Re: cr> on Trusts and Antitrust


(Note from moderator: we're getting away from electronic networking
and rights into general economic principles again, so after these
messages I'm going to start turning people away.--Andy)

Sender: •••@••.•••

In a message dated 96-04-03 15:54:45 EST, you write:

> The fact
>that somebody else can make a profit selling below YOUR cost to produce
>usually means you're in the wrong business. But it happens all the time.

Take the once great R.L. Drake Company for example. R.L. Drake Company
manufactures large dish satellite recievers (C and Ku band) and Ameture Radio
Equipment. After years of prosperity, Drake has fallen on desperatly hard
times due to the introduction of DirectTV and the ability for foriegn
companies to absorb millions of dollars in losses by selling off thier
inventorys at below cost.(ie Toshiba who sold off 150,000 recievers at a
staggering 50% loss) Drake has since laid off nearly 100 workers (from a
total workforce of only 400) and is desperatly seeking other areas in which
to expand to prevent total failure. The introduction of new technology and
the ability for someone to produce and sell similar products at a greatly
lower cost is the reason behind thier financial woes. Can we fault Drake for
Toshiba's advantage in production costs? No. Can we fault Drake's management
for not anticipating Toshiba's move? Yes.

It's not monopolistic, it's just better business.
The maniac, a Drake surviver.


Sender: "Michael R. Widner" <•••@••.•••>

In a previous message, •••@••.••• wrote:
> today the subject for my rant is regulation of pricing by our government.
[Mostly valid 'rant' snipped]

[Q: Should 'we' demand pricing regulation of ISP type services?]
> ...  we cannot request this of anyone, simply because this is
> illegal.  no one should interfere with sound (and perhaps not-so-sound)
> business decisions, or with the pressures that we, the consumers, bring to
> bear.

We certainly can request this of our federal legislators.  There is already
a plethora of federal regulation concerning business.  While I grant that
it is fairly rare for them to regulate pricing of consumer services it is
not entirely unheard of.  What springs readily to mind is regulation of
railway fares decades ago, which was challenged to and upheld by the
supreme court.  You see, the federal government can and does enact a vast
amount of legislation concerning business and defends it under the 'commerce
clause' of the constitution.  The clause simply states that congress has
the right to enact legislation "to regulate Commerce... among the several
States."  (Article I, section 8)  ISP services undoubtedly qualify as
interstate commerce by the presently broad interpretation of this clause.

[Excellent points about why this should not be done snipped.]

I agree that such legislation would be a terrible error for precisely the
reasons you've mentioned, but that doesn't mean that it can't or won't

> the capitalist system works as
> well as it does because it responds in the correct way to consumer needs, and
> because it is not mixed with socialism.

We have tons and tons of socialist elements in our system.  I will argue
vehemently that capitialism allocates goods and resources more efficiently
and effectively than socialism because consumers are able to determine
what they want for themselves and vote with their dollars.  The socialistic
alternative is for beaurocrats to determine, by whatever means they can,  what
consumers want and need, then allocate resources and set prices accordingly.

> both systems work apart, but when
> mixed, someone else will always get carried by the system.

Dictatorships work.  Communism works.  Anarchy works.  The determination
of how well they work depends on your goals.  My personal philosophy
happens to tend pretty far toward capitalism, but with a few exceptions.
There do exist such things as 'natural monopolies'.  For those that aren't
familiar with the term, natural monopolies form when there are infinite
economies of scale in a given market or when the most efficient free market
solution is for only one provider to exist.  Examples:  local telephone
companies (because it would be grossly inefficient to have multiple lines
running down every street and to ever building.  Technology may eliminate
this natural monopoly IMHO)  Utility companies, such as the power company,
the water company, the gas company, etc. (for very similar reasons)  Another
would be any thoroughfare company, such as railroads to varying extents
or a 'highway company' if such a thing existed.  (private toll roads?)

The natural monopoly point is made, I think, and that regulation of these
is in the best interests of the consumer is practicaly undeniable.  The
questions we must answer are: 1) whether network services will ever fall into
this category, and 2) even if we expect that they will, is the proper time
for regulation when it reaches this state or before?

Of course the natural monopoly issue is only one example of a time when
the government _should_ impose its heavy hand on the otherwise smooth
operations of capitalism.  Others are general public safety (thus OSHA),
exploitation and other unfair practices toward labor (NLRB), the FAA, the
FCC... The list goes on.  Each of these are created with a clear and
fairly concise statement of purpose and reason for the necessity of
existence.  I have yet to see any clear and rational purpose or necessity
for any body or legislation concerning regulation of internet services.

-Michael Widner

 Posted by Andrew Oram  - •••@••.••• - Moderator: CYBER-RIGHTS (CPSR)
   CyberJournal:  (WWW or FTP) -->
 Materials may be reposted in their _entirety_ for non-commercial use.