Government Regulations
To quote Jamie Dimon of JP Morgan Chase before Congress on June 13, 2012, "Lets not throw the baby out with the bathwater", ... "I believe in strong regulation, not necessarily more regulation".. He clarified by saying that continuing to add regulation on top of bad, ineffective regulation would just make it more complex and costly and less effective, meaning be a little thoughtful about the regulation that you impose on business. That is the common sense approach. People are concerned when they hear that Congress invites industry experts in to discuss development of laws and regulations for fear of watering down the law/regulation. So, that means they would rather have politicians in Congress who DO NOT understand the industry, develop a new law/regulation on their own? That hurts the industry, the economy and the employees and clients of the industry in question. If Congress is the "executive" representing the people of the US, they should use industry experts and make strong and proper executive decisions that create effective laws with with the best interests of the country in mind, and with out political maneuvering.

Is This Time Different? Schumpeter, the Tech Giants, and Monopoly Fatalism

from TPPF,

Growing numbers of legislators and policy experts charge that tech firms such as Amazon, Google, Facebook, Apple, and Microsoft are “monopolies” with the potential power to harm consumers. Many economists, lawyers, and politicians say that economic features of these companies’ product markets — such as network effects, economies of scale, data collection, tying of complementary goods, or operating online marketplaces — create unfair competition or insurmountable entry barriers for new competitors. They conclude that “forward-looking” antitrust policy is needed to prevent persistent market dominance from undermining consumer welfare. Economist Joseph Schumpeter warned against such monopoly fatalism. He recognized that the most important long-term competitive pressure comes from new products cannibalizing incumbent businesses through marked product quality improvements. An antitrust policy that second-guesses the future based on the present ignores this unpredictable margin of competition, to the detriment of consumers. Over the past century, large businesses operating in industries similar to today’s tech firms were regularly labeled as unassailable monopolies. Retailers, social networks, mobile phone producers, camera manufacturers, and internet browser and search engine companies have all been thought likely to dominate their sectors perpetually, based on similar economic reasoning to that heard about tech companies today.

Yet historical case studies of the Great Atlantic and Pacific Tea Company, Myspace, Nokia, Kodak, Apple’s iTunes, Microsoft’s Internet Explorer, and more show that none of these features ensured continued dominance. All these businesses saw their market shares disintegrate in the face of innovative new products and companies, as Schumpeter theorized. This suggests that we should be extremely skeptical about predictions of entrenched monopoly power for Amazon, Google, Facebook, Apple, and Microsoft today. Basing antitrust policy on overcoming market features that “tip” markets toward one-firm dominance or legislating to prevent highly speculative “future harms” is a fool’s errand.

More From TPPF:

365 Days Page
Comment ( 0 )