Questions for capitalists.
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31-10-2013, 08:28 PM
RE: Questions for capitalists.
(31-10-2013 07:07 PM)frankksj Wrote:  
(31-10-2013 01:06 PM)Carlo_The_Bugsmasher_Driver Wrote:  Standard Oil quickly comes to mind. They rose to prominence without direct govenment aid prior to their breakup. Actually they were the opposite of protection by regulation in that their collusion with the steel and railroad industries gave them an unfair advantage.

I beg to differ. Refined oil prices fell from over 30 cents per gallon in 1869, to 10 cents in 1874, to 8 cents in 1885, and to 5.9 cents in 1897 as Standard Oil kept driving down prices by being pioneering radical new techniques to improve efficiency, and inventing a lot of new ways to make money from oil, such as making a profit from the waste with Vaseline, instead of dumping the waste into the rivers. The reason Rockefeller eventually got to 90% market share was by continuously staying one step ahead of everyone else and driving prices way down. This was a HUGE benefit to the consumer. And clearly he did NOT have a monopoly and faced heavy competition, if he did, then why did he keep lowering the price? Why didn't he keep it at 30 cents/gallon if he had no competition? The fact is he DID have a lot of competition, and got a huge market share by staying one step ahead.

I don't think this is disputed by any serious economist, that Standard Oil faced fierce competition until around 1900. Now, AFTER 1900 Standard Oil DID shift tactics and begin predatory pricing and all sorts of other dirty tricks. But the question to ask yourself is how did he get away with it? Once he pioneered all these new innovations, like selling the waste instead of paying to dispose of it, why didn't all those competitors keep nipping at his heels? That is clear: GOVERNMENT ISSUED PATENTS. He got the courts to enforce his patents and drive out his competitors. It was only once he had the government protecting him and forcing out the competition that he had a real monopoly, without competition, and could price gouge.

So, Standard Oil DOES fall into the category of a monopoly that was obtained with the help of the government. If the government hadn't driven out his competitors, they'd have kept taking his innovations and building on them forcing him to keep playing leap frog, which is the whole point of capitalism. It was government interference in the free market system that drove this to a halt and gave him a monopoly.

You are defining patents as government interference? Consider

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31-10-2013, 08:50 PM (This post was last modified: 31-10-2013 08:55 PM by frankksj.)
RE: Questions for capitalists.
(31-10-2013 08:28 PM)Chas Wrote:  You are defining patents as government interference? Consider

Of course they're government interference. Elisha Gray invented the telephone first, before Alexander Graham Bell. But Gray spent his time perfecting his invention and, from what I've read, creating a better telephone, and by contrast Bell spent his time in the patent office securing government assistance. The government then forced Gray out of the business and gave Bell a monopoly which lasted for decades and made him a fortune (AT&T).

The patent was conceived a way for government to intervene in the free market to encourage innovation. However, like most government intervention, despite good intentions, it's turned into a disaster. Today, most innovating giants, like Bill Gates and the Google guys, etc., etc., all agree the #1 thing that's blocking innovation is patents. It got especially egregious in the early 90's as I recall when the rules changed so that you could patent general concepts, not just tangible goods. Now, if I hear that you're inventing some wormhole generator, I can go patent the CONCEPT, without having a clue how to actually make the thing, and then when you finally invent it, I can sue you and take over your company. It happens every day. Read the story of the guy who invented Siri and was licensing it to Apple. A notorious patent troll came along and claimed they patented the very concept of speech recognition, sued him, put him out of business, and now the troll, not the inventor, gets the royalties for Siri.

I'm in the tech space and in the business of licensing intellectual property, and the #1 barrier for me is always patents. I've been involved in legal battles with patent trolls who've never invented anything. They just hear that someone else is inventing something and rush to patent the concept first, and then sue. For that reason, even though I'm American, I don't sell to the US, and my business is now based out of Hong Kong. Like with so many government programs, bureaucrats think they're helping, but they're just making more problems.

Here's a good story on NPR about this. Interestingly, there are MORE patent lawsuits filed in the tiny town of Marshall, Texas (population 23,000) than anywhere else, including Silicon Valley, New York, etc. That one federal court has setup a cottage business of always ruling for the plaintiff in patent cases. The town's economy is driven by supporting the patent troll industry. It'd be like setting up a town that advertised "Want to kill your wife? Come to Bumbfuck, Texas, where we always acquit." And then they offer groupon's for 'second honeymoon packages' and the town's economy is built on the wife-killing industry.

P.S. This is the same Texas county, btw, which is notorious for stopping African Americans who are driving nice cars and using the broad asset forfeiture laws to claim that the driver MUST be selling drugs, and they've confiscated thousands of cars (and all the cash and belongings) from innocent, unsuspecting motorists who've never been charged with a crime and whose only mistake was driving through that fucked up county. link
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31-10-2013, 08:50 PM
RE: Questions for capitalists.
(31-10-2013 07:07 PM)frankksj Wrote:  
(31-10-2013 01:06 PM)Carlo_The_Bugsmasher_Driver Wrote:  Standard Oil quickly comes to mind. They rose to prominence without direct govenment aid prior to their breakup. Actually they were the opposite of protection by regulation in that their collusion with the steel and railroad industries gave them an unfair advantage.

I beg to differ. Refined oil prices fell from over 30 cents per gallon in 1869, to 10 cents in 1874, to 8 cents in 1885, and to 5.9 cents in 1897 as Standard Oil kept driving down prices by being pioneering radical new techniques to improve efficiency, and inventing a lot of new ways to make money from oil, such as making a profit from the waste with Vaseline, instead of dumping the waste into the rivers. The reason Rockefeller eventually got to 90% market share was by continuously staying one step ahead of everyone else and driving prices way down. This was a HUGE benefit to the consumer. And clearly he did NOT have a monopoly and faced heavy competition, if he did, then why did he keep lowering the price? Why didn't he keep it at 30 cents/gallon if he had no competition? The fact is he DID have a lot of competition, and got a huge market share by staying one step ahead.

I don't think this is disputed by any serious economist, that Standard Oil faced fierce competition until around 1900. Now, AFTER 1900 Standard Oil DID shift tactics and begin predatory pricing and all sorts of other dirty tricks. But the question to ask yourself is how did he get away with it? Once he pioneered all these new innovations, like selling the waste instead of paying to dispose of it, why didn't all those competitors keep nipping at his heels? That is clear: GOVERNMENT ISSUED PATENTS. He got the courts to enforce his patents and drive out his competitors. It was only once he had the government protecting him and forcing out the competition that he had a real monopoly, without competition, and could price gouge.

So, Standard Oil DOES fall into the category of a monopoly that was obtained with the help of the government. If the government hadn't driven out his competitors, they'd have kept taking his innovations and building on them forcing him to keep playing leap frog, which is the whole point of capitalism. It was government interference in the free market system that drove this to a halt and gave him a monopoly.

Standard oil undercut themselves and invested heavily in expansion. The prices where low because they needed to destroy their competition as they cornered markets and because they controlled the railroads needed to bring product to market. Once the market was cornered the prices could be and where jacked up.

Sony sold the PS3 at a loss, they make their money through games. Epson sells printers for next to nothing when you buy a computer through Dell (or w/e) but they shape and price ink cartridges to make the their money back and then some. etc. etc.

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31-10-2013, 10:09 PM
RE: Questions for capitalists.
(31-10-2013 08:50 PM)ridethespiral Wrote:  Standard oil undercut themselves and invested heavily in expansion. The prices where low because they needed to destroy their competition as they cornered markets...

You're contradicting yourself. You acknowledge they DID have competition, and correctly point out they cut prices to corner the market. Thus they weren't a monopoly at that time as they DID have competition, and your first sentence is wrong... They cut prices not because of some desire to "undercut themselves", they did it drive out competitors.

Quote:Once the market was cornered the prices could be and where jacked up.

Yes, but WHY couldn't their competitors do the same thing? Are you seriously disputing Standard Oil filed a bunch of patents to block competitors?

Quote:Sony sold the PS3 at a loss, they make their money through games. Epson sells printers for next to nothing when you buy a computer through Dell (or w/e) but they shape and price ink cartridges to make the their money back and then some. etc. etc.

Yes, and none of them have monopolies. PS3 competes with XBox and Wi. Epson with HP and Canon, etc., etc. Offering loss leader products (like printers) doesn't give you a monopoly because your competitors simply do the same thing. PS3, XBox, Wi, as well as Epson, HP, Canon, all use the same technique. So it doesn't give any of them a leg up on the others, and doesn't lead to a monopoly.

What leads to a monopoly is when one company can PREVENT competitors from doing the same thing. And to do that, you need the government's help because only the government can use force to block others from doing things you don't like.
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31-10-2013, 10:23 PM
RE: Questions for capitalists.
Remember when I said this patent mess is a daily occurrence? 30 minutes after posting this while reading the news, here's today's big headline:

Google, Samsung, and more sued over Rockstar's patents:

Both sides have spent about $20 BILLION so far on these patent war chests. Imagine if they put that money into actually inventing new products! And where was the lawsuit filed? None other than Marshall, Texas.
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31-10-2013, 11:11 PM
RE: Questions for capitalists.
"What are your thoughts on indentured servitude?"

I was confused when I read that this was an American phenomenon. I've read "Dickens". I double checked your link to Wikipedia, to make sure you knew what you are talking about! Apparently you do. Then it occurred to me that, maybe, it's a matter of definition. I'm thinking an "Indentured Servant", is the same thing as an "Apprentice". Is an "indentured servant" the same as a slave. I think, no. Because the "servant" was learning a trade that would help him escape pover
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01-11-2013, 05:35 AM
RE: Questions for capitalists.
(31-10-2013 08:50 PM)frankksj Wrote:  
(31-10-2013 08:28 PM)Chas Wrote:  You are defining patents as government interference? Consider

Of course they're government interference. Elisha Gray invented the telephone first, before Alexander Graham Bell. But Gray spent his time perfecting his invention and, from what I've read, creating a better telephone, and by contrast Bell spent his time in the patent office securing government assistance. The government then forced Gray out of the business and gave Bell a monopoly which lasted for decades and made him a fortune (AT&T).

The patent was conceived a way for government to intervene in the free market to encourage innovation. However, like most government intervention, despite good intentions, it's turned into a disaster. Today, most innovating giants, like Bill Gates and the Google guys, etc., etc., all agree the #1 thing that's blocking innovation is patents. It got especially egregious in the early 90's as I recall when the rules changed so that you could patent general concepts, not just tangible goods. Now, if I hear that you're inventing some wormhole generator, I can go patent the CONCEPT, without having a clue how to actually make the thing, and then when you finally invent it, I can sue you and take over your company. It happens every day. Read the story of the guy who invented Siri and was licensing it to Apple. A notorious patent troll came along and claimed they patented the very concept of speech recognition, sued him, put him out of business, and now the troll, not the inventor, gets the royalties for Siri.

I'm in the tech space and in the business of licensing intellectual property, and the #1 barrier for me is always patents. I've been involved in legal battles with patent trolls who've never invented anything. They just hear that someone else is inventing something and rush to patent the concept first, and then sue. For that reason, even though I'm American, I don't sell to the US, and my business is now based out of Hong Kong. Like with so many government programs, bureaucrats think they're helping, but they're just making more problems.

Here's a good story on NPR about this. Interestingly, there are MORE patent lawsuits filed in the tiny town of Marshall, Texas (population 23,000) than anywhere else, including Silicon Valley, New York, etc. That one federal court has setup a cottage business of always ruling for the plaintiff in patent cases. The town's economy is driven by supporting the patent troll industry. It'd be like setting up a town that advertised "Want to kill your wife? Come to Bumbfuck, Texas, where we always acquit." And then they offer groupon's for 'second honeymoon packages' and the town's economy is built on the wife-killing industry.

P.S. This is the same Texas county, btw, which is notorious for stopping African Americans who are driving nice cars and using the broad asset forfeiture laws to claim that the driver MUST be selling drugs, and they've confiscated thousands of cars (and all the cash and belongings) from innocent, unsuspecting motorists who've never been charged with a crime and whose only mistake was driving through that fucked up county. link

You conclude that patents are bad because some people are gaming the system?

No, the system is flawed, not the concept of patents.

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Science is not a subject, but a method.
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01-11-2013, 06:29 AM
RE: Questions for capitalists.
As of right now, prisons, weapons manufacturing, and private armies (which fight along side U.S. military) are prominent and becoming more prominent in todays capitalism.

How does one with zero weapons, very little money, and whom can be held in prison by a private corporation expect to ever be treated fair and just and equally as the group of people that have power over him?

Explain how this is going to happen without a government to at least pretend to limit this.
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01-11-2013, 09:59 AM
RE: Questions for capitalists.
(01-11-2013 05:35 AM)Chas Wrote:  You conclude that patents are bad because some people are gaming the system?

No, the system is flawed, not the concept of patents.

We are in basic agreement. There is some merit to the concept of patents. I firmly believe in copyrights, for example. Why should one artist who paints be able to monetize his work, and another who sings starve to death because everybody is free to copy her work? In a modern age, intellectual property is property, just like physical property.

Patents are more gray because they cover ideas. It's the difference between Elvis Presley being able to copyright "Jailhouse rock" vs. him being able to patent the whole concept of rock 'n roll so that nobody else could expand the genre.

However, we are in agreement that the system, the implementation is terribly flawed. For starters, the patent system was based on a 'first to file', not a 'first to invent'. So if YOU invented something, and I was dimwit who happened to find your notes, I could patent your invention and steal it from you. Like Bell did with the phone. It's outrageous that Gray invented the phone on his own and did all the work, and someone else profited from it.

Also, in a capitalist society, one thing that is absolutely essential is competition. Without it, you get the kind of oppression I and I talks about, where the wealth is concentrated in the hands of a few oppressors. Patents do limit competition, and this is very dangerous in a capitalist society.

But most of all it's just the sheer incompetence of the government bureaucrats running the system. They obviously have no competition, and have developed an attitude where they really don't give a fuck whose lives they destroy. I read on NPR, as I recall, that it's estimated that for every new invention there are generally 5 different patents issued for the same thing, and about 80% of patents issued are bogus. The PTO knows they're destroying innovation and driving business away, but they refuse to consider reform. They're lazy and more concerned with their own jobs. So, especially in the 90's, they just stamped 'approved' on every application that went through the office and figured they'd leave it to the private sector to battle it in the courts and sort out which patents were legit.

So it's very hard to separate the original "concept" from the actual "implementation". Same thing with Obamacare. For years the private sector has operated health insurance exchanges with no problem. Hundreds of them get built for a couple hundred thousand dollars, and the business get launched with a million or two in seed money, and they served lots of customers. I bought my last health insurance on such an exchange. Then the government tries to do the same thing. They spend $300 million on it, and they only got SIX people to actually enroll on the first day, and the site couldn't keep up, while the private sector sites can do 6 registrations a second with no problem for 1/1000th the operating costs. The "concept" of an insurance exchange had merits, just like the concept of patents, but government is just so inept at implementation that they both turned into a disaster.
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01-11-2013, 02:17 PM
RE: Questions for capitalists.
(31-10-2013 10:09 PM)frankksj Wrote:  
(31-10-2013 08:50 PM)ridethespiral Wrote:  Standard oil undercut themselves and invested heavily in expansion. The prices where low because they needed to destroy their competition as they cornered markets...

You're contradicting yourself. You acknowledge they DID have competition, and correctly point out they cut prices to corner the market. Thus they weren't a monopoly at that time as they DID have competition, and your first sentence is wrong... They cut prices not because of some desire to "undercut themselves", they did it drive out competitors.

Quote:Once the market was cornered the prices could be and where jacked up.

Yes, but WHY couldn't their competitors do the same thing? Are you seriously disputing Standard Oil filed a bunch of patents to block competitors?

Quote:Sony sold the PS3 at a loss, they make their money through games. Epson sells printers for next to nothing when you buy a computer through Dell (or w/e) but they shape and price ink cartridges to make the their money back and then some. etc. etc.

Yes, and none of them have monopolies. PS3 competes with XBox and Wi. Epson with HP and Canon, etc., etc. Offering loss leader products (like printers) doesn't give you a monopoly because your competitors simply do the same thing. PS3, XBox, Wi, as well as Epson, HP, Canon, all use the same technique. So it doesn't give any of them a leg up on the others, and doesn't lead to a monopoly.

What leads to a monopoly is when one company can PREVENT competitors from doing the same thing. And to do that, you need the government's help because only the government can use force to block others from doing things you don't like.

What I mean by 'undercut themselves' is that they sold the product at a loss or a near loss as part of a long term strategy. I never claimed any of those companies had monopolies I brought them up simply to provide examples of companies who sell a product at a loss to recoup the earnings further down the road.

I'm never even brought up patents, all I was trying to say is that this notion that "standard oil was so good and kind and they would have kept selling their product at rock bottom prices" is bollocks.

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