Category Archives: Monopolies

Atlanta Prefers Government Control to Results

Education, Monopolies, Politics

Achieve Academy could be shut down

But Achieve Academy may close, a move that would force Zicuria and the school’s 170 or so other students from grades five through seven back to the traditional public schools they left. Atlanta Superintendent Beverly Hall is recommending against approving Achieve Academy’s charter, citing a weak curriculum, a history of financial mismanagement, low enrollment and other problems. The board is scheduled to vote today on the charter.

…

David Morgan, principal at Achieve Academy, said Atlanta school officials have been “unyielding in their position,” that the charter school must close, despite test scores that met state standards under the federal No Child Left Behind law.

Though Achieve met state testing goals, the school did not meet testing goals spelled out in its charter, district officials said. “The performance in fifth grade was particularly troubling, as 23 out of 41 students did not meet standards on one or both of reading or mathematics tests,” district official Sharron Pitts wrote in a letter to Achieve’s board chair, Dana Thomas.

Morgan said school officials point out weak scores while ignoring high scores. Seventh-graders performed well on the state’s Criterion Referenced Competency Test, with 87 percent passing math and reading. Achieve students generally outperformed schools such as Carson and Kennedy, where half the seventh-graders failed reading and where students will be sent back to if Achieve closes.

I realize that in their first year, fifth graders (who, invariably, were products of Atlanta Public Schools up until that point) were failing. But it certainly looks like they’ve gotten those same failing students up to an 87% pass rate by the time they hit 7th grade. That sounds like positive results.

So the students are happy, the parents are happy, and the kids are leaving with a higher pass rate than they came in. Even the fifth-graders, who didn’t meet the standards the school set for themselves, passed state and NCLB guidelines, which not all Atlanta Public Schools do.

It sounds like the school does have a bit of turmoil, between financial problems, moving every year, some leadership turnover, and losing out on one of their curriculum programs (due to a too-low enrollment number). But despite these problems, they’re getting it done.

And it appears that they’re on the right track, trying to buy a property while working with a new company, Imagine Schools. But apparently that’s not good enough for the local government:

Deputy Superintendent Kathy Augustine said the school had shown “pockets of improvement,” but she stopped short of calling Achieve a success.

She found the school’s plan for a partnership with the nonprofit Imagine Schools void of detail and full of conflicting information about such matters as whether the Saturday program would end at noon or 12:30 and whether students would be allowed a snack time. Augustine was not convinced teachers would cover the state curriculum, nor was she satisfied with the school’s plan to operate in a former church Imagine officials have said they intend to buy.

A half hour on Saturday? Snack time? These are reasons to refuse their charter? And the state curriculum hasn’t exactly made Atlanta Public Schools a success, so maybe they should stick with what actually works. I think Atlanta is searching for any reason to refuse the charter, not looking to determine if this school will actually educate children.

I think we can see through this. This school, despite its problems, is succeeding in its primary goal, educating children. If such a problematic charter school can succeed, I’ll bet the local government schools are quaking in their boots. How can they explain their failure in the face of success like this?

Hat Tip: Jason Pye

Brad Warbiany
https://thelibertypapers.org/

Where Markets Beat Government — and Vice Versa

Economics, Education, Monopolies, Politics

I checked out Perry’s site the other day, and ran across this post on Wal-Mart. It looks like Wal-Mart is opening its doors again in New Orleans, while Congress is still pointing fingers. It got me thinking: why is it that we see for-profit businesses flocking to the area, while FEMA is still trying to figure out where to park their beautiful trailers?

I originally wanted to issue a snark-filled rant on why government is inefficient, bloated, and ineffectual. But this, combined with Massachusetts’ insanity, calls for something a little better. I’m not an anarcho-capitalist. I realize that there are places where government can get necessary things done that the market cannot. It is only when we ask it to do things it is not suited for that we run into problems.

Bear in mind, this is an off-the-cuff treatise, so I welcome comments pointing out all the places I am wrong.

I see there being a few major types of services provided by the government and markets:

1. Distributed provider, distributed user: This would fit the mold of most day-to-day interactions. When you go to buy lunch, you have a wide range of choices. Purveyors of those products can sell to anybody; there are few long-term interactions.

2. Single-provider, distributed user: This would fit things such as roads, sewers, police, military, courts, etc. In these types of interactions, there action between the provider and the user is often severed. In the case of roads/sewers/etc, it is common that an individual homeowner or driver could not contract with a provider to build a new sewer system or road to service them. Often, maintenance of these services are paid for by some sort of taxation, and only occasionally by a true “user fee” arrangement. Courts, police, and military are even more so, because there is not often a true link between what police or courts do for those who aren’t currently the victim or perpetrators of crimes, but they offer a sort of “blanket of protection” for everyone. Again, the link is fairly severed between provider and user.

3. Specialty provider, specific user: This is a tough category. In this, I place things such as medical care, which often is difficult to procure in a true competitive environment (outside of general-practitioner care), and is highly tailored to the specific user. There may be 3 hospitals in a close area, but only one specialist in the field you need. This may also include education and other services, where the relationship between a specific provider and user is difficult to break. For example, when you put your child into a school, you don’t want to have to change that school without good reason, because of the relationships your child generates with classmates/teachers/etc. Last, it includes such things as insurance, where acute costs are very high and risk may need to be pooled.

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The first case is a place where markets always beat government, hands down. Government action, nearly by definition, is one of monopoly, and monopolies are known for poor efficiency. They don’t innovate to serve their customers, they don’t bring costs down through competition, and they have no reason to do either. This one is so obvious that it needs no further discussion.

The second case is the poster child for government action. This is the one agreed upon by everyone except the anarcho-capitalists. There is a little point of distinction on things like roads (the “pure” libertarian will ask for them to be privatized), but I’m going to gloss over that. I chose sewers but left out other utilities for a reason, as well. Without getting too heavily into it, there are certain “common carrier” services that form a bit of a gray area. Electrical or gas service doesn’t lend itself quite to competition very well, due to the extremely high infrastructure costs in service. Georgia’s take on natural gas, however, is one where the actual distribution of gas is centralized, but you have your choice of “service company” to sell you that gas. It blends some of the benefits of competition without the drawback of requiring multiple companies to lay redundant infrastructure. But in most “common carrier” utilities, some sort of government action is required, as local government is typically granting monopolistic licenses to providers. The cases of courts, police, and military, however, are specialized enough where we leave government to provide these directly. This is the one case where we grant a monopoly on initiating force, and choose to keep that power in the hands of government we control with our vote.

So I think we can all agree that communist Russia showed us how dangerous it is to let the first case be provided solely by government. And I think we can look post-communist Russia to see how lack of infrastructure and legitimate courts/police/military to protect the rule of law will lead to anarchy and rule by the strong.

But the third case is problematic. This is a case where it is easy for politicians to advocate government action, and easy to dupe unsuspecting voters into agreeing to it. Usually, they play to emotions. It is always hard to watch people go without adequate medical care or education. It is far too easy to go from watching this to thinking that it simply shouldn’t happen, and therefore the government should take over and provide the service. But while this is different than the first case, it is still not a place where government monopoly works. Our current educational system is evidence of that. In the case of medical care, nobody wants to see people lose their entire livelihood due to high medical costs. But the proper way to pool risk is with insurance. Just as we would not ask the government to provide flood insurance, car insurance, or homeowners insurance, medical insurance is not for the government to pay. It would help, of course, for the government to end its policies which make it nearly impossible for individuals to provide their own coverage reasonably cheaply, but that’s a whole different debate. Again, look at education. Education would be much better provided in this country if we returned to a competitive market, with parents paying for school directly, and (at best) a safety-net program to help the poor. When even the NYT is realizing that vouchers work, it is obvious that we need to change our strategies.

As I said, there are times when government action is the best way to get something done. Those cases are few and far between, and in all of them I suggest making the services controlled as locally as possible, to allow a “market in governments” to form. Just as people choose which business to patronize, and should be able to choose which school to patronize, the experience of federalism and local control allow people to choose which local government to patronize. This will allow people to choose local government based upon the ability of government to provide necessary services, and allow competing localities to learn through competition how to be more efficient. You can ask states like Massachusetts (the only state in the union to lose gross population year-to-year) just how important this is.

But where government action is not efficient (almost everywhere), we need to make sure our policies are designed to facilitate the working of a market, not impede it.

Brad Warbiany
https://thelibertypapers.org/

Thoughts Along The Same Lines

Economics, Individual Rights, Monopolies, Politics, Theory and Ideas

Sean Lynch has an interesting discussion at Catallarchy in a post called Connecting The Political Circle. He puts quite a few words into discussing the differences, and similarities, between libertarians (aka anarcho-capitalists) and anarchists (aka anarcho-syndicalists) and socialists.

It’s occurred to me that the main difference between libertarians or anarcho capitalists and socialists or communists is beliefs about what is likely/possible rather than what is desirable. I think the main reason anarchists say anarcho-capitalists are “not anarchists” is that they think anarcho-capitalists just want to eliminate government and want/expect the existing corporations to stay as they are, with the end result being that the corporations become the new government (hence calling us not-anarchists).

I think the last sentence is clearly how Libertarians are perceived. It is, in fact, one of my primary issues, as has been evident in the discussion between Doug Mataconis and I here on The Liberty Papers (see this, this and this for examples). Yes, I believe in individual rights and liberties and the power of markets, I detest the idea of “positive freedoms”, and agree with much else that libertarians believe in. But, I’m not a libertarian, and rarely describe myself as being one. Then it is usually because I’m closer to that position than anything else. The thing I think that libertarians and anarcho-capitalists basically lose sight of is that all concentrations of power are destructive to individual liberty, whether they are formal governments, or not.

Speaking of collusion, this brings up another issue that keeps people on the socialist side of the fence: monopolies. We’re all taught in school that artificial monopolies (i.e. those that are created intentionally by monopolists) can be created and sustained, that they harm the consumer, and that they must be broken up or controlled by government. In school, these were simply called “monopolies” and natural or state monopolies simply weren’t addressed. In actuality, it’s not hard to show that historical monopolies have always failed except when the state has intervened to support them, and that even where natural monopolies persist, they do not harm the consumer (at least not more than a state monopoly) and advances in technology eventually make them competitive anyway.

I think there’s some important thoughts in here, one of which Sean sort of glosses over. First, I agree that artificial, legal and natural monopolies are not permanent things. Second, I agree that government intervention does much more harm than good. In my opinion, the anti-trust lawsuit against Microsoft actually helped to sustain the monopoly they currently have over consumer operating systems and the desktop office suite markets, rather than breaking it up. If nothing else, it convinced people that they had to buy Microsoft products because they were the only viable product. It also convinced competitors to come to terms with Microsoft in a way that favored MS when the government failed to do anything meaningful (from their perspective). Probably the most important thought is downplayed, in a deprecatory sort of fashion. And that is that non-government monopolies hurt consumers. Of course they aren’t worse for consumers than legal monopolies, but that doesn’t mean that Microsoft being able to artificially control scarcity in the office suite market is good for consumers.

So, what does all this make me? I’m clearly neither a socialist nor an anarcho-syndicalist. But, my perspective on corporations, monopolies and concentrations of power seems incompatible with libertarians, conservatives and anarcho-capitalists. I usually describe myself as a rational anarchist. I believe in the sovereignty and responsibility of the individual, and oppose the concentration of power aimed at coercing the individual. I think that is, ultimately, the disconnect between libertarians and I.

Update: A thought struck me, and I think it’s one worth exploring, on this whole issue of libertarians, corporations and monopolies. I think that what is happening is that libertarians are stepping over a line that they should reconsider. They go from defending the market against government intrusion to defending the actual entities within the market that are the proximate cause of the desired intrusion. While government intervention and/or intrusion into the market is something we don’t desire and should actively work against, that doesn’t mean that the target of the intrusion, Microsoft for example, is something good that needs to be defended. In fact, neither Microsoft nor Wal-Mart are shining examples free market practices to hold up to the world. We have a tendency to defend the target of the government intervention, which is a mistake.

Eric
Security executive, work for Core Security, veteran, kids, dogs, cat, chickens, mortgage, bills. I like #liberty #InfoSec #scotch, #wine, #cigars, #travel, #baseball
http://www.securitycigarsfud.com/

A Final Word On Monopolies

Economics, Monopolies

About two weeks ago, we had quite a spirited debate here about the question of monopolies in a free market system, and specifically the question of whether Microsoft, or any other supposed monopoly was a problem that libertarians and classical liberals needed to concern themselves with. For a recap of those arguments, you should start here and then go here, and then here, then here, then here, and, finally, here. Be sure to read the comments along the way.

On several ocassions during our discussion I started, then stopped, writing a more detailed post discussing what a monopoly actually is in economic terms and whether a monopolist in a free market economy, should one exist, would be a problem worth worrying about. For many reasons, I never got around to it, and now it looks like someone has beat me to it.

Over at Liberty Corner, there’s an excellent post titled Monopoly And The General Welfare that puts the issues forward fairly succintly. The post goes into detail to explain why, in a free market economy, a monopolist would be no different than any other market player and would still be subject to the same free market forces that any other company would be, with the added benefit that the monopolist would not be able to appeal to the state for protection from competition.

The only kind of monopoly that harms consumers is a legal monopoly, one that is operated or regulated by government. Such a monopoly isn’t harmful per se, it’s harmful because the government’s operation or regulation of the monopoly ensures that it cannot and will not respond to price signals. A natural monopolist (like Jack the breadmaker) must bargain with his customers, and must be alert to the possibility that his customers will turn to substitutes and near-substitutes if he doesn’t bargain with them. But when government operates and regulates whole sectors of the economy (e.g., telecommunications and health care), price signals are practically meaningless — there is no bargaining — and substitutes are hard to come by (near-substitutes will be regulated, of course).

The only real monopoly, then, is one that is operated or regulated by government. It is that kind of monopoly — not Microsoft or Wal-Mart (for example) — which ought to be broken up or fenced in by the trust-busters.

As usual, the real harm comes from the state.

Doug Mataconis
http://www.belowthebeltway.com

Monopolies, Markets and Microsoft

Economics, Monopolies

Okay, we’ve had an ongoing discussion here at the Liberty Papers about monopolies, markets and Microsoft. The position presented on one side, a position taken by many libertarians and libertarian-conservatives, is that monopolies that are not directly created by government fiat are okay and we shouldn’t see them as bad. They are, in this line of thinking, natural and arise out of very good business practices and market forces. I’m going to argue that this is not the case and that all monopolies, of whatever origin, should be viewed with suspicion and distrust by those who describe themselves as libertarians, classic liberals, anarcho-capitalists, etc. There are, essentially, five types of monopolies.

  1. The government created, or legal monopoly. AT&T was a legal monopoly, as are the police and fire departments in most cities. When the government directly intervenes and legally creates a market where only one competitor is allowed, that is a legal monopoly.
  2. Natural monopolies are ones that arise because economies of scale, economic efficiencies and capital costs for competitors are such that one one competitor is able to satisfy the demands of the market. In a perfect free market this is impossible.
  3. Monopolistic competition occurs when a single competitor in the market is powerful enough to act as a de facto monopoly. For example, at its height, Standard Oil controlled 64% of the oil market although there were more than 100 competitors in the market. Microsoft, today, is a monopolistic competition with control of 90% of the PC operating system market and more than 90% of the desktop office suite market. Companies in this position are able to take actions to maintain their position that a non-monopolistic competitor could not.
  4. Coercive monopolies occur when competitors use activities that violate the principles of free market. Coercion is aimed at hiding information from the market or influencing consumers and competitors in order to maintain a dominant position in the market. It is often difficult to distinguish between good business practices and coercive practices.
  5. Local monopolies exist when only one resource for a specific product exists in a given area, but not within the market as a whole. For example (and I’ll discuss it further down), Starbucks is a local monopoly at the Sacramento International Airport.

» Read more

Eric
Security executive, work for Core Security, veteran, kids, dogs, cat, chickens, mortgage, bills. I like #liberty #InfoSec #scotch, #wine, #cigars, #travel, #baseball
http://www.securitycigarsfud.com/
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