Study Finds Regulation Good For Telecom Customers 293
jfruhlinger writes "Customers are always better off when government bureaucrats get out of the way and let the market work, right? Well, maybe not in all cases. As described at ITworld.com, a recent study compared the regulatory regimes and telecom environments in various European countries. The study concluded that in countries where regulators had more power to levy fines and punish monopolistic behavior, customers paid less and got more services." From the article: "The report, conducted by Jones Day and Strategy and Policy Consultants Network Ltd., showed that investment in telecommunications, which leads to better services for end users, is lower in countries where there is little competition."
You're kidding, right? (Score:5, Insightful)
Is the submitter on drugs? The reason most industries that are regulated are regulated is precisely because the market doesn't work for that industry!
When natural gas was deregulated in my state, prices skyrocketed and a bunch of natural gas marketers (mine included) began outright stealing money from their customers. (Long story.) When cable television was deregulated, my cable prices skyrocketed and I got less and crappier channels. (Thank god for satellite, which itself is regulated to prevent it from competing with cable companies on their own terms.) After 9/11, the airline industry, which isn't regulated, liked the government enough to go begging for a $5 billion bailout. What did they do with the money? Well, Delta Airlines used $17.3 million of it to give executives bonuses [house.gov] while losing $1.3 billion more and cutting 16,000 jobs. But when anyone bought up the thougt of regulating the industry, god, you would have thought we were communists.
And don't even get me started on the phone company [slashdot.org].
A healthy market depends on well-regulated businesses. If anything, I would say that customers are hardly ever better off when government gets out of the way and let the market work in an unfettered manner. The only exceptions are when the government bureaucrats are working in collusion with the industry, a sad state of affairs that is unfortunately becoming more and more common.
I knew this years ago (Score:4, Insightful)
Last I looked, you can't make a pay phone call for less than $0.50 now. And if you use a calling card, it's probably closer to $1.00 just to connect.
Of course, cell phones eat into the profitabily of pay phones; but then, at current prices it doesn't take long for someone to think that any cell phone plan is cheaper than using a pay phone, never mind convenience. That wasn't the case, though, when deregulation started.
Slashdot doing downhill (Score:3, Insightful)
> and let the market work, right? Well, maybe not in all cases.
This is economics 101.
Free markets are efficient. Monopolies are the exact opposite of a free market. One of the roles of the State is to intervene to prevent monopolies.
Slashdot is going downhill.
Posts about full-on AI being developed and now this?
Do you really want to present something which has been known about since Adam Smith wrote Inquiry (1776) as if it were startling new news?
Question: (Score:5, Insightful)
Answer:
Because slashdot readers like the conclusions in this one.
Telecom Market Inherently Oligopolistic (Score:4, Insightful)
On systems like the Internet that allow for very free competition, customers pay less for more without any need for government regulation whatsoever.
__________
My New Blog [naijarita.com]
WHEN did the FCC root for the lil' man? (Score:3, Insightful)
Only FCC accomplishments that I can peg is
Never mind. FCC did squat for us lowly consumers.
But if you can't name the 14 technologies that FCC did a rim-job for consumers, you're ain't no uber-geek.
Free market = good. Anything else = communist/ bad (Score:4, Insightful)
The truth is that France had realized this early on. Some things shouldn't be left up to the market to decide: electricity, gas, water, telecoms were all owned by the state previously. Even if you lived on top of a lone mountain, it was your right as a French citizen to have access to water, electricity and a phone line (not sure about the phone line and natural gas, can't be bothered to check), and almost on-the-spot service from them. The cost of such a measure was spread out over the millions of users that these companies had. So everyone was happy paying a FIXED FEE, wherever you lived, and usually a pretty low one too.
But now, the EU with their "free market is good no matter what", has been pressuring France into privatizing EDF, GDF, France Telecom/Orange... This study comes 5 years too late :(
Re:Question: (Score:5, Insightful)
Market deregulation is the answer.
However, to have a truly deregulated market, towns, cities, counties, etc must also be allowed to compete.
The TELCOs are playing fast and loose with the concept of a free market. Most TELCOs (and cable/dsl outfits) are effectively mono/oligopolies in that they recieve exclusive contracts from the local governing bodies. Actively suing to prevent municipalities from providing internet or phone service makes them at best bastards, and at worst monopolists protecting their interests.
The current state of 'deregulation' is at best a half-effort which allows entrenched businesses to maintain the high entry-barriers into their field. Deregulation requires not only the lifting of limits, but of protections... something the major players are loath to consider.
Free market theory and hard real life [tm] (Score:4, Insightful)
consists of "I'm free to do whatever I want" monopoly power play and lack of business ethics (actually nonexistence of them). I call it coorporative feodalism - and it feels like.
Why I mentioned that it is not reason of economics? Problem with economical theory for now it is that it totally shuns out reasons of capital owner. Economical theories assume that owners are reasonable, clever, have good reasons to do whatever they want to do, right?
So what about Bin Laden with his milions to rise war against West? What about those "banana republics" where milioners mostly compete which will have bigger boat, count of cars, and don't care about their country? What about Balmer of Microsoft, which, as we know, has got emotional in his war against Google?
Someone will say that it is good that personal ambitions are all good to drive capitalism and free market. It is clearly overestemated. It is not.
So, more on topic. About regulations - I don't know about other countries, but for our country I say "thanks God" - and it will be truely that way - that we have _some_ regulation. It doesn't work all the time, but hey at least monopolies - and frankly we have them lots - thinks twice before say "ok, we will rise prices". At least it have been important for heat and gas, which affects as all, as we have rather large and cold winters.
So regulations should be everywhere where it feels that market isn't capable to set price tag right, t.i. there is no competition.
Hmmm, some of such market we all know. Operational systems, software anyone?
How about an industry that regulates itself? (Score:2, Insightful)
Does the government levying taxes in the form of technology fees and other surcharges count as regulation? All I know is that my $49.99/mo. plan gets turned into $60+ after taxes.
I give them credit though, at least they're smart enough to get a piece of the action.
Some myths about the market and competition (Score:5, Insightful)
The goal of competition is to end all competition
Every company wants to be in a position where you have to buy their product. No matter how often a product manager or marketing executive tells you that competition is good for them, their real dream situation is of course a monopoly. Just look at the companies that are or have been there, and how they cling to it. It makes perfect sense, competition is not their goal, sales are. One common way of achieving this is through consolidation, where you end up with a dozen brands but only a few actual producers. It may look like competition, but it's just different brands from the same producer.
It doesn't happen as often as you think
There are very few products on the market that compete head on. It's the explicit job of the product manager (I've been one) to find the "niche" for his products, to make sure that they do not compete head on with someone else, to find a slightly different demographic, a different price range, a different geographic location. Differentiation is the key, and the purpose is to avoid head-on competition.
Consumers don't make informed choices most of the time
For consumers to be able to "vote with the wallet" (this feature is supposedly what makes a deregulated market good) they need to be able to make informed choices. But no company is compelled to inform their customers, only to persuade them. Hence all the marketing BS that we are constantly exposed to, and that is also why the one with the biggest marketing budget wins, not the one with the best product. This doesn't benefit consumers.
A totally unregulated market is perhaps the best choice for your local bakery stores, but for large corporations regulation is needed to protect the consumers by ensuring that competition actually is taking place. Competition is a consumer interest, not a corporation one.
Comment removed (Score:3, Insightful)
Fukuyama The End of History--inverted (Score:4, Insightful)
I argue that Francis Fukuyama completely misread what he called "The End of History"--the late 20th century was not the triumph of what he called liberal democracy but its rejection. The 21st century then will be various countries dealing with the consequences.
Western Europe I would argue is re-creating not the Roman Empire but the Catholic Church, only a secular version in its bureacracy. Thus Europe's new Church will once again be the fusion of the functions of moral guidance, legal enforcement, and scientific research.
The United States has no historic fallback position and will simply continue to deteriorate in the effectiveness of its regulation of anything. There is period of its history that could be used to revitalize it, but it is generally forbidden to teach that a major plank of the Progressive movement was greatly restricted immigration.
The central Indian belief appears to me to be fatalism, which has advantages in that there is no illusion that there is any chance of fair outcomes for the masses. However fatalism is not exactly the most conducive philosophy for summoning the national will to have a functioning government.
But the country in the strongest position is China, for its defining literature is free of the illusions that plagued both the Catholic Church and its successor the European bureacracy, the confusion that what is moral has to agree with what is true. China will be led by people who, even if they have not read the work, are influenced by the ideas of works such as Romance of Three Kingdoms.
I suggest the Chinese idea of the cycle of rise and decline of empire is at its heart a protest against what seemed to be the deadlock that the only people who had the power to end hereditary rule were the people who when they achieved power would simply reimpose it to favor their own offspring. If the current regime has solved that problem then it will be China that has the greatest alignment of its form of government with the truth and not what one wishes to be true. For the Chinese are the ones who feel the least constraint towards the sacrifice of oceans of blood to achieve the needs of the state.
Re:You're kidding, right? (Score:5, Insightful)
More to the point, quite a few free-market fundamentalists make the mistake of assuming that people are well-informed of everything that has something to do with them, and that they have the strength to do everything in their power about it. Both of these assumptions are wrong.
To be well-informed of something, you need to follow it. This requires time. You only have a limited amount of time on this Earth, so using it is an investment. Constantly watching industries for the slightest hint of foul play is a bad investment. It makes more sense to invest that time on your work, your family, your personal life; the return value is much higher.
Same goes for strength. Everything you do requires some of it. You only have a limited supply. It simply doesn't make sense to use it to regulate industries, when a centralized regulation agency (government) can do the job adequately.
So no, consumers aren't apathetic and ignorant. They are human beings with far more important (to them) things to do with their time and energy.
I guess that all this is saying that free market is a usefull tool to manage economy, but it is in no way an ideal state, and can never be as long as we remain humans with limited time and strength.
Re:Some myths about the market and competition (Score:2, Insightful)
And the answer to this is, not surprising, to get rid of those dozen brandings. But how to do it in a fair way? It's quite simple: only allow a company to own a trademark that contains the company's name. In short, if Philip Morris wants to sell cheese, they're perfectly welcome to try to sell Kraft Cheese. But so can anyone else (this means, btw, that Philip Morris might decide to sell "Philip Morris Kraft Cheese" and someone else might sell "Uncle Bob's Kraft Cheese"). And if a "brand" is really worth so much, a company has to choose to buy up the company and changes its name to fit the brand, or it has to relabel the product to fit the original name. Part of this is to discourage horizontal and vertical monopolies. The other part is to address the following.
For consumers to be able to "vote with the wallet" (this feature is supposedly what makes a deregulated market good) they need to be able to make informed choices. But no company is compelled to inform their customers, only to persuade them. Hence all the marketing BS that we are constantly exposed to, and that is also why the one with the biggest marketing budget wins, not the one with the best product. This doesn't benefit consumers.
I totally agree, and this is so often the overlook fact when people talk about "the free market". Capitalism, as has ever existed, isn't a free market. In a free market, there are informed consumers, so it's impossible to commmit fraud (you can't deceive someone who is omnipotent, for example). If there was any one thing that government should do it should be working on ways to inform the consumer in any way possible. Truthfully, people should be doing the same in the above "vote with the wallet", but it's not unreasonable to have a political party or a consumer group devote funds to such information.
Certainly, the government should only grant to companies exclusive rights only if such is to inform the consumer, not benefit the company--any benefit to the company, which might be zero, would have to come as a side-effect. This is why it would make sense to abolish copyright (dumpster diving + reprinting) while still retain trademark (informs the consumer on who makes a product, so they can avoid them in that field and all other fields if they desire). I'm tempted to go so far as to require company attribution on all products, but there doesn't seem any basis to support such.
In any case, informing the consumer is obviously a big step in making deregulation, or the market in general, work out. Another key component is not simply giving companies who were regulated, and hence de facto monopolies in many areas, all the assets (ie, wiring, tubing, etc) they did not fairly earn. If deregulation was warranted, it'd make sense to give such to the various cities, towns, and counties and to divide the company up into many parts, certainly a lot more than 7 or 8. The simple fact is that deregulation would create a temporary burst of chaos, where investors would have the chance to actually compete for a change in a locked market. The simple fact that deregulation has gone so smoothly in the past is a clear sign that deregulation of the past was done improperly.
Re:You're kidding, right? (Score:4, Insightful)
Pretty simple (Score:3, Insightful)
The knee-jerk reaction is usually that the government is always worse. But think about it - a government monopoly is still accountable to customers because customers are voters, whereas a private sector monopoly is accountable to no one.
Obviously the smart thing to do is to keep companies private and legislate against monopolies forming in the first place. But once the horse is out of the barn, it's hard to argue that the private sector monopoly isn't the greater evil.
Consciousness is the answer (Score:3, Insightful)
A) In a free market, like the stock market, greed and sense of ownership ensures that often the right price for a product is found in a way better than any expert can predict.
B) In a democracy, the ignorance of the masses of every issue is solved by representative democracy. The representants will come to the conclusions independent of their voters to a certain extent.
These two diagonally opposite measures is really to alleviate limitations in our consciousness. If:
A)
B)
Both the solution of A and B require the same measure, namely to lift off the ignorance of the masses, instead of relying on an external system to decide things for us through lower emotions such as greed and fear of loss.
So I believe spirituality is the answer toward all the growing problems of humankind. If you want to read some provoking thoughts on spirituality, you can read an earlier post about the difference between spirituality and religion [slashdot.org]. Often, people confuse spirituality with the external traditions, symbols, mantras, leaders, etc of established religions or sects. This is not really spirituality, just the package around it. Spirituality is that which unites every path, every human being, both religious and atheist. It is the unchanging core, and not just the wrappings which are always changing with time. The core of a muslim is the same as the core of a christian and the core of an atheist, etc. I recommend reading this earlier post to see the difference between spirituality and religion.
I'm also convinced the "Economist Dream" is about to burst. Here is a post about the "Economist Dream" too [slashdot.org]. It is really a very appropriate post for this article.
Phobia (Score:3, Insightful)
A perfect example: "Imagine how things would be if there wasn't regulation on safety and repair."
Government regulation is always double-edged. First, it creates bureaucratic overhead, both for the "industry" regulated, raising their costs of doing business and therefore their prices, and for the taxpayer who has to pay for the bureaucracy. Government, by its regulations, creates a limit on liability. So the hapless consumer has to pay three times over for everything done "for your own good".
Unfortunately, because of this democracy crap, people who fear their neighbors gang together and demand that "government do something", thereby externalizing the costs of their phobia on everyone else by force. Bureaucrats and politicians love it, because it increases their power and prestige. The phobic receive a false sense of security, and the rest of us have yet another barrier to overcome, another loss of liberty, another tax.
It's actually very easy to imagine deregulation. No more excuses that "we were following regulations, so you can't sue us."
The airline's insurance company does not want to pay out, neither do passengers want to die. Therefore, they will make efforts to be safe and reliable in order to get more business. It might indeed raise the price of a ticket on a reputable airline, but that price is paid only by those who choose to use that service. No tax-supported bureaucracy, no regulatory overhead. The actual "costs" to "society" are reduced dramatically, and there are more resources available to do something productive.
Re:Pretty simple (Score:3, Insightful)
First, a definition: A government monopoly means that anyone who tries to compete is arrested and jailed. At the very least, they are put out of business by force. That's what a government monopoly means.
So how would a free-market monopoly exist? It would have to provide a service people wanted, otherwise people wouldn't buy it. It would have to be provided cheaper and/or better than anyone else could provide the service, or some smart-ass would step in and sell it cheaper.
Lastly, the free-market monopoly would have to constantly innovate with the changes in technology and style, or some smart-ass would step in and sell a blue one if the monopoly only sold red ones.
Government monopolies are accountable, yes, but only to higher level bureaucrats. A free-market monopoly is accountable to *me*, the customer. If I, as a customer, are dissatisfied, I will pay more to some other provider just to spite the monopoly. This opens up yet another avenue for profitable competition.
A private-sector monopoly is a very fragile thing, as Microsoft is discovering. They are temporary abberations, unlike government.
Bob-
Re:You're kidding, right? (Score:1, Insightful)
In the end, though government-run markets are inefficient, completely taking government out of the market almost inevitably leads to these situations. You must have some measure of control to guarantee a low enough barrier to access for the market so that there remains a steady flow of new agents to dilute the power concentration. That's where government comes in: to make market agents impotent.
With companies like BellSouth.... (Score:3, Insightful)
Their VP recently said that they should have the right to, for example, offer Yahoo! a paid service which allows BellSouth's customers to access Yahoo! more quickly than Google. If they're allowed to have monopoly access to infrastructure, they shouldn't be allowed to do this. Philosophically, the consumers would wind up footing the bill through higher costs.
regulate the health care industry (Score:4, Insightful)
I find it unbelievable that US citizens believe it is cheaper not having national health insurance. The industry is so unregulated and regulated (which is the real problem) that big companies are shielded from the small companies. The product's costs are inflated and it is the little man that is screwed.
The old saying that an ounce of prevention is worth a pound of cure really applies. If people didn't put off getting treatment for simple things because of the rising costs of healthcare, then they wouldn't have to pay more to 'cure' it later.
National Health Insurance is the ultimate regulation of the industry, but it would be far cheaper for the nation and the average citizen.
anyway...just my 2cents
False Headline. (Score:5, Insightful)
Actual deregulation, that is allowing anyone to enter the market and at the same time letting companies that do not do well fail, is not the problem at all. As usual, failures of government regulation are being touted as "free market" failures where there is no "free market".
Bob-
Re:Phobia (Score:5, Insightful)
Boy, you really are living in a dream world. I admire your idealism, and I wish I could share some of that Utopia. Unfortunately, I live in the real world where some folks just aren't quite of pure heart.
Me wanting government regulation has nothing to do with me fearing my neighbors. It has to do with me fearing corporations.
How many scandals have to go down before folks like you realize that for-profit corporations exist for one purpose and one purpose only: to make money. If they can make more money by killing their customers than not, they'll kill their customers. (Witness the tobacco industry.) If they can do it by hacking into their customers' computers, they'll hack into their customers' computers. (Witness Sony.) If they can do it by projecting a squeaky-clean image, they'll project a squeaky-clean image. (Witness Google.)
Why do we need regulation then? Because somewhere around the dawn of the age of mankind, people discovered that one really effective way to get people to do stuff you want them to (e.g. to give you money, which is, remember the sole purpose of a corporation) is to lie.
There are thriving businesses that makes lots of money that exist for the sole purpose of helping other corporations lie about things. Lawyers, accountants, public relations firms, advertising agencies... the list goes on and on. Why do these businesses exist? So that other companies can pay them some money to make a lot more by lying about things.
Given a choice between making an honest buck or making a dishonest two, very rarely will a corporation choose the former. My own company (a Fortune 100) has gotten in trouble many times over the years, especially the last twenty or so, for doing things that everyone knows is wrong. But it still goes strong, because it pays hundreds of millions of dollars every year to some of those companies listed above to convince everyone that it's an all-American company. Because Americans have such a frustratingly small attention span and don't recognize important things as being important, they keep getting away with it.
So how do us average schmoes out here keep all these unetical companies from absolutely stripping us dry? Well, if we tried your way, I suppose we could depend on what little information we get through investigative journalism and the scant few whistleblowers that are out there to help protect us from these corporate lying bastards, but I kind of like the thought of not being insane. No, a better idea would be to set up some government agencies with the collective power of the American consumer to act on our behalf to serve as the representative of our interests. Thus, we have organizations around like the FAA, the USDA, the FTC, and all the others that are supposedly looking out for us because it's impossible for us, individually, to look out for all the millions of others who want to screw us over and rob us blind every day.
There are two serious problems with the system, though. The first, I hate to say, is people like you. People who give corporations a lot more credit than they deserve, more credit than they've historically earned. They think that the public has some sort of magical insight to see past multi-million dollar ad campaigns to know when corporations are being evil and when they aren't. They think that if a person gets food poisoning because some corporation ran the numbers and figured out that it could make more money by poisoning some small percentage of its customers, it's the sick person's fault for not personally sending every morsel they eat to a lab to be tested. No, they're "irresponsible consumers" who deserve what they get, right?
The other problem is that a lot of the very same government agencies that we set up to protect us are now working for the corporations they're supposed to be protecting us from. That's why you have stuff like energy policies being written by oil companies and DRM laws being written by the RIAA. This i
Nice in Theory (Score:5, Insightful)
The airline's insurance company does not want to pay out, neither do passengers want to die. Therefore, they will make efforts to be safe and reliable in order to get more business. It might indeed raise the price of a ticket on a reputable airline, but that price is paid only by those who choose to use that service. No tax-supported bureaucracy, no regulatory overhead. The actual "costs" to "society" are reduced dramatically, and there are more resources available to do something productive.
That sounds great in theory, but so did a lot of things that fell apart in practice. In particular, you are assuming airline executives know exactly how much to cut in order to be perfectly competitive, the execution will be perfect, and they will never be tempted to cut just a bit more to survive against a competitor. Otherwise, you are assuming that anybody would want to be on the planes of the airline that does go too far and is eliminated by "the invisible hand of the perfect market". Finally, you assume that the market does not tend towards a monopoly. Unfortunately, history and present day are littered with counter-examples to your assumptions.
Interestingly, nothing in your post addresses the study under discussion, which itself finds yet another hole in "perfect market" theories.
Jones Day (Score:1, Insightful)
Re:You're kidding, right? (Score:5, Insightful)
If you're looking for a toothless government where private interests rule, there are plenty of countries on the planet that can be of service to you. Just remember to bring your toothbrush, because it just isn't all that profitable to sell toothbrushes in a country where the government isn't strong enough to educate the population in the value of personal health and hygine.
Your hyperbole is so goddamned rote, I swear to god. Governments arn't *supposed* to be efficient; they're supposed to provide you with the protection and safety you need in order to further human culture, society and technology. You cannot have a private sector without a public sector
Regulation of private interests is 100% neccessary, because a true free market is a non-existant ideal. On the flip side, private monitoring of the public sector is also 100% neccessary, because a fully trustable, transparent, representative government is also a non-existant ideal.
What kills me are the folks who need their world to be so black and white; I guess you would have loved the stone age, things were alot simpler back then, with non of that pesky government regulation bullshit.
Oversight != Regulation (Score:3, Insightful)
People, no matter how hard you want to not have to admit it, government regulation is bad. In the US, it has a particularly nasty track record in that it has caused or significantly contributed to every "market correction" of any signifigance. While no economist will ever admit that having government regulatory bodies watchdog private industry is a bad idea, only a rabid Keynesian (or outright Marxist) would ever think it's kosher to allow government to fiddle with the mechanicals of a societies economic engine.
Re:Slashdot doing downhill (Score:1, Insightful)
Re:Phobia (Score:2, Insightful)
So the thing to do, it would seem, would be to remove the power of the government to authorize and perpetuate corporations. But instead, by building huge bodies of regulation around entire industries to hedge in the corporations, you make it impossible for any individual to compete -- because it costs a great deal of money to research and comply with those regulations. So a responsible individual has two choices: get out of the industry altogether, or incorporate -- and thereby perpetuate the very evils you rightly decry.
"More government" is virtually never the answer to government-created problems like corporate misbehavior.
Re:You're kidding, right? (Score:5, Insightful)
I was having a conversation about school vouchers the other day. One of the things mentioned was that private schools are "more efficient" than public schools. I laughed at the guy. Are the private schools required to go pick up their students in busses? Are the private schools required to accept anyone that appplies? Are the laws set up to require school-age people to attend private schools, whether or not they want to be there?
The differences in the way private and public schools are expected to operate are huge. Looking at a price-per-student and declaring one "more efficient" is something used only by people that want to sabotage one or the other. It is often similar to other agencies. Perhaps the DMV is open from 6 a.m. to 9 p.m. to make it more convenient for citizens to conduct their business there, but if they were to open at 10 a.m. and close at 4 p.m. they would save on labor costs and the people that needed to go there would have to go anyway, so it would be more "efficient" to screw the customer and shorten hours. Personally, I'd prefer the convenience over a strictly profit model of business. They are here to serve, not to make a profit. That will always create issues where they will appear more inefficient.
Fool. (Score:3, Insightful)
-russ
Re:You're kidding, right? (Score:3, Insightful)
I agree that the free market has its pitfalls. However, excessive bureaucracy in a regulated environment can and often does choke out innovation and change.
For example, in India, it can take up to 3 years for one to get a phone line installed in his or her house, because of all of the bureaucracy and red tape. The phone company is a regulated government monopoly. The situation has gotten so bad that private individuals are finding that its easier and more profiable to string their own phone lines, despite the fact that its grossly inefficient (and far more expensive) for everyone to string their own lines.
Just saying that government regulation isn't a panacea.
Re:You're kidding, right? (Score:3, Insightful)
Barring a natural monopoly (where costs of infrastructure or development are so high, once someone gets there it deters all other entry) and an industry with significant externalities (positive or negative); the government is almost always a harmful force in the market. Consumers are better at picking for themselves what they want and how much they are willing to pay for it, than the government is. Soviet Russia showed us this with resounding clarity.
Markets are supposed regulated when it will help the consumer. That is the goal. This entire article is basically affirming economists long standing position on natural monopolies. Regulating them is good.
Sometimes the Free Market leads to Monopolies (Score:3, Insightful)
Not really. He's talking about utility companies. Utility companies are the perfect example of an industry that if left to the free market will inevitably contract into a monopoly. The cost of entry into becoming a utility company is enormous, and it's very hard to convert customers from other businesses. In a deregulated water utility market, nothing forces the incumbent to share water pipes with competitors. If I want to switch, then the new company has to build lines to my house (hence the five pipes to a house comment). The cost of this (which I must bear) is too large to the smaller company to be competitive. A monopoly that forms because of natural barriers to competition is called a natural monopoly [wikipedia.org]. The concept is covered well in any introductory economics class.
Without regulation, competition can't survive in a utility market. This is why we have to have the FCC make phone and cable companies share their networks. Otherwise, companies like Earthlink can't offer competitive prices (or service at all in some areas). Sure technology might come along that gives new competition to a service (like cell phones) but nobody's replacing good old pipes for getting people water & gas anytime soon.
Regulation is necessary for some markets to preserve competition. This is his argument. The free market doesn't work for utilities because of the high barriers to competition and the unique hold utility companies hold over their customers' lives.
Re:Phobia (Score:3, Insightful)
You mean your interests, which incidentally, don't align with my interests, which is why we need less government and more freedom.
Fear the tyranny of the majority.
Re:Nice in Theory (Score:3, Insightful)
Really, when?
in order to be perfectly competitive, the execution will be perfect, and they will never be tempted to cut just a bit more to survive against a competitor.
Putting words in my mouth doesn't work. Not only didn't I say that, your use of the words "perfectly competitive" is the antithesis of what I know to be true.
But in order for regulation to work, the regulators would have to know all these things you say is impossible for the airline executives to know.
So how about this: Nothing is perfect. A free-market allows failure, which a government bureaucracy is inherently insulated against. By those failures, awareness of what works and what doesn't in increased.
One fact you cannot deny: Any airline with a proven quality and safety record could charge a premium, just like Compaq or Apple computers, and people will pay it.
The study under discussion addresses the abuses of entrenched telecommunications "monopolies". The problem being that those "monopolies" were established by governments in the first place. All the study does is prove Ludwig von Mises' axiom that every government intervention causes problems which spawn more government interventions to "fix", which cause more problems, ad infinitum.
Bob-