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Comment by bostonscott | Hacker News Reader

It's not the endgame of all capitalists. Actual capitalists, limited in number as they are, prefer free markets (e.g. no cronyism) because they'll make more money that way over time.

Opportunists are the ones who thrive when things are rigged. They can't survive on their own.

But yes, many capitalists (and non-capitalists alike) "buy" regulatory advantages.

Some leverage their dollars (buying) Some leverage their numbers (voting)

These groups enable eachother. Motives range from "defense" (virtuous) to "offense" (sinister).

You will find no practical solution to this problem other than starving the beast (decentralizing power away from government).

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> Actual capitalists, limited in number as they are, prefer free markets (e.g. no cronyism) because they'll make more money that way over time.

Citation needed.

You doubt people act in their rational self-interest?

Smart, hard-working people who consistently exercise good judgement, prefer merit-based systems.

They do better in merit-based systems than systems that reward those who are born lucky, who have access, or who cheat and lie.

Is a citation really needed?

> You doubt people act in their rational self-interest?

Yes the rational choice model is well-established to be false.

They may act in their perceived self-interest, but rational self-interest involves a lot more than that.

> Yes the rational choice model is well-established to be false.

Citation? I hear this a lot, and it seems to stem from a misunderstanding of the word "rational" in this context, which I believe is supposed to mean "perceived" - how else would you objectively define rational?

Is it rational for a thirsting person to prefer gatorade to water (it is for them, if that's the choice they want to make)? Do you have more perfect information to justify your opinion on the matter as more "rational"?

Rational choice theory holds that actual behavior will be that which maximizes utility (in it's simple form), and expected (in the Bayesian probability sense) utility (in the more complex version addressing uncertainty.)

“Rationality” refers specifically to this mathematical optimization.

> You will find no practical solution to this problem other than starving the beast (decentralizing power away from government)

All this will lead to is dictatorship by the wealthy. I much prefer our current system, as flawed as it is, to corporate fascism.

Disagree. It is our current system, which increasingly empowers opportunists over capitalists, that will create "corporate fascism."

Current system:

1) Big companies pay minimal or negative taxes. Small companies are taxed at the individual rate (and increasing). If Company A pays 0% at top bracket, and Company B pays 50%, Company B is unlikely to out-compete Company A.

Read: our tax system creates "monopolies."

2) Our current system allows big companies to write or shape gov regulations, making compliance only possible for the largest companies. Prohibiting health ins cos from selling across state lines is an example.

Read: overreaching laws and regulations create "monopolies."

3) Our current system provides a safety net to large companies, who have leveraged #1 and #2 above in order to become "systemic." This gives them a greater tolerance for risk, "counterbalancing" regulations notwithstanding.

Read: death spiral

Want to fight "corporate fascism?"

Shrink a "corporate fascist's" source of power.

Their power comes not from creating superior products or services, and delivering these at a superior price. It comes from their ability to manipulate corrupt or dumb politicians, bureaucrats, and voters.

Again, you will find no practical solution to this problem other than starving the beast.

1. Competition drives down prices and profits.

2. Restated, monopolies earn more short term profits than companies in a competitive market.

3. stock investors look to maximize short term profits.

4. stock investors are offering a premium for monopolistic companies.

5. The stock market is rewarding this behavior without government intervention.

"starving the beast" will just feed another beast.

1. Half true. Competition drives down prices, but not necessarily profits. For example, you can lower your prices using innovation, by achieving economies of scale, etc.

2. Over long-term, probably true. In short-term, not true. Often monopolies are formed and initially sustained by keeping prices aggressively low.

3. If you said stock investors look to maximize profits, i'd agree. Short-term? Not necessarily. Value investors like Warren Buffet are not motivated by short-term profits.

4. Stock investors offer a premium for profitable companies who can protect themselves against "threats." Government protection is one such way, I guess. Building sustainable competitive advantage is another (merit-based).

5. Your thesis rests on a premise that the government doesn't intervene in the stock market? Really? Have you heard of quantitative easing?

If you don't like the fact that big companies have a lot of power, I suggest you spend time thinking about why they have so much power, before you randomly proscribe solutions.

I'm not arguing that bad government regulations and rules don't create monopolies, but monopolies are also created through natural means and that still doesn't change my general premise.

stock investors are offering a premium for monopolistic companies and rational companies management will combine companies to eventually become a monopoly to maximize profits and stockholder value.

My basic argument is the only reason companies don't more aggressively try to become monopolies is because government regulation(anti-trust laws) deter it.

Am I arguing for more corporate welfare absolutely not. Am I arguing for more regulation generally no. more effective regulation yes. More enforcement of current regulation yes. Both of which require more qualified effective people, which usually involves investment.

For having such a good understanding of market economic your solution is a little half baked.

The problem with this country everyone wants more or less taxes when the focus should be on more effective, transparent use of the countries funds.

There are somethings you can't just throw money at and it will fix it. Well, that's true in the negative as well.

Can you provide an example of such a monopoly, that you contend has been created through "natural means?"

It's a sincere question. I can't think of a single example.

Depends on what you mean. Government defines property so just by how you define property you can change what "natural" means.

Controlling supply or distribution, network effects are natural ways to get to a monopoly.

You said:

"but monopolies are also created through natural means and that still doesn't change my general premise"

I'm just looking for an example of a single monopoly that fits your statement.

Any actor that gets powerful enough to influence the government will seek to influence the government to its advantage, such as passing new regulations to prevent competition. If the government is too weak to be of any use the powerful corporate actor, then that corporation is now a de-facto government, and the "government" is merely a rubber stamping government by name only.

I would argue all corporation are rent seekers. Markets which enable assets to be traded buy all and expose assets true value to all participants. corporations hide assets behind private contracts.

So a doctor who decides to solve the problem of <x-disease>, and proceeds to raise $500 million over the next 15 years to develop a solution, get it approved, and commercialize it...

is a "rent seeker" ?

Nope. Historically proven false multiple times.

Free markets lead to regulatory capture over time.

Example?

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