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Rourke

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Thanks, you're right, this is predatory pricing, not price-fixing. But you say it's a false concept. How about a definition then: Setting a price artificially low (i.e., below the cost of the product being sold) for the express purpose of preventing a potential competitor from succeeding in a given market.

I've read Cap a few times over the past few months, and I don't remember it addressing the impossibility of monopoly formation in a free market, other than in the long term broad market context, and, of course, in discussion of a successful free-market monopoly, Alcoa.

Your point about small guys at all other locations is good, except, again, it ignores the limited time context required for anticompetitive or predatory pricing. Predatory pricing can operate almost real time with price changes intended to undercut a local competitor. If a small guy starts up in one location, how long can he survive with pred pricing in place? Unless you get a coordinated, widespread attack by a bunch of little guys all at once, all the big guy needs to do is react as each comer tries to enter, until people learn their lesson and stay out. If he keeps his profits reasonable, their incentive to enter based on long term lucrativity, diminishes.

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Predatory pricing is good, in the same manner that "greed" is good. In the business world, as long as force or fraud is not used, all prices are the result of voluntary interactions of market participants and are justified. Each side to the transaction determines that what he pays is in his self-interest. In this sense, SoftwareNerd's statement really captures the essence of the benefit of low prices: "Save money. Live better."

In defiance of that slogan, the predatory pricing argument is a smear against successful competition, and an attempt to justify a third party (the government) stepping in the middle of mutually-agreed upon, mutually-beneficial transactions.

The argument also is cast in terms of hypotheticals, allowing all sorts of claims. In reality, no business could operate for long if it regularly incurred losses to drive out more efficient competitors. In fact, if his competitors are more efficient, they would be able to get unlimited financing to fight their battle with the less efficient monopolist and thereby gain the monopolists' coveted position, because once they gained it, they would make even more money with their lower cost structure.

The real predatory pricing argument is being made by less competent competitors in an attempt to throttle their more successful competition. Just look at the history of antitrust for examples.

The term "predatory pricing" is a package deal. In that sense it is similar to "greed." For instance, greed attempts to unite a positive and a negative concept. The positive concept is "self-interest," and the negative concept is "willingness to harm others in order to achieve one's goals." By packaging the two concepts together, the legitimate meaning of self-interest is destroyed.

In the same manner, "predatory pricing" attempts to tie together a good term, "low prices," with some sort of nefarious, undefined implication of "predatory" behavior. By tying these two terms together, the virtue of low prices is smeared.

In sum, to state this in personal terms, no owner of a (relatively) poorly run mom and pop store in collusion with his local congressman has the right to tell me that I can't shop at Wal-Mart, or that Wal-Mart cannot open a store in my neighborhood! That is what the argument against predatory pricing boils down to.

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Predatory pricing is good, in the same manner that "greed" is good. In the business world, as long as force or fraud is not used, all prices are the result of voluntary interactions of market participants and are justified. Each side to the transaction determines that what he pays is in his self-interest. In this sense, SoftwareNerd's statement really captures the essence of the benefit of low prices: "Save money. Live better."

I guess I have to concede on that point. If the citizens of a certain area want to pay low temporary prices rather than see a competitive store, then that's their right, and it's the buyers, not the predatory seller, who create the anti-competitive environment.

Thanks

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Thanks, you're right, this is predatory pricing, not price-fixing. But you say it's a false concept. How about a definition then: Setting a price artificially low (i.e., below the cost of the product being sold) for the express purpose of preventing a potential competitor from succeeding in a given market.

I've read Cap a few times over the past few months, and I don't remember it addressing the impossibility of monopoly formation in a free market, other than in the long term broad market context, and, of course, in discussion of a successful free-market monopoly, Alcoa.

Your point about small guys at all other locations is good, except, again, it ignores the limited time context required for anticompetitive or predatory pricing. Predatory pricing can operate almost real time with price changes intended to undercut a local competitor. If a small guy starts up in one location, how long can he survive with pred pricing in place? Unless you get a coordinated, widespread attack by a bunch of little guys all at once, all the big guy needs to do is react as each comer tries to enter, until people learn their lesson and stay out. If he keeps his profits reasonable, their incentive to enter based on long term lucrativity, diminishes.

Galileo gave a good response to this post, but I just wanted to add something. If you are interested in this topic more, I recommend reading the following paper, Austrian Monopoly Theory - A Critique.

The central point is that, from an economists' point of view, there is no way to differentiate between "monopolistic pricing" and "competitive pricing." The example the author offers of Muhammad Ali choosing to fight 3 times a year when consumers demand he fight 52 times a year is a good one. It is impossible for one to conclude that Ali is withholding his fights so that he will earn more per fight, therefore "infringing upon the rights of consumers." He may simply not wish to fight every night. He gives other examples as well. Moreover the author points out that every business controls its production. The owner of the business makes a decision to produce X amount of goods for sale at price Y because it yields him the greatest profit. But in every conceivable situation the business owner could have chosen to produce 2X amount of goods for sale at price 1/2Y, or 3X goods at 1/3Y, or 4X goods at 1/4Y. The reality is that all firms try to estimate the demand of their goods and set production and price controls to maximize profits. The conclusion is, as stated in the paper, there is no way to approach a businessman and tell him "You sir are a monopolist!" because there is no human action which can be conclusively shown as an attempt to create "monopoly prices."

So, if there is no way to differentiate between competitive pricing and monopolistic pricing, and all producers choose the quantity of goods they wish to bring to market, then the concept of monopoly is rendered meaningless in the context of a free market.

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Galileo gave a good response to this post, but I just wanted to add something. If you are interested in this topic more, I recommend reading the following paper, Austrian Monopoly Theory - A Critique.

The central point is that, from an economists' point of view, there is no way to differentiate between "monopolistic pricing" and "competitive pricing."

Interesting point. I will read the paper.

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I read most of the paper Adrock cites. I find his argument largely convincing. Another point to bear in mind is that the standard of consumer welfare that modern economics uses is based on the theory of perfect competition. The theory says that if certain unworldly conditions are met, then individuals will price and consume goods in a certain way. One of those impossible conditions are: universal omniscience. Every economic participant has equal knowledge of all production methods, everyone's "utility functions," etc. Using such an unreal standard, the authors of this theory trace an argument that concludes that "consumer welfare" is only "maximized" when all businesses are passive "price-takers."

Then these consumerists look at the real world and discover that businesses or people, such as Muhammed Ali, control their output to maximize their personal benefit. They conclude that this is immoral because the production level and prices are different than what would exist in their unreal world.

"Monopolistic prices" appears to be another manifestation of the unreal fantasy world created by these economists. It exists in their fictional world, but it does not exist in reality.

A key to cutting through this morass is to focus on individual rights. If people deal with each other as traders -- no force or fraud is used -- then all prices are just. That such a society also results in the greatest possible advance in our standard of living is also true and not coincidental.

Interestingly, because perfect competition theory is unreal, and therefore false, it should be no surprise that the policy implication of that theory, antitrust, actually reduces our standard of living by punishing the most successful companies in order to aid the less successful.

The real world consequence of attempting to put an unreal theory into practice is destruction. The real world consequence of applying a reality-based understanding of economics is wealth creation and capitalism.

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The basic fact of the matter is that price collusion is an ineffective strategy to hold onto competitive advantage in the long term. It doesn't work. Where it is claimed to work in the long term, is where it does not exist and someone is mistaking some other valid reason for price premiums or a scenario that is not in fact lasseiz fair capitalsim as price collusion. Here is an example of the sort of strawman characteristics imparted to these hypotheticals.

David vs. Goliath. Someone puts forward a scenario where the big guys are colluding preventing the small guys from entering. This makes the mistake of c. - it ignores the fact that in LF capitalism, you always develop this thing called the captial market, where by there is ample cash waiting for good investment opportunities. In other words, if collusion exists, a financier can put up the capital to bring a third competitor into the market place. But if the entry requires significant capital, then no financier worth his weight would every finance a small "newbie". Instead he'll go find another Goliath. Many counter this by saying that no financier would do such a thing because he knows the premium is artificial and thereby it will evaporate once he creates his new Goliath. But that same argument works against collusion in teh first place. That is, no incumbent would charge artificial premiums for long because they risk bringing a new competitor into the market place, and once that competitor clears the significant barrier to entry, then the incumbents are going to have a fight on their hands. The natural barrier to entry is a significant competitive advantage and no incumbent will throw that away foolishly by allowing another competitor to be created. In a free market the only way you can do this is to innovate or with price. What results then is a big game of "chicken" between Goliaths, and it is that pressure that will force price to it's natural level. It is the high capital barrier that is a natural aspect of capitalism and the actual price premium that will get charged in the long term will be the price premium that reflects that barrier. Let competitors collude all they want. The price that will be reached in the long term will be the same. It will reflect that natural barrier to entry, not the supposed artificial one of price collusion. It may not look like an equilibrium price in that it is steady but it will be so none the less.

The point about the capital markets is not to be taken lightly. Only the truly ignorant don't understand the immense size and relative ease of availability of today's capital markets. Ease with respect to any viable competitor in a given context, not just anyone.

Nice argument, but for some odd reason you decided to define collusion in terms of price only in your theoretical scenario. Even still, I'm curious how your thoery would incorporate this case involving Toys R Us that shows that not only was an artificially high price reached, but that suppliers were in effect prevented from selling to other discount retailers if they wanted to continue selling to Toys R Us.

Despite your assertions that price collusion doesn't work, efforts continue in the marketplace to achieve it, as well as bid rigging and other non-competitive practices, hence the busy year by the Department of Justice Antitrust Division in 2007. However they are notoriously difficult to feret out, and are usually only discovered when the DOJ is investigating the company/industry for some other reason. Whether price collusion works over the long term may be a moot point anyway, depending on the definition of "long term" and what kind of market we are talking about.

By the way, the argument that artificial forms of monopoly power like price collusion cannot exist in LF capitalism, is an argument that is made eminently clear in Cap the Unknown Ideal. Maybe instead of continuing to decry the book on the premise that ethics and economics are unrelated it is exactly that premise you should examine.

If unwilling to do that, the Market's Don't Fail might be a better choice.

Believe it or not, over the past week I happened to be in 2 book superstores stores, and went looking for the Rand book and the Bernstein book. Neither had it in stock. Then I checked the nearby county library holdings, and, despite living in the suburb of a large city, no regional library had these books. In any event, I am highly dubious of their value, considering their limited availability and what I have heard anectdotally. I will check out (or attempt to) Markets Don't Fail, though.

This discussion seems to be going nowhere.

I have to agree. There are too many issues in play here and the focus now seems to be solely on monopolies (and some massive oversimplifications) instead of the other dozen or so potential weaknesses of LF capitalism I have introduced. As to ethics in economics, it is a general guideline in economics that work in pure and applied economic theory is ethically neutral (although I'm sure the Austrians have their own unique views). On economic policy, ethics does permeate the discussion.

Anyway, my larger contention here was that pure LF capitalism is self destructive to the soceity that implements it, and thus holding it up as the ideal appears to be irrational. But I'll have to reformulate my arguments and present them more coherently and succinctly in another thread(s).

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Nice argument, but for some odd reason you decided to define collusion in terms of price only in your theoretical scenario. Even still, I'm curious how your thoery would incorporate this case involving Toys R Us that shows that not only was an artificially high price reached, but that suppliers were in effect prevented from selling to other discount retailers if they wanted to continue selling to Toys R Us.

No! Really? They couldn't have their cake and eat it too?

Damn, call in the Reds, we demand a revolution!

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It's question time!

Nice argument, but for some odd reason you decided to define collusion in terms of price only in your theoretical scenario. Even still, I'm curious how your thoery would incorporate this case involving Toys R Us that shows that not only was an artificially high price reached, but that suppliers were in effect prevented from selling to other discount retailers if they wanted to continue selling to Toys R Us.

By what right is a supplier guaranteed to do business with Toys R Us?

If a smaller vendor makes the same deal ("I won't buy from you if you sell to this other company"), should that also be illegal, even if that decision would mean that business will be going out of business? Or is Toys R Us's largeness the essential factor in determining whether or not it's practices should be illegal?

Are consumers REQUIRED to buy Mr Potato Head and Barbie? Or do they have the option to buy other things? Do consumers have the right to set the price of products against the will of those who create and sell the product? What if Mr Potato Head and Barbie were new and relatively unknown toys, would that make the same practices illegal?

and the focus now seems to be solely on monopolies (and some massive oversimplifications) instead of the other dozen or so potential weaknesses of LF capitalism I have introduced.

The majority of your argument is on oligopolies or monopolies (even the article you posted is on "monopolistic" or "oligopolistic" policies), which, fundamentally are almost exactly the same thing. We identify the essence of your arguments, and argue against that essence.

Edited by Chops
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I happened to be in 2 book superstores stores

As far as I'm concerned, Amazon is the only bookstore worth purchasing from.

Which, of course, means they're probably doing anti-competitive practices like selling artificially lower than others until those others go out of business so they can sell for ridiculously high prices without any competition. Then knowledge would be too expensive for anyone but the richest in the world. They should be proactively shut down.

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Believe it or not, over the past week I happened to be in 2 book superstores stores, and went looking for the Rand book and the Bernstein book. Neither had it in stock. Then I checked the nearby county library holdings, and, despite living in the suburb of a large city, no regional library had these books. In any event, I am highly dubious of their value, considering their limited availability and what I have heard anectdotally. I will check out (or attempt to) Markets Don't Fail, though.

Well if that isn't the most thinly veiled argumentum ad veracundia I've seen in some time. I highly doubt your independance of thought if you only read what the mob tells you to read. And continuing to doubt the value of something you deign to actually open, stunning. Capitalism is usually carried by the big box stores, but only a copy or two at a time. Maybe instead of doubting it's value by it's availability, maybe it's inavailability is an indication of it's demand. Judging by the fact that Atlas and The Fountainhead still sell over a quarter of a million copies a year, 50 some years after their publication, and that Atlas was voted the 2nd most influential book next to the bible in a recent publishers poll, why I'd have though you'd be screaming out there to buy more of Rand. Markets is an academic book, but nice try.

Regarless both are orderable. You must have a computer right? How about you just jump on amazon's site and order it?

I have to agree. There are too many issues in play here and the focus now seems to be solely on monopolies (and some massive oversimplifications) instead of the other dozen or so potential weaknesses of LF capitalism I have introduced. As to ethics in economics, it is a general guideline in economics that work in pure and applied economic theory is ethically neutral (although I'm sure the Austrians have their own unique views). On economic policy, ethics does permeate the discussion.

Anyway, my larger contention here was that pure LF capitalism is self destructive to the soceity that implements it, and thus holding it up as the ideal appears to be irrational. But I'll have to reformulate my arguments and present them more coherently and succinctly in another thread(s).

If there are too many issues its because you keep raising tangential ones as a supposed defense of the ones you started with. I'll wait for htat succint statement of position that you're so eloquently putting together.

As to ethics in economics. veracundia again. The fact that something is a "general guideline" does not in anyway make it the truth. Maybe you'd like to actually provide us with argumentation.

As to your argument on collusion. Your idea that just because people try such things means that they shoudl be forced not to, when reality will teach them that exact lesson without my tax dollars at work is evidence of your nanny-state thinking. Next we'll be forcing people to eat right becuase they don't. Oh... wait... You're probably for that.

By the way, I am trying to be explicitly insulting. Your veiled sarcasm and insults hiding as veracundia deserve no less, and I'll keep doing it until the mods call you on it, or until you stop it. That last post for the amount of space it took was nothing more than poor argumentation, and veiled insults.

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OMG, you're kidding right? This is the first error of "monopoly" thinking. Anything is a monopoly if you define the market small enough so as to make it so, and the market can only be defined as that consisting of all similiar products and not its substitutes. Google is sucking the life out of the OS my friend, by unbundling it and porting it's key apps to the web. Other than photo, music and browser apps, most of what i have on my desktop can be done via a web browser and Googles suite. It doesnt' mean that there still won't be somehing running your system one day, but if all it has to do is run a web browser it really is going to be hard to differentiate it. Google is just such an example of how competition to the established encumbents actually happens. It's an example of how we don't need regulation to force people to be able to compete.

Just in case anyone was watching today, Microsoft made a bid for Yahoo, in answer to its inability to keep up with the threat posed to it by Google.

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Just in case anyone was watching today, Microsoft made a bid for Yahoo, in answer to its inability to keep up with the threat posed to it by Google.

And, of course, this attempt to be competitive in the search engine market is obviously worthy of a congressional inquiry. This oughtta be fun. Even with them both they wouldn't be able to compete with Google.

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In federal court there were 3 findings of fact: Microsoft was found to be a monopoly of PC operating systems (this is the focus here, NOT software), Microsoft harmed consumers through its use of its monopoly powers, and several of Microsoft's contracts had anti-competitive effects. This was affirmed on appeal to a US Appeals Court. Here you can read the decision. It goes into good detail on Demand Substitutability, Microsoft's power in the relevant market, The Applications Barrier to Entry, Viable Alternatives to Windows, Microsoft's Actions Toward Other Firms, etc., etc. Excerpts:

"As has been shown, Microsoft also engaged in a concerted series of actions designed to protect the applications barrier to entry, and hence its monopoly power, from a variety of middleware threats, including Netscape's Web browser and Sun's implementation of Java. Many of these actions have harmed consumers in ways that are immediate and easily discernible."

"Many of the tactics that Microsoft has employed have also harmed consumers indirectly by unjustifiably distorting competition. The actions that Microsoft took against Navigator hobbled a form of innovation that had shown the potential to depress the applications barrier to entry sufficiently to enable other firms to compete effectively against Microsoft in the market for Intel-compatible PC operating systems. That competition would have conduced to consumer choice and nurtured innovation. The campaign against Navigator also retarded widespread acceptance of Sun's Java implementation. "

"Most harmful of all is the message that Microsoft's actions have conveyed to every enterprise with the potential to innovate in the computer industry. Through its conduct toward Netscape, IBM, Compaq, Intel, and others, Microsoft has demonstrated that it will use its prodigious market power and immense profits to harm any firm that insists on pursuing initiatives that could intensify competition against one of Microsoft's core products. Microsoft's past success in hurting such companies and stifling innovation deters investment in technologies and businesses that exhibit the potential to threaten Microsoft. The ultimate result is that some innovations that would truly benefit consumers never occur for the sole reason that they do not coincide with Microsoft's self-interest."

A good argument can be made that only through anti trust actions vs Microsoft could Google be threatening Microsoft now.

Now is Google any better? Some think Google is heading towards a potential monopoly in the future.

Why should anyone care about the Google monopoly? Here are my reasons:

Google is already an information gatekeeper. The company's business is all about information access and selling stuff around that information. Google got ahead by shrewd business and technology tactics, as did Microsoft when building its monopoly. Google's dominance gives it unprecedented control over information that is vital to business. What happens if in the future when Google's stock price declines, the company seeks to recoup dollars elsewhere, such as charging for search ranking. Google already is going in that direction, with paid placement, but I'm saying more. Suppose Google required payment for all local searches? Local search is vital to millions of businesses. The company could mollify regulators by arguing that overall search would remain free but local search is a specialty service.

There is inherent conflict of interest between Google information gathering and selling stuff around the information. Google doesn't just offer search, but advertising, keyword search and demographic services around information and businesses pay for this stuff. DoubleClick will greatly enhance the latter activity. Marketers are hungry for demographic information, and they're willing to pay for it. Google provides the door, checks who's coming inside and can pass that information onto marketing paparazzi. The temptation to mine the information will be huge, and that temptation will increase as Google matures, its growth slows and its stock falls to earth. As a young growth company, Microsoft also gave away lots of stuff (anyone else remember free tech support) during its growth years. But as growth slowed (because of overwhelming market share) and dominance seemed threatened, Microsoft acted to protect its monopoly position. I predict Google will eventually do the same, not that the company needs to wait that long. Google wants to get into the big advertising bucket, not just online, and mining demographic data will be one way to conquer new ad markets.

Google has already demonstrated questionable ethics. The company claims that "You can make money without doing evil." Fine words maybe, but I judge people and companies based on their actions. In May, Google invested $3.9 million in co-founder Sergey Brin's wife's biotech startup 23andMe. There is an inherent conflict of interest in the investment, or at least the appearance of it. For a company most people seeking information on the Web put their trust in, even the appearance of a conflict of interest should be deterrent enough. But it wasn't.

Google's business model leaches off the good work of others. Google produces nothing. Shall I repeat that statement? The company's core business is about search and advertising, which relies on the content of other people and businesses. Google doesn't own the information from which it makes nearly all its revenue. Google is the middleman of the information, which it takes for free. At least Microsoft produces software and makes money off the licensing. Microsoft owns what it sells, but not Google.

Google has no respect for intellectual property rights. Google's information grubbing ways come without any asking permission. In one sense, people want their Web sites to be found, for information to be mined. But they're not compensated for something for which Google makes oodles. Google searches libraries of copyrighted books, with no respect for their authors or compensating them. Google bought YouTube knowing full well that Hollywood objected to the television and movie content posted there. Yesterday, Microsoft and Viacom announced a lucrative content and advertising deal. As my Google Watch colleague Clint Boulton observes in a blog post: "Google bought YouTube after the [Viacom] suit was filed. Viacom can take that to mean Google doesn't care that YouTube is infringing on its copyrighted content and believes it will win in court."

With DoubleClick, Google is looking a whole lot scarier and is better positioned to become a true monopoly—and I contend more dangerous than any claims made against Microsoft. My colleague Clint doesn't share the same view. He's the Google guy, and so I should normally defer to his good judgment. But I've covered Microsoft for a long time, and I'm a historian. History will repeat itself unless Google is checked, whether by government regulators or increased competition.

The biggest problem is brand. Like Microsoft in its youth, Google has a bright brand about which people feel good. People like Google. But should they trust Google? People feel good about grifters, too. They win your trust and then take your money. Google is by no means on the grift. But is Google trustworthy? John Dalberg-Acton said, "Power tends to corrupt; absolute power corrupts absolutely." (bold mine) If what he said is true, then the answer is no.

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Your entire post is one long piece of non-content. You've effectively said nothing. It's one giant appeal to emotion: "Microsoft used it's power to crush the competition. Others were harmed" (without showing HOW anyone was actually HARMED), and contains in it the implication that a small company can forcibly demand that larger companies try not to compete.

A good argument can be made that only through anti trust actions vs Microsoft could Google be threatening Microsoft now.

Let's hear it then. How would Google have NOT started succeeded without Microsoft antitrust convictions? Consider, Google didn't (and still doesn't) advertise, and was started in 1998, and survived both Netscape getting crushed and Firefox's emergence. Additionally, Google piggybacked off Yahoo early. Nowhere in there is Microsoft even a consideration.

Your post, as it stands, completely ignores both Kendall's and my posts, and just turns on the emotional anti-conceptual emotional appeal.

I request that you do the following:

1) Demonstrate how Microsoft did harm. Real harm. Not this "they did better than us, therefore harmed us"

2) Explain what right does a company have to force the competition to not compete.

3) Define the difference between competitive and anti-competitive practices (defining both concepts)

4) As a follow-up to (3), define why competitive practices are good, while anti-competitive practices are bad.

Edit: Typos and brief clarifications.

Edited by Chops
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Google produces nothing.

Google produces as much as any data miner or data analyist. It produces reports and a means of (very) quickly extracting data from a massive set of data. By that standard, there is no market for any analysis of data, because that analysis is "nothing."

Google's information grubbing ways come without any asking permission.

False. Google respects the robots.txt standard.

Your Google article is completely worthless. It says nothing about Google doing ANYTHING wrong, other than that it concluding Google is evil, grounding its argument in "what-ifs" rather than "what-is" (ie, reality)

Edited by Chops
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Yeah, I'm still waiting for Rourke to post that concise statement of position that he so long has ignored and so long admits he needs to do.

Yes, Rourke, arguments "can be made." Please get to actually making them.

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I request that you do the following:

1) Demonstrate how Microsoft did harm. Real harm. Not this "they did better than us, therefore harmed us"

2) Explain what right does a company have to force the competition to not compete.

3) Define the difference between competitive and anti-competitive practices (defining both concepts)

4) As a follow-up to (3), define why competitive practices are good, while anti-competitive practices are bad.

1) The district court decision I posted goes into the details of how individual companies and consumers were harmed. The text is quite lengthy so I see no need to add this into a post here since I have made it readily available to you through the link. To try to sum it up would leave out way too much information.

2) According to the Objectivist view, it appears there is none.

3) I don't have a problem with the wikipedia entry to define anti-competitive practices. Not that any of these things should necessarily be illegal on their face, but egregious implementation of these practices should be curtailed. Competitive practices would simply be the absence of any of these things.

4) You're never going to understand the answer to this question unless you understand the concept of power. From here:

"Power" is about being able to realize wishes, to produce the effects you want to produce. It is one of the basic dimensions of all human experience, whether at the interpersonal, group, or societal level. It is only one of several universal dimensions in the human experience, along with love, cooperation, esthetics, and intellectual curiosity, but it's the one that plays the lead role in all the problems discussed on this web site. It's the dimension that leads to bullies, rival gangs, enforced cooperation, hierarchy, ruling elites, ruling classes, and wars among rival nation-states.

Simply put, who do you think has more power, a CEO or a janitor? I'm not saying there should be equality of economic outcomes, just some understanding of how wealth really shapes the social and economic landscape.

Further info on the relationship between wealth and power here.

The Google column I posted was just a little conjecture on what possibly lies ahead. Take it with a grain of salt if you like.

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4) You're never going to understand the answer to this question unless you understand the concept of power.

Ah, finally someone makes a point of that. (and ironically, it is the person who is using the Marxist definition who did so!)

(Yes, I saw the brief mention earlier in the thread, but nobody jumped on it)

Basically, folks, that right there is the keystone to this thread. So long as he is allowed to continue to use the Marxist anti-concept of "power," and equates the use of force with the offering of money, this thread will go in circles.

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Simply put, who do you think has more power, a CEO or a janitor?

Simply put, you have to understand how the CEO got to be a CEO and why the janitor is a janitor. I don't think it's a stretch to assert that some janitors later became CEO's (yea, probably not very many) and some janitors remained janitors. Likewise, some CEO's have probably ended up as janitors.

IF a person has violated someone's right in order to obtain the wealth they have, he should be held responsible accordingly. But if he hasn't, there should be no involvement by the government in robbing his company to support other people's "needs".

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I'd like to hear form anyone who actually read the 2 (short) articles I posted on the relationship between wealth and power. This is an important concept that is almost universally accepted as valid, so it would be instructive to hear the reason why here it is considered a "non-concept."

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I'd like to hear form anyone who actually read the 2 (short) articles I posted on the relationship between wealth and power. This is an important concept that is almost universally accepted as valid, so it would be instructive to hear the reason why here it is considered a "non-concept."

I'm curiuos to know if you actually read Cap the Unkown Ideal because the answer is in there. It is an imiportant concept, so one that I'm sure you're wont to understand.

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This woman is a fool. She compares religious fundamentalism to Marxism, which is Communism, which proscribes religion. No two philosophies could be farther apart. The people who usually get "angry at the system" are the victims of the system, the system being socialism, in which one group of people (the productive) are forced by government to provide the means of existence for another group, (the nonproductive) a group for whom they bear no responsibility and whose condition they did not cause. Ayn Rand's desire for a perfect system depended upon basic freedom, in which men who produced were allowed to benefit from that production, and moochers were allowed to suffer the consequences of their inactivity. Rand saw that the USA was the best chance for all men, with a government rooted in the basic belief that a man's life belonged to himself and no other. Liberals, communists, and socialists believe that the best chance for man is to attach himself to another man like an economic parasite, the punishment for refusal being imprisonment. Welcome to America, I hope you're happy with what you've allowed your country to become.

You're missing the point of the analogy. Both christians and marxists believe in a perfect system (failed systems; if only everyone believed) and she's attempting to link capitalism to the same behavior. The God question is superficial. "Economic parasite" is "ad mom-inum", and doesn't address the question. The rest is a re-statement or summary of "The Virtue of Selfishness".

How do we transition to a capitalist society? What does that transition look like? How do we answer the questions regarding the abuses of futures traders (hedge funds)?

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Further info on the relationship between wealth and power here.

You don't have to read past paragraph three to see through the premises of Prof. Domhoff's "argument:"

First, though, two definitions. Generally speaking, "wealth" is the value of everything a person or family owns, minus any debts. However, for purposes of studying the wealth distribution, economists define wealth in terms of marketable assets, such as real estate, stocks, and bonds, leaving aside consumer durables like cars and household items because they are not as readily converted into cash and are more valuable to their owners for use purposes than they are for resale... In addition, economists use the concept of financial wealth, which is defined as net worth minus net equity in owner-occupied housing.

So virtually all of the valuables owned by low-production (i.e., low-income) families is defined out of the concept of "wealth." Brilliant. What follows is a statistical analysis, which, in typical socialist fashion, treats wealth as if it was a natural resource, which has been unfairly distributed between the evil rich and the virtuous poor. Never is there any discussion of the source of wealth - the productive capacity of the smallest sliver of society. Domhoff argues that wealth is the source of a person's power, without once considering the possibility that a man's intelligence, diligence, tenacity and courage are the fountainhead from which his power and his wealth flow. As with any "humanist" he believes that the productive capacity of each man is the the common property of all men, that is, that the productive are the rightful servants of the unproductive. He would take those factories built through the process of rational vision, planning and effort, and redistribute them to the loudest, neediest savages of society, and then, we presume, demand more factories when those have been driven back into the dirt from whence they sprang, through neglect and incompetence.

Instead of asking who has more power, the janitor or the CEO, you should be asking: Who is more productive, courageous and rational? Who can turn the sum of their efforts into a factory employing hundreds of men, and whose life effort consists of a line of dirt and sawdust being pushed along by a broom whose very construction is beyond his conceptual grasp?

And who, therefore, would a rational man select to run a factory and decide the best allocation of resources: The man who has been successful allocating resources and raising the total productive capacity of his society? -- or the man who sits on the sidelines covetously counting other peoples' money and dreaming of a utopia where the productive are yoked and the unproductive freed from the "wage slavery" of capitalism?

If you still think Domhoff is a brilliant sociologist, you'll love Hillary's piece on "Shared Prosperity" in Monday's WSJ.

Enjoy.

Edited by agrippa1
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