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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Don Lloyd who wrote (6961)	8/12/2001 2:17:47 AM
From: Maurice Winn	Read Replies (1) \| Respond to of 74559

Don, this is what I love about cyberspace. I like to think out loud and people are often prompted to tell me where I'm wrong, which saves my bacon if I've got wacky ideas. Thanks for enlarging on productivity. I've enjoyed reading your economically erudite posts. About 20 years ago I had a discussion with a woman at a ski field. I said the only thing wrong with unemployment was that there wasn't enough of it and the pay rate was too low. She argued that the unemployed wouldn't have anything to do. I pointed out that she seemed to be happily skiing. She said there wouldn't be room for them all to be skiing. She seemed to not understand that she was a person and we all aspire to her lifestyle and that the mountain was not her private property. She couldn't really understand what I was saying. Which brings me back to the productivity stuff. You stopped a little short too [posts can only be so long]. When the productivity process has gone on long enough, end users get all the benefits in terms of standard of living. At some stage, people really don't need to work and only do it because they want to or want to have more stuff. A lifestyle which the middle class enjoyed 80 years ago is available at near-zero prices. We want MORE!! We prefer to work for more than see others enjoying the good stuff. So the whole circus keeps going. But we could live on the smell of an oily rag, boiled potatoes, meat three times a week, walking everywhere or riding a bicycle...etc. A couple of years ago everyone seemed to be puzzled about why there was no inflation. The productivity frees people up to do more stuff. The price of the previously expensive products drops. The new stuff comes on stream. Because people are laid off from the newly-efficient companies, there is no pressure for increased wages and salaries. So standards of living improve, inflation remains zilch, production goes on increasing as more and more globalized people come on stream and profits actually increase because the total sales increase even in the newly-efficient companies due to more and more people around the world being in a position to buy. Alan Green$pan can pick a lot more money from his money tree without diluting existing money-holders too much, causing inflation and getting them nervous. I understand that end users don't really get profits; they get a standard of living improvement. But it's really a profit in that they get whatever they wanted to do done really easily and cheaply, so they can use the time and money saved to do nothing [retire happily in the sun] or use that time to produce more stuff to sell [even if it's only their time, hired out to somebody, or donated in the form of helping their friends do something]. So they do actually get a sort of profit, even if the tax people haven't figured it out or can't collect it. <In the limit, productivity advances available to competitors in a given segment drive its prices and total revenues towards zero, effectively removing it as a significant part of the economy as its revenues can no longer support significant wages or profits, even as its products remain highly desired by consumers. > So, in the end, we should get to what I figured 20 years ago. We'll log on for a new car to be delivered from the end of the robotic production line which will self-drive to our place [using SnapTrack and electrophotonic vehicle controls]. We'll swing by the nearest autofood shop on the way to a week at the newly constructed 5km high ski-mountains which will be conveniently close to major cities. Total cost, maybe $100. Unemployment will be almost 100%. People will still 'work' because it's fun [like Irwin Jacobs does for QUALCOMM and like $ill Gates does for Microsoft]. Yes, I know that will take a while and before that time actually arrives, we'll probably be overtaken by New Paradigm events, genetics and things. I agree on the anti-monopoly stuff too. I've ranted for years about it. The simple explanation is that every transaction is an instantaneous monopoly. The greater the price of that transaction, the greater the value of the service being provided, so ideally, we'd like really high-priced monopolies because that would mean huge value is being created - Windows2000 is a cheap monopoly - what would a cancer vaccine monopoly be worth? Many people would pay them a fortune and be grateful. Governments only like to attack BIG monopolies. They can't be bothered with rats and mice monopolies. Envy is against rich people, not the more ordinary, even if their monopoly has huge profit margins. Mqurice

To: Don Lloyd who wrote (6961)	8/12/2001 11:54:40 AM
From: Ilaine	Read Replies (3) \| Respond to of 74559

As a practical matter, antitrust laws are not invoked unless the monopolistic company crosses a line between monopoly through sheer efficiency and monopoly through using methods intended to monopolize, strong-arm tactics like price-fixing and market allocation. Microsoft is a very good example. Nobody really minded that MS-DOS and later, Windows, were effectively monopolies. Bill Gates was welcome to 80-90% of market share because the product was useful. Even if Windows had 100% of the market just by being better than anyone else, that would have been OK. It was when he started trying to take 95-99% of market share using methods other than sheer efficiency, other than just being better than anyone else, that people got P.O.'d. Stuff like telling OEMs that they must ship the product with Windows or else pay a license fee anyway, or else Microsoft would not sell them Windows, period, is just bad form. The definition for that kind of tactic is market allocation. There's no reason to do that unless you want to drive competitors out of business, otherwise it doesn't make economic sense to refuse to sell your product to a willing and able buyer unless he quits selling competitive products. There's no reasonable justification for that type of activity. Richard Posner, the 7th Circuit Court of Appeals judge who was appointed to act as mediator in the Microsoft case, is a founding member of the Federalist Society and teaches at the University Chicago about the nexus of law and economics from a free market perspective. He believes that the government should not get involved in economic activities unless there is a sound reason. You may have noticed that Judge Jackson delayed ruling until after Judge Posner gave up the mediation attempt as "fruitless" after four months. What you probably don't know is that Jackson appointed Posner because he respects Posner's free market perspective. Professor Lessig, who served as a Special Master for Jackson in the 1997 case against Microsoft, was one of Posner's law clerks. Jackson asked Lessig to serve as Special Master because he understands antitrust law, a very arcane subject - and Lessig also has a free market perspective. Even though Lessig was removed from the case, Jackson allowed him to file an Amicus Curiae brief. Price fixing, bid rigging, market allocation and the like don't do anyone any good except those in collusion. If a company is better than anyone else, more productive, more efficient, produces a better product, why do they have to engage in strong-arm tactics? It's the mirror image of bribery, and antithetical to free markets. I suppose you can come up with a free market justification of bribery, too?