RE: GPL & commercial software, the critical distinction (fwd)

Forwarded message:

> Date: Sun, 04 Oct 1998 12:11:04 -0700
> From: "James A. Donald" <jamesd@echeque.com>
> Subject: RE: GPL & commercial software, the critical distinction (fwd)

> At 05:28 AM 10/2/98 -0500, Brown, R Ken wrote:
> > Nonsense. Most of those businesses became monopolies - or
> > local monopolies - in the relatively unregulated 1880-1914
> > period.=20
> 
> Untrue:

Actualy it is. But I'd certaily entertain any evidence you may want to
present to your case...other than just saying it over and over.

> > In some of them - like rail or oil in the USA - governments
> > introduced regulation to *force* competition.=20
> 
> In the case of the railways, the governments granted and
> imposed monopolies.

Only after the early 1890's when the situation got so bad they had to do
something. Prior to that there was no federal intervention in railroad
operations per se (I say that because the US government used the railroads
at a very hefty discount).

>  In the case of oil, I assume you are
> referring to "Standard Oil", there was no monopoly, and the
> government regulation had little apparent effect.=20

You assume wrong. I am talking of the entire oil industry as a whole.

> Also the Standard Oil issue was about refineries, not oil
> wells or oil pipelines.  There was nothing to prevent any man
> or his dog from setting up a refinery, and lots of them did.

The issue in the oil industry isn't the refineries or pipelines or any of
that other stuff. It's mineral rights. And every drop of mineral rights in
this country is owned by oil companies or the US government as a result of
the conflicts that took place from the late 1800's to the early 1900's.

> > Recently government has forcibly broken up gas supply
> > monopolies in this country. =20
> 
> After first forcibly creating gas supply monopolies.

Actualy the local and state regulators did that back in the late 50's and
early 60's the federals had no hand in it. The same happend prior to the TVA
projects of the late 20's and 30's with the electric production industry.

> > What happens much more often is that one company becomes
> > dominant and then uses money to undersell rivals.
> 
> Why don't you argue that they conduct sacrifices to Satan?

Because then he would be doing what you like to do, change the subject and
claim it's the same thing.

> A big company has no monetary advantage over a small company.

You know nothing of how large businesses work over small ones then.

> Suppose Firm A controls 90% of the market and firm B controls
> 10% of the market.  Artificially low prices cost the big firm
> nine times as much as the small firm.

Bullshit math. The interactions are nowhere near as simple as you state.
The big company has the resources to outlast the smaller company in any
industry that can monopolize (an issue you seem to miss, not all industries
can monopolize) and if its' smart will buy the smaller company at some
point (unless prevented) as the smaller companies becomes resource starved.

>  Under capitalism, the
> small company can duke it out on equal terms with the big
> firm, and with great regularity, that is exactly what they
> do.

Examples please where a small firm dukes it out (sic) on equal terms with a
larger one...

 > Garbage (what we call rubbish over here) collection  is
> > different again. It's not at all a nutural monopoly and
> > there is nothing stopping anyone offering to do it as a
> > business. But it is a natural for social ownership,
> 
> You mistake the political adventures of your local elite for
> universal laws.  In some parts of the world rubbish
> collection is private. 

In just about everyplace in the US the company doing the trash collection
and dumping is private, especialy in the bigger cities. They may be working
under contract for the city but the company is privately held. My suspicion
is that most places on the planet, excluding control markets like Cuba, use
private companies under contract for this.

> In other parts of the world shoe
> production is public.

What country produces shoes as a function of government agency and prevents
private shoe production?

I must admit I nearly hurt myself laughing at this one.

> In one of those nordic countries, I think Finland, the phone
> system was never made a public enterprise or state regulated
> monopoly, but most other things were.

Then how does it operate? Who owns the switches and wires? Either it's a
public utility or it's some sort of private enterprise (though it may be
under contract to the government).

> There is no "natural monopoly" that is not somewhere a

A 'natural' monoploy, to my mind, is a company that operates in an industry
that can be saturated. By saturation I mean that the demand of the market
can be met by a small number (approaching 1 if left unregulated over time,
usualy by by-outs or business experation) of manufacturers.

The VCR industry is a great example of a 'natural' monopoly. Only a few years
ago *every* VCR mechanism on the planet was made by one of 5 companies and
with the cessation of Curtis-Williams, not one of them was a US company. It
is not possible to buy a VCR designed and made in the US today because of
this market monopolization. It is also impossible to start such a company
because the costs of market entry are too enormous. There is *no* government
regulation of the VCR industry outside of EOE issues to this day.


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Jim Choate claims that free markets are routinely overrun by
monopolies.  I say this is nonsense.

At 03:51 PM 10/4/98 -0500, Jim Choate wrote:
> But I'd certaily entertain any evidence you may want to 
> present to your case.

How can anyone present evidence when except for Microsoft you
have not named a single company that alleged became a
monopoly, and you have been vague about the markets that
these companies allegedly monopolized, and the periods during
which these markets were monpolized.

It is as if you were claiming that giant monsters frequently
terrorized US cities.  Unless you make a specific allegation,
no refutation is possible or necessary.

For example if you were to claim that King Kong demolished
the empire state building, then someone could point out that
the empire state building still stands.

A simple explanation for your inability to name any specific
giant monsters, or any particular places and times where
these giant monsters were rampaging, is that these giant
monsters do not exist, and never have existed.

> Examples please where a small firm dukes it out (sic) on
> equal terms with a larger one...

MacDonalds vs Burger King.  Hertz vs Avis.  Mastercard vs
Visa.

And of course, the biggest mismatch of them all 

Microsoft vs Linux.

> > You mistake the political adventures of your local elite
> > for universal laws.

> What country produces shoes as a function of government
> agency and prevents private shoe production? 
>
> I must admit I nearly hurt myself laughing at this one.

Holland used to do this on the grounds that shoes were a
vital necessity, and if the market was left to private
enterprise some people would go shoeless.

> A 'natural' monoploy, to my mind, is a company that
> operates in an industry that can be saturated. By
> saturation I mean that the demand of the market can be met
> by a small number (approaching 1 if left unregulated over
> time, usualy by by-outs or business experation) of
> manufacturers.

There is no empirical evidence that any natural monopolies
exist.

> The VCR industry is a great example of a 'natural'
> monopoly. Only a few years ago *every* VCR mechanism on the
> planet was made by one of 5 companies and with the
> cessation of Curtis-Williams, not one of them was a US
> company. 

This does not make the VCR business a monopoly.  It would
only be a monopoly if the existing players were free to raise
prices.  Manifestly the market for the mechanism of the VCR
has become a commodity market, in which profit margins are
extremely low.

The same is true of the aluminium market, where you have all
aluminium smelted by a single provider.  There is nothing to
stop anyone else from going into the business, but because
the profit margins are razor thin, nobody bothers.  Although
there is only a single company, it is not a monopoly because
if they expanded their very thin proft margins by the
slightest degree, other people would promptly eat their
lunch. 

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         James A. Donald
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http://www.jim.com/jamesd/      James A. Donald