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Comment by cs702 | Hacker News Reader

"I started a manufacturing company in Little Elm, about 35 miles north of Dallas, to produce the first-ever automatically retracting syringe to eliminate the risk of nurses contracting HIV through accidental needle sticks. The syringe received rave reviews from nurses, hospital executives and public health officials, a major grant from the National Institutes of Health and robust private investment. But when my partners and I tried to sell it to hospitals, we were told time and time again that even though it was a better product — a lifesaving product — they weren’t able to purchase it. The primary supplier of syringes, which controlled 80 percent of the market, structured an arrangement with a vast network of hospitals that essentially closed our industry to new firms for good."

A market in which buyers are not free to choose better products is not a free market.

A market in which new entrants cannot compete fairly against established players is not a free market.

A market in which innovators have to get permission and pay established players for "access" (think ISPs) is not a free market.

And yes, a market in which economic and political power is concentrated in large corporations geographically clustered in a handful of giant metropolitan areas... is also not a free market.

Those corporations have both strong incentives and the means to change the rules of competition to their advantage.

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That's the thing though, that is exactly what a late stage "free market" looks like. What you need is a heavily regulated market that prevents exactly this behaviour.

People need to stop wishing for the "free" market. The term is abused by orators and manipulators who prey on peoples desire for a market which is free in the spirit of the word, and deliver to them a market which is technically "free" and horrible.

> That's the thing though, that is exactly what a late stage "free market" looks like.

How would you know? We haven't had anything approaching a free market since the early 20th century, even if we ignore government-granted monopolies via restricted land grants and patents.

At least to me it looks like making the market more "free" by means of deregulation would only exacerbate the problems mentioned above.

Free market != deregulation

Sadly, it often does in the realm of public discourse as directed by politicians and the average voter who engages.

Making the market "monopoly and oligopoly free" by regulation, as a synopsis.

This is exactly the same argument people make in favor of socialism..

The thing is, societies that were close to ideal free market capitalism have done extremely well, whereas societies that were close to ideal socialism have generally done very poorly (in the long term). On account of local linearity, I think it's probably OK to use societies that were almost like what is proposed to judge the proposal.

The US isn't even close to a free market (although it used to be very close), so I don't think the current performance of the US economy is a reasonable basis on which to judge free markets.

Similarly, many people used countries that were barely socialist to judge socialism, which is also a bad idea.

When has a close to ideal free market existed?

How would you know? Just because it's never been truly tested in reality doesn't mean we can't stop and think about the situation. We know what corporations do when they are given a choice (they choose profits over anything else) and we know that consumers will choose low prices over everything else as well. So, it's not hard to draw the conclusion that this will result in consolidation, economies of scale, and eventually monopolies. Exactly what is already happening.

In a "free market", what is going to prevent this? Every actor here is acting in their best interest. What could possibly change their behavior other than the government telling them to?

Where has economies of scale hurt?

ISPs are a special case because regulations make it difficult or impossible for competitors to run cable. But economies of scale turned cars, PCs, consumer electronics, air travel, etc, from rich peoples play toys into affordable products for the masses. As consolidation hit all those industries their products merely got cheaper and in most cases, far better.

Walmart. Walmart has destroyed thousands of businesses. Now you can argue the consumer got lower prices, but low prices don't matter when no one has money to afford them. Additionally, those economies of scale produced cheap, disposable, polluting goods that have an engineered lifetime so that customers have to keep buying the same appliance (or whatever) over and over.

The question isn't when economies of scale hurt, that's a loaded question. The question is "when does consolidation no longer benefit the consumer?". I would argue many, many industries have reached this point, with ISPs being the most obvious one, but there are many examples (like the syringe one given above) where a business you've never heard of silently corners the market through consolidation and trust building.

Walmart has been a huge boon to the middle class. It's inarguable that consumers got lower prices, substantially lower prices. That's increased their standard of living.

You can argue that Walmart hurt the standard of living of the Americans (less than 1% of US employees) who actually work for it. But that ignores the fact that the smaller competitors didn't pay much better, and never had a stock option plan, so the pay difference was marginal while the customer benefit was massive. Walmart big advantage wasn't labor costs, it was scale and inventory management from day one.

And it's products are as good or better as the competitors. I hate Walmart, hate shopping there, but when I have to I'm always struck by how good the products are and how amazing the prices are.

You're off-base in almost every regard.

>It's inarguable that consumers got lower prices, substantially lower prices. That's increased their standard of living.

It's a multifaceted issue. Yes, Walmart sells cheap stuff, but that's not the company's only impact on the standard of living. The middle class has been steadily shrinking since the 70s, consistent with the rise of Walmart http://www.huffingtonpost.com/2013/06/06/middle-class-jobs-i...

> You can argue that Walmart hurt the standard of living of the Americans (less than 1% of US employees) who actually work for it.

The key issue is not Walmart's employees, but rather the employees of the companies they source from.

> Walmart big advantage wasn't labor costs, it was scale and inventory management from day one.

Once again, it's about the cost of the goods they sell that has a bigger economic impact than their direct labor cost. What goes into the cost of the goods they sell? Labor costs of their suppliers. What did they do after their advantage of scale and great inventory management management eroded? They started sourcing products from markets that were fueled by cheap labor i.e. not the USA. Sam Walton has been rolling in his grave for years: The first true Wal-Mart opened on July 2, 1962, in Rogers, Arkansas.[18] Called the Wal-Mart Discount City store, it was located at 719 West Walnut Street. He launched a determined effort to market American-made products. Included in the effort was a willingness to find American manufacturers who could supply merchandise for the entire Wal-Mart chain at a price low enough to meet the foreign competition. --> https://en.m.wikipedia.org/wiki/Sam_Walton

> I'm always struck by how good the products are and how amazing the prices are.

You're probably one of very few

When a Walmart opens, it knocks out about half the jobs in a small town. It doesn't replace that number. It also pays so low many of its employees are on welfare. Companies like WalMart are subsidized by the taxpayer. Repeat that across thousands of stores to get enormous impact on economy.

Add downsizing, consolidation, price gouging (i.e. Koch's, oil), and offshoring to get an even bigger one across the board. The Recession was a given with buying power always going down while costs always go up.

Walmart has certainly not been a huge boon to the middle class, if they have been, we have not seen any evidence of it. The middle class is shrinking. So if this is true, that means the middle class is doing MUCH worse than realized.

From what I've read, Despite the cheaper prices, there was a net loss in jobs and significant damage to small business-resulting in higher losses in the local economy than gained from cheaper product. I don't know if there's enough evidence of all of that, but it seems logical.

Also you're ignoring the local economic impact of closing small businesses. It's not just the small retail store employee that loses out. Small businesses close-that means there's less need for accountants, cleaners, advertisers, real estate, etc. Walmart does all of this at the corporate level. This results in even more, well paying job loss, and sets off a spiral that destroys these communities.

> And it's products are as good or better as the competitors.

Sounds like confirmation bias to me. Nothing I ever see or buy from walmart has ever been quality, but I couldn't present that as evidence.

>Walmart has been a huge boon to the middle class. It's inarguable that consumers got lower prices, substantially lower prices. That's increased their standard of living.

Only when thinking in first-order effects. How about the city businesses it destroyed, and thus the standard of living associated with the families that owned them and the whole support system? How about the power it affects upon manufacturers -- and thus to the people that work there?

I think Walmart has damaged the economy a lot. Maybe smaller companies are less efficient but Walmart has destroyed a lot of small business that provided fairly stable jobs to middle class people.

How does Wal-mart stay in business if "no one has money to afford them"?

Walmart isn't singular they are part of a huge array of companies paying shit wages.

A lot of people in the same economic class as the workers are receiving government assistance meaning you are footing the bill for the food stamps that feeds the cashiers kids while ironically congratulating yourself on the good deal you got.

That's easy to answer: it doesn't in the long run (assuming it was the only player -- of course the reality is more nuanced).

But it can destroy a whole lot of value (and be the last "business" standing) in the short and mid-run.

In fact as such businesses erode the working/middle class, short and mid-term they become more enticing to it than other stores, since they are the cheaper options.

If a company causes a "race to the bottom" for jobs and wages by selling too cheaply and paying too little, then those whose wages are affected will mostly be able to shop at that place exactly. And if that company is one business upon many that are causing the same issues, then people wont even be able to single them out for blaming...

Easy. Food stamps.

https://www.google.com/amp/s/www.forbes.com/sites/clareoconn...

http://www.slate.com/articles/business/moneybox/2014/04/walm...

They stay in business courtesy of government programs to keep people afloat enough to afford basic necessities, and by negotiating to pay reduced or no local taxes or infrastructure costs, coupled with relocating stores any time a tax-break deal expires. As long as you don't have to pay a living wage (because the government picks up the difference) and don't have to pay the cost of building and maintaining the infrastructure of your store (because the government picks up the difference), you can "sustain" an otherwise-unprofitable business for quite a long time.

Are you familiar with intelligence squared? I encourage you to watch their debate on the value of walmart to society.

Destroying jobs is precisely how economies of scale and efficiency generally happens. If those other businesses kept employing as many people, products wouldn't get cheaper as much

There were powerful monopolies in the late 19th and early 20th century like U.S. Steel and Standard Oil that the government broke up.

Always found it interesting that the middle class in the US grew immensely wealthier during the period US Steel and Standard Oil were "monopolies".

How do you figure? Most historians credit the rise of the middle class to the post-war boom in the 50s. Standard Oil and US Steel were broken up during the Roosevelt and Taft administrations in the early 20th century.

When JD Rockefeller was growing up, the average American rode a horse (if lucky), never traveled more than a few miles from home, few had even been on a train. Sailing ships were the main and dangerous form of sea transport. 95% of Americans worked brutal farm labor jobs. Homes were lit by candle and whale oil, and heated with firewood.

By the time Standard Oil was broken up, railroads were everywhere, steel ships ruled the sea, cars roamed the roads. Homes were lit by electricity. Energy consumption had skyrocketed because the costs (esp. the cost of oil) had plummeted. Labor saving devices increased productivity and the standard of living, and were made possible by cheaper steel as well as cheaper energy.

And the same thing happened in other countries without Standard Oil and US Steel monopolies.

That's great, but I don't see why you credit that to those companies being monopolies. There's no reason to think these positive things wouldn't have occurred for consumers just the same if there was more healthy competition in the steel and petroleum market. That just happens to be the technological change that was sweeping the world at the time.

It reminds me of Microsoft receiving credit for computers becoming pervasive and useful in everyday life, as if they deserve special recognition, or thanks, for brutally clawing their way to the top of a very profitable industry and ruthlessly suppressing competition, even when it meant scuttling superior technology. Clearly someone else would have made an OS for home and small business computing if Microsoft didn't.

>How would you know? We haven't had anything approaching a free market since the early 20th century

We know exactly because of that. That there's the theoretical free market and the "really existing" one, and the really existing one is exactly what we get in practice if the big players get their way.

>We haven't had anything approaching a free market since the early 20th century

Hong Kong is often held up as a fairly free market that has worked well. The government does get involved in health care and the like but commerce is pretty free.

http://www.cnbc.com/2016/02/01/hong-kong-is-worlds-freest-ec...

> What you need is a heavily regulated market that prevents exactly this behaviour.

That seems like the opposite of a solution.

For such a system to work one has to believe that that the regulatory apparatus is staffed with monks who are unaffected by the temptations of wealth, power and vanity that other humans are subject to and that 'regulatory capture' isn't a real thing.

Further that the price mechanism as an information channel is worthless, and that corrupting it with noise will have negligable effect on efficiency and technological development will remain at at least the same levels we enjoy now.

You're acting like rules and oversight don't exist. Regulatory capture is a real problem but that means you need to take measures to prevent it, not give up on the concept — just as the threat of embezzlement doesn't mean we gave up on banking.

Don't let perfect be the enemy of good.

Yes, regulations aren't perfect. Yes, regulatory capture is a problem. Neither of those things is a reason to not have regulations.

>>that corrupting it with noise will have negligable effect on efficiency and technological development

What really hurts efficiency and technological development is monopolies. A company that is a monopoly has very little reason to innovate. We see this all over America with Internet Service Providers. They only improve their service levels if they fear competition (like what happened with Google Fiber).

ISPs is an anecdote, economies of scale in most business means products are much cheaper if provided by large companies, so where is the cutoff between "monopolies" and simple economies of scale?

The author claims 6 seed companies are worse than hundreds of seed companies, but doesn't give a single fact to support that claim.

You bring up an important point. I have thought about this issue a lot.

For ISPs the problem is that companies tend to expand. So where 20 years ago an ISP might have been a small regional provider. Things have consolidated and expanded so now that same company owns almost the entire infrastructure and many other services that depend on it. They can also bundle services together to make it harder for a new competitor to enter.

> For ISPs the problem is that companies tend to expand.

Not cooperatives. Co-ops tend to focus on their region, and have neither a reason to push into other territories, nor usually the foothold to do so as easily as in their own region.

"Farming out" your lines to outsiders then deciding that you don't want further construction efforts because 'the cables are already there' - effectively giving them a monopoly over your region - is what got us into this mess in the first place.

> so where is the cutoff between "monopolies" and simple economies of scale?

If a market is closed to new entrants purely because the economies of scale make the established players products cheaper, then that is one thing.

That is rarely the case. Usually, as described here, there are also deliberate attempts by the established players to exclude new entrants via other means.

"The primary supplier of syringes, which controlled 80 percent of the market, structured an arrangement with a vast network of hospitals that essentially closed our industry to new firms for good."

> The author claims 6 seed companies are worse than hundreds of seed companies, but doesn't give a single fact to support that claim.

Yes, he does:

"The result is that the farmer’s share of each retail dollar of food has been collapsing, while consumers pay either the same or higher prices. Mega-corporations in the middle exploit their dominant market positions to reap all the profits."

Extremely strong economies of scale are probably the single biggest argument for government monopolies in my opinion. That being said, governments are horrible at providing end-user level service, so it would make sense for them to lease out capacity to private firms who service end users.

He's not arguing for perfect, he's arguing for sustainable.

No system of regulations you build won't eventually be corrupted because (exactly as he says) there exists no neutral desireless arbiters in our world to enforce them.

No system of regulations you build WON'T get you back here eventually. [0]

[0] https://youtube.com/watch?v=2It2HRGGtCk

>>No system of regulations you build won't eventually be corrupted because (exactly as he says) there exists no neutral desireless arbiters in our world to enforce them.

I don't believe that. Al Capone was notorious for bribing the police and the judges, or intimidating them and their families if bribery failed, to the point where many people thought he was invincible. That turned out to be incorrect:

https://en.wikipedia.org/wiki/Untouchables_(law_enforcement)

There exist people in the world with strong moral standards and fearless attitudes. We just need to identify them and put them in the right positions.

> We just need to identify them and put them in the right positions.

Such an approach hinges on the presumption that the people doing the identifying and appointing are also virtuous and non-corruptible. Any attempt at a guarantee of the neutrality of the arbiters and enforcers will quickly descend into a Seussian "who's watching the watch watchers?" scenario.

I'm not saying it would be easy. I'm just saying Eliot Ness's example proved that it's possible, even in an environment rife with corruption (Prohibition-era Chicago).

Frankly, I don't see Ness & Friends as paragons of virtue. Sure, they were effective at upholding the law, but I don't see the law as at all just. I just can't look at people who relentlessly upheld prohibition and say "I want more of those in my government". Sure, Capone was a crooked crook, but the government was not any better in that case.

The same applies to markets too. In general, no static human-made system won't eventually be corrupted if some humans stand to gain from that corruption. Corruption needs to be fought actively and continuously.

On a tangent, I don't believe regulation-free markets are even possible; power and money are inherently connected (money itself being a form of power), so you'll always have "money in politics", and if governments were to suddenly disappear, then private actors with money would start performing their functions.

This isn't true, if you make regulation a democratic process then the only way to influence the arbiter (assuming laws against propaganda) is via the public good, which was the whole point all along.

The same people you trust with regulating, you trust are going to regulate against regulations. There's going to be an arbiter no matter what. The way we make sure he's not corrupt is through democracy. By limiting his time in power, and having the people choose his replacement.

The problem with monopolies is that they begin to approach government like control over one or more dimensions of society, but we have no corruption control on them.

>For such a system to work one has to believe that that the regulatory apparatus is staffed with monks who are unaffected by the temptations of wealth, power and vanity that other humans are subject to and that 'regulatory capture' isn't a real thing.

That's only if we demand unreasonable effectiveness of such a system.

In practice, it only requires that the people (consumers etc) can influence government and policy more than conglomerates and big private interests can.

This is why I'm pro lynch mob. Allow a free market with few if any regulations. Also allow for common violence if a company strays too far from customs. If a CEO is shown to pollute the water ways there is always an AR15 out there.

Few people fear violence since they know the law is weak.

> Also allow for common violence if a company strays too far from customs. If a CEO is shown to pollute the water ways there is always an AR15 out there.

I come to HN so that I don't have to read such stupid, knee-jerk, badly thought through opinions. If you have to, post this in a Facebook comment thread, but not here.

What do you think would be the consequences of legally allowing lynching? And I mean all consequences, not just the ones you intend?

'People need to stop wishing for the "free" market. The term is abused by orators and manipulators who prey on peoples desire for a market which is free in the spirit of the word, and deliver to them a market which is technically "free" and horrible.'

Don't call it the free market. Call it what it is: COMPETITION.

"Free market" implies "I can do what I want", but frankly we don't WANT people to be free to pull anti-competitive shenanigans. Competition is the priority, not "the free market".

> "Free market" implies "I can do what I want"

I always though free implied free from non-consensual acts. It's not much of a free market if your actions are non-consensual (1).

(1) Defining what makes an action consensual is difficult but doable.

"Consent or die" is not a choice, but on free market it is.

That's the American libertarian definition.

Difficult indeed.

An ordinary American internet user consents to countless pages of legalese in adhesion and other unread contracts (TOSs, privacy policies and so on) everyday day. These days, every website, piece of software, digital service or product comes with pages upon pages of contracts to which the user must consent to even walk in the door. Reading all of them is easily a full time job.

So, no one has coerced anyone into anything, just a bunch of consenting parties in theory.

In practice, getting consumers to throw away their rights and consent to stridently anti-competitive behavior by companies seems kind of easy.

Taken in the sense of an economy of mutual consent, "free market" is too low a bar to hop over. I can see why people don't think that the barebones style of "free market" is very free.

This is a deep discussion to have: too deep for a medium like HN. That being said...

Your points pre-suppose parties consented to a dispute resolution system: one that is based on arbitrary boundaries and quite monopolistic (1).

> I can see why people don't think that the barebones style of "free market" is very free.

So, I agree that it is hard for people to understand what consent is when they were never given a chance to choose which dispute resolution system(s) they can participate in.

(1) Example being I was born in the USA so somehow automatically consented to the rules of the land.

You're given that chance every day you choose not to go elsewhere where the legal situation is more to your liking. The social contract has an opt-out. But that'd be hard, so...

There being no good place to move because every other government also allows these things, is a sort of monopoly problem of its own...

Have you considered that maybe there are reasons for that that don't involve the twirling of mustachios?

What you say is true much of the time, but it is also true that consumers often do "choose" their arbiter. The aforementioned adhesion contracts often stipulate a private (non-government) arbiter, which the consumer (probably you, too) consents to of their own free will.

I see your points. But I kind of feel like we were having a rather nuts and bolts discussion about how to improve security in Linux, and then someone chimes in that we should probably rewrite everything in Haskell.

If achieving a free market requires a complete upheaval of all of our governments and laws, then the idea isn't very useful.

> If achieving a free market requires a complete upheaval of all of our governments and laws, then the idea isn't very useful.

The idea is extremely useful: act consensual to others. There is no better basis of a social system than this. Having conversations like the one were having now is really all we need. To force the ideas on others in anyway, especially through democracy, would be hypocritical.

A social system based on utility, which is basically all social systems we've had throughout history, is violent, aggressive and dangerous. No wonder history repeats itself.

The existence of property is based on a non-consensual model for the purpose of utility.

Which is forced upon others through threat of violence. And was obtained via violence in the first place.

"(1) Example being I was born in the USA so somehow automatically consented to the rules of the land."

Your parents consented on your behalf when you were born. Parents everywhere are entitled to make legal decisions for their offspring before the children reach the age of majority; this is what yours did for you.

When you reached the age of majority, you suddenly gained the freedom to consent on your own (by remaining) or reject the terms of living in your country of origin (by leaving).

There's no mystery about being ensnared into something you didn't ask for; your parents did so for you, following a tradition and law as universal and old as time.

The ability of consensual exchange to increase utility for both parties frays at the limits of the ability of the parties giving consent to predict the results of their decision. Our ability to express the inherent failings of consensual contracts requires us to understand the limits of our own predictive power, which turns out to be a monstrously difficult scientific question.

However, it seems to me that, if one party to a negotiation takes actions which are intended to limit the other's understanding of the exchange, the usefulness of consent as a mechanism to prevent bad trades is degraded. This is not quite violence, but it is scummy, and it doesn't seem that it would be "anti-capitalist" to restrict it.

Fully agree. It wouldn't surprise me if acting 'scummy' was considered, by at least one party, to be non-consensual.

Yes, I can understand the desire to die on the "but the term as used correctly is what we want" hill. The far more pertinent fact is that just calling it 'the free market' allows others to advance their own concepts under the same guise (there's no regulators nor 'false advertising' when it comes to terminology differences) and you end up getting screwed.

Call it competition; refer to the literal changes it entails; use strong examples like the one above about safer needles. (My go-to was always airless tires till now; I'm sure we could compile a list of technology advancements we're sitting on but haven't adopted because of our LSC society.)

I've always preferred the term 'open market' rather than 'free market' to counter this exact point.

I like this. "Competitive Market" is what you want, "Free Market" has a shitty steady state.

I like "open market". It implies it's accessible to everybody.

> That's the thing though, that is exactly what a late stage "free market" looks like. What you need is a heavily regulated market that prevents exactly this behaviour.

I've joked for years that the end stage of capitalism is "one company selling you oxygen".

Turns out someone else had that idea back in the 1920's and there is a 'sci-fi' book based on the premise.

https://m.youtube.com/watch?v=SiabeNR_q0U

This is just one of those definition things where the common amateur usage of terms differs from their meaning amongst professionals in the relevant field. The common understanding of "free market" seems to be synonymous with "unregulated market", but that's not how economists use the term.

Which matters a hell of a lot more than those professionals' opinion, as unfortunately democracy's current models rely far more on what the amateur 'baseline' knowledge is and not 'what the professionals know'.

As the professionals are probably fine bellowing off their ivory towers so they can later go doen as "having been right" rather than actually attempting to change things (except Lessig who iirc tried with a PAC), I don't think relying on them will get you anywhere. Better to analyze what the people think and why, and work to improve that baseline, than ignore it.

(Or come up with an alternative model of democracy which does privilege 'professional known' information with minimal corruption risk somehow.)

The end state of free market (as in free of government regulation, not free to compete) is monopoly. Capitalist societies understand that and regulate to ensure freedom to compete. Europe is much better at this than the US.

Incorrect. Monopolies do not naturally occur in most markets (with a few exceptions). The barriers to entry that create monopolies arise largely from regulatory capture. Some level of regulation is often necessary, but devising regimes that don't favor early entrants is very difficult. Nobody does this well; neither the US nor Europe.

> Monopolies do not naturally occur in most market

They naturally occur in markets with network externalities, which are quite common.

They do if a company is able to do anything but make and sell products. The end goal of any company is to become monopoly.

Often times, companies in the US lobby for regulation that adds barrier to entry. Of course economies of scale greatly contribute to barrier to entry, forcing an entrant to have large volume to even compete. I've read where large companies sell products cheaper than competitors can buy them wholesale. Once there are a few large competitors, mergers happen resulting in monopoly or near monopoly.

Of course industries like food service don't have monopolies, but they don't pay very well. They are also geographically restricted. I don't really care about those companies, they don't contribute much to the middle class.

Google is an effective monopoly, Amazon is certainly headed that way. Facebook is pretty close. Microsoft would be except the rare occurrence of someone writing a free operating system that was very good at the dawn of the internet age. Airlines are effective monopolies in their selective hubs. Monsanto certainly. They don't have to be the last company standing to show monopolistic tendencies in my mind. Microsoft wasn't technically a monopoly in the 90s, but it might as well have been.

> Europe is much better at this than the US.

By Europe, I think you mean 3 or 4 countries in all of Europe. Most countries in Europe entirely fail at what you're claiming and most are embarrassingly behind the US on: innovation, productivity, median incomes, unemployment, global & domestic corporate competitiveness, research spending (both public and private).

I wasn't aware that Russia, Ukraine, Latvia, Poland, Hungary, Croatia, Belarus, Lithuania, Romania, Greece, Spain, Portugal, Italy, Bulgaria, Moldova, Serbia, etc. had such stellar economies, that functioned at a high level with excellent competition and dynamism.

The majority of nations in Europe are backwards, poor (often extremely poor), mediocre at competition, with terrible median incomes, terrible median household net worth levels, perpetual unemployment problems, and very stagnant innovation within their economies. The results - among the nations I listed for example - when it comes to GDP per capita, median incomes, unemployment, exports, etc. all speak very loudly.

Many of the nicer countries in Europe, have rigid economic systems that are narrow industry dependent, non-innovative and stagnant. That includes Norway, Denmark and Finland (which is trying to crawl out of a ten year near-depression, and is heavily dependent on ancient industries like paper production). France has had a stagnant economy for decades with hyper low growth, rigid is an understatement there; if they grow median wages at 1/4th the rate of the US, it's considered a good outcome.

Germany would be in the middle of a ten year recession, were they not free riding on their Euro neighbors when it comes to benefiting from an artificially cheap currency (cheap for them).

Europe is not better than the US at facilitating competition, a very select few countries in Europe may be (Sweden for one). Europe is overwhelmingly dominated by dynastic corporations, handed down through the generations (Europe overall has a far worse stagnant dynastic wealth score than the US), and have almost entirely failed to keep pace with the US when it comes to spurring very successful new companies in the last 30 or 40 years. That proof is in how far behind nearly all (not all, nearly all) European nations are in rapid innovation fields like software, Internet, mobile, AI, biotech, robotics, VR/AR, etc.

But feel free to list all the amazing Internet, biotech, robotics, AI, Mobile, etc. firms in the highly dynamic & competitive Russia or Greek or Spanish or Polish markets.

If I was wrong, the results, the economic standing, for all those nations I listed, wouldn't be so horrible. Poland wouldn't have a $13k GDP per capita; Russia's median income wouldn't be 1/5th that of the US; Spain wouldn't have 20% unemployment (still); Bulgaria wouldn't have a median income that's nearly at third world levels; and so on.

If USA is so innovative and Europe so backwards how come USA has trade deficit with EU?

The US has a $50 billion trade deficit with Mexico. Are we to argue that Mexico's business environment and economy is better and more innovative than the US? A trade deficit is not necessarily a bad thing.

Why is this being downvoted? This comment is factually correct.

> If I was wrong, the results, the economic standing, for all those nations I listed, wouldn't be so horrible.

What you are saying about the economies of those countries might be true, but it's not necessarily because they are worse at regulating capitalism. The effects of the Soviet Union, the size of the countries, language barriers, sanctions on Russia, problems with how the currency works, etc are enough to cause the things you mention even if they are better at making their markets more dynamic and competitive than the US. Countries with five million people like Norway, Denmark and Finland simply don't have enough people to have multiple strong industries simultaneously.

Uber gets effectively shut down in France, leaving my region with just taxis and no price competition. Try finding a non Air France nonstop between Marseille and Paris or Paris to Bordeaux. It doesn't exist. Try finding nonstop flights between Houston and Dallas -- there are five different airlines with nonstop service.

Air France has a practically guaranteed monopoly within France; the only reason that monopoly doesn't extend past its borders is that international air transport agreements would make it impossible for Air France to control the entire French air transport system.

Where's that freedom to compete? If one argues that "Europe does it better," I might argue that either that person hasn't ever lived and done business in the US and hasn't lived and done business in Europe. Anyone that suggests that competition is protected in Europe (or in my case, specifically France,) has no idea what they're talking about. Competing against entrenched players in agriculture, transport, infrastructure and technology is excessively difficult. In the US anyone that can buy an airliner, get the FAA inspections can essentially start an airline. In France such an attempt would be met with violence. Air France itself attempted to start a budget airline in 2014 and strikes essentially shut down French aviation for over 11 days.

Protecting competition would mean the that the government wouldn't abide the labor monopolies that hamstring companies attempting to compete.

France does have monopolies -- although most of those monopolies are in labor -- and labor monopolies, otherwise known as unions are just as destructive as any other form of monopoly.

Europe does not do it better -- they just do it differently.

The problem in this particular case seems not to be too much freedom to buy and sell things but overreach by the courts. If some syringe supplier slips stuff into the small print that they will be the only supplier for ever after then the legal system should refuse to enforce that as is probably the case in most places outside the US.

> the legal system should refuse to enforce that

What you're asking for is the opposite is the opposite of what you're stating the problem is. The courts doing nothing but enforcing contracts is expected.

Asking for the courts to step in to say "while legal this isn't right and won't be enforced" is asking for 'more reach' by the courts.

Ok, I didn't put it very well but the solution to the courts protecting the syringe makers monopoly is for the government to change the law to disallow such things. A lot of these kind of things like business process patents seem to start with a court judgement and then need legislation to fix.

Freedom takes work to protect. An unregulated market is not necessarily the same as a free market. Or maybe no market is unregulated, and the real choice is between a market regulated for the common good and in the interest of freedom, or one regulated for the interest of specific players on that market.

Not the first time this story is on HN. I always wondered - why focus on selling to American hospitals which could not care less?

If the problem is universal, pitch to elite European hospitals, especially Swiss. They cater for rich patients from all around the world and if it's a good idea they'll definitely be interested. Later on, when it catches, American hospitals will come to you too.

Or maybe you will find that European hospitals has already figured this out in some way. Tough story, then.

Why even bother with hospitals and there bureaucracy. They could pitch it to doctors offices and the end users, like diabetics.

Retail is a different game than batch supplies.

That's why I always eyeroll when people in forums like this talk about the free market.

Many many corners of the economy are little vertical command economies. Fiscal policy, de-toothing of regulators, and allowing large players to form cartels is the antithesis of free market. Markets require a firm regulatory hand to be free.

Medical is a great example. Between strategic sourcing in hospitals that killed all of the little companies making medical supplies, the CVS/Walgreens/RiteAid/ExpressScripts shitshow that eliminated meaningful retail and wholesale drug competition, and now the formation of regional medical cartels is a planned economy more valuable than the Soviet Union was.

In 10 years we'll be back to the Bell System for telecommunications, without the consumer protections and firm controls of tariffs that blunted the impact of the AT&T monopoly.

I'm not sure what your point is. This isn't a free market because of monopolies or because of regulations?

To me, it seems like we have a completely free market here... and that is the problem. Companies are free to create and exploit monopolies. It's the final state of a completely free market.

80% of the market is not an unassailable monopoly. Such things rarely if ever exist unless they are created by regulation.

That depends on the actions of the market leader no?

There are any number of anticompetitive practices that the market leader can engage in to effectively eliminate any threat to their monopoly from tying to predatory pricing to exclusive deals.

>is not a free market

One of the things that fascinates and terrifies me most about American political discourse is this need to label things, and then have those labels divide people into polar opposites so they argue endlessly about the label, instead of the actual issue.

Really, who gives a s&%t what the hell you call the system you have now. It's completely meaningless. What really matters is you decide if it's good or not, and what to do about fixing it. THAT'S what really matters.

Americans have forgotten the point is to actually get around to improving things, they are so busy arguing about labels. "Single Payer" vs "Socialism", "Theocracy" vs. "Democracy", etc. etc.

Another element is that a monopolistic institution can often afford to wait until expiration of any promising patents and that appears to be a factor in this case as well:

At Retractable, "Shaw still isn’t any closer to breaking into the hospital market, and in the meantime the life on his patents is dwindling."

"So he has partnered with Chinese companies, which put up money to build assembly lines in China in return for permission to produce his syringes for the Chinese market. When his patents do run out, the Chinese manufacturers will be the ones poised to bring his technology to the world market, meaning all the jobs and economic benefits that could have gone to the local residents will instead go to the people of Gansu Province."

http://washingtonmonthly.com/magazine/julyaugust-2010/dirty-...

What you're describing is a fair market, not a free one.

Free market means free from monopolies as well.

Nonsense. Free market means the ideal market of whatever one's personal ideology thinks will work best. It's the economic version of "a perfect world", and everyone has a different vision of what "a perfect world" even means.

Nonsense.

Free market, which btw has grown to become a economical and political buzzword, is not "the ideal market of whatever one's personal ideology thinks will work best"; The core ideology behind it was to let the buyer and seller work on what works for them and keep third party interference to the least.

Fair market imply either party is made aware of all the details behind the trade in case of which price discovery is impossible as the buyers won't buy above real value and sellers won't sell below real value. Anti-trust and Anti-monopoly laws that are sub-points of a fair market are inherently against the ideal free market.

Also, theory does not really work in practice and no market is entirely free or fair.

No it doesn't. https://en.wikipedia.org/wiki/Natural_monopoly

It does:

> One view is that a free market is a system in which the prices for goods and services are determined by the open market and consumers, in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority.

That's how I define it. Monopoly makes the market non free.

"free from any intervention by a government, price-setting monopoly, or other authority"

But here's the thing... if there ends up being a monopoly, who exactly is going to intervene to stop it, if not the government or other authority?

Competition.

Conversely, a free market is free for monopolies to form; is free to charge whatever they want; is free to block other companies from entering and selling to a company via any means short of bribery (although even that could be thought of as free); is free to to do anything when competing short of breaking the law.

We do not live in a free society, we are not free to do whatever we want; for example, I don't think anyone says we should be 'free' to murder anyone we want.

I think the GP is more accurate with fair. I'd actually say, it's a guaranteed to be 'open market' we want; meaning everyone must play by the same rules. Of course the challenge is that whoever sets the rules, will end up protecting their own interests, and then we end up where we are anyway. Maybe we can turn to AI to be absolutely fair in creating rules to establish open markets... and then AI becomes the pure benevolent dictator, except for that pesky off by one error I left lurking in the code :/

> Conversely, a free market is free for monopolies to form;

Which will make it non free. Free market requires mechanisms of preventing monopolies by its definition.

But what guarantees this freedom? And as I understand it, it doesn't prevent monopolies from forming, it is meant to restrict monopolies from controlling the market.

According to wikipedia:

https://en.wikipedia.org/wiki/Free_market

"... are free from any intervention by a government, price-setting monopoly, or other authority."

The government is supposed to step in to block monopolies from controlling the market, but that implies that the government is intervening in the market. All I was pointing out is that there is no perfect system where politics, monopolies and private interests won't compete to control the market.

> But what guarantees this freedom?

That's up to the society which wants to have a free market. For instance, anti-trust laws is one way of doing it.

> The government is supposed to step in to block monopolies from controlling the market, but that implies that the government is intervening in the market.

Someone should to step in here, whether it's government or not, is another question. But clearly, if market has no way of preventing a monopoly, it's not really free.

> Someone should to step in here, whether it's government or not, is another question.

Actually, it is the central question, because without a feasible answer all you have is a fine-sounding principle that is utterly infeasible.

It's the same question of how society is regulating things. It's quite a broad subject, but we were talking about the principle here.

Free markets means they are free to entry, which means creating a monopoly is impossible.

That is nonsense. There are plenty of natural monopolies [1], where competitors are free to enter the market but simple can't compete. E.g. if there are economies of scale (e.g. Google search engine) or network effects (e.g. Facebook).

[1] https://en.wikipedia.org/wiki/Natural_monopoly

Who cares what it's called? Wouldn't we all prefer a fair market, even if it does mean regulation?

Who decides what is fair?

Merit.

If you have a better product. A bigger corporate shouldn't be allowed to use its war chest to swing things in favor through buying out politicians, law or other such stuff.

and who decides what is a better product and on what basis? a `better` product isn't always what a consumer wants - value for money is a thing.

While I agree with the second part, "Merit" isn't an unbiased descriptor. At the end of the day, deciding what criteria constitutes "Merit" and who has earned it is up to people. People with their own biases.

> A market in which buyers are not free to choose better products is not a free market.

Most businesses can choose better products (not sure about hospital industry). They can also choose to sign an agreement that makes a supplier relationship exclusive. For instance, a restaurant can sign an agreement to accept only Mastercard. Is this not a free market?

Yeah so the point is that if the only restaurant in the USA is Applebee's and they sign an exclusive agreement with Mastercard, they are extending their monopoly -- likely illegally in the US:

"But exclusive dealing also can be anticompetitive in some circumstances. For example, exclusive dealing may allow one manufacturer, in effect, to monopolize efficient distribution services and thereby prevent its rivals from competing effectively. As then-Judge Breyer explained, exclusive dealing can harm consumers by thwarting entry or inhibiting the growth of existing rivals:

'Exclusive dealing arrangements may sometimes be found unreasonable under the antitrust laws because they may place enough outlets, or sources of supply, in the hands of a single firm (or small group of firms) to make it difficult for new, potentially competing firms to penetrate the market. To put the matter more technically, the arrangements may "foreclose" outlets or supplies to potential entrants, thereby raising entry barriers. Higher entry barriers make it easier for existing firms to exploit whatever power they have to raise prices above the competitive level because they have less to fear from potential new entrants.'"

https://www.justice.gov/atr/competition-and-monopoly-single-...

> if the only restaurant in the USA is Applebee's

Except that it isn't the only restaurant. You need a much better example.

The ironic thing is that the only way I can conceive we could be in a situation in which there is only one restaurant in the USA, is through over-regulation and treating restaurants as a utility. Food is important after-all and can't be left to the markets, as some may argue.

It would be better if you just used the obvious historical precedent - Standard Oil integrated with rail services by negotiating discounts that provided an insurmountable barrier to entry for smaller competitive. It was restraining trade, and while prices may have benefited consumers in the short run, the lack of competition would have been a negative over the long run.

A restaurant that agrees to exclusively accept Mastercard would be out of business very quickly (no matter how much Mastercard lowered its fees for them). That's why we don't have to regulate such behavior.

So what you're saying is that market forces prevent this behavior that harms consumers and pushes an inferior product?

I'm saying I don't know what market forces allow an Applebees to survive.

Not a restaurant, but Costco used to accept only Amex as a credit card (debit was a different story) and now only accepts Visa.

No, that would not be a free market. That would be a supplier abusing their market position.

Things that benefit a consumer on price (Walmart), don't necessarily benefit the economy as a whole (destruction of the smaller retailers that worked in this market). While consumers save money, the money is leaving the local economy and going to Walmart HQ, while money spent at a local retailer will continue to circulate within the area

Quite frankly, auto retracting syringes suck ass, which is way 20+ years later, they're still not commonly used in healthcare facilities.

The trick is in how you define "the better". Problem is that hospitals don't buy just syringes, they buy lots of medical supplies at once, and corporations can offer much better deals on such orders, you can just buy everything at once. They then use that position to push exclusive deals with hospitals and kill the small players. It is still a free market at work, hospital gets the best deal business-wise, but it has retrograde effects on the progress and end-users.

The medical industry, including the medical device industry, is the most heavily regulated industry in the US. It's far from free market.

Also, airspace (FAA) and railways. And the regulations exist for good reason - f..k stuff up and people die.

The problem arises when regulations are not kept up-to-date or the regulators are being outright bought (like in financial services), and that must change.

Doesn't pass the smell test to me.

So a big company had 80% of the market? What about the other 20%?

Think Intel, AMD, and um, who else makes desktop grade chips? (No, netbooks/tops don't count)

Why not count those? ARM is much more democratized and is huge. With the advent of compiler backend abstractions being used in LLVM and GCC, it's even possible to target unique chips more easily.

Intel is definitely no longer the monopoly player they were after the huge success of ARM in lower power environments.

Intel has never been a monopoly. There have always been dozens of competitors in most of their markets. Even at the height of Wintel, there was AMD and others. Intel didn't win there because it was able to shut out competitors, those competitors copied Intel designed instruction sets and Intel couldn't stop them from doing it. Intel dominated the market because of their better processes.

From an antitrust perspective, a monopoly is simply a firm with significant and durable market power with courts having typically set that to having over 50% marketshare within a certain geographic area.

Intel certainly qualifies.

I am not sure how to pull this off in practice but I think it would be healthy for an economy if companies couldn't grow beyond a certain size. Once companies get too big they pretty much kill new and innovative companies. Just look at how quickly small companies in the 70s and early 80s innovated around personal computing and how little innovation is happening in the smart phone or search engine area now because Google and Apple are pretty much trampling over the small guys.

Again, I have no idea how to do this in practice.

Hmmm I believe that the Google/Apple smartphone issue is squarely the result of developers (the same ones who complain about Android and IOS). Manufacturers could create smartphone after smartphone, but if developers don't build apps to make the phones attractive, consumers aren't interested in purchasing. Developers, unfortunately, are the ones blocking out other smartphone makers.

It's a feedback loop. Without developers a platform can't thrive but without users of the platform the developers can't afford to write apps for the platform.

"A market in which buyers are not free to choose better products is not a free market."

Which is not the case here.

If I sign a one year gym contract and suddenly a much better, much cheaper gym opens across the street, I can whine that the gym market is "not free". In fact it is, not like "free" in "free beer" but in "free" like in "freedom". But if I insist of using the better gym instantly I may have to pay for two gyms at the same time.

I agree. Of course, most of the reticence to do anything new in medical care comes from extremely overwrought CYA policies. It's very hard to argue that these policies aren't the result of legislation particular to medicine, whether it's legally necessary (but patient-unfriendly) bureaucratization of medical care or insurance red tape brought on by legally enforced uniformity of insurance concerns.

The paradox is that a market, in order to be free, needs regulation.

Markets don't tend to entropy by themselves.

One quick question: why does it matter that the large corporations in which power is concentrated are geographically clustered? Would the situation be better if ceteris paribus the corporations were more geographically distributed?

This is also a huge problem in scientific research supplies and chemicals.

> 80 percent of the market

What about the other 20%? what about the international market? what about the non-hospital market (i.e. people who inject themselves, such as diabetics, at home)?

That kind of arrangement already clearly illegal if the hospital takes government healthcare funds.

What about outside of US?

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