It's after midnight; I should be in bed. But your tirade got under my skin, so here's my response.
Possibly the most regulated (partly at industry request for both financial and technical reasons), and subsidy dependent industry in history,
I'm not sure what your point is here, so I'll assume you are saying that government regulation of the electric utility industry has not been all it's been cracked up to be and agree with you.
We are now moving towards a competitive market model in the electric utility industry because the change in technology has undermined the natural monopoly structure of the industry.
built a bunch of nuclear plants that are going to be problems for the next few thousand years
As I am sure you would be the first to point out, the nuclear power industry would not exist were it not for massive, sustained government intervention and subsidy which artificially reduced the cost of nuclear power development and generation to the point where private utilities could undertake it profitably. The government paid for the technology, then pushed the private sector to adopt it, as a result of which the countryside is dotted with white elephants the rate payers are going to have to pay for and disasters waiting to happen.
The history of the nuclear power industry is a standing indictment of government's role in promoting technology.
No reason to let them do what they want.
I'm not sure who "them" is, but if "them" is the utility industry, in light of the scathing indictment of government regulation you outline above, for you to say this is a total non sequitur. Based on your critique, maybe the thing to do is get the government out of the business of regulating and subsidizing the electric utility industry and just let them do what they want, natural monopoly or not.
Let's see. The government created the railroads by the simple expedient of letting them take other peoples land away. To retain their local monopoly power, they instituted systems of incompatible track sizes and engine types, so that whenever you crossed into the monopoly domain of some little railroad, sometimes as small as fifty miles across, you had to unload everything from one train and put in on the other, at great expense. Government regulation was required to bring lower prices to the freight shipper because of that.
And your point is????
The railroads would probably still be in good health if it wasn't for the massive subsidization of the trucking industry by the government, which continues today. The shipping industry would also probably be in good shape if it weren't for regulations intended to protect unions and local ship builders. This is a great case to show that better, or less corrupt, regulation would have yielded better results for businesses and consumers, but not a good case for showing that no regulation or government planning would have been better. In that case we would have neither a functional rail system nor the interstate highway system that the truckers depend on.
The evidence you put forward seems to support the proposition that government regulations in the trucking industry should be reduced, a proposition with which I agree. Idon;t know what you mean by "better, or less corrupt, regulation" so I'll just wait for you to define that term before responding further.
Perhaps you don't remember the natural monopoly of rail being used by Rockefeller to keep all of his competitors from being able to ship their oil. If one of Rockefeller's customers or suppliers did business with a competitor, he reacted badly in a number of ways. This isn't very different from the browser case, except that old Rocky I used to have people wacked. And absolutely, the government had to step in.
Actually, if you read Greenspan's statement I linked to in my last post, you will see that he believes that government intervention might not have been necessary in the case of Standard Oil, that Royal Dutch and others would have eroded Rockefellar's monopoly without the need for government intervention.
Maybe you know something he doesn't? Or maybe he's just a libertarian schill in the service of Microsoft?
I don't know if you can show that there is such a thing as a natural monopoly that the government shouldn't take over, regulate tightly, or break up. I don't know how you can show that natural monopolies are good.
I'm not trying to say that natural monopolies are good or bad. They just are. And the antitrust laws are not well-suited to deal with them because using antitrust remedies to break up or regulate a natural monopoly will generally reduce efficiency and consumer welfare.
I do not know if Microsoft is a natural monopoly or not in the OS market. Perhaps not, as multiple OS's could be put on the same machine, and multiple networks of OS's could coexist, each having its own set of "network effects" and "increasing returns". Furthermore, Microsoft's OS market may be sufficiently contestable that it would be impossible for Microsoft to restrict output and raise prices. I'm not saying it is or it isn't. But true natural monopolies are rare.
Maybe Greenspan is right, that if it is a monopoly, natural or otherwise, it is better just to leave it alone and let competition and creative destruction engendered by technological change erode it over time.
But if it is a natural monopoly, and if we are going to regulate it, the antitrust law is not the way to do it. You complain about browser integration, and everyone knows what happens to competitors when Microsoft incorporates some new "feature" into its OS. But the antitrust answer to this, I would argue, is that this is OK, because integration adds features for which consumers do not have to pay. It's essentially a rebate of Microsoft's monopoly profits back to consumers in the form of more functional products. The fact that netscape gets destroyed in the process is irrelevant for antitrust purposes because antitrust law is only concerned with protecting "competition," not "competitors."
If Microsoft truly is a natural monopoly, then maybe we need something analogous to the filed rate doctrine, which would limit Microsoft's ability, without government permission, to incorporate new features into its products in a way that harms the competitors who are future sources of innovation in the software industry. Maybe this would deal with your concerns about product quality. I'm not saying we should go down this path, but if you are going to do that, then you should be up front about it and not try to pass it off as an antitrust remedy, which it is not. You need a debate and a new law passed by Congress, just as you had with the passage of the laws that set up the FCC and created the filed rate doctrine in the first place in the telecommunications industry. |
