Yes, I do. The free market is a system where corporations like to take
the easiest road to do the least work to maximize profits, while everyone
else is doing the same thing. Normally, this might merely result in the
sort of situation you have with Wal-Mart vs K-Mart vs Target, where the
consumer gets to trade off different variables (quality of goods, price
of goods, condition of store, etc). In the case of telecommunications,
however, certain telecommunications companies looked around at the situation
and determined it was most easily accomplished by lobbying the government
for pseudo-monopoly status, in exchange for promises of an "open network,"
followed by repeated backpedaling so they wind up providing less on a
closed-to-the-competition network, and an easily hoodwinked government
that agrees to all of this, with the end result that you wind up with a
monopoly (or duopoly). By doing so, one (two) large corporation "wins,"
maximizing profit while minimizing expenditures *and* competition.
The free market created this situation, because, without separation of
the network from the service providers, or without stern and fair
oversight and regulation, the natural tendency of the free market system
will be for the party that owns the last mile infrastructure to see it as
"theirs" (hello Ed Whitacre!) and to try to make it as difficult as
possible for the competition. This results in things like Ameritech
selling wholesale DSL circuits to CLEC's and ISP's for *more* than what
they're selling them at retail for via Ameritech's own ISP service.
If it isn't readily apparent that I understand what "free market" means,
and how our government has caved in to give us anything BUT a free market,
well, sigh. The free market has a really tough time operating in an
environment where the government ultimately enables and gives a blank
check to monopolies.
The telcos might disagree... it's a free market... they're free to
market whatever they want.
... JG
Recognizing your biases here, I think an economist might define it a little differently. For example, see http://www.investorwords.com/2086/free_market.html.
The key thing in that definition is the lack of government intervention in its various forms. That's D'Arcy's point. Where there is government subsidy, regulation, or other intervention, it cannot be described as a free market.
Fred Baker wrote:
The key thing in that definition is the lack of government intervention in its various forms. That's D'Arcy's point. Where there is government subsidy, regulation, or other intervention, it cannot be described as a free market.
I have always understood the issue to be the presence or absence of unfettered competition. Competition is good. It's lack is bad.
Government can be one source of fettering. So can monopolization. So can post-purchase lock-in. Anything that restricts the ability of the consumer to make on-going choices for alternate sources of products and services.
Which is to say, anything that alters the incentives of companies to provide better products at better prices.
We ought to stop saying 'free' and instead say 'competitive'.
d/
Dave Crocker wrote:
I have always understood the issue to be the presence or absence of unfettered
competition. Competition is good. It's lack is bad.
The problem is that it is rather hard to enable full competitive
environment in the last mile. No city, no citizen wants to have 300
wires running along the poles on streets.
In fact, a properly managed monopoly (with rules to grant access to the
last mile) can probably financially justify deploying fibre to the home
far more easily than in a competitive environment.
The big problem in north america is whoever decided to make ADSL work on
old copper. Had ADSL never materialised, the telcos would have been
forced to put fibre to the homes. But now that they have invested in the
ADSL quagmire, it becomes much harder for them to justify fibre to the
home.
But a CEO with vision would get the telco to stop deploying remotes
everywhere and leverage the fibre's ability to reach longer distances
and cover neighbourhoods with far fewer remote/nodes.
The problem is that CEOs are not hired for their vision, they are hired
for their ability to please wall street casino analysts (who in term
please shareholders with their articles in the various wall street
casino newspapers/magazines).
Competition only works when the goal is to please customers. It does not
work when the goal is to screw customers as much as they will tolerate.
(Consider mobile telephony in north america, especially
Rogers/Bell/Telus in canada).
> > The problem with the free market is that it doesn't work in the public's
> > best interest, but rather in the best interest of the companies involved.
>
> Say What? You talk about government mandated monopolies, government
> subsidies and massive government regulation and then point to it as a
> failure of the free market? Do you even know what "free market" means?
Yes, I do. The free market is a system where corporations like to take
the easiest road to do the least work to maximize profits, while everyone
else is doing the same thing. Normally, this might merely result in the
sort of situation you have with Wal-Mart vs K-Mart vs Target, where the
consumer gets to trade off different variables (quality of goods, price
of goods, condition of store, etc). In the case of telecommunications,
however, certain telecommunications companies looked around at the situation
and determined it was most easily accomplished by lobbying the government
for pseudo-monopoly status, in exchange for promises of an "open network,"
But if the government is in a position to "grant" monopoly status how
can you call that "free?" Free from what?
The free market created this situation, because, without separation of
Companies lobbied for this situation. The non-free market (i.e.
government) forces everyone else to stay out of the market. Force !=
free.
If it isn't readily apparent that I understand what "free market" means,
and how our government has caved in to give us anything BUT a free market,
well, sigh. The free market has a really tough time operating in an
environment where the government ultimately enables and gives a blank
check to monopolies.
Perhaps we are just in violent agreement disagreeing over terminology
then but to me a free market is free of government interference. You
seem to be describing a "market" that responds to the given situation,
not a free market.
This should probably be taken off list.