Should monopsonies be legal?

A large part of our current recession is Wal-Mart's fault.

Yes, I said it. WAL-MART IS RESPONSIBLE FOR OUR RECESSION!

Why? Because they are a monopsony to many different wholesalers, manufacturers, and suppliers.

They have a policy that prices must come down on a regular basis (Walmart: Rollin' back prices). Since they are already being made as cheaply as possible, here in America, companies are faced with either shipping their labor to other countries, or having their products removed from Wal-Mart's shelves. Since Wal-Mart is one of their biggest customers, and, in some regions, their only customer, they choose the former.

This is perfectly legal, however, since antitrust laws only affect suppliers.

If Wal-Mart had to compete with others in terms of buying wholesale and manufacturers' direct, they probably would not be in such a position to demand such cheap prices.

Not only that, but, as a monopsony, as opposed to a monopoly, Wal Mart is in a perfect position to demand that farmers sign multi-year long exclusive contracts with Wal Mart to provide their agricultural products for about $15,000 a year, forcing many farmers to get 9-5 jobs outside the house (since they have to buy their own food for the animals, and pay their own land taxes on scores of acres of land each year, they are not left with much). This drives other potential buyers out of the region, as they cannot find anyone who is contractually allowed to do business with them.

I think one way to help the economy get back on track, and help it stay there, is to repeal monopsonies' exemptions from antitrust laws. Wal-Mart can still have their "prices must come down yearly" policy if they want to, but they'll have to compete with the buying policies of the likes of Target, K-Mart, Sears, etc, as well as other specialty stores like Gamestop, Toys R Us, Barnes N Noble, and Best Buy.

Oh, and don't give me any lip about how Wal-Mart's monopsony is a "media myth," because I know better. In fact, I am physically in a region where farmers are subject to a Wal-Mart monopsony, myself, so I know it's happening!

Thoughts?

Since don't like monopsonies, then are you against a single payer health care system too? That would be a monopsony too.

Porchev said:

Since don't like monopsonies, then are you against a single payer health care system too? That would be a monopsony too.

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That's not a complete monopsony, though.

The voters can influence THAT monopsony.

well, Wikipedia defines BOTH as a monopsony. Thanks for the introduction to the term, btw. I had never heard it.

I will have to give it some thought.

But.... I would suggest that depending on how it is structured, Porchev may be right.

If the Single Payer provider is acting as a for profit entity, it would indeed be a monoposony, controlling its cost. It would also be a monopoply, controlling price. We face a very like condition with the recently passed legislation, though there would be a pool of providers rather than merely one.

If however it is independent, state (and, therefore, in a democracy, buyer) regulated and nonprofit, then it merely acts as a an accounting mechanism and conduit between seller (doctor) and buyer (patient) and so would not be in a position to control either seller or buyer cost.

Walmart is not the only resource for the products it sells and so can control ITS purchase price, but not the price of the products in general - as such, i dunno if it actually qualifies as a monopsony.

they are manipulative of their providers, customers and employees, though. that is certain and i would step not into a Walmart to use the toilet.

geo.

middleagedgamer said:

Wal-Mart can still have their "prices must come down yearly" policy if they want to, but they'll have to compete with the buying policies of the likes of Target, K-Mart, Sears, etc, as well as other specialty stores like Gamestop, Toys R Us, Barnes N Noble, and Best Buy.

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Um, that already happens.

Dav said:

Um, that already happens.

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Not in some regions, it doesn't.

I live in one of those regions, myself, so don't go saying bullcrap that you know absolutely nothing about.

There is nothing wrong with a monopoly as long as all companies in that particular market segment engage in fair competition.

megaprogman said:

There is nothing wrong with a monopoly as long as all companies in that particular market segment engage in fair competition.

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Dude, do you even realize the crap that you just typed?

Go and read about monopolies, and you'll see just how stupid that is.

middleagedgamer said:

Dude, do you even realize the crap that you just typed?

Go and read about monopolies, and you'll see just how stupid that is.

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There's no need for the aggression!

I generally agree with you. I think monopsony should be challenged through regulation in the same way that monopolies are. Here in Europe we have the exact same issue as you outlined relating to Walmart. Tesco in the UK, Carrefour and Auchamps in France and Spain behave in the same dictatorial and uncompetitive manner as Walmart. The impact of this behaviour is to reduce their shelf prices in the urban areas where their stores are based and seriously reduce the income of the small and medium-sized suppliers in the rural areas where the produce is grown. This increases rural depopulation because farming families simply cannot exist on the money they now receive for their crops. Add to that that they don't have ready access to these megastores and the low, low prices that they themselves are susidising!

This is a dark and dysfunctional side of 'free market' economics that no one wants to recognise or remedy because to do so means rising food prices for town-folk, i.e. the majority of voters.

I DO NOT shop at Walmart.......
I suppose the fact that there isn't one in Seattle helps.....

Partisan said:

I DO NOT shop at Walmart.......
I suppose the fact that there isn't one in Seattle helps.....

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No Walmart in all of Seattle? They have a store in almost every British town over about 30,000 people. There they are called Asda and almost as bad as the evil Tesco!

I see no problem with a monopsony, like Walmart, that wants to control its price. There is no need of regulation or anti-trust legislation in this area. That they squeeze down the price for suppliers to the point where suppliers cannot survive merely tells me that there is too much supply. Some of them need to find new careers. This should not be used as an opportunity for government to stick its nose in and artificially control price. Of course they are already doing so in the agricultural sector and they should stop subsidizing farmers.

This urge on the part of progressives to use the government to regulate the free market is destructive and unhealthy.

reefedjib said:

I see no problem with a monopsony, like Walmart, that wants to control its price. There is no need of regulation or anti-trust legislation in this area. That they squeeze down the price for suppliers to the point where suppliers cannot survive merely tells me that there is too much supply. Some of them need to find new careers. This should not be used as an opportunity for government to stick its nose in and artificially control price. Of course they are already doing so in the agricultural sector and they should stop subsidizing farmers.

This urge on the part of progressives to use the government to regulate the free market is destructive and unhealthy.

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Yet conservatives (and others) are quite keen on the idea of energy self-sufficiency, which would entail developing sources that are more expensive than those available from overseas, in order to reduce US dependence on foreign imports. How does that not hold good for food production?

If domestic farmers are being forced out of the market due to retail price wars, you'll find that more and more food must be imported to fill the supply no longer coming from domestic agriculture. Why is importing more and more food more acceptable than importing oil?

TBH there is no such thing as a free market. Name me a commodity and I'll name you a body or a set of agreements and regulations that controls that trade. Or perhaps you CAN come up with an area of commerce that is entirely unregulated and that operates purely according to Smithian 'hidden hand' principles.

Andalublue said:

Yet conservatives (and others) are quite keen on the idea of energy self-sufficiency, which would entail developing sources that are more expensive than those available from overseas, in order to reduce US dependence on foreign imports. How does that not hold good for food production?

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Self-sufficiency yes, but developing more expensive sources not so much. Conservatives want to access domestic supplies that are marked off limits. (I am not a conservative). I want to develop CNG for transportation. We produce plenty of food.

If domestic farmers are being forced out of the market due to retail price wars, you'll find that more and more food must be imported to fill the supply no longer coming from domestic agriculture. Why is importing more and more food more acceptable than importing oil?

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We do not need to import food supplies. Subsidies keep food prices artificially low for industrial food suppliers.

TBH there is no such thing as a free market. Name me a commodity and I'll name you a body or a set of agreements and regulations that controls that trade. Or perhaps you CAN come up with an area of commerce that is entirely unregulated and that operates purely according to Smithian 'hidden hand' principles.

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What is TBH?

I agree there is too much unnecessary regulation. Some is good to protect things like the consumer and the environment. Too much distorts the "hidden hand".

Andalublue said:

No Walmart in all of Seattle? They have a store in almost every British town over about 30,000 people. There they are called Asda and almost as bad as the evil Tesco!

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Not a one!.....
I think there is a Sam's Club though....
I think that's for the elite group of Walmart shoppers......:mrgreen:

TBH there is no such thing as a free market.

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no, there is not, and there never really was.

but what we overlook (or, more properly, what most of us never realize) is that the controls we apply now are a response to the controls that the "market" originally placed on itself. Hell, Adam Smith, was still alive and kicking when the industrialists and Capitalists began to see that a literally free Free Market was unworkable. Gluts resulting in prices so low as to threaten the ability to make profit and shortages which limited the ability to sell at all were rampant at the birth of European capitalism. Competition itself came to be seen as an enemy of business... at least to those who lost.

It was the capitalists themselves that created the first regulating mechanisms, instituting the same cartels and monopolies of the mercantilists that controlled finance for hundreds of years prior - setting fixed prices and maximum sales quotas to sustain high prices and suppress competitiion. Though technically illegal, British Common law obliged the victim to bring suit against the corporation. It requires little imagination to see how fruitless this was.

An even more dangerous mechanism was Trusts.

"state regulation" as a response to this internal regulation is a product of Liberalism as In the Sherman Anti-Trust act (1890).

no, regulation is not some satanic conspiracy. it is consumers protecting themselves.

geo.

note: TBH = To Be Honest

Geo Patric said:

no, there is not, and there never really was.

but what we overlook (or, more properly, what most of us never realize) is that the controls we apply now are a response to the controls that the "market" originally placed on itself. Hell, Adam Smith, was still alive and kicking when the industrialists and Capitalists began to see that a literally free Free Market was unworkable. Gluts resulting in prices so low as to threaten the ability to make profit and shortages which limited the ability to sell at all were rampant at the birth of European capitalism. Competition itself came to be seen as an enemy of business... at least to those who lost.

It was the capitalists themselves that created the first regulating mechanisms, instituting the same cartels and monopolies of the mercantilists that controlled finance for hundreds of years prior - setting fixed prices and maximum sales quotas to sustain high prices and suppress competitiion. Though technically illegal, British Common law obliged the victim to bring suit against the corporation. It requires little imagination to see how fruitless this was.

An even more dangerous mechanism was Trusts.

"state regulation" as a response to this internal regulation is a product of Liberalism as In the Sherman Anti-Trust act (1890).

no, regulation is not some satanic conspiracy. it is consumers protecting themselves.

geo.

note: TBH = To Be Honest

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I was just about to post a response to R'jib and then read your post. I really can't think of anything to add; you put it succinctly, clearly and accurately. Thanks, I was going to pull my old college economics texts off the shelf, blow off the dust and get down to it. Now I can happily go back to discussing the Rev Hellhound's dinner plans. :lol:

Just a few brief points:

1. I didn't even know the term "monopsony" existed prior to reading this thread. Thank you, middleagedgamer, for expanding my vocabulary.
2. I'm still feeling a little sheepish. Until I got past the first 3 or 4 posts, I thought "monopsony" was a misspelling that others had taken up as a joke.
3. I'm not a big fan of WalMart, but I'm not entirely certain that they have any actual responsibility for the recession. WalMart stores, just like Save-a-Lot and Aldees, give us poorer folks venues in which to purchase what we need with the limited funds we've got.
4. That said, the huge influence of large corporations like WalMart suggests to me that, while the free market is a powerful thing, there is such a thing as "too big."

TacticalEvilDan said:

Just a few brief points:

1. I didn't even know the term "monopsony" existed prior to reading this thread. Thank you, middleagedgamer, for expanding my vocabulary.
2. I'm still feeling a little sheepish. Until I got past the first 3 or 4 posts, I thought "monopsony" was a misspelling that others had taken up as a joke.
3. I'm not a big fan of WalMart, but I'm not entirely certain that they have any actual responsibility for the recession. WalMart stores, just like Save-a-Lot and Aldees, give us poorer folks venues in which to purchase what we need with the limited funds we've got.
4. That said, the huge influence of large corporations like WalMart suggests to me that, while the free market is a powerful thing, there is such a thing as "too big."

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Monopsonies have existed for quite a while, they are just as bad as monopolies.

Labor unions, elder medical care and some others.
Usually, it takes government action for a monopsony to exist.

Partisan said:

I DO NOT shop at Walmart.......
I suppose the fact that there isn't one in Seattle helps.....

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Unfortunately, many suppliers (you are not a supplier if you SHOP there) do not have that choice. It's either Wal-Mart, or no one.