A private company makes mistakes. Competition corrects it by either forcing the private company to adapt or driving them out of business. There are issues with that plan when there are not enough competitors.
There also are problems with having too many competitors. For example having much less money (due to lower margins) to hire and pay your employees and creating lengthy processes to ensure quality. Competition isn’t necessarily the best solution or even a good one.
More competition is similar to “defunding” all the competing companies.
Yes. There is literally never enough competition for bean counter arguments to matter. Saying “competition” is the solution to a problem is just a bad excuse to not fix it. In the real world, large organizations make decisions based on political pressure from governments and the public.
The only real competition is for shareholder "investment" and returns.
In the absence of effective external oversight and regulation - clearly a problem across the economy, never mind here - you can guarantee a race to the bottom where only the beans matter.
If the company stops making quality products that usually creates a bonus, because cheap. Lower headcount? Bonus. Union busting? Bonus. Low wages? Bonus. Indifference to worker welfare? Bonus. Cosy revolving door relationship between lawmakers, regulators, and senior management? Mega payout!
The incentives are all aligned towards making payouts for owners bigger, while lowering objective quality of service, worker conditions, and worker pay.
Airbus is less terrible because the EU regulatory regime isn't quite as toothless, and the EU has a very slightly less competitive and exploitative financial culture.
You find the same human-hostile forces right across the economy - from landlords who send rents into an exploding price spiral, to utilities that monopolise infrastructure while investing as little as possible, to pork barrel government spending at inflated prices, to startups whose only real USP is an app and a plan to sidestep existing regulations, to tiny restaurants that expect customers to tip generously, because they're certainly not going to pay waitstaff a living wage.
I think of the WW1 Christmas Truce and wonder how many competitors are able to stop competing for mutual benefit. It's good when competition in war ceases, but it's not good when several "competing" companies decide to cease competition for mutual benefit. If people can do it in the highly charged situation of trench warfare, why can't companies do it to? Could a market with 10 competing companies cease competing for mutual benefit? What about 20?
Competition is not enough. It must be easy for new competitors to enter the market to ensure a nefarious trust doesn't form between companies.
I get what you're trying to say, but the context of the Christmas truces is more complicated than just mutual benefit:
There was a huge disconnect between the leadership of the respective armies and the rank-and-file soldiers dying in the trenches. So it wasn't just "its Christmas, we shouldn't be killing each other", it was also "we have no idea why we are fighting in the first place, and our leaders think it more important that we die than that we win." It was deliberate insubordination to what the soldiers understood was pointless wasting of their lives.
I think the correct analogy is if the workers of Airbus and Boeing both struck because the two companies had both adopted new business practices in the name of business competition, that simply killed workers and passengers without providing either with any kind of competitive advantage.
Not everything is zero sum. The important element is not whether or not it is mutually beneficial to the companies, but whether it is detrimental to some other party.
Price fixing, wage suppression, monopolizing etc are all detrimental to the customer, employees, or other businesses, but it is possible to collaborate or “cease competition” in certain areas for mutual benefit in ways that are not detrimental (and in fact, are also beneficial) to others.
If it's organized, but what if it's just an unspoken rule in the industry? The result would be an unchanging status que with little innovation.
If this were true I'd expect to see industries where innovation usually comes from new companies in the market. The existing companies have stopped trying, stopped competing, and thus you only see innovation from new companies. Do we see this pattern often?
My point is the number of competitors is less important than how easy it is for new competitors to enter.
Comments
A private company makes mistakes. Competition corrects it by either forcing the private company to adapt or driving them out of business. There are issues with that plan when there are not enough competitors.
There also are problems with having too many competitors. For example having much less money (due to lower margins) to hire and pay your employees and creating lengthy processes to ensure quality. Competition isn’t necessarily the best solution or even a good one.
More competition is similar to “defunding” all the competing companies.
Yes. There is literally never enough competition for bean counter arguments to matter. Saying “competition” is the solution to a problem is just a bad excuse to not fix it. In the real world, large organizations make decisions based on political pressure from governments and the public.
The only real competition is for shareholder "investment" and returns.
In the absence of effective external oversight and regulation - clearly a problem across the economy, never mind here - you can guarantee a race to the bottom where only the beans matter.
If the company stops making quality products that usually creates a bonus, because cheap. Lower headcount? Bonus. Union busting? Bonus. Low wages? Bonus. Indifference to worker welfare? Bonus. Cosy revolving door relationship between lawmakers, regulators, and senior management? Mega payout!
The incentives are all aligned towards making payouts for owners bigger, while lowering objective quality of service, worker conditions, and worker pay.
Airbus is less terrible because the EU regulatory regime isn't quite as toothless, and the EU has a very slightly less competitive and exploitative financial culture.
You find the same human-hostile forces right across the economy - from landlords who send rents into an exploding price spiral, to utilities that monopolise infrastructure while investing as little as possible, to pork barrel government spending at inflated prices, to startups whose only real USP is an app and a plan to sidestep existing regulations, to tiny restaurants that expect customers to tip generously, because they're certainly not going to pay waitstaff a living wage.
I think of the WW1 Christmas Truce and wonder how many competitors are able to stop competing for mutual benefit. It's good when competition in war ceases, but it's not good when several "competing" companies decide to cease competition for mutual benefit. If people can do it in the highly charged situation of trench warfare, why can't companies do it to? Could a market with 10 competing companies cease competing for mutual benefit? What about 20?
Competition is not enough. It must be easy for new competitors to enter the market to ensure a nefarious trust doesn't form between companies.
I get what you're trying to say, but the context of the Christmas truces is more complicated than just mutual benefit:
There was a huge disconnect between the leadership of the respective armies and the rank-and-file soldiers dying in the trenches. So it wasn't just "its Christmas, we shouldn't be killing each other", it was also "we have no idea why we are fighting in the first place, and our leaders think it more important that we die than that we win." It was deliberate insubordination to what the soldiers understood was pointless wasting of their lives.
I think the correct analogy is if the workers of Airbus and Boeing both struck because the two companies had both adopted new business practices in the name of business competition, that simply killed workers and passengers without providing either with any kind of competitive advantage.
Boeing and Airbus work together on the CAD standards that they use to build their products.
Ceasing competition for mutual benefit is generally illegal.
Not everything is zero sum. The important element is not whether or not it is mutually beneficial to the companies, but whether it is detrimental to some other party.
Price fixing, wage suppression, monopolizing etc are all detrimental to the customer, employees, or other businesses, but it is possible to collaborate or “cease competition” in certain areas for mutual benefit in ways that are not detrimental (and in fact, are also beneficial) to others.
If it's organized, but what if it's just an unspoken rule in the industry? The result would be an unchanging status que with little innovation.
If this were true I'd expect to see industries where innovation usually comes from new companies in the market. The existing companies have stopped trying, stopped competing, and thus you only see innovation from new companies. Do we see this pattern often?
My point is the number of competitors is less important than how easy it is for new competitors to enter.
I agree, but I'm not sure how that relates.
You said it's illegal, and I claimed it happens all the time, that's how it relates.
Sorry, I still don't quite follow. Can you give an example of companies ceasing competition for mutual benefit?