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I Oppose Aam Admi Party

Discussion in 'National Politics' started by tilopa, Nov 26, 2012.

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  1. Marqueur

    Marqueur Peaceful Silence ELITE MEMBER

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    [​IMG] for sparing us ... :yes:
     
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  2. Kejriwal4PM

    Kejriwal4PM 2nd Lieutant FULL MEMBER

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    You support govt regulation on individual item prices as a solution to cartels, collusion and predatory pricing?! Thats a very impractical and anti-liberal (statist) way of dealing with it. There are tooo many sectors, tooo many companies and tooo many items for govt to keep a watch and cap prices or have minimum prices (for predatory undercutting).

    For example (taken from wiki): Anti-trust law in Minnesota forced Wal-Mart to increase its price for a one month supply of the prescription birth control pill Tri-Sprintec from $9.00 to $26.88. How do you propose that govt can keep a watch on all items in all companies in all sectors?!

    Take paid journalism: The kind of examples reported in the only ever official PCI report are really hard to recognize unless you do the kind of research that they did on the few cases that they traced.

    Like I said cartel, collusion and predatory pricing, in free markets, can happen over an sms, a oral communication over tea etc, and are hard to track.

    So, do you have any better way of addressing these issues in free-market, or is that it?
     
    Last edited: Nov 27, 2012
  3. vstol jockey

    vstol jockey Colonel MILITARY STRATEGIST

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    I had suggested a mandatory audit of such firms/cartels. Cartel causes high price and predatory pricing is done to finish off competition. Both are bad. Just the way Walmart was forced to increase price to ensure that they do not force out the competition from biz to create monopoly.
    A mandatory audit of firms suspected of collusion/cartel/predatory prices will help us determine the exact cost structure of each company and from thr you can make out the problem. This is what most nations do to break cartels. This is a problem of every nation and they all deal with it with firm hand. we too need to do that.
    BTW, The air tkt price is set by airlines themselves, DGCA does not force them to fix it at a particular value but if they go beyond that structure like they did in Oct-Nov, DGCA has powers to force them to stick to fare chart approved byit. But this is never done.
     
  4. Kejriwal4PM

    Kejriwal4PM 2nd Lieutant FULL MEMBER

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    Let me remind you why free-market or privatization is proposed: It is to bring down leakages and corruption in govt sector enterprises (incentives can be taken care of by linking public sector salaries with performance) because the argument is that govt will not be able to find and punish such crimes in an unbiased and efficient way. Now, if your suggestion to curb cartel formation, collusion and predatory pricing in private sector is for government to be a watch dog into nitty gritties of such crimes, then the whole argument of privatization breaks down in the sense that there is no difference between statism and free-markets!

    Actually, even in other countries with strictest anti-trust laws, for every 1 such case that is tried 1000 others are never known at all. Because, like I said, it is hard to fish our such crimes (as hard as fishing out insider trading which can happen by passing a secret over tea or chat). So, it is very very hard to establish such crimes

    There are waaaay too many companies and products, and their cost of production continuously vary everyday, and its difficult to verify and keep a check on prices like it is done for the narrow sector of DGCA. And this is just for predatory pricing.

    Collusion is as hard too. How can you establish that NDTV did a blackout of a non-congress party event because some cong party man met some ndtv guy and said govt will give 10% more ad revenues if it did a blackout. This is collusion and cartel formation across sectors (preventing new political and media entrant) that is impossible to both know about and to establish in courts.
     
    Last edited: Nov 27, 2012
  5. vstol jockey

    vstol jockey Colonel MILITARY STRATEGIST

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    Pls understand that we already have a commission to stop it all. Its a govt watchdog with powers to investigate and prosecute but just like CBI it is not allowed to function. As I had written to you earlier, we do have an excellent system in place but it is not allowed to function. We need policy changes for agriculture only rest of our policies are very good and we only need to remove corruption.
     
  6. vstol jockey

    vstol jockey Colonel MILITARY STRATEGIST

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    it is very easy to verify cost structure thru audits and stop predatory pricing/cartels.
     
  7. Kejriwal4PM

    Kejriwal4PM 2nd Lieutant FULL MEMBER

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    A statist would argue that we already have good anti-corruption laws and CBI, CAG and CVC as watch dogs to oversee corruption in govt sector companies. So, what is the new thing that free-markets bring? Like I said above, incentive for innovation is easy to achieve even in public sector if the salaries there are linked to performance. So, this is not really a differentiator. In public sector, citizens are the share holders just like millions in pvt sector reliance industries. Everything is same except for the argument that free-markets will have necessary checks to curb corruption. But I am saying, while it may curb corruption as we know it, it brings in other forms of "corruption" like collusion, predatory pricing and cartels which are as hard to curb.

    Also, it is not very easy to establish predatory pricing, as you think. There are two things - first is to know about it and second is to dig proof to establish it in courts. Like I have been telling, even knowing about them is hard for various reasons that I have listed earlier. Then, auditing is also not easy. Every company will surely fight tooth and nail in courts to allow a govt auditor to scrutinize its secrets. So, govt should already have that much info to make a strong case to audit. Also, it is exactly things like these that lead to corruption (while it was license permit in nehruvian model, it is audit and blackmail in this model).

    I think we are only going in circles here - while you say eliminating corruption in license raj is hard inspite of laws and CBI/CVC/CAG etc, you say eliminating collusion, cartels and predatory practices in free-markets is very easy through another set of laws and govt depts like competition regulator (which have not worked well even in countries with strictest anti-trust laws). I see more faith than logic in that statement. I think we can agree to disagree here.
     
    Last edited: Nov 27, 2012
  8. vstol jockey

    vstol jockey Colonel MILITARY STRATEGIST

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    Walmart does not manufacture anything. It retails and thats all. In case of predatory pricing, all you need to check is the cost at which it has acquired the stuff and at what cost the original supplier has sold it to other retailers and what is the cost price of the manufacturer. You will get a complete picture of who is doing what in just two days.
    Look it appears to me that you do not have biz background or financial background. You are probably a techi. It is nearly impossible for me to teach you all these dynamics as it took me years to learn it myself.
     
  9. Kejriwal4PM

    Kejriwal4PM 2nd Lieutant FULL MEMBER

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    You are again missing the woods for the trees and fixated on the example/word. I was talking about predatory pricing in everything from retail to manufacturing to services to aviation to farming etc etc.

    It is not so easy to even guess the presence of predatory pricing (leave alone to get court orders to examine company fully). It is because, it is not just only about making loses to drive out competition - it can even be about just maintaining around cost price. Even some fair competitive practices to one can be seen as anti-competitive to others. Moreover, merely selling below cost-price is not seen as anti-competitive. It has to be proven that it was done with a strategy to bring in monopoly (US Federal commission says on its site).

    I will give you one other example from wiki: Due to economics of scale, Amazon might be able to afford free shipping as a way to force out smaller-scale competitors who cant afford such. This can be seen to be valid competitive practice (like in USA) but it also means that smaller competitors will be either forced out or be forced to sell to other bigger players if possible. Also, a new entrant will find it hard unless he has deep pockets to sustain himself through some loss periods. This is exactly why Amazon was asked by french competitive board to remove freeshipping or pay some fine per day basis. Amazon paid fine everyday while continuing to offer free shipping. Note that Amazon was still making profit with free shipping. It may not have enforced text-book monopoly, but it has moved markets towards that even if it didnt undersell.

    Same with Walmart in Germany: Regulators asked it to raise prices of flour, butter, oil, milk and rice. But in USA, Federal commission has not convicted any firm of predatory pricing since 1993 (wiki says so), although Walmart's "aggressive competition" is well documented in USA (because, like I said, what is competitive to one is anti-competitive to another).

    Same with telecom in India - everyone has been undercutting prices (where loss or profit is dependent on economic of scale) in the hopes that the other will blink first. It is good for consumers, but companies will not have enough left to roll out new services (3G has not caught up) and new players with better ideas cannot enter unless he has really deep pockets.

    Same with many dotcom companies - barring a very very very few, rest are all running high just on valuations and are yet to make profits on paper. So, now, any new player needs a VC with really deep pockets to support him.

    And all this is just for predatory pricing. We have not even touched collusion and cartel. Anyway, I will stop here.
     
    Last edited: Nov 27, 2012
  10. vstol jockey

    vstol jockey Colonel MILITARY STRATEGIST

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    Predatory pricing is good for consumer but bad for company health and the company indulging in this game must have really deep pockets.
    As you wrote in your post, the complete chain can be inspected and final price verified. Walmart does contract farming and contract manufacturing. They bring down wastage and increase volumes to bring down the cost. take for example the agriculture. 35% of all food produced in India is wasted. Walmart forces its farmers to use better seeds and thru better supply chain they bring down losses. So even if they pick the entire produce, they have nearly 50% higher volume for same price due to better yield of better seeds and less wastage due to better supply chain activity. This way they ensure better price for farmers and also the consumer. The farmers in Punjab and Gujrat who have done this contract farming for them are the happiest lot as they have no worries. walmart even pays them advance to go for higher yield, disease resistant seeds.
    All these activities can be quantified and a real value arrived at thru audit.
    India has a p[opulation of 1.21 billion which is expected to rise and stabilise at 1.65 billion in 2040-2045 and start reducing after that. Which means about 35% more people will be added. We are self sufficient today with nearly 35% wastage. If we can just reduce this wastage, we are already self sufficient for 2045 population of 1.65 billion.
     
  11. Kejriwal4PM

    Kejriwal4PM 2nd Lieutant FULL MEMBER

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    Predatory pricing is good only in the short run. In the longer run, it establishes oligopoly and serves as a huge barrier to new entrants with new ideas and news value creation. Prices can also increase beyond what was earlier since secrets of collusion and cartel formation are better preserved with fewer player (oligopoly). Predatory pricing on supplier side leads to increased price for their produce initially, followed by decreased price. There is even a paper that shows how the price at farmer's gate had initially increased few decades back but has started falling, but even I cant say for certainty that it is due to predatory pricing or collusion of retailers. Like I said, everything from defining these crimes to suspecting one is almost impossible to do (leave alone establishing it later, through audits).

    Thats why I earlier said I am not fully convinced (rather puzzled) by arguments that eliminating corruption in license raj is hard inspite of laws and CBI/CVC/CAG etc, while eliminating collusion, cartels and predatory practices in free-markets is very easy through another set of same laws and another set of same govt depts like competition regulator etc (which have not worked even in countries with strict anti-trust laws).

    As for the utility of retail giants in farming, I am fully for it (with the rather academic/naive assumption that there wont be predatory pricing, collusion etc). That is why I disagree with parties like BJP, Communist party, Mamta etc organizing bandhs, stalling parliaments and organizing protests on this!
     
  12. Marqueur

    Marqueur Peaceful Silence ELITE MEMBER

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    pls dont insult techi's by calling K4PM one :sad: ... im a techi ... i sufficiently understand what ur saying ... i'll say u have used layman's language to explain business dynamics ... if some one had closed his eyes n ears and babbling around you or me cant help it ... :cheers:
     
    Last edited: Nov 27, 2012
  13. vstol jockey

    vstol jockey Colonel MILITARY STRATEGIST

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    Bro you must know that there is corruption even in the court of Lord Indra. The word Biz is about exploitation for gains. How can you do biz with no gains???? Profits are the essence of biz. What you are trying to create thru a socialist or centerist economy is to stop profiteering which means that you are killing private sector. If I have my way, I wud like to earn 300% profit or even more if I can. Do you remember PL-480 from USA? Now-a-days its called Dowry. What we got with it was kharpatwar. A kind of destructive grass which kills crops. It came as seeds with the red wheat which came from USA in 1967-68.
    Try to find a balance rather than disturb the whole balance.
     
  14. vstol jockey

    vstol jockey Colonel MILITARY STRATEGIST

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    I am a techie myself and thought that all techies might understand my sentiments. if you know how to create, you need no other qualification. In your own class, only about 10-15% must have opted for tech. That explains the brain power of techies.
     
  15. Kejriwal4PM

    Kejriwal4PM 2nd Lieutant FULL MEMBER

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    We are not talking about gains and profits. We are talking about anti-competitive acts like collusion and predatory pricing.

    My whole aim through this discussion was to make you realize that an intelligent, mixed (govt-private) and centrist (socialist-capitalist) view is needed rather than total privatization and total capitalism, since there are problems in free-markets too and so it cant cure all problems (it only changes the issue from corruption to anti-competitive behavior). A related aim of me was to show you how far-right capitalism like abolition/reduction of corporate tax is deeply flawed.

    It is in these contexts that one should appreciate when AAP says that it is not in favor of failed concepts of nehruvian socialism of near total govt-control, but is neither in favor of total privatization in all sectors. It is also neither in favor of total socialist economy nor in favor of total capitalism. It is mixed and centrist.

    @Marquerer: Cr*ped alright? Now, scoot! :D In all this discussion your only contributions have been two scoops of cra*p here and there :))

    I used to be a technologist, but now I am into science/physics.
     
    Last edited: Nov 28, 2012
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