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Want to rescue rural America? Bust monopolies (washingtonpost.com)
417 points by avyfain on Apr 23, 2017 | hide | past | web | favorite | 335 comments

"I started a manufacturing company in Little Elm, about 35 miles north of Dallas, to produce the first-ever automatically retracting syringe to eliminate the risk of nurses contracting HIV through accidental needle sticks. The syringe received rave reviews from nurses, hospital executives and public health officials, a major grant from the National Institutes of Health and robust private investment. But when my partners and I tried to sell it to hospitals, we were told time and time again that even though it was a better product — a lifesaving product — they weren’t able to purchase it. The primary supplier of syringes, which controlled 80 percent of the market, structured an arrangement with a vast network of hospitals that essentially closed our industry to new firms for good."

A market in which buyers are not free to choose better products is not a free market.

A market in which new entrants cannot compete fairly against established players is not a free market.

A market in which innovators have to get permission and pay established players for "access" (think ISPs) is not a free market.

And yes, a market in which economic and political power is concentrated in large corporations geographically clustered in a handful of giant metropolitan areas... is also not a free market.

Those corporations have both strong incentives and the means to change the rules of competition to their advantage.

That's the thing though, that is exactly what a late stage "free market" looks like. What you need is a heavily regulated market that prevents exactly this behaviour.

People need to stop wishing for the "free" market. The term is abused by orators and manipulators who prey on peoples desire for a market which is free in the spirit of the word, and deliver to them a market which is technically "free" and horrible.

'People need to stop wishing for the "free" market. The term is abused by orators and manipulators who prey on peoples desire for a market which is free in the spirit of the word, and deliver to them a market which is technically "free" and horrible.'

Don't call it the free market. Call it what it is: COMPETITION.

"Free market" implies "I can do what I want", but frankly we don't WANT people to be free to pull anti-competitive shenanigans. Competition is the priority, not "the free market".

> "Free market" implies "I can do what I want"

I always though free implied free from non-consensual acts. It's not much of a free market if your actions are non-consensual (1).

(1) Defining what makes an action consensual is difficult but doable.

Difficult indeed.

An ordinary American internet user consents to countless pages of legalese in adhesion and other unread contracts (TOSs, privacy policies and so on) everyday day. These days, every website, piece of software, digital service or product comes with pages upon pages of contracts to which the user must consent to even walk in the door. Reading all of them is easily a full time job.

So, no one has coerced anyone into anything, just a bunch of consenting parties in theory.

In practice, getting consumers to throw away their rights and consent to stridently anti-competitive behavior by companies seems kind of easy.

Taken in the sense of an economy of mutual consent, "free market" is too low a bar to hop over. I can see why people don't think that the barebones style of "free market" is very free.

This is a deep discussion to have: too deep for a medium like HN. That being said...

Your points pre-suppose parties consented to a dispute resolution system: one that is based on arbitrary boundaries and quite monopolistic (1).

> I can see why people don't think that the barebones style of "free market" is very free.

So, I agree that it is hard for people to understand what consent is when they were never given a chance to choose which dispute resolution system(s) they can participate in.

(1) Example being I was born in the USA so somehow automatically consented to the rules of the land.

"(1) Example being I was born in the USA so somehow automatically consented to the rules of the land."

Your parents consented on your behalf when you were born. Parents everywhere are entitled to make legal decisions for their offspring before the children reach the age of majority; this is what yours did for you.

When you reached the age of majority, you suddenly gained the freedom to consent on your own (by remaining) or reject the terms of living in your country of origin (by leaving).

There's no mystery about being ensnared into something you didn't ask for; your parents did so for you, following a tradition and law as universal and old as time.

What you say is true much of the time, but it is also true that consumers often do "choose" their arbiter. The aforementioned adhesion contracts often stipulate a private (non-government) arbiter, which the consumer (probably you, too) consents to of their own free will.

I see your points. But I kind of feel like we were having a rather nuts and bolts discussion about how to improve security in Linux, and then someone chimes in that we should probably rewrite everything in Haskell.

If achieving a free market requires a complete upheaval of all of our governments and laws, then the idea isn't very useful.

> If achieving a free market requires a complete upheaval of all of our governments and laws, then the idea isn't very useful.

The idea is extremely useful: act consensual to others. There is no better basis of a social system than this. Having conversations like the one were having now is really all we need. To force the ideas on others in anyway, especially through democracy, would be hypocritical.

A social system based on utility, which is basically all social systems we've had throughout history, is violent, aggressive and dangerous. No wonder history repeats itself.

The existence of property is based on a non-consensual model for the purpose of utility.

Which is forced upon others through threat of violence. And was obtained via violence in the first place.

You're given that chance every day you choose not to go elsewhere where the legal situation is more to your liking. The social contract has an opt-out. But that'd be hard, so...

There being no good place to move because every other government also allows these things, is a sort of monopoly problem of its own...

Have you considered that maybe there are reasons for that that don't involve the twirling of mustachios?

"Consent or die" is not a choice, but on free market it is.

The ability of consensual exchange to increase utility for both parties frays at the limits of the ability of the parties giving consent to predict the results of their decision. Our ability to express the inherent failings of consensual contracts requires us to understand the limits of our own predictive power, which turns out to be a monstrously difficult scientific question.

However, it seems to me that, if one party to a negotiation takes actions which are intended to limit the other's understanding of the exchange, the usefulness of consent as a mechanism to prevent bad trades is degraded. This is not quite violence, but it is scummy, and it doesn't seem that it would be "anti-capitalist" to restrict it.

Fully agree. It wouldn't surprise me if acting 'scummy' was considered, by at least one party, to be non-consensual.

That's the American libertarian definition.

Yes, I can understand the desire to die on the "but the term as used correctly is what we want" hill. The far more pertinent fact is that just calling it 'the free market' allows others to advance their own concepts under the same guise (there's no regulators nor 'false advertising' when it comes to terminology differences) and you end up getting screwed.

Call it competition; refer to the literal changes it entails; use strong examples like the one above about safer needles. (My go-to was always airless tires till now; I'm sure we could compile a list of technology advancements we're sitting on but haven't adopted because of our LSC society.)

I've always preferred the term 'open market' rather than 'free market' to counter this exact point.

I like this. "Competitive Market" is what you want, "Free Market" has a shitty steady state.

I like "open market". It implies it's accessible to everybody.

> What you need is a heavily regulated market that prevents exactly this behaviour.

That seems like the opposite of a solution.

For such a system to work one has to believe that that the regulatory apparatus is staffed with monks who are unaffected by the temptations of wealth, power and vanity that other humans are subject to and that 'regulatory capture' isn't a real thing.

Further that the price mechanism as an information channel is worthless, and that corrupting it with noise will have negligable effect on efficiency and technological development will remain at at least the same levels we enjoy now.

Don't let perfect be the enemy of good.

Yes, regulations aren't perfect. Yes, regulatory capture is a problem. Neither of those things is a reason to not have regulations.

>>that corrupting it with noise will have negligable effect on efficiency and technological development

What really hurts efficiency and technological development is monopolies. A company that is a monopoly has very little reason to innovate. We see this all over America with Internet Service Providers. They only improve their service levels if they fear competition (like what happened with Google Fiber).

He's not arguing for perfect, he's arguing for sustainable.

No system of regulations you build won't eventually be corrupted because (exactly as he says) there exists no neutral desireless arbiters in our world to enforce them.

No system of regulations you build WON'T get you back here eventually. [0]

[0] https://youtube.com/watch?v=2It2HRGGtCk

>>No system of regulations you build won't eventually be corrupted because (exactly as he says) there exists no neutral desireless arbiters in our world to enforce them.

I don't believe that. Al Capone was notorious for bribing the police and the judges, or intimidating them and their families if bribery failed, to the point where many people thought he was invincible. That turned out to be incorrect:


There exist people in the world with strong moral standards and fearless attitudes. We just need to identify them and put them in the right positions.

> We just need to identify them and put them in the right positions.

Such an approach hinges on the presumption that the people doing the identifying and appointing are also virtuous and non-corruptible. Any attempt at a guarantee of the neutrality of the arbiters and enforcers will quickly descend into a Seussian "who's watching the watch watchers?" scenario.

I'm not saying it would be easy. I'm just saying Eliot Ness's example proved that it's possible, even in an environment rife with corruption (Prohibition-era Chicago).

Frankly, I don't see Ness & Friends as paragons of virtue. Sure, they were effective at upholding the law, but I don't see the law as at all just. I just can't look at people who relentlessly upheld prohibition and say "I want more of those in my government". Sure, Capone was a crooked crook, but the government was not any better in that case.

The same applies to markets too. In general, no static human-made system won't eventually be corrupted if some humans stand to gain from that corruption. Corruption needs to be fought actively and continuously.


On a tangent, I don't believe regulation-free markets are even possible; power and money are inherently connected (money itself being a form of power), so you'll always have "money in politics", and if governments were to suddenly disappear, then private actors with money would start performing their functions.

This isn't true, if you make regulation a democratic process then the only way to influence the arbiter (assuming laws against propaganda) is via the public good, which was the whole point all along.

ISPs is an anecdote, economies of scale in most business means products are much cheaper if provided by large companies, so where is the cutoff between "monopolies" and simple economies of scale?

The author claims 6 seed companies are worse than hundreds of seed companies, but doesn't give a single fact to support that claim.

> so where is the cutoff between "monopolies" and simple economies of scale?

If a market is closed to new entrants purely because the economies of scale make the established players products cheaper, then that is one thing.

That is rarely the case. Usually, as described here, there are also deliberate attempts by the established players to exclude new entrants via other means.

"The primary supplier of syringes, which controlled 80 percent of the market, structured an arrangement with a vast network of hospitals that essentially closed our industry to new firms for good."

> The author claims 6 seed companies are worse than hundreds of seed companies, but doesn't give a single fact to support that claim.

Yes, he does:

"The result is that the farmer’s share of each retail dollar of food has been collapsing, while consumers pay either the same or higher prices. Mega-corporations in the middle exploit their dominant market positions to reap all the profits."

You bring up an important point. I have thought about this issue a lot.

For ISPs the problem is that companies tend to expand. So where 20 years ago an ISP might have been a small regional provider. Things have consolidated and expanded so now that same company owns almost the entire infrastructure and many other services that depend on it. They can also bundle services together to make it harder for a new competitor to enter.

> For ISPs the problem is that companies tend to expand.

Not cooperatives. Co-ops tend to focus on their region, and have neither a reason to push into other territories, nor usually the foothold to do so as easily as in their own region.

"Farming out" your lines to outsiders then deciding that you don't want further construction efforts because 'the cables are already there' - effectively giving them a monopoly over your region - is what got us into this mess in the first place.

Extremely strong economies of scale are probably the single biggest argument for government monopolies in my opinion. That being said, governments are horrible at providing end-user level service, so it would make sense for them to lease out capacity to private firms who service end users.

You're acting like rules and oversight don't exist. Regulatory capture is a real problem but that means you need to take measures to prevent it, not give up on the concept — just as the threat of embezzlement doesn't mean we gave up on banking.

The same people you trust with regulating, you trust are going to regulate against regulations. There's going to be an arbiter no matter what. The way we make sure he's not corrupt is through democracy. By limiting his time in power, and having the people choose his replacement.

The problem with monopolies is that they begin to approach government like control over one or more dimensions of society, but we have no corruption control on them.

>For such a system to work one has to believe that that the regulatory apparatus is staffed with monks who are unaffected by the temptations of wealth, power and vanity that other humans are subject to and that 'regulatory capture' isn't a real thing.

That's only if we demand unreasonable effectiveness of such a system.

In practice, it only requires that the people (consumers etc) can influence government and policy more than conglomerates and big private interests can.

This is why I'm pro lynch mob. Allow a free market with few if any regulations. Also allow for common violence if a company strays too far from customs. If a CEO is shown to pollute the water ways there is always an AR15 out there.

Few people fear violence since they know the law is weak.

> Also allow for common violence if a company strays too far from customs. If a CEO is shown to pollute the water ways there is always an AR15 out there.

I come to HN so that I don't have to read such stupid, knee-jerk, badly thought through opinions. If you have to, post this in a Facebook comment thread, but not here.

What do you think would be the consequences of legally allowing lynching? And I mean all consequences, not just the ones you intend?

> That's the thing though, that is exactly what a late stage "free market" looks like. What you need is a heavily regulated market that prevents exactly this behaviour.

I've joked for years that the end stage of capitalism is "one company selling you oxygen".

Turns out someone else had that idea back in the 1920's and there is a 'sci-fi' book based on the premise.

This is just one of those definition things where the common amateur usage of terms differs from their meaning amongst professionals in the relevant field. The common understanding of "free market" seems to be synonymous with "unregulated market", but that's not how economists use the term.

Which matters a hell of a lot more than those professionals' opinion, as unfortunately democracy's current models rely far more on what the amateur 'baseline' knowledge is and not 'what the professionals know'.

As the professionals are probably fine bellowing off their ivory towers so they can later go doen as "having been right" rather than actually attempting to change things (except Lessig who iirc tried with a PAC), I don't think relying on them will get you anywhere. Better to analyze what the people think and why, and work to improve that baseline, than ignore it.

(Or come up with an alternative model of democracy which does privilege 'professional known' information with minimal corruption risk somehow.)

The end state of free market (as in free of government regulation, not free to compete) is monopoly. Capitalist societies understand that and regulate to ensure freedom to compete. Europe is much better at this than the US.

Incorrect. Monopolies do not naturally occur in most markets (with a few exceptions). The barriers to entry that create monopolies arise largely from regulatory capture. Some level of regulation is often necessary, but devising regimes that don't favor early entrants is very difficult. Nobody does this well; neither the US nor Europe.

> Monopolies do not naturally occur in most market

They naturally occur in markets with network externalities, which are quite common.

Often times, companies in the US lobby for regulation that adds barrier to entry. Of course economies of scale greatly contribute to barrier to entry, forcing an entrant to have large volume to even compete. I've read where large companies sell products cheaper than competitors can buy them wholesale. Once there are a few large competitors, mergers happen resulting in monopoly or near monopoly.

Of course industries like food service don't have monopolies, but they don't pay very well. They are also geographically restricted. I don't really care about those companies, they don't contribute much to the middle class.

Google is an effective monopoly, Amazon is certainly headed that way. Facebook is pretty close. Microsoft would be except the rare occurrence of someone writing a free operating system that was very good at the dawn of the internet age. Airlines are effective monopolies in their selective hubs. Monsanto certainly. They don't have to be the last company standing to show monopolistic tendencies in my mind. Microsoft wasn't technically a monopoly in the 90s, but it might as well have been.

They do if a company is able to do anything but make and sell products. The end goal of any company is to become monopoly.

Uber gets effectively shut down in France, leaving my region with just taxis and no price competition. Try finding a non Air France nonstop between Marseille and Paris or Paris to Bordeaux. It doesn't exist. Try finding nonstop flights between Houston and Dallas -- there are five different airlines with nonstop service.

Air France has a practically guaranteed monopoly within France; the only reason that monopoly doesn't extend past its borders is that international air transport agreements would make it impossible for Air France to control the entire French air transport system.

Where's that freedom to compete? If one argues that "Europe does it better," I might argue that either that person hasn't ever lived and done business in the US and hasn't lived and done business in Europe. Anyone that suggests that competition is protected in Europe (or in my case, specifically France,) has no idea what they're talking about. Competing against entrenched players in agriculture, transport, infrastructure and technology is excessively difficult. In the US anyone that can buy an airliner, get the FAA inspections can essentially start an airline. In France such an attempt would be met with violence. Air France itself attempted to start a budget airline in 2014 and strikes essentially shut down French aviation for over 11 days.

Protecting competition would mean the that the government wouldn't abide the labor monopolies that hamstring companies attempting to compete.

France does have monopolies -- although most of those monopolies are in labor -- and labor monopolies, otherwise known as unions are just as destructive as any other form of monopoly.

Europe does not do it better -- they just do it differently.

> Europe is much better at this than the US.

By Europe, I think you mean 3 or 4 countries in all of Europe. Most countries in Europe entirely fail at what you're claiming and most are embarrassingly behind the US on: innovation, productivity, median incomes, unemployment, global & domestic corporate competitiveness, research spending (both public and private).

I wasn't aware that Russia, Ukraine, Latvia, Poland, Hungary, Croatia, Belarus, Lithuania, Romania, Greece, Spain, Portugal, Italy, Bulgaria, Moldova, Serbia, etc. had such stellar economies, that functioned at a high level with excellent competition and dynamism.

The majority of nations in Europe are backwards, poor (often extremely poor), mediocre at competition, with terrible median incomes, terrible median household net worth levels, perpetual unemployment problems, and very stagnant innovation within their economies. The results - among the nations I listed for example - when it comes to GDP per capita, median incomes, unemployment, exports, etc. all speak very loudly.

Many of the nicer countries in Europe, have rigid economic systems that are narrow industry dependent, non-innovative and stagnant. That includes Norway, Denmark and Finland (which is trying to crawl out of a ten year near-depression, and is heavily dependent on ancient industries like paper production). France has had a stagnant economy for decades with hyper low growth, rigid is an understatement there; if they grow median wages at 1/4th the rate of the US, it's considered a good outcome.

Germany would be in the middle of a ten year recession, were they not free riding on their Euro neighbors when it comes to benefiting from an artificially cheap currency (cheap for them).

Europe is not better than the US at facilitating competition, a very select few countries in Europe may be (Sweden for one). Europe is overwhelmingly dominated by dynastic corporations, handed down through the generations (Europe overall has a far worse stagnant dynastic wealth score than the US), and have almost entirely failed to keep pace with the US when it comes to spurring very successful new companies in the last 30 or 40 years. That proof is in how far behind nearly all (not all, nearly all) European nations are in rapid innovation fields like software, Internet, mobile, AI, biotech, robotics, VR/AR, etc.

But feel free to list all the amazing Internet, biotech, robotics, AI, Mobile, etc. firms in the highly dynamic & competitive Russia or Greek or Spanish or Polish markets.

If I was wrong, the results, the economic standing, for all those nations I listed, wouldn't be so horrible. Poland wouldn't have a $13k GDP per capita; Russia's median income wouldn't be 1/5th that of the US; Spain wouldn't have 20% unemployment (still); Bulgaria wouldn't have a median income that's nearly at third world levels; and so on.

> If I was wrong, the results, the economic standing, for all those nations I listed, wouldn't be so horrible.

What you are saying about the economies of those countries might be true, but it's not necessarily because they are worse at regulating capitalism. The effects of the Soviet Union, the size of the countries, language barriers, sanctions on Russia, problems with how the currency works, etc are enough to cause the things you mention even if they are better at making their markets more dynamic and competitive than the US. Countries with five million people like Norway, Denmark and Finland simply don't have enough people to have multiple strong industries simultaneously.

If USA is so innovative and Europe so backwards how come USA has trade deficit with EU?

The US has a $50 billion trade deficit with Mexico. Are we to argue that Mexico's business environment and economy is better and more innovative than the US? A trade deficit is not necessarily a bad thing.

Why is this being downvoted? This comment is factually correct.

The problem in this particular case seems not to be too much freedom to buy and sell things but overreach by the courts. If some syringe supplier slips stuff into the small print that they will be the only supplier for ever after then the legal system should refuse to enforce that as is probably the case in most places outside the US.

> the legal system should refuse to enforce that

What you're asking for is the opposite is the opposite of what you're stating the problem is. The courts doing nothing but enforcing contracts is expected.

Asking for the courts to step in to say "while legal this isn't right and won't be enforced" is asking for 'more reach' by the courts.

Ok, I didn't put it very well but the solution to the courts protecting the syringe makers monopoly is for the government to change the law to disallow such things. A lot of these kind of things like business process patents seem to start with a court judgement and then need legislation to fix.

Freedom takes work to protect. An unregulated market is not necessarily the same as a free market. Or maybe no market is unregulated, and the real choice is between a market regulated for the common good and in the interest of freedom, or one regulated for the interest of specific players on that market.

> That's the thing though, that is exactly what a late stage "free market" looks like.

How would you know? We haven't had anything approaching a free market since the early 20th century, even if we ignore government-granted monopolies via restricted land grants and patents.

How would you know? Just because it's never been truly tested in reality doesn't mean we can't stop and think about the situation. We know what corporations do when they are given a choice (they choose profits over anything else) and we know that consumers will choose low prices over everything else as well. So, it's not hard to draw the conclusion that this will result in consolidation, economies of scale, and eventually monopolies. Exactly what is already happening.

In a "free market", what is going to prevent this? Every actor here is acting in their best interest. What could possibly change their behavior other than the government telling them to?

Where has economies of scale hurt?

ISPs are a special case because regulations make it difficult or impossible for competitors to run cable. But economies of scale turned cars, PCs, consumer electronics, air travel, etc, from rich peoples play toys into affordable products for the masses. As consolidation hit all those industries their products merely got cheaper and in most cases, far better.

Walmart. Walmart has destroyed thousands of businesses. Now you can argue the consumer got lower prices, but low prices don't matter when no one has money to afford them. Additionally, those economies of scale produced cheap, disposable, polluting goods that have an engineered lifetime so that customers have to keep buying the same appliance (or whatever) over and over.

The question isn't when economies of scale hurt, that's a loaded question. The question is "when does consolidation no longer benefit the consumer?". I would argue many, many industries have reached this point, with ISPs being the most obvious one, but there are many examples (like the syringe one given above) where a business you've never heard of silently corners the market through consolidation and trust building.

Walmart has been a huge boon to the middle class. It's inarguable that consumers got lower prices, substantially lower prices. That's increased their standard of living.

You can argue that Walmart hurt the standard of living of the Americans (less than 1% of US employees) who actually work for it. But that ignores the fact that the smaller competitors didn't pay much better, and never had a stock option plan, so the pay difference was marginal while the customer benefit was massive. Walmart big advantage wasn't labor costs, it was scale and inventory management from day one.

And it's products are as good or better as the competitors. I hate Walmart, hate shopping there, but when I have to I'm always struck by how good the products are and how amazing the prices are.

You're off-base in almost every regard.

>It's inarguable that consumers got lower prices, substantially lower prices. That's increased their standard of living.

It's a multifaceted issue. Yes, Walmart sells cheap stuff, but that's not the company's only impact on the standard of living. The middle class has been steadily shrinking since the 70s, consistent with the rise of Walmart http://www.huffingtonpost.com/2013/06/06/middle-class-jobs-i...

> You can argue that Walmart hurt the standard of living of the Americans (less than 1% of US employees) who actually work for it.

The key issue is not Walmart's employees, but rather the employees of the companies they source from.

> Walmart big advantage wasn't labor costs, it was scale and inventory management from day one.

Once again, it's about the cost of the goods they sell that has a bigger economic impact than their direct labor cost. What goes into the cost of the goods they sell? Labor costs of their suppliers. What did they do after their advantage of scale and great inventory management management eroded? They started sourcing products from markets that were fueled by cheap labor i.e. not the USA. Sam Walton has been rolling in his grave for years: The first true Wal-Mart opened on July 2, 1962, in Rogers, Arkansas.[18] Called the Wal-Mart Discount City store, it was located at 719 West Walnut Street. He launched a determined effort to market American-made products. Included in the effort was a willingness to find American manufacturers who could supply merchandise for the entire Wal-Mart chain at a price low enough to meet the foreign competition. --> https://en.m.wikipedia.org/wiki/Sam_Walton

> I'm always struck by how good the products are and how amazing the prices are.

You're probably one of very few

When a Walmart opens, it knocks out about half the jobs in a small town. It doesn't replace that number. It also pays so low many of its employees are on welfare. Companies like WalMart are subsidized by the taxpayer. Repeat that across thousands of stores to get enormous impact on economy.

Add downsizing, consolidation, price gouging (i.e. Koch's, oil), and offshoring to get an even bigger one across the board. The Recession was a given with buying power always going down while costs always go up.

Walmart has certainly not been a huge boon to the middle class, if they have been, we have not seen any evidence of it. The middle class is shrinking. So if this is true, that means the middle class is doing MUCH worse than realized.

From what I've read, Despite the cheaper prices, there was a net loss in jobs and significant damage to small business-resulting in higher losses in the local economy than gained from cheaper product. I don't know if there's enough evidence of all of that, but it seems logical.

Also you're ignoring the local economic impact of closing small businesses. It's not just the small retail store employee that loses out. Small businesses close-that means there's less need for accountants, cleaners, advertisers, real estate, etc. Walmart does all of this at the corporate level. This results in even more, well paying job loss, and sets off a spiral that destroys these communities.

> And it's products are as good or better as the competitors.

Sounds like confirmation bias to me. Nothing I ever see or buy from walmart has ever been quality, but I couldn't present that as evidence.

>Walmart has been a huge boon to the middle class. It's inarguable that consumers got lower prices, substantially lower prices. That's increased their standard of living.

Only when thinking in first-order effects. How about the city businesses it destroyed, and thus the standard of living associated with the families that owned them and the whole support system? How about the power it affects upon manufacturers -- and thus to the people that work there?

I think Walmart has damaged the economy a lot. Maybe smaller companies are less efficient but Walmart has destroyed a lot of small business that provided fairly stable jobs to middle class people.

Are you familiar with intelligence squared? I encourage you to watch their debate on the value of walmart to society.

Destroying jobs is precisely how economies of scale and efficiency generally happens. If those other businesses kept employing as many people, products wouldn't get cheaper as much

How does Wal-mart stay in business if "no one has money to afford them"?

That's easy to answer: it doesn't in the long run (assuming it was the only player -- of course the reality is more nuanced).

But it can destroy a whole lot of value (and be the last "business" standing) in the short and mid-run.

In fact as such businesses erode the working/middle class, short and mid-term they become more enticing to it than other stores, since they are the cheaper options.

If a company causes a "race to the bottom" for jobs and wages by selling too cheaply and paying too little, then those whose wages are affected will mostly be able to shop at that place exactly. And if that company is one business upon many that are causing the same issues, then people wont even be able to single them out for blaming...

They stay in business courtesy of government programs to keep people afloat enough to afford basic necessities, and by negotiating to pay reduced or no local taxes or infrastructure costs, coupled with relocating stores any time a tax-break deal expires. As long as you don't have to pay a living wage (because the government picks up the difference) and don't have to pay the cost of building and maintaining the infrastructure of your store (because the government picks up the difference), you can "sustain" an otherwise-unprofitable business for quite a long time.

Walmart isn't singular they are part of a huge array of companies paying shit wages.

A lot of people in the same economic class as the workers are receiving government assistance meaning you are footing the bill for the food stamps that feeds the cashiers kids while ironically congratulating yourself on the good deal you got.

At least to me it looks like making the market more "free" by means of deregulation would only exacerbate the problems mentioned above.

Free market != deregulation

Sadly, it often does in the realm of public discourse as directed by politicians and the average voter who engages.

Making the market "monopoly and oligopoly free" by regulation, as a synopsis.

>We haven't had anything approaching a free market since the early 20th century

Hong Kong is often held up as a fairly free market that has worked well. The government does get involved in health care and the like but commerce is pretty free.


There were powerful monopolies in the late 19th and early 20th century like U.S. Steel and Standard Oil that the government broke up.

Always found it interesting that the middle class in the US grew immensely wealthier during the period US Steel and Standard Oil were "monopolies".

How do you figure? Most historians credit the rise of the middle class to the post-war boom in the 50s. Standard Oil and US Steel were broken up during the Roosevelt and Taft administrations in the early 20th century.

When JD Rockefeller was growing up, the average American rode a horse (if lucky), never traveled more than a few miles from home, few had even been on a train. Sailing ships were the main and dangerous form of sea transport. 95% of Americans worked brutal farm labor jobs. Homes were lit by candle and whale oil, and heated with firewood.

By the time Standard Oil was broken up, railroads were everywhere, steel ships ruled the sea, cars roamed the roads. Homes were lit by electricity. Energy consumption had skyrocketed because the costs (esp. the cost of oil) had plummeted. Labor saving devices increased productivity and the standard of living, and were made possible by cheaper steel as well as cheaper energy.

That's great, but I don't see why you credit that to those companies being monopolies. There's no reason to think these positive things wouldn't have occurred for consumers just the same if there was more healthy competition in the steel and petroleum market. That just happens to be the technological change that was sweeping the world at the time.

It reminds me of Microsoft receiving credit for computers becoming pervasive and useful in everyday life, as if they deserve special recognition, or thanks, for brutally clawing their way to the top of a very profitable industry and ruthlessly suppressing competition, even when it meant scuttling superior technology. Clearly someone else would have made an OS for home and small business computing if Microsoft didn't.

And the same thing happened in other countries without Standard Oil and US Steel monopolies.

>How would you know? We haven't had anything approaching a free market since the early 20th century

We know exactly because of that. That there's the theoretical free market and the "really existing" one, and the really existing one is exactly what we get in practice if the big players get their way.

This is exactly the same argument people make in favor of socialism..

The thing is, societies that were close to ideal free market capitalism have done extremely well, whereas societies that were close to ideal socialism have generally done very poorly (in the long term). On account of local linearity, I think it's probably OK to use societies that were almost like what is proposed to judge the proposal.

The US isn't even close to a free market (although it used to be very close), so I don't think the current performance of the US economy is a reasonable basis on which to judge free markets.

Similarly, many people used countries that were barely socialist to judge socialism, which is also a bad idea.

When has a close to ideal free market existed?

Not the first time this story is on HN. I always wondered - why focus on selling to American hospitals which could not care less?

If the problem is universal, pitch to elite European hospitals, especially Swiss. They cater for rich patients from all around the world and if it's a good idea they'll definitely be interested. Later on, when it catches, American hospitals will come to you too.

Or maybe you will find that European hospitals has already figured this out in some way. Tough story, then.

Why even bother with hospitals and there bureaucracy. They could pitch it to doctors offices and the end users, like diabetics.

Retail is a different game than batch supplies.

That's why I always eyeroll when people in forums like this talk about the free market.

Many many corners of the economy are little vertical command economies. Fiscal policy, de-toothing of regulators, and allowing large players to form cartels is the antithesis of free market. Markets require a firm regulatory hand to be free.

Medical is a great example. Between strategic sourcing in hospitals that killed all of the little companies making medical supplies, the CVS/Walgreens/RiteAid/ExpressScripts shitshow that eliminated meaningful retail and wholesale drug competition, and now the formation of regional medical cartels is a planned economy more valuable than the Soviet Union was.

In 10 years we'll be back to the Bell System for telecommunications, without the consumer protections and firm controls of tariffs that blunted the impact of the AT&T monopoly.

I'm not sure what your point is. This isn't a free market because of monopolies or because of regulations?

To me, it seems like we have a completely free market here... and that is the problem. Companies are free to create and exploit monopolies. It's the final state of a completely free market.

80% of the market is not an unassailable monopoly. Such things rarely if ever exist unless they are created by regulation.

That depends on the actions of the market leader no?

There are any number of anticompetitive practices that the market leader can engage in to effectively eliminate any threat to their monopoly from tying to predatory pricing to exclusive deals.

>is not a free market

One of the things that fascinates and terrifies me most about American political discourse is this need to label things, and then have those labels divide people into polar opposites so they argue endlessly about the label, instead of the actual issue.

Really, who gives a s&%t what the hell you call the system you have now. It's completely meaningless. What really matters is you decide if it's good or not, and what to do about fixing it. THAT'S what really matters.

Americans have forgotten the point is to actually get around to improving things, they are so busy arguing about labels. "Single Payer" vs "Socialism", "Theocracy" vs. "Democracy", etc. etc.

Another element is that a monopolistic institution can often afford to wait until expiration of any promising patents and that appears to be a factor in this case as well:

At Retractable, "Shaw still isn’t any closer to breaking into the hospital market, and in the meantime the life on his patents is dwindling."

"So he has partnered with Chinese companies, which put up money to build assembly lines in China in return for permission to produce his syringes for the Chinese market. When his patents do run out, the Chinese manufacturers will be the ones poised to bring his technology to the world market, meaning all the jobs and economic benefits that could have gone to the local residents will instead go to the people of Gansu Province."


What you're describing is a fair market, not a free one.

Who cares what it's called? Wouldn't we all prefer a fair market, even if it does mean regulation?

Who decides what is fair?


If you have a better product. A bigger corporate shouldn't be allowed to use its war chest to swing things in favor through buying out politicians, law or other such stuff.

While I agree with the second part, "Merit" isn't an unbiased descriptor. At the end of the day, deciding what criteria constitutes "Merit" and who has earned it is up to people. People with their own biases.

and who decides what is a better product and on what basis? a `better` product isn't always what a consumer wants - value for money is a thing.

Free market means free from monopolies as well.

Conversely, a free market is free for monopolies to form; is free to charge whatever they want; is free to block other companies from entering and selling to a company via any means short of bribery (although even that could be thought of as free); is free to to do anything when competing short of breaking the law.

We do not live in a free society, we are not free to do whatever we want; for example, I don't think anyone says we should be 'free' to murder anyone we want.

I think the GP is more accurate with fair. I'd actually say, it's a guaranteed to be 'open market' we want; meaning everyone must play by the same rules. Of course the challenge is that whoever sets the rules, will end up protecting their own interests, and then we end up where we are anyway. Maybe we can turn to AI to be absolutely fair in creating rules to establish open markets... and then AI becomes the pure benevolent dictator, except for that pesky off by one error I left lurking in the code :/

> Conversely, a free market is free for monopolies to form;

Which will make it non free. Free market requires mechanisms of preventing monopolies by its definition.

But what guarantees this freedom? And as I understand it, it doesn't prevent monopolies from forming, it is meant to restrict monopolies from controlling the market.

According to wikipedia:


"... are free from any intervention by a government, price-setting monopoly, or other authority."

The government is supposed to step in to block monopolies from controlling the market, but that implies that the government is intervening in the market. All I was pointing out is that there is no perfect system where politics, monopolies and private interests won't compete to control the market.

> But what guarantees this freedom?

That's up to the society which wants to have a free market. For instance, anti-trust laws is one way of doing it.

> The government is supposed to step in to block monopolies from controlling the market, but that implies that the government is intervening in the market.

Someone should to step in here, whether it's government or not, is another question. But clearly, if market has no way of preventing a monopoly, it's not really free.

> Someone should to step in here, whether it's government or not, is another question.

Actually, it is the central question, because without a feasible answer all you have is a fine-sounding principle that is utterly infeasible.

It's the same question of how society is regulating things. It's quite a broad subject, but we were talking about the principle here.

Free markets means they are free to entry, which means creating a monopoly is impossible.

That is nonsense. There are plenty of natural monopolies [1], where competitors are free to enter the market but simple can't compete. E.g. if there are economies of scale (e.g. Google search engine) or network effects (e.g. Facebook).

[1] https://en.wikipedia.org/wiki/Natural_monopoly

It does:

> One view is that a free market is a system in which the prices for goods and services are determined by the open market and consumers, in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority.

That's how I define it. Monopoly makes the market non free.

"free from any intervention by a government, price-setting monopoly, or other authority"

But here's the thing... if there ends up being a monopoly, who exactly is going to intervene to stop it, if not the government or other authority?


Nonsense. Free market means the ideal market of whatever one's personal ideology thinks will work best. It's the economic version of "a perfect world", and everyone has a different vision of what "a perfect world" even means.


Free market, which btw has grown to become a economical and political buzzword, is not "the ideal market of whatever one's personal ideology thinks will work best"; The core ideology behind it was to let the buyer and seller work on what works for them and keep third party interference to the least.

Fair market imply either party is made aware of all the details behind the trade in case of which price discovery is impossible as the buyers won't buy above real value and sellers won't sell below real value. Anti-trust and Anti-monopoly laws that are sub-points of a fair market are inherently against the ideal free market.

Also, theory does not really work in practice and no market is entirely free or fair.

> A market in which buyers are not free to choose better products is not a free market.

Most businesses can choose better products (not sure about hospital industry). They can also choose to sign an agreement that makes a supplier relationship exclusive. For instance, a restaurant can sign an agreement to accept only Mastercard. Is this not a free market?

Yeah so the point is that if the only restaurant in the USA is Applebee's and they sign an exclusive agreement with Mastercard, they are extending their monopoly -- likely illegally in the US:

"But exclusive dealing also can be anticompetitive in some circumstances. For example, exclusive dealing may allow one manufacturer, in effect, to monopolize efficient distribution services and thereby prevent its rivals from competing effectively. As then-Judge Breyer explained, exclusive dealing can harm consumers by thwarting entry or inhibiting the growth of existing rivals:

'Exclusive dealing arrangements may sometimes be found unreasonable under the antitrust laws because they may place enough outlets, or sources of supply, in the hands of a single firm (or small group of firms) to make it difficult for new, potentially competing firms to penetrate the market. To put the matter more technically, the arrangements may "foreclose" outlets or supplies to potential entrants, thereby raising entry barriers. Higher entry barriers make it easier for existing firms to exploit whatever power they have to raise prices above the competitive level because they have less to fear from potential new entrants.'"


It would be better if you just used the obvious historical precedent - Standard Oil integrated with rail services by negotiating discounts that provided an insurmountable barrier to entry for smaller competitive. It was restraining trade, and while prices may have benefited consumers in the short run, the lack of competition would have been a negative over the long run.

> if the only restaurant in the USA is Applebee's

Except that it isn't the only restaurant. You need a much better example.

The ironic thing is that the only way I can conceive we could be in a situation in which there is only one restaurant in the USA, is through over-regulation and treating restaurants as a utility. Food is important after-all and can't be left to the markets, as some may argue.

A restaurant that agrees to exclusively accept Mastercard would be out of business very quickly (no matter how much Mastercard lowered its fees for them). That's why we don't have to regulate such behavior.

Not a restaurant, but Costco used to accept only Amex as a credit card (debit was a different story) and now only accepts Visa.

So what you're saying is that market forces prevent this behavior that harms consumers and pushes an inferior product?

I'm saying I don't know what market forces allow an Applebees to survive.

Things that benefit a consumer on price (Walmart), don't necessarily benefit the economy as a whole (destruction of the smaller retailers that worked in this market). While consumers save money, the money is leaving the local economy and going to Walmart HQ, while money spent at a local retailer will continue to circulate within the area

No, that would not be a free market. That would be a supplier abusing their market position.

Quite frankly, auto retracting syringes suck ass, which is way 20+ years later, they're still not commonly used in healthcare facilities.

The trick is in how you define "the better". Problem is that hospitals don't buy just syringes, they buy lots of medical supplies at once, and corporations can offer much better deals on such orders, you can just buy everything at once. They then use that position to push exclusive deals with hospitals and kill the small players. It is still a free market at work, hospital gets the best deal business-wise, but it has retrograde effects on the progress and end-users.

The medical industry, including the medical device industry, is the most heavily regulated industry in the US. It's far from free market.

Also, airspace (FAA) and railways. And the regulations exist for good reason - f..k stuff up and people die.

The problem arises when regulations are not kept up-to-date or the regulators are being outright bought (like in financial services), and that must change.

Doesn't pass the smell test to me.

So a big company had 80% of the market? What about the other 20%?

Think Intel, AMD, and um, who else makes desktop grade chips? (No, netbooks/tops don't count)

Why not count those? ARM is much more democratized and is huge. With the advent of compiler backend abstractions being used in LLVM and GCC, it's even possible to target unique chips more easily.

Intel is definitely no longer the monopoly player they were after the huge success of ARM in lower power environments.

Intel has never been a monopoly. There have always been dozens of competitors in most of their markets. Even at the height of Wintel, there was AMD and others. Intel didn't win there because it was able to shut out competitors, those competitors copied Intel designed instruction sets and Intel couldn't stop them from doing it. Intel dominated the market because of their better processes.

From an antitrust perspective, a monopoly is simply a firm with significant and durable market power with courts having typically set that to having over 50% marketshare within a certain geographic area.

Intel certainly qualifies.

I am not sure how to pull this off in practice but I think it would be healthy for an economy if companies couldn't grow beyond a certain size. Once companies get too big they pretty much kill new and innovative companies. Just look at how quickly small companies in the 70s and early 80s innovated around personal computing and how little innovation is happening in the smart phone or search engine area now because Google and Apple are pretty much trampling over the small guys.

Again, I have no idea how to do this in practice.

Hmmm I believe that the Google/Apple smartphone issue is squarely the result of developers (the same ones who complain about Android and IOS). Manufacturers could create smartphone after smartphone, but if developers don't build apps to make the phones attractive, consumers aren't interested in purchasing. Developers, unfortunately, are the ones blocking out other smartphone makers.

It's a feedback loop. Without developers a platform can't thrive but without users of the platform the developers can't afford to write apps for the platform.

"A market in which buyers are not free to choose better products is not a free market."

Which is not the case here.

If I sign a one year gym contract and suddenly a much better, much cheaper gym opens across the street, I can whine that the gym market is "not free". In fact it is, not like "free" in "free beer" but in "free" like in "freedom". But if I insist of using the better gym instantly I may have to pay for two gyms at the same time.

I agree. Of course, most of the reticence to do anything new in medical care comes from extremely overwrought CYA policies. It's very hard to argue that these policies aren't the result of legislation particular to medicine, whether it's legally necessary (but patient-unfriendly) bureaucratization of medical care or insurance red tape brought on by legally enforced uniformity of insurance concerns.

The paradox is that a market, in order to be free, needs regulation.

Markets don't tend to entropy by themselves.

One quick question: why does it matter that the large corporations in which power is concentrated are geographically clustered? Would the situation be better if ceteris paribus the corporations were more geographically distributed?

This is also a huge problem in scientific research supplies and chemicals.

> 80 percent of the market

What about the other 20%? what about the international market? what about the non-hospital market (i.e. people who inject themselves, such as diabetics, at home)?

That kind of arrangement already clearly illegal if the hospital takes government healthcare funds.

What about outside of US?

Highly relevant: Matt Stoller in The Atlantic:

"How Democrats Killed Their Populist Soul In the 1970s, a new wave of post-Watergate liberals stopped fighting monopoly power. The result is an increasingly dangerous political system."


Amen. Matt Stoller is basically the playbook and on how the democrats can regain the common man. My family are multi-generational democrats and it would literally blow the mind of my lost past immigrant grandfather if knew that his party's nominee was taking bigly money from Deutsche Bank and Goldman and soliciting donations from commodities oligarchs from lawless countries. And on top of that, not seemingly giving a sh1t that median real wages had not budge in 15 years.

Agreed, I follow Stoller on twitter and I've found him very thought provoking.

> Matt Stoller is basically the playbook and on how the democrats can regain the common man.

<sarcasm>I'm a common man and that there sounds a bit socialistic. Real Americans(TM) pull themselves up by their bootstraps through grit, determination and hard work - they don't need big-government meddling.</sarcasm>

My feeling is that a negative view of regulation/government action has been unchallenged for decades in red America. In those areas, the democrats will never gain the common man that way because the negativity has been internalized.

I'm not sure it's socialistic, I think it's more anti-cronyism and anti-regulatory capture. but hey, I could be projecting my hopes/dreams like so many disappointed Obama cheerleaders before me.

In any event, the party/candidate that comes up and can execute a plan to aid the middle class (or least keep them getting pushed around), should rule the roost.

If Trump/Brexit/France showed us anything, it's that big money in politics has hit the point of diminishing returns and one-man, one-vote may not be completely dead.

This is an excellent piece that explains a lot about how we got into the situation we're in. Another quote:

By the late 1970s, the populist Brandeisian anti-monopoly tradition—protecting communities by breaking up concentrations of power—had been air-brushed out of the debate. And in doing so, America’s fundamental political vision transformed: from protecting citizen sovereignty to maximizing consumer welfare.

How does that work? In the 1970s, the democrats were realigning, after the civil rights movement had fractured their tradional coalition and cast the Jim Crow Democrats into the Republican party with Nixon's Southern Strategy.

This really opened my eye: a long time ago, there was actually a meaningful difference between voting D and voting R. I can't really imagine voting in such a context, but it sounds nice...

Similar things are happening in germany. Most people I talk to feel like the 2 major parties have lost their grit, their profile, and they have become mostly the same. However, in germany, this just gives new parties chances to rise. I think that's a sign of a healthy democray - if the old parties stop representing the people, voters will replace them.

That happens in the US too, but instead of new parties, we just end up with the existing parties shifting what they stand for over time. The Republican party may be going through such a shift right now (though it remains to be seen what their platform will be next year), and both parties shifted in fundamental ways in the middle of the 20th century.

In the US, the two primary parties collude to ensure that a third party will never gain control. An example is they both have contracts with the news organizations that televise the debates excluding a third party without a significant (millions) of supporters.

That is simply not true. You don't even have to look too far in the past to see examples of meaningful differences even if you restrict yourself to economic/financial/business issues. The most recent example is the internet privacy repeal bill. But even Obama's term alone saw Dodd-Frank, the auto bailout, the stimulus package following the great recession all supported by Democrats and opposed by Republicans.

The two parties are nowhere near the same on economic issues. Yes, they are both largely in favour of free trade. But there are very significant differences in terms of philosophies the two parties take towards regulatory behaviour.

How can you call LGBT rights, women's rights, police consent decrees, environmental issues, and health care, just off the top of my head, meaningless?

Not the GP, but these are social issues largely, and while I care about them, I consider them less important than economic issues (for a multitude of reasons). And on economic/business issues, the two parties seems to have minimal differences.

Health care is squarely an economic/business issue that affects nearly everybody, and there are clear, meaningful differences between the two parties here.

I continually heard some years back that Obamacare was basically Romneycare which was basically the Republican plan from the Clinton years. Further, as we can see from the current state of things, the Republicans might say they hate Obamacare, but now that they have a chance to repeal it and put their own plan in place, they've failed continually. There's no politically-tenable position to move further rightward unless you are in favor of less people having care or people having worse care.

In short, the Democrats basically adopted the old Republican position on the only economic issue listed by the OP - exactly in line with my earlier point.

The Democrats adopted Romneycare with some tweaks as a compromise effort. They view it as a starting point, not the end goal. Any attempts to move beyond that starting point were obstructed by Republicans.

The AHCA failed due to a small handful of Republicans rejecting it, with one part of that handful complaining that it wasn't pulled rightward enough, and the rest actually realizing that going rightward wasn't politically-tenable as you said. Most of the party was totally fine with the AHCA.

AHCA, Obamacare is definitely better than before, it guarantees open access to many who didn't have it before. A good thing.

But it didn't go far enough. It played in to the corporate healthcare system demands by not offering a competitive public option. The so called Blue Dog democrats blocked that, which is such a shame.

Far better than anything the Republicans have put on the table. The problem is that we basically have one sane party which is backed by corporate interests, and another party backed by the same or similar corporate interests which plays off fear for support.

I believe the only fix to this is to weaken party entrenchment, and have ranked choice voting in place; but who in these two parties would actually support that?

[Edit: typo]

It is not better at all. The deductibles increased tremendously, and it wound up turning normal insurance into expensive catastrophic insurance. Many poor people are worse off under it, because at least before it was possible to pay for insurance with a decent deductible as part time help. Now most of them just eat the tax penalty (or avoid it, there is a provision where it can be waived if you demonstrate it's literally too expensive to afford) and have no insurance at all.

The solution would be employer-matched health savings accounts for casual care, with mandatory from 18-up catastrophic insurance at low premiums.

> Now most of them just eat the tax penalty (or avoid it, there is a provision where it can be waived if you demonstrate it's literally too expensive to afford) and have no insurance at all.

Don't the increased numbers of insured people contradict this statement? Being poor still sucks, and having to make this choice, still sucks. But it also expanded Medicaid coverage to more people.

They should have offered Medicare as an choice in every market, or at least every market where there are fewer than three options on the exchange.

> mandatory from 18-up catastrophic insurance at low premiums.

Isn't that what the law does? The mandatory bit is enforced with the tax penalty.

Obamacare increased the cost of my families healthcare from $400 a month to $1800 a month, and now my family doesn't have long term healthcare insurance.

So please keep telling me how it's better.

I suspect that you already know the answer here: better !== better for everybody, and worse for you !== worse for everybody.

A lot of people even think that "more expensive for most" still qualifies as "better" as long as it means that people that previously could not get coverage at any cost are now able to, since none of us know when we might develop a "pre-existing condition" that pre-ACA would have made us uninsurable forever.

Whether a system is truly better or worse depends on how you account for all the different people that it helps or hurts. http://www.politifact.com/truth-o-meter/article/2017/jan/05/... has some examples that suggest that things are better for a whole lot of people under ACA, but I'm sure other groups and analyses will paint different pictures.

Another anecdata on the "worse for me" side...

My income has been pretty irregular over the past few years. All but two months I've made $0. In two months I made many tens of thousands of dollars. I got denied for free coverage because of the two months I earned money. I got denied for purchasing through the exchange because my projected income was $0/mo. /me is an edge case, I guess. So, having some time off, I left the country for 8 months and didn't purchase US insurance while I was on the other side of the globe. Another edge case found...since I wasn't outside of the country for 11 months in a calendar year, I had to pay the penalty for the entire year, despite being nowhere near US health services for the entirety of the time I didn't have health coverage. I now have health coverage that I'm purchasing directly from a health insurer. It's expensive and a plan I could have bought pre-Obamacare.

As a programmer, I see Obamacare as the equivalent of rushed code that only works for the primary success case and crashes whenever you throw any abnormal situation at it. Too bad they couldn't have hired Silicon Valley engineers to fix the legislation as well as they fixed the healthcare.gov website. I've found at least 3 bugs in it that need to be fixed.

Have you 'reported the bugs'?

So what else changed. Did you get more coverage for things? What happened to your premium? How much did you use your $400 insurance (i.e. did it actually provide coverage.)

Price is an important aspect to health-care but devoid of any other information it doesn't mean much.

The framing of your question implies that for every dollar you spend there is some return (risk-adjusted, to account for the possibility you did not need that care). Why should that be the case, if poor public policy allows health insurance providers from acting as monopolies?

Consider: http://quotes.morningstar.com/chart/fund/chart?t=VHCIX&regio...

Premiums were rising before the ACA was enacted and continued to rise afterwards [1].

> So please keep telling me how it's better.

It expanded Medicaid and gave premium discounts to lower income brackets in states that accepted it.

[1] http://i.imgur.com/sKUm2u0.jpg

The posted graph(http://imgur.com/sKUm2u0) shows only 1999 onward. From the articles I've seen, the trend of increasing health care costs (2-3x rate of inflation) extends as far back as the mid-80's. The broader trend is largely independent of the ACA and remains a huge issue.

Speaking of the graph... what is that huge gap that opened between between "Workers Contribution to Premiums" and "Premiums" in 2010, right when the ACA was signed into law? Is that just... raw profit taking?

I completely agree. I was just pointing out to the poster I was replying to that with regards to one of the most important economic issues the US currently faces, there are meaningful differences between the two parties, despite the fact that they are both backed by mostly the same corporate interests. I'm tired of the "both parties are the same" trope. Current events clearly contradict that.

Isn't it obvious that it's a matter of perspective? Ask two non-programmers the difference between Python and Haskell, and they'll say, "They look the same to me." Ask two programmers the difference between Python and Haskell, and it's a fair bet that they'd be able to list off a laundry list of differences. Both perspectives are actually right, and neither one is a "trope" as you put it.

What you think of as meaningful differences someone else might think of as nominal differences.

The differences between Python and Haskell only affect programmers and people who employ programmers. The difference between the two parties approach to health care affects everybody in the US. It's not simply a matter of perspective.

My point is that you see a large impact between the parties while others might see a low impact between the parties. That is a difference of perspective.

People who can't distinguish between the meaningful impact of the differences between the two parties approach to health care are not paying attention or willfully ignorant. Bringing out the trope perpetuates this. It's a real problem.

I'm trying to explain a perspective that is clearly different from yours. You're free to reject it of course, but snubbing your nose at it doesn't seem productive. It certainly won't make it go away, no matter how much you declare it to be a trope.

> not paying attention or willfully ignorant

I love how you've left out a third choice, which is, "they just disagree with me and my own economic forecasts." You know you've really gone down an interesting road when the only way someone can disagree with you is if they're a boob (accidental or not).

I'm specifically not making a value judgment on the approaches of the two parties. Health care is a complicated topic, and there are many approaches of with pros and cons to each. All I'm saying is that the parties have fairly different approaches to the issue, which are meaningful, due to some fundamental principles on which they differ.

You've been saying how there's a perspective where they do not meaningfully differ, but you have not actually articulated how that perspective is valid. My position is that this perspective is not valid, and recent events with the AHCA have made this very clear.

The next time you want to have a conversation with someone that disagrees with you, you might want to consider not calling them an idiot. Namely, you haven't articulated anything either. No value judgments? Please. The subtext of your comments is oozing with value judgments.

This is a somewhat relevant read - https://medium.com/@jamesallworth/the-slow-decay-of-americas...

Basically discussed shift from discussion in politics about democracy to economics.

It's easy for those who aren't affected by those social issues to consider them less important.

Ds talk a better game, but they rarely walk that talk. Take just your first example. W's first year in office, he wanted to standardize "civil unions" that would have entailed all the same rights as "traditional marriages". Of course, lots of "conservatives" were against that, so W reached across the aisle. Crickets. Ds decided they wanted to preserve that issue's political value, so it was more than a decade before gay and lesbian couples in conservative states had access to these rights.

My memory is a bit fuzzy and news archives aren't showing me anything from Bush's first four years about civil unions.

The only article I can find discussing them are from after Bush was re-elected in 2004 when he proposed a Constitutional amendment banning gay marriage, but allowing states to have civil unions.

If that's what you're talking about, then I hardly think it is surprising that Democrats balked.

IIRC that would have entailed striking the word "marriage" from the legal books entirely. Conservatives are not down with that; the logistics with support would be insane, without support impossible.

Given the outcome, I find this an odd talking point of failure to compromise. We dodged a separate but equal bullet..

Separate but equal always turns out well...

What's your point in your false equivalency?

Are you implying that the 20 million people that now have medical coverage because of Democrats pushing for Obamacare isn't worth it? Was that all "talk"?

I'm seriously trying to understand your "equivalency" position.

Let me know what the Republicans would have done for health care? Right now it seems that the only thing they've done is to actually limit universal health care, so we have less than 100% coverage.

Are the two parties the same on health care?

Right now I don't trust anybody that says the two parties are the same, since they are clearly very, very different. In fact, it seems the only people that say that are Republicans that don't have a better argument?

Are you a Republican? Or maybe you fall under the auspices of a white-male demographic that bias towards conservatism?

Yeah I'm such a racist conservative that I voted in the primary for Bernie, and certainly would have voted for him again in the general if DNC hadn't been in the tank for Mrs. Superpredator, because he had the most credible argument for something, anything different. Congratulations on electing Trump instead! Congratulations, too, on hypnotizing yourself into really believing that there's no one to your own left.

Perhaps you can't imagine it, but I really don't care about purported "differences" between Ds and Rs. It's clear that both of those gangs are interested in exploring only a tiny portion of the universe of political possibility. (So far, that seems to be the portion that maximizes public payouts to big political donors!) I have voted and will vote for any departure from that tiny area, in any direction whatsoever. If Vladimir Lenin and David Hume both rose from the grave and ran on a ticket together, I would vote for that. Unlike everyone who votes every election for the status quo (NB: that's you!), I am not a conservative.

I don't understand.. are you saying you're not interested in the differences between the two parties, or are you saying ther are no differences between the two parties?

Because if it's the latter, do you think the 20 million additional people that receive health-care under Obamacare isn't a difference?

Because, like Joe Biden said, it's a "big fucking deal".

Also, you're not helping your cause by saying you're a Bernie-bro. Bernie-bros are generally racist, as he supports a largely xenophobic nativist trade policy.

There's a reason Bernie's base is largely white. Bernie and Trump supporters are the same.

In the end, you should never trust anyone that claims the two parties are equal. Those people have other problems they need to work out first. Maybe they just don't want 20 million Americans to have health care?

Wo-hoo... what's this name calling! Are you seriously accusing the latest American spin to socialism as xenophobic racists?! You serious?

So let's hear from you, what are we supposed to do? Respectfully defer to the pundits endlessly quibbling about the differences between D and R? That is also part of the problem, in case you hadn't noticed...

> So let's hear from you, what are we supposed to do?

You're supposed to pick a side, from the choices given to you, because that's how government works.

Government is not about getting what you want. Government is about picking from the limited choices given to you. Complaints about your limited choices go unheeded, because no one wants 300 million choices in government since everyone wants to be their own pretty princess that rules the country. So we, as a society, decided to limit you to 2 choices, and you can proceed from there.

So, which side are you on? R or D? Pick, because no one is on your side.

You've deteriorated to self-parody here. Also you've conceded, in bizarrely triumphant fashion, the awful truth I highlighted at the top of the thread: in USA we effectively have no choice in political outcomes.

I'm glad you agree that you have a choice in your vote.

Now, pick.

'Government is not about getting what you want. '

This speaks for itself

If only more people knew this about how government actually worked.

They would complain less, and be more appreciative of the people that actually choose to run for public office.

If more people knew "about how [this particular] government actually worked", there would be more political assassinations. Fortunately there are other less drastic options, but we'll have to ignore you and your "best of all possible worlds" bullshit to effectively pursue them.

What really blows my mind is that all these self-described "progressives" have decided this particular monstrous warmonger is the line they won't abide crossing. Have you ever actually listened to a single thing HRC said?

Oh it's certainly a better system than your "Waaah! Waaah! Why aren't these politicians waiting on me hand-and-foot? Waaah!" system of governance...

Government is about what you do for others.

Government is not about what it does for you.

Why? Because you are insignificant.

> Let me know what the Republicans would have done for health care?

"Obamacare" (formerly known as "Romneycare") is a republican healthcare plan. One of the big reasons we claim that our two major parties are approximately equivalent is the Democrats' habit of passing Republican policies.

> since they are clearly very, very different

There are differences between R & D that are significant, but they are minor compared to all the ways they are the same. You can be 100% sure that politicians will side with their establishment, monied donors.

> Are the two parties the same on health care?

No, but they're both bad. Yes, Republicans are not going to improve healthcare, but neither are the Democrats. Did you know Feinstein said a few days ago in a town hall that she has no intention to support single-payer?

> it seems the only people that say that are Republicans

Assuming things like that only makes you sound partisan or uninformed. I'm not a Republican, so now you have a counterexample.

> No, but they're both bad. Yes, Republicans are not going to improve healthcare, but neither are the Democrats. Did you know Feinstein said a few days ago in a town hall that she has no intention to support single-payer?

I don't know Feinstein's motivations, nor am I knowledgeable about the internal politics of the Democratic Party, but do you think her rejection of single payer has more to do with politics than with actual belief? The "public option" was realistically the closest America ever came to a single payer system, and that proposal was largely sunk by Republicans in Congress, though some Democrats in right-leaning states also rejected it. Are Democrats just trying to compromise in a right-leaning political climate, or are they truly the same?

Using Feinstein as a representative of a typical politician is like using McVeigh as an example of the typical veteran.

The only people who deserve to be compared to here are the people who voted for her.

I don't believe 20M more people have medical coverage because of Obamacare, that's a lagging indicator that's likely dead wrong. If you are self employed it made medical insurance unaffordable. Before Obamacare I paid $400 a month for a $5k deductible plan for my family. Post Obamacare I paid $1,100/month, then $1,400/month and quit when it went to $1,800 a month.

So my family has no long term medical insurance and no one is counting our dropping medical insurance in any statistic.

About 13 million fewer people are without insurance than before ACA, that's a 1.3% decrease in the amount of uninsured people [1].

ACA marketplaces will insure about 13.1 million people in 2017 and insured 12.9 million in 2016. The rate of private insurance increased 1.2% from 2014 to 2015 and the rate of public insurance .6%.

Now, how much of this is due to ACA and how much is due to other factors is really impossible to separate. Almost anything would be pure speculation. Interestingly, premiums on the exchanges are climbing slower than private insurance [2].

Health insurance premiums had been rising for years, probably due to several issues: aging population, rising costs of equipment and pharmaceuticals, administrative overhead, tort, etc, etc. Additionally, ACA added some costs in the inclusion of pre-existing conditions. I don't disagree that something has to be done, but getting rid of ACA is not going to be a panacea.



Insured and insured in a meaningful manner are totally different things.

It's like measuring productivity in lines of code. Once a metric becomes a target it's meaningless as a metric.

Unless you can come up with something to dispute it, you are not entitled to your own facts.


I don't find that a very enlightening point, but I will offer some real numbers. The widely cited 20 million is from the Congressional Budget Office, a non-partisan organization, not CNN, as you state [1]. And even if you chose to reject that, the number of health insurance policies purchased on exchanges in 2016 was 12.7 million and is expected to top 13 million this year, not an insignificant amount and not including the "ripple effect" that would create in the insurance market.

[1]: https://www.cbo.gov/publication/52486


It's illegal? Or it doesn't meet the minimum qualifications for the tax benefit, because those are quite different.


As to costs, those vary widely by state. This recent article in the NYTimes was a fairly good overview of how policy decisions can affect the premiums: https://www.nytimes.com/2017/04/21/health/how-gop-in-2-state...

Illegal. The reason my families health insurance was $400 a month was because the insurer could exclude pre-existing conditions. That's no longer allowed. And I'm self employed.

The ban on pre-existing conditions was done either because the drafters of Obamacare have no clue what insurance actually is, or they actually wanted to destroy health insurance. No one is going to pay for coverage when healthy if they can sign up when sick.

Our first year of Obamacare was $1,100 a month for the same level of coverage as our banned $400 plan. The second year was $1,400 a month. This year the only available plan had the same $5k a year deductible, and was $1,800 month. So we don't have medical insurance any more.

The NY Times link is LOL, I notice how it didn't track how exchange prices have exploded. New Mexico's exchange is going to get crushed like all the others, it can't stop rational behavior. It will soon have to subsidize everyone or all self employed people will be out.

> The ban on pre-existing conditions was done either because the drafters of Obamacare have no clue what insurance actually is, or they actually wanted to destroy health insurance. No one is going to pay for coverage when healthy if they can sign up when sick.

Oh good, so the alternative is a market where you'll never get coverage again once you are diagnosed with a condition - or even before, given that insurers have been sued for attempting to cancel coverage when a condition is diagnosed by going back and looking at previous physician visits. "Oh, we know you weren't diagnosed with cancer back then, but you went to the doctor a bit, and the things you went for are consistent with that, so we determined you had cancer when you got coverage, and as a result are canceling your policy for this".

Health insurance is not insurance in any definition of the word. Insurers want as many of the benefits of insurance as possible while wanting to assume as few of the risks as possible, things they shouldn't be able to do as an insurer. I've watched it for a long time (hint: one of my jobs is designing claims adjudication and management systems for health insurers).

Go your way, where insurers can exclude, and in very short order, everyone will. And then the only ones who offer coverage that support pre-existing conditions will be the ones willing to gouge those people.

But you won't care, as long as _your_ premium is $400/mo, right? Or at least until someone in your family gets sick.

Here's the dirty little secret: actuaries and statisticians working for the insurers factor in all these conditions (in the medical sense) into their premium accounting. What percentage of what demographic is likely to get an illness or disease, etc.

They have to. Or they'd go bankrupt.

So they do. And then they work feverishly to cover as few of those people as possible, to increase their profit profile, reduce their exposure and risk.

If that's what people "wanting to destroy health insurance" want to be rid of? I entirely support them.

> The ban on pre-existing conditions was done either because the drafters of Obamacare have no clue what insurance actually is, or they actually wanted to destroy health insurance. No one is going to pay for coverage when healthy if they can sign up when sick.

This is what the tax penalty was meant to prevent, correct? I'm curious, what is your solution to insuring people with pre-existing conditions?

If is to be insurance then people with pre-existing conditions should get coverage for everything that isn't related to the condition.

Got cancer? Fine, we'll still cover breaking your leg, as long as the break isn't from cancer invading the bone or from cancer drugs weakening your bones. You're on your own for the cancer.

You want a useless product that will guarantee your death because it meets the dictionary definition of insurance?

This is why the real policy issue is lack of healthcare, not lack of "health insurance", which is a fake benefit invented to maybe get you healthcare.

Real insurance involves a gamble. You pay a small amount to get what is essentially a lottery ticket. You win if disaster happens, giving you money to deal with the disaster.

Would you buy a lottery ticket if it was known to be a winner? Sure! Would anybody want to sell it? No! That isn't a viable business model.

What you are looking for is more like welfare. You have a problem, there is no gamble, you don't have the money, and you expect "society" to pay. That definitely isn't insurance.

Those are the options: insurance, welfare, self-pay

Imposing a duty to handle pre-existing conditions on "insurance" companies is forcing a business to provide welfare. Obviously, people will switch from the cheap company (or none) to the high-quality company when they get a problem. The tax on people without "insurance" is intended to discourage this, but it is ineffective because "insurance" costs more and because people will still switch from cheap to fancy.

In any case, we've invented some pretty fancy health care. Giving it to everybody would exceed our GDP. This is obviously unworkable. The situation only worsens as we invent more. How do you propose to limit usage, if not by price? Would you just promise everything, but let people die on waiting lists? Would you rate and rank people, perhaps on a point system with extra points for politically-connected people?

Considering the US is one of the only developed countries not to have some sort of socialized health care, I don't believe it's not doable. The US lags behind on critical metrics like life expectancy and infant mortality. Waiting lists are only getting longer with the consolidation of healthcare into large systems. And that consolidation is driven by doctors leaving private practice because the margins are so thin that the business model doesn't work. Healthcare does not work for anyone in the US except maybe pharmaceuticals and equipment manufacturers and it does work elsewhere.

Healthcare isn't really working anywhere in the world. All systems deny healthcare to people who need it; the alternative is not possible for any economy.

I think it was just a few months ago that some girl in the UK headed to the USA for surgery, mortgaging a house to get it. The UK had decided that the surgery might not be the cheapest option that would meet a low-end standard of care, so they said no. That was it: leave the country, get an inferior surgery, or be permanently deformed.

That is typical. Also typical is "yes, of course, but the waiting list is 2 years". Also typical is "denied for people over age 60". For example, a hospital in the USA gave my 80-year-old grandmother hepatitis. Being the USA, she got a treatment that costs about $100,000. At her age, that would have been denied under the typical government healthcare system. It wouldn't be cost-effective you see, so she would just die.

So the fantasy of everybody getting the very best is out. It won't happen. It can't happen. How would you like to deny healthcare to people?

In the USA, we are really touchy about having the government say "no". We are also really touchy about paying for other people, especially people who don't seem to contribute much to society. That is just how Americans feel, on average. Life expectancy and infant mortality metrics are just fine in the USA if you ignore the poor, as typical Americans do. When you say that socialized health care helps, and you point to averages, you aren't selling Americans on the idea. The better-off Americans want care that is better and cheaper, not available to more people.

Since you are a researcher, where is your research published?

I would like to see your peer-reviewed research that you did to come up with your data.

Am I right in thinking that the first three were achieved through litigation rather than legislation?

Her two examples, the medical and agriculture sectors, are two of the most regulated industries around.

A lot of these "monopolies" result because of regulation pushed by combination of well-meaning and self interested people and corporations (see bootleggers and baptists).

Her examples suggest it'd be better to focus on the marriage between corporations and government, which allows companies to focus their energy on getting gov to hassle their competitors vs improving their own product.


I don't know why you are getting downvoted because you're absolutely right. The first three markets named (airlines, telecommunications, health care) are all heavily regulated and the barrier to entries are controlled by the government, not natural market forces.

Monopolies are not all bad. Sometimes a company has a monopoly because they just offer a better product (Amazon, Google) and they shouldn't be punished for that, especially when there's no government intervention that exists to protect them.

Yeah, and it's debatable whether -- in these cases -- the monopolies would exist if it weren't for this regulation. The health care market is extremely distorted, and that's definitely true in the case of agriculture:


Amazon is a infested with scam storefronts. And Amazon is really compelled to do anything about it because they have no competition.

Airlines have huge market barriers: getting and maintaining huge, expensive, gas guzzling aircraft. That is not a regulation barrier.

Both telecomm and health care are intwined monopsonies backing the play of regional monopolies (cartels) backing federal congresspeople.

I just don't buy any of your comment as fact at all.

Airlines have new entrants all the time. Sure it's costly to start a new airline, but not by the standards of available capital. But there are also lots of regulatory barriers, available landing slots and terminals for example. For some reasons we think it necessary to have government run airports.

Amazon has to compete with other online retailers and local retailers. How many scams it allows is a measure of it's competence, not it's market power. If I get scammed on Amazon they are getting a charge-back and will have to deal with my credit card company.

>Amazon is a infested with scam storefronts.


"The first three markets named (airlines, telecommunications, health care) are all heavily regulated and the barrier to entries are controlled by the government, not natural market forces."

Not true. It costs a lot of money to purchase a commercial aircraft, and not because of regulation. It also costs a lot of money to start up an ISP, and not just because of regulation.

> "regulations are supported both by groups that want the ostensible purpose of the regulation, and by groups that profit from undermining that purpose." Wikipedia

Yes, we should stop the people that want to undermine the purpose of regulations. Regulations are critical to assure the safety of our medicines and of what we eat. But we need to pay more attention to the abuses, and to separate the well-needed regulations from the abuses pushed by interested parties. But that is true for all the government work, we should stop the interference of a small powerful few so we can get what society, as a whole, needs.

In many cases the most qualified people to say what should be regulated and how work for the companies that would be affected by the regulation.

Regulation isn't a binary thing. And it's probably better to speak of government intervention than regulation, as the former is more general. We need to cut the interventions that effectively serve as protectionism for powerful interests and reinforce those that provide for a fair market and protect the social good.

Obviously, those things are subjective, but I would welcome a political discourse that centered on how we slice those concerns.

Drive through many American small towns and it looks the exact same.

A strip mall with a Subway, a couple national fast food joints, and if you're big enough, Wal-Mart.

There are literally 1000s of towns with this copy and paste setup-- how could this not be detrimental when money is going to a huge corporation every time?

Object-oriented economy. Rather than reusing code, we reuse business plans!

If you haven't read Snow Crash by Neal Stephenson, he refers to people doing just that (reusing proven business plans) as three-ringers. I.e. people who got their business plan in a 3-ring binder, and are implementing it without much in the way of critical thinking about why it works or ambition to do much beyond implementing it.

Okay, let's replace Wal-Mart with a bunch of local businesses, and assume they both manage to get their work done with the same amount of workers and pay the same salaries. In that case, Wal-Mart actually seems to provide a benefit to the community - its reduced prices from economies of scale benefit all consumers, while the wealth generated by local businesses is concentrated in the business owners and only trickles down to the rest of the community if they choose to invest it there.

In order for Wal-Mart to be detrimental you would need to evaluate these factors:

- What is the percentage of local business owners among the populace that you are aiming for? You would want a majority/large minority of people to be business owners to reap the wealth benefits, but in Wal-Mart's case you're essentially transferring wealth from the poor strata to a new middle-to-high class strata of business owners.

- Can local businesses employ more local community members and pay better wages? This is a possibility if you assume Wal-Mart is pocketing huge profits for themselves, which altruistic business owners would instead redistribute among the community in the form of wages. This expectation does not mesh with my experience but I don't know if there's any study on this, maybe I'm wrong.

- Can you evaluate whether the huge corporation is pocketing more money from your community than a collection of local businesses? While the huge corporation may make tons of money, what is the profit they extract from just your community, and how would it compare when replaced with local business? Obviously, you would allow for some leeway since at least the profits are going to some members of your community.

- Would consumers be willing to take a hit to their standard of living in order to support local businesses? I'm skeptical, as even in the entrepreneurial-friendly US(expected higher number of business owners per capita?) the rise of corporations has been eradicating local business.

you're describing the American cultural wasteland that is the suburbs and exurbs. These communities are drowning because their local vitality has been subsumed by giant national corporations that clone themselves over and over again into every community they operate in. The result is a national monoculture where everyone is worse off. On the plus side, though, your toilet paper costs about 15% less than it used to.

On the downside, incomes have stagnated since ~1970s. Before Reagan, company mergers had to consider monopoly power in regions and economic distribution; after reagan, it became mostly about consumer price

Multiple other comments in here about this particular niche that the subject of the story went into (medical supplies), but what came to mind to me was a similar story about how it's a similar situation with the golf ball market [1] and from many other stories with eyeglasses (Luxottica artificially dominates the market).

These are both cases where it's not so much anti-merger/monopoly law that's the culprit, but the general structure of the legal system that favors those with the larger pockets and forces out upstart manufacturers.

1 - http://www.golfdigest.com/story/ball-wars-costco-files-lawsu...

Patents are government monopolies created to incentivize inventors to share their inventions so others could build upon them. The fear was they'd hide their IP behind factory walls and innovation would be slow.

Now patents are used by those who don't make anything and often don't even invent anything in order to blackmail those who do.

"Intellectual Property" is the use of the State's violence in an attempt to enforce an artificial scarcity upon something that is naturally non-scarce - information. It is inherently antithetical to a free society and always ends up hurting the everyman (and society at large) in the long run.

When I hear "IP" I now perceive "rent." Rent is drag and is a prime mover in income inequality.

The two are not at all alike, though. Rent is payment made in exchange for the use of a physical, scarce resource. Information, in contrast, is inherently non-scarce.

> In 1994, at the height of the AIDS crisis, in which I lost several friends and a beloved employee to the disease, I started a manufacturing company in Little Elm, about 35 miles north of Dallas, to produce the first-ever automatically retracting syringe to eliminate the risk of nurses contracting HIV through accidental needle sticks. The syringe received rave reviews from nurses, hospital executives and public health officials, a major grant from the National Institutes of Health and robust private investment. But when my partners and I tried to sell it to hospitals, we were told time and time again that even though it was a better product — a lifesaving product — they weren’t able to purchase it. The primary supplier of syringes, which controlled 80 percent of the market, structured an arrangement with a vast network of hospitals that essentially closed our industry to new firms for good.

That last bit sentence me a bit odd. Rather than go into the details of incentives of hospitals and why they would forgo a better alternative, the author just attributes it to "monopoly". If this is true, there is some deeper misalignment with incentives in this industry that won't go away by just removing product providers that control a significant portion of the market. Or something that the author doesn't know about the industry that would make this decision make sense.

Monopoly says you buy 100% of your products from us at 50% discount or 99% of your products from us at full price. Now someone is offering a better product but just that one product, so even if it was free your prices go up. See Intel discounts for avoiding AMD, or Microsoft discounts for avoiding Linux, or ...

What do you do?

Your hypothetical scenario is suggesting that there are no alternative for 99% of the monopoly provider's products and only a better alternative from the 1%? No alternatives for the 99% even with a 50% markup (50 discounted vs 100 full price)? In that case, the buyer is much better off with a 50% discount on 99% of the products since no alternative exists, even at the 100 full price.

That's the argument being made. The buyer is better off staying with the single supplier. The argument is that this is a breakdown in markets and should be regulated (for instance by breaking the supplier apart).

If the buyer is better off, and presumably the consumer, who's worse off? The woman who wrote the article that can't compete? She can't force the hospital to go against its interest and purchase her product?

Everyone except the supplier is worse off. Remember, a 50% discount on 3x price increase is still a huge price increase.

Further it's all short vs long term pricing. In the short term a company will setup lower prices to kill of competitors, the when there is no competition they raise prices significantly to have a long term war chest. So, on a day to day basis they might be the cheapest option, but their average price over decades is more than their short lived competition.

It's local optima - they get the 50% price dip from buying 100% instead of 99%, because it saves the monopoly money by killing competitors before they spring up, but the lack of competition hurts the consumers because the monopoly has no incentive to drop their prices or really innovate until a competitor with the ability to drop consumer's costs by MORE THAN FIFTY PERCENT comes along.

So even if a competitor with 10% cheaper goods comes along, the consumer sticks with the monopoly 100%, for fear of being dicked by the consumer's 99% prices.

That doesn't mean the consumer is better off. The consumer is missing out on better products. The economy is also worse off, because it is missing out on competition which would drive the prices down, and provide jobs.

In an ideal world, such agreements would be illegal, leading to a freer market.

the hospital and its staff are worse off in that they are using products that aren't the best available. the hospital is also worse off in that it is effectively blocked from pursuing innovations in medical device technology because it is obligated to only buy medical devices supplied by the monopolist.

Power begets power, and that's just as true in markets as it is in politics. Large players have an entire playbook of dark, gray, and white strategies for getting a leg up on small players. Dumping, bundling, FUD, bribery, regulatory capture, moat-building, economies of scale, network effects, the list goes on.

A sizable fraction of large markets are dominated by monopolies or oligopolies. While it's arguable which factors contribute most, it's an observed fact that this happens, so I'm not sure I'd call any particular instance "a bit odd." Sadly.

There's a link in the next paragraph to http://washingtonmonthly.com/magazine/julyaugust-2010/dirty-... which tells more of the story. Claim is that rule change allowed hospitals to join group purchasing organiations (GPOs) which could get their fees from vendors rather than buyers, essentially creating a system of kickbacks from dominant vendors, which could be large enough for GPOs and thus hospitals and thus patients and thus taxpayers to purchase from the dominant vendors even if their products were not as good as those from medical device startups.

I also found interesting the only two brief mentions of patents in the article. One, a dominant vendor historically using patents to quash startups. Two, the startup the article focuses on has patents that would expire soon (maybe have, the article is from 2010), so other companies would benefit from their innovation (the article mentions a Chinese manufacturer, where the startup eventually took their product).

If the startup's product was really better, why didn't they license their patents to the big vendors? Was the startup simply greedy? The startup's research was largely paid for by taxpayers, why did they need a patent at all? It seems odd to expect inventors will also be good entrepreneurs and litigators: this seems a situation in which grants or prizes without patents would be superior. Alternatively, it points to some market failure in licensing patents that maybe could be solved by some kind of compulsory licensing, eliminating the problem of too greedy startups holding out. How am I wrong?

Finally, with articles like this about the health care industry, I'm always struck by intense focus on bringing innovations to market in the US, and the huge barriers to doing so. I realize that the US is the largest market, but still. Maybe BRIC and other companies should get better at delivering innovations stalled in the US, or maybe the innovations aren't actually so great?

The dominant company might not have agreed to decent terms. After all, they own the market so they can starve a startup out. Though you are right, you'd think they would want to sell an improved syringe at huge margins.

Go to the nurse unions. Perhaps the next contract could require the syringe.

Go to congress. Lobby. While you may be outspent, that isn't everything. You can also apply pressure via an ad campaign, asking voters to demand that nurses are safe. There is some real emotional appeal potential here.

End result: the dominant company is forced to cave in some way. They can buy the syringe, allow an exception for the syringe, or just lose 100% of their customers.

The same bundling dynamics can play out between manufacturer and vendor as play out between vendor and hospital.

Licensing the patent would further monopolize the syringe market. Her community would be better off if they had been permitted to manufacture and sell the product.

It's quite simple - charge a much higher price than is reasonable per syringe, then offer a significant "discount" (down to reasonable price) to hospitals willing to buy from only you for the next five years.

These are called group purchasing organizations and a lot has been written about them. Here's an article that also discusses this particular syringe: http://washingtonmonthly.com/magazine/julyaugust-2010/dirty-...

I can speak for a different market in a different country (but I also lived in the US for a decade): IT freelancing in Germany.

I get paid well, but there is something really strange going on: I can't get my contracts directly. I always have to go through a company whose sole business it is to be an intermediate between the (large) company that wants to hire a freelancer and the freelancer. Note that those freelancers are not employed by that company and the relationship is pretty loose. The business pays the intermediary and they pay you, it's a per-project contract.

The large companies won't hire someone directly even though they would save lots of money (and freelancers would get more). Suspicious as you guys are you probably think that well, there must be a logical business reason that it actually really is worth the additional money being spent on the intermediary. For example, finding and bundling lots of freelancer resumes. While that sure is a reason it isn't nearly sufficient for an explanation, not only because they actually do precious little for the money they keep. Also, the legal side can't be the reason either when I look at how the contracts between me and the intermediary are set up.

To give one example from a very large client I worked for for 1.5 years as a freelancer, the reason I was told they go through the intermediary is that it makes their accounting much easier. Since I once worked for that company and experienced the exact same thing I was not surprised: When I worked for them in Silicon Valley I saved the company a lot of money by looking for an apartment myself. I ended up sharing one with somebody else. However, the expensive all-inclusive one-bedroom apartment I had had in Mountain View had the advantage that there only was a single bill (paid by corporate Amex card). The (far cheaper) shared apartment I got instead produced a handful of different invoices (furniture rental, cheques for the rent instead of Amex, etc.), so the company told me they would have preferred to pay the much higher amount from a single source. Which I don't quite understand - I do have some business background and understand accounting, in the computer age, what's the big deal? In the freelancer scenario they said it just works better with their SAP system then having lots of individual contracts. That company also had a big program to "streamline" and centralize their purchasing, which of course means having significantly less firms to deal with as a goal that overrides other concerns.

So, it seems the large businesses prefer to work with other large businesses, no matter how much money they could save. We don't even need to argue whether and/or how much legal and business reasons are valid or not, I think the only thing that matters for the purpose of the discussion is that the effect exists, and that that means "market" is more and more a lie the more of a countries wealth creation is done by big businesses. You don't need to look for actual "monopolies" in the classical sense, those firms quite voluntarily restrict themselves (and again, the bottom line is that it exists, how justifiable it is from the individual firm's POV is a different question, let's assume they know what they are doing and that it makes sense for them).

When large corporations are comfortable in their revenue side (approaching monopoly) they obsess over risk. Every contract poses a risk, including litigation risk. That's probably why. GE is obsessed with outsourcing right now, they even outsourced the mail room. A side effect is this promotes inequality as you can no longer get a job in the mailroom and work your way up to CEO. See the hbr ideacast on this

Thank your for the explanation.

The human labor cost of processing a contract goes up at a more than linear rate with the size of the company.

Meanwhile, "managing" contracts is almost as expensive as managing employees.

At some point having an accounting dept manage 10K contracts is simply impossible.

Its a labor and control fraud limitation not technological.

As I said, I think the focus for the points of this discussion is the effect. No doubt everybody acts logically, I didn't suggest that everybody in those companies just lost their mind. This goes long the same lines as "For evil to triumph, all that is required is for good men to respond rationally to incentives." (so here it is the loss of ever more "market" in the "market economy" that we get as an effect, and it's questionable we get it back in economies of scale, judging by the popularity of Dilbert cartoons).

Are there tax reasons as in the UK that make umbrella companies more common?

Not that I'm aware of in the context that my examples are from. They pay for independent(!) freelancer programmers and consultants, should be the same except for having just a single partner instead of many.

Most legislation, counted in line or pages, is written by industry. Legislators aren't writing this themselves.

And there's little in the way of taking a strong anti-trust (competition law) in politics. The Obama administration watched over, and permitted mergers that very blatantly reduce competition: multiple airlines, and drug companies. And it was more aggressive overall in applying competition law compared to previous Republican administrations. So, point is, even with a Democratic president, competition law isn't pressed strongly enough, let alone with a Republican in office where it's apparently "we need to recognize more natural monopolies, and help them whenever possible".

About the only thing all Americans might be able to agree on when it comes to politics, is the increasingly obvious need for a constitutional amendment getting money out of politics.

Does anyone else think that nearly all huge companies exist due to monopolies or near-monopolies? MS has monopoly on desktops. Apple on cell phones and tablets. Facebook on social networking. Google on search. I think any market without at least 3-4 strong competitors will devolve into one dominant player who can milk more from the customer base.

How does MS have a monopoly on desktops? I have three desktops in my house, and no microsoft software running on any of them.

Markets don't devolve into "monopolies" very often. In Microsofts case, it had an operating system that provided massive economies of scale to customers. You could run it on any compatible PC and be guaranteed to be able run hundreds of leading applications. Most businesses are significantly more productive with 100% windows than 50% windows and 50% other platforms. The only reason Apple Mac OS is in corporate America is because of it's special advantages in specific uses. It's always been too expensive to equip everyone with a Mac, esp. your lowest paid order entry/support types.

Most markets don't grow economies of scale for their customers in that manner. The advantage of having all of your sales people drive Fords instead of a mix of cars is a minor one from a fleet purchase perspective. And the same advantage can be had with a fleet purchase agreement with virtually any competitor.

Android has a higher market share than iOS. How does that make Apple a monopoly?

A more apt comparison would be Apple (iOS) vs Samsung (Android) vs LG (Android) vs Motorola (Android).

And Apple has the most mobile device profits.

Still, I agree: nowhere near a monopoly.

They definitely have a monopoly in my house...

Fair point.

Aside from 2008-9ish where they had around 50% and Blackberry was king, Apple has had a very small share of the mobile phone market. There is a myriad of competitors. The tablet share is up there but not to facebook or ms windows levels of having almost no competition.

Part of the issue here is defining "market" and their scope. MS has a monopoly on desktops, but how much impact does that have with people increasingly shifting off the desktop? How do you define Facebook's market? If it's "social media" does that include blogging? twitter? email?

The article never establishes what is wrong with rural America in the first place. Why does it need rescuing? Why are businesses with large market share a problem for rural America? The premise that monopolies are bad is never explained.

The author never establishes any of this. How did this make it to the front page?

> The article never establishes what is wrong with rural America in the first place.

She presented numbers related to how many new businesses were formed recently in small towns vs large towns. Sure, she didn't go through the hoops to explain that more new businesses = more new jobs = more local wealth, but would that have even contributed to the article?

> The premise that monopolies are bad is never explained.

The article did attempt to explain this through an anecdote about a superior syringe being blocked off the market by another company that held a monopoly on medical devices & arranged contracts with buyers to lock them in.

Maybe she should have been more explicit - and I'm not trying to say that the article's good material for HN - but she did at least touch on most of those points.

Rural America could bust monopolies tomorrow if they voted differently. They've done it before, and they don't need to be rescued by us for that. More like they need to rescue themselves and the rest of us.

Unfortunately voting differently also means voting for social change in other areas, which rural populations usually aren't eager for.

Mmhmm. This is the same Rural America that thumps its chest proudly at how the Electoral College pulls power in the US away from major population centers and "into the heartland" (witness Trump). And yet it's our jobs to bail Rural America out?

Welcome to the new world of corporate mercantilism.


Mercantilism is how capitalism dies. Self interested capitalists buy monopolies from politicians until no free markets remain.

Today we have Trump favoring Coal, Oil, military contractors, the Sands corporation (Sheldon Adelson) and corporations searching for special favors such as Tariffs, etc, because of their contributions to his campaign.

Hilary would have favored Wall Street banks, hedge funds, "green companies" in search of federal handouts, unions, etc.

We have the political system we have because of massive contributions by moneyed players who want either handouts or rules to keep competitors out.

First things first: ISPs

I feel you. I started a small ISP in Montana a few years ago. We're getting into laying our own duct and fiber.

Once I get the machine running, I want to focus on providing tools and information to others looking to do the same thing.

I've been running a Slack channel called ISP School for about a year now to bring together other interested people. Email me at matt@tsi.io if anybody wants an invitation.

is TSI a CLEC?

Nope. We argued that we were providing data services under the FCC definition of utility. The only real person who got in our way was the city attorney. He said that internet didn't qualify as Montana Code (circa 1950) only mentioned telephone and telegraph.

So we registered with the PSC as a telegraph provider...

I mean you have telephony via IP, and I'm sure there's an RFC to telegraphy via IP. So it's not wrong to say you're providing telegraphy. You're just choosing a very ... deep and expensive tech stack to do so.

Awesome. Do you actually have to sell telegram services?

Legally, I don't think so. But we did build a little Raspberry Pi based machine with a telegraph key. It needs some more work, but there are people who are legitimately wanting to buy the service.

There are people that want to buy telegraph service?

Surprisingly yes. I think it falls into two categories: nostalgia and hipster.

I was going to ask about the telegraph part of the name...hah. very interesting!

that's easy -- de-privatize the last mile access networks. run (copious strand count) fiber to everything, lease at standard pricing for every entrant, with operations & maintenance (and plant depreciation) built in.


I think the hardest thing about a municipal network like that is having a government organization competent in managing it. Streets are still mostly functional with potholes, but a network certainly isn't.

We're operating on a brand new municipal network right now and it's not awesome. In an effort to be fair to all parties, no one is actually in charge. The network operator is separate from the construction contractor who is separate from the bandwidth providers. It's extremely frustrating.

Where I live, the local government runs the last-mile powerline stuff. It appears to be as competent at it as any other place I've lived.

Even monopolies don't want to built networks in rural america. I can't imagine multiple competitors doing it.

It was the monopoly power of AT&T that got them phone lines in the first place.

I wonder if, without monopolies, rural areas would be served at all with the types goods and services that these companies bring them. It might not be economically feasible!

They need to deregulate the entire medical industry, so anyone can start a medical practice. Right now, doctors control the supply of new medical licenses, and they're incentivized to restrict the supply so their own wages go up. The official line is that they can ensure high-quality medical treatments this way, but that's just something they tell themselves to feel good about it.

One of the consequences is that doctors are beholden to large corporations who have teams of lawyers to handle legal issues and malpractice lawsuits. Since there are limited slots, some of them even work in foreign countries until they get experience to land a job in the US, which is a waste of talent.

If anyone could start a medical practice, a new syringe company could sell to smaller practices that haven't yet been mired in enterprise contracts.

Right now, in order to even build a hospital you have to submit "evidence of need" to the government to get approval. Imagine if every startup had to convince a bureaucrat that they were needed: fewer people would be interested in starting one.

It's probably worth considering moving medical negotiations from insurance companies and employers to the consumer. I don't know that it's very common to call up multiple doctors and find the one with the lowest price, because you're paying your insurance company to do the negotiation for you. Taxing employer-provided health insurance as income might remove the incentive for them to provide it at all. Together with deregulating the entire medical industry, it would make it possible to buy cheap treatment without insurance, which might be enough to make insurance less important.

There's an awful lot of middle ground between what we have now and "anyone can start a medical practice".

If I'm reading you right, you're worried about e.g. some crackpot calling himself a doctor who rubs moonstones on an infection to make the evil spirits go away. An unfortunate consequence of "anyone can start a medical practice" is that the crackpot would be allowed to operate, but the negative aspects could be mitigated by:

* Somebody starting a "Yelp for doctors"

* The government could give some approval stamp to doctors using all the existing restrictions, and you could always ask a doctor "Are you XYZ-approved?" It would be a very serious crime for a moonstone-carrying crackpot to lie about his governmental approval, and his status could be verified on a government website. People who solely use government-approved doctors would still benefit, since licensed doctors would still be competing against unlicensed doctors, so there'd be a limit to how much the government policy could distort the market.

* People who repair your sidewalk or furnace often advertise "licensed, bonded, and insured". A furnace can burn your house down, which seems a similar risk to medical malpractice. You could ask your doctor if he's licensed by the government, has put his personal capital into a bond, and is insured.

I'm not terribly worried about literal crackpots.

I'm skeptical that "Yelp for doctors" will in practice be more efficient than up front regulation about who can provide certain services.

I certainly think there are impediments that should be removed, just not all of them.

You're skeptical it is possible for something to be more efficient than the US Government?

I largely agree with the observations in the article although I believe the author misstates the intention of government with "But in the 1980s, folks in power decided bigger was better, and conventional political wisdom followed suit." The issue with the 80's was that the US economy was in a very weird place where we had low growth and very high inflation (called 'stagflation' at the time). The mechanics of the economy were adjusted not to make 'bigger better' but instead to break out of the state of stagnant inflation.

That the changes weren't undone in the 90s when much of the economic forces were re-aligned was a problem, but understandable since nobody wanted to go back to that mode. We are living in the opposite local minimum of growth and deflation where the economy is growing but inflation isn't happening because real income is going down.

That said I believe that making single supplier contracts unenforcable would be an interesting change to try.

This was just after US got off the gold standard, and around the time of the savings and loans crisis. More recently, Medicare and drug prices is one of my favorite examples, and the same logic apply to things like the NSA.

A fair point. Missing the connection to the NSA though :-)

And repeating that I agree with the basic premise that single supplier contracts should be made unenforcable however to do that you have to provide a way to penalizing companies that do things to enforce them.

The point is that the NSA is funded by government debt, which is their way of printing money. One of the reasons why we got off the gold standard is government spending.

What if the burst of growth in the 90s could be attributed to the inflation in the 80s?

That'd be pretty unfortunate, if the low inflation mandate of the fed kept inflation below some inflection point where economic growth is more likely.

Most 'monopolies' that exist today are artificial - This is because they are only monopolies to the extent that they are able to:

1. Keep buying up advertising to make sure that any potential competitor cannot afford eyeballs.

2. Keep hiring up as much technical talent as possible to make sure that any potential competitor doesn't get access to that talent in order to build a competing product.

3. Keep subsidising the cost of their own services (at a loss to themselves) in order to make the market non-viable for any potential competitor.

It's a scorched-earth approach. Any company that has the money can create an artificial monopoly for themselves by engaging in any of the three activities above.

However, those activities are increasingly expensive because they drive up advertising costs and engineer salaries.

If companies keep doing this, eventually, they'll make the market non-viable even for themselves.

I found this book rather interesting: https://en.wikipedia.org/wiki/Monopoly_Capital it reflects over essentially the same problem (to make a Marxist critique to capitalist pretenses of freedom, fairness and its claims to optimality.) Among other points, the book spends time arguing how Corporate Capitalism is fundamentally monopolistic.

Apparently this is true not only of the US but also of Japan.

I just finished watching a nice dram series called 'Shitamachi Rocketto' which might be of interest to folk on HN.

This is behind many (maybe most) of our problems in America. For example, this is the biggest source of what's wrong with our healthcare system.

Businesses have built up "moats" throughout the system, leading to high prices and poor service. This is the source of the "cost disease" that makes our healthcare too expensive.

Competition is part of the very foundation of capitalism. Without it, capitalism itself doesn't work. So we better figure out some answers.

As someone who loves rural USA and especially Texas, how could we spread the word better? How could we make it more attractive? Do you think there are other possibilities to revive it besides changing government policies? Let us brainstorm about it!

If a monopoly is hard-won and not being abused, what's the problem?

Arguably this also affects workers in major centers who have to move to high-cost housing areas just to be employed while not materially improving quality of life.

Well that's deregulated capitalism 101.

Where are the trust-busting candidates?

Oh you mean like Comcast?

But our savior Peter Theil said monopolies are good and the thing every company wants to become!

No! Rural America is responsible for the death of millions, Rural America is the responsible for holding the progression of human race and most important: rural America is who created the monopolies. Free market can only exist where states aren't.

Or make it profitable to build shit in this country again. If you taxed the hell out of manufactured imports, and loosened up the regulations that are choking US businesses to death, you'd have less meth-and-fentanyl scourged abandoned mill towns.

If you tax the hell out of manufactured imports, you hurt our best businesses and drive up prices on everything for everyone. You really think you can force Apple to build iPhones in the US for twice the cost that Samsung will build Galaxys in Asia for? Do you think US iOS developers are going to still make $20B a year after you do it? Do you think bringing minimum wage manufacturing jobs back to america is a good idea?

This is the kind of big government republicanism that is killing the party. Import tariffs benefit to benefit a few rich corporations and key donors, and screw everyone else. Frame it as a return to the "good old days" that never existed like you remembered. Taft-Hartley existed in those days, and it was a terrible time.

> You really think you can force Apple to build iPhones in the US for twice the cost that Samsung will build Galaxys in Asia for?

Boohoo, thay might have half their markup eaten up if they built them someplace that doesn't have to have suicide nets underneath the windows of the factory.

Which specific regulations do you think are choking US businesses to death? I see a lot of handwaving about oppressive regulation, but I don't see anything careful cost-benefit discussion of which regulations are oppressive.

You've never worked in a blue-collar industry, then. It's a death by 1000 cuts. When your workers are frustrated by the amount of red tape and regulation surrounding their day to day work tasks, something is wrong.

Every factory, the explanation hours for the kindergarden- do not jump, do use the stairwell rails, do read all the rules, do not use the robots for rodeo.

And if you complain about the stupidness of regulations, the responsibility shysters barricading proclaim you hysteric or careless. My personal favorite is lumber-work, where in some of the heavy duty protection equipment you are supposed to wear is so heavy, people make exhausted stupid mistakes and get injured because of the security measure. Example references the Kevlar jackets and trousers- lately partially replaced by lighter plastic protection gear. The worst part is - some regulations introduce routine- and routine kills.

There are good examples, like the Japanese railroad signal system though, so its not all bad.

Land use planning, eminent domain, employee regulations, tax regulations, etc, etc, etc. Where do you want to start?

Eminent domain is killing businesses? In rural areas? How so?

This is essentially Trump's plan, which has had a hard time finding anyone in the field of economics to back it.

Can you point to anyone who has qualifications beyond being a pundit that believes that things would work out as you say?

you mean like electrical, fire, and general safety regulations? going off your "mill town" example, would you rather copy Bangladesh where the buildings collapse and children as young as 11 work 70 hours weeks in the textile industry?

One needn't always trot out an extreme to try to discredit a point. I've watched my home county wither and die over the last 20 years as increasingly they have been undercut by goods produced under conditions that would be illegal in this country. If you want to regulate industries to make them incredibly safe, you have to penalize other countries that are willing to cut those corners, or all you have done is extinguish your industries.

name some laws that have been implemented in the last 40 years that have drastically changed manufacturing companies to be profitable.

There are a slew of reasons why its more expensive to manufacture things here in the US - globalization, cheap labor overseas. Taxes on corporations have no increased though in that period of time.

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