Thread by @PerBylund

Three commonly held but untrue views seem to nicely summarize this "report":
1. Selling your goods below cost is a success strategy
2. Being "big" means you cannot be disrupted
3. Government wants to save us from "market power"

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by @rooseveltinst view original on Twitter

#1 only produces a return if one can then raise prices and still sell big volumes *and* no one else can enter the market. How can firms "protect" their staked-out market space? Without government privilege there's only one way: by offering goods of higher quality at lower prices.

So to be successful, either the firm produces better goods or they're more efficient (lower cost). Neither is much of a problem for consumers. And if they charge prices above what consumers think it's worth, both the good itself and the purchasing power of their money, they fail.

#2 seems blatantly false: small/new firms replace incumbents all the time. Innovations aren't stopped or unable to provide value to consumers because the incumbent firm is "big." Unless, of course, entrepreneurs are not *allowed* to compete (again, that's government).

Wouldn't big, powerful firms just "buy out" entrepreneurs? That's reverse logic that assumes the outcome: they need to become big and powerful first. How? Certainly not by buying out competitors.

But let's assume a firm is "big." They can only buy out entrepreneurs if (a) entrepreneurs are willing to sell and (b) the incumbent makes enough money to buy out the constant flow of entrepreneurs/innovators entering the market. Why is (a) assumed to be true? And why (b)? How

can you make money while constantly needing to pay entrepreneurs what they demand for not entering the market? By charging high prices, is the answer. Okay, but those high prices are exactly what attracts entrepreneurs to compete this market! The argument is simply BS.

So #1 and #2 can logically only be true for one reason: there is undue (that is, uneconomic) influence that a firm has over a market that excludes others. What is such influence? It's not that the firm is so much better at satisfying consumers than consumers, because that's only

ever a temporary state - and cannot by any means be called a problem. A problem consisting of a business making profits because they're "outrageously" providing consumers with a lot more value than others can possibly do?

It will only be sustained until the next innovation: new consumers' goods, new production techniques, new organization forms, new uses for natural resources, etc. You cannot protect yourself from these things running a business.

Except... you can, if you manage to acquire special privileges from a power that places extra-economic limits, restrictions, and rules on economic action. In other words, if government grants a firm with monopoly privilege, innovators are prohibited from challenging it. Only then

can you raise prices above their market level and safely continue to do so - because the cost of inefficiency can be transferred onto consumers. But that's a result of artificial barriers to entry that must be caused by non-economic, mandating action: government.

The "solution" to the problem is the only reasonably logical cause of it. The stated arguments assume the conclusion, which simply comes down to very bad thinking. Or, as is commonly the case, anti-market ideology disguised as an economic logic. #fail