fagin@ucbvax.ARPA (Barry Steven Fagin) (08/02/85)
Regarding Charley Wingate's conjecture that Ma Bell was (is?) monopolistic: (Taken from Gabriel Kolko's book *The Triumph of Conservatism*. I hate to keep repeating that, but I don't want to take credit for work that isn't mine) True enough, from 1877 to 1894, Ma Bell did indeed exercise a virtual monopoly over the telephone industry. But once its patents expired (most libertarians, by the way, are in favor of time limitations on patents), independent companies multiplied like rabbits, with the result that Bell initiated twenty-seven patent infringement lawsuits against them in 1894 and 1895. This policy of litigation failed because many of the new companies had important patents of their own, and were very aggressive in R & D. Bell also refused to allow its subsidiary, Western Electric, to sell equipment to the new companies, but new firms like Kellogg Switchboard, Stromberg-Carlson, and the Automatic Electric Company sprang up to sell what W.E. would not. These independent companies, no fools they, reliazed that mutual cooperation was crucial if any were to survive, and organized a national association in 1897 to establish long distance serivce between their cities. (Note that this is exactly the sort of thing that supposedly can't happen without coercion). In spite of AT&T's superior capital position, it faced intense competition and began losing control of the industry. In 1902, there were *9100* independent telephone systems, and by 1907 there were *22000*. That same year, AT&T had 3.1 million phones in service, while the independents had 3 million. What halted this trend was the passage of the Mann-Elkins Act of 1910, lobbied for by AT&T (and, in all fairness, by others as well), which placed telephones under the jurisdiction of the ICC. Bye-bye rate wars. Telephones were perceived as a public necessity, and AT&T chairman Theodore Vail embarked on a massive public relations campaign on the necessity of centralized regulation of the phone system, using the standard "public necessity" arguments. In 1914 Mr. Vail proclaimed the virtues of regulation: "We believe in and were the first to advocate state government control and regulation of public utilities...there should be a centralized general administration in close communication with and having general authority over the whole on matters common to all or matters of general policy." This makes the breakup of AT&T so ironic. I personally think it was a good idea, but what would our phone system have been like if we had just left it alone? --Barry -- Barry Fagin @ University of California, Berkeley
mangoe@umcp-cs.UUCP (Charley Wingate) (08/05/85)
In article <9563@ucbvax.ARPA> fagin@ucbvax.UUCP (Barry Steven Fagin) writes: >True enough, from 1877 to 1894, Ma Bell did indeed exercise a virtual >monopoly over the telephone industry. But once its patents expired, >independent companies multiplied like rabbits, with the result that Bell >initiated twenty-seven patent infringement lawsuits against them in >1894 and 1895. >These independent companies, no fools they, reliazed that mutual >cooperation was crucial if any were to survive, and organized a national >association in 1897 to establish long distance serivce between their >cities. (Note that this is exactly the sort of thing that supposedly >can't happen without coercion). Isn't the threat of being forceably put out of business coercion? > In spite of AT&T's superior >capital position, it faced intense competition and began losing >control of the industry. In 1902, there were *9100* independent >telephone systems, and by 1907 there were *22000*. That same >year, AT&T had 3.1 million phones in service, while the independents had 3 >million. >What halted this trend was the passage of the Mann-Elkins Act of 1910, >lobbied for by AT&T (and, in all fairness, by others as well), which >placed telephones under the jurisdiction of the ICC. Bye-bye rate >wars. Telephones were perceived as a public necessity, and AT&T >chairman Theodore Vail embarked on a massive public relations campaign >on the necessity of centralized regulation of the phone system, using >the standard "public necessity" arguments. In 1914 Mr. Vail proclaimed >the virtues of regulation: [quotation omitted] Bringing us again to the $64 question: what is going to prevent this from happening in Libertaria? C Wingate
berman@psuvax1.UUCP (Piotr Berman) (08/07/85)
> Regarding Charley Wingate's conjecture that Ma Bell was (is?) > monopolistic: > > True enough, from 1877 to 1894, Ma Bell did indeed exercise a virtual > monopoly over the telephone industry. But once its patents expired > (most libertarians, by the way, are in favor of time limitations on patents), > independent companies multiplied like rabbits, with the result that Bell > initiated twenty-seven patent infringement lawsuits against them in > 1894 and 1895. This policy of litigation failed ... > > These independent companies, no fools they, reliazed that mutual > cooperation was crucial if any were to survive, and organized a national > association in 1897 to establish long distance serivce between THEIR > CITIES. (Note that this is exactly the sort of thing that supposedly > can't happen without coercion)... > > What halted this trend was the passage of the Mann-Elkins Act of 1910, > lobbied for by AT&T (and, in all fairness, by others as well)... > > This makes the breakup of AT&T so ironic. I personally think it was a > good idea, but what would our phone system have been like if we > had just left it alone? > > --Barry > -- > Barry Fagin @ University of California, Berkeley Not only Ma Bell was monopolistic, all local companies are. Therefore I stressed "THEIR CITIES". Each local telephone network is a local monopoly, as such subject of (local) goverment regulation. The "market process" there is a bargaining between company and representatives of population. The breakup of AT&T merely split the representation of the consumer in the process, what resulted in continuus rate hikes. For each of the companies local network is a "cash cow" to produce funds to develop new services. Piotr Berman
fagin@ucbvax.ARPA (Barry Steven Fagin) (08/24/85)
>> Me > Charley Wingate > >>These independent companies, no fools they, reliazed that mutual >>cooperation was crucial if any were to survive, and organized a national >>association in 1897 to establish long distance serivce between their >>cities. (Note that this is exactly the sort of thing that supposedly >>can't happen without coercion). > >Isn't the threat of being forceably put out of business coercion? > No, it is not. This question has been raised often on the net; perhaps it's worth another look. Putting someone out of business, if it does not involve acts of violence or fraud, is not coercion. It is simply charging lower prices and/or offering better goods in an attempt to change the economic behavior of third parties. Consider two people who want to sell you widgets. For whatever reasons, you habitually purchase widgets from A. Then, one day, you notice that B is selling better widgets for 10% less than A, or that B's store is air conditioned, or something that makes you change your mind and start buying widgets from A. Has coercion occured? Surely the answer is no. You made a decision as a free human being to control your actions according to your will. Now multiply this scenario by N buyers, and M sellers, then reenact it. Has coercion occured? Most who accept your definition would say yes, at least for certain values of N and M. But how did the coercion creep into things? At what point did it happen? Are there critical numbers of buyers and sellers that make economic activities coercive, below which they are not? Clearly further discussion along this line is absurd. The reason this is so important in political discourse is that twisting "coercion" to include the results of the economic transactions of third parties implies that coercion is in turn justified in influencing these transactions. In my opinion, interventionists reason backward: they want coercion to be justified in influencing economic transactions, so they define coercion to include economic transactions. I believe libertarians, by contrast, are not guilty of the same crime; by accepting their definition of "coercion", one is not forced (:-) to accept self-evidently absurd propositions that follow from it. Later on ... >> [My examples of how the government became involved in the telephone >> industry] > >Bringing us again to the $64 question: what is going to prevent this from >happening in Libertaria? > Now Charley, you're not playing fair. You're original claim was: >>>The historical [record] rather plainly shows that markets tend to drift away >>from perfect >>>competition towards monopolies and oligopolies as a result of natural >>>forces, unless there are restraining forces to oppose this. When I attempt to refute this with examples, you shift gears and assert instead that the *political* forces that lead to monopolies and oligopolies are inevitable, even in Libertaria. This claim is *very* different from your original one. I'll address it in another posting to net.politics.theory. --Barry -- Barry Fagin @ University of California, Berkeley