The Political Thread

[The Legendary Shark]

Take away a company's government protection, open up the marketplace to true competition and society will thrive.

This? Again? All available evidence suggest you are entirely wrong about this. All businesses are, by fundamental inclination, wannabe monopolists and the platonic ideal of any company with shareholders is one that makes no product, provides no services, but finds a way to directly extract exactly the amount money from everyone's bank accounts that they have enough left to not starve. That is maximising shareholder value at its logical conclusion.

Yes, again.

What evidence? There's no need to produce all of it, just five examples, say?

Not every company is a wannabe monopolist - the majority of small businesses I know are happy to run at enough profit to pay the bills, invest in the business, save for a pension and provide for the owners/workers.

There's no way any company can build a protected monopoly without government shielding. I can see nothing wrong with an unprotected, meritorious, naturally occurring monopoly. For example, let's say that Acme Co invents the Omniwidget and produces it to the highest standards and at a lower price than anyone else can manage. In that case, if nobody else wants to or is able to produce Omniwidgets of the same quality and price, then Acme Co is perfectly justified in cornering the market in Omniwidgets. Under the present protectionist system, Acme Co can lobby the government to legislate against competition, for example by granting Acme Co a government monopoly to produce all the country's Omniwidgets, requiring any other company to purchase licenses or pay production taxes, declaring "unofficial" Omniwidgets illegal, requiring prospective Omniwidget engineers to pay for government approved certificates, imposing an Omniwidget tax, etc., etc., etc. Thus protected, Acme Co has little incentive to improve the Omniwidget, streamline production methods or even provide sales promotions such as 25% off or BOGOF. (When was the last time, for example, you saw an introductory offer, a January sale or any other kind of promotion on water, gas, electricity or car tax?) The Omniwidget therefore stagnates as protected profits continue to roll in regardless of quality or price. This is bad for the customer.

Under a non-protectionist system, Acme Co can only keep its monopoly as long as it deserves to. If Whizzo Co comes up with a better Omniwidget or an Omniwidget of the same or better quality for a lower price, then Acme Co can either compete, try to buy out or merge with Whizzo Co, be content with having a market share instead of a monopoly, improve its own methods of production, sell out to somebody else or go bust. The competition between Whizzo Co and Acme Co is good for the customer.

There's no way any company can directly extract money from your bank account without a) your permission, b) a valid court order, c) through government created legislation or d) through theft.

Finally, the absolute apex of the "...company... that makes no product, provides no services, but finds a way to directly extract exactly the amount money from everyone's bank accounts..." is government. Government adds nothing at all to society except violence and the threat of violence and sees itself as having carte blanch to take your money and/or possessions whenever it wants and for whatever it desires. Private companies or corporations cannot do that on their own - but if they hitch themselves to government they can. 

[Jim_Campbell]

Once again, you argue from a position so tangential to observable reality that there is literally no way to engage with your argument.

(I will note, however, that you seem to have missed the word 'platonic' when I was describing the logical conclusion of shareholder-based companies in a capitalist free market.)

[The Legendary Shark]

Once again, you argue from a position so tangential to observable reality that there is literally no way to engage with your argument.

So, no five pieces of evidence, then? How about just one? If this evidence you have is so firmly a part of observable reality, it should be easy to produce and therefore provide you with a way to engage with my argument.

(I will note, however, that you seem to have missed the word 'platonic' when I was describing the logical conclusion of shareholder-based companies in a capitalist free market.)

(Ah, so you're talking about the perfect form of a shareholder-based company's ultimate goal; an ideal, a paragon - an imaginary thing? This seems to me to confuse the drive to succeed and expand with a mania for total dominance of the marketplace by any means possible. Or do I misunderstand? Further, as I have pointed out before, any market in which the government interferes (through taxes, tariffs, penalties, fees, restrictions, protections, licensing, legislating and so on and on) is not a free market. How can any market, be it capitalist, communist or whatever else, be free if there are certain transactions you are forbidden or forced to make and certain people or companies you are forbidden or forced to trade with?)

Perhaps it would help us to agree upon a definition of "free market." I suggest the following definition from Dictionary.com: "An economic system in which prices and wages are determined by unrestricted competition between businesses, without government regulation or fear of monopolies."

Is this definition acceptable or do you have a preferred alternative?

[Steven Denton]

the platonic ideal of any company with shareholders is one that makes no product, provides no services, but finds a way to directly extract exactly the amount money from everyone's bank accounts that they have enough left to not starve. That is maximising shareholder value at its logical conclusion.

Surprisingly easy to achieve, lend small amount of money with astronomical interest rate, set the minimum repayment as exactly the amount money from the 'customer's' that they can give and have enough left to not starve. receive payment by direct debit, repeat and expand.

[Jim_Campbell]

So, no five pieces of evidence, then? How about just one? If this evidence you have is so firmly a part of observable reality, it should be easy to produce and therefore provide you with a way to engage with my argument.

Right. OK. I'm on top of today's work, so here's an example. I'm certainly not fucking about giving you five, when this is just the way capitalism works:

Cadburys. A family-run company with a hundred-plus-year history of worrying about its workers' welfare and caring about the quality and ethics of their products.

Kraft bought the company out from under the family. There was considerable pressure for the government to intervene in the takeover and, at the very least, extract some binding assurances about how the business would be run. Government did not intervene and it turns out the assurances Kraft gave the shareholders weren't worth the paper they (weren't) printed on, because they very quickly closed UK manufacturing capacity and moved it Poland. They also changed the formulation of a lot of their chocolate, using cocoa and palm oil to produce that gritty crap the Americans have been calling chocolate for years.

Aha! Goes the Shark version of economics. Then they will lose dissatisfied customers and their loss will be the gain of some other company, manufacturing better chocolate. Well, no. Kraft just bought Green & Blacks as well.

How about Tyrell's Crisps? A potato farmer so sick of having his margins squeezed to the point of bankruptcy by the big supermarkets realised he could install a couple of industrial deep fryers in the farm outbuildings and make posh crisps himself, which he sold to pubs and small retail outlets and not supermarkets. A heartening success story.

The business was sold on to an investment company on two conditions: they continued to use British potatoes, and they didn't sell to supermarkets. In a very short space of time, Tyrell's were on sale in supermarkets, and the downward pressure on margins demanded by those big retailers sent the company sourcing potatoes from outside the UK.

Big companies eat small companies. They are only interested in the brand as a means of securing market share. Big companies merge with other big companies, or get swallowed up by even bigger companies. This is the natural progression of the free market and is the exact reason we have laws to prevent anti-competitive practise, and the establishment of monopolies.

[The Legendary Shark]

the platonic ideal of any company with shareholders is one that makes no product, provides no services, but finds a way to directly extract exactly the amount money from everyone's bank accounts that they have enough left to not starve. That is maximising shareholder value at its logical conclusion.

Surprisingly easy to achieve, lend small amount of money with astronomical interest rate, set the minimum repayment as exactly the amount money from the 'customer's' that they can give and have enough left to not starve. receive payment by direct debit, repeat and expand.

Excellent example. And why is this possible under today's system? Because banking is hugely government regulated and controlled. This regulation (and the very nature of money creation, which is a whole 'nother kettle of fish) means the high street banks and other lenders have little need to compete with each other. Indeed, if a bank fails (as more and more are doing, including the oldest bank in the world), they don't go out of business or lose customers to competing banks (because there are none) but simply get bailed out with taxpayer (your) money.

Remove government regulation and return to a system of countless small, private, local banks and competition instantly arises between them - not to mention a much easier and cheaper opportunity for a bank to insure itself against a run or ally with others to mitigate the effects of such a failure. If one fails, it fails, and only a small number of customers are affected instead of the population of an entire country or superstate. It is, of course, government that makes the rape of economies, communities and countries by protected banks so breathtakingly easy.

[Steven Denton]

Actually, this is a loan shark's system and not really legally possible because of laws and regulation but would be entirely possible without them.

[Leigh S]

Getting rid of Government seems at best like trying to save a drowning man by removing the water from the river rather than just removing the man himself! More realistically, it would be like pouring a hose on him

If Government has got itself corrupted by corporate interests (and no doubt it has to a dangerous degree), the reason this has happened is so that the corporate interests can operate free of Government interference.

So tomorrow, there are no bail outs and everyone competes on an even playing field.  Except the giant corporations that have the money to squash any competition, free from any regulation.  To cut corners and maybe poison their customers, but hey - if they poison enough, they will go out of business  I look forward to the compensation I will get for my loved ones when they die from such malpractice... except, there is no Government, so no consequences for that company.  Sounds like a paradise

[The Legendary Shark]

Cadburys. A family-run company with a hundred-plus-year history of worrying about its workers' welfare and caring about the quality and ethics of their products.

Kraft bought the company out from under the family. There was considerable pressure for the government to intervene in the takeover and, at the very least, extract some binding assurances about how the business would be run. Government did not intervene and it turns out the assurances Kraft gave the shareholders weren't worth the paper they (weren't) printed on, because they very quickly closed UK manufacturing capacity and moved it Poland. They also changed the formulation of a lot of their chocolate, using cocoa and palm oil to produce that gritty crap the Americans have been calling chocolate for years.

Aha! Goes the Shark version of economics. Then they will lose dissatisfied customers and their loss will be the gain of some other company, manufacturing better chocolate. Well, no. Kraft just bought Green & Blacks as well.

How about Tyrell's Crisps? A potato farmer so sick of having his margins squeezed to the point of bankruptcy by the big supermarkets realised he could install a couple of industrial deep fryers in the farm outbuildings and make posh crisps himself, which he sold to pubs and small retail outlets and not supermarkets. A heartening success story.

The business was sold on to an investment company on two conditions: they continued to use British potatoes, and they didn't sell to supermarkets. In a very short space of time, Tyrell's were on sale in supermarkets, and the downward pressure on margins demanded by those big retailers sent the company sourcing potatoes from outside the UK.

Big companies eat small companies. They are only interested in the brand as a means of securing market share. Big companies merge with other big companies, or get swallowed up by even bigger companies. This is the natural progression of the free market and is the exact reason we have laws to prevent anti-competitive practise, and the establishment of monopolies.

The sale of Cadbury's shares to Kraft became compulsory on March 29th 2010 under section 979 of the Companies Act 2006. Cadbury's could have avoided this by making sure they kept 11% of shares and/or 51% of voting rights away from Kraft. Cadbury's fell foul of government legislation, Kraft took advantage of it. Everything else, from closed factories to gritty chocolate, stems from the same thing. Furthermore, Cadbury's was not a government protected monopoly and any company who trades its shares is open to the same kind of attack.

The Grocer found Cadbury's best-selling seasonal lines were £10m lower in 2015, cutting the confectioner's market share from 42% to 40%, so that's an example of market forces right there - as you pointed out, they lost dissatisfied customers and their £10M loss was the gain of some other company. That's how the market works. Mondelez (formerly Kraft), knows how to milk governments and was given nearly £638,000 of tax money by Innovate UK from 2013 to 2015 to help the multinational giant develop a process to distribute nuts and raisins more regularly in its chocolate bars. It doesn't even fund its own innovations - you do.

So, your first example is a standard government-based clusterdrokk.

Your second example is simply a case of sour grapes and a poor grasp of business. The founder of Tyrrell's crisps was a farmer who sold the business because it was getting too big for him to manage. He was happy to supply smaller pubs and whatnot and, presumably, happier still to accept £30M for the brand in 2008. It seems naive to expect a large corporation to fiddle about with individual small businesses - it makes no sense in the area of economies of scale, of which I know you are a fan. If his insistence on keeping the small customers he cultivated had been properly set out in a proper contract, he could have sued Langholme for breach of contract and I can find no evidence that he did so or even considered the option.

While the founder of Tyrrell's, William Chase, was unwilling to sell his crisps to Tesco he now makes vodka and sells it at up to £38 a bottle. Does he still hold to his ideals of not selling to Tesco? "I'll sell it to Tesco," he says. I'll sell to anybody if they're interested." (The Tyrrell's brand was sold on by Langholme in 2013 for £100M and again in 2016 for £300M. Like it or not, big companies have caused Tyrrell's to thrive far beyond the capabilities of a struggling potato farmer.)

So your second example has no bearing on anything except the usual buying and selling of companies with the goal of making a profit. It does seem to be, however, a decent example of how business works perfectly well (even if some parties grumble a bit) without government interference.

Big companies eat small companies, financing the founders of small companies to either retire or start another small company. Small companies innovate and challenge big companies. Big companies sell off or close down unprofitable, unpopular and/or obsolete products and services. Small companies grow big. They are only interested in the brand as a means of securing market share, which is what brands are for. Big companies merge with other big companies, or get swallowed up by even bigger companies. Small companies merge with small companies. Companies of all sizes thrive and go bust all the time. A thriving company encourages the creation of other small companies to outsource certain tasks to (such as cleaning services, maintenance services and suppliers, amongst others) and big companies going bust or retiring from a certain arena also encourages entrepreneurs to step into the gap. This is the natural progression of the true free market and is the exact reason we have legislation to prevent anti-competitive practice - because to government protected companies, "competition is a sin," as David Rockerfeller said - and the establishment of non-government monopolies.

Oh, did you settle on a definition of "free market" that works for you?

Actually, this is a loan shark's system and not really legally possible because of laws and regulation but would be entirely possible without them.

QuickQuid
PayDayUK
WizzCash
And so on. (These companies borrow ledger money from large banks, and the BoE, at pifflingly small interest rates, sometimes under 1%, and lend it out at APRs of 1300% or more. Remember, the loaned money was created from nothing to begin with. Even loan sharks have the decency to lend hard cash.)

Getting rid of Government seems at best like trying to save a drowning man by removing the water from the river rather than just removing the man himself! More realistically, it would be like pouring a hose on him

If Government has got itself corrupted by corporate interests (and no doubt it has to a dangerous degree), the reason this has happened is so that the corporate interests can operate free of Government interference.

So tomorrow, there are no bail outs and everyone competes on an even playing field.  Except the giant corporations that have the money to squash any competition, free from any regulation.  To cut corners and maybe poison their customers, but hey - if they poison enough, they will go out of business  I look forward to the compensation I will get for my loved ones when they die from such malpractice... except, there is no Government, so no consequences for that company.  Sounds like a paradise

Getting rid of government is more like making sure everyone can swim and looking out for those who can't.

Corporations get in bed with governments not only to avoid government interference but also to take advantage of government power, money and legislation.

You do know that removing government power in no way diminishes, and in many ways actually increases, the power and efficacy of courts, right? You do know that you can have police, doctors, hospitals, safe food and clean water without government power?

It's government power that's the toxic ingredient. We can keep the organisational infrastructure which has grown up around government, mostly in spite of it, as it is in many instances quite useful but we don't need the violence and shadows that come with it.

[Jim_Campbell]

The sale of Cadbury's shares to Kraft became compulsory on March 29th 2010 under section 979 of the Companies Act 2006. Cadbury's could have avoided this by making sure they kept 11% of shares and/or 51% of voting rights away from Kraft.

They could have protected themselves using laws and regulations? Is that what you're saying, because it looks an awful lot like you are. Where do those laws and regulations come from? Who enforces them? How, in your red-in-tooth-and-claw free market, do you prevent large companies simply establishing vast monopolies and crushing any competition with economies of scale and cross subsidies from other parts of their business (the latter of which being illegal*)?

*Unless you're Rupert Murdoch.

[Steven Denton]

The Bank of England don't create money from nothing.

regulation isn't the same as banning.

[Jim_Campbell]

The Bank of England don't create money from nothing.

They kind of do. The money supply hasn't been directly backed by gold reserves for a long time, now.

[The Legendary Shark]

They could have protected themselves using existing laws and regulations, yes, of course they could! Under the current system, it's one way that they could! If someone shoots at you with a gun it makes no sense to not shoot back because you don't believe in guns! The solution, in this analogy, is to take all the guns away.

Legislative law and regulations come from the minds of human beings, not some mysterious, invisible, all-powerful force called "government." Legislative law applies with the consent of the governed. That is, it applies to human beings with their consent. A company is not a human being, it is an artificial person, and I have absolutely no problem with a legislative or regulatory body applying legislation and regulation to companies.

You can employ police, regulators, inspectors or whomever to enforce legislations on companies. You can name and shame bad practices on national tv, for example, this seems to work.

You don't prevent large companies from trying to establish monopolies, as I said earlier, if they can do it and the public allows it then have at it. Why not? If they try to do so unlawfully then that's what the courts are for, and the police, and public groups, and the media, and market forces, and societal attitudes, and education, and monetary democracy, and organisation, and local pressure groups, and Anne Robinson.

That last mention of Murdoch is very telling - how close is he to governments around the world? Governments that turn a blind eye to - thus enabling and even tacitly endorsing - his nefarious activities. If old Rupe couldn't get through the door of Number 10, or if the Prime Minister living there had only the same rights, powers and responsibilities as the rest of us, he'd be buggered. He's one of the best examples of a government protected corporatist you could have mentioned - but far from the only one.

[Steven Denton]

The Bank of England don't create money from nothing.

They kind of do. The money supply hasn't been directly backed by gold reserves for a long time, now.

Warning, gross simplification on the way...

Even when they used the gold standard the value of gold was dependent on economic growth and GDP of the country's with that gold. All removing gold did was unpin money from a rare metal. Money does not need a phisical representation as, especially now wealth has little to do with goods, money represents far more then objects in a barter system.

[Leigh S]

But WHY is Murdoch close to Governments - because he knows they potentially stand in his way!  You seem to be suggesting removing any weak and potentially corruptible barriers and replacing them with a chalk mark will improve matters.