Thread: Bilateral Economics
Re: Member’s post of 11/30/24
I think Rockefeller was on balance a hero, but not an Ayn Rand Hero.
Of course. Except, from my limited knowledge, you don’t have to say “on balance.”
At several points he led the formation of cartels and other such actions to establish prices and volumes he deemed rational.
I don’t think he did. I think that’s among the lies told about him. But assume it’s true. What’s wrong with that?
A cartel is a contractual arrangement among producers to control their property in a certain way to achieve their greedy, selfish goals. That is exactly what morality endorses their doing. Just as it endorses any peaceful activity buyers engage in to achieve their greedy, selfish goals.
But cartels cannot raise prices, so they are not actually selfish. The prices for something like oil cannot be higher than what would be the costs of production of potential competitors, plus the average rate of profit.
If it would cost the most efficient potential entrant $1 to produce a barrel of oil, and if the average rate of profit is 10% (adjusted for risk), then nothing can make oil sell for more than about $1.10. Nothing except governmental coercion, that is. A cartel trying to sell for $1.20 would draw in a lot of capital to finance a competitor ($1.20 would mean you get 20% on your investment when the average is half that).
Leftists will then talk about “barriers to entry” as if the facts of reality were a “barrier”–I mean the fact that Joe the Plumber can’t build an oil well using a pick and shovel. What they call “barriers to entry” an entrepreneur calls “an opportunity” and an investor calls “a great place to put my money.”
The last refuge of the Leftist is the idea of “predatory price cutting” which is total nonsense. It’s not worth going into all the contradictions in that idea. You merely need to note that the resources of a Big Tycoon or Giant Cartel are as nothing compared to the total economy’s funds seeking the most profitable investment. If Rockefeller and his supposed cartel-mates had $100 million dollars (waiting in some money bin!) to tide the cartel over periods of predatory price-cutting, the New York Stock Market plus the exchanges in London, Paris, Germany, etc. had $100 billion dollars to finance a competitor.
If the cartel bought him out, that would be great for the competitor—and would produce a stampede of copy-cat investors wanting to be similarly bought out.
The whole animus against “giant” firms and “monopolies” comes from confusing production and destruction. Since a bigger army means more power, it is assumed that a bigger business means more power. Well, it often does: more productive power, not coercive power like an army.
I can take this back to “bilateral economics”: “bilateral” refers to two sides of a trade, not the two sides consisting of victor and vanquished.
Trade is win-win. War is lose-lose. Both sides lose in a war, but one side loses more.
And behind not understanding trade, behind the idea that businessmen are motivated by the desire to make people worse off, is the sick morality of altruism. Altruism preaches: I should lose, and let you win. It considers trade to be evil—because a trade has no loser, no sacrificial victim. Didn’t Jesus chase the money-changers from the temple?