What is AC?

[Case Closed]

borodog,

The AC argument is a very interesting one. Although is there really such a need to be such a jerk through out the entire thread?

[Propertarian]

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Ah, but this is stupid and short sighted. It might be the case that one firm could produce a desired output at a lower cost to the industry than two or more firms at that time, but it is only competition that drives down costs over time; hence competitive markets always can produce desired outputs at a lower cost to the industry than a single historical monopoly firm could. Market competition drives industries toward efficient production via profits and losses. Monopolies do not need to be efficient, therefore they will not be so.

[/ QUOTE ] You still don't understand natural monopolies, and you are wrong. You just assert that the market will work because you say it will work, despite the fact that competition has failed to bring down costs over time in some areas, and governments have produced desired outputs at a lower cost to industry than the market has in some areas (and not just for this reason either; health care is another area, but that is because of a different market failure).

[Borodog]

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Just because more than one company exists does not mean competition is working effectively. A natural monopoly, once again using wiki: "An industry is said to be a natural monopoly if one firm can produce a desired output at a lower cost to the industry than two or more firms". Competition may exist, but the outcome is not as efficient as if one entity was providing it. Best of all, you can use democratic accountability on the natural monopoly as well.

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How do you objectively identify if competition is "working effectively"? What is the incentive for a monopoly system to drive to more efficient production over time? The incentive for competing firms is obvious. Since it is clear that competing firms have increased productivity by many orders of magnitude over time, isn't it a bit deceptive to stop the system at any one point in time and claim, "See, if everyone used the techniques of the most productive firm, this product could be provided more efficiently"? And if you had monopolized the entire industry at that time, say by nationalizing it, even using the best production tachniques known at the time, what would have happened to the quality of the products and services over time in the absence of market competition?

Where do you think car production would be in the US if the government, after Henry Ford brought the assembly line to automobile production, had outlawed all other automobile manufacturing in the United States and awarded Ford the sole license to manufacture cars? I am quite certain that, at the time, Ford could manufacture cars more efficiently than anyone else in the country, or even the world.

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If you've ever been to a city you should realize why private road making doesn't work in all situations. You can't actually compete over the road to any specific area; a business can only be directly attached to a couple of roads; their can't be any effective competition between providers on individual roads and roads to some place, although their can be more than one provider of roads in general. I.E. their is no competition for "road that that one extremely popular stadium/concert hall is on" or "road that Harvard is on". If Harvard is on road X; you need to cross it to get to Harvard, then their is only one buyer/seller for "the road to Harvard", a distinct product/service. Even if Harvard is on five roads, somebody could buy all of them if privatized, and jack up the price to a ridiculous ammount, with kids stuck paying a 50k/year tuition and facing the prospect of permanent bad grades if they don't cross the road being stuck paying hundreds of dollars daily to cross it. It is beyond scary that you don't realize this and the problems it entails. Do you really want to have 12 identical roads side by side all going to the same place when their is only enough traffic for one anyway? Wouldn't that just be a waste of time, resources, money and space?

The government started providing roads because the market wasn't doing a good job of providing them; simple history.

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Lol, no. You construct a strawman and show that it fails. That's only an indicator that you aren't very imaginative and would make a [censored] businessman. But then we knew that.

The people that would own the streets are the people who most benefit from them. I own my driveway. The streets in subdivisions are owned by the developers until they are turned over to HOAs. The streets that service businesses are owned by the businesses. Why? Because without road access their customers, employees, and suppliers cannot get to them. The routes connecting all of these things are plentiful and have many alternates. I have a GPS system in my car that can calculate by shortest distance or shortest time. Given data on road prices and quality, I could have it calculate the most economical routes, the routes with the least potholes, the quickest routes, hell even the most scenic routes, or any combination thereof. There is plenty of competition in routes. If you don't think so you've clearly never driven anywhere with a woman; she always knows a better route than you do.

Just because you are incapable of thinking of how the market can provide for something doesn't mean it can't.

And the roads were monopolized for the same reason everything was monopolized, so that a priveleged set of providers could reap monopoly prices off of the backs of the consumers and taxpayers.

[Propertarian]

"When a MONOPOLY occurs because it is more efficient for one firm to serve an entire market than for two or more FIRMS to do so, because of the sort of ECONOMIES OF SCALE available in that market. A common example is water distribution, in which the main cost is laying a network of pipes to deliver water. One firm can do the job at a lower AVERAGE cost per customer than two firms with competing networks of pipes."
Economist.com

Apparently you'll have to look economy of a scale to understand how this happens as well.

Look, I don't know how much you've studied actual economics, but Austrian economists redefine these terms, then say that they don't exist in a "free market", which may or may not be true but is completely irrelevant, because nobody is contending that they exist under the Austrian re-definition of the terms...It's like me saying I don't have a dog by changin the definition of dog to: "600 foot tall creature that flies". Well, duh. If that is the definition of a dog then I don't have one.

It's just straw-man burning.

[Borodog]

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Ah, but this is stupid and short sighted. It might be the case that one firm could produce a desired output at a lower cost to the industry than two or more firms at that time, but it is only competition that drives down costs over time; hence competitive markets always can produce desired outputs at a lower cost to the industry than a single historical monopoly firm could. Market competition drives industries toward efficient production via profits and losses. Monopolies do not need to be efficient, therefore they will not be so.

[/ QUOTE ] You still don't understand natural monopolies, and you are wrong. You just assert that the market will work because you say it will work, despite the fact that competition has failed to bring down costs over time in some areas, and governments have produced desired outputs at a lower cost to industry than the market has in some areas (and not just for this reason either; health care is another area, but that is because of a different market failure).

[/ QUOTE ]

You still haven't provided an example of a natural monopoly. Nor have you provided an example of a case where market competition has failed to bring down costs over time, except, of course, in those cases where government has made true market competition illegal, such as in the case of health care.

Look around the economy at the things that, adjusted for (government created) inflation, drop in cost over time. They are the things with the least amount of government regulation, like consumer electronics. Then look at the things that consistently increase in cost over time. They are the things that the government monopolizes or regulates the most heavily, like education, health care and health insurance. Only the truly Faithful could fail to see the connection.

[Propertarian]

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The people that would own the streets are the people who most benefit from them. I own my driveway. The streets in subdivisions are owned by the developers until they are turned over to HOAs. The streets that service businesses are owned by the businesses

[/ QUOTE ] This is pure assertion, and contradicts the history of private road ownership in history in places.

[Borodog]

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"When a MONOPOLY occurs because it is more efficient for one firm to serve an entire market than for two or more FIRMS to do so, because of the sort of ECONOMIES OF SCALE available in that market. A common example is water distribution, in which the main cost is laying a network of pipes to deliver water. One firm can do the job at a lower AVERAGE cost per customer than two firms with competing networks of pipes."
Economist.com

Apparently you'll have to look economy of a scale to understand how this happens as well.

Look, I don't know how much you've studied actual economics, but Austrian economists redefine these terms, then say that they don't exist in a "free market", which may or may not be true but is completely irrelevant, because nobody is contending that they exist under the Austrian re-definition of the terms...It's like me saying I don't have a dog by changin the definition of dog to: "600 foot tall creature that flies". Well, duh. If that is the definition of a dog then I don't have one.

It's just straw-man burning.

[/ QUOTE ]

No, there's no redefinition of terms going on at all. You keep saying that, but haven't shown where I've done it. All you do is ignore my arguments (what a shock), like ignoring what happens if you artificially halt the market competition that drive toward higher efficiencies and lower costs in the name of short term efficiency.

Your pipe example is stupid as well; it's just as bad as the roads. I own the pipes in my house. My HOA could own the pipes in the subdivision, the local mall owns the pipes on it's premises, and there is no reason why there can't be plenty of competing water mains, and no reason why competing companies couldn't sign mutually beneficial agreements to connect to and utilize each others infrastructure, as has happened many times in the free market, for example in both private roads and railroads, as well as cellular communications, etc.

[Propertarian]

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They are the things that the government monopolizes or regulates the most heavily, like education, health care and health insurance. Only the truly Faithful could fail to see the connection.

[/ QUOTE ] Correct, only the true ideologues wouldn't be able to see that it is because the market won't provide these things effectively.

Or that in many places the price of these things has been driven down drastically by government (look at how inexpensive health care/insurance and education is in Canada and in many Western European states).

Here is your example of a natural monopoly, an especially disasterous one, from the wiki:

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Such a process happened in the water industry in nineteenth century Britain. Up until the mid-nineteenth century, Parliament discouraged municipal involvement in water supply; in 1851, private companies had 60% of the market. Competition amongst the companies in larger industrial towns lowered profit margins, as companies were less able to charge a sufficient price for installation of networks in new areas. In areas with direct competition (with two sets of mains), usually at the edge of companies' territories, profit margins were lowest of all. Such situations resulted in higher costs and lower efficiency, as two networks, neither used to capacity, were used. With a limited number of households that could afford their services, expansion of networks slowed, and many companies were barely profitable. With a lack of water and sanitation claiming thousands of lives in periodic epidemics, municipalisation proceeded rapidly after 1860, and it was municipalities which were able to raise the finance for investment which private companies in many cases could not. A few well-run private companies which worked together with their local towns and cities (gaining legal monopolies and thereby the financial security to invest as required) did survive, providing around 20% of the population with water even today. The rest of the water industry in England and Wales was reprivatised in the form of 10 regional monopolies in 1989.

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[Borodog]

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The people that would own the streets are the people who most benefit from them. I own my driveway. The streets in subdivisions are owned by the developers until they are turned over to HOAs. The streets that service businesses are owned by the businesses

[/ QUOTE ] This is pure assertion, and contradicts the history of private road ownership in history in places.

[/ QUOTE ]

Lol. So let me get this straight, you demand to know how private road ownership could work, and then when I describe it, you say it's an assertion? So if it doesn't exist, it can't exist, and we must have the benevolent angels of government put down asphalt for us?

[Propertarian]

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No, there's no redefinition of terms going on at all. You keep saying that, but haven't shown where I've done it.

[/ QUOTE ] Monopoly in classic economics vs. traditional.

Natural monopoly.

Efficiency.

Not you specifically but other Austrian followers have given me a critique of a straw man definition of public good ("one in which all people in an area attach the exact same valuation to something").