Tuesday, April 17, 2012

Word of the Day: Monopsony

Interesting, in an article by Stross about Amazon where he takes some swipes at libertarian thought he mentions a delightful word: Monopsony

A monopoly is where customers have only one seller.
A monopsony is where sellers have only one customer.

The defense industry is like that. Electric Boat can only sell their submarines to one entity: the US Government.

And what does Stross view on monopsonies?

Monopsonies suck for their suppliers because the suppliers are systematically starved of profits by the middle-men running the monopsony. Which can lead to suppliers going bust, and a reduction in the diversity and quality of goods available (via the monopsony) to consumers.

(It's kind of like inflation and deflation in economics. Inflation is bad; deflation, its opposite, is not good, it's simply differently bad. Similarly, both monopolies and monopsonies are bad.)

And the peculiar evil genius of Amazon is that Amazon seems to be trying to simultaneously establish a wholesale monopsony and a retail monopoly in the ebook sector.

Emphasis in original. And my does monopsony not adequatly describe the ills that face defense procurment?

Hmmm, a combination of supplier and customer monopolies eh?

So a system with a dominant middle man that all customers have to partonize, and all suppliers have to sell too.

I wonder what Stross' opinion is of Single-Payer healthcare?

That would be a monopsony/monoploly that is backed by the force of law. Where is is illegal for suppliers or customers to go anywhere else.

Given Stross' Rule 34 has Scotland's Healthcare system surviving (and being one of the few points of light) in a post-indepencende, post-deflationary crash, economic basket case, country... one does wonder.

Though I've looked at the the mental blind spots in Rule 34 before.

And while he does not think State mandation is required for a monopoly to exist, he should realize that state mandation would make a monopoly more powerful, more difficult to remove, and exacerbate the very problems monopolies, and monopsonies, engender.

So put Stross's views on healthcare on the back burner. First Stross, tell us what you really think about libertarians:

I'm not going to lecture you about Jeff Bezos either, although I do want to note that he came out of a hedge fund and he's ostensibly a libertarian; these aspects of his background make me uneasy, because in my experience they tend to be found in conjunction with a social-darwinist ideology that has no time for social justice, compassion, or charity. (When you hear a libertarian talking about "disruption" and "innovation" what they usually mean is "opportunities to make a quick buck, however damaging the long-term side effects may be". Watch for the self-serving cant and the shout-outs to abstractions framed in terms of market ideology.)

So he freely uses the slur "social darwinist" and that very possibility someone could oppose social justice makes him uneasy.

Whle also seeing Social Justice on the same moral plane as Compassion and Charity (is that government enforced charity may'hap?) one wonders what his healthcare views are even more.

Also the irony of him deriding self-serving cant and free market ideology in an article where Stross proposes a free-market solution that would obviously benifit him and his publishers? Delicious.

As for his views on Healthcare, well wonder no more. Stross is against Single-Payer. But the details get a bit strange from there. You see... he's still a big fan of socialized medicine.

Short version for foreigners: the Conservatives are unhappy to be presiding over a socialist healthcare system that works, so they've decided to break it by turning it into a single payer insurance system.

We'll ignore the whole idea that the NHS "works" and that he thinks the Conservatives are reforming healthcare purely out of spite and put a pin in the idea of breaking a socialist healthcare system by turning it single payer.

FIrst let's look at Scotland's system which he's mighty approving of.

Healthcare in Scotland is mainly provided by Scotland's public health service, NHS Scotland, that provides healthcare to all permanent residents that is free at the point of need and paid for from general taxation. Health is a matter that is devolved, and considerable differences are now developing between the public healthcare systems in the different countries of the United Kingdom.[1] Though the public system dominates healthcare provision, private health care and a wide variety of alternative and complementary treatments are available for those willing to pay.

Emphasis added. So... Stross is for a system where one can get most of their medical services paid for by the State, but has the option to pay out of pocket if they want more. But he'll also take care to highlight and mock "measures [that] would facilitate the transition from tax financed healthcare to the mixed financing model of the United States. [{Stross's} emphasis] " saying:

They're not merely trying to turn the NHS into a single-payer insurance system, they're trying to turn it into a copy of the most notoriously bad private healthcare system in the world (as measured by the ratio of inputs to outcomes).

Emphasis his. Can someone tell me how you can have Single-Payer and mixed-public-private financing? That seems mutually exclusive.

So Stross is ardently against Single-Payer. Fine.

He sees Single-Payer as a threat to Socialized Healthcare... huh?

But he's also against mixed public-private financing... save he likes Soctland's system which is a mixed system. What?

Well... at least he's against Single-Payer which is explicitly defined as a monopsony.

However, "the United Kingdom's National Health Service, Australia's Medicare, Canada's Medicare, and Taiwan's National Health Insurance" are also defined as being Single-Payer...

I'm confused.

Eh, just go with Stross being consistent enough to not like monopsony health-care systems. I guess he likes public-private mixes as long as there State pays the lion's share of services.

Would it be rude to point out the self-service nature of wanting a system where those with wealth are still free to buy whatever medical care they want? Or since Stross is also for the state paying "whatever-care" for the masses that gives him a pass?

And apparently, there's a difference between Socialized Healthcare and Single Payer healthcare, and proponents of either tend to hate each other. I guess it'd also be rude to point out how I'm reminded of the Sino-Soviet split and of Trotsky-v-Stalin.

And in a comment here are Stross' thoughs on libertarianism. With this as the summary:

TL:DR; don't trust ideologues who come bearing attractive theories that over-simplify human behaviour.

Which is a fair cop. Though Libertarian has a nice advantage over Leninsm (his contrasting example) as Libertarianism has a strong philosophical dislike of coercive force on the part of the State and Leninsm... doesn't.

His earlier point in said comment about "No true-Scotsman" syndrome being rampant is also spot on.

Some of the other commenters, however, are pretty creepy:

While I have run into Libertarian idealists, none of them have confronted the question of how a society which puts rights up on an altar could be gamed by those who do not have an ideal of responsibility. We're watching this happen in the US right now, (Bill of Rights without a Bill of Responsibilities) and it's quite ugly.

Now there's a man with some real hostility towards the idea of inaliable rights.
Becha he thinks the Heinleist idea of "Service equals Citizenship" is facist though.

And a "Bill of Responsibilities" would be... what? Paying taxes? Obeying laws? Conscription (maybe this guy is an MI fan)? Fealty to the State? Or does he mean social responsibilities? Like charity and compassion... and if you fail to be sufficiently compasionate? What then?

What does the State due to those volatile the Bill of Responsibilities? Hmmm.

At the very least, Stross sees the solution to Amazon's dominance lies not in "there oughta be a LAW" thinking. Back from the first link:

If the major publishers switch to selling ebooks without DRM, then they can enable customers to buy books from a variety of outlets and move away from the walled garden of the Kindle store. They see DRM as a defense against piracy, but piracy is a much less immediate threat than a gigantic multinational with revenue of $48 Billion in 2011 (more than the entire global publishing industry) that has expressed its intention to "disrupt" them, and whose chief executive said recently "even well-meaning gatekeepers slow innovation" (where "innovation" is code-speak for "opportunities for me to turn a profit").

Note that even someone who treats profit as a dirty word can see that State-enforced controls like DRM only serve to prop up "favored companies".

And consider, he is advocating a way for the major publishers "to sell their wares as widely as possible" in order to increase their profits.

Perhaps Stross could explain when profit is bad and when it is good.
I suppose it has to do with how "disruptive" it is and how much Compassion and Social Justice is being used.

Hmmm commenters talking about social responsibilities and Stross bemoaning too much disruptive technology and a lack of charity and compasion. My how... conservative.

On another note, I've enjoyed much of Stross' work. And I've purchased it all via Amazon.

Oh and to twist the knife one last time: Clearly, Stross does not actually think Amazon would reach 100% market share; it would only control enough of the market to have an effective monopoly/monosopy. Due to the low barriers to entry (and lack of the State mandating Amazon) anyone could setup a webpage and sell ebooks.

Granted, in such a hypothetical situation Amazon would have such a domination of the market that it would be able to dictate terms and set market standards. One could sell e-books without working with Amazon but it would be at the fringes of the market. Amazon's size would also put the small players at a disadvantage due to the higher visibility and volume Amazon works with.

Thus Stross is not just against 100% monosopies such as Single Payer, but against 95% monosopies such as what he fears Amazon could become.

Huh... What was that about Scotland's Socialized Medical system. The one Stross likes so much?

Though the public system dominates healthcare provision, private health care and a wide variety of alternative and complementary treatments are available for those willing to pay.

Ahhh yes. Lovely.

Via Glenn Reynolds

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