Minor Thoughts from me to you

Archives for Competition (page 1 / 1)

Amazon Not As Unstoppable As It Might Appear →

Farhad Manjoo:

The Bay Area has become a hotbed for some of the most innovative retailing start-ups.

With Instacart, you can get groceries delivered instantly from big and small supermarkets. With Google’s Express delivery service, you can get household goods from big-box stores delivered on the same day you order. The app Curbside lets users order items from Target, and have them ready when they drive up to a store. And with Postmates, it is possible to order takeout, and pretty much anything else, and have it delivered directly very quickly.

These services all have in common speed and convenience: Because they route purchases from stores, they can often shuttle goods to buyers faster than they are available from Amazon. The prices are even competitive with Amazon, which delivers most of its products, even groceries, from warehouses that are a few hours away.

This entry was tagged. Competition

America Should Be More Like Disney →

I think almost everyone agrees that all levels of government underinvest in infrastructure and maintenance. Here's an argument for turning infrastructure over to a competitive private sector.

No, what makes Disney invest in infrastructure is not happy thoughts. Johnston is in fact clear about this:

The Walt Disney Co. invests in infrastructure because it makes the company money.

The problem with America is that our public infrastructure has been turned over to a fickle political process that is not governed by a rational calculation of cost and benefit, market test and experimentation but by a pursuit of power, glory and advantage that only rarely coincides with the public interest.

America should be more like Disneyland and to do that we need to develop institutions that allow more infrastructure to built by the private sector. Most ambitiously we need more cities as hotels, more proprietary cities.

Here's A Better Idea Than Net Neutrality Knockoffs →

Brock Cusick writes,

My proposal for fixing these problems is fairly simple, and relies on a mix of civic organization and free-market entrepreneurialism. The goal is to break the current monopoly on ISP service held by local cable companies in most of America, force local utility companies to act in the public's best interest, and bring some competition to the ISP business to keep prices low and innovation high.

Here it is.

Require utility companies to lease space on their rights-of-way to at least four ISPs, at cost.

Call it infrastructure neutrality, or open leasing. This proposal should independently provide most of the benefits in changing the Internet companies' status to 'telecommunications service' as mere competition between local firms will discourage them from withholding any service or level of service offered by their local competitors. This competition would thus provide the consumer protections that voters are looking for, while allowing Internet companies to remain more lightly regulated (and thus more innovative) information services.

I like this idea much better than the current net neutrality suggestions floating around. I really want my internet providers to compete against each other for my business. I have far more faith in that competition than I do that we'll get competent regulation of monopoly internet providers.

Exit Matters

Participation in a democracy is not the most important thing to preserve liberty and promote well being. I don't see much value in showing up at school board meetings or town hall meetings or just showing up to vote. It rarely changes anything. Exit is what matters: the ability to say "If you're not going to make me happy then I'll go somewhere else where I'll be happier".

I bring this up because I was recently listening to Russ Roberts' EconTalk interview of Martha Nussbaum. Dr. Nussbaum was arguing that it's enough to participate, that it's enough to have an accountable government that listens to everyone's input.

Why do I say, 'government represents the people'? Look, you do not need to show that you win to show that government is in some meaningful sense, yours. Of course, if you have a vote, some people will win and some will lose. But having the chance to weigh in on those policies is what I'm talking about. In the era when women couldn't vote, well they might often get what they wanted by wheedling their husbands and getting the husbands to give them what they want. But there's a crucial difference--namely, that they are being dominated. The government is not accountable to them. And in the era where women have the vote, it's different. Women don't always win. No, of course not. But no individual wins all the time. That's what democracy is about. But on the other hand, you are in that process. And it is in that sense, yours. Even the Constitution, which I think does, by the way, command the agreement and assent of a pretty large proportion of Americans at some level of generality, you know, there's an Amendment process. So, you can always work at organized work to amend the Constitution if you don't like it, and see how it goes. You can't expect to win, but you can participate in that process.

I understand Dr. Nussbaum's argument about how government "represents the people". I understand the argument but I don't think that it gives government a moral right to control as much of society as our government controls. I think she places a far higher value on the mere process of participation than I do. Her view would seem to say that it doesn't matter if you often lose. The important thing is that you participated, that you had an opportunity to talk, and an opportunity to cast a ballot.

I think the important thing is whether you were able to do what you wanted to do. Were you able to get the education that you wanted? Were you able to get the medical care that you wanted, in a way that you liked? Were you able to use your property in the way that you wanted? Were you able to exercise your skills? Were you able to not only make a choice but to follow through on that choice?

I think the crucial factor is not one of participation but one of exit. I think the crucial factor is that you can not only express disapproval with a policy but that you can go elsewhere, to find a policy that you do approve of. In the private sector, I have this choice. When I don't like the look and feel of WalMart stores, I can exit WalMart and shop at Target instead. When I don't want the hassle of driving 25 minutes to Home Depot to pick up a bolt I need, I can choose to drive 5 minutes to the local Ace Hardware to pick up the bolt I need. When I don't like the fact that Google makes my personal information available to advertisers, I can choose to search the web through DuckDuckGo, a search engine focused on privacy, instead of through Google. If I don't like the way that Mazda designs the control panel in their cars, I can choose to buy a car from Hyundai instead.

In each of these situations, I had the freedom to participate and to give these companies my feedback. More importantly, when they ignored my feedback I could ignore them and choose to fulfill my needs and wants elsewhere. In the minutes and hours of my daily life, I constantly exercise the freedom to exit something I don't like and to move to something I do like. That matters to me far more than mere "participation".

Participation, whether in education or in anything else, is not enough. You must have the choice to leave, when you don't like the way that you're treated.

Complex Napoleon Rivalry Heads for Its Waterloo →

This is a story that's ripped right from the script of a future Castle episode. Max Colchester writes, at the Wall Street Journal, about two reenactors who are fighting over the opportunity to portray Napoleon during a 200th anniversary reenactment of the Battle of Waterloo.

Mr. Samson is sorry that he is slightly less than an inch taller than Napoleon was. But he dismisses claims that Mr. Schneider is the spitting image of the general, saying that his rival's face is too thin to represent the older Napoleon. "Also he doesn't have the right embroidery on his saddle."

Mr. Schneider points out that, at 5-foot-7, he is exactly the same height as Napoleon. He also shares the French leader's distinctive nose. Napoleon "was born in 1769 and I was born in 1969," he says. "All of this makes my job easier."

But Mr. Schneider has been hampered by legal problems. He currently spends two days a week in jail near Williamsburg after pleading guilty to driving under the influence in 2008. He has taken 2013 off from traveling to Europe for re-enactments.

The American hopes to return in 2014, in time to be exiled to Elba. Napoleon was sent to the island off the Italian coast in 1814 after his army was defeated and he abdicated. Mr. Samson says he also wants to be exiled to Elba.

This, folks, is nerdery of a high level. I tip my hat to both gentleman (even as I snicker a bit).

This entry was tagged. Competition History

Moving Beyond Free-Market Minimalism →

The Foundation for Economic Education has an informative article out, regarding what's necessary for a "free market" to function. After I read it, I realized that it explains what I couldn't, regarding how and why markets and competition work.

In a free market, “Scrooge-like behavior” is certainly permissible as long as it doesn’t initiate violence or fraud. But where do the high quality, low price, and innovation we associate with the free market come from? Well, as most economists will tell you, much of it comes from the fear of competition. If you cut corners and charge consistently high prices, even though you may be within your rights to do so, many free-market advocates would rightly point out that free entry and hungry entrepreneurs will tend to keep you in line. That’s important, but it’s not the whole story; not by a long shot.

Honesty and fair play, trust and reciprocity, are principles that FEE has always upheld as crucial parts of the “foundation of economics.” They go far beyond the indispensable but bare minimum of private ownership of property, free trade, and individual self-seeking—or what one might call “free-market minimalism.”

... A chapter called “Murder, Reciprocity, and Trust” in Paul Seabright’s excellent book The Company of Strangers, proposes that we divide society into “calculators” and “reciprocators.” A pure calculator is the economic-man caricature who is ready to act opportunistically (with guile) at any moment. A reciprocator is someone who is going to repay what is done to her, good or bad, no matter what. If someone cheats a reciprocator, she’ll go to the ends of the earth to make him pay; if someone does her a favor, she’s going to return it, even at great inconvenience to herself. A reciprocator keeps her promises.

Seabright argues that even pure calculators would have to pretend to be reciprocators at least sometimes lest everyone, including other pure calculators, shun her. It’s people with a norm of reciprocity, an internalized rule to give tit-for-tat even when you don’t have to, who are critical to the free market.

Note also, however, that if B reciprocates and repays A, A must have first trusted that B would indeed repay her. Trust means here that A is willing to make herself vulnerable to B’s opportunistically not keeping his promise. Trust is the flip side of reciprocity.

But if A is too trusting, calculators will take advantage of her, which gives A an incentive to be a calculator at least part of the time. That’s why Seabright argues that in the real world people have an incentive to find the right balance between opportunism and trust/reciprocity.

... The free market is a great engine of discovery and development because the people in it have the opportunity and the willingness to take chances. Bringing many strangers together who have diverse knowledge, skills, and tastes—which we find markets doing around the world—presents the opportunity. Being willing to trust people we don’t know—new employers, suppliers, coworkers, customers, neighbors, and friends—enables us to take advantage of those opportunities.

Of course, sometimes trusting someone who turns out to be untrustworthy hurts us. But even those unpleasant experiences teach us something: we learn the circumstances under which people are trustworthy or not. That’s valuable knowledge we would never have learned if we were unwilling to trust in the first place.

If we are unwilling to trust when the opportunity arises, if we are mere economizing calculators, we shouldn’t expect the free market nor any other system to develop the complex division of knowledge and labor necessary to achieve real prosperity. The greatness of the free market, however, is that, more than any other system that we know, it enables us to learn and to grow, even as it allows us to flourish.

After the ACA: Freeing the market for health care →

John Cochrane recently wrote about healthcare reform. This is the direction we need to go in, not Obamacare.

First, he talked about the insurance side of health care.

To summarize briefly, health insurance should and can be individual, portable, life-long, guaranteed-renewable, transferrable, competitive, and lightly regulated, mostly to ensure that companies keep their contractual promises. “Guaranteed renewable” means that your premiums do not increase and you can’t be dropped if you get sick. “Transferable” gives you the right to change insurance companies, increasing competition.

Insurance should be insurance, not a payment plan for routine expenses. It should protect overall wealth from large shocks, leaving as many marginal decisions unaltered as possible.

Preexisting conditions, lack of insurance by the young and healthy, and spiraling insurance costs– the main problems motivating the ACA -- are neatly addressed by this alternative. Why do we not have a system? Because law and regulation prevent it from emerging. Before ACA, the elephant in the room was the tax deduction and regulatory pressure for employer-based group plans. This distortion killed the long-term individual market and thus directly caused the pre-existing conditions mess. Anyone who might get a job in the future will not buy long-term insurance. Mandated coverage, tax deductibility of regular expenses if cloaked as “insurance,” prohibition of full rating, barriers to insurance across state lines – why buy long term insurance if you might move? – and a string of other regulations did the rest. Now, the ACA is the whale in the room: The kind of private health insurance I described is simply and explicitly illegal.

He finished by writing about the supply of health care and why we have expensive, low quality options.

So, where are the Walmarts and Southwest Airlines of health care? They are missing, and for a rather obvious reason: regulation and legal impediments.

A small example: In Illinois as in 35 other states7, every new hospital, or even major purchase, requires a “certificate of need.” This certificate is issued by our “hospital equalization board,” appointed by the governor (insert joke here) and regularly in the newspapers for various scandals. The board has an explicit mandate to defend the profitability of existing hospitals. It holds hearings at which they can complain that a new entrant would hurt their bottom line.

Specialized practices that deliver single kinds of service or targeted groups of customers cheaply face additional hurdles, as they undermine the cross-subsidization provided by “full service” hospitals. For example, the Institute for Justice is bringing a major suit8 by a specialty colonoscopy practice in Virginia, which local “full service” hospitals managed to ban.

... The increasing spread of medical tourism to cash-only offshore hospitals is a revealing trend. Why does this have to occur offshore? What’s different about the hospital location? Answer: the regulatory regime.

So, what’s the biggest thing we could do to “bend the cost curve,” as well as finally tackle the ridiculous inefficiency and consequent low quality of health-care delivery? Look for every limit on supply of health care services, especially entry by new companies, and get rid of it.

Employers Opt for Medical Tourism →

Competition is coming to the healthcare system. It's coming very slowly, but it is coming.

In Priceless, I hazarded a guess that employers could cut the cost of hospital care in half by engaging in medical tourism. It’s a variation on what is sometimes called “value-based purchasing” or “reference pricing.” In its pure form, the employer picks a low-cost, high quality facility and covers all costs there. If the employee chooses another hospital, the employee must pay the full extra cost of the more expensive choice. In Priceless, I argued that to take full advantage of the opportunities available, the patients must be willing to travel.

Several large companies are already trying the idea out. As Jim Landers explains:

Wal-Mart Stores Inc., the nation’s largest employer, will jump into medical tourism next year by offering insured employees no-cost heart and spine surgeries at Scott & White Memorial [in Temple, Texas] and seven other hospitals across the country…By using a hospital in the new narrow network, patients could save as much as $5,000 or more…

The hospitals in Wal-Mart’s network — including the Cleveland Clinic and Geisinger Medical Center in Danville, Pa. — have gained national reputations for both quality and value. Physicians and surgeons work under financial incentives rewarding improved patient outcomes.

HSAs force health providers to compete →

John Goodman talks about how HSA's help customers save money and help lower costs for the overall healthcare system. Too bad the Obama administration, through Obamacare, wants to get rid of HSAs.

Megan Johnson, a self-employed single mother in Dallas, had severe pains in her side and back, just below the ribs. Her doctor said it was possibly kidney stones, but a CT scan would be necessary to confirm the diagnosis. Megan's doctor gave her the name of an outpatient radiology department near her home. A call to the hospital revealed her share of the cost would be more than $2,800. Because Megan's health insurance had a $5,000 deductible, she decided to ask some questions: Do I really need this? Is it less expensive anywhere else?

A quick search of HealthcareBlueBook.com confirmed a reasonable price for an abdominal CT scan was about $800 - not $2,800. More online research identified dozens of medical imaging centers - including one next to the doctor's office. The insurance company negotiated price was $407 - a fraction of the initial price the hospital quoted. Megan was able to save nearly $2,400 by simply doing a little research online.

Hospital death-rate measurement method needs adjustment →

How safe and effective is a hospital? It depends and we may not even be using the right metric.

Hospitals, health insurers and patients often rely on patient death rates in hospitals to compare hospital quality. Now a new study by researchers at Yale School of Medicine questions the accuracy of that widely used approach and supports measuring patient deaths over a period of 30 days from admission even after they have left the hospital.

Published in the Jan. 3 issue of Annals of Internal Medicine, the study has wide implications as quality measures take on more importance in the healthcare system, notes Elizabeth Drye, M.D., a research scientist at Yale School of Medicine’s Center for Outcomes Research and Evaluation, who led the research. The study compared two widely used approaches to assessing hospital quality. One approach uses mortality rates of patients who die during their initial hospitalization, and the other uses rates of patients who die within 30 days, whether or not they have been discharged.

Just to be clear, the standard metric is based on patients who died while they were actually in the hospital.

Drye and colleagues focused on mortality rates for patients with heart attack, heart failure, and pneumonia. For these conditions, one-third to one-half of deaths within 30 days occur after the patient leaves the hospital, but this proportion often varies by hospital.

“We were concerned that only counting deaths during the initial hospitalization can be misleading,” said Drye. “Because some hospitals keep their patients for less time than others due to patient transfers to other facilities or because they send patients home more quickly.”

Drye and her colleagues found that quality at many U.S. hospitals looked quite different using the two different accounting methods. The team also found that measures looking only at deaths in the hospital favor hospitals that keep their patients for a shorter length of time.

This entry was tagged. Competition

Book Review: Against Thrift | Shiny Objects →

Megan McArdle artfully skewers an entire genre: books that make us feel bad about buying things.

One of the running themes of the economist Robin Hanson's excellent blog is that arguments like the ones found in these books are actually an elite-status proxy war. They denigrate the one measure of high-visibility achievement—income—that public intellectuals don't do very well on. Reading "Shiny Objects," you get the feeling that he is onto something.

Consider the matter of status competition. Mr. Roberts, like so many before him, argues that conspicuous consumption is an unhappy zero-sum game. But this is of course true of most forms of competition: Most academics I know can rank-order everyone in the room at a professional conference with the speed and precision of a courtier at Versailles. Any competition, from looks to money to academic credentialing, both consumes a lot of resources and makes many of the participants feel bad about themselves. Why, then, does the literature on status competition always tell us that we should redistribute capital gains or inheritances and never tell us that we should redistribute academic chairs or book contracts?

Fantastic.

This entry was tagged. Competition Wealth

What are 'Pro-Business' Policies?

Don Boudreaux talks about the two ways to be 'pro-business':

There are two ways for a government to be 'pro-business.' The first way is to avoid interfering in capitalist acts among consenting adults - that is, to keep taxes low, regulations few, and subsidies non-existent. This 'pro-business' stance promotes widespread prosperity because in reality it isn't so much pro-business as it is pro-consumer. When this way is pursued, businesses are rewarded for pleasing consumers, and only for pleasing consumers.

The second, and very different, way for government to be pro-business is to bestow favors and privileges on politically connected firms. These favors and privileges, such as tariffs and export subsidies, invariably oblige consumers to pay more - either directly in the form of higher prices, or indirectly in the form of higher taxes - for goods and services. This way of being pro-business reduces the nation's prosperity by relieving businesses of the need to satisfy consumers. When this second way is pursued, businesses are rewarded for pleasing politicians. Competition for consumers' dollars is replaced by competition for political favors.

Just for the record, I believe in the first kind of pro-business policies. I'm adamantly, vehemently opposed to anything that involves tariffs, subsidies, or special incentives. Businesses should rise and fall based on only two factors: how happy they make their customers and how well they do at predicting the future and planning accordingly. Businesses shouldn't be succeeding or failing on any other basis.

Obamacare delenda est

A Radically Different Approach to Health Insurance

John Goodman recommends A Radically Different Approach to Health Insurance:

Middle-class families need health insurance to protect themselves from the financial devastation of a catastrophic illness. But many (arguably, almost all) of the most serious defects of the health care system are created by third-party payment of medical bills.

After 5 years of supporting the billing departments of different healthcare organizations (and using my own healthcare), I've come to agree. Increasingly, I want the choice to spend my own healthcare dollars with the doctor of my choice, for the services of my choice, without having to get approval from an insurance company first.

I truly believe that the lack of competition in our current healthcare system is what's killing American healthcare. And we won't see true competition until we stop relying on someone else to pay our healthcare bills. Sadly, Obamacare will only make this problem worse.

Do read John Goodman's recommendation. He describes how you could pay for healthcare yourself without bankrupting yourself.

Obamacare delenda est

John Stossel on health care markets

I should know by now that whenever I try to explain something John Stossel has already explained it better. First, he delivers a great quote about why competition keeps prices low.

In a free market, a business that is complacent about costs learns that its prices are too high when it sees lower-cost competitors winning over its customers.

I posted yesterday about why "exchanges" are worse than free markets. Stossel takes that on too and does a far better job than I did.

... Competition is not a bunch of companies offering the same products and services in the same way. That sterile notion of competition assumes we already know all that there is to know.

But consumers often don't know what they want until it's offered, and their preferences and requirements change. Businesses don't know exactly what consumers want or the most efficient way to produce it until they are in the thick of the competitive hustle and bustle.

Nobel laureate F.A. Hayek taught that competition is a "discovery procedure." In other words, the "data" of supply and demand emerge only through the market process. We need open-ended competition not merely to see which rival is better, but to learn things we didn't know before and aren't likely to learn any other way.

"Competition is valuable only because, and so far as, its results are unpredictable and on the whole different from those which anyone has, or could have, deliberately aimed at," Hayek wrote.

The health care bills are perfect examples. If competition is a discovery process, the congressional bills would impose the opposite of competition. They would forbid real choice.

In place of the variety of products that competition would generate, we would be forced "choose" among virtually identical insurance plans. Government would define these plans down to the last detail. Every one would have at least the same "basic" coverage, including physical exams, maternity benefits, well-baby care, alcoholism treatment, and mental-health services. Consumers could not buy a cheap, high-deductible catastrophic policy. Every insurance company would have to use an identical government-designed pricing structure. Prices would be the same for sick and healthy.

The problem with health insurance "exchanges"

In today's New York Times, David Leonhardt talks about the problem of health care choice. Specifically, the fact that most people don't have any choice. He starts out making a lot of sense.

Health insurers often act like monopolies -- like a cable company or the Department of Motor Vehicles -- because they resemble monopolies. Consumers, instead of being able to choose freely among insurers, are restricted to the plans their employer offers. So insurers are spared the rigors of true competition, and they end up with high costs and spotty service.

But then, discussing the Wyden-Bennett bill, he makes less sense.

In the simplest version, families would receive a voucher worth as much as their employer spends on their health insurance. They would then buy an insurance plan on an "exchange" where insurers would compete for their business. The government would regulate this exchange. Insurers would be required to offer basic benefits, and insurers that attracted a sicker group of patients would be subsidized by those that attracted a healthier group.

The immediate advantage would be that people could choose a plan that fit their own preferences, rather than having to accept a plan chosen by human resources. You would be able to carry your plan from one job to the next -- or hold onto it if you found yourself unemployed. You would never have to switch doctors because your employer switched insurance plans.

The problem with this idea is that it really doesn't offer much choice. Insurance companies are still protected from competition by the friendly confines of a government controlled "exchange". True choice would consist of an open market place where any entrepreneur can offer any product to any interested consumer. The success or failure of the product would depend on one all important criteria: whether or not consumers saw any value in it. Insurers would no longer be able to foist their plans on consumers who don't want them. And entrepreneurs would be free to introduce radical, new products that threaten the current insurance companies.

That kind of free choice wouldn't exist under an insurance "exchange". Each new product would have to be carefully weighed and analyzed by government bureaucrats. Nothing new would be approved unless they determined that it was worthwhile and useful. Existing insurance companies would have a hand in writing the regulations and only products that conform to the current status-quo would be allowed in. Anything that threatens that status-quo would be barred from the "exchange" and never offered to consumers. The end result would be akin to Ford's infamous statement that consumers could buy any color car they wanted -- as long as it was black.

Instead of fostering innovation and creativity in health care, the Wyden-Bennett bill would take the current "insurance" industry and lock it in cement. Consumers would continue to be forced to buy health insurance not health care and bureaucrats would continue to dicatate how, when, and where their health care dollars can be spent.

All of this makes me happy to hear that Wyden-Bennett doesn't have much support in the Senate.

Goliath Doesn't Like to Lose

I've been spending time this weekend catching up on some of the articles that I marked for reading over the last couple of months. This morning, I read How David Beats Goliath by Malcom Gladwell.

He tells several stories throughout the article to illustrate his main points: underdogs have to change the rules of the game.

How?

  • Change the speed of the game
  • Supplant superior ability with superior effort: work harder than the competition.
  • Do what is socially horrifying: "challenge the conventions about how battles are supposed to be fought".
  • Accept the disapproval of the insider's.
  • Be prepared for Goliath to insist on unfair rules -- rules that only benefit Goliath.

Goliath doesn't like to lose. He'll stack the deck and insist on playing on terms that are favorable to him. Your job -- whether in sport, business, or battle -- is to exploit every loophole he gives you, to change the rules as much as possible, and to resist the pressure to conform to Goliath's rules.

Here's a few of my favorite quotes from the article:

What happened, Arreguin-Toft wondered, when the underdogs likewise acknowledged their weakness and chose an unconventional strategy? He went back and re-analyzed his data. In those cases, David's winning percentage went from 28.5 to 63.6. When underdogs choose not to play by Goliath's rules, they win, Arreguin-Toft concluded, "even when everything we think we know about power says they shouldn't."

... David's victory over Goliath, in the Biblical account, is held to be an anomaly. It was not. Davids win all the time. The political scientist Ivan Arreguin-Toft recently looked at every war fought in the past two hundred years between strong and weak combatants. The Goliaths, he found, won in 71.5 per cent of the cases. That is a remarkable fact. Arreguin-Toft was analyzing conflicts in which one side was at least ten times as powerful--in terms of armed might and population--as its opponent, and even in those lopsided contests the underdog won almost a third of the time.

... We tell ourselves that skill is the precious resource and effort is the commodity. It's the other way around. Effort can trump ability--legs, in Saxe's formulation, can overpower arms--because relentless effort is in fact something rarer than the ability to engage in some finely tuned act of motor coordination.

... This is the second half of the insurgent's creed. Insurgents work harder than Goliath. But their other advantage is that they will do what is "socially horrifying"--they will challenge the conventions about how battles are supposed to be fought. All the things that distinguish the ideal basketball player are acts of skill and coordination. When the game becomes about effort over ability, it becomes unrecognizable--a shocking mixture of broken plays and flailing limbs and usually competent players panicking and throwing the ball out of bounds. You have to be outside the establishment--a foreigner new to the game or a skinny kid from New York at the end of the bench--to have the audacity to play it that way.

... The price that the outsider pays for being so heedless of custom is, of course, the disapproval of the insider. Why did the Ivy League schools of the nineteen-twenties limit the admission of Jewish immigrants? Because they were the establishment and the Jews were the insurgents, scrambling and pressing and playing by immigrant rules that must have seemed to the Wasp elite of the time to be socially horrifying. "Their accomplishment is well over a hundred per cent of their ability on account of their tremendous energy and ambition," the dean of Columbia College said of the insurgents from Brooklyn, the Bronx, and the Lower East Side. He wasn't being complimentary. Goliath does not simply dwarf David. He brings the full force of social convention against him; he has contempt for David.

... But let's remember who made that rule: Goliath. And let's remember why Goliath made that rule: when the world has to play on Goliath's terms, Goliath wins.

This entry was tagged. Competition

Where Do You Buy Your Books?

When is a monopoly not a monopoly?

"If Barnes & Noble does buy Borders, we're facing a real monopoly," she said, though such a deal would also be likely to receive regulatory scrutiny. "We would see an initial deep discounting, trying to keep or attract the Borders customers to Barnes & Noble."

Meade argues that Barnes & Noble would gain a "monopoly" position, if it bought Borders. I don't think that word means what she thinks it means. Her quote comes from an article on The Changing Bookstore Battle.

Barbara Meade could not resist a little schadenfreude. After the Borders bookstore chain announced recently that it was exploring "strategic alternatives" -- corporate lingo for "there's trouble" -- the co-owner of the independent store Politics and Prose, which has held on against the chain's cost-cutting competition, took note in her online newsletter.

"We have never been tempted by the allure of corporate imperialism -- invading new book markets, slashing prices, demolishing the competition, and then back to business as usual, poor inventory and poor customer service," Meade wrote, reporting that "Borders announced a shift in direction from selling books to selling the whole business."

While it is tempting to marvel at, or even gloat about, the potential demise of a tough competitor, analysts and publishing industry executives say Borders's troubles are emblematic of an ironic shift in book selling. Large corporate booksellers, once an enemy of the little guy, now have enemies of their own: Amazon.com and big-box retailers like Costco and Target are taking on Borders with even deeper discounts than the chains used against the independents.

Barbara Meade, Amazon, Costco, Target -- it seems like Barnes & Noble would still have plenty of competition, even after buying Borders. What monopoly is Barbara Meade referring to?