of monoplies and government

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kiryan
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of monoplies and government

Postby kiryan » Mon Apr 19, 2010 7:35 pm

We all know monopolies are bad or at least as a society we know that. An entity monopolizes something then can dictate price and terms to the market. In the old days, monopolies were broken up for abusing customers with higher prices, Euros decided that abuse of consumers could happen even when the monopolistic practices resulted in cheaper costs ("abuse of undue market influence"). THe focus is usually on consumer goods and serivces, but also can be labor based.

If you buy up all the dairy farms in a town, you can set the wages those people will work for (since they aren't goign to move). There is an investigation announced looking into the hiring practices of tech firms like IBM, apple, microsoft, google on whether they are working together to cap workers wages by agreeing on salary ranges amongst themselves. This is obviously bad in a monopolistic way (unless you're like me and think tech people are overpaid, then again we aren't lawyers).

Now lets talk government. Medicaid/medicare who actively targets doctors wages. It reportedly pays < 70% of the market rate often cited as not even paying for the actual cost of serive let alone what the market will pay. Just take a look at private insurance reimbursement rates vs medicare/medicaid. I think you can make a strong case that Medicaid/medicare engage in monopolistic practices, engage in "undue influence" to reduce prices for consumer and harm doctors directly. Why is it ok for government to run such a monopoly and to outright abuse its power to set prices at lower than market rates? To threaten to use its legislative and political power to bully organizations into obediance?

Sure you can make similar arguments all around like government employed accountants vs private sector accountants and members of the armed forces vs private contractors, but this is a much clearer case in my mind because A) the doctors work for both private and public payers (insurance companies) at the same time and B) because the services they provide are very specific and easily compared and C) payment is specific to a service rather than an hourly rate. It is quite literally, the same doctor providing the same service in the same clinic with the same equipment and getting dramatically different pay. Not only that, if that doctor goes somewhere else, he'll still get basically the same pay from the government.

government is obviously immune to anti monopoly rules, and I certainly don't want the feds paying market rates for healthcare... but at the same time the priniciples dangers of monopolistic behavior are on display in how Medicaid / Medicare work. It's really no different than when Mugabe or Chavez went out and said bread will cost $1 a loaf and all bread manufacturers will not only sell what they in stock at that price (despite that it costs $1.50 a loaf) but they will also ramp up production or we'll fine you, arrest you or take your business. Production falls (which has been in process for 20 years) and black market prices go up (private insurance and patient pays). Then government cracks down on the black market (healthcare reform) to try and make the price fixing stick. The good workers leave, less skilled workers replace them at the same or lower cost and the entire system breaks down.

so anyways, just another tirade / thought on how government has ruined healthcare.
Disoputlip
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Re: of monoplies and government

Postby Disoputlip » Mon Apr 19, 2010 8:46 pm

I don't think you achieve a whole lot when comparing different businesses.

School teachers
Soldiers
Mail service

Here are 3 different groups that each play an important role to the country. Let us say only soldiers had a business case, and therefore private armies began to pop up all over. But nobody was interested in creating a school. Then nobody would get educated, and you would all die to malnutrition because noone learned to read. Mail service had a good business case in the cities, but not in the countryside.

As I see it government tries to figure out where the good for the country > the businesscase, and help those industries. Often the businesses then at some point take over if it is a good business case.

The privatisation of the space industry in the US is a good example of an industry where the businesscase is beginning to make sense.
teflor the ranger
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Re: of monoplies and government

Postby teflor the ranger » Tue Apr 20, 2010 1:47 pm

school teachers - The United States has a thriving private school industry, the market exists for this and could step in place of the public school in the vast majority of the country.

soldiers - XE Services, aka Blackwater.

mail carriers - Is there anywhere FedEx and UPS don't ship to? Maybe not on a daily basis, but if there's a road, they'll probably drive down it.
kiryan
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Re: of monoplies and government

Postby kiryan » Tue Apr 20, 2010 3:08 pm

I think Diso's point is that government has a role in starting certain industries in a monopolistic fashion... All these situations are different than healthcare because healthcare is/was a private industry and the government is moving more towards making healthcare a public industry. The justification is that its a "right" and therefore the government must provide it and therefore the government must control / manage risk that it might not be accessible in the future. Kind of like the army...

The Army is one thing I don't support being privatized because of the subject matter which is killing and disrupting governments in general. Yes there are humanitarian things like security and road building logistics ect... but there is a reason why members of the armed forces are "government property". Also, this need is one of the few things that actually justify the federal government that is in the constitution. Imagine if the army was completely private. If we needed to go to war and the government had no money... how would they do it? Or if most of them refused to participate in a specific operation (battle, intelligence ect)... Can't have that...

UPS and Fedex should probably take over or merge... or spin off their actual local delivery and share it between UPS, FedEx and the post office. There are some things that it does make sense to have a monopoly on... things like this and utiltiies make sense because of the efficiency. Technically USPS is private, but essentially government sponsored and regulated. In this situation, I don't see USPS acting as a monopoly. Its rates and the wages are competitive with private industry as far as I know.

Schools should be stop being public or at least face competition. public education is something like 50% of most states budgets and yet according to the media we underachieve. This is a place where I think competition should be involved. Unfortunately, competition means price premiums for better schools means schools start to segregate based on socioeconomic class. Not really that ideal.
teflor the ranger
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Re: of monoplies and government

Postby teflor the ranger » Tue Apr 20, 2010 5:30 pm

Alternative to competition, we could just suck less at education and stop treating children like morons (and focus that energy on parents).
kiryan
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Re: of monoplies and government

Postby kiryan » Tue Apr 20, 2010 5:58 pm

no doubt teflor. but in order to do that we'd have to send the self indulgent double income parents back to the ghetto from suburbia. they have to work 2 jobs to have everyhting they are entitled too even if it means Nicolodeon and the school system parent their children.
teflor the ranger
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Re: of monoplies and government

Postby teflor the ranger » Tue Apr 20, 2010 10:23 pm

I believe government can vastly improve upon what it does without more money. They just need to be held accountable.

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