Restricting Trade

[BigRedBuster]

 

 

Please explain how monopolies and predatory pricing are enabled by completion.

 

Spoiler alert: there are almost zero free market monopolies. Almost all monopolies, historically, were enabled by regulations restricting competition. That's pure and indisputable fact. I would bet you can't name one monopoly in history that was established absent government support. Heck, the word even comes from the period when kings would grant monopolies in exchange for a piece of the profits.

 

As to preditory pricing, it doesn't work. It's trotted out in economic theory, especially by populists who like to rail against things like "currency manipulation," but in practice (a) competitors rarely engage in it because, to cut prices enough to drive out completion (I.e., operating at a loss for a period of time), they will never be able to raise price high enough compared to the applicable market price to recoup their losses, and (b) it's a boon to consumers if a competitor stupidly provides a good or service at a below market/at a loss price (see again, how we benefit from Chinese "currency manipulation" as consumers).

 

This is basic economics that is so consistent misunderstood or ignored for political reasons that it underscores exactly why we need to reduce regulatory influence as much as possible.

 

Antitrust law is generally a colossal waste of taxpayer resources. Even state sponsored cartels can't stand up to market forces. Just look at OPEC's struggled to keep its members in line.

 

 

By the way, why won't you offer any guiding principles on how to fix OSHA?

sooooo....we are back to you being all for completely open and unfettered markets without governmental regulations that will cause problems.

 

You talk in circles. That is why it is virtually impossible to discuss things with you.

 

I have specifically addressed your OSHA question now at least twice. If you choose to ignore those posts, then so be it.

If you're bound and determined to talk in circles on this, then I'm done with the conversation.

 

 

And...yes....I personally know of predatory pricing that has worked. My raw material suppliers use it. When we got into our industry, our main raw material was supplied by over 30 companies. Now, we are down to 3. This was done through predatory pricing where they learn a company is suffering, the entire industry lowers the price to the point it drives that company to fold or sell. Then the price raises back up till another one suffers then bam...it drops and drives them out.

 

It's now to the point where it is very close to a monopoly. They work very hard to restrict access to competition. This industry was slammed with law suits over this action back in the 70s only to see it start doing it again. Now, it's to the point where the customers have no power to stop it because the suppliers will just refuse to sell to any company that brings up the issue....basically driving them out of business.

 

 

If you think it doesn't happen and doesn't work, you are extremely naive.

 

 

So.....again....if you choose to ignore my comments and talk in circles....I'm fine with just ending the conversation and moving on.

 

 

Also.....pretty much any time in an argument someone says...."That's pure and indisputable fact." pretty much flies up a red flag that in fact....it is disputable.

So... you received your raw materials more cheaply than you should have for periods of time, and this is bad why? Poorly run companies that were suffering under the weight of competition were driven out of business, and this is bad why? What is keeping competitors from re entering the market now? If it's simply that the current 3 competitors are offering raw materials at a price that's too competitive to make investment worthwile, that's not a bad thing. If government restrictions, usually sponsored by the 3 dominant competitors, are barriers to entry, then you see the problem as plainly as I do.

 

In any event, how does one prove and prevent preditory pricing in your mind? Does a regulator fix a minimum price? Do you see the problem here?

 

Antitrust law is intended to protect consumers (in this case you), not competitors.

 

How were you damaged by preditory pricing?

 

p.s. Having dominant market share doesn't mean you have a monopoly. Just ask apple in the smart phone context.

 

The market I'm talking about is more complex than what can be described here. Basically, on average, we pay more now than we used to and we have literally no negotiation power. It's very similar to price fixing.

 

And, I personally know people who have been in prison for that.

 

The industry is so small, that the management of the companies can easily communicate and fix the price at where they want which typically is higher than what it used to be. Now, when a competitor tries to enter the market, they crash the price driving them out of business.

 

It's become so prevalent in our industry that foreign competitors have just stopped trying. The industry has basically divided up the world and US markets are stuck with just these three competitors.

[cm husker]

You absolutely refuse to answer direct questions, let alone offer

 

Preditory pricing is not price fixing. And price fixing is illegal, but rarely exists where you have open and competitive markets because competitors will always undercut where possible.

 

Again, look at opec and its inability to fix prices.

 

Just because you "pay more than you used to" and have less negotiating power doesn't mean you are the victim of an unfair practice.

[BigRedBuster]

You absolutely refuse to answer direct questions, let alone offer

 

 

 

You view it that way because you expect a simple answer to a very complex problem. This is pretty common with you in everything including football.

 

 

 

Preditory pricing is not price fixing. And price fixing is illegal, but rarely exists where you have open and competitive markets because competitors will always undercut where possible.

 

 

Many times they go hand in hand and is going on at the same time. I have specifically explained a situation I personally know about and you refuse to acknowledge it.

 

 

 

Again, look at opec and its inability to fix prices.

 

 

 

That's just plain laughable that you think OPEC has not controlled oil prices.

 

 

Just because you "pay more than you used to" and have less negotiating power doesn't mean you are the victim of an unfair practice.

 

 

Ummmm.....I thought your plan was supposed to benefit the consumer.

[cm husker]

You honestly don't know what you're talking about. You say you know of a situation where someone is in jail for predatory pricing. I don't believe that, because it's a fact that the federal government has never been able to successful prosecute a company for preditory pricing, let alone gotten a criminal conviction of an individual. You have actually not explained the situation. You've alluded to one. Do you have any link to such a story?

 

Have you been following opec recently? They have absolutely not been able to control prices/production. And you want to know why? Because of competition from shale producers.

 

For the benefit of a consumer doesn't mean the consumer gets a cheaper than market good or service. It's not my plan though. It's the jurisprudence of antitrust law that states the focus of analysis is on the consumer not the fellow competitors.

[BigRedBuster]

You honestly don't know what you're talking about. You say you know of a situation where someone is in jail for predatory pricing. I don't believe that, because it's a fact that the federal government has never been able to successful prosecute a company for preditory pricing, let alone gotten a criminal conviction of an individual. You have actually not explained the situation. You've alluded to one. Do you have any link to such a story?

 

I didn't say he was in jail for predatory pricing. I said he went to prison for price fixing. This was in Nebraska and back in the 1970s.

 

Also....this didn't take long to find.

 

Walmart found guilty of Predatory pricing

 

I'm done with the conversation.

 

You're lack of even thinking clearly and openly about it is preventing a meaningful conversation.

 

Have a good day.

[cm husker]

What court was that in? Not federal. And it was a terrible decision that was probably overturned on appeal.

[cm husker]

Oh, you are trying to conflate price fixing with preditory pricing. I see. That's fundamentally wrong. But whatever. Happy to stop the convo here.

[cm husker]

And yep, conviction overturned on appeal:

 

https://news.google.com/newspapers?nid=1734&dat=19950106&id=ousbAAAAIBAJ&sjid=71IEAAAAIBAJ&pg=4279,666097&hl=en

[cm husker]

Bumping this thread because Brexit is fundamentally about restricting trade (immigration is just a form of labor trade).

 

Here's a quote by a real dolt:

 

"Come November, the American people will have the chance to re-declare their independence. Americans will have a chance to vote for trade, immigration and foreign policies that put our citizens first," he said. "They will have the chance to reject today's rule by the global elite, and to embrace real change that delivers a government of, by and for the people."

 

 

This fool is starting to believe his own rhetoric.

 

How many here would support the US ending all trade with foreign nations? How many wild support allowing the US to "pass policies that protect its citizens" in trade, noting that really means only certain citizens, like steel and car manufacturers?

 

How many people would be ok with California refusing to allow Nebraska to export corn and beef to California?

[zoogs]

I don't know much about this topic. In general I'm opposed to protectionism and trade restrictions. Although in some degree all of this happens; I'm sure it's a bit of a tangled web. However I'm leery, for example, of Democrats being pushed towards an anti-TPP direction. Or at least, a direction that opposes any sort of trade deal or cooperation on the principle of it. I'm sure when you get 12 countries together to negotiate an agreement it will have its strengths, weaknesses, and compromises.

[84HuskerLaw]

After reading this thread through, there are many good posts on both sides but frankly there are fundamental economics principles that are being missed and or misunderstood by all comments (although to be fair sometimes one makes a general statement that really is not meant to be the be all end all of the point).

 

Free and fair and open global trade, in theory, is the ideal circumstance whereby all persons around the world could enjoy the greatest possible standards of living. This is basic capitalism at its core.

 

The problem is that no country and no group of people within that country will ever really enjoy such a theoretical condition because of politics, logistics, social and geographic and myriad other factors that come into play which create barriers to such free trade from becoming reality.

 

Entire libraries of books have been written on basic economics and the pros and cons of completely free trade implementation.

 

Each and every nation around the world has to protect itself and its peoples from unfair or unwise or undesirable economic and other conditions which may pose a threat to the health, safety and well being of its citizens and their way of life. Cultural and social and political factors weigh heavily on the economics involved in all aspects of foreign and domestic trade. National security is dramatically impacted by foreign trade as dependence on the supplies of goods and services from foreign markets becomes a weakness or vulnerability to any given nation that becomes reliant upon the continuance of such trade for basic goods and necessaries of life. Obviously, we all know the USA has long been heavily dependent on foreign oil to supply the desperately needed energy required to fuel our economy and provide for the common defense and social well being.

 

Free and open and fair trade amongst all the nations of the world and within each of them is the IDEAL for the mutual benefit of all. But that is unrealistic and really only suited for discussion in the classeroom setting as it does not exist and never really will in the future. NAFTA (North American Free Trade Agreement) dramatically opened the several countries thereof to increased free exchanges of goods and services. But certainly the standard of living of Mexicans went up while it went down for Americans as the flows of wealth went south as a result. Over another 50 years or so, if the unfettered trade and open borders continue, Mexico will catch up with the USA to be quite comparable in terms of living standards, wages, etc. Of course, the weighted average of the two nations means that US standards fall while Mexico's rises. The easiset way to think about it is that having two bodies of water seperated by a strip of land such as Panama. Imagine that the Atlantic and Pacific oceans were not connected at all anywhere and the Pacific representing the United States economy was 50 feet higher to sea level than the Atlantic. Now we build the Panama canal to connect them together and open the gates. What will happen to the relative levels of the two oceans, over time, as the water flows through the canal? Pacific will fall and Atlantic will rise until the point in time where the two oceans are 'level' with each other.

[cm husker]

I disagree that the SOL of Americans has fallen since NAFTA and I also disagree that a normalizing of sOL between us and Mexico means US has to diminish. Both can easily rise, just with Mexico at a faster pace, and therefore catching the US.

 

And that's a GOOD thing for the US and the world.

 

I'm sorry, 84, economic prosperity is not a zero sum game. If it were, then we would all live in economic conditions as bad as our worst off state, because we have free trade with it.

 

And frankly, the US should adopt a unilateral free trade position, even if other countries continue to hurt themselves by keep their goods artificially cheap or refusing to import our goods.

 

In the long run that will be an untenable position for those countries (already seeing that in China) and in the meantime, US consumers, corporate, industrial and individual alike, is benefiting from the discounted goods and services.

 

We have a million examples of why it works, but almost no actual examples of why protecting our own industries against foreign competition has benefited Americans as a whole.

 

If we are worried about sharing the prosperity of international trade alike, then let's deal with that in a much cleaner or efficient manner than the hamhanded use of anti-trade policy, which is easily one of the prime examples of corporate welfare; not to mention it has a net effect of being a regressive tax (eg, American poor people are hurt much more by a anti-trade policy's 10%+ rise in basic clothing, personal goods and food staples like fruits and vegetables, than the wealthy).

[Danny Bateman]

So.... I did a lot of reading on TPP yesterday. I wanted to wrap my head around why Obama is so pro-TPP and everyone else seems to hate it.

 

Basically, to distill down what I read... The TPP isn't that great. There's some objectionable stuff in their regarding inter-member lawsuits and patenting weird stuff like plants and animals. Tariffs are already historically low, so benefits in lowering them are at this point, questionable.

 

But... Obama views this as a capstone to his "pivot to Asia" strategy for strengthening the economy. If he does not push through THIS deal, the risk is China designing an alternate agreement with these same member companies. That would make trade harder for us with that half of the world and could lead to lower enviornmental/worker protection standards, which could hurt our economy in the same way TPP will, but to a much greater degree. I think he's trying to choose the lesser of two evils.

 

Thoughts?