Are combinations in restraint of trade part of a free market economy?

[d-ray657]

For the conservatives who believe that a free market will do a better job of curing economic ills than regulations, I have a question. Do companies who agree not to compete, or who merge smaller competitors into ever larger corporations, advance or detract from a properly functioning economy?

Regards,

D-Ray

[merrylander]

Detract, and for the record I am for regulation simply because greed is still part of the human condition.

[d-ray657]

Originally Posted by merrylander

Detract, and for the record I am for regulation simply because greed is still part of the human condition.

Heck Rob, I knew what you would say. I'm waiting to hear from TD, Chas, Jack, Pete & the gang. Hear that guys - I'm calling you out.

Regards,

D-Ray

[Fast_Eddie]

Originally Posted by d-ray657

Heck Rob, I knew what you would say. I'm waiting to hear from TD, Chas, Jack, Pete & the gang. Hear that guys - I'm calling you out.

Regards,

D-Ray

You said conservatives. Far as I know Rob is the only one here.

[JJIII]

For the record, I don't think that smaller company's merging into ever growing amoeba like monster corporations is a good thing. I just have hard time wrapping my mind around government interference in the private sector. I guess I should change my name to Pollyanna!

[Fast_Eddie]

Originally Posted by JJIII

For the record, I don't think that smaller company's merging into ever growing amoeba like monster corporations is a good thing. I just have hard time wrapping my mind around government interference in the private sector. I guess I should change my name to Pollyanna!

Just a couple of thoughts. I understand the idea - let business and competition do their thing and it will find its own balance. I think we've seen, however, that it doesn't always work. I might suggest a reason for that.

I work for a large, publicly traded company. That "publicly traded" bit is big. Free market ideals assume that a company will do what is in its best interest. But bonuses and compensation packages are based on quarterly stock performance. Now that's big. If I run a huge company and can move a stock price significantly, I can make tens of millions of dollars in a few years. Trouble starts when there are courses of action that make short term stock gains likely but threaten long term stability of the company.

In other words, and I think we all see this more clearly than we did a few years ago, it is often in a CEOs best interest to make decisions that are *not* in the company's long term best interest. Okay, that would be well and good. Board of directors can say "he's not doing a good job for our company" and get rid of him. But there are two problems with that.

The board of directors are the ones demanding the short term performance, so they're unlikely to punish the person delivering it. I can tell you there is very much a "take care of this quarter and we'll worry about next quarter when we get there" mentality in large companies. So what, you say? They are short sighted and they fail. Free market will eliminate those people on its own.

And that's where problem #2 comes in. We've seen this recently too. When these companies are allowed to get as large and powerful as they have been allowed to get (due to lack of regulation) when they fail, it has a significant effect on our economy. Furthermore, again due to lax regulation, companies in similar fields are more and more working together to develop procedures and products that help achieve these short term gains at the expense of corporate stability. So one doesn't fail, many fail. Their game is so inter-related it becomes a house of cards. Again, I think this is a lot more clear than it was. We've seen what happens when an entire sector of our economy sees massive failure. We all pay. And the people who did it make millions.

Appropriate regulation creates disincentives for these behaviors. There is a lot of "we'll do it if you do" going on. In my opinion, it is collusion. That is *not* competition. Appropriate regulation enhances competition by preventing these relationships.

[Fast_Eddie]

Sorry, didn't realize I wrote another one of my books...

[d-ray657]

Interesting answer JJ. From my reading of your posts, I have kind of had you in the swing voter group, with a leaning toward the right. In other words, you are practical about many things, but share a different view of the proper role of the government than this anti-capitalist. No offense intended, and please excuse any appearance of pigeonholing.

Regards,

D-Ray

[Charles]

Originally Posted by d-ray657

For the conservatives who believe that a free market will do a better job of curing economic ills than regulations, I have a question. Do companies who agree not to compete, or who merge smaller competitors into ever larger corporations, advance or detract from a properly functioning economy?

Regards,

D-Ray

I suppose I should respond, since I've been call out by name. I'm not really up to this as I didn't get much sleep last night and feel like shit...but here goes.

There should be some regulation concerning monopolies, unethical business practices, etc. Then again, the government is just as effective at creating regulations which make the situation worse as the are at making the situation better.

I'm in favor of good and effective regulations on big business. But anytime they decide to quit forcing me to wear a seatbelt, quit trying to screw me with cap and trade, quit refusing to let me take a junk water water heater to the dump because it is hazardous waste, quit requiring that I get certified in lead abatement, etc, etc, etc, would suit me just fine.

Effective regulations on the government are at least as necessary as effective regulations on the multinationals.

Clear as mud?

Chas

[JJIII]

Originally Posted by d-ray657

Interesting answer JJ. From my reading of your posts, I have kind of had you in the swing voter group, with a leaning toward the right. In other words, you are practical about many things, but share a different view of the proper role of the government than this anti-capitalist. No offense intended, and please excuse any appearance of pigeonholing.

Regards,

D-Ray

I'd say you have a pretty good handle on me for the most part. My biggest problem is that I want desperately for people to want to do the right thing... and obviously they don't live up to that. Hence the "Pollyanna" reference. I do live my life in a "practical" way for the most part and I dream of a world in which everyone would put aside their selfish wants "for the good of mankind!" That would include a need for much less government involvement in day to day life and commerce. I do recognize the need for rules and regulations, but I don't much like it. I guess I'm just an old school hippy. Sort of out of touch but wishing for the best that Man can be.