[jaybrendansmith]

I really want to love this manifesto. This is my one sticking point. Regulatory capture, monopolies, and cartels are the fatal flaw in this techno-optimism, and they break everything. Let's say I subscribe to this wonderful story Marc tells. Please tell me the purpose of government if it is not to destroy cartels and monopolies. They are every bit as bad as the government, which is a type of monopoly itself.

[scyzoryk_xyz]

Isn't that them speaking from multiple sides of the mouth? It's a manifesto by... venture capitalists. They have a very specific and diverse audience that they want to read this.

I mean, there is not going to be any low-interest capital flowing in to fuel all these techno-optimist ideals if the start-ups can't later be acquired by the existing monopolies.

[nickpp]

Point me to a resistant monopoly or cartel and I will show you a government granted/supported one. Free markets are naturally resistant through free competition (startups!) and, you know, laws.

[TheDong]

> Point me to a resistant monopoly or cartel and I will show you a government granted/supported one.

Microsoft famously made deals with laptop vendors to prevent Dell, HP, and so on from selling computers with any operating system other than Windows: https://en.wikipedia.org/wiki/Bundling_of_Microsoft_Windows

Similarly, Intel stifled AMD by providing financial incentives to vendors who offered no AMD-based products: https://en.wikipedia.org/wiki/Advanced_Micro_Devices,_Inc._v....

Were those government supported monopolistic behaviors? Does the "free market" mean that a competitor could have simply made one company that produced an entire laptop, OS, and CPU from scratch to provide the consumer a cheaper choice?

Why would the "free market" lead to vibrant competition, rather than monopolistic hoarding of power?

[nickpp]

Government's action did had zero effect against Microsoft. Slap on the wrist. Their monopoly was naturally made irrelevant by the market moving onto the next tech frontier: mobile & cloud.

The free market lead to that. Countless startups trying everything under the sun made sure incumbents like Apple or Google had to innovate, acquire and evolve to avoid Microsoft's fate. In a free market there is always a chance a new startup will spring up and upend the order. Tons of VC money are continuously trying exactly that.

[kalleboo]

The only reason that mobile went the way it did was because Microsoft was so afraid of government Antitrust action that they let Apple survive

[nickpp]

Apple survived thanks to Steve Jobs and Steve Jobs alone. He could've built his vision in any company or startup though, when he took over Apple was a few weeks away from bankruptcy.

[kalleboo]

Without Microsoft Office and Internet Explorer, the Mac would have been dead. Gil Amelio negotiated their continuation (as settlement for the old Look & Feel and QuickTime lawsuits) with Microsoft and Jobs closed the deal by letting up on some of Amelio's demands. Microsoft could have just said no and the Mac would have been useless to both education and business and they would have been dead in weeks as you said.

NeXT would never have built the iPhone, they had given up on hardware.

[lmm]

> Free markets are naturally resistant through free competition

That's circular logic. Free markets are defined as those in which competition happens. Unregulated markets often tend towards cartelization and monopoly.

> and, you know, laws.

Which need to be enforced by governments.

> Point me to a resistant monopoly or cartel and I will show you a government granted/supported one.

The whole robber baron era is a counterexample - the likes of Standard Oil getting broken up by the goverment. Market competition is powerful but it only works when the government is actively enforcing a competitive market, which there is sadly little enthusiasm for lately.

[nickpp]

Nobody said anything about not having governments. Rule of Law is required for societies to even exist.

Read some more on the robber baron era - you'll find out Standard Oil was already losing to competition before government action. For another great example how the free market broke a cartel, read up on how Dow Chemical fought the German bromine cartel:

https://en.wikipedia.org/wiki/Herbert_Henry_Dow#Breaking_a_m...

No government intervention necessary.

[lmm]

> Nobody said anything about not having governments.

That's very clearly where you're going with this though.

> Point me to a resistant monopoly or cartel and I will show you a government granted/supported one.

[nickpp]

Please don't put words in my mouth. Government's role in a free market economy is quite essential: upholding rule of law (specifically contract law) and taxing externalities. Overreach is the problem though (like regulating the charging port on my damn phone).

[winphone1974]

Any capital intensive project can become a resistant monopoly for the first mover, who then manipulates pricing to prevent competition.

[nickpp]

> who then manipulates pricing to prevent competition

How exactly? Reducing profits defeats the purpose of becoming a monopoly, while any sliver of profit is the startup's opportunity.

To create a monopoly you need to restrict competition some other way, like through governmental regulation.

[spiralx]

> Reducing profits defeats the purpose of becoming a monopoly, while any sliver of profit is the startup's opportunity.

Only if you ignore the concept of loss leaders, or the very act of competing in the market itself by undercutting competitors' prices. Companies are very happy to receive less money in the short term in exchange for guaranteed recurring revenue in the long term, it's only rational after all, and applies as much to a yearly subscription being cheaper than 12 individual monthly subscriptions as it does to established companies accepting reduced revenue in the short term to guarantee their share of the market in the long term.

This is all pretty obvious from a basic understanding of how companies work TBH.

[nickpp]

Loss leaders, price dumping and price wars are as old as the world and free markets are perfectly capable to deal with them. Here's how how Dow Chemical fought the German bromine cartel's price dumping at the beginning of the last century:

https://en.wikipedia.org/wiki/Herbert_Henry_Dow#Breaking_a_m...

No government intervention necessary.

[james4k]

And how do you think a government reinforcing a monopoly comes to be?

[nickpp]

Countless ways. From sheer governmental incompetence like when regulating the competition out of markets. To simply not understanding second order effects when “helping markets” with patents and humongous copyright terms. To not understanding supply and demand when pressed to fulfill voter promises like when attempting to control and fix prices. To being captive to interest groups that end up controlling a huge chunk of economy like in heath care.

But most of all through sheer, pure corruption. Because why else would someone become a politician - a relatively low paid position - if not to be in a position to transform all that power and influence into money, for the highest bidder?

[james4k]

And who are the highest bidders?

[scubbo]

Corporations, in America, where the travesty known as Citizens United exists.

(I'm not claiming that other countries don't have money in politics; but America is the one where it is most clearly enshrined with an actual name to the philosophy)

[nickpp]

Incumbents, of course. The ones holding the largest interest in preserving the status-quo and freezing competition. Professional organizations needing power to preserve the barrier of entry. Huge, trans-national Unions.

But other power brokers as well. Other politicians with more money. Their own stock holdings. Foreign powers. Well moneyed interest groups. Ideological organizations siphoning old money.

Occasionally even the scrappy start-up trying to game the system. These usually fail, see SBF - but they are not saints either.

There is no shortage in interests vying to corrupt politicians. Somehow they never mind and always succumb.