Why Do we Have Business Cycles?

Using that logic, everyone working 8 hours a day should be paid the same amount. The nurse that assists in surgery should be paid the same as the surgeon, and the janitor that cleans up after.

 

Basic error! Only something like marginal cost is theoretical. To suggest supply and demand is theoretical means you're either accepting that all firms have price-making power (good luck with that!) or you're rejecting the whole approach for the labour theory of value

You're merely saying that the entrepreneur has price making power. Complete nonsense of course. Any failure to deliver the market price would lead to their elimination.

Now of course supply & demand doesn't actually determine prices. Cost-plus pricing is a more reasoned understanding of firm behaviour (which of course is also reliant on market power, with that power leading to instabilities for the competitive sector). However, its interesting how little you fellows know about it.

Again, the argument is simple: if they get prices wrong they will be driven out of the market. They have, according to supply and demand, no price making power

 

Privilege is where government violates the natural rights of most citizens, without paying compensation, but allows some citizens to do what all the rest are forbidden to do. Or to put it another way, a privilege is something you can only have by depriving everyone else of what they otherwise would have had, had government not stepped into the scene.

Government issues the titles, and protects them.

Disagree all you want, but without government there can be no landowners, and land will not have an exchange value.

The protection that government provides is what makes it “ownership”. Without that protection, land can only be in possession, and the possessor would bare the cost of protecting his claim. Without government nobody would buy land, people would simply kill for it, and then defend it to the best of their ability.

 

You obviously do not know what privilege is. Bill Gates (Micro$oft) has enjoyed patent, copyright, and corporate protection from the beginning, all three of which are government-issued privileges (those protections didn’t exist until government invented them). Google and Facebook are the same scenario.

So you don’t waste anymore of our time:

“From its Latin origin, a privilege is a "private law," a law with someone's name on it, a law that permits someone to do what others may not do. We should agree to eschew privilege.” -- Nic Tideman

There is not a rich person in existence, in the whole world, who does not own (directly or indirectly) a piece of government-issued paper, a paper with his name on it, that allows him to do what others are forbidden to do. Try again.

 

I'll agree with this 100%. I'd also point out that government first grants itself such privilege, and then extends this privilege to other parties.

I disagree. Government takes property from people all the time.

Property protection and dispute resolution can be accomplished by other means than coercive, monopoly government.

 

Do you think those companies would not have existied but for government? Did the early railroad need government - or just a private contractor - the Pinkertons.

Are all 8 million + patents protections for the fat cats? Or, do patents protect many small companies from big ones?

 

The vast majority protect the fat cats, yes. They are used to prevent smaller companies from providing similar services.

 

With very few exceptions, I can't stand patent law or copyrights, it stifles innovation. My only exception is pharmaceutical where the cost to produce 1 new pill can be in the billions, while the price to copy it is tiny.

Patents and copyrights are government issued monopoly rights that allow giant profits to be made purely from rents.

 

I don't see a problem with patents and copyrights, but there is a problem with the current effectively unlimited duration of such patents.

Patents give the developer of a new technology an opportunity to profit from it. They actually encourage new technology because a patent ensures that the person who develops that technology will have a chance to get something for it before other people start copying his idea.

On the other hand, after a reasonable amount of time that patent should expire. Then others should have to opportunity to build on the technology of that patent to take things even further. A duration of about ten years would give a developer plenty of time to implement his ideas and earn a good profit from the idea. After that the technology could be released to the public domain, allowing other people to develop further innovations based on what that inventor came up with. It would also encourage that inventor to continue development and possibly bring something new into the market to keep his income up.

 

LOL, thats right, there is no cycle, only eternal poverty with a small very wealthy ruling class. Learn about the USSR, China, North Korea, or Cuba. Planned economies don't work.

 

You think everything is easy except pharmaceuticals? There are many products that take years of time and many man-years to develop and bring to market. An airliner structure, the engine that powers the airliner, the software that controls the engine, the flight software that controls the airplane, the navigation software that determines the positon of the aircraft, the inertial measurement unit that measures the rates and accelerations. Each one of these is a huge investment involving vast amounts of corporate intellectual property. In fact, much of the knowledge that goes into these products is never patented because patents are open to the public and competitors. The algorithms in control and navigation software in particular are never patented or published, and the software is very strictly controlled and protected.

Thats just one part of one industry. Automobiles probably have their body of knowledge that has taken decades of experience to develop, most industries do. Why do you think industrial espionage is such a major issue? If everything in the world was "open source" we would never progress beyond the basics.

 

yet another duplicate post

 

Nope, but very few things have the same gigantic margins between the first product and the clones.

Hogwash, I'm a software dev. practically everything made these days is built on existing platforms and frameworks. Besides, somehow in lieu of copyrights and patents java and firefox exist... your narrow minded view of the profit motive doesn't explain that.

Reality objects: wikipedia, java, eclipse, apache, android, sugarCRM and openoffice. Emergent order > planning, EZPZ

 

Smart comment! Patents and copyrights should have variable lengths, and the length would determine the level of scrutiny.

Only if there is a huge discrepancy between the cost to develop the first and the subsequent copies. Otherwise it does very little to discourage innovation, we aren't just motivated by profit, we also are motivated by fame, and the admiration of our peers. Firefox and Java are perfect examples of that.

Completely depends on the product, like I said to gator, most development happens on the backbone of someone else's idea and many of those were created without a profit motive.

The market is powered by tacit knowledge, government granted monopolies stifle that. This is really shocking to me, I thought the right wingers on here would be diving head over heels about limiting governments scope.

 

You have no idea what you are talking about. If you actually studied these countries you act like you know about you'd realise how much of an idiot you look like right now.
Under a planned economy the USSR industrialized straight from a feudal agarian society at a rate unseen before in human history.
China's "Great leap forward" failed because of beureucracy. On orders from above they melted metal in bonfires not realizing that it could only produce pig iron, this continued for a long time even once the "leadership" discovered this fact. They followed wierd agricultural practices by a discredited soviet scientist that caused severe famine. Altimately Mao's plan was a huge embarrassment and ecenomic planning was scrapped for state capitalism.
Cuba has a higher standard of living than their capitalist neighbors despite the collapse of the trading partner they were hugely dependent on for things like heavily subsidized petrol - the Soviet bloc. The significance of this is massive, they survived peak oil. Whole industries had to adjust (how do you farm effectively without a tractor?). Cuba went through tuff times and thanks to their planned economy bounced back. They even have free healthcare and regularly send doctors to humanitarian crises. The US still keeps up the long standing trade embargo. The idea that Cuba is poorer than its US colonial neighbors is simply false.
North Korea was pretty much raised to the ground during the war, have had crippling famines and the dictators adhere to the bizzar "Juche" ideology (self dependence) which means that they don't trade with other countries. To top it off the dictators have a military first policy so the people have been stunted and malnourished for generations.

 

What part of that "years of time" was consumed avoiding existing patents? In the business I'm in, it is better than half the development time.

Golden rice was created to minimize blindness due to vitamin A deficiency in 3rd world countries. It almost didn't happen because of the 60+ existing patents. Fortunately, the developer was able to get authorization.

Patents are no longer a reward for innovation, they are a way to stifle innovation. Features are patented, instead of whole concepts. The descriptions are purposely vague to make it harder for competitors to find during patent searches.

 

Its actually difficult to find economies that haven't used economic planning to engineer economic development. Even the Anglo-Saxon economies!

 

Wrong, and how would you know anyway? Are you an expert in all business activites? And how do you define "gigantic"? What margin is big enough to warrant protection? You don't know any of these answers.

If a company spends a decade developing a product, brings it to market, and then a competitor steals it or clones it, the original developer is out a decade of work.

Great, so you are one of those software guys that thinks he knows everything. There are many areas of software development. You dont work in the aircraft or navigation industry, you don't have any idea of the work required to develop those products.

And there is the responsibililty factor with open source. If you use it, you are responsible for the result even if the flaw wasn't your doing. If you use open source code, and there is a flaw that brings down an airliner, its your fault, you will pay the price, not the open source developers. Wikipedia can make a mistake, no harm done. Android can and does make mistakes, but people dont die. Open source works when the consequences are trivial. Join the real world where mistakes matter and there is no open source.

 

Don't forget the tens of millions murdered, millions more enslaved to work the will of the elite ruling class, and untold misery by the entire population. And it was such a great success that it collapsed after 70 years.

Thanks for proving my point.

Its so wonderful every year thousands risk death to leave and come to the US.

The standard of living dropped after the loss of subsidies from the USSR, and it has only begun to increase since Cuba began implementing market based (thats capitalism and free market) reforms.

And thanks for proving my point again.

Hey thanks again for proving my point. Appreciate it.

 

Most the examples you gave are software and I'm a developer. So my knowledge is both anecdotal and based on research, a welcome change from your spew.

Yes, I even gave a solution. That the length of the patent or copyright would be variable based on the size of the initial investment. But you ignored that, at least your ignorance is consistent.

An extremely tiny minority of goods that are produced.

"We stand on the shoulders of giants"

I know enough to know what I don't know. Something you might ought to consider working towards.

Hope your not using FireFox to post this, one of the most reliable browsers on the market. Though, based on what I've seen so far, I'd bet you're using IE.

For Wiki, last test it was as reliable as Britannica, and Android devices constantly make 911 calls, so sure, it can be life and death. Your problem is on one hand you worship "the free market" and cry about "gubmint", and at the same time want them to issue a flat 20 year monopoly privilege. You're at best inconsistent...

The real world​ is quite clearly a concept entirely foreign to you.

 

You understand one part of the software world and extrapolate to the universe. You are like the construction worker who thinks since he frames a wall he can install a marble bathroom because he is in "construction". You are acutally worse because you extrapolate your "software developer" knowledge beyond "software".

"Software" has its subsets each with its own body of expertise. A html/java programer, a flight simulation programmer, a distributed system programmer, and a real-time embedded programmer are all distinct with their own expertise. An expert in one field is not an expert or even competent in the other fields.

Again, how would you know? Because you are a "software developer"? That is supposed to give you insight into everything?

Think of a car, how much work does it take to develop a new one? Ford isnt going to help you, they aren't going to explain all the lessons they have learned over decades of designing and manufacturing cars. It took them decades to figure out how to manufacure reliably, learn all the little tricks-of-the-trade in materials, design, tooling, shipping, software and production. You are going to have to learn those all on your own through trial and error, you are going to have to build a manufacturing facility and make mistakes and learn. After you go through all that education, you are going to want to get a return on your investment, and you will never publish your hard won lessons so others can get up that learning curve for free. And what you have to reveal you will want patents to protect your investment.

Thats how the real world works.

 

Without a doubt, but it's painfully obvious you know nothing about it. You know nothing about the patent sharks who buy up domain space and other ridiculous pieces of intellectual property before they have any value, basically speculating on irrelevant concepts to stifle competition and maximize the amount of rents that can be extracted.

Why do you want monopolies?

Everything, no. The things I get paid to do, yes. Your argument is basically that mechanics no nothing about cars, and everyone can see how stupid it is.

And the vast majority of those training techniques and software would be completely useless to anyone else. Those types of things those seldom get patented. What does get patented is frivolous technologies that prevent entrepreneurs from expounding upon them. We want volatile market disruptions that make goods cheaper and more accessible, that's how progress occurs.

Worst of all, it perverts incentives. It steers the private sector towards patentable goods rather than towards actual innovation. It's basically a rent seeking game.

The world you want is one where industry giants can actively prevent competition and extract monopoly rents on the backs of consumers. You're real world is really a monopolistic dystopia.

 

You watch too much late night tv.

Don't you read the posts? Thats not at all what I wrote.

A mechanic can repair a car, make recommendations for improvement in some areas, a good one can customize a car. That does not mean a "mechanic" can design a car, test the design, plan and build a production facility, develop the manufacturing processes. A mechanic is an expert in his specialty, he is not an expert or even knowledgable in all aspects of the automotive industry.

You are totally wrong there, while some knowledge Ford has is specific to Ford vehicles, there are many aspects of the design and production of a car, and the design/construction/operation of a production facility that are applicable to the general task of vehicle design and production. They absolutely would transfer to other auto companies (and other manufacturing companies in general).

You have one thing right, much intellectual property never gets patented. A patent requires public disclosure of the information, and it is also difficult to defend a patent. Its better, particularly for a small business, not to patent information but to keep it secret. Manufacturing processes and procedures are generally not patented but kept private.

Wrong again.

A musician wants to be paid for his music, he expects a return on his investment. It took him years of hard work to learn his musical instruments, and learn how to write music and lyrics, probably all while living on a minimal income. He doesnt want to publish his music just so everyone can copy it for free.

Same with software. People spend time and money creating a new game, OS, etc. and they want to be paid for their efforts.

Someone developes a new winglet that cuts an airliner drag by 2%, it might have taken years of work to design and test the winglet, they invest their life savings to start their own company to sell their winglet, they want a return on their investment (thats a true story, by the way). They pursue the winglet because they see an opportunity to make money, they feel secure taking the risk because they can be protected by a patent.

Thats copyright/patent law.

Its no different than a law against stealing. Would you be ok if someone goes into your home and takes your tv and computer which you bought with your hard earned money? Thats the same situation with intellectual property. Patent law just protects intellectual property.

 

I plan on making a thread for this topic, but don't want to derail the conversation on business cycles as it's deserving of its own space. I may get around to that tomorrow and will use my response to your post as a jumping off point.