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View Diary: What did Adam Smith really have to say... (105 comments)

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  •  I read it a little differently: (15+ / 0-)
    To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens.

    Isn't "narrowing the competition" like saying every business would prefer to have a monopoly? Well, of course they would.

    The tax referred to is thus assessed in the form of higher prices paid for goods and services.

    That is why we have anti-trust laws, no?

    What's The Matter With Kansas? -Nothing. Folks like to have their dreams, is all.

    by RyanBTC on Wed Mar 02, 2011 at 05:37:57 PM PST

    [ Parent ]

    •  Hmmm... (16+ / 0-)
      That is why we have anti-trust laws, no?

      We do? News to me.

      Don't squander your youth. You never can buy it back.

      by fredlonsdale on Wed Mar 02, 2011 at 05:43:36 PM PST

      [ Parent ]

      •  We do have the laws (7+ / 0-)

        I suspect your argument is rather with enforcement.

        What's The Matter With Kansas? -Nothing. Folks like to have their dreams, is all.

        by RyanBTC on Wed Mar 02, 2011 at 05:45:41 PM PST

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        •  Even the Laws Have Been Weakened (10+ / 0-)

          Media concentration for one.

          That Health Insurance Companies are exempt from many of the federal antitrust laws is another (only that industry and major league baseball enjoy that preferential status.)

          I'm sure there are other places as well where the laws intended to protect the market itself - and thus it's participants and consumers -  have been eroded since the rise of the Reagan Counter-revolution.

          The laws have also not been updated to recognize the evolution of globalized financial companies and the anti-competitive impact of their concentrated control of not only their own market but through it, the control of the markets of many other industries.  

          And yes, enforcement has essentially gone to sleep.  

          Once again we are in the clutches of "bigger is always better".  

          In part because as Adam Smith well knew, concentration of economic power leads inevitably to concentration of political power and the use of that power to further enlarge the concentration of both on behalf of those who hold both kinds of power.  

          As far as the economic system represented by the Wall Street business model (vs the Mainstreet model) what we have today was the kind of system that Adam Smith was fighting against.  

          Bah.  

          Sometimes when life hands you lemons, you should throw them back.

          by Into The Woods on Thu Mar 03, 2011 at 09:17:35 AM PST

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      •  The Sherman Act of 1890 (12+ / 0-)

        for starters........

        http://en.wikipedia.org/...

        The Sherman Antitrust Act (Sherman Act,[1] February 30, 1890, ch. 647, 26 Stat. 209, 15 U.S.C. §§ 1–7) requires the United States federal government to investigate and pursue trusts, companies, and organizations suspected of violating the Act. It was the first Federal statute to limit cartels and monopolies, and today still forms the basis for most antitrust litigation by the United States federal government. However, for the most part, politicians were unwilling to refer to the law until Theodore Roosevelt's presidency (1901–1909)................

        'Despite its name, the Act has fairly little to do with "trusts". Around the world, what U.S. lawmakers and attorneys call "antitrust" is more commonly known as "competition law." The purpose of the Act was to oppose the combination of entities that could potentially harm competition, such as monopolies or cartels. Its reference to trusts today is anachronistic. At the time of its passage, the trust was synonymous with monopolistic practice, because the trust was a popular way for monopolists to hold their businesses, and a way for cartel participants to create enforceable agreements.'

        two more that I know of...

        The Clayton Anti Trust Act of 1914
        The Robinson-Partman Act of 1936

    •  Yes, not that they are followed as scrupulously (9+ / 0-)

      as they were in the days of greater income and wealth equality.

      And yes, he highlights "narrowing the competition" by which he means monopoly or near to it, as the common method for "raising their profits" but I think we have plenty of other examples of ways in which the profit seeking class game the system in order to increase their own profit.

      Hence my focus on the "raising their profits" part of the statement as being the absurd tax. Whether it is through gaining a monopoly or government subsidy for the oil industry or mandates for buying inadequate private insurance or eliminating collective bargaining in order to then be able to cut wages and thereby increase profits... it all amounts to an absurd tax upon the rest of society.

      So I don't think we are really reading it differently. I just focused on a different part in order to expand the idea to cover more than just monopoly.

      Peace,

      Andrew

      "Do what you can with what you have where you are." - Teddy Roosevelt

      by Andrew C White on Wed Mar 02, 2011 at 05:45:11 PM PST

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      •  "in the days of greater income/wealth equality" (5+ / 0-)

        Is another pique of mine. Sorry.

        Truth is, prior to WW II the U.S. was not much of a global power or player. We had something like the 10th or 12th largest global economy. We were vastly eclipsed by the Germans, English, and Japanese,  amongst others.

        But after the war, we were the only industrialized country of note left standing, and the whole world needed to rebuild.

        Talk about a monopoly!

        It was a once-in-history moment, and we sure did boom. But we boomed because we had unlimited customers and no competition.

        What's The Matter With Kansas? -Nothing. Folks like to have their dreams, is all.

        by RyanBTC on Wed Mar 02, 2011 at 05:54:00 PM PST

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        •  I would dispute that a little bit (13+ / 0-)

          World War I saw the United States enter its own as one of the major military powers. We were also leaving the stage of our own development as a nation with the closing of the frontier and the growth of our industrial and technological strength.

          In the inter-war period we were a "sleeping giant." Americans desire to stay out of European affairs was still predominant.

          So yes, you are right but there is a little more to it than that.

          Post World War II we were the last man standing. No doubt about that. And England handed its empire off to us as it couldn't hold on to it any more. The agreement being that they would get to stay on top by being our #2.

          The change over to a global economy with the growth of Germany and Japan (primarily) shows the effectiveness of the Marshall Plan. Prior to that we really did have a monopoly in our part of the world while Russian had a vastly less effective one in its.

          But I would argue that we boomed not just because of monopoly but also because of resources. The U.S. was poised to be one of the top players anyhow. Being last man standing simply made it easy and inevitable.

          But those few decades of greater income/wealth equality didn't have to happen. They were not natural by products of the economic boom. Let me correct that. Part of it was as there was a lot of wealth to go around and the wages of labor were consequently high. But it also had to do with higher unionism rates and higher taxes too and those didn't have to be there and we are suffering mightily for them being gone.

          Peace,

          Andrew

          "Do what you can with what you have where you are." - Teddy Roosevelt

          by Andrew C White on Wed Mar 02, 2011 at 06:08:05 PM PST

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          •  "But those few decades of greater income/wealth (2+ / 0-)
            Recommended by:
            Sparhawk, Andrew C White

            equality didn't have to happen".

            Well, according to your Diary, they were inevitable:

            The wages of the labourer, it has already been shewn, are never so high as when the demand for labour is continually rising, or when the quantity employed is every year increasing considerably.

            Supply and demand is all. Incredible demand from all over the world, and a limited supply of labor.

            P.S. You forgot about the Great Depression after WW I. The rest of the world just had a minor recession.

            What's The Matter With Kansas? -Nothing. Folks like to have their dreams, is all.

            by RyanBTC on Wed Mar 02, 2011 at 06:19:15 PM PST

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            •  The Great Depression was in the 30's (10+ / 0-)

              which is better described as prior to WWII then after WWI. The U.S. economy went through its usual cycles after WWI and was in quite the boom in the 20's prior to the crash of the 30's.

              I also think that describing what the rest of the world went through as "a minor recession" is stretching it a wee bit don't you?

              But you make a good point about what Smith said about the wages of the laborer being healthy in a healthy economy... which I acknowledged in my comment.

              But I think I'll stand by the rest of my comment in acknowledging the role that higher unionism rates and higher taxes played in that as well.

              Peace,

              Andrew

              "Do what you can with what you have where you are." - Teddy Roosevelt

              by Andrew C White on Wed Mar 02, 2011 at 06:31:16 PM PST

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    •  Good question, which opens a "Yes and No" (7+ / 0-)

      type of answer that has a hidden "But Also" attached to it.

      The rise of globalization and mega-corporations, supplemented by the various 'bad behaviours' that corporate personhood has provided (and reinforced through the US), enables the illusion of a small degree of a 'fair and open' market which is ultimately just a growing set of industry monopolies controlled by fewer and fewer monied mega-corps but represented by a lot of smaller 'front' companies and organizations.

      In effect, the monied interests of the profit class are creating and reinforcing the illusion of a global marketplace and competition, while creating monopolies that can be protected from anti-trust laws or kept out of their immediate reach.

      As Andrew states, below (and much more clearly than my convoluted pap above):

      And yes, he highlights "narrowing the competition" by which he means monopoly or near to it, as the common method for "raising their profits" but I think we have plenty of other examples of ways in which the profit seeking class game the system in order to increase their own profit.

      Hence my focus on the "raising their profits" part of the statement as being the absurd tax. Whether it is through gaining a monopoly or government subsidy for the oil industry or mandates for buying inadequate private insurance or eliminating collective bargaining in order to then be able to cut wages and thereby increase profits... it all amounts to an absurd tax upon the rest of society.

      (Emphasis mine.)

    •  Operates quite similarly under conditions of (3+ / 0-)
      Recommended by:
      Andrew C White, Sychotic1, jm214

      oligopoly, the economic condition under which we currently operate.

      "What we do for ourselves dies with us; what we do for others, and the world, remains, and is immortal." -- Albert Pine

      by caul on Thu Mar 03, 2011 at 03:46:55 AM PST

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    •  anti-trust? (4+ / 0-)

      If these were enforced we would have a different landscape.

      Be the change you want to see in the world. -Gandhi

      by DRo on Thu Mar 03, 2011 at 06:40:36 AM PST

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    •  Anti trust (1+ / 0-)
      Recommended by:
      Andrew C White

      laws that are being ignored in order to widen the market worldwide is to kill the competition within certain countries where the market has been taken away overseas.

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