Mangled Thoughts

Not that this is rare for Bolt, and the problem is:

Andrew Bolt damages great causes, because he doesn’t bother with those who can set him straight.

Pratt is not a criminal. He doesn’t bash up old grannies, threaten others with violence, nor does he defraud anyone. All in all, he’s a thoroughly decent man who happens to be a successful entrepreneur. He is a pratt though, but for entirely different reasons:

- Embracing the Green’s lie of global warming and trying to make Visy compliant with their cultic ‘environmental demands’ is a major mistake that is damaging and not only to his company. The reason for this problem is the same as why for no reason at all he has been put through a wringer by Samuel and the ACCC:

- Instead of surrounding himself with PR flunkeys, clueless in economics lawyers and, perhaps, relying on advice from the screwballs in the IPA and CIS, he needs guns to advise him and fight the ACCC.

Perfect competition is the assumption of the politicians, their advisers, apparatchiks and bureaucrats. It is the assumption of the risible Australian Competition and Consumer Commission. Under Fels, the ACCC, as Brookesnews reported on, fined a small trucking firm, then newly formed, for establishing an ‘illegal’ cartel’. Perfect Competition is the pin of ‘trust-busting’. What is this?

Breaking up efficient firms, eliminating genuine competition, and also as a protectionist measure as in the case of the US Sherman Act. The US Stalinist Democrats resorted to this ‘Act’ in a brazen attempt to break up Microsoft.

What also does not occur to Bolt is, ‘anti-trust’ - ‘anti-monopolistic ‘law’, besides an assault on efficient firms and investors’ capital employed in them, is also an attack on consumers. It’s an attempt to destroy production of goods consumers demand, in quantities they demand, and at prices they value them. It is not a measure that improves competition but destroys it. Everyone, Bolt, ends up the poorer for it.

There is, certainly in Australia, an element of schizophrenia involved, reflected in the ACCC’s pursuit of also major supermarket chains and oil companies (viz fuel):

1. Companies should be punished for ‘predatory pricing’. The line is : companies that supply at prices lower than others do (can) are engaged in predatory pricing to knock out other firms. The problem with this is, predatory pricing would mean companies are running at loss. This does mean:

Companies knock out competitors by liquidating their own capital. That’s right, they achieve the feat by destroying themselves. Shareholders don’t hire entrepreneurs to do this. They hire entrepreneurs to serve customers and that means employing capital efficiently as stated above.

2. Companies are to be pursued if they are deemed to be extracting high prices. Higher than what, pray tell? Samuel and all those addicted to ‘perfect competition’ have no grounds to say what is pure economic profit.

Besides, if such profits occur entrepreneurs enter and knock out pure economic profit. The assumption has nothing to do with the market processes by which goods are priced. It is capricious. Secondly, it means companies again make profit by extinguishing capital - capital is sunk in market decided scale, but then they proceed to cut production in order to make profit.

3. From perfect competition, suppliers must act blind. The perfect competition brigade doesn’t see that this too contains an obvious lunacy: Prices are signals for entrepreneurs and investors in allocating capital, and to discover what to do and how to do it. By the same token, entrepreneurs will not drive capital into production of certain goods if an existing firm(s are) is already doing the job - not unless they wish to wipe out what they are entrusted to drive, capital.

4. From perfect competition, concentration (how many firms in a market) defines whether it is competitive. This is why, presumably, breaking up large, efficient firms makes markets more competitive:

Once you have every man and his dog producing, say, bottles in their living room, then the market is competitive. This was done under Mao, with horrifying force for the victims of this thug and his henchmen. What Samuel also desires is a great leap backwards.

These notions are truly bizarre that it is difficult to understand how supposedly rational adults could ever entertain them. Then again, they do hold to the root falsehood of perfect competition.

A competitive market is one in which entry is free. Governmet doesn’t hamper it with ‘regulations’ and other burdens, including overt taxes, that act as barriers to entry. There it is, only Government can impose monopolies and monopolistics markets. This is why until the 1930’s monopoly was never discussed; all knew why they can occur, government coercion only, never in free markets. Perhaps Samuel should pursue the Government.

Turning to Samuels:

In December 2005 the ACCC pursued Pratt for entering ‘cartel’ arrangements with Amcor.

In October 2007, ACCC accused Richard Pratt of price fixing, cheating customers and companies of approximately $700 million through cartel arrangements with Amcor. In other words, defrauding many Australians.

Slater and Gordon are using the ACCC’s number to pursue Visy and Pratt. Apart from a mystic ball, there is no basis for this figure. But then the defrauding accusation is entirely baseless anyway.

The ACCC then proceeded to assert that Amcor, Visy, and Pratt are guilty of breaches of ‘law’ and concealed their hideous crimes. Except for one thing, they did no such thing, and legalese is not the rule of common law, contrary to that statist ignoramus Peter Costello.

The ACCC then asserted Pratt lied to them, though they in fact supplied no evidence of this. We see Pratt’s real crime: he didn’t stand up before this star chamber and orate a ‘confession’. This is Australia, not Maoist China.

For the rest of the explanation, all one has to do is cite a couple of articles, one includes a shocking case study. Though, the persecution of Pratt, Visy, and Amcor is also thoroughly disgusting. It is another tribute to the witless illiterates of the comatose “Right” and their clunker tanks the Centre for Independent Studies and the Institute of Public Affairs, whose capacity for entertaining the bizarre has no limit.

Anti-merger laws are bad for the Australian economy, Mr Barnaby Joyce

A good way of looking at mergers is to study cartels. Let us, for instance, go back to 2000 when the express trucking company McPhee and four of its executives were fined $4 million in a federal court for price collusion. The charges had been brought by Professor Alan Fels…

What Fels and Samuel treat as wicked is volitional actions, which bring costs down and makes firms more efficient and this means lowering prices. Today, Brookesnews has an aticle up addressing the ACCC’s and Samuel’s persecution of Pratt:

Monopoly and free markets: the ACCC’s Graeme Samuel gets it wrong

Jackson gives a sharp contrast between Fels and Samuel on the one hand, and George Stigler who was once addicted to the perfect competition fiction. Stigler had an epiphany, and rebuilt his intellectual foundations as an economist. Jackson draws out more bizarre contradictions the perfect competition fiction entails and in terms of its extension, monopolies and cartels.

WIthout realising it, in joining the ‘let’s get Pratt’ hysteria, Bolt is also calling for the overthrow of free market action and, with it, damaging consumers considerably.

Samuel is also engaged in a witchhunt against oil companies and supermarket chains. The second is also being driven by protectionists mounting a vicious campaign which also damages consumers. This is another attack on consumers who support what the chains are doing by shopping in their stores.

On the announcement of Samuel as head of the ACCC, he was enthustically praised by mainstream media economic commentators as, in contrast to Fels, coming with solid business experience. They are wrong. He wasn’t an entrepreneur. He was an administrator in business, that is, an accountant.

If Samuel believes he can do better by customers than the chains, oil and supermarket, he should convince investors with a solid case to back him in a new chain. I would be most amused by this, as there is quite a bit involved but:

It is driven by discovering what customers want, uncovering producers who can meet it and these are only two elements of entrepreneuership in the retail chain business. There is nothing to conclude other than the chains are serving customers, and are competitive. Serving customers is the priority and this has a blunt edge to it too: lose them and the business dies, quickly. Abuse of customers is the forte of meddlers and hangers on, and not entepreneurs.

Of course, Samuel cannot put risk - his money, where his mouth is. [For some odd reason, to suspect, investor’s would also baulk at entrusting their funds to him.] He knows he would be a great loss to Government as one of its super unero Meddlers.

With the above out, there is only one outstanding matter, Bolt’s vicious backhanders to Pratt and Jews. This will be the subject of Pt.III.