Milton Friedman on Monopoly
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- čas přidán 22. 08. 2024
- What is the largest monopoly? Government.
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Friedman was a f*ing genius, and honest in his opinions!
Imagine a time where people could disagree in a civilized manner, and walk away without anyone being assaulted or canceled.
Imagine....
Exactly!!
We need you now Milton
Yeah hows globalization working out? Your current government is trying to reverse it
Free trade is a solution to kill the domestic monopolies but not the global ones. That happens in the industries with high fixed overhead costs. Information technology is the best example: high fixed costs and almost 0 variable costs. You have only one serious web search engine (Google), only one serious online retailer (Amazon).
In that case Free Trade is not enough to kill the monopoly.
Additionally, mergers of competitors can create a monopoly. The Oil Trust of the 1800's used non-government methods to suppress their competitors, too.
They aren't monopolies. They offer the best product in the market.
Amazon nor Google have monopoly, you don't know what the meaning of monopoly is.
"(an organization or group that has) complete control of something, especially an area of business, so that others have no share:"
Amazons market share in Scandinavia is next to 0.
Alibaba is huge in Asia etc.
Baidu is bigger than Google in China.
Bad examples. I buy a lot more from Aliexpress and eBay than from Amazon, especially for small items that cost about 50 or 60p to ship in the UK and for which Amazon would charge me five or six times more. I also use Duck Duck Go and Bing as search engines. When these fail, I go to Google.
Google and Amazon both rule the day but not the tommorow.
Valid points, although things are getting much more complicated these days. Most of the large tech firms, for instance, will just buy up competitors before they have a chance to compete with them. This strategy puts an end to competitive pressures outright. There has been a radical trend towards M&A's (mergers and acquisitions) these days - mostly due to wealthy corporations lobbying in congress to protect them from scrutiny or government intervention. Those same corporate representatives are also former congress members or have held political positions, giving them inside knowledge into all of the loopholes of "gaming the system" as a result.
I suggest reading 'The Myth of Capitalism' by Jonathan Tepper, which gives a more complete perspective on monopoly, duopoly, and oligopoly. This book is hands-down one of the best arguments ever put together against many of Friedman's theories. Very eye-opening book from someone who understands the current-day complexities of business. Jonathan argues that Friedman's theories are fine and well if business are allowed to compete on fair grounds - however, with the M&A mania of the recent decade, this has not been the case.
Thats because "these days" Big companies already have an advantage when it comes to taxation and regulations.
When was the last time we saw the break down of giant conglomerates? when the tax code was rewritten and taxation was drastically removed(along side the thousands of exemptions that big companies arranged for themselves) in the 70s.
Wish he could come back and speak today
Thoughts on Foreign monopolies
Ok so, the solution to domestic monopolies(At least to Friedman) is to open all free trade with. Because of course it’ll lead to them competing in the world market, but with that you risk foreign monopolies. So with that my assumption is that foreign monopolies in our country would be worse because in it’s main country or country where it’s headquartered (China for example) would use it’s power over their economy to weaponize it and use it across the world to push the agenda of the Foreign Government. So what are your thoughts on Foreign Monopolies?
China maybe but thats kinda it
He is just stating the names of government agencies but he isn't stating HOW did those government create monopolies and if left alone what would stop the companies from creating monopolies and duopolies of there own.
@@alyciagoode4115 Amazon also lobbies for civil rights. Just because amazon lobbies for it isn't an automatic evidence of anything.
Minimum wage increases, effectiveness is is heavily dependent on if its regional or national. Because the cost of living is different in different regions. So it has varying effects. But the studies shown that even with that, the effects on the businesses over time is temporary and the market levels out and benefits everyone as a whole. The minimum wage adjusts the wages of everyone up the ladder. Consumers have more money to spend in the market.
The real problem is that businesses aren't rational in the sense of the society or workers. Businesses goal and rational is towards increasing profit every year. Not making a profit but increasing the margin of the profits. So they will monopolise and cut corners, sacrifice and cheat to get a marginal profit increase. So a company will literally cripple itself for a long term run to get a short term profit increase.
@@JevPrivate But just because they lobby for something moral that you care about, doesn't mean everything that they lobby for is also moral.
@@JevPrivate Yes of course their motivation is profit, but why should that mean they hurt workers? They need to retain workers, they need to give benefits to workers, so that their workers don't leave the company. It's only rational to keep their job satisfaction level very high. And yes, it's for profit, but who's hurting from profit?
Milton Friedman did not see the International Monopoly coming.
If there is no antimonopoly intervention, and trade tarifs would be lifted, how would you protect the market from an orchestrated monopoly atempt by some other country?
@@hcokiddtony That's not how it works, because China, geographically is a monopoly itself, there are benefits given by nature that you just can't compete, this theory of absolute freedom is ideal, but it's not real, because life is not like that. Certain intervention has to be put in affect to create a market close as it can be to a free market.
Absolute freedom of trade in nowadays situations are almost like gambling, your labour is too small compared to the massive resources of others. One example, China is the cheapest manufacturer, sell products for cheapest price, they can do this by pre-given advantages, so other companies in the world will just die?
What will happen then? People in China got richer while others just die?
And also China is not free for others to come and do the same thing, so by default, the market with the involvement of an entity that doesn't follow the free rules, are not free.
Friedman overlooked, the market will work, until there's somebody big enough to control the market, and those entities shall came up by chances, or by hard work, anyway, it's just harmful if they can just disrupt the market.
Make sure it remains legal for local companies to compete against the foreign monopoly.
note:
Perhaps you refer to a big foreign company selling into the local market at a price below the cost of production to wipe out their competitors. So It will cost them a fortune to do that, but OK, lets say they do. At some point they will start to charge monopoly (very high) prices, after all, that is the whole point of trying to achieve a monopoly. At that point, competitors will re-enter the market and we are back to a competitive market, unless of course, the government enforces the monopoly.
My thinking is that companies in a developed country shouldn't be trying to compete with China on things that are heavily labour dependent, because they will always lose. They are better off advancing technology that would allow them to outcompete China through things like greater advances in automation. As countries develop, their wages go up, so there is a time limit baked into how much labour price supremacy they have. If the US played to its competitive advantage, which is skilled labour supremacy, they would use their increased technological know-how and resources to develop automated solutions that other countries don't have the ability to produce yet.
The obvious concern would be what we would do in the transitionary time between when our agricultural industry fails to compete and dies, and the time it takes for tech solutions to allow us to sell at better prices. There would be a period of time for which our food supply would be at the whims of other nations, who may leverage that to influence us in some way. There would first have to be strong agreements with every other nation on the planet to sell us food in the instance that some individual country tries to strongarm us.
Many people would be concerned about what would happen if a country tries to deliberately destroy our industries by subsidizing the sale of goods so that we cannot compete, but I would argue that this is a net benefit for the consumer. Remember, the West is the largest consumer market in the world, every country is competing to make sales here, so there will be a race to the bottom for every country to sell to our consumers at incredibly low prices. As our technology advances, they will be forced to either subsidize even more to outcompete, or lose out to us. Every advancement would force other countries to permanently race to the bottom, as our companies would just pick back up and produce at a lower cost if they ever stopped.
Such scenarios are unsustainable, our technological supremacy would eventually win. There's no way any country can justify operating at a loss from a prolonged period of time just so that the US doesn't grow its own crops, especially when it isn't guaranteed that they will always buy from the same person. All the US would need to do is help facilitate the connection between people with money, people with ideas, and people with know-how.
And what with the social media and tech giants?
So, instead of monopolies restricted to one country, now we have global monopolies. Great
What about google and tech companies?
Don't confuse monopoly with high market share. Google has a very high market share, but there is also yahoo bing and duckduckgo. Also, don't confuse short term with long term; Mircosoft had a large market share on operating systems, but they got trounced by Android. As Milton said, monopolies are almost never sustainable without government enforcement.
@@JohnSmith-wo7fs the government stopped Microsoft having a monopoly by limiting their stake in Apple. Freidman is a dinasour his economic theories are almost redundant in todays market
Allowing free trade, no tariffs, might prevent monopolies and oligopolies but what would that do for wages? More competition means lower prices which mean less business income with which to pay workers!
netcomptech Businesses must either reduce inefficiencies in their production processes to remain competitive or lower their wages if the wage rate is above that of the foreign competitors. If increasing efficiency and decreasing wages still doesn’t allow a firm to remain competitive, the government must let them fail as other countries have a competitive advantage in that given industry. This would not only benefit foreign output, but actually world output.
Now we must consider what will happen to the workers who have lost their jobs. The domestic country will have other industries in which they have a comparative advantage over foreign firms and therefore be able to produce products or services at a lower price point. As a result employment remains constant, however it will more likely increases due to opportunities of economies of scale, as well as domestic consumers having larger disposable incomes due to the fact that they can benefit from lower prices for goods and services, which where previously owned by inefficient domestic monopolies.
On the micro scale, lower prices means more consumers able to purchase the product, which means higher volumes possible. If a business can scale the production of their product (assuming they have a reasonable percent of cost being fixed) then their increased sales would allow for wages to remain the same or increase. What about competition? Well companies have to address competition by innovating. If they're selling something that can be duplicated without innovation, then yes - wages will decrease. But they'll only decrease to an equilibrium level. That's just what happens with commodities. And you don't typically see monopolies form around commodities. Someone else can absolutely prove me wrong!
If I could make one law, and I'm spitballing, it would be that bigger companies should not be allowed to undercut young startups. For instance, in that story of the gas station in the small town. Let's say a new gas station owned by locals opens up near the gas giant franchise. In the story, the giant sets their price so low that the opening store cannot compete, and once it dies, then they raise the prices again.
In my opinion, if a new competitive company opens up and offers a lower price than the company that already exists, they should not be allowed to undercut the price for a full year or something. That way, in order to stay safe, the gas giant franchise should keep their prices competitive indefinitely, because who knows when competition could open up?
What about the monopolies in the industrial revolution? Were they protected by the government?
genius
This is such a stupid point. For water electricity as an example what he's saying wouldnt work because of the heavy infrastructure investment required for each independent enterprise and the literal physical space required to do it. . Also if u have foreign control of such a key national resource it affect all foreign relation both security and economic.
The companies would also outsource every single thing that they can to cheaper labor sites across the world.
Friedman lives in a fantasy land because nothing he says works that way. People don't work that way, companies don't work that way and governments don't work that way. They all exist at the same time u cant create a reality with independent of each other because they ARE NOT independent.
What video did you watch? He never mentions water or electricity... He never states that there would be no monopolies on a free market society (as it seems to me that you are implying). There are necessary government monopolies like in the industries of services that you mention. However, necessary or not, whenever there is a monopoly there is a government behind it. His main point however is that free trade is and has been the best tool against monopolies, wich is true as day and has always been.
There's only pne person working in a fantasy world here, and that's you. Electricity companies already compete in many parts of the world.
Water is literally found everywhere on earth, and electricity can be made in multiple ways. It is impossible to have a monopoly on energy.
“Outsourcing for cheaper labor” I don’t know if you know this but he believes in NO minimum wage.
This argue is not valid anymore, whales in Wall Street have more leverage and power in world economy than the amount Mr.Friedman's free market can regulate and compete against...
The whales in Wall Street have shrunk substantially over the last 20 or so years, so I'm not convinced of your argument.