Originally Posted by liberty

When has this scenario ever played out? The fact is, setting a low price to undercut competition is a lot harded than it sounds. In order to run all companies out of business, Comp. 1 will have to keep prices low for a long time. This means losing a lot of money. So, if Comp. 1 succeeds in driving out all competitiors, it is going to have one hell of a time when another competitor comes on the market. It has alread lost a lot of money from this scheme to undercut competition, it can't afford any new competition. Comp.1 will be engaged in a never-ending price cutting war in which it will never succeed. Some other company is always in the wings, waiting to take over the customers. Every time this happens, the Comp. 1 must do one of two things. 1) Make an awesome offer to the competing company for a purchase. This is unlikly because the competing company will request much more money than it believes it will ever make. 2) Continue to undercut, and continue to lose. This will not go on for long.

Also, if a company continues to undercut competition as you suggest, other companies will simply hold their goods off the market and sell them when Comp.1 increases prices. This will really do damage to Comp. 1.

This is why companies need gov't to inhibit competition in order to form a monopoly. When has a monopoly risen from a free market. I want an actual example.

Originally Posted by Luap

Governments have played a role in establishing or protecting monopolies and cartels, true. But what about businesses that provide essential utilities? You seem like an absolute laissez-faire capitalist, so I have to ask: what about the poorest people in the Third World that are finding their water and electricity privatized and themselves unable to pay for these essential services? Just tell them to toughen up and wait for competition to develop?

Originally Posted by liberty1776

Why don't we just completly eliminate all taxes at all levels?

Originally Posted by Malvolio

Not even in economic theory. There are certain cases that can lead to a market failure. Like with public goods, natural monopolies, external effects, moral hazard, etc. Markets are very powerful tools, but we can't expect them to solve all problems. And that's the reason why there always will be the need of a limited public sector and government regulations.

Originally Posted by danielpalos

What is the opinion, of a general sales tax that is based on individual transactions? In the example of electronic transactions, a market friendly transaction fee could be included as a form tax. Hypothetically (I haven't crunched any numbers.) that form of taxation could be less than one cent per transaction.

Ideally, other forms of direct taxation could be reduced, to the extent revenue is offset by a transaction based revenue model.

Originally Posted by liberty1776

I don't really know enough about the third world countries to speak to this very well. But I can guess at a few things. First, I know that there are oppressive dictatorships in a lot of third world countries. This would seem to support my argument. Second, when you say 'prvitized' what do you mean? Have they actually been prvitized? Third, if they are truly prvitized, what is the problem that is keeping them from getting water?

Originally Posted by Luap

I'm not all that knowledgeable of the Third World either, but enough to know that there are a lot of people pissed at the rapid liberalization and deregulation mandated by the IMF. Listening to their arguments in A Movement of Movements, I think, or Stiglitz's arguments in Globalization and its Discontents, helps one understand just how destructive these laissez-faire policies can be on the lower classes and to progress in general, particularly in developing countries.

When I say "privatized," I mean that state-owned enterprises are sold off to (almost always foriegn) firms. These firms are privately owned, so yes, the services have truly been privatized. The problem lies in the fact that many of these people live in poverty and cannot afford some essential newly-privatized services, such as water or electricity. Usually, the rapidity of the process and government corruption contribute to a single firm having an unfair advantage in the market, and knowing that its services are essential, it raises the prices to a point that many people cannot afford. You can say, "Oh, well, if it wasn't for government, then this problem wouldn't have happened," but that still ignores the tragedy unfolding and the problem of the application of privatization, liberalization, and deregulation.

Originally Posted by Mark_Twain

How would we provide for basic services, such as national defense and the regulation of interstate commerce (things clearly called for in that troubling document called THE CONSTITUTION).

Originally Posted by iTaliAN_ICe

A monopoly is a business. The military is not. You can compare the two and equate the military to a business, but the military is not and should never be a business.

Originally Posted by Ambiguous

Monopolies are not restricted to businesses. A monopoly is nothing more than a market form in which there are many buyers but only one seller. But that's not the case with the military, as there are many sellers but only one buyer. As such the military is better described as a monopsony, not a monopoly.

Originally Posted by liberty1776

Thanks for shedding some light on the issue. Still, I am not familuar with the regulations that the IMF demand. But, if markets are completly privitized as you claim, there are two things to consider. First, how were the services before the privitazation. Second, when an economy is shifting from a command economy to a market economy will doubtlessly cause some problems. It is likely that many people will want to go back to the old ways. For example, when Boris Yeltsin was elected after Gorbachev resigned, a the Communist Party recieved a third of the vote. This is because it really sucked in Russia after everything was deregulated. Now, however, things only suck (I think, if I remember correctly, Russia's per capita GNP is less than one tenth of America's). The distance from a command ecnonmy to a market economy is greater than the distance from a poor market economy to a rich market economy.

Now, as I said, I don't know much about third world countries, but this is my guess.

Originally Posted by liberty1776

Many sellers? There is one seller of defense: the military. With whom does the military compete? If there are many sellers, who else can I chose to defend me? And, there are many 'buyers' of defense; I'd say about 300 million.

So, I am confused by what you are saying.

Originally Posted by Ambiguous

Ah, I misunderstood. Another way to put it is to say the military -- or more appropriately, the government -- has a monopoly on the use of force.

I was talking about it from a different perspective where there are many sellers of equipment (defense contractors) but only one buyer for their products (the military).

I guess you could say the military/government is in the unique position of being both a monopoly and a monopsony. In either case I think it shows that extremism is most readily possible through government. It gets to play the game as well as set the rules. Fun combination.

Originally Posted by Americano

And immensely profitable for favored sellers and buyers.

Originally Posted by Luap

I agree that such a radical change from a command to a market economy will cause problems, and history shows that. The IMF's "conditionalities" for loans have required rapid and intense deregulation and privatization, despite the evidence that this "shock therapy" results in corruption and suffering. In other words, the complete removal of government from the economy, at least so quickly, is hugely problematic. I was just raising the point about the Third World in response to your advocacy of a complete laissez-faire system, of which I'm very skeptical.