patrick.net

I'm not seeing this resulting in any conclusion. Malcolm, with all due respect, you are refusing to engage on objective grounds.

My conclusions, as stated before in earlier threads spanning over a year ago, are:

* The MLS consortium represents a potential source of future anti-competitive enforcement action. It violates a number of tests normally applied to similar environments.

* People misunderstand, or choose to selectively understand, the fundamentals of American Free Market Capitalism. Thus the ridiculous analogies this debate has reached.

* The law is complicated and even most lawyers only understand portions of it. Couple that with the fact many words with legal definitions are overloaded by terms of art from various sciences, which are again overloaded by conventional connotation. Monopoly is such a word.

* The NAR and its MLS consortium will not be regulated in the near future due to practical political reasons. This will not be a vote on whether it is "right" or "wrong", just that it is.

* The free market will eventually have its revenge, if the industry is not regulated first. But not before a spectacular amount of unnecessary economic sacrifices are made at the alter of self-serving inefficiencies and anti-free market behavior.

* There is precedent for everything I've said above.

Ok Randy since I don't like being accused of dodging the point I will go one by one.

Randy H Says:

April 18th, 2007 at 11:50 am
I’m not seeing this resulting in any conclusion. Malcolm, with all due respect, you are refusing to engage on objective grounds.

(How? I am the only one to substantiate my points.)

My conclusions, as stated before in earlier threads spanning over a year ago, are:

* The MLS consortium represents a potential source of future anti-competitive enforcement action. It violates a number of tests normally applied to similar environments.

(The courts seem to disagree so far)

* People misunderstand, or choose to selectively understand, the fundamentals of American Free Market Capitalism. Thus the ridiculous analogies this debate has reached.

(I agree, but if you are applying this to me let's all whip out our degrees, or life stories. My credentials aren't peanuts.)

* The law is complicated and even most lawyers only understand portions of it. Couple that with the fact many words with legal definitions are overloaded by terms of art from various sciences, which are again overloaded by conventional connotation. Monopoly is such a word.

(Yes, people here throw terms around for shock value, and don't even understand that even loosely termed there is no shock value to those of us who know the systems.)

* The NAR and its MLS consortium will not be regulated in the near future due to practical political reasons. This will not be a vote on whether it is “right” or “wrong”, just that it is.

(That's what I've been saying.)

* The free market will eventually have its revenge, if the industry is not regulated first. But not before a spectacular amount of unnecessary economic sacrifices are made at the alter of self-serving inefficiencies and anti-free market behavior.

(The sacrifices are required for the free market to work. Back to theory, excess profits invite competition. When you block the excessive profit you delay indefinitely a market correction.)

* There is precedent for everything I’ve said above.

(Yes)

Is anything else about my point of view ambiguous?

MLS is a proprietary system, or course it is anti competitive, that is the definition of proprietary. You guys have this purist view of how business works. It is not like that. It is just like the military, your goal is to establish an unfair advantage. If that seems wrong to you then I’m afraid you have some big problems because that is the main point in most MBA programs.

I don't think I'm totally naive in how business really operates, and I know that businesses always try to create unfair advantages to the extent they are allowed to by law. The question is, do any of the NAR-MLS activities and/or member agreements actually violate antitrust laws?

Also, the military has a legal and de facto "monopoly" on warfare, granted by the Constitution.

I haven't resorted to making up words or applied some idiot smashing signs as supporting my argument. I am always cautious when people can't just use a word directly because it doesn't apply that they start adding prefixes like pseudo, or stringing a bunch of terms together to sound intellectual.

Oh come on, you know I meant the military has the objective of attaining an unfair advantage over the enemy, not whether it competes with the free market.

Malcolm

I was applying my criticisms generally. Lack of understanding or respect for free market capitalism is a running theme of mine on this bog. I apply it fairly evenly, even to fellow MBA holders. The rise of MBA CSR course, programs and institutions is a perfect example of what I see as a failure to understand the basic tenants of market capitalism within a representative social democracy.

I continue to take issue with your categorization of "dead loss" as "excess profits". The point of "dead loss" is that it does not invite entrants, but it discourages entrants. The *only* way to remedy dead loss is through government regulation, or to wait long enough for the entrenched industry to become technologically irrelevant. The latter is hardly a triumph of market capitalism so much as it is a statement about human society.

Or more academically, it is a failure of the market to efficiently allocate capital in the short, medium or long-term. Only in the very-long run does capital reallocate itself through obsolescence.

Your question of NAR-MLS lies in the courts, not to how many people with the same agenda of not liking something whine about it. It is a nonissue until you get a court to agree with you.

I'm not debating dead loss or excess profits, they are related but tangents to the main issue we are discussing. To refocus, is the MLS system a violation of antitrust laws or is it so legally out of line that reform is needed?

Honestly, if I went down that path there are so many industries you would have a problem with, that you would literally rethink some very basic foundations.

Malcolm,

RE: military analogy

You said: "It [meaning business] is just like the military, your goal is to establish an unfair advantage." For business to become just like warfare, we would have to fully deregulate each market. The short-term result would be close to anarchy, and the long-term result would be monopolies and cartels that enforce their anti-competitive market power through violence or threat of violence. Pretty much like modern-day Sudan or Nigeria, I suppose. Is this an ideal "free market"?

"Or more academically, it is a failure of the market to efficiently allocate capital in the short, medium or long-term. Only in the very-long run does capital reallocate itself through obsolescence. "

Peter, Randy is hinting that the free maket sometimes fails.

HARM, nice point, and I agree with it. That's why I'm not a purist either, I just don't have a problem with a bunch of nitwit realtors.

HARM I am trying to get it published but my thesis was actually on Public Private Partnerships.

I believe public policy sets the limits, then you let the free market do its thing. That's my view in a nutshell.

@Malcolm,

Ok then. I don't really have a problem with nitwit realtors either, as long as they don't gang up, collude and start acting like mobsters.

Peter, Randy is hinting that the free maket sometimes fails.

Even I fail sometimes. ;)

No, not you.

But HARM, this is the slippery slope that everyone is on. They take the numberous incidents of predictable human behavior and extrapolate in an image (purely for shock value) of a bunch of guys breaking knee caps. They are not mobsters, many of them couldn't even follow this discussion.

MLS is by everyones opinion here going to be obsolete in its form. That is not a monopoly or deadweight, it is the normal industry/product life cycle. It was great for a few decades, now the Internet is destroying it. It's natural.

Malcolm

I don't agree that dead loss is a tangential issue. For me, at least, the market economics are all I really care about as a theoretical debate.

Yes, I am not suggesting that free markets sometimes fail. I am declaring that free markets often fail in the short, medium and even long term. I am one of those who believes in principles based market regulations which are dynamically codified into effective rules-based constraints. I also believe we are failing on both points currently. So my assertion that the MLS represents a market failure is consistent.

Similarly, I am a pragmatist. I would endeavor to address market failures which are of a higher priority, and accommodate or rationalize those which are less consequential. The NFL, for example, is easily rationalizable. It is also economically less consequential than the MLS, or say the various dead losses which exist in the energy complex.

Many of the FBs are realtors who supposidly had the inside scoop on what was going on. ha ha ha

Perhaps sellers should list their homes on SL instead of MLS. Potential buyers can appreciate the artist depiction of the house in the virtual landscape. They can submit offers right there, they will also have to outbid other cartoon characters.

MLS is by everyones opinion here going to be obsolete in its form. That is not a monopoly or deadweight, it is the normal industry/product life cycle. It was great for a few decades, now the Internet is destroying it. It’s natural.

That does not preclude economic dead weight. By your definition centrally planned economies which boom for 15 years, suck the life blood out of a continent for 35 more years, then decay into anarchistic capitalism contain no dead weight either.

Malcom,

Where you, you're fully paid off home and considerable credentials are going to be sorely let down is that ultimately the MLS WILL be dismantled. Yes, dismantled. It'll take time but watch, you'll see.

NO other industry has such a direct interface (and influence over) non-combatants (rank and file consumers). Drawing a parallel as to how commodity producers treat each other and how the NAR lines up people that only want buy a house for their "bi-annual sheering" is pointless.

Seriously man, your logic is so flawed.... I don't know WHAT to do with you. I can't wait for your book to come out, so I can set it next to the crapper.

Randy, the main problem I'm having with the slightly differing POVs here is that (deadloss/excess profit) whatever concept, that you think you can go from industry to industry and declare that they have an excessive revenue stream. That is just fundamentally different from how I look at things. Who is to determine what a normal margin is? I said it earlier 6% is no longer the norm, not here in SD anyway. When a house cost 100K, 6K in realtor selling costs might be reasonable; the market has changed because 6% of 800K seems excessive. But it is not what I think is excessive that matters, it is the market.

I made gains which even I think were excessive but many times I had multiple bidders who couldn't wait to run head first into a brick wall. That is the dynamic of a free market, a willing seller, a willing buyer. They don't have to be happy just willing.

DINO, I agree that it will dismantle itself, what's your problem?

My logic isn't flawed, you just need to learn that there is more to an issue than just what a JBR thinks is fair.

Peter P is a jerk. Just kidding, he is so damn likeable that someone had to say it.

Hi_there,

This all started when Malcom "took offense" to NAR being described as a monopoly but thanks for the Monday Morning Quaterback ctrique!

By_there :)

Oh Dino, now you're going to speak for me. "He started it!"

"Peter P is my favorite. He is the most practical guy around here."

Why? Do you sell sushi?

I'm happy to see free markets flourish. I don't want the government picking winners and losers. Malcolm you're switching contexts in the debate arbitrarily. We've now switched from a legal/economic discussion to a practical/ideological one.

I'll revert back to my practical question (no jargon added):

Is it fair that the MLS boards force members to sign an exclusivity agreement that prevents them from using any competing services?

If that's ok then there sure are a whole lot of companies out there missing some spectacular "excess" profit potential.

"Is it fair that the MLS boards force members to sign an exclusivity agreement that prevents them from using any competing services?"

I have no idea. What competing services do you mean?

It would seem like a bad long term business decision to me, but what do I know?

Oh come on Malcolm. It's an honest question. The competing services are those you keep telling us will make all this moot.

The MLS Boards put member agents in jeopardy by forcing them to "marry the MLS" and ne'er lay eyes on anything else. Misbehaving agents are kicked out of the "membership", which is after all just a big club. Are there any barriers to honest competition in that system?

Malcom,

I'm *not a JBR. I'm a bubble-sitter. There's a difference. While CA might prove to be a bit of a challenge there's no community in OR I couldn't well afford to buy in to. I chose not to.

They say there's at least "some" truth behind every sterotype and with as much as we're seeing "the fee driven abusive mortgage broker" being played out in real time for all to see I just find it hard to believe that anyone would (or should) rush to any REIC member's side?

Since it's now obvious to anyone following that NAR/MLS "is" a monoploy you've quietly abandoned that saying technology alone will provide the disintermediation? Why didn't you just fess' up earlier and save a lot of trouble?

Randy, this is not arguing objectively because to form your argument it would be more compelling if you could actually cite the clause, then I can read it and give my opinion.

Honestly, if I went down that path there are so many industries you would have a problem with, that you would literally rethink some very basic foundations.

Such as? For most consumers, the difference between paying a 6% commission and a 2% commission is far greater than the TOTAL SPENDING for most other categories.

Malcolm, I've been enjoying the debate between you and Randy, but in my opinion his points are more compelling, largely due to superior organization and debating skills. I would like to see you outline your position in the way he has (and not in one sentence either). Present him with a set of falsifiable tests as he has to you. Until then, you haven't convinced this lurker.

By the way, is this lawsuit spurious?

http://www.realestatejournal.com/buysell/agentsandbrokers/20050511-hagerty.html?refresh=on

By the way, I fully agree that dead weight is a critical issue. Other than supply and demand, it is the most vivid and useful concept I remember from my undergrad econ minor.

I challenged the initial premise that all monopolies were illegal, and questioned how a tradegroup is a monopoly? I questioned if you actually knew what a monopoly was because it seemed to me that you were using the term for shock value.

JBR is just a term and not meant to anyone personally. It is used third party with me because it denotes a mindset. No offense intended, though claiming to be bubble sitting is basically telling everyone that you want to be a property owner.