored why it isn't like that, and surprise surprise there actually is a consensus. High barriers to entry are the cause of natural monopolies. And not every industry has high barriers to entry. And oligopolies and collusion have never been stable.

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> This is entirely false, and there are stacks of economic literature spanning a 200 year timeframe and covering every economic ideology that have explored why it isn't like that, and surprise surprise there actually is a consensus.

"It is difficult to get a man to understand something, when his salary depends upon his not understanding it." -- Upton Sinclair

> "It is difficult to get a man to understand something, when his salary depends upon his not understanding it." -- Upton Sinclair

Ah, so you're in the "reject science" camp. Gotcha.

To clarify for anyone who might be confused like saosebastiao about what I'm saying: the consensus saosebastiao is claiming exists is exactly what you would expect from economists who are trying to make money for themselves.

It's additionally worth noting that a) there is not a consensus, and b) consensus is not part of the scientific method.

There is a consensus, and in social sciences like economics, consensus absolutely matters because universal truths do not exist.

And no, the incentives of academic economists are not aligned with industry like is claimed. If that were true, the majority of academic economists would not be Keynesian welfare-state supporting democrats like they currently are in the US.

Ironically in simultaneous parallel to the 200 years of economic literature we have explaining why it isn't like that, we have 200 years of recorded history explaining why it is like that. When scientific theory and facts come into a disagreement, theory walks away defeated. But when economic theory and facts come into a disagreement, the opposite occurs -- the facts must be reinterpreted properly to fit the theory, of course, so economists may continue on as highly educated cheerleaders for wealthy capitalists. Oligopoly and collusion is nothing more than a succinct description of actual economic history.

Economic literature isn't just philosophical or theoretical, it is empirical as well. The only empirically falsifiable theory here is that monopoly is natural for all businesses. The world's oldest profession, prostitution, has never been run by companies the size of Standard Oil. Neither has wheat, sugar, electricity production, coal, iron, or copper. Only revisionist history would take such a limited view of the economic scope of the world. If monopoly were the economic end state of all industries, surely some of these old industries would have been monopolized by now...or at least they would have been before Anti-Trust law was a thing. Note that that has not ever happened.

A natural monopoly only exists in the face of high barriers to entry. Those barriers may be natural, or they may be political, but either way they must be high. Some may be high enough to only have a few competitors, but compete they must do. Collusion is mathematically and empirically unstable. In fact, the economic criteria for cartel success is a) how much profits increase, and b) how long they last. There would be no need for `b` as a success criteria if they were stable.

And there is a tendency towards (politically-created) monopoly because only monopolies can concentrate enough wealth to buy elections. Natural or political, the only way to do away with monopolies does not have to do with public/private, but with campaign finance reform.

> The world's oldest profession, prostitution, has never been run by companies the size of Standard Oil.

This is because of government intervention (it's illegal for Christ's sake).

> Neither has wheat, sugar, electricity production, coal, iron, or copper.

Wheat has been regulated forever.

Sugar--are you not aware of the corn lobby?

Electricity production: this is pretty well monopolized regionally.

Coal: not yet.

Iron: USS wasn't a good enough a monopoly for you?

> A natural monopoly only exists in the face of high barriers to entry. Those barriers may be natural, or they may be political, but either way they must be high. Some may be high enough to only have a few competitors, but compete they must do. Collusion is mathematically and empirically unstable. In fact, the economic criteria for cartel success is a) how much profits increase, and b) how long they last. There would be no need for `b` as a success criteria if they were stable.

What makes you think that a large company will not create high barriers to entry in their field? When a company reaches a size where they can lobby the government successfully the field ceases to be an even playing field.

> This is because of government intervention (it's illegal for Christ's sake).

In the US, of course. There are plenty of places where it is legal, but no monopolies have formed. Even before it was illegal, there was no monopolization. If the timeframe for inevitable monopolization is on the order of millenia, like it has yet to do with Prostitution, well then consider me unimpressed by the argument.

> Wheat has been regulated forever.

Forever? I'm pretty sure wheat farming predates the existence of the idea of government regulation. And yet, no monopolies. Ever.

> Electricity production: this is pretty well monopolized regionally.

Distribution is pretty well monopolized (hey, what do you know...an industry with high barriers to entry!). Production, not even close.

> Sugar--are you not aware of the corn lobby?

You're still just talking about the special case of the US. Open your eyes.

> Iron: USS wasn't a good enough a monopoly for you?

US Steel wasn't even a monopoly in the US (it peaked at 67% of the US market)...nowhere close to a monopoly world wide.

> What makes you think that a large company will not create high barriers to entry in their field? When a company reaches a size where they can lobby the government successfully the field ceases to be an even playing field.

So what you're saying is that non-natural Monopolies are the end state of government intervention. I agree. Natural monopolies can exist due to or in spite of government intervention.

You're setting an unreasonably high bar for what you're willing to define as a monopoly.

Yes, most of my examples aren't global, but that's largely a function of regulation: the US is the only country with permissive enough economic policy to allow spontaneous monopolies and a large enough economy to be worth creating a monopoly in.

As for historical monopolies on the order of millennia: the modern corporation hasn't existed for millennia and indeed societal, technological, and infrastructural advancement was necessary before we could reach a point where a large scale monopoly was possible. It's hard to run a monopoly by carrier pigeon.

>> What makes you think that a large company will not create high barriers to entry in their field? When a company reaches a size where they can lobby the government successfully the field ceases to be an even playing field.

> So what you're saying is that non-natural Monopolies are the end state of government intervention.

It's ironic that in your excitement when you thought you had caught me in a mistake, you simply missed my point and failed to respond to it.

Given your general tactics in this debate have been rude and childish, I'm not going to continue debating with you further, but here's a question for you to ponder: in your hypothetical unregulated corporate free market, what prevents large corporations from changing the market so that it's no longer a free market?

> You're setting an unreasonably high bar for what you're willing to define as a monopoly

No I'm not. A monopoly by definition requires no competition, and monopolistic profits are not possible with competition. They could possibly occur with cartels in markets with high barriers to entry, but cartels are unstable because the markets benefit cartel-breaking behavior more than they benefit cartel behavior.

I find it absolutely rational of you to not want to discuss any further. It's the natural end state of stubborn ignorance. I've already demonstrated that not all markets end in monopoly, but only those with high barriers to entry. If any reader wants more examples, they can google the term Commodity.

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