One More Thought …

Following up on the previous post … in the great monopolies of the 20th century, IBM and Bell Labs, to name the big players, maintained great laboratories of innovation. If they were going to be monopolies, they wanted the public to feel they were benefiting from it. We’re still benefitting from much of the innovation today that has come out of those two monopolists in the 20th century.

The robber barons of the 21st century will captivate the public imagination with space travel, supersonic transport, electric cars, and other wonders. They will do their best to bring us the future we were promised, so we will also remain happy with our monopolies and accept their political power.

There has to be a balance. I don’t believe the economic and social policies of the 20th century will achieve what we need, and I notice a lot of the elders in my life are myopically still fighting yesterday’s battles, and settling old scores which don’t honestly matter anymore.

One thing I do believe is that Trump and Obama are both transformative figures. They are two peas in a pod, even if neither they nor their supporters could ever accept that. Both are products of the 20th century post-WWII political arrangement. Sooner than most anyone else, they came to understand the post-WWI arrangement was breaking down. Wishing to make their mark on the world, both are now locked in a struggle to replace that order, but neither of them are really in a position to do so. Something will replace that order, but whatever it will be, and whoever will be its standard bearer, has not fully developed.

23 thoughts on “One More Thought …”

  1. We’re still benefitting from much of the innovation today that has come out of those two monopolists in the 20th century.

    What you’re celebrating there are the hits; what you don’t know about are the misses. Many of those were strangled in their cribs by the internal monopolistic bureaucracies, and some of them offered similar benefit to the hits we applaud so much, but got killed off because the corporate culture wouldn’t accept, or, rather, tolerate, them.

    I’m not suggesting today’s environment is better, just somewhat different, although the opportunities to go outside the barricades and pursue success seem to have increased.

  2. “The robber barons of the 21st century will captivate the public imagination with space travel, supersonic transport, electric cars, and other wonders…”

    A wisecrack I often use in conversation, in several variations is, it astounds me how many big businesses are built on solving problems I never knew I had, or enabling me to do things I never knew I wanted to do. And, am still not convinced that I want to.

    I say that from the perspective of someone on the old side of the baby boom generation. The point being, first we had to be sold the idea we wanted something, before it could be sold to us. An illustration being, self-driving cars. They fascinate the hell out of me in terms of their technology, which I won’t disparage, but I wouldn’t pay a nickel for, myself.

    (Of course I realize I am only a generational update of my father, who died in the 21st century, but to his dying day maintained that the Model A Ford had been the peak of auto technology, and everything had gone downhill from there; the Model A did everything he valued in a car, and didn’t add anything that was just going to be an eventual pain-in-the-ass.)

  3. “I notice a lot of the elders in my life are myopically still fighting yesterday’s battles…”

    I used to think the same thing. Then I discovered that a lot of what I was told were “new ideas”, were actually ideas that had lost the battles of the 19th and early 20th centuries, had laid dormant for a generation or so, but now were being recast as “steps in the right direction”, usually toward individual liberty.

    Possibly my favorite example is “privatization” in almost any of its manifestations. Possibly my first pointed doubt came more than 20 years ago, when Ed Fuellner (sp?) of the Heritage Foundation wrote a glowing paean to “contracting out” government services. He wrote that the key advantage was that contracted, privately owned services relieved governments from the responsibility of actually producing goods and services, while leaving government firmly in control of what was produced and how production was distributed.

    It struck me at the time that that was precisely the definition of that political system whose economic definition is “The means of production are privately owned, but The State controls production and distribution.”

    I won’t say the word because its use appears to really offend people; but the word was coined nearly a century ago, and the concept had predated that coinage, probably by centuries.

    Subsequently of course we have had things develop like the private prison industry, which lobbies for more and more things (like mandatory minimum sentences, Project Exile, etc.) to put more and more people behind bars, for longer. As a route to individual liberty, privatization seems to be taking a lot of twists and turns. But I’m sure The State will wither away, any day now.

    1. Marxism was a 19th Century idea that dominated much of the 20th Century before dying at the end. Now it is back. In fact, it was the most dominant of all 19th Century ideas.

    2. That is good. I never thought of the privatization as state owned means of production I do see your point.

  4. Everybody’s got an agenda, including the rule-makers. Something I don’t think is really captured in Libertarian thinking

    1. “Something I don’t think is really captured in Libertarian thinking…”

      I think what is actively (and falsely) promoted in much libertarian thinking is that most people are to a high degree altruistic (or just plain “honest”) in their motivations, and that in any system, the number of people who are deliberately scummy, or who can find justifications for scumminess, are so small in number that they can be managed by small and unobtrusive institutions.

      Actually that is the failing assumption of nearly every ideology.

      1. That’s what made the Constitution so brilliant. They knew what kind of people would be attracted to government power so they designed a government that was essentially a steel cage match between competing factions of scumbags.

        1. “…a steel cage match between competing factions of scumbags.”

          I love it! I’m going to borrow that, with credit, in the future.

          But if you’ve read any of the “Anti-Federalist Papers” (either the condensed version, or the full seven-volume version edited by Storing), you know the Anti-Federalists’ criticism of the Federalist Constitution was that the powerful central government it was creating would be competed for by those very scumbags; and would yield scumbag “factions” (I don’t think the word “party” had been coined yet, or at least applied in the Americas) who would place their own control of that vast power above the interests of the people and the nation itself.

          I don’t see where they have been proven wrong; their prescience appears to be arriving at complete fulfillment in recent decades, and especially since the recent turn of century.

          (I always feel compelled to point out that the “Federalist Papers” were coordinated campaign screeds in the “Vote Yes” campaign for ratification of the constitution. They were printed in almost every major “media outlet” of the era, meaning the major newspapers of every political power center. The “Anti-Federalist Papers” are the cogent replies to them, but in most cases were relegated to country and second-string newspapers. The “Federalist Papers” have been referred to as the first example of bought-and-paid-for “media bias” in the history of the United States. In any case, as the campaign screeds that they were, they made a lot of promises that no one strained themselves to deliver on.)

          1. Whetherman, you overstate the inequality of venues for the late 18th-Century Federalist/Anti-Federalist essays and perhaps underplay the keeneness of the debate by casting in the light of late 20th-Centry media and media environment.

            1. “perhaps underplay the keeneness of the debate by casting in the light of late 20th-Centry media and media environment.”

              That may be true. Like thousands of small, historical details, it would be fascinating to study that in a formal way, laying out the statistics.

              The simplest would be, the “circulation” of what would be considered Federalist opinion (e.g., The Federalist Papers) versus Anti-Federalist counter-opinion.

              If you place a Federalist Paper next to an Anti-Federalist response to it, from our perspective it would appear there had been a “spirited debate.” But if say, close to a million people (about 1/3 the population) read or heard the Federalist Paper, while only say, 5,000 people had seen the response, in fact there was almost no “public debate” at all, and such as there was, was fragmented geographically.

              I’m coming at that partly from the perspective that, having an Ivy League (though technical) education, I never even knew there had been “Anti-Federalist Papers” until I stumbled over a very condensed paperback version when I had time to kill in an airport — at close to age 40. The fact that there had been cogent dissent to the constitution was just never stressed in my high school history courses, which were in a suburban high school that was and is still considered a good school. It may not be a valid assumption, but I do assume that reflects the historical distribution of opinion at the time of ratification. Contrary opinions were to a great degree suppressed.

              (I would need to look up the actual title, but I’d recommend that paper titled roughly “The dissenting opinion of the minority of the Pennsylvania ratifying convention” that reports that when dissenting delegates walked out of the convention because of their poor treatment, they were pursued, captured, and held bound and gagged so that their presence as prisoners would constitute a quorum for official voting purposes. Their other complaints about a “rigged” convention are also worthy of noting.)

              1. Just to punch up my argument slightly:

                Storing came up with approximately 7,000 pages of materials that would qualify as “The Anti-Federalist Papers.” If you took that statistic alone, and compared it to however many (few) pages what are recognized as the “Federalist Papers” would take in a similar format, you would be convinced that the Anti-Federalist arguments had been overwhelming. But they weren’t, because as I’ve mentioned above, the efforts were fragmented, and not as “centralized” to the degree they could be at the time, which the Federalist Papers were.

                Of course I’m sure there were many pages of decentralized pro-Federalist opinion, too. But the fact that there are what are opinions recognized and numbered as The Federalist Papers, are a strong indicator of the degree of centralization they enjoyed at the time.

              2. Here is one source for what I am referring to. However it appears not to be complete. Some excerpts are:

                The Address and reasons of dissent of the minority of the convention, of the state of Pennsylvania, to their constituents.

                To such lengths did the tools of despotism carry their outrage, that in the night of the election for members of convention, in the city of Philadelphia, several of the subscribers (being then in the city to transact your business) were grossly abused, ill-treated and insulted while they were quiet in their lodgings, though they did not interfere, nor had any thing to do with the said election, but as they apprehend, because they were suppose to be adverse to the proposed constitution, and would not namely surrender those sacred rights, which you had committed to their charge.

                -‘Tis true the majority permitted us to debate on each article, but restrained us from proposing amendments.–They also determined not to permit us to enter on the minutes our reasons of dissent against any of the articles nor even on the final question our reasons of dissent against the whole.

                It sounds as fresh as tomorrow.

              3. It’s also possible that the Anti-Federalist papers were taught in schools until a certain date, and then dropped. If there’s any evidence of this, I’d also like to know when it happened.

                I, for one, don’t recall learning about the Federalist papers even during my high school years (this, despite taking AP American History), but that may be because I didn’t recognize the significance of learning about the papers. I didn’t read either the Federalist or the Anti-Federalist papers until I was in graduate school (and I was studying mathematics at the time, so my graduate work had nothing to do with learning about these papers).

                Even if neglected, the Anti-Federalist papers are more important than people typically realize: the opposition these papers represent is what gave us the Bill of Rights. (Publius in particular was confident that we didn’t need a Bill of Rights, but it’s now clear that they are crucial for defending liberty.) It’s also astounding how many pessimistic predictions made by Anti-Federalists actually came to fruition….

              1. Richard my boy, you have yet to point out what I’ve said that has been wrong. I like to learn, so an intelligent, detailed reply, someday, would be appreciated, especially if it corrected a false impression on my part.

                That you don’t like what you hear, doesn’t necessarily make it wrong. And shouting variations of “Fake News!” may work with some people, but it doesn’t work with me.

              2. BTW, I know from past discussions that Roberta is quite capable of speaking intelligently for herself, unlike some other participants.

                Nothing would make me happier than if she came forth with reference to some historical statistics that could be used to rationally compare the weighted impact of lots of little, uncoordinated voices (the Anti-Federalists) to that of a few very big, coordinated voices (the Federalist Papers) in the constitutional debates of 1787 – 1788. And, if those statistics blew my contentions out of the water.

                It occurs to me that if you ask most people with a modicum of historical knowledge, to name a single Anti-Federalist, often all they can think of is George Mason, who being a rich man, commanded a lot more regional attention than most of the rest. (And of course many of the rest chose to write under pseudonyms — something I’ve come to appreciate as polarization has escalated.)

  5. When I studied economics in the 1970’s the net of the argument was “monopoly bad / competition good”. We didn’t think much more about the matter; beyond, of course, trying to deal with “natural monopolies” like telephone companies.

    I’m a lot older and a little wiser today. I was stunned by reading about the phenomena of “ever-increasing economies-of-scale”. It turned my thinking about monopolies upside-down. What do you make of an industry like computer chips? The larger the scale of production the lower the costs; lower-costs allow lower prices; lower prices create a greater market; greater markets mean greater profits. This was inconceivable according to the curriculum of Econ 2. But, in some cases, it’s quite real today.

    The argument is – now – that if you identify such an industry with ever-increasing economies-of-scale, the best policy is to leave it alone to monopolize its market (if it can). Admittedly, there may be only a few such industries – now. Yet, there might be lots more in the future. And, like computer chips, these industries might prove to be the most important to growth. This consideration really takes the edge off of trying to find a public policy to limit monopolies.

    Another argument that I see is my engrained presupposition that whatever government tries to do, it is more likely to make things worse than better. IF this presupposition is valid then it ought to make us very cautious about government efforts to control monopolies. The most likely outcome is crony capitalism. The monopolist bribes government officials (elected and hired) to carry-on doing most of what it wants to do. The winner is BIG Government. Would we be better off with smaller-government and leaving the monopolist to contend with interlopers?

    I remain fond (nostalgic) of the arguments for competition and against monopolies. Yet, I no longer harbor any confidence whatsoever that government regulation of monopolies is likely to do more good than harm. A good example is telephone service. Government more-than-likely delayed innovation in phone service by a decade or two. It wasn’t until AT&T decided (for internal ambitions) to give-up its monopoly status that competition showed that there was no longer a natural monopoly in long-distance service. Cell phone and cable service are now showing that there is no longer a natural monopoly in the “last-mile” of service.

    It’s hard to see the electric power grid as anything other than a natural monopoly. Yet, this might be myopic. Solar power generation at the point-of-consumption might “compete” with the owners of the local distribution network. The more they charge for distribution the more competition they will face from solar cells.

    1. First let me say that I LOVE essays based on, “after 40+ years I today ponder what I was once taught as gospel.”

      This is going to be simplistic by comparison to your fine essay, but have you considered that what monopolies do is CREATE “big government” as one of the tools for both creating and defending their monopoly?

      I think my point is, nothing is ever static. Once the monopoly is established, and all kinds of good may or may not come out of it, it won’t stop there at the point where all seems good. Too much is never enough.

      1. Yes, I presume that monopolists create big government. Moreover, they don’t have to be monopolists when they start to create the big government that will grant them a monopoly. The taxi cab medallion system is probably a good example. Suppose a small city has 5 independent taxi cab drivers. They ask the city council to license taxies so that growth in the number of taxies will be controlled. The population of the city grows faster than the number of licenses; and, the concentration of licenses in the hands of a few holders grows.

        Government and any private interest (e.g., patrons of the arts who imagine that they alone should decide what hangs in the museums) will always desire to enter into a symbiotic relationship. Officials seek patronage; the private interests seek power they can’t buy as cheaply in the marketplace.

        I’m by no means blind to the potential of monopolists to either raise prices or stifle innovation. These are the basics of the classical description of micro-economics. The question is: What to do about monopolies? The track record of government regulation is not encouraging.

        My point is that the time is now ripe for us to begin to question whether government regulation of monopolies makes things worse rather than better; and, be alert for signs of such a possibility. Carrying on with an unexamined presumption that government can fix things is unwise.

        A market for X just might be better-off if left alone for a monopolist to exploit to the fullest extent it can and chooses to do so; and, without the government adding barriers to entry. Extraordinary profits (at high prices) will invite interlopers whom the monopolist can’t exclude (without the eager assistance of government).

        I don’t suggest that we could have confidence that the market will cure itself of monopolists at the lowest cost to society. Perhaps it would not. Should I have confidence that government regulation of monopolies has magically found the lowest cost to society? To so presume is magical thinking. Instead, I’m inclined to suspect that government regulation – when it improves the cost to society – does so at a cost that is NOT the lowest possible solution. In fact, it may be little better than letting the monopolist exploit his market; perhaps, it government is worse than leaving the monopolist alone.

        Here, I’m merely arguing against BLIND presumptions of confidence in government to deal with monopolists at a lower cost than interlopers would so deal.

    2. As far as I’ve been able to determine, monopolies most often arise when government props up the monopoly. To the degree that this is true, expecting government to break up monopolies is a fool’s errand.

      I also find it interesting that there are many people who wouldn’t hesitate in telling you why monopolies are bad, but would then turn around and try to explain why we need “single-payer health care” without noticing that such a beast will have every problem any monopoly has.

      As you say, though, this is an issue that’s more complicated than we’ve been led to believe….

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