From top to bottom:
That one local place which has DIVINE pizza (which is Great Plains in Ames or Alfano's in Rock Island, YMMV)
GodFathers
PizzaHut
Papa Johns
Little Ceasers
Dominoes
(all those thin-crust pizza joints)
When Alice will sell at 100 and Bob will buy at 80. Yeah, I get that.
Alternatively, they can look for a close price that's acceptable.
. . . Well yeah, if you have $100 worth of trinkets but need to sell, you'll take $80, and eat the loss. You get hosed, but you get money when you need it. Or yeah, you can instead offer to sell for $90, and wait to see if anyone takes that sweeter deal. That's about exactly half-way between getting it now and getting what it's worth. That's like saying a healthy alternative is to sell it to me for half it's value.
I get the whole "everything is worth what the buyer/seller will part with" thing, but it ignores urgency. If you value something at $100, if you accept anything less it means you're between a rock and a hard place. You're hand is being forced. You don't want to sell for less than $100, but pressures are making you. That... doesn't seem quite right.
But ok ok, I really don't understand why Bob would offer to buy at 110, when there's already someone offering to sell at 100. That's pretty much a perfect example of an irrational market. Which the free market depends upon. Anyone taking advantage of stupid people being irrational is little better than a con artist.
They can unwind their position
I don't really get that. You mean... one buys and one sells?
Now enter HFT. The market maker is out of a job. The spread is now $0.01, and the bid/ask is around 90.10/90.11.
This part. This right here. WHY? How does HFT makes the spread go from 0.25 to 0.01? That is a complete mystery to me.
Lastly, neither Bob nor Alice can really afford to trade directly on the exchange.
Yeah, I hear you about the ignorant thing. I have no idea why it costs so much to trade directly on an exchange. The cost back in the day was... well, being on the floor with someone shouting things over the din. Today it's just another ebay and everyone with an ISP could access it. If it's really so expensive, you think the least they could do is hook up two people that want to exchange stuff.
The pitchforks aren't coming out just because we don't understand. It's because people are extracting ludicrous sums of money from a system that we know we're paying into, and we don't understand their justification. I'd love to stay out of stocks, but I only have about 4 options when it comes to my 401k, and I'm not allowed to sell. So all the income of everyone on wallstreet seems like a tax on my savings account. Personally I think the HFT are absolutely cheating the system and screwing people out of money. But they're screwing us less than the previous system, so it's a step in the right direction. I think. Like you said, I'm largely ignorant of how this all works.
So Alice has stock she wants to sell for 100, Bob wants to buy for 80. The spread is 20. Now, obviously, Alice and bob won't be doing any trading. They simply don't agree on the price.
It's not like any market with a high spread doesn't have any trades. So, I imagine, something happens with Alice and she needs money. She has to consent to Bob's price. Or Bob really wants into the market so he consents to Alice's price. That's "transaction" cost, what it takes to move money in a market. That's "bad", sorta, as it limits trades and punishes people who NEED to buy/sell. (But it also rewards patient people. Open offers to buy/sell simply make more money.)
Now, arbitrage, where HFT makes money, is when Alice wants to sell for 100, and Bob wants to buy at 110. They don't know about each other. (WTF is the point of an exchange then!?) The fast trader comes in, buys at 100, sells at 110, and pockets the difference.
Feel free to correct me if I got any of that wrong.
How exactly is this reducing the spread? In that scenario, isn't the spread negative 10? How does someone buying and selling quickly get people to agree on a price?
But it's more or less trivial to combine baskets. It's like you have a shoddy encryption algorithm, encrypting it TWICE isn't going to make you safer.
This idea would have merit if your accounts had nothing to tie them together, like, say, YOUR NAME.
Don't get me wrong, super-targeted advertising is creepy, but I'm not advocating living in the wilderness. What I don't want though, is for anyone to delude themselves with any false sense of security.
they are less likely to share the data with each other.
It just means the people actually using that data, marketers, FBI, underpants gnomes, have to buy it from more than one source and then merge it. Facebook and such aren't the evil overmind bent on peering into your home. They're just the middle-man getting paid by the evil overmind bent on peering into your home.
But to ward all you coasters away from my precious succulent jobs, I'll warn you that we hit 110 degF back there, and the entire month of July was 90+ and humid. Our winters AVERAGE at 18 degF, can swing down to -20 and we regularly get feet of snow that lasts the entire winter (just not the last one, that was pretty mild). You have to drive 3 hours before you reach civilization. We don't have fresh fish. And remember to scrap the mud off your boots before you get on our wooden sidewalks.
The possibility of competition is enough, as I've already explained.
I want to come back to this, just to hammer something home which I think libertarians need a remedial lesson on. I was going to say that, no you're wrong, you not only need actual competition, you need actual competition that actually competes. Oligarchies don't count. But that got me thinking.
The amount of competition is a sliding scale. It's not all or nothing, and it slides all the way down into values of "possible competition", "improbable competition", and "wisp of the idea of competition".
No market is totally free, but it's a nice ideal to strive for. Likewise, no market has total competition, but it's a good thing for society to strive for. It's a downright kick in the pants for anyone trying to make a buck in the market, but I digress.
If you have a total monopoly on a given vital resource, with no hope of anyone ever prying your cold dead hands from it, you effectively have achieved world domination. If the resource is less than vital, well, it's up to you to price the thing however you can attract the most money.
If you're in a market saturated with competition, "total competition" if you will, everyone is willing, able, and actively trying to do the job you're trying to making a living at. You are running at cost, or as near cost as you can survive on. And the bum under the bridge who eats what he can find is trying to undercut you. For the buyer, and society at large, this is ideal.
The less competition a market has, the worse the market works for society. The more competition a market has, the better it is for society. In the USA, we have barred total monopolies as illegal. The government, and by proxy all of us, are the fallback competition if there isn't any other. We will cut you up and make you compete with yourself if it comes to that. We've also removed the possibility of total competition. If you can't even subsist in a market, you can fall back on the safety net that is welfare.
And I want to repeat that this value slides all over the place. A market where there's only one supplier, a monopoly, can still have variable amounts of potential competition. The threat of competition is kinda sorta like competition. A market with two competitors going for each others throats can be a lot more competitive than 5 companies that all follow each others lead, or 50 companies that collude together in a back room (or openly as an association).
And it's not just one variable. A threat of future competition is different than than straight immediate competition. A market it takes 5 years to break into is different then one where anyone can drop some cash and step into. A market tied to customer loyalty has complicated psychological relationships to competition. A market that has historically had competition will behave differently. The customer's expectations will continue on with inertia. In short, it's complicated. It's nowhere NEAR as simple as "free trade = mutually beneficial exchange of goods, so let's deregulate". You can't ignore the market. You can't ignore the competition. And you can't ignore the need for some regulation in some markets.
So a free market requires competition. Some markets only have the threat of competition, and those markets suck (for society). The people in charge of establishing the system in which these markets function (our government and society at large) need to strive for a system which promotes more competition, and more meaningful competition. Where there is a lack of competition, where people simply can't compete, the government needs to establish regulation to keep the market from becoming abusive.
What happens when those angry letters and fines aren't paid?
Same thing as when you break a contract. Essentially when you live in a society, you have a contract to not break the rules and be an A-hole. A "social contract" if you will.
Yeah, yeah, metaphorical violence, got it.
Look at McDonald's. They didn't start out as a franchise.
HAHA OH WOW. So you know that the people that invented the whole "fast food" idea, the founders of macdonalds got royally screwed by a slimy rat-faced businessman right? They sold the company and rights to him with a hand-shake and verbal agreement to get a 2% royalty from the franchises. This is NOT a story you want to whip out when you want to argue in favor of big business and the free market.
Who exactly is talking about going from being a hobo on the streets to getting a loan
YOU:
even if I'm broke I can get someone to loan me
They were already top dog yet couldn't prevent the other 150 competitors but somehow could pull it off once they started losing ground?
Did you read my post? They were top dog, in their region. They didn't lose ground, new ground was developed. The market increased in size. Now, if only we had an example of the big dog eating all the little dogs.
Thanks for discussion though.
No problem, the back and forth is good for others that might be reading. Hell, and someone out there modded me up DAYS after the original post. Libertarians have a pretty idealistic view of how economics and business work. Ideally, yeah everything would function like that and we really wouldn't need a government or a military. Sadly, the real world doesn't work that way and by and far the whole game is rigged to help those who have already won. You can't stick your head in the sand and pretend that the poor street urchin is playing the same game as CEO of Knight Capital Group who can nix a bunch of trades because he's buddy buddy with the guy who runs the stock exchange.
Is a deregulated free market the same as open-carry nukes?
When the market is nuclear weaponry? YES. Yes it is. The point I was going for is that IN SOME CASES, regulation and government control is required. Some markets cannot be free, some markets we should now allow to be free. Slavery, for example, is simply wrong and shall be illegal. But I'm pretty sure you and I all agree on that. Wouldn't it be nice if we focused on our common ground rather than leaping for each others throats?
Laws
How do you think that's enforced? Angry letters?
Yeah, mostly. And fines. Especially when it comes to corporations breaking industry regulation. I'm telling you that the SEC doesn't drop from helicopters, burst through doors, and mow down brokers in a hail of gunfire. At worst they serve arrest warrants to white collar criminals who come along, get process, get a lawyer, lose some money, and get on with their lives. Now, boil it down, on some metaphorical level, sure, any sort of authority can be said to be derived from force. Or violence if you will. But we don't say that meter maids punish people through the use of violence. Come on, they just write you a ticket. An "angry letter" if you will.
However, that barrier still represents an upper bound to the prices you can set. If you set your prices too high then it becomes possible for me to enter the market. If people are buying lemonade for $1,000 a glass a $5 barrier to entry is nothing, even if I'm broke I can get someone to loan me the $5 for a cut of the profits or interest.
And this is where you miss the lesson. When you're broke you usually CAN'T get a loan to start up a shoe factory, or a cable company, or a heavy industries manufacturing plant. And, if you CAN, because you've got rich parents or something, now you are burdened with a massive amount of debt. All the formerly monopolistic company has to do is sell their goods at a reasonable rate and they can undercut you. Because they don't have that massive debt. There's also customer lock in, right-of-way with power lines/roads/airspace, contracts that last for years, and probably dozens of other ways to keep out competition. Things that people with business degrees dream up at night. And that's the legal stuff. But we all know there are bad businessmen out there.
But you're right, some markets like lemonade stands have a low barrier to entry. And look, we don't have any lemonade monopolies squeezing out the competition. For other markets, like heavy manufacturing, power generation, telecommunications, finances, oil, you know "big business", people like you and I have absolutely zero hope of breaking into that market. The barrier to entry is simply too high. Even large corporations can't break into those markets. The cost and risk is simply too great for any sane CEO to try.
Oh, don't get me wrong. Standard Oil most certainly deserved to get to the top. They simply had a better way of doing things, and the consumer prospered for it. But at the end they were abusing their position (come on, read it). The reason their market share was down was because oil fields were booming west of the Mississippi. If they weren't chopped up, they would have eaten the competition. This is an example of the government fixing a verifiable problem that was about to become an even bigger problem. Of course, there are plenty of other examples. Take your pick".
Yeah, "take-backs" was supposed to sound childish. Suitable for the spoiled little children that are running around on wall street playing games with our economy. It's good that you noticed that.
If they aren't committing fraud (illegal) or using the government (artificial monopolies) then they are engaging in voluntary exchanges i.e. free trade.
Good ol' fashioned regular monopolies don't function inside of the free market. They OWN the market. The free market is dependent on rational well-informed people who can take their business elsewhere. The free market requires competition. Without it, there is no free market.
[free trade] That's what I advocate.
Me too. The free market system works fantastically well. Capitalism works bitches! But only when there's a free market, competition, rational and informed buyers/sellers. And it's a sliding scale, where the market is more free, it works better and where it's less free it doesn't work as well. It's not an all-or-nothing thing. Where there are man-made monopolies, natural monopolies, or thingswecan'tentrustto the free market, then we need oversight, regulation, or flat-out government control. Or should it be every individual's Libertarian-wet-dream RIGHT to go purchase and open-carry a nuke?
The alternative is one of us using violence to force
No it isn't. That's your sad strawman you pulled from behind the couch. The alternative I'm suggesting is to make it illegal, like fraud, to have an unfair advantage in a market. That's not violence. It's a rule we all agree to play under. If a company breaks the rules, it gets fined. If it REALLY screws the system, it gets broken up into smaller corporations. Cry me a river. Is paying a speeding ticket the same as jack-boot thugs giving you a curb-stomp?
But having an unfair competitive advantage should be illegal. Like when there's a monopoly. Oh wait, that's already because we've been through this before. And now it looks like we need additional regulation to keep people from cheating the system by calling a mulligan just because they lost of lot of money and they're powerful.
Even once the other shoemakers go out of business, Nike isn't going to be able to start charging $10,000 a pair. Whenever the price gets high enough, other firms will be tempted to enter the market.
Yawn, Barrier to Entry. Man, have you even taken a GLANCE up from your Ayn Rand novels to take a look at economics?
but historically that's highly unlikely and has never resulted in a stable abusive monopoly.
Standard Oil drove a lot of people out of business with it. It was only an "unstable" strategy because politicians threatened to break them up, which they did. Eventually.
You don't think they'd boycott a business that's trying to systematically fuck them over monetarily?"
Apple. The masses are fickle and not entirely rational.
"take-backs" on stock exchanges
I'm not familiar with that term. However, I will say that if you agree to some terms and conditions then you must follow through with them. Otherwise, it's breach of contract (tortious) or fraud (illegal). If you'll elaborate more then I'll address that too but I don't have hope that it will stand up to scrutiny.
Read the article dude. And it's actually the main thing that I was rallying against. Read the ancestor anonymous post that I was defending. It'd be nice if you were aware of the current discussion.
Wow "market makers". That makes total sense. They connect buyers with sellers.
Gee, if only there was a place people could go to post what they wish to buy and/or sell without some asshat in the middle eating their lunch?
You're reading that wrong. It's not just "nice" being rich, the "advantage" that the previous coward was talking about is a competitive advantage. They're not playing by the same rules you and I are. It's a bias in the game that favors them. It's systematic cheating.
I agree with you that there are rich scumbags who didn't get there honestly. But regardless of how they got rich, the rich aren't (generally) making their income honestly. And that's at our expense. All that money comes from somewhere. The financial industry does not generate wealth. Monopolies, oligarchies, back room deals, and "take-backs" on stock exchanges, these are failures of the free market. They're playing the big business game, and you and I aren't allowed in.
(Unless we all team up to form an even bigger and more powerful zoid that forces them to play nice)
Whole communities fail these tests because they were built for appearance and not for living in.
Whoa now, too far. They were built for living in, while connected to grid power. Don't say crazy things least it detract from your larger argument (which is that solar power is good, but it depends on your house and it's surroundings).
Said like a corporate climber who's not interested in the job they have, but only with how high they can climb.
How you dress is important, for office politics.
Yes, you can wear t-shirts and jeans and stay exactly where you are today.
The concept of a program to simulate a slide-rule on a smartphone both enrages the efficiency-minded and practical part of me and makes my inner-geek sqwee with want.
Sooooo, there's the assumption that Facebook couldn't function without finding additional investors to throw cash at them?
Is this the business-model that has become the norm?
Is there no concept of a company getting a loan?
Yeah, the tone of the article was just plain weird. It was very much like they're a cheerleader for the stock market. Which, oh wait, it's Forbes, THEY ARE.
They trivialize his work on facebook, and them claim the market nose-dive is "a big deal".
Dear god, and lines like this:
The bankers at Morgan Stanley applied all the lessons of the last 15 years and priced the IPO at $38,
Apparently those lessons were pretty shitty and were ignorant of the 2001 dot-com bubble. Because that was a laughable price.
With such a big valuation at IPO time, Facebook had to show some results.
No. No they didn't. It's an IPO. It's Zuckerburg and the rest of the early investors, diluting their shares in exchange FOR CASH. They received far more cash than the whole shebang is worth, and Zuckerburg still owns the damn thing. HE DOESN'T HAVE TO SHOW SHIT, except for a off-hand comment about what suckers everyone is for trusting him.
Wall Street and Silicon Valley need each other.
Bad assumption. If you're a sucker and you go to the open market for cash, you're going to be hosed. If you have a hot tech company that no-one understand and everyone wants a piece of, and you still own it, the back-door deals is where you bring the lambs for the slaughter.
You seem to assume that keeping investors happy was their goal. No sir, I believe their goal was to make as much money as possible. So selling at the peak was indeed the correct action. Sure, it pisses off everyone with stock. Like investors, employees with stock options, and possibly the IPO underwriters are all kinda screwed, but Zuckerburg, the owner who sold at the peak, makes out like a bandit.
The lesson of the Facebook fiasco for Silicon Valley is clear. Start-up entrepreneurs cannot evade the discipline of the capital markets
WTF? That is the biggest load of bullshit I've heard since... well, about a week. Facebook could simply choose not to go public. EASY AS THAT.
Seriously, any time you hear "The lesson is clear", it's probably isn't. It's one of those terms that salesman use to pretend they not full of lies an villainy.
I think you're a bit confused. The cop broke the law and the official policy if he took this guy's cell phone. That's what makes this so face-palmy. The chief just announced that this sort of behavior is against policy. She made that policy because someone won a court case against the police department, but that doesn't change much.
It's legal to film cops.
It's the police deparment's policy that it's legal to film cops.
The cop didn't let this guy film him.
Soooooo yeah, the cop is the lawbreaker here.
I guess in some scenarios, there are bad laws and it'd be nice if cops ignored them. But that isn't this case.
I really can't imagine where these people are working that this is even an issue.
Small businesses. Where the IT staff is 4 guys, including the boss. There are a LOT of employees in big businesses, but there are a LOT of small businesses. Places where the HR department is just the owner, who might also be the lead architect/codemonkey.
Last small shop I worked in had a 50+ three-time divorcee, a 30-something with kids who was headed for a divorce, and the A-hole boss whose wife made more than him (and he was bitter about it). The work was alright, if less than technically challenging, but I couldn't get over the sexist, racist, off-color jokes. Didn't figure the white guy had much chance of suing a company who was owned by a big political donor, so I simply went elsewhere.
The guys in the small shop before that were nice enough, and the jokes were made in better humor, but it was simply unprofessional.
One of the smallers code-shops in town had a business trip to the strip joint. They also all play weekly D&D, minecraft, and whatnot. "Brogrammers" for sure. All 6 of them. Even the one that's a chick.
Slashdot Mirror
From top to bottom:
That one local place which has DIVINE pizza (which is Great Plains in Ames or Alfano's in Rock Island, YMMV)
GodFathers
PizzaHut
Papa Johns
Little Ceasers
Dominoes
(all those thin-crust pizza joints)
So the first step is to assume the horse is a sphere...
But then THEY ARE PART OF THE SPREAD!
When Alice will sell at 100 and Bob will buy at 80. Yeah, I get that.
Alternatively, they can look for a close price that's acceptable.
. . . Well yeah, if you have $100 worth of trinkets but need to sell, you'll take $80, and eat the loss. You get hosed, but you get money when you need it. Or yeah, you can instead offer to sell for $90, and wait to see if anyone takes that sweeter deal. That's about exactly half-way between getting it now and getting what it's worth. That's like saying a healthy alternative is to sell it to me for half it's value.
I get the whole "everything is worth what the buyer/seller will part with" thing, but it ignores urgency. If you value something at $100, if you accept anything less it means you're between a rock and a hard place. You're hand is being forced. You don't want to sell for less than $100, but pressures are making you. That... doesn't seem quite right.
But ok ok, I really don't understand why Bob would offer to buy at 110, when there's already someone offering to sell at 100. That's pretty much a perfect example of an irrational market. Which the free market depends upon. Anyone taking advantage of stupid people being irrational is little better than a con artist.
They can unwind their position
I don't really get that. You mean... one buys and one sells?
Now enter HFT. The market maker is out of a job. The spread is now $0.01, and the bid/ask is around 90.10/90.11.
This part. This right here. WHY? How does HFT makes the spread go from 0.25 to 0.01? That is a complete mystery to me.
Lastly, neither Bob nor Alice can really afford to trade directly on the exchange.
Yeah, I hear you about the ignorant thing. I have no idea why it costs so much to trade directly on an exchange. The cost back in the day was... well, being on the floor with someone shouting things over the din. Today it's just another ebay and everyone with an ISP could access it. If it's really so expensive, you think the least they could do is hook up two people that want to exchange stuff.
The pitchforks aren't coming out just because we don't understand. It's because people are extracting ludicrous sums of money from a system that we know we're paying into, and we don't understand their justification. I'd love to stay out of stocks, but I only have about 4 options when it comes to my 401k, and I'm not allowed to sell. So all the income of everyone on wallstreet seems like a tax on my savings account. Personally I think the HFT are absolutely cheating the system and screwing people out of money. But they're screwing us less than the previous system, so it's a step in the right direction. I think. Like you said, I'm largely ignorant of how this all works.
Maybe you can explain this for me.
So Alice has stock she wants to sell for 100, Bob wants to buy for 80. The spread is 20. Now, obviously, Alice and bob won't be doing any trading. They simply don't agree on the price.
It's not like any market with a high spread doesn't have any trades. So, I imagine, something happens with Alice and she needs money. She has to consent to Bob's price. Or Bob really wants into the market so he consents to Alice's price. That's "transaction" cost, what it takes to move money in a market. That's "bad", sorta, as it limits trades and punishes people who NEED to buy/sell. (But it also rewards patient people. Open offers to buy/sell simply make more money.)
Now, arbitrage, where HFT makes money, is when Alice wants to sell for 100, and Bob wants to buy at 110. They don't know about each other. (WTF is the point of an exchange then!?) The fast trader comes in, buys at 100, sells at 110, and pockets the difference.
Feel free to correct me if I got any of that wrong.
How exactly is this reducing the spread? In that scenario, isn't the spread negative 10? How does someone buying and selling quickly get people to agree on a price?
But it's more or less trivial to combine baskets. It's like you have a shoddy encryption algorithm, encrypting it TWICE isn't going to make you safer.
This idea would have merit if your accounts had nothing to tie them together, like, say, YOUR NAME.
Don't get me wrong, super-targeted advertising is creepy, but I'm not advocating living in the wilderness. What I don't want though, is for anyone to delude themselves with any false sense of security.
they are less likely to share the data with each other.
It just means the people actually using that data, marketers, FBI, underpants gnomes, have to buy it from more than one source and then merge it. Facebook and such aren't the evil overmind bent on peering into your home. They're just the middle-man getting paid by the evil overmind bent on peering into your home.
Yeah, pretty much this.
But to ward all you coasters away from my precious succulent jobs, I'll warn you that we hit 110 degF back there, and the entire month of July was 90+ and humid. Our winters AVERAGE at 18 degF, can swing down to -20 and we regularly get feet of snow that lasts the entire winter (just not the last one, that was pretty mild). You have to drive 3 hours before you reach civilization. We don't have fresh fish. And remember to scrap the mud off your boots before you get on our wooden sidewalks.
The free market requires competition.
The possibility of competition is enough, as I've already explained.
I want to come back to this, just to hammer something home which I think libertarians need a remedial lesson on. I was going to say that, no you're wrong, you not only need actual competition, you need actual competition that actually competes. Oligarchies don't count. But that got me thinking.
The amount of competition is a sliding scale. It's not all or nothing, and it slides all the way down into values of "possible competition", "improbable competition", and "wisp of the idea of competition".
No market is totally free, but it's a nice ideal to strive for. Likewise, no market has total competition, but it's a good thing for society to strive for. It's a downright kick in the pants for anyone trying to make a buck in the market, but I digress.
If you have a total monopoly on a given vital resource, with no hope of anyone ever prying your cold dead hands from it, you effectively have achieved world domination. If the resource is less than vital, well, it's up to you to price the thing however you can attract the most money.
If you're in a market saturated with competition, "total competition" if you will, everyone is willing, able, and actively trying to do the job you're trying to making a living at. You are running at cost, or as near cost as you can survive on. And the bum under the bridge who eats what he can find is trying to undercut you. For the buyer, and society at large, this is ideal.
The less competition a market has, the worse the market works for society. The more competition a market has, the better it is for society. In the USA, we have barred total monopolies as illegal. The government, and by proxy all of us, are the fallback competition if there isn't any other. We will cut you up and make you compete with yourself if it comes to that. We've also removed the possibility of total competition. If you can't even subsist in a market, you can fall back on the safety net that is welfare.
And I want to repeat that this value slides all over the place. A market where there's only one supplier, a monopoly, can still have variable amounts of potential competition. The threat of competition is kinda sorta like competition. A market with two competitors going for each others throats can be a lot more competitive than 5 companies that all follow each others lead, or 50 companies that collude together in a back room (or openly as an association).
And it's not just one variable. A threat of future competition is different than than straight immediate competition. A market it takes 5 years to break into is different then one where anyone can drop some cash and step into. A market tied to customer loyalty has complicated psychological relationships to competition. A market that has historically had competition will behave differently. The customer's expectations will continue on with inertia. In short, it's complicated. It's nowhere NEAR as simple as "free trade = mutually beneficial exchange of goods, so let's deregulate". You can't ignore the market. You can't ignore the competition. And you can't ignore the need for some regulation in some markets.
So a free market requires competition. Some markets only have the threat of competition, and those markets suck (for society). The people in charge of establishing the system in which these markets function (our government and society at large) need to strive for a system which promotes more competition, and more meaningful competition. Where there is a lack of competition, where people simply can't compete, the government needs to establish regulation to keep the market from becoming abusive.
What happens when those angry letters and fines aren't paid?
Same thing as when you break a contract. Essentially when you live in a society, you have a contract to not break the rules and be an A-hole. A "social contract" if you will.
Yeah, yeah, metaphorical violence, got it.
Look at McDonald's. They didn't start out as a franchise.
HAHA OH WOW. So you know that the people that invented the whole "fast food" idea, the founders of macdonalds got royally screwed by a slimy rat-faced businessman right? They sold the company and rights to him with a hand-shake and verbal agreement to get a 2% royalty from the franchises. This is NOT a story you want to whip out when you want to argue in favor of big business and the free market.
Who exactly is talking about going from being a hobo on the streets to getting a loan
YOU:
even if I'm broke I can get someone to loan me
They were already top dog yet couldn't prevent the other 150 competitors but somehow could pull it off once they started losing ground?
Did you read my post? They were top dog, in their region. They didn't lose ground, new ground was developed. The market increased in size. Now, if only we had an example of the big dog eating all the little dogs.
Thanks for discussion though.
No problem, the back and forth is good for others that might be reading. Hell, and someone out there modded me up DAYS after the original post.
Libertarians have a pretty idealistic view of how economics and business work. Ideally, yeah everything would function like that and we really wouldn't need a government or a military. Sadly, the real world doesn't work that way and by and far the whole game is rigged to help those who have already won. You can't stick your head in the sand and pretend that the poor street urchin is playing the same game as CEO of Knight Capital Group who can nix a bunch of trades because he's buddy buddy with the guy who runs the stock exchange.
Is a deregulated free market the same as open-carry nukes?
When the market is nuclear weaponry? YES. Yes it is. The point I was going for is that IN SOME CASES, regulation and government control is required. Some markets cannot be free, some markets we should now allow to be free. Slavery, for example, is simply wrong and shall be illegal. But I'm pretty sure you and I all agree on that. Wouldn't it be nice if we focused on our common ground rather than leaping for each others throats?
Laws
How do you think that's enforced? Angry letters?
Yeah, mostly. And fines. Especially when it comes to corporations breaking industry regulation. I'm telling you that the SEC doesn't drop from helicopters, burst through doors, and mow down brokers in a hail of gunfire. At worst they serve arrest warrants to white collar criminals who come along, get process, get a lawyer, lose some money, and get on with their lives. Now, boil it down, on some metaphorical level, sure, any sort of authority can be said to be derived from force. Or violence if you will. But we don't say that meter maids punish people through the use of violence. Come on, they just write you a ticket. An "angry letter" if you will.
However, that barrier still represents an upper bound to the prices you can set. If you set your prices too high then it becomes possible for me to enter the market. If people are buying lemonade for $1,000 a glass a $5 barrier to entry is nothing, even if I'm broke I can get someone to loan me the $5 for a cut of the profits or interest.
And this is where you miss the lesson. When you're broke you usually CAN'T get a loan to start up a shoe factory, or a cable company, or a heavy industries manufacturing plant. And, if you CAN, because you've got rich parents or something, now you are burdened with a massive amount of debt. All the formerly monopolistic company has to do is sell their goods at a reasonable rate and they can undercut you. Because they don't have that massive debt. There's also customer lock in, right-of-way with power lines/roads/airspace, contracts that last for years, and probably dozens of other ways to keep out competition. Things that people with business degrees dream up at night. And that's the legal stuff. But we all know there are bad businessmen out there.
But you're right, some markets like lemonade stands have a low barrier to entry. And look, we don't have any lemonade monopolies squeezing out the competition. For other markets, like heavy manufacturing, power generation, telecommunications, finances, oil, you know "big business", people like you and I have absolutely zero hope of breaking into that market. The barrier to entry is simply too high. Even large corporations can't break into those markets. The cost and risk is simply too great for any sane CEO to try.
Oh, don't get me wrong. Standard Oil most certainly deserved to get to the top. They simply had a better way of doing things, and the consumer prospered for it. But at the end they were abusing their position (come on, read it). The reason their market share was down was because oil fields were booming west of the Mississippi. If they weren't chopped up, they would have eaten the competition. This is an example of the government fixing a verifiable problem that was about to become an even bigger problem. Of course, there are plenty of other examples. Take your pick".
Yeah, "take-backs" was supposed to sound childish. Suitable for the spoiled little children that are running around on wall street playing games with our economy. It's good that you noticed that.
If they aren't committing fraud (illegal) or using the government (artificial monopolies) then they are engaging in voluntary exchanges i.e. free trade.
Good ol' fashioned regular monopolies don't function inside of the free market. They OWN the market. The free market is dependent on rational well-informed people who can take their business elsewhere. The free market requires competition. Without it, there is no free market.
[free trade] That's what I advocate.
Me too. The free market system works fantastically well. Capitalism works bitches! But only when there's a free market, competition, rational and informed buyers/sellers. And it's a sliding scale, where the market is more free, it works better and where it's less free it doesn't work as well. It's not an all-or-nothing thing. Where there are man-made monopolies, natural monopolies, or things we can't entrust to the free market, then we need oversight, regulation, or flat-out government control. Or should it be every individual's Libertarian-wet-dream RIGHT to go purchase and open-carry a nuke?
The alternative is one of us using violence to force
No it isn't. That's your sad strawman you pulled from behind the couch. The alternative I'm suggesting is to make it illegal, like fraud, to have an unfair advantage in a market. That's not violence. It's a rule we all agree to play under. If a company breaks the rules, it gets fined. If it REALLY screws the system, it gets broken up into smaller corporations. Cry me a river. Is paying a speeding ticket the same as jack-boot thugs giving you a curb-stomp?
But having an unfair competitive advantage should be illegal. Like when there's a monopoly. Oh wait, that's already because we've been through this before. And now it looks like we need additional regulation to keep people from cheating the system by calling a mulligan just because they lost of lot of money and they're powerful.
Even once the other shoemakers go out of business, Nike isn't going to be able to start charging $10,000 a pair. Whenever the price gets high enough, other firms will be tempted to enter the market.
Yawn, Barrier to Entry. Man, have you even taken a GLANCE up from your Ayn Rand novels to take a look at economics?
but historically that's highly unlikely and has never resulted in a stable abusive monopoly.
Standard Oil drove a lot of people out of business with it. It was only an "unstable" strategy because politicians threatened to break them up, which they did. Eventually.
You don't think they'd boycott a business that's trying to systematically fuck them over monetarily?"
Apple. The masses are fickle and not entirely rational.
"take-backs" on stock exchanges
I'm not familiar with that term. However, I will say that if you agree to some terms and conditions then you must follow through with them. Otherwise, it's breach of contract (tortious) or fraud (illegal). If you'll elaborate more then I'll address that too but I don't have hope that it will stand up to scrutiny.
Read the article dude. And it's actually the main thing that I was rallying against. Read the ancestor anonymous post that I was defending. It'd be nice if you were aware of the current discussion.
and is $440 million the total amount of money that they threw around with this glitchy software?
Wow "market makers". That makes total sense. They connect buyers with sellers.
Gee, if only there was a place people could go to post what they wish to buy and/or sell without some asshat in the middle eating their lunch?
You're reading that wrong. It's not just "nice" being rich, the "advantage" that the previous coward was talking about is a competitive advantage. They're not playing by the same rules you and I are. It's a bias in the game that favors them. It's systematic cheating. I agree with you that there are rich scumbags who didn't get there honestly. But regardless of how they got rich, the rich aren't (generally) making their income honestly. And that's at our expense. All that money comes from somewhere. The financial industry does not generate wealth. Monopolies, oligarchies, back room deals, and "take-backs" on stock exchanges, these are failures of the free market. They're playing the big business game, and you and I aren't allowed in.
(Unless we all team up to form an even bigger and more powerful zoid that forces them to play nice)
Whole communities fail these tests because they were built for appearance and not for living in.
Whoa now, too far. They were built for living in, while connected to grid power. Don't say crazy things least it detract from your larger argument (which is that solar power is good, but it depends on your house and it's surroundings).
How you dress is important, for office politics.
Yes, you can wear t-shirts and jeans and stay exactly where you are today.
And you say that like it's a bad thing.
Isn't there any hope that we can shape the reality around us? Even just a little?
The concept of a program to simulate a slide-rule on a smartphone both enrages the efficiency-minded and practical part of me and makes my inner-geek sqwee with want.
So now I hate and admire you.
Sooooo, there's the assumption that Facebook couldn't function without finding additional investors to throw cash at them?
Is this the business-model that has become the norm?
Is there no concept of a company getting a loan?
They trivialize his work on facebook, and them claim the market nose-dive is "a big deal". Dear god, and lines like this:
The bankers at Morgan Stanley applied all the lessons of the last 15 years and priced the IPO at $38,
Apparently those lessons were pretty shitty and were ignorant of the 2001 dot-com bubble. Because that was a laughable price.
With such a big valuation at IPO time, Facebook had to show some results.
No. No they didn't. It's an IPO. It's Zuckerburg and the rest of the early investors, diluting their shares in exchange FOR CASH. They received far more cash than the whole shebang is worth, and Zuckerburg still owns the damn thing. HE DOESN'T HAVE TO SHOW SHIT, except for a off-hand comment about what suckers everyone is for trusting him.
Wall Street and Silicon Valley need each other.
Bad assumption. If you're a sucker and you go to the open market for cash, you're going to be hosed. If you have a hot tech company that no-one understand and everyone wants a piece of, and you still own it, the back-door deals is where you bring the lambs for the slaughter.
You seem to assume that keeping investors happy was their goal. No sir, I believe their goal was to make as much money as possible. So selling at the peak was indeed the correct action. Sure, it pisses off everyone with stock. Like investors, employees with stock options, and possibly the IPO underwriters are all kinda screwed, but Zuckerburg, the owner who sold at the peak, makes out like a bandit.
The lesson of the Facebook fiasco for Silicon Valley is clear. Start-up entrepreneurs cannot evade the discipline of the capital markets
WTF? That is the biggest load of bullshit I've heard since... well, about a week. Facebook could simply choose not to go public. EASY AS THAT.
Seriously, any time you hear "The lesson is clear", it's probably isn't. It's one of those terms that salesman use to pretend they not full of lies an villainy.
I think you're a bit confused. The cop broke the law and the official policy if he took this guy's cell phone. That's what makes this so face-palmy. The chief just announced that this sort of behavior is against policy. She made that policy because someone won a court case against the police department, but that doesn't change much.
It's legal to film cops.
It's the police deparment's policy that it's legal to film cops.
The cop didn't let this guy film him.
Soooooo yeah, the cop is the lawbreaker here.
I guess in some scenarios, there are bad laws and it'd be nice if cops ignored them. But that isn't this case.
What the hell? Are you twelve?
I really can't imagine where these people are working that this is even an issue.
Small businesses. Where the IT staff is 4 guys, including the boss. There are a LOT of employees in big businesses, but there are a LOT of small businesses. Places where the HR department is just the owner, who might also be the lead architect/codemonkey.
Last small shop I worked in had a 50+ three-time divorcee, a 30-something with kids who was headed for a divorce, and the A-hole boss whose wife made more than him (and he was bitter about it). The work was alright, if less than technically challenging, but I couldn't get over the sexist, racist, off-color jokes. Didn't figure the white guy had much chance of suing a company who was owned by a big political donor, so I simply went elsewhere.
The guys in the small shop before that were nice enough, and the jokes were made in better humor, but it was simply unprofessional.
One of the smallers code-shops in town had a business trip to the strip joint. They also all play weekly D&D, minecraft, and whatnot. "Brogrammers" for sure. All 6 of them. Even the one that's a chick.
So yeah, small shops. That's where.