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Monopolies and Oligopolies do not a Free Market Make

Pretty much everyone (certainly the vast majority of regulators and politicians) have no clue about capitalism. The concept that a “free market” should be allowed to operate is theoretical, based on “perfect competition” (which essentially means zero barriers to entry). Obviously the politicians support, not capitalism (which would require regulation of imperfect markets (and certainly not support consolidation past the point of many competing companies), but the idea that those with the gold make the rules. Natural monopolies (like gas distribution, electricity, likely internet infrastructure…) should be fully regulated companies which then have the infrastructure accessed by multiple competitors (none of which own the natural monopoly - of course).

With some market that is even remotely in the area where a capitalist free market was in place, it is very simple to not have to deal with companies that treat customers horribly (like Verizon, Comcast, Time Warner Cable…) you just chose another company to deal with.

But these companies want to have the government allow them to create a monopoly (or something extremely close) and then claim to be in favor of capitalism (and further make ludicrous claims about what capitalism would suggest about regulation in oligopolistic markets). These ideas is so laughable that if politicians had even a sense of economic understanding they would adopt the appropriate capitalist response (for government).

Obviously, regulation is required as the market moves away from the area of “perfect competition.” When some huge company wants to buy some other huge company (say creating greater than 10% of the market combined) this would be rejected. If the market is a natural monopoly where the free market is not the proper capitalist market (such as one where the government would allow the proper capitalist response to players in the market attempting to break the free market by gaining to much control), then, of course a regulated natural monopoly would take on that economic task. This is not really complicated stuff.
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June 10th, 2008 by John Hunter | 2 Comments | Tags: Economics

Avoid Getting Squeezed by Credit Card Companies

Squeezed by credit card companies

“I was charged an over-limit fee when the interest charge kicked my account over my limit,” said Cressman. When he called his credit card issuer to complain, they refunded the charge. “I was told that in the future I would ‘just have to watch my balance,’” he recalled.

Over-the-limit fees aren’t the only tactic in the credit card companies’ bag of tricks. There are a slew of penalties, fees and other billing practices that can cause consumers to find themselves drowning in debt.
…
But even borrowers who pay their bills on time can fall victim to deceptive practices used by the card issuers and get slammed with rising interest and hidden fees, which have become the industry norm in recent years.
…
many banks calculate finance charges using what’s called double-cycle billing, a confusing practice that averages out the balance from your previous two bills. So if you carry a balance and pay a finance charge one month, you’ll get hit with a finance charge on your next bill as well, even if you’ve paid off the balance.

Then, there’s a practice known as “trailing interest” - another “gotcha” to watch out for, Arnold said. If you send in a payment according to the full amount on your statement, you may find that you still owe a small balance next month. That’s because you accrued interest between the time you sent the payment and when it was posted to your account.

As previous posts have pointed out you really need to keep your eye on your credit card company as though they will trick you out of your money given any chance to do so.

Related: Don’t Let the Credit Card Companies Play You for a Fool - Managing Your Credit Card Successfully - Sneaky Credit Card Fees - Legislation to Address the Worst Credit Card Fee Abuse, Hopefully

May 27th, 2008 by John Hunter | Leave a Comment | Tags: Credit Cards, Personal finance, Tips

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