
Everything that is wrong with American capitalism, in one headline - lisper
http://blog.rongarret.info/2014/04/everything-that-is-wrong-with-american.html
======
rayiner
Service businesses spin off and absorb blocks of customers all the time. If I
sell someone else my paper delivery route, is that an indictment of American
capitalism?

Really, the title should be "everything that's wrong with state and local
politics in one headline."

If you want to blame someone for the situation in "such cities as Long Beach,
Malibu" (that often, there's only one guy delivering papers), start here:
[http://www.cpuc.ca.gov/PUC/Telco/Information+for+providing+s...](http://www.cpuc.ca.gov/PUC/Telco/Information+for+providing+service/videofranchising.htm).
The state of California grants cable franchises,[1] and not with just an eye
towards creating competition. Read the four bullet points on that page. Only
the first has to do with competition. The other three are priorities that
necessitate policies that discourage investment and competition.

~~~
lisper
> If I sell someone else my paper delivery route, is that an indictment of
> American capitalism?

It is if your customers don't have the option to switch to another paper.

~~~
jpadkins
and the reason you don't have the option to switch to another service provider
is your state and local governments granting comcast, et al local monopolies.

Please direct criticism to the proper source: government interference.

~~~
mullingitover
> and the reason you don't have the option to switch to another service
> provider is your state and local governments granting comcast, et al local
> monopolies.

The real reason is the FCC doesn't require the infrastructure businesses to
sell wholesale access to competitors. Once upon a time, Comcast et al would've
leased you the line, but you would've had choice in your ISP service. A stroke
of the pen eliminated all serious competition in the ISP game, and made it so
Comcast owns the entertainment pipeline all the way from movie studio lot to
your internet connection.

Odd that the studios aren't allowed to own movie theaters [1], but they're
heading straight for the same end result by controlling your internet access.

[1]
[http://en.wikipedia.org/wiki/United_States_v._Paramount_Pict...](http://en.wikipedia.org/wiki/United_States_v._Paramount_Pictures,_Inc).

------
ericingram
> in a free market, the customer is supposed to select the supplier, not the
> other way around

Which free market philosopher expressed this sentiment exactly? None that I'm
aware of. Free markets involve free choice of both customers and suppliers.
Customers may chose to leave the supplier based on this move, and are
absolutely within their right to do so. Customers might even be able to argue
their way out of locked contracts.

The idea that free markets should be sort of one-sided, consumer owns
supplier, is just silly in my view.

~~~
kar2014
Free market is where consumer has right to buy the goods they want and
suppliers have right to produce goods they want. I agree to your point, both
sides should have options to select what they want. But here consumers have no
choice. It cannot be considered free market even remotely.

~~~
smsm42
Telecom market is obviously not a free market - there are piles of
regulations, both federal and local. It looks, however, as the OP sees free
market as "suppliers do what I want" \- which may be a consequence of free
market, sometimes, due to consumer's power to withhold purchase from suppliers
that don't do what they want - but is not a condition. There could be free
market where consumers have no choice - i.e., if for some reason there's only
one supplier of said good. Simplest example would be unique non-commodity
items - if somebody has the Picasso painting that you want, you can't just go
to a competitor and buy it from them, you have no choice. Another example can
be markets with very high barriers of entry and very low profit margins, where
fixed costs of entering the market may outweigh potential benefits, and as
such once one player has established itself there may be extended periods -
with completely free markets - that there is no competition for them on that
market.

So, the absence of buyer's choice is not per se an evidence of the market not
being free, and there's nothing in free market that ensures buyer would
_always_ have a choice - only a promise that in most cases, the choice would
exist, supported by ample evidence.

~~~
kar2014
Remember ATT bid for T-Mobile? FCC stopped the deal to keep the competition
and also so consumers have a choice. Same applies here but seems they are
turning their eyes away. Your example of Picasso painting does not apply, by
definition that is one of a kind item and only selected people want them, it
is not a commodity, so market competition does not apply.

~~~
smsm42
Market is any set of voluntary exchanges, I just point out that some markets
can have no competition despite being free. This can happen even in commodity
markets, e.g. if somebody owns a huge chunk of the market. E.g. diamonds & De
Beers. For telecom markets, there seem to be no substantial reasons why
healthy competition can not exist on a free market.

------
hacknat
Can someone explain to me how this doesn't violate the Sherman Act (I'm being
serious)?

Comcast is actively engaging in trust behavior with another company in order
to obtain a desirable merger ruling with the FCC. How is that not anti-
competitive?

~~~
vonmoltke
Cable monopolies are state sanctioned and state controlled, and thus fall
under the Parker immunity doctrine[1]. Its the same doctrine that permits
tight state regulation of electric, gas, and other utilities.

[1]
[https://en.wikipedia.org/wiki/State_action_immunity_doctrine](https://en.wikipedia.org/wiki/State_action_immunity_doctrine)

~~~
vonmoltke
I would like to correct myself. Cable _franchises_ are state sanctioned and
state controlled. Monopolies ("exclusive franchises") _were_ also permitted
under the Parker immunity doctrine, but as rayiner pointed out elsewhere in
the discussion Congress explicitly prohibited them with various acts in the
90s.

------
tn13
So Comcast is trying to build a monopoly and people see it as a failure of
Capitalism ? In non-capitalist societies monopoly is a default state. (India
for example for a long had only one government telecom provider. It exists
today with wages to turnover ratio of 103% where as for private companies it
is 5%.)

If Comcast actually manages to create an monopoly it will be able to dictate
higher prices for poorer service. What prevents Google or someone else who has
interest in cheap internet from entering the market as a new service provider
? One answer as usual: Government.

All corporations are greedy and will do everything in their power to create
monopolies and squeeze every last penny out of our pockets. This is true is
all societies and the best way to stop them is not by letting government fix
the problem but letting government out of it.

~~~
NegativeK
The answer to poor regulation isn't no regulation.

I'm much more interested in government counterbalancing corporations instead
of one of them grossly overpowering the other.

~~~
tn13
Asking government to come up with "counterbalancing regulations" is exactly
same as asking corporations not to be ruthless in making profits. In one word:
"Impossible".

There is a good reason why corporations are ruthless in profit making. It is
because the people who are responsible for making its decisions have a strong
incentive to make more and more profits at all cost.

Government out of all people have 0 incentive to come up with anything that
acts as a counterbalance. Government employees including Mr. President have
only one incentive. Keep that damn job. I worked in a department that was
focused on improving certain aspect of engineering education. Very quickly I
realized that our jobs and funding depended on painting a very sad picture of
reality and getting lots of money from government. Improving education was the
last thing we were concerned about.

I do not see what is wrong with "no-regulation" at all. In fact all the
empirical evidence suggests that no-regulation leads to far better outcomes in
most areas.

------
bane
> the customer is supposed to select the supplier, not the other way around

Which isn't entirely right. Companies routinely chase after specific
demographic groups. Porsche isn't exactly selling huge numbers of low-cost
commuter boxes. Where you live is just as much a demographic category as
anything else.

It doesn't mean it's not a crappy deal, but the article doesn't get how things
work from the company side.

~~~
TheCoelacanth
What you're describing is companies choosing who they market to, not choosing
who their customers are.

~~~
NegativeK
Extending the metaphor is off-topic, but Lamborghini (or Ferrari -- can't
remember which) picks it's customers. In order to get on the waiting list for
their small run cars, you have to have purchased one of their cars before and
not done anything to piss them off.

When the supply is that low and the demand that high, the costs move beyond
monetary.

------
smoyer
Cable (and other utilities) are not good examples of free-market capitalism
since they operate under franchise agreements with the affected
municipalities.

~~~
001sky
This is mis-reading the thesis. Those franchise-agreements and associated
rgulatory structures are the premise. The bit about "everything that is wrong
with American Capitalism" more or less logically follows.

~~~
smoyer
I read his thesis ... I'm stating it's wrong. Utilities are not free-market
and don't represent American capitalism. This is one step away from
government-owned utilities, closer to socialism and worse than both
(capitalism and socialism).

EDIT:

Reading the sub-comments below, I think perhaps my mistake is assuming that
American capitalism tends to be more like Tesla, Amazon, etc (maybe I'm
deluded or just a hopeless optimist). But if "Bad American Capitalism" is the
topic being discussed, utilities are a perfect example and perhaps we can
agree that there are examples of "Good American Capitalism".

~~~
pdonis
_> Utilities are not free-market_

True.

 _> and don't represent American capitalism_

Depends on how you define "American capitalism". I think they represent
American capitalism just fine, because to me "American capitalism" very often
means "companies that can't compete in the free market use their capital to
get the government to pass laws and regulations that protect them from
competition".

------
holograham
How are these customers not free to select their supplier? If you dont like
the new owner then you can switch to another service provider.

Suppliers switch ALL THE TIME in the free market and consumers are none-the-
wiser. Consumers care about the end product...is it up to par for what I pay?
Think of the hundreds of suppliers that go into the computer you use. Did you
select them? Do you care who provided the plastic for your keyboard?

~~~
agscala
With regards to cable/internet service providers, in a lot of locations there
simply is only one option. If that's the case in the area where the customer
trading is going on, then the only option is to cancel that service and go
without the internet/cable. That's why it is bad.

------
mikestew
"Not only is this the situation we are in, but we have somehow gotten here
with only the feeblest of protests. "

Feeblest of protests? I ditched Comcast years ago, and it apparently bothers
them enough that they send a person to my door every month or two. What does
he want me to do, storm the local Comcast office?

------
andcase
If its that easy to "switch" customer bases why can't I just choose an
upstream provider and force providers to compete on service?

------
BillyParadise
I've been "owned" by three different cable companies in the last 3 years. In
the same house. The worst part is, the big fish who "owns" me now hasn't
bothered to upgrade fish #2's infrastructure to match their own. So I now have
the worst of both worlds - famously crappy support, with poor selection. Thank
Buddha for Satellite.

~~~
Omniusaspirer
It's a sad state of affairs when anybody is happy with satellite internet. So
much expense for such an awful service in all respects.

~~~
Loughla
As a (very) rural satellite consumer, it's only awful in most respects, not
all. With the latest incarnation of satellite, the speed isn't terrible.
Really, it's not.

If the weather isn't bad, and it's not spring/fall sunspot season, and you
only use 15 gigs. But at least it's overpriced.

~~~
PhasmaFelis
And if you don't have hills or trees between you and the southern sky, and you
don't have any interest in anything latency-dependent, like gaming or
VPN/remote desktop.

Oh, and uploading anything ever. Does satellite still use dial-up lines for
all upstream communication?

~~~
Loughla
Uploading isn't terrible anymore. No dial-up lines. Not super fast, by any
stretch, but it's not an the abomination it used to be.

What kills me, personally, is that I have a fiber line running between two of
the major metros in my state underground at the front of my property, and no
feasible way to tie into it. Am currently taking suggestions on how to do
that.

------
steven2012
That's because we don't live in a capitalistic society. We live in a
plutocracy where the rich change the rules depending on whatever is most
advantageous to them. We privatize our gains and socialize our losses. There
was a time during the financial crisis where I thought real change was going
to occur, but things like the Tea Party went upside down and started
attracting kooks and racists instead of real fiscal conservatives.

~~~
caughtexception
Wait what ?

hypocrisy: the practice of claiming to have moral standards or _beliefs_ to
which one's own _behavior_ does not conform;

Social Networking Platforms are know to treat and swap users as commodities.
Why are people even complaining ?

"I am not a Number; I am a Man!"

------
renata
I'm not sure this is as much of a problem as he makes it out to be - if
anything, we should be disturbed that the merger is being allowed to go
through in the first place. Separating out some customers to prevent a
monopoly is a good thing, if anything, and has been done before - when Verizon
acquired Alltel, they were required to let AT&T buy the North Dakota portion
of Alltel so there wouldn't be a Verizon monopoly here.

~~~
enginerd
I agree that the merger approval is the original and bigger problem at large,
however, unlike AT&T/Alltel this does not seem like 'monopoly prevention' but
in fact just the opposite. Calling it 'saving-face' doesn't even do the
situation justice.

Sure, Comcast sells off 1.4 million viewers. The gap from No.1 to No.2 post-
merge then grows from ~11m subscribers to nearly ~25m. Not only that, but as
the LA Times article points out, this is "a fast-evolving industry that
requires huge capital investments to maintain..."

Competitors will be reluctant to enter an industry with such significant
capital barriers, and why would they? Comcast owns their customers before
they've even started.

~~~
kar2014
Based on what I've seen and heard, Comcast has history of doing things like
this. They have entered in contract with apartment complex across the nation
and have mandated each apartment to have their service. The consumers have
been at their mercy whether they like their content or not or even want it.
Comcast has gotten too large, it is very dangerous when one company controls
so much of media in the country. Where are the regulators?

------
dba7dba
Afaik, the cable companies got virtual monopolies to certain
regions/cities/neighborhoods with the claim that they were like utilities.
Laying cables and maintaining them was similar to what power companies do.

And now, we are finding out the rates of the cable companies are going up and
up because we are basically financing their expansion into other businesses.

It's like my local power company raising rates so that they can go into
business of running data centers.

------
pbreit
When discussing the cable industry, one must acknowledge that it is unique in
its government mandated monopoly. Trying to analyze it as normal capitalism is
pointless.

------
gcb0
This was an unintentional bait and switch.

Monopolies on tv? Who cares? I don't even watch it.

...and then overnight they steal internet from the phone companies and
dedicated isp.

------
dck273
[https://petitions.whitehouse.gov/petition/maintain-true-
net-...](https://petitions.whitehouse.gov/petition/maintain-true-net-
neutrality-protect-freedom-information-united-states/9sxxdBgy)

------
joshuaheard
Looks like an industry ripe for disruption.

------
cognivore
I did choose. I don't have cable.

------
olssy
A lot more than that is wrong with capitalism like the fact that no value is
given to anything you can't sell.

------
coherentpony
Everything that is wrong with this HN post, in one headline.

