MIT Professor says powerful elites set up monopolies so they can abuse consumers | Hacker News Reader

MIT Professor says powerful elites set up monopolies so they can abuse consumers

foreignpolicy.com

71 pointsteslacar20 comments

It breaks the HN guidelines to rewrite titles like this, so please don't.

https://news.ycombinator.com/newsguidelines.html

I imagine that it would be intolerable to have a huge amount of money and power, and also accept that you're part of the root cause of the worst the world has to offer. When you can convince yourself that you're a "thought leader" instead, and that you would be more responsible with those riches anyway... well... of coursed you believe that.

Most people with very little personal impact and responsibility struggle to accept their small role in things. I suppose it would be too much to expect more from people just because they managed to get money. It's not too much to demand though.

What's interesting is Peter Thiel is one of the few rich people who accepts and says it openly that creating monopoly is the only way to get extremely rich. Although I don't like the deals he does to get government contracts, I can't deny that he's quite successful in creating monopoly.

To be fair to him, the argument he's making is in essence the same argument behind the patent system. That in a world of perfect economic competition, all economic profits will be competed away. In such a world, no one has an incentive to create or fund startups, because even if they are successful, their economy profits will vanish due to competition. Hence, if you want to be successful as a startup, you need to find a business model that grants you at least a temporarily Monopoly. This also happens to benefit society for the same reasons that a patent system benefits society.

You may not buy the intellectual argument above, but at least he isn't saying it with malevolent intent.

Is it really true that in a world of perfect competition profits would be competed away? It depends on what you mean by "perfect," but I always assumed there would still be differences in skills, access to certain resources, and whatnot, so that profits might be decreased, but not eliminated.

The point you're making, though, is why patents are so important to get right and not overextend. I'm personally opposed to them completely, although I respect arguments for limited patents.

'Perfect competition' is a technical term, like 'ideal gas'. https://en.wikipedia.org/wiki/Perfect_competition

To add on, my previous post was referring to "economic profits", which is different from nominal profits. A sublink from above clarifies this further.

https://en.wikipedia.org/wiki/Perfect_competition#Normal_pro...

It's probably worse than that. It's probably a "dollar auction." Worse than perfect competition, a species of prisoner's dilemma.

Can you expand on how a patent system benefits society? I'm not sure I buy the argument that it encourages innovation or even that innovation would be somehow stifled without. A certain kind of society maybe? If everything were up for grabs would you always have IP?

The reasoning is that in a world without patents, companies wouldn't invest heavily in R&D. They would just wait for someone else to come up with a good idea, and then copy it. In a world where everyone does this, aggregate R&D investments would be much smaller than what they are now. Which would in turn reduce the rate of innovation and technological progress.

Or at least that's the argument as framed by defenders of the patent system, which generally includes most mainstream economists and policy-makers. However, there certainly are numerous groups, such as libertarians and socialists, who would dispute many parts of the argument above.

Yeah call me 'Ron Swanson'. I understand the 'R&D is expensive and people wouldn't bother' argument but I'm not sure I buy it? Won't people always create and invent? They can't help themselves. The actual people who have the ideas rarely benefit from them nowadays anyway. It can also have perverse consequences such as pharmaceuticals only investing in stuff that eases symptoms and not cures? (I have no actual data on that). Thanks.

I don't know the man, only what any of us can have heard, but my impression is that he's untroubled by the moral dimension of things. I suspect that a combination of intelligence, self-control, and a substantial lack of empathy can probably allow one to both acquire and enjoy immense wealth.

I don't think he approves or condemns. He says that monopoly of craftsmanship(product so good that you don't want to switch) like Google is not that bad.

It seems the antitrust action is inevitable. May first happen in EU.

I can't comment on Google, as I work there, but I started reading the book, and it looks interesting..I wish history was taught like this.

I read the book "Why Nations Fail." I found it to be poorly organized and repetitive. But the biggest problem I had with it was that it suffered from the fallacy of the single cause. The authors tried to attack every other theory about the prosperity of nations in favor of their one thesis. Their arguments against other theories seemed weak and poorly supported. While I think there is truth to their hypothesis that economic prosperity is related to inclusiveness of a society, and they presented some sound arguments for it, trying to say it is the only cause is a bridge too far in my opinion.

Amusing who argues against the idea that elites set up monopolies to accrue money and power.

I'm pretty sure you don't need a PhD to figure that one out!

Indeed. And worse, we have antitrust laws on the books already. All that remains is to actually enforce them.

>MIT Professor says powerful elites set up monopolies so they can abuse consumers

It takes a MIT processor to know that?

No, the majority wouldn't listen to others

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