We kinda knew that there couldn't be any
antitrust smoke without the fire of
market collusion, and sure enough, Sony Optiarc has been joined on the naughty step by Hitachi-LG Data Storage and Toshiba Samsung Storage Technology Corp. As the names should tell you, these are joint ventures involving some of the world's biggest electronics manufacturers, whose American optical drive divisions appear to be under suspicion of fixing prices. We'd have expected Hitachi and LG to wise up after
paying out fines for
LCD price fixing recently, but when you look at Hitachi's stock trading up after this news -- with traders confident any forthcoming fines will be too small to dent the company's bottom line -- maybe "by hook or by crook"
is actually a viable business plan?
posted Oct 27th 2009 5:31AM
that's why capitalism without regulation or oversight only works on paper... There will always be people willing to scheme to extract more profit than they deserve
I don't see why as consumers we can get together and scheme to not buy a product or refuse to pay more than a certain amount, but as companies they can't refuse to sell it for less than a certain amount. The whole system is very one-sided for the consumer and in most cases I take the corporation's side of the argument.
"I don't see why as consumers we can get together and scheme to not buy a product or refuse to pay more than a certain amount, but as companies they can't refuse to sell it for less than a certain amount. The whole system is very one-sided for the consumer and in most cases I take the corporation's side of the argument."
That's an easy position to take when the products are luxuries, but because it's a very slippery slope, if you allow companies to do this with certain product eventually they will do it with all products...necessities.
Competition is the cornerstone of free market capitalism, while price fixing is not!
Actually during economic classes we did once a lot of trials regarding construction fraud. Construction companies 10 years ago used to work together and setup fixed prices. Now after prices were left loose and companies had to offer the best price they could all of a sudden a lot of small companies went broke and only a few big parties were left over. The result is that now the prices actually have risen rather steep after 5 years. End result is that besides temporary a big loss of work places is that now especially the government can´t get good prices anymore.
Competition is one thing yet cut troat competition isnt good either and a good balance in which the consumer pays a reasonble price for their products isn´t bad. You could call it long term greed since short term balances dont profit from these actions.
I agree that unfettered capitalism without some regulation or oversight might stifle innovation, reduce product safety, and reduce corporate responsibility while keeping finished goods prices artificially high. But government intervention into every aspect of every company and their products is not the answer either. Can you possibly argue that the VAT in the EU has made any product safer or expanded competition to the benefit of the consumer?
Your second comment is profoundly pessimistic and intellectual weak - what constitutes the "correct" amount of profit that a company "deserves" to make on their products?
Capitalism doesn't even work on paper or in theoretical models. If you logically inspect the premises on which Capitalism is based and defended, and project out the consequences, you'd see that almost all of the elements of Capitalism are actually detrimental to society and the individual, people as labor is sometimes euphemisticaly referred to.
Having looked at the inherent contradictions within the lie that is Capitalism, especially that of the supremacy of self interest, I can only draw one conclusion... self interest is not in the interest of society, and we cannot logically form into any group larger than a solitary individual and practice true capitalism. True capitalism is therefore a myth and cannot ever exist, because thankfully, we do value at least one other individual more than the profit motive.
Taken another way, the whole fabrication of self interest applying to and being valid for all things at all times is as logical as being consumed with self preservation at all times. You don't live in total fear, and therefore cannot logicaly live in total self absorption. You can, but then it just makes you a misanthrope, which is what capitalism breeds...
But capitalism is insidious... it's so insidious that almost all of the Labor market believes that Capitalists should reap the big rewards while labor is more and more marginalized. Do you not see the idiocy in that position and the brilliance of the mechanism manipulating your thoughts? Labor is taught that self interest is the primary concern, and then makes labor part of the mechanism of control by making everyone complicit in the exploitation / suffering / greed / inequity. There can be no revolution when everyone is complicit and aspiring to the same goal... exploitation of someone else's labor... oh the f*cking irony. THat's why it's tragic to hear people complain about the obscene pensions and benefits the labor unions garnered... hello, how many of you are capital and how many of you are labor? Labor is all the activity that is not performed by the owner / financier... labor is more and more performed by machines.
Labor's position is not self preserving, it's self destructive. So in practice, self interest is taught as a cornerstone of liberation of the individual, and people believe this crap, leading to a situation where Capital has effectively dismantled the collective strength of labor, and therefore made labor much easier to control / manipulate / marginalize, thereby leading to the demise of labor, meaning, failure of self preservation. That's the consequence of jobs being in China right now... to lower your wages here and everywhere, so that the threat of losing your job will make you accept a much lower wage. Presently, the labor market doubled thanks to Nafta and technologies, so your salary effectively got cut by more than half, evetually, because the rate is exponential.
That's why from a logical point of view, Friedman was insanely wrong. He didn't believe in any goodness in people. That's plain Machiavelian. There may be better models on which to base our social exchanges, and still include Money as part of the mechanism... but Capitalism as it's practiced routinely today is not good for humanity. The accumulation and disparity of wealth visible today should make all of this pretty self evident. :)
By the way, in a free market laissez faire system, price fixing and collusion should be legal, because no rules should be placed on capital... no limitations. Morality / ethics are for the historians, not the economists.
@ dlheritage
" But government intervention into every aspect of every company and their products is not the answer either"
I never said anything to this effect. It's always a black and white, all or none thing to people like you.
"Your second comment is profoundly pessimistic and intellectual weak - what constitutes the "correct" amount of profit that a company "deserves" to make on their products?"
I believe the "correct" amount is whatever the market dictates though supply and demand and competition. An "Incorrect amount is one earned through practices such as exploitation of their workforce, price fixing, monopolization etc.
"that's why capitalism without regulation or oversight only works on paper... There will always be people willing to scheme to extract more profit than they deserve"
Capitalism would agree with you on both points. Capitalism requires oversight. Also, Collusion is anti-Capitalistic.
you have to remember that their customer is not you or I, their customer is Dell, HP, etc... equally large corporations that are playing them off each other. These companies sell the vast majority of their production directly to other corporations under contract prices.. what we buy for discount prices on newegg.com is the overrun, the extras contract customers didn't take. The issue that the DOJ seems to be missing is that semiconductor pricing is essentially paying for availability and on-time delivery. THAT is why contract prices are HIGHER than newegg prices.
The DOJ is making the same mistake consumers make that just because the drive is "on sale" online the original buyers were cheated because they paid more. This is econ 101 but the "other side". You may buy one CD rom on sale for $50, so somebody will sell you one cheap after they've made their profit margins, but Dell is demanding GUARANTEES of MILLIONS, the extra cost is the SERVICE of shipping large volumes on time. As Dell demands 1 Million units the price actually goes up for the manufacture to guarantee their entire business for 3-6 months. The "Walmart plan" of crushing manufacturers in order to get drastic discounts doesn't work in the PC industry because the initial investments are many Billions of dollars, this isn't stuff you can replace overnight like making toys or auto parts... CD-rom/RAM/chip makers know what they need as a price per unit and aren't going to lower it just because 5% of their odd-lot product is sold below cost on newegg.
Ironically these same companies were sued not 3-4 years ago because they received "unfair" loans and perks from their local governments and banks and were pricing too LOW to be fair... which is it DOJ? This is basically Dell, HP, Micron and some others got the ear of the DOJ about "foreign companies" picking on them. Thing is that it's only going to get WORSE as HP and Dell slip from the top PC maker spots in ASIA so "happy good customer" status, and best prices, will start going to the home teams like Asus and Acer directly.
I like your writing style Mr Savov.
why am I still up and on engadget?
Isn't it widely known that the Japanese use their closed system economy and backdoor deals with each other to their advantage to destroy foreign industry and competition (for the greater good of Japan). Like how they took tech from the American t.v. industry, copied it then then artificially raised their prices in Japan so they could lower them in the u.s. effectively leaving the American companies to either go bankrupt or just shut down their t.v. divisions.
I thought people watched for this kind of stuff now days? You think it'd be harder to get away with.
Who watches the watchers?
The prices are the same in Japan, just move the decimal point two places over.
Link, it may be widely known, but it's not well known. Ask the average American. They'll (incorrectly) tell you that the Japanese won the TV war because they're more efficient. They simply aren't aware of the destructive tactics that were used.
Btw: Anyone remember the 10-year warranties on some American televisions? No Japanese company ever offered a 10-year warranty.
@ dlheritage
" But government intervention into every aspect of every company and their products is not the answer either"
I never said anything to this effect. It's always a black and white, all or none thing to people like you.
"Your second comment is profoundly pessimistic and intellectual weak - what constitutes the "correct" amount of profit that a company "deserves" to make on their products?"
I believe the "correct" amount is whatever the market dictates though supply and demand and competition. An "Incorrect amount is one earned through practices such as exploitation of their workforce, price fixing, monopolization etc.
sorry for the double post.
now let's talk about China selling things to the world for less than they should cost to make by severely underpaying their workers, having zero safety concerns, etc. And Wal-Mart for empowering them to do such.