[ExI] Usages of the term libertarianism

[Rafal Smigrodzki]

On Mon, May 30, 2011 at 2:18 PM, Damien Sullivan
<phoenix at ugcs.caltech.edu> wrote:
> On Mon, May 30, 2011 at 07:11:37PM +0200, Stefano Vaj wrote:
>
>>    "Barriers to entry" (typically, a given market or profession) would not
>>    be, especially if they are of a legal nature, would they?
>>    I am not sure of other, non-legal barriers, but then I am no expert of
>>    libertarian doctrines about cartels.
>
> Not sure why you're jumping to barriers to entry but no, legal barriers
> like doctor licensing wouldn't be very libertarian.  But that's
> irrelevant to land monopoly like I was talking about.
>
> Non-legal barriers would be high capital requirements, economies of
> scale, and the ability to use price dumping to drive new competitors out
> of business.  Which last is perfectly libertarian.

### Read Sowell on common economic fallacies, including "price
dumping". There has never been a case where price dumping (i.e. using
unsustainably low prices of a good or service to permanently drive out
competitors) was actually proven to occur in a real free market.
Dumping is an invention of propagandists for incumbent industries,
used to rationalize laws restraining trade - in a way, a trick to make
voters shoot themselves in the foot, and pay for it.

I mean, you have to be an idiot to believe the guy who is selling
expensive cars when he tells you that you have to ban cheap cars, or
otherwise in the future car prices will be even higher, don't you
think?

The fact is, the "market" (random guys looking to make a buck) has a
much longer time horizon than even the richest "dumper" (a guy who
thinks he can make money by first losing money and then making it up
on the same product). Yes, in theory, you could make widgets for 10$,
and sell for 5$, stopping all >5$ manufacturers from making a sale.
But, these competitors wouldn't just curl up and die. They could look
at your prices, make a guess about your competitiveness, and decide to
lie low for a while, make other gizmos, have just enough widgets on
hand to keep you from being able to raise prices above their own cost,
while you are hemorrhaging money. Once you run out of cash for
dumping, they would be back, selling at 6$. Of course, they would't go
bankrupt, not all of them, only the weakest ones. The idea that you
can defeat *all* competitors but out-losing them is stupid. And it
takes only one competitor to prevent you from jacking up prices above
market level, which you would need to recoup your losses.

What boggles me is that about 20 years ago I uncritically accepted the
idea of dumping, until I read analyses similar to above. How could *I*
have been so stupid as to believe an inanity?

Which goes to show that one must always be on the lookout for glib
stories, especially the ones that appeal to tribal feelings ("our
manufacturers" being "attacked" by "unfair" aliens, i.e. brown or
yellow people). Even very smart people can trip themselves up on their
own prejudice.

Rafal