But they did at one time right? I remember eating some good tomatoes and eggplants courtesy of a friend & Bell Labs. They had a small monopoly back then IIRC.

Planning For a Steady State (No Growth) Society

Not all innovation comes from capitalist motives. I, myself, worked in the non-profit sector for my entire career doing R&D. But these days there is little basic research being done outside of universities, and much of that is now based abroad. The big industrial labs no longer exist or are devoted to product development, not research. All of this is a consequence of decisions being based upon financial factors, especially short-term returns to boost stock prices.

I don’t think capitalism is the answer, in fact I don’t even think it is the best system, but we do need a way to foster innovation and entrepreneurship. The results from centrally planned systems have never been good. If you think you have some ideas let’s hear them.

As to #5, what were the advances we got? More per capita refrig space? More hotel rooms with mini fridges, built-in tv’s and $60 water filters. Hooray!

Evidently there has been no innovation in public transit—subway systems are all run the exact way they were when they came into public ownership 60 or 70 or 80 years ago. Evidently there has been no innovation in the French nuclear power industry. Police forces, fire protection, the military—all unchanged down the centuries. And of course no innovation coming from researchers in universities. Because no profits = no innovation. Yup.

What we have now is that there is a failure between 1 and 2. The public speaks, but the politicians who get elected don’t follow the mandates. They follow the money instead. What we have is a broken democracy. The cure, for which, is more democracy.

Capitalism, is not democratic. All firms are run as top-down fiefdoms. Neither are most public institutions which are typically run by self-perpetuating boards of directors. Since such institutions are not democratic it is all the more important that the public be able to control their actions through a responsive government.

The unexamined issue is still the corrupt campaign process. They cycle it will cost $1 billion to get elected.

Right, but the other end of that is gross market dilution where there is often not enough money to spend on meaningful R&D – the double edged sword. It’s not either or, but both.

‘’When there are 47 choices it is because the field is undergoing rapid technological change and each firm thinks that its combination of ideas will prevail.’’

That holds some truth for some markets/items; bought laundry detergent or cereal lately? Obviously competition and choice can be good but almost equally it can be harmful. Most ‘innovation’ comes in the form of a differential marketing of the same thing rather than meaningful product improvement. The ‘market’ will eventually recongeal the mortg industry thus proving that they ‘work’ having had weeded out the now rebranded CountryWide’s and all the mom and pop shops that really were not needed and in light of current problems, were less than beneficial. But choice is good.

‘’Do you want some arbitrary judges to decide what gets produced?’’

Yes, the gatekeepers at local landfills might be a good starting point. Perhaps even the ones at airports. It took an [almost] arbitrary judge to make refrigerators and toilets more efficient. This in a market[s] that had lots of money and competition, but was not making any real steps forward. The ‘market’ is not real good at [though it is improving] factoring in the long term social costs, but it is real good at supplyying monies to mitigate action/regulation that attempts to control for that. Again a double edge sword.

What’s the alternative? Do you want some arbitrary judges to decide what gets produced? Where would the choices come from? Without the possibility of making a (large) profit firms won’t invest in the R&D and won’t attract the bright minds needed to do the innovation.

The kind of inefficiency I’m talking about is that where firms don’t spend on R&D because they control markets and raise prices because they have no effective competition. The first stifles innovation and the second shifts money from consumers and into the hands of the least innovative parts of society.

As for the financial “innovation” that has been much touted over the past two decades. There was only one real innovation: this was permitting banks to resell their mortgages and thus gain fresh capital to offer new ones. Before this banks held the mortgages and were constrained by the amount of deposits they could attract. The resold mortgages could be offered to groups with money that would never deposit it in US banks. This includes foreigners, other corporations and mutual and other financial investment firms.

When this started Fannie Mae was just a conduit for this repackaging and offered a new type of service – collecting, marketing and pricing these derivative securities. That was the “innovation”. All the other things that have been going on are simple variations on the same financial trickery that has always existed. Jay Gould (died 1892) would feel right at home these days – watered stock, subsidiaries with no assets, overinflated asset values (underwater real estate in Florida, anyone), and the promises of profits in excess of the cash flow from the investment.

The only innovation came from the government. It’s innovation was the ability to trash existing regulations and laws that had been put into place as a result of previous Ponzi schemes. Figuring out how to bamboozle congress, the press and the public was a real “innovation”

How does one go about deselecting monopoly? There is much inefficiency in having broad choice as well, which one could ascribe to consumer society in general. This too can stifle innovation and market entry. Is Apple a monopoly? Do we need more than 47 kinds of 6-8 mega pixel point and shoot cameras on the market at a given moment [plus of course phone cams…]? Is that efficient? Is it efficient for a homeowner to not go with the added initial cost of building an energy efficient home if/when the odds are against them recovering that investment?

There’s something to this analogy. But you know, historically, the latter did somehow lead to the former. It’s at least possible that, with enough presure from below, the expanded economic role of the state could be redeployed to help build a more humane and sustainable society.

Indeed. It has the option of doing that because HSBC Group plc has plenty of cash globally (and it presumably believes that in the long run, the UK business has strong enough recovery prospects that retaining 100% of the risks and rewards is a good idea. Which I guess is fairly promising news for UK taxpayers on the value of their investment, given that HSBC is generally rated as quite competent at understanding Things And Stuff).

At the end of the day, whether these firms go through a “nationalized” phase or not, we will have even more concentration in key industries. The surviver firms will not only be “too big to fail” but will be guaranteed not to fail.

This is in contrast to the days when we had regulated monopolies like AT&T, where their profits were regulated and more like the 1870’s when the railroads set their own rates and owned their own politicians and were granted eminent domain.

The problem is that favored monopolies are inefficient, not innovative and suppress innovation by preventing new firms from entering the market. Other countries which will not be making the same mistakes can be expected to out innovate and out compete us. Welcome to the end of the American branch of the British Empire..

The UK isn’t nationalising either, it seems. HSBC says it will be using internal funds to recapitalise HSBC Bank plc.

Delia: I still fondly remember a Steve Bell series from the 1998 financial crisis (Russia default, LTCM collapse etc) about lean times at the “Eurobond factories”.