I believe that the free-market allocates resources and production in the most efficient manner possible through pricing. I believe that government often does more harm than good towards promoting the free market- however, is it really about promoting a free market, or promoting perfect competition? Are there not certain ways that the government can more appropriately promote perfect competition? As a proponent of the free-market, the classical diagnosis of the problem has pointed to government hindering the free market and a hinderance in the free market hindering competition. But does hindering the free market in certain ways hinder competition necessarily? Take a major example- a progressive corporate tax- for instance- It rewards smaller businesses at the expense of big businesses- which is an example of hindering the free market through favoritism- but doesn't it, on the other hand, promote development of competition for big businesses? Thoughts?
It's hard to promote true free market or perfect competition when there is always a politician in the back pocket of any certain corporation or business, or even a certain small business in a small town that is being aided by a politician (for some side change). The day you stop corruption is the day we see perfect competition. Unfortunately human nature always gets in the way. There is no law that can stop this either. The capitalist society is hindered only by human nature, which is something that cannot be controlled.
Right, but I guess my question is asking- in what ways has government promoted perfect competition? By definition, a truly free market cannot exist with government intervention, but is this really necessarily true about promotion of perfect competition?
I guess it depends on which market and one's perspective. For instance, the government milk production regimen allows a person with 100 cows to compete with a farmer with 1,000 cows by price controls at the wholesale market which helps keep small farmers in business. The problem of course is that the price controls inflate prices above natural rates at the retail level where there are basically only two companies--PET and Maola.
So in this case, this is unfair since it puts extra burden on bigger companies (sort of like the progressive corporate tax) - but the tradeoff comes with an increase of competition which limits any kind of price gouging or monopolization of markets- I'd say that anything that government can do to reduce illicit collusion and barriers of entry without putting a burden on companies currently in market is the best way to promote perfect competition. Imagine what eliminating patents and IP would do, for example.
IMO, truly free markets and government intervention are contradictions in terms. That does not mean free markets are good or government intervention is bad, but we all know the business of our government is business. It government intervenes wherever the money points it.
Depends on what part of the market I suppose. For corporate farming, subsidies are very profitable as they get the benefit of the the economy of scale and a guaranteed revenue above what the market would naturally produce in the name of keeping small farms in operation. For the purchasers of their products, and ultimately the consumer, it is not such a good deal economically in relation to what it could be, but at the same time, they are also protected against monopolistic price gouging. The higher wholesale price point might also make it more scalable for farmers to move vertically and create their own independent local/regional dairies that might be able to somewhat compete with PET and Maola in those areas. I have a love-hate relationship with IP. I think the for a limited time authorization of IP protection in the Constitution has been taken to the extreme. Certainly should be no more than 10 years, but probably at least 5.
But I think that while subsidization logically helps smaller businesses, it kills the spirit of competition- I think that lowering barriers so there is little excuse for difficulty in breaking in is what I'm really aiming at. My concerns come with the potential situation when big companies attain the ability to hog all resources, and choke all competition to the point where they have full reign over prices. While the free market generally discourages this practice, it has happened in the past- so this is where my skepticism comes from.
Isn't that what farm subsidies do? They allow more competition by lowering the risk to enter the business. It raises another issue though. Many people too quickly think about economics in the light of end consumers of goods and services, not that manufacturers themselves are consumers. I don't know the answer, but what would be the better route to take in an imperfect market--pursue that which is better for consumer costs or that which is better for wholesale costs when there is tension and correlation between the two?
Lowering cost of entry and giving certain companies more money than others are not necessarily the same thing. By lowering barriers, I'm referring to when in extreme cases competitor businesses are simply UNABLE to enter the competition because a monopolizing entity has full control over resources and suppliers. Is the farm industry in this sort of position?
government meddling always causes harm big corps use governmetn licenses standards approvaed methods etc to all stifle competition its best to let individuals free action think not fo groups, groupthink leads to socialism and shortages, think of millionsof individuals voluntary trade
Government is the only entity that can set ground rules for things like pollution standards, giving all companies a level playing field. But then regulation goes too far. The standard for lead content was below the level in nature (there is a background level of lead). Then the standard was "lead free", which increased cost, with no health benefit. The "benefit" it is gave the EPA regulators something to do.
There is no such thing as a level playing field. The playing field is bought, end of story. Laws are made or diverted because they are bought. It works both ways. This is where human nature comes into play. There is no perfect solution, because human beings are far from perfect.
Perfect competition in the markets reflected through price is only achievable by universal instantaneous information dissemination to all market participants. In other words, perfect competition cannot exist if all market participants do not have all the information. Governments are not the purveyors of much market information but their rules and laws that require the immediate publicity of any and all information that may be of concern to market participants have made markets far more transparent, and pushed them closer to the ideal of perfect competition. That said, government transparency itself is not perfect and neither are its rules, but they are far better than the nothing that existed before. As to the path to perfect competition, we can only hope that further technological advances result in more transparency and faster information dissemination that overwhelms and makes obsolete the cult of information propriety that is currently creating huge impediments to the free flow of market information. Make no mistake, the current meme of proprietary information ownership has moved markets from supply and demand to asymmetric information manipulation. Information has become a market in itself, the one thing that can create perfect competition is a secret, available only to those who can pay the price.
