OMG EU stealing money from teh companies again

[Spiffor]

QFT. I'm surprise on how many of our fellow Polytubbies hate free markets and want to revert to merchantilism.

In mercantilism, state-sponsored monopolies used their status to make as much profit as possible, by milking the consumer..

In modern countries, state-monopolies provide a public service, to the benefit of the consumer.

Let's take the example of electricy : in France, the regulated price of electricity is lower than that of the European market (thanks to nuclear power, for which we reap rewards after the initial investment - other European countries that don't produce nuclear power have a higher market price).
Two years after the consumer market had been opened, 97% of the customers still use the reglated price provided by the former state monopoly (which is still forced, as per the law, to provide the regulated price).
In order to increase the competition, the European commission wants the regulated price to end as quickly as possible, and the French government is considering ending it by the end 2010. That's because the competition won't take any significant market share as long as electricity prices will be set by the state for the benefit of the population.

I'm a bit saddened that Zkribbler, of all people, would put all forms of regulated market in the same mercantilist bag.

Though I agree that state monopolies, when they anticipate their privatization and the market's opening, try to milk as much as they can, and go back to all the bad practices of a monopoly. Over here, we've seen this with telecom, and we're seeing it right now with rail.

[Kuciwalker]

State-sponsored monopolies have substantially less incentive to innovate and provide new services.

[Zkribbler]

Monopolies and cartels are bad things. They stifle innovation; they gouge the public; they have no incentive to provide quality goods and/or services.

Competition is the engine that drives Western economies. It creates the best products and services at the lowest prices.

Why would so many Poly-tubbies rush to defend price fixing??

[Kuciwalker]

Ah, Zkrib, you saw how unions are a bad thing?

[Spiffor]

Monopolies and cartels are bad things. They stifle innovation; they gouge the public; they have no incentive to provide quality goods and/or services.

Again, this is a completely one-sided view. Somme goods can either be produced through the market, or be produced as a public service

Over here, the state made policies with gas, electricity, rail transportation, postal services and so on.
Those policies are what made our nuclear network possible (each nuclear plant over here was vastly cheaper than in the US, because they were all built by the state monopoly, which benefitted from the economies of scale - the regulated price shows it).
Those policies have been a strong tool for providing infrastructure -and maintaining it- outside of Paris : the rail company ran trains at a loss in the countryside, the utility companies connected suburbs and the countryside at a loss as well. If we didn't have those tools, our power grid would have been about as sucky as yours. And actually, the European power grid (including France's, now that the market has opened) is getting bad very quickly.

Over here, the people in the public services often take pride of a job well done. Exactly like policemen or teachers. And the incentive to provide quality is political : the higher management is appointed by the government depending on the government's priority : sometimes, the priority is about quality ; sometimes, it's about preparing privatization (this is what the electricity company is doing very well : it lobbies to increase the regulated price by 20%, thus losing its competitive advantage over the market); sometimes, the priority is putting friends in high places.

What I'm surprised with, is that in the US you do have public companies that do what the market would do very badly : you have plenty of municipal utility factories, and in California you have seen the incentive of the market to provide you quality energy [/enron]

[Spiffor]

BTW, unlike Zkrib, Kuci's right. The real problem with state monopolies that provide a public service is innovation. Innovation supposes that you question yourself strongly enough, which involves being challenged.
Market-like competition is not the only reason why companies would question themselves (political pressure and new technologies do as well), but the market is a very strong incentive indeed.

No such thing can be said for quality, work ethics and prices : what drives those is the aim of the company. Some companies do nt strive for maximized profit, as they belong to the public service.

[Kuciwalker]

Yes, but for most things it's clear that maximizing total wealth is usually done better by competitive private industry than state monopolies (or private monopolies). If you're worried that a profit-motivated company will be bad for consumers, just tax them more and give the money back.

[Spiffor]

Yes, but for most things it's clear that maximizing total wealth is usually done better by competitive private industry than state monopolies (or private monopolies). If you're worried that a profit-motivated company will be bad for consumers, just tax them more and give the money back.

I'm not only worried about the consumers. There's also the infrastructure, and the whole "externality" thing.

Sure, with regulation and taxation, the state can steer the market into creating a good infrastructure, and provide those externalities. However, it usually involves complex rules for which you'll need a bunch of bureaucrats controlling that the companies are doing what they're supposed to, and a nightmare of red tape.

I'd much rather have the state (or whatever layer of government) do the job it intends to do, rather than try having the market do it. I'm pretty sure it's more efficient as a whole.

[HalfLotus]

Breaking up anti-competitive oligarchic practices.

They didn't break up anything, the agreement ended 4 years ago.

[Zkribbler]

Punishing anti-competitive oligarchic practices.

Fixed

[Zkribbler]

Ah, Zkrib, you saw how unions are a bad thing?

Au contraire. Employers have banded together to form a single entity called a corporation. This necessitates the employees banding together to form a single entity called a union. It's the only way to obtain equal bargaining power.

[Kuciwalker]

[QUOTE=Spiffor;5636128]I'm not only worried about the consumers. There's also the infrastructure, and the whole "externality" thing.

Sure, with regulation and taxation, the state can steer the market into creating a good infrastructure, and provide those externalities.[/q]

You keep using that word. I don't think it means what you think it means

However, it usually involves complex rules for which you'll need a bunch of bureaucrats controlling that the companies are doing what they're supposed to, and a nightmare of red tape.

I'd much rather have the state (or whatever layer of government) do the job it intends to do, rather than try having the market do it. I'm pretty sure it's more efficient as a whole.

1) Why?

2) Why do you think the government's incentive structure is any better aligned with efficient operation than the market, in the general case?

[Kuciwalker]

Au contraire. Employers have banded together to form a single entity called a corporation. This necessitates the employees banding together to form a single entity called a union. It's the only way to obtain equal bargaining power.

1) You complained about price fixing. THAT IS THE ENTIRE PURPOSE OF A UNION. TO FIX PRICES.

2) There are usually multiple employers in any given area, often even in a given industry.

[Zkribbler]

THAT IS THE ENTIRE PURPOSE OF A UNION. TO FIX PRICES.

No. Fixing prices are what is done by cartels...and by corporate employers who dicate their employees' salaries. I'm talking about negotiating salaries and working conditions.

[Kuciwalker]

No. Fixing prices are what is done by cartels...and by corporate employers who dicate their employees' salaries. I'm talking about negotiating salaries and working conditions.

WHAT DO YOU THINK A SALARY IS BUT THE PRICE OF LABOR.

You just said that the purpose of a union is to negotiate salaries, i.e. all the workers get together and agree "we are not going to sell our labor for less than $N/hour". This is price fixing as much as a group of companies getting together and agreeing "we are not going to sell our stuff for less than $N/widget".