China: An Empire of Illusion | Frank Dikötter

Very recommendable! Right on Frank Dikötter!

(227) China: An Empire of Illusion | Frank Dikötter | Hoover Institution - YouTube

Why does China dominate the world market for processed rare earth minerals with a share of about 85%?

It is Western stupidity! Too much government overregulation and environmentalism prevents the processing of rare earth in Western countries.

One could also say Western countries offloaded the processing to China to satisfy green activists!

"... While China only controls about 30 percent of the rare earth minerals known to exist on the planet, they process about 85 percent of it. This is down from a peak of 97 percent a few years ago.

The reason why they are able to dominate is partially because of American bureaucracy and hypocrisy. Our bureaucracy creates mountains of red tape that must be navigated in order to get these elements out of the ground (or ocean) and into useable form, in large part due to environmental concerns. ..."

Breitbart Business Digest

Something Wrong With Government Run Lotteries

Posted: 1/21/2017

I have mentally grappled for a long time what I should think of the pervasive prevalence of government run lotteries in Western democracies. Caveat, I am not really familiar with many of them.

1. Usually, these lotteries are run as state monopolies. Hence, private, commercial lotteries of the same scale usually do not exist in the same country
2. It is a form of government controlled gambling and a prohibition of private enterprise
3. These lotteries are highly profitable for governments! That these profits are dedicated to be spent on public goods is a pretense
4. Usually, the lottery prizes are highly skewed towards extreme prizes for a few winners. These prizes then are taxed accordingly! Nice!
   Why not have smaller prizes for many winners? Why so much for a few?
5. Apparently, before the 20th century, lotteries in the U.S. used to be privately run, before they were prohibited by government like in other Western countries
6. If lottery is a form of taxation, then why not make tax payments entirely a voluntary expense for citizens instead of being compulsory! Make Benjamin Franklin proud who said “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.” (or Daniel Defoe)
   Ban this certainty of taxes so citizens can vote with their money for the policies of our elected representatives. More democracy with dollars and cents!

Peter Thiel Incriminates Google As A Monopoly

Posted: 9/14/2014

Trigger

Just read in the wall street journal review section of this weekend’s U.S. print edition of 9/13/2014 Mr. Peter Thiel’s piece titled “Competition Is for Losers/If you want to create and capture lasting value, look to build a monopoly”. In this article Mr. Thiel argues several times that Google is a monopoly.

Games People Play

So here is this financial wizard Peter Thiel accusing Google of being a monopoly at exactly the time when the business news ar full of reports that the European Union trust busters want to scrutinize Google much more intensely. I am sure the EU commissars (oops Commissioners) will read his piece with delight.

Worse, Mr. Thiel describes in detail how alleged monopolists try to hide that they are in his view monopolists again using Google as his posterchild.

His exhibit B for Google being a monopoly is the entry of Google into the Oxford English Dictionary. This is more than laughable, Mr. Thiel.

Or Mr. Thiel earnestly claims “A monopoly like Google is different. Since it doesn't have to worry about competing with anyone, it has wider latitude to care about its workers, its products and its impact on the wider world.” Are you nuts, Mr. Thiel? Google could be challenged at any moment from anywhere on the Internet from the most unlikely companies. Many Internet darlings have already disappeared in almost a blink of an eye.

Armchair Economist

Now lets look a bit more at the substance of Mr. Thiel’s argument. Unfortunately, he comes away as an armchair economist using a very shallow analysis.

Google is definitely not a monopoly as Mr. Thiel so strenuously claims. Google is very competitive, constantly striving to be the best in what it is doing. However, any of its leading businesses, e.g. search engine or Web advertisement, could be seriously challenged at any time by other private sector competitors barren any stupid government interventions.

Even under perfect competition profits do not get competed away as Mr. Thiel claims. This might be basic economic textbook representation, but it is wrong. If there are no profits to be had, there would be no entrepreneurs doing it.

Many of Mr. Thiels chosen examples like  airline industry, restaurants in Palo Alto are amusing at best.

The best Mr. Thiel can argue for is that Google has achieved a temporary monopoly, but it is under constant pressure from competitors.

Culmination Of His Argument

Perhaps this is the culmination of his argument (emphasis added): “Before that, IBM's hardware monopoly of the 1960s and '70s was overtaken by Microsoft's software monopoly. AT&T had a monopoly on telephone service for most of the 20th century, but now anyone can get a cheap cellphone plan from any number of providers. If the tendency of monopoly businesses was to hold back progress, they would be dangerous, and we'd be right to oppose them. But the history of progress is a history of better monopoly businesses replacing incumbents. Monopolies drive progress because the promise of years or even decades of monopoly profits provides a powerful incentive to innovate.”

Mr. Thiel, did you not know that AT&T was a big government imposed monopoly that for decades exploited the American consumers with shoddy technology?

Mr. Thiel Got One Thing Partially Right

In his long article, I found one morsel of wisdom by him, “Even the government knows this: That is why one of its departments works hard to create monopolies (by granting patents to new inventions) even though another part hunts them down (by prosecuting antitrust cases). It is possible to question whether anyone should really be awarded a monopoly simply for having been the first to think of something like a mobile software design.” (emphasis added). But again, he did not think deep enough, because he limits his insights to mobile software design! Perhaps, patents or other intellectual property rights should not be granted at all by government in the name of human progress and better living conditions.

Cab Drivers In Western Countries Protest Uber

Luddites Or Monopolists

Cab drivers and companies are vested interest groups vigorously defending their privileges.

Here are some pertinent quotes from a recent Wall Street Journal article:

1. “But the scale of the planned protests across Europe also underscores the extent to which the technology has upended one of the world's most regulated industries.”
2. “But the hurdles have been higher in Europe, where taxi drivers tend to be well organized. The industry is often more heavily regulated, and governments are more willing to actively protect sectors under threat of job losses.”

Every cab driver who own their car is free to join Uber or to compete with Uber!

The Only Constant In Life Is Change

Economies are dynamic organisms. Markets or businesses come and go ...

Will The Consumers Protest The Monopoly

We hope the consumers will respond by buying more of Uber’s services!

We hope that governments bust these ridiculous cab monopolies and relax regulations!

A World Without Any Intellectual Property Rights

Prolog

Here is an interesting article along the lines of my blog. Here is an interesting website dealing with this issue.

Here is the link to my earlier blog post on intellectual property.

What Is Wrong With Existing Intellectual Property Rights?

·         It is a government granted exclusive, artificial monopoly for extended periods of time

·         Too many frivolous, trivial patents

·         Terms of protection are way too long in many cases

·         Patent trolls

·         Lawsuits to intimidate competitors or to interfere with competition

·         Impediment to human progress

To use hyperbole, what are Apple and Samsung fighting over in court? Rounded square button icons?

Reverse Engineering

In a competitive world with intelectual property rights one has to suspect that competitors are constantly reverse engineering any new or modified product or service from any other competitor as soon as it hits the market or even earlier, which, I suppose, is a legal activity.

I suppose also that competitors quickly try to replicate new and successful features etc. to the extent as not to infringe on intellectual property rights.

Tabula Rasa

I like thought experiments and to start with a blank slate given a thorny issue like intellectual property rights in the 21^st century. Unfortunately, I am not an expert in the history of such rights and how they came about over the centuries.

Whatever were the reasons that governments became involved in granting and enforcing such exclusive monopoly rights, the question is whether from today’s perspective such rights still make sense and can be justified.

Do intellectual property rights improve human progress and technological innovation more than what would be the case without it? Do we have empirical data to corroborate that?

Benefits Of No Intellectual Property Rights

·         Cheaper products

·         Less government bureaucracy and litigation

·         More intense competition

·         Possibly more and better competitors

·         Possibly more specialization and differentiation among competitors

·         Possibly more dynamic markets

·         Better first mover and inventor advantage

·         Accelerated innovation and technological progress

·         Free market contractual protections instead of government granted one size fits all monopolies

Clearly, the first mover would be ahead of its competitors for some time before they catch up. The first mover would also have a strong incentive to keep improving or differentiate their products and to sell other services etc. related to their original invention. Similar holds true for authors and artists.

A Two Way Street

In a world without intellectual property rights any competitor can imitate anything another competitor has come out with and, very important, vice versa.

Once a competitor adopted a new feature by imitation, the competitor then can try to add new variations or a completely different feature and be the first to market and so on.

Counter Arguments

Capital as well as research & development investments by Companies would be reduced. In my estimation this is a myth or a red herring. Before a first mover can sell a new product on the market before anyone else, the first mover needs to make some kind of investment.

The profit motivation would be eliminated or greatly reduced. In my estimation this is another myth or a red herring. A first mover will in most cases make some profit or he can sell his invention to the highest bidder etc. The inventor or author has expert knowledge that his rivals very likely do not have to the same extent for some time.