Eastleigh

[Danishfurniturelover]

Richie what do you think to Amazon not paying tax? i have stopped using amazon because of how they behave and because i do not want to lose a company like John Lewis, but because people are so short of cash at the moment they are going for the cheaper version. Do you think the government should do more to make sure Amazon pay their right amount of tax and then can not under cut companies like John Lewis.

 

[Richie]

Richie what do you think to Amazon not paying tax? i have stopped using amazon because of how they behave and because i do not want to lose a company like John Lewis, but because people are so short of cash at the moment they are going for the cheaper version. Do you think the government should do more to make sure Amazon pay their right amount of tax and then can not under cut companies like John Lewis.

The headline for the Amazon tax story should have read:

LUXEMBOURG COMPANY PAYS NO CORPORATION TAX IN UK.

No brick. Personally I don't have a massive problem with it. I've spoken before how I consider corporation tax to be ridiculous anyway, but I won't go in to that. Amazon still pays plenty of tax in the UK in terms of business rates, it creates UK jobes etc... I in fact worked in the Amazon distribution warehouse at J13 of the M1 about 10 years ago. I know my dad buys books from Amazon.com because they are cheaper even when you include shipping. While it looks bad because Amazon has a UK registered domain name (which means nothing btw, bit.ly isn't a Libyan company for example) you are just buying a product from a business based in another country.

Having said that, I completely support what you are doing. I personally don't mind so much, but I believe in 'voting with your wallet' about a company and that is exactly what you are doing. More people should if they really feel strongly enough about a company IMO.

If British companies can't compete, I don't blame foreign companies. I blame the burden of tax on British businesses making them uncompetitive.

EDIT: A short and sweet Forbes article on the issue. http://www.forbes.com/sites/timworstall/2013/01/30/amazons-outrageous-tax-dodging-ways/. Amazon are using the EU single market to base themselves in one country and distribute to the others. That's what the EU is for.

 

[Richie]

I would like to add re: Amazon my main problem is that perhaps the customer has been misled. Amazon should have been more transparent about where their company is based etc... as using a UK domain name can be misleading. However, the actual act of basing themselves in another country to pay less tax I have no problem with.

An example of another online retailer I use is Play.com. The are a subsidiary of the Japanese Rakuten group, and it is right on their website so I've never thought of it as a British company. They are based in Jersey so I don't know the figures on their tax bill, I would venture a guess it is low though.

 

[DubaiSpur]

Im sorry, but this is nonsense. You are completely misunderstanding what a monopoly is. If EA had a monopoly, there would be no other 'non-EA' games to buy. In fact, EA don't even have a monopoly in any of their genres. Dont like FIFA? Buy Pro Evo. Don't like NBA Live 12? Buy NBA 2k12. Don't like Medal of Honour? Buy Call of Duty. Hell, CoD is the best selling franchise of the last 5 years is it not?

Just because a company has a large market share doesn't mean they have a monopoly. There is a huge amount of competition in all genres of games. If people are choosing to play EA games over others then that just means they are putting out a better product. There is plenty of competition though. I prefer FIFA but I used to be a Pro Evo guy. I feel FIFA is a better game so I play it.

Again, this is not true. There is absolutely not monopoly whatsoever for Google. People are choosing to use Google instead of other alternatives, and that is their choice. Don't like it? Go to Yahoo, Bing, Ask or one of dozen of others. There is plenty of other options for people, but if Google are putting out the best product then there's no reason they shouldn't have a large market share.

As for web browsers, again they don't have anything close to a monopoly. I'm posting this from Firefox, I could just as easily be using Opera, IE or Chrome. If I was on a Mac I could use Safari. On my phone I use one called Dolphin.

Large market share does not equal a monopoly. In all the situations listed there are alternatives for consumers, if they are overwhelmingly choosing Google or Google products then that is up to each individual.

You miss the point somewhat. In EA's case, they have a monopoly over all the games produced by their subsidiary studios. This is fundamentally different to an industry like the shoe or appliance industry, because it is user-driven. Take, for instance, the Dragon Age games on PC. People loved the first iteration. Millions of people hated the second. Yet EA sales and marketing spent billions and convinced enough consumers to override the opinions of this very, very considerable group of people to buy the game. They spent revenue to pay off the reviewers to ensure a high score, and pushed ad campaigns on TV, the internet, the radio and even by bloody SMS. This led to enough people buying it for EA to proclaim the game a success. Yet a lot of those people turned out not to like the game as well, and demanded a better one in Dragon Age 3.

But they can't do anything about it. The only source of Dragon Age games is EA. And they evidently want to fill it with micro-transactions and make it Facebook-integrated, among other wonderful things. Why? Because enough people will buy it to make the lost revenue from those who won't insignificant. And why will that happen? Because EA will spend another billion on flashy marketing to convince them to do so.

Free market economics holds that the lost revenue will end up somewhere else and benefit some other company, which will cause EA to readjust to appeal to the 'lost' demographic. But no one else is sufficiently large enough to threaten EA, save for Activision Blizzard and Nintendo. Nintendo has been losing money for years, and is mainly console-based, anyway (a far more competitive market), while Activision Blizzard relies on its four main titles (Starcraft, World of Warcraft, COD and Diablo) and is reluctant to expand into EA's territory, according to Robert Kotick.

So how exactly is there 'consumer choice'? Advertising convinces people to buy the game, not the quality of the game itself, as has been clearly established by the number of people disappointed with EA's products. Yet people do not know of any alternatives to EA's games. Why? Because their direct competitors cannot compete with the revenue and publicity generated by EA's massive ad campaigns. So there is no realistic alternative to EA's games, save for Pro Evo and COD, two games which I will plead as exceptions similar to Friedman's.

In a free market, consumers logically and objectively judge products on their worth. Using advertising and mass promotion to fool people into buying things that are actually quite bad is surely monopoly-forming behaviour when you consider that the sales of these games helps EA grow and acquire more titles, which it then dumbs down and sells with an accompanying ad blitz. And at the moment, there is no one to rival EA's breadth of games, that also possesses the money required to wrest even a tiny market share away from them. The company has grown so large by the standards of the average gaming developer/publisher, that any competitors are either bought out before they can acquire a greater market share or crushed into obscurity by EA's marketing department.

So perhaps I was in the wrong. EA is not a monopoly. It is, however, actively monopoly-forming, if the practises and the inevitable conclusion (two or three mega-publishers, each waiting for one of the others to die so they can pick off its carcass and become just 'two' big publishers) do not mis-inform me.

In the second case, again, I probably did make a mistake. Google is monopoly-forming, not already a monopoly. Many of the same arguments can be applied here: Bing, Yahoo et al are simply not used because they do not possess Google's revenue generation capacity or users, and thus cannot persuade web pages to list with them instead of Google.'go to Yahoo or Bing' is a straw man; no one goes there because Google's head start means that they simply cannot ever acquire the market share required to become 'good'. And if the argument 'that's because Google is so good!' comes my way, I reply with this: Google is so large that it lists almost everything on the web, whereas Bing and Yahoo can only list small subsets of searches, and they can't expand because Google is so big that they've already covered what they're trying to expand into.

In other words, Google has already cornered the entire market, and searching on Bing and Yahoo (As opposed to Google) is useless because of this. So what is this, if not a monopoly?

That is, after all, a monopoly, now that they have also started buying out their main competitors to extend their almost unassailable market lead. One company being the sole provider for searches, and nearly (though not completely) the sole provider for internet videos. You could argue that the reason for this is because they do such a good job, and you'd be right; their monopoly occurs because they provide a great product in their web-searches. However, once they established it, they went and bought Youtube and Bloggr (formerly BlogSpot), thus gaining millions if not billions of contributors to their company, extending their lead.

If you cannot see the logical consequences of this (more revenue = more buying out of competitors = more revenue = more buying out of competitors, etcetera), then what more will be needed to convince you?

Companies exist for the profit motive, and the best way to do that is to make sure you are the only company left to give money to. It is a logical extension of the basic principle of free-market businesses.

 

[Skinhead in a Suit]

re: not enough providers, there are two important points. First of all, we don't live in a truly free market, and that's a problem. In reality there will never be a market truly independent of regulation, but we can definitely do better than we have at the moment.

The second point you are spot on, there are higher barriers to entry which benefit big corporations. The problem here is that it is regulations that create these artificially high barriers. If we regulated less, the smaller start ups would be more able to compete. I would actually argue there are a significant number of telecomms providers for you to choose from, I think you underestimate the market choice. In terms of mobile phone contracts, I think there is great competition between providers, I can count 7 off the top of my head. There will however only be as many providers as the market is able to accommodate as there are only so many people to provide for.

As to your point about dividends, I think there is some misconception about shareholders. These are publicly traded companies, there's nothing stopping you from buying some shares and getting your own slice of the dividend. Furthermore, if you have a pension you almost certainly benefit from these profits. When you pay in to your pension, someone is investing that money (and everyone elses) in to stocks and shares and to help make sure you a return when you retire.

Re: medical services, this is a big and complex issue. However put simply (and this is especially true in the case of the US), when something is guaranteed through the treasury there is less competition. This is because you know you're going to get paid whatever price you charge, so why do people need to compete on price? Since the end user (me and you) don't care about price because it's a 'free' service, there is no incentive to look for the best deal. People are always more careful when spending their own money than when spending other peoples money. Always.

I think the ultimate difference in our views (good debate btw) is that your idea of a free market is one in which corporations are able to act without any government interference to provide goods and services which they want to provide (for the purpose of making profits), whereas my interpretation of the term means the markets are driven by consumer demands rather than supply-side economics. Would you agree?

The main problem with the supply-side position you are taking is that corporations are there to make money. Period. That is their ultimate goal. I have no problem with a company making a profit if it beneficial to both sides of the transaction. But we have got to a point where these multi-national corporations are so large and powerful (again lobbyists) that we are seeing massive abuses of the system at the expense of the consumer that are going unpunished and not being rectified. This is where I have issues with these policies. The current financial crisis is the perfect example of this. Government restrictions were taken away which protected the consumer from corporate greed. Now, less than 30 years later the global economic system, upon which every person in the world is affected by, is controlled by unelected people with questionable business ethics. The system isn't correcting itself as your free-market theorists predicted it would, it getting worse.

I may not trust politicians, but at least I get a say in who gets to be in power. We don't have that choice with these massive corporations and the way in which they are managed, and this is why they should not be allowed to run regulation-free over the interest of the consumer.

 

[Richie]

You miss the point somewhat. In EA's case, they have a monopoly over all the games produced by their subsidiary studios. This is fundamentally different to an industry like the shoe or appliance industry, because it is user-driven. Take, for instance, the Dragon Age games on PC. People loved the first iteration. Millions of people hated the second. Yet EA sales and marketing spent billions and convinced enough consumers to override the opinions of this very, very considerable group of people to buy the game. They spent revenue to pay off the reviewers to ensure a high score, and pushed ad campaigns on TV, the internet, the radio and even by bloody SMS. This led to enough people buying it for EA to proclaim the game a success. Yet a lot of those people turned out not to like the game as well, and demanded a better one in Dragon Age 3.

But they can't do anything about it. The only source of Dragon Age games is EA. And they evidently want to fill it with micro-transactions and make it Facebook-integrated, among other wonderful things. Why? Because enough people will buy it to make the lost revenue from those who won't insignificant. And why will that happen? Because EA will spend another billion on flashy marketing to convince them to do so.

Free market economics holds that the lost revenue will end up somewhere else and benefit some other company, which will cause EA to readjust to appeal to the 'lost' demographic. But no one else is sufficiently large enough to threaten EA, save for Activision Blizzard and Nintendo. Nintendo has been losing money for years, and is mainly console-based, anyway (a far more competitive market), while Activision Blizzard relies on its four main titles (Starcraft, World of Warcraft, COD and Diablo) and is reluctant to expand into EA's territory, according to Robert Kotick.

So how exactly is there 'consumer choice'? Advertising convinces people to buy the game, not the quality of the game itself, as has been clearly established by the number of people disappointed with EA's products. Yet people do not know of any alternatives to EA's games. Why? Because their direct competitors cannot compete with the revenue and publicity generated by EA's massive ad campaigns. So there is no realistic alternative to EA's games, save for Pro Evo and COD, two games which I will plead as exceptions similar to Friedman's.

First of all, the idea of a company having a monopoly over it's own products is just ridiculous. That's like saying Coca-cola has a monopoly over Fanta. Of course it does, it owns it. It doesn't have a monopoly over fizzy drinks though.

You seem to think there is something wrong with a company marketing a product heavily. Honestly, I'd never heard of Dragon Age before you mentioned it, I'm not the biggest gamer. I went to Wikipedia and I see it's an RPG. Again, if you don't like it, buy a different game. Skyrim for example, which I have heard of because everyone I know raves about how great it is. As far as I know, they have no link to EA either.

I would argue how is there not consumer choice? "Advertising makes people buy the game". No brick, that's what advertising is there for. People are allowed to buy a crap product if they want. Dragons Age seems to have only got reviews in the 75-85% range anyway, which seems pretty low compared to Skyrims 95%+.

Bottom line is nobody forced these people to buy the game. If EA wants to destroy a presumably solid brand with sub par sequels then theres nothing wrong with that. If people get convinced to buy a sub par product through marketing that thats fine too.

In a free market, consumers logically and objectively judge products on their worth. Using advertising and mass promotion to fool people into buying things that are actually quite bad is surely monopoly-forming behaviour when you consider that the sales of these games helps EA grow and acquire more titles, which it then dumbs down and sells with an accompanying ad blitz. And at the moment, there is no one to rival EA's breadth of games, that also possesses the money required to wrest even a tiny market share away from them. The company has grown so large by the standards of the average gaming developer/publisher, that any competitors are either bought out before they can acquire a greater market share or crushed into obscurity by EA's marketing department.

So perhaps I was in the wrong. EA is not a monopoly. It is, however, actively monopoly-forming, if the practises and the inevitable conclusion (two or three mega-publishers, each waiting for one of the others to die so they can pick off its carcass and become just 'two' big publishers) do not mis-inform me.

So we have established that EA is not a monopoly, but is 'monopoly-forming' whatever that means. Here's how the free market fixes that.

First off, there is nothing to say any particular developer has to sell to EA. I actually own more Take-Two games than EA: NBA2k12, Borderlands 2, Red Dead Redemption, BioShock. All are sensational games. In fact I bought them because they have come so highly recommended. If EA games are of low quality, people should stop buying them.

I understand your issue with EA, but I don't understand why you have a problem with it. They are buying up a lot of companies and expanding their catalogue of titles, and subsequently producing poor sequels of these titles. The answer is for people to stop buying these sequels, which they will do. The idea that sheer weight of advertising can offset poor quality is nonsense. Of the top 10 selling games of 2012, as far as I can tell only FIFA13 and Madden13 are EA games, both of which are excellent quality IMO.

In the second case, again, I probably did make a mistake. Google is monopoly-forming, not already a monopoly. Many of the same arguments can be applied here: Bing, Yahoo et al are simply not used because they do not possess Google's revenue generation capacity or users, and thus cannot persuade web pages to list with them instead of Google.'go to Yahoo or Bing' is a straw man; no one goes there because Google's head start means that they simply cannot ever acquire the market share required to become 'good'. And if the argument 'that's because Google is so good!' comes my way, I reply with this: Google is so large that it lists almost everything on the web, whereas Bing and Yahoo can only list small subsets of searches, and they can't expand because Google is so big that they've already covered what they're trying to expand into.

Sorry but this is again wrong. I'm sure you would have said the same about Netscape in 1995 when it had an over 90% market share of web browsers. Then IE came along and won a similar 90% market share for a few years. Then people realised they could make a better web browser than IE, and Firefox, Chrome and Opera came along and demolished IE's market share with superior products. In fact, the same probably could have been said about Yahoo when Google Search first started, they dominated the market but Google came along with a superior product.

So Google lists everything on the web, whereas Yahoo and Bing only list small subsets. As far as I can see, in the terms of web search this is the very definition of having a superior product.

In other words, Google has already cornered the entire market, and searching on Bing and Yahoo (As opposed to Google) is useless because of this. So what is this, if not a monopoly?

I don't think you understand what a monopoly is. A monopoly is having no competition. Google clearly has competition in the likes of Yahoo and Bing so there is no monopoly. They are simply giving a better service to people. People can use Yahoo or Bing if they want but they don't. Why? Because they like using Google.

Having a large market share because people choose to use your service over another is not the same as having a monopoly. It's giving the consumer what they want.

If you cannot see the logical consequences of this (more revenue = more buying out of competitors = more revenue = more buying out of competitors, etcetera), then what more will be needed to convince you?

Companies exist for the profit motive, and the best way to do that is to make sure you are the only company left to give money to. It is a logical extension of the basic principle of free-market businesses.

You're argument is completely flawed because it assumes that the competition wants to sell to the bigger corporation. Look at Activision, they are making money hand over fist with the Call of Duty franchise. Why would they want to sell to EA? In fact, in terms of software revenues Nintendo and Activision both have higher revenues than your EA 'monopoly'.

And lets take a step on and say you're right. Let's say a company buys out all competition and has 100% of the market share with a poor product. What happens then is you get new companies forming with superior products, as was the case with Firefox vs IE in the early 2000s. If EA owned every game and produced only crap, another company would see an opportunity for profit and win their own market share. That's how the free market prevents monopolies.

 

[Richie]

I think the ultimate difference in our views (good debate btw) is that your idea of a free market is one in which corporations are able to act without any government interference to provide goods and services which they want to provide (for the purpose of making profits), whereas my interpretation of the term means the markets are driven by consumer demands rather than supply-side economics. Would you agree?

The main problem with the supply-side position you are taking is that corporations are there to make money. Period. That is their ultimate goal. I have no problem with a company making a profit if it beneficial to both sides of the transaction. But we have got to a point where these multi-national corporations are so large and powerful (again lobbyists) that we are seeing massive abuses of the system at the expense of the consumer that are going unpunished and not being rectified. This is where I have issues with these policies. The current financial crisis is the perfect example of this. Government restrictions were taken away which protected the consumer from corporate greed. Now, less than 30 years later the global economic system, upon which every person in the world is affected by, is controlled by unelected people with questionable business ethics. The system isn't correcting itself as your free-market theorists predicted it would, it getting worse.

Unfortunately, the financial crisis was caused as much by politicians (via central banks) trying to fiddle with the economy as it was by the bankers. Greenspan plummeted interest rates to 1% after the dotcom bubble to avoid a shallow recession, which lead investors towards riskier investments and allowed banks to borrow from the Fed at incredibly low rates. This abundance of credit is the beginning of the credit crisis.

I will add that I am still very much undecided on regulation of the banking sector. While my default position is anti-regulation, I just don't know enough about the sector to really have a strong opinion on it. I can see the logic in separation of investment and commercial banks for example, but are these just problems that originate from government in the first place (i.e. treasury insurance on deposits)? I really don't know.

As for you being ok with profit as long as it is beneficial for both sides, again that is the very definition of profit. Businesses only make profit by providing goods and services that people want. Conversely if a business produces a product that people aren't willing to buy (i.e. the trade would not be beneficial for both sides) then the business makes a loss and goes bankrupt.

I may not trust politicians, but at least I get a say in who gets to be in power. We don't have that choice with these massive corporations and the way in which they are managed, and this is why they should not be allowed to run regulation-free over the interest of the consumer.

I have to say I fundamentally disagree on this last point. You DO have a say in the massive corporations by not buying their products. However just like in an election if you are in a small minority your 'voice' will be drowned out by the masses. Just as it takes large groups to elect governments, it takes large groups to affect change to companies.

 

[DubaiSpur]

First of all, the idea of a company having a monopoly over it's own products is just ridiculous. That's like saying Coca-cola has a monopoly over Fanta. Of course it does, it owns it. It doesn't have a monopoly over fizzy drinks though.

You seem to think there is something wrong with a company marketing a product heavily. Honestly, I'd never heard of Dragon Age before you mentioned it, I'm not the biggest gamer. I went to Wikipedia and I see it's an RPG. Again, if you don't like it, buy a different game. Skyrim for example, which I have heard of because everyone I know raves about how great it is. As far as I know, they have no link to EA either.

I would argue how is there not consumer choice? "Advertising makes people buy the game". No brick, that's what advertising is there for. People are allowed to buy a crap product if they want. Dragons Age seems to have only got reviews in the 75-85% range anyway, which seems pretty low compared to Skyrims 95%+.

Bottom line is nobody forced these people to buy the game. If EA wants to destroy a presumably solid brand with sub par sequels then theres nothing wrong with that. If people get convinced to buy a sub par product through marketing that thats fine too.



So we have established that EA is not a monopoly, but is 'monopoly-forming' whatever that means. Here's how the free market fixes that.

First off, there is nothing to say any particular developer has to sell to EA. I actually own more Take-Two games than EA: NBA2k12, Borderlands 2, Red Dead Redemption, BioShock. All are sensational games. In fact I bought them because they have come so highly recommended. If EA games are of low quality, people should stop buying them.

I understand your issue with EA, but I don't understand why you have a problem with it. They are buying up a lot of companies and expanding their catalogue of titles, and subsequently producing poor sequels of these titles. The answer is for people to stop buying these sequels, which they will do. The idea that sheer weight of advertising can offset poor quality is nonsense. Of the top 10 selling games of 2012, as far as I can tell only FIFA13 and Madden13 are EA games, both of which are excellent quality IMO.



Sorry but this is again wrong. I'm sure you would have said the same about Netscape in 1995 when it had an over 90% market share of web browsers. Then IE came along and won a similar 90% market share for a few years. Then people realised they could make a better web browser than IE, and Firefox, Chrome and Opera came along and demolished IE's market share with superior products. In fact, the same probably could have been said about Yahoo when Google Search first started, they dominated the market but Google came along with a superior product.



I don't think you understand what a monopoly is. A monopoly is having no competition. Google clearly has competition in the likes of Yahoo and Bing so there is no monopoly. They are simply giving a better service to people. People can use Yahoo or Bing if they want but they don't. Why? Because they like using Google.

Having a large market share because people choose to use your service over another is not the same as having a monopoly. It's giving the consumer what they want.



You're argument is completely flawed because it assumes that the competition wants to sell to the bigger corporation. Look at Activision, they are making money hand over fist with the Call of Duty franchise. Why would they want to sell to EA? In fact, in terms of software revenues Nintendo and Activision both have higher revenues than your EA 'monopoly'.

And lets take a step on and say you're right. Let's say a company buys out all competition and has 100% of the market share with a poor product. What happens then is you get new companies forming with superior products, as was the case with Firefox vs IE in the early 2000s. If EA owned every game and produced only crap, another company would see an opportunity for profit and win their own market share. That's how the free market prevents monopolies.

In all honesty, I did a bit of thinking after posting that, and I arrived at many of the same conclusions as you did. In my haste, I confused an oligopoly with a pure monopoly, and based my flawed arguments on that premise. I apologise, and will consider your views for a while before returning with a response.

However, I must point out that I repeatedly mentioned EA as being a player in the 'PC' industry. On the PC, it's pretty much EA, ActiBlizz, and Valve, with Take 2, SEGA and the rest a considerable way behind. I specifically mentioned consoles being a much more competitive market because that's where Nintendo and CoD-publishing ActiBlizz make the majority of their money (albeit with ActiBlizz earning PC-based revenue from Diablo, Starcraft and WoW). And the gist of my argument was that a monolithic company like Google or EA would stop at nothing to achieve a 100 percent market share. That still stands. The quality of the games EA make, and the quality of the services Google provide, may decline, but they will have established a sufficiently high barrier of entry (via their massive advertising budgets, buyout offers and brand leveraging) to prevent anyone entering their ultimate monopoly. As for the sheer weight of advertising not affecting sales, Mass Effect 3 recieved a 9.5 on IGN, and was named game of the year by everyone from PC Gamer to Gamespot, at the same time bad reviews about the horrible ending were popping up by the dozen on user-based websites across the net. This was almost entirely due to EA funding, and ensured that Mass Effect 3 registered sales of 1.5 million copies of March 2012 (and roughly the same average sales figures for the next three months) and earned about 200 million dollars in revenue, dwarfing its immediate competitors. At the same time, Bioware (the game's developer) came under unprecedented fire for the ending to the series, with fans demanding a change to the final bits of the game and an entirely different end to the story. There was a complaint to the Federal Trade Commission, hundreds of petitions demanding changes to the game appeared, and it was panned by a large variety of Youtube and blogger critics. There was even intense speculation following their retirement that the founders of the company, Ray Muzyka and Greg Zeschuk, only did so because of the poor reception to the game.

So you have this strange phenomenon where unprecedented criticism of a game is occurring at the same time as unprecedented sales...of the same game. If advertising didn't help that, I don't know what did.

Anyway, like I said, a lot of what I stated was flat-out wrong due to me misunderstanding basic terms, and your well-composed arguments have resulted in me assessing my own position on this matter.In 'On Liberty', John Stuart Mill asserted that every generation had to examine its core beliefs with rational, rigorous analysis in order to ensure that 'dead dogma' didn't become society's leading principle. He also believed that every individual had a duty to do the same, in order to help his community create utility. I'm a firm follower of that, and even my interventionist,considerably socialist hard-left beliefs have to be examined when put up against firm evidence. I hope you won't take it awry or as a sign of my complete acquiescence to your ideas if I take some time to do so.

I'll return to this thread once I have devoted some more thought to the matter, but thank you very much for an enjoyable and enlightening discussion.

 

[Richie]

In all honesty, I did a bit of thinking after posting that, and I arrived at many of the same conclusions as you did. In my haste, I confused an oligopoly with a pure monopoly, and based my flawed arguments on that premise. I apologise, and will consider your views for a while before returning with a response.

However, I must point out that I repeatedly mentioned EA as being a player in the 'PC' industry. On the PC, it's pretty much EA, ActiBlizz, and Steam. I specifically mentioned consoles being a much more competitive market because that's where Nintendo and CoD-publishing ActiBlizz make the majority of their money (albeit with ActiBlizz earning PC-based revenue from Diablo, Starcraft and WoW). And the gist of my argument was that a monolithic company like Google or EA would stop at nothing to achieve a 100 percent market share. That still stands. The quality of the games EA make, and the quality of the services Google provide, may decline, but they will have established a sufficiently high barrier of entry (via their massive advertising budgets, buyout offers and brand leveraging) to prevent anyone entering their ultimate monopoly. As for the sheer weight of advertising not affecting sales, Mass Effect 3 recieved a 9.5 on IGN, and was named game of the year by everyone from PC Gamer to Gamespot, at the same time bad reviews about the horrible ending were popping up by the dozen on user-based websites across the net. This was almost entirely due to EA funding, and ensured that Mass Effect 3 registered sales of 1.5 million copies of March 2012 (and roughly the same average sales figures for the next three months) and earned about 200 million dollars in revenue, dwarfing its immediate competitors. At the same time, Bioware (the game's developer) came under unprecedented fire for the ending to the series, with fans demanding a change to the final bits of the game and an entirely different end to the story. There was a complaint to the Federal Trade Commission, hundreds of petitions demanding changes to the game appeared, and it was panned by a large variety of Youtube and blogger critics. There was even intense speculation following their retirement that the founders of the company, Ray Muzyka and Greg Zeschuk, only did so because of the poor reception to the game.

So you have this strange phenomenon where unprecedented criticism of a game is occurring at the same time as unprecedented sales...of the same game. If advertising didn't help that, I don't know what did.

Anyway, like I said, a lot of what I stated was flat-out wrong due to me misunderstanding basic terms, and your well-composed arguments have resulted in me assessing my own position on this matter.In 'On Liberty', John Stuart Mill asserted that every generation had to examine its core beliefs with rational, rigorous analysis in order to ensure that 'dead dogma' didn't become society's leading principle. He also believed that every individual had a duty to do the same, in order to help his community create utility. I'm a firm follower of that, and even my interventionist,considerably socialist hard-left beliefs have to be examined when put up against firm evidence. I hope you won't take it awry or as a sign of my complete acquiescence to your ideas if I take some time to do so.

I'll return to this thread once I have devoted some more thought to the matter, but thank you very much for an enjoyable and enlightening discussion.

An enjoyable debate indeed. In terms of Mass Effect 3, I would hope that consumers will think twice about buying a Mass Effect sequel. I'm sure however some brand loyalty will come in to play and it will still be a big seller though.

Great quote from John Stewart Mill, I think I'll use that one in future.

 

[Skinhead in a Suit]

As for you being ok with profit as long as it is beneficial for both sides, again that is the very definition of profit. Businesses only make profit by providing goods and services that people want. Conversely if a business produces a product that people aren't willing to buy (i.e. the trade would not be beneficial for both sides) then the business makes a loss and goes bankrupt.

But what happens when the market only has a few suppliers in it (due to obstacles to competing businesses from emerging), thus taking away the consumers' ability to affect change with their purchasing power? For example, I have only one choice for my gas and electric provider, Pacific Gas and Electric (PG&E). Because of the size of this company, they are able to prevent any other competition from entering into the market. The only alternative available is solar panels, which wouldn't be available if the government hadn't offered subsidies to small, sustainable resource companies since the engineering and research costs didn't initially equal the revenues they were able to reap. Obviously the use of solar panels is preferable to fossil-fuels, but if there hadn't been intervention in the market place by the government (local or federal), then I, the consumer, would be stuck with a single option, and thus no buying power to cause change in the marketplace.

This is just a singular example of an industry where the large players are able to use their powers to coerce the market to their agenda. Additionally, they are able to dictate to the governments and regulatory bodies via lobbying/funding into not putting sufficient regulations and incentives in place to protect the consumer, but rather conditions which broaden their powers even further, creating a dangerous cycle of political power = favourable regulations = more political power = more favourable regulations etc etc.

I have to say I fundamentally disagree on this last point. You DO have a say in the massive corporations by not buying their products. However just like in an election if you are in a small minority your 'voice' will be drowned out by the masses. Just as it takes large groups to elect governments, it takes large groups to affect change to companies.

Ultimately, I think your ideal of completely regulatory-free, fluid markets is flawed for the exact same reason as Communism was...human greed. On paper, the idea of everyone working towards a common goal does have some worthy benefits but the individuals in power became corrupt and power hungry and twisted the system to be so that the majority were working for the benefit of the few. Coincidentally, your idea of ultimate Capitalism is flawed by the same concept, where a few large players can skew the system in their favour, and end up with more power than can be controlled solely by the purchasing public. Thus we end up being dictated to and essentially "slaves" to the multi-national corporations.

 

[Richie]

ultimately, I think your ideal of completely regulatory-free, fluid markets is flawed for the exact same reason as Communism was...human greed. On paper, the idea of everyone working towards a common goal does have some worthy benefits but the individuals in power became corrupt and power hungry and twisted the system to be so that the majority were working for the benefit of the few. Coincidentally, your idea of ultimate Capitalism is flawed by the same concept, where a few large players can skew the system in their favour, and end up with more power than can be controlled solely by the purchasing public. Thus we end up being dictated to and essentially "slaves" to the multi-national corporations.

I think you are slightly misunderstanding my position. My position is low (but not necessarily zero) regulation on business, and allowing them to sink on swim solely on the merits of their business. By stopping government from interfering in the market, you remove the power businesses gain from lobbying governments. This in turn puts all the power in to the hands of consumers with their purchasing power.

As you say, there are clear artificial barriers to entry in many sectors imposed by regulation. This is what is stopping businesses compete on an even playing field. This is what I want to remove, so a business can't use government to defend their market share. It is government intervention that diminishes purchasing power by enacting regulation which protects certain businesses, even if that is not the intention of the regulation. One example of this is environmental legislation which can impose very large start up costs on new businesses.

Funny you should mention greed, because I disagree. The free market is fueled by greed, and that is exactly what makes it work and is exactly why we have problems now. Regulations allow these so called greedy companies to protect their market share. In a world with less regulation on businesses (and therefore smaller barriers to entry and thus more competition) there will be just as much greed, but the businesses will have to actually earn their market share rather than relying on the government to protect it. The more free the market, the harder it is to be greedy because the consumers purchasing power is much greater.

 

[Skinhead in a Suit]

I think you are slightly misunderstanding my position. My position is low (but not necessarily zero) regulation on business, and allowing them to sink on swim solely on the merits of their business. By stopping government from interfering in the market, you remove the power businesses gain from lobbying governments. This in turn puts all the power in to the hands of consumers with their purchasing power.

As you say, there are clear artificial barriers to entry in many sectors imposed by regulation. This is what is stopping businesses compete on an even playing field. This is what I want to remove, so a business can't use government to defend their market share. It is government intervention that diminishes purchasing power by enacting regulation which protects certain businesses, even if that is not the intention of the regulation. One example of this is environmental legislation which can impose very large start up costs on new businesses.

Funny you should mention greed, because I disagree. The free market is fueled by greed, and that is exactly what makes it work and is exactly why we have problems now. Regulations allow these so called greedy companies to protect their market share. In a world with less regulation on businesses (and therefore smaller barriers to entry and thus more competition) there will be just as much greed, but the businesses will have to actually earn their market share rather than relying on the government to protect it. The more free the market, the harder it is to be greedy because the consumers purchasing power is much greater.

I'll give you credit for making a much clearer and more concise argument for your position than any of the right-wing talking heads/nutjobs we see on the media. Your explanation of why you want to get rid of (most) regulations is one I had not heard before and does make sense to a certain degree. Previously, I had assumed the underlying reason behind this was to let businesses do as they want at the expense of the consumer (again, see the banking sector since de-regulation started in the 80's) but you do make a good point in that it would take away the power of large corporations to sway governments into putting in place regulations which unfairly benefit them mainly.

However, I'd be interested to hear your views on government interaction in the markets when society has a need that the free market cannot satisfy on it's own, in particular the medical/pharmaceutical industry. Let's take the example of AIDS medicine. The cost of R&D on these drugs, as with any other medicine, is extremely costly, so costly in fact that the average person would not have been able to afford these treatments let alone the poor and disenfranchised who seem to be more at risk of this disease than the wealthier Western populations. If we stick to your free market principles, the pharmaceutical companies would have given up on research a long time ago when they figured out they couldn't make a cost-effective medicine. However, through the assistance provided by local and national governments via funding and tax incentives (as well as further assistance by global leaders such as Bill Clinton), there are now treatments available for even the poorest amongst us, especially in Africa where the term "poor" is taken to a whole other level. Do you not think that government interaction in the free markets is important in areas such as these?

 

[Richie]

I'll give you credit for making a much clearer and more concise argument for your position than any of the right-wing talking heads/nutjobs we see on the media. Your explanation of why you want to get rid of (most) regulations is one I had not heard before and does make sense to a certain degree. Previously, I had assumed the underlying reason behind this was to let businesses do as they want at the expense of the consumer (again, see the banking sector since de-regulation started in the 80's) but you do make a good point in that it would take away the power of large corporations to sway governments into putting in place regulations which unfairly benefit them mainly.

Thanks. It should be noted that you can't cite businesses as a group with a single voice. For every regulation there will be businesses who support it because it benefits them, and those who oppose it because it doesn't benefit them. We all accept that businesses put profit above all else, so if a business supports regulation then it is doing so because it means they will get an advantage that they otherwise aren't getting from the market.

An interesting example of this is that of Wal-Mart, they were on the side of a raise in the minimum wage. The reason for this is not altruistic as they would have you believe. Wal-Mart already largely paid it's employees above minimum wage, so an increase would have little effect on their overheads. However it would increase the overheads of their competitors who do pay their staff minimum wage, making their competition less competitive in comparison.

However, I'd be interested to hear your views on government interaction in the markets when society has a need that the free market cannot satisfy on it's own, in particular the medical/pharmaceutical industry. Let's take the example of AIDS medicine. The cost of R&D on these drugs, as with any other medicine, is extremely costly, so costly in fact that the average person would not have been able to afford these treatments let alone the poor and disenfranchised who seem to be more at risk of this disease than the wealthier Western populations. If we stick to your free market principles, the pharmaceutical companies would have given up on research a long time ago when they figured out they couldn't make a cost-effective medicine. However, through the assistance provided by local and national governments via funding and tax incentives (as well as further assistance by global leaders such as Bill Clinton), there are now treatments available for even the poorest amongst us, especially in Africa where the term "poor" is taken to a whole other level. Do you not think that government interaction in the free markets is important in areas such as these?

I disagree with the idea that without government subsidy the big companies wouldn't commit to research. Research, especially in medicine, is very expensive but the payoffs are huge when you get a drug and patent it. There is plenty of incentive for companies to research.

However, lets assume your argument has some merit, I still don't agree with a government spending tax payers money on it. This is because you are overlooking the third sector, the non-profits. When the governments give out money for research, the person who's money it is (the tax payer) has no say in the matter. I'd argue that with lower taxes and more money in their pocket, people would be more willing (and able) to donate to charities. Just as businesses have to compete for their market share, competition which fuels innovation, so would charities.

When I first heard this idea floated, I was very dubious of it. However, the National Trust is an excellent example. They maintain over 500 historical properties and sites with a staff of nearly 5000 and 60,000 volunteers without a single penny from the government.

A counter example is foreign aid. I can only speak personally, but if the government wasn't spending £13 billion/year in foreign aid, I'd be much more inclined to donate to world charities. In fact, that is exactly the reason why I didn't donate to Comic Relief this year.

I may have gone a bit off topic but I think one of, if not THE biggest problem in todays society is the idea that whatever the problem it is governments responsibility to take care of it. People (read: the Treasury) are never as careful with somebody else's money as they are with their own, each person making a decision with their own money to give to charities they feel will make a difference is a far better system than having it taken by the government and letting politicians decide.

 

[Richie]

Also this thread appears to have become a debate between the two of us, I think the length of responses have scared everyone else off. I'm ok with it though, I'm enjoying the debate

 

[Richie]

Also Skinhead, this is an excellent read about the role government played in the financial crisis.

An Open Letter to my Friends on the Left by Steve Horwitz

 

[BushHillSpurs]

Also this thread appears to have become a debate between the two of us, I think the length of responses have scared everyone else off. I'm ok with it though, I'm enjoying the debate

THIS.

Lol, cant be bothered to read. In my opinion though, this thread should be renamed the politics thread. I've had a browse and cant see one..

 

[DubaiSpur]

Also this thread appears to have become a debate between the two of us, I think the length of responses have scared everyone else off. I'm ok with it though, I'm enjoying the debate

Still present, and actively reading. You have an audience, gentlemen.

 

[Richie]

THIS.

Lol, cant be bothered to read. In my opinion though, this thread should be renamed the politics thread. I've had a browse and cant see one..

To sum up my points in as brief a way as possible, regulation is bad because corporations always lobby to have it legislated to give them an advantage at the expense of the consumer. As such, more regulation cannot be the solution, because the corporations will always find a way to make it suit them.