An Economy of Overfed Middlemen(mattstoller.substack.com)
mattstoller.substack.com
An Economy of Overfed Middlemen
https://mattstoller.substack.com/p/a-moat-trajectory
155 comments
Sometimes I wonder if 'monopoly' in the US has become a no true Scotsman fallacy. The threshold of direct consumer harm is either so high or evidence requirements so onerous it's as if there is no more Sherman Antitrust Act. The monopolizing doesn't even have to be in a computer or layers of shell companies anymore.
The passivity against monopolies has more to do with international competition and the fear of losing world domination.
Nations aren't a real unit to anyone except for rubes. The reasons interests and nations roughly correlate is because the individuals who make a nation's laws and direct its spending are more likely to be financially entangled with the people who those laws affect and the people to which that spending is directed.
They will also be financially entangled with elites in former colonies, and the operators of extractive industries in weak countries that depend on outside investments, and with everyone in the financial industry globally. They're also financially entangled with family members and friends.
The only people anti-monopoly legislation helps are people who are less connected and less influential. The only place it will be supported (by the well-connected and influential) is in countries who are trying to protect domestic industries. Once the protectionism (or the nationalized industries) are destroyed, then monopoly becomes ok in time to get control over entire sectors of the economy and raise prices to maximize profit extraction.
Any concern about whether the US is dominating the world or not is only practical. It's useless to sic the US against a country that is being protectionist or refuses to denationalize if the US doesn't have the strength to properly make the people who reside in those countries miserable enough to support the opposition.
They will also be financially entangled with elites in former colonies, and the operators of extractive industries in weak countries that depend on outside investments, and with everyone in the financial industry globally. They're also financially entangled with family members and friends.
The only people anti-monopoly legislation helps are people who are less connected and less influential. The only place it will be supported (by the well-connected and influential) is in countries who are trying to protect domestic industries. Once the protectionism (or the nationalized industries) are destroyed, then monopoly becomes ok in time to get control over entire sectors of the economy and raise prices to maximize profit extraction.
Any concern about whether the US is dominating the world or not is only practical. It's useless to sic the US against a country that is being protectionist or refuses to denationalize if the US doesn't have the strength to properly make the people who reside in those countries miserable enough to support the opposition.
> Nations aren't a real unit to anyone except for rubes
A geographically contiguous group of people who see themselves as having a common culture and values, combining for economic/military coordination and centralized decision-making for certain kinds of decisions certainly seems like a natural unit for humans to organize themselves.
A geographically contiguous group of people who see themselves as having a common culture and values, combining for economic/military coordination and centralized decision-making for certain kinds of decisions certainly seems like a natural unit for humans to organize themselves.
The passivity against monopolies in US is a well-documented consequence of a drastic reinterpretation of the historical justification for anti-trust legislation in 1980s, driven primarily by right-wing "free market" proponents (I'm putting that in quotes because any monopoly is the opposite of free market by its classic definition).
https://en.wikipedia.org/wiki/The_Antitrust_Paradox
Before then, things were very different. Here's an example of an anti-trust court case against a company selling shoes - read the court's rationale for applicability of regulation, and consider how many of them would apply to any of the large tech companies today:
https://supreme.justia.com/cases/federal/us/370/294/
https://en.wikipedia.org/wiki/The_Antitrust_Paradox
Before then, things were very different. Here's an example of an anti-trust court case against a company selling shoes - read the court's rationale for applicability of regulation, and consider how many of them would apply to any of the large tech companies today:
https://supreme.justia.com/cases/federal/us/370/294/
The entire four-decade scam called "The Federalist Society" has been a devil's bargain between the "rich people should be richer" monopolists you identify and pro-lifers. The rich lobbyists held their noses and tolerated the pro-lifers. The pro-lifers were on the whole too dumb to realize that Gilded-Age levels of wealth inequality are not good for poor dumb people or for unborn babies. Either of these groups by itself would not hold six seats on the Supreme Court. Ethical people should seek similar collaborations that could improve our society rather than devastating it.
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I think international economic competition has less to do with "world domination" and more to do with
1) having real international influence without resorting to military action
2) being resilient against international influence from others
The trillion dollar question is how to effectively keep private businesses in check without sacrificing on those points.
1) having real international influence without resorting to military action
2) being resilient against international influence from others
The trillion dollar question is how to effectively keep private businesses in check without sacrificing on those points.
No country (including the US) has "world dominance". However all countries have more or less influence and soft power on other countries.
Does it? Or does it have more to do with the massive industry capture of politics? Not to mention the right-wing ideology of, effectively, if you can make money doing it, and hide the negative effects from the public at least a little, you're a Real American Hero.
"Massive industry" is the applicable term. The scale of both the capture, and the middle man loss to a more parochial/regional model is terrifying to 'captains of industry' and their political minions.
There are many progressives who've come around to favouring mega businesses over "mom-and-pop" for: higher wages, stabler jobs, easier enforcement of regulations..
For example: Matt Yglesias
For example: Matt Yglesias
Then it becomes unclear where the state begins and the (mega) corporation(s) begins.
I'm neither for or against this strategy. I only wish, quixotically, the misc belligerents in policy debates would be intellectually honest.
It's ridiculous to use liberation theology terms, eg "freedom markets", when referring to Fortune 500 corporations.
I'm neither for or against this strategy. I only wish, quixotically, the misc belligerents in policy debates would be intellectually honest.
It's ridiculous to use liberation theology terms, eg "freedom markets", when referring to Fortune 500 corporations.
True, the most progressive people (largely just optical) work for the largest neoliberal monopolists.
I guarantee you, there are plenty of totally real (not just optical), actually-progressive progressives who do not work for neoliberal monopolists.
If the people you have seen spouting what seems like the most progressive rhetoric do work at such places, that doesn't mean they're representative of all people who believe in progressive ideology.
If the people you have seen spouting what seems like the most progressive rhetoric do work at such places, that doesn't mean they're representative of all people who believe in progressive ideology.
There are many people who have been steeped in our hypercapitalist society for decades and have simply accepted its premises as valid, regardless of their stated politics as a whole.
It doesn't mean that the source of this ultimately deeply destructive ideology isn't the political right.
It doesn't mean that the source of this ultimately deeply destructive ideology isn't the political right.
You must not have heard of "Walmart socialism" or have worked for a small-business tyrant.
Scale and logistics are good. I think they should be managed by federation (and through regulation), but I'm sick of having bosses who see my salary (rationally) as something directly coming out of their bank account. I prefer a little indirection and mediation in the relationship.
Efficiency is good for everyone. The more time and effort you save, the more time and effort you have to waste. There are scales that are ideal for particular businesses, and that scale doesn't always coincidentally coincide with the scale a small-business owner can handle. Business should be as big as real (not paper or regulatory) efficiencies can be found at, and against those efficiencies we should maximize the flexibility and ability to innovate of individual businesses and workers.
Instead we just subsidize the biggest businesses most, and through legislation create false efficiencies to subsidize them even more (and guard them from any externalities.)
Scale and logistics are good. I think they should be managed by federation (and through regulation), but I'm sick of having bosses who see my salary (rationally) as something directly coming out of their bank account. I prefer a little indirection and mediation in the relationship.
Efficiency is good for everyone. The more time and effort you save, the more time and effort you have to waste. There are scales that are ideal for particular businesses, and that scale doesn't always coincidentally coincide with the scale a small-business owner can handle. Business should be as big as real (not paper or regulatory) efficiencies can be found at, and against those efficiencies we should maximize the flexibility and ability to innovate of individual businesses and workers.
Instead we just subsidize the biggest businesses most, and through legislation create false efficiencies to subsidize them even more (and guard them from any externalities.)
Efficiency is good.
Maximizing for efficiency is not. It leads to a variety of problems, including (but not limited to) a strong tendency toward consolidation of power in too few hands (thus leading to abuses), and fragile systems that break down when a shock comes (like we saw with the supply chain issues during the height of COVID lockdowns).
Maximizing for efficiency is not. It leads to a variety of problems, including (but not limited to) a strong tendency toward consolidation of power in too few hands (thus leading to abuses), and fragile systems that break down when a shock comes (like we saw with the supply chain issues during the height of COVID lockdowns).
> our hypercapitalist society for decades
The US has been turning away from free markets for at least a century now.
The US has been turning away from free markets for at least a century now.
It is perhaps a relevant observation that "free market" and "capitalism" don't share a Wikipedia page.
Especially in the NFT era of rug pulls. Globalization cannot run on fly by night grifters.
Anarcho-syndicalists that argue for workers councils run by experts basically got that but it comes coupled to outdated story of ownership.
In real terms the logistics and infrastructure are determined by experts but with the extra steps of getting validation from financiers who have no experience with the engineering methods, but their name is on some paperwork somewhere saying “they own that”.
I am cool with centralization effort to minimize duplication of effort. Not the kowtowing to some financier who lucked into money in the past in unrelated business, picking and choosing what I work on today as an engineer with nearly 30 years experience ranging from hardware design to kernel hacking, onto web app stacks with everyone else.
The ownership story is political double speak and corrupt expropriation of agency; replacing pols has improved economic gains for public and flushed corruption: https://www.nber.org/papers/w29766
Anarcho-syndicalists that argue for workers councils run by experts basically got that but it comes coupled to outdated story of ownership.
In real terms the logistics and infrastructure are determined by experts but with the extra steps of getting validation from financiers who have no experience with the engineering methods, but their name is on some paperwork somewhere saying “they own that”.
I am cool with centralization effort to minimize duplication of effort. Not the kowtowing to some financier who lucked into money in the past in unrelated business, picking and choosing what I work on today as an engineer with nearly 30 years experience ranging from hardware design to kernel hacking, onto web app stacks with everyone else.
The ownership story is political double speak and corrupt expropriation of agency; replacing pols has improved economic gains for public and flushed corruption: https://www.nber.org/papers/w29766
> and hide the negative effects from the public at least a little, you're a Real American Hero.
Has there ever been a socialist operation (or any other operation) that didn't also do this?
Like, say, Chernobyl?
Has there ever been a socialist operation (or any other operation) that didn't also do this?
Like, say, Chernobyl?
Chernobyl wasn't hiding the negative effects of making money.
edit: I think Communism, or at least Soviet communism, is as bad or worse for the environment as capitalism. The difference is that the benefits of Soviet environmental disasters flowed to the nation in general. The benefits under capitalism generally go to fewer people than I could fit in my bathroom.
edit: I think Communism, or at least Soviet communism, is as bad or worse for the environment as capitalism. The difference is that the benefits of Soviet environmental disasters flowed to the nation in general. The benefits under capitalism generally go to fewer people than I could fit in my bathroom.
Look at what the Soviets did to whale populations. I don’t think you can argue those benefits flowed to anyone.
Chernobyl hid the fact that the reactor was highly unsafe, because it was too expensive to fix it. So yeah, it was about money. Socialism is not immune to having things require a positive return on investment, and is hardly immune from forces that cause them to hide costs and risks.
As for the benefits of capitalism, it's the only system that has managed to lift millions of poor people into the middle class and beyond.
As for the benefits of capitalism, it's the only system that has managed to lift millions of poor people into the middle class and beyond.
I don't think there's such an easy attribution to capitalism. If anything, it's ignoring property rights when people become richer.
If you consider the settler colonial projects like the USA, the wealth comes from ignoring the property ownership of the indigenous people, and then also the slavery, and the ignoring or intellectual property for inventions and arts.
If you look at Europe, there's the extreme wealth transfer of living and shifting the Indian economy into Europe, along with you know, stealing the world's gold, silver, and other valuables.
For more modern times, you also need to contend with unions and government regulations(including socialist policies), along with more wealth redistribution from things like the GI Bill. The people(and descendents) who benefited from the GI Bill are significantly wealthier than the people who didnt.
Wealth and land redistribution, especially at the expense of poorer people gives a clearer direction for what has lifted people out of poverty.
If you consider the settler colonial projects like the USA, the wealth comes from ignoring the property ownership of the indigenous people, and then also the slavery, and the ignoring or intellectual property for inventions and arts.
If you look at Europe, there's the extreme wealth transfer of living and shifting the Indian economy into Europe, along with you know, stealing the world's gold, silver, and other valuables.
For more modern times, you also need to contend with unions and government regulations(including socialist policies), along with more wealth redistribution from things like the GI Bill. The people(and descendents) who benefited from the GI Bill are significantly wealthier than the people who didnt.
Wealth and land redistribution, especially at the expense of poorer people gives a clearer direction for what has lifted people out of poverty.
What you posted is certainly the prevailing modern opinion. Looking a bit deeper, though:
1. if wealth comes from owning property, why weren't the indigenous people wealthy?
2. In South America, the indigenous people were pushed off their land, too. Why did South America remain poor up to the present?
3. How did Japan become such an incredible economic power despite having little land and no natural resources?
4. The American slave states were never particularly wealthy, and what wealth there was was erased in the Civil War. Literally burned to the ground. Slavery did not build the wealth in the US.
5. The GIs earned the benefits from the GI bill. It is not wealth redistribution. They risked everything for yours and my freedoms.
6. The Spanish indeed took tons of gold & silver from S. America. Do you know what happened? Inflation! The same thing that happened after every gold rush. The reason is simple - gold is not wealth. Gold represents wealth.
1. if wealth comes from owning property, why weren't the indigenous people wealthy?
2. In South America, the indigenous people were pushed off their land, too. Why did South America remain poor up to the present?
3. How did Japan become such an incredible economic power despite having little land and no natural resources?
4. The American slave states were never particularly wealthy, and what wealth there was was erased in the Civil War. Literally burned to the ground. Slavery did not build the wealth in the US.
5. The GIs earned the benefits from the GI bill. It is not wealth redistribution. They risked everything for yours and my freedoms.
6. The Spanish indeed took tons of gold & silver from S. America. Do you know what happened? Inflation! The same thing that happened after every gold rush. The reason is simple - gold is not wealth. Gold represents wealth.
The historical record soundly contradicts you wrt Japan. It modernized and became powerful on the backs of colonies in Manchuria and the Korean peninsula. Japan was a backwater prior to the Meiji Restoration, when those projects began.
https://en.m.wikipedia.org/wiki/Greater_East_Asia_Co-Prosper...
https://en.m.wikipedia.org/wiki/Greater_East_Asia_Co-Prosper...
I'm talking about after WW2. Japan's industry and economy were literally burned to the ground. Yet by the 1980s, the US was terrified that Japan's economy was going to take over the world.
What they did after WW2 was adopt a free market.
What they did after WW2 was adopt a free market.
Point one made me hesitant but when I got to point five until I realized this was just propaganda.
Property might not be 100% of what causes wealth cause you know, gotta mix capital with labor, but are you really arguing that America didn’t benefit off the stolen wealth of other nations? Is all the land that was taken from them valued at 0?
Property might not be 100% of what causes wealth cause you know, gotta mix capital with labor, but are you really arguing that America didn’t benefit off the stolen wealth of other nations? Is all the land that was taken from them valued at 0?
> are you really arguing that America didn’t benefit off the stolen wealth of other nations?
Land by itself does nothing. Japan proved that land is not a crucial factor.
Bill Gates' wealth didn't come from land.
> mix capital with labor
This is also not necessarily true. Slavery was certainly applied, but the wealth created thereby was minimal.
The common factor with wealth creation is free markets. None of the other factors you mentioned.
Land by itself does nothing. Japan proved that land is not a crucial factor.
Bill Gates' wealth didn't come from land.
> mix capital with labor
This is also not necessarily true. Slavery was certainly applied, but the wealth created thereby was minimal.
The common factor with wealth creation is free markets. None of the other factors you mentioned.
> Land by itself does nothing. Japan proved that land is not a crucial factor.
Can you show me a single successful enterprise that does not require any land?
> This is also not necessarily true. Slavery was certainly applied, but the wealth created thereby was minimal.
> The common factor with wealth creation is free markets. None of the other factors you mentioned.
Jesus Christ guy, I’ve seen free market bootlickers before but this is a new, amazing level. Next are you going to tell us how the free market was so amazing before that rapscallion FDR came in and ruined the masterpiece of the free market that was the Great Depression? Or does the result of one of the most laissez-faire economic system a of all time not count because it ended bad?
Can you show me a single successful enterprise that does not require any land?
> This is also not necessarily true. Slavery was certainly applied, but the wealth created thereby was minimal.
> The common factor with wealth creation is free markets. None of the other factors you mentioned.
Jesus Christ guy, I’ve seen free market bootlickers before but this is a new, amazing level. Next are you going to tell us how the free market was so amazing before that rapscallion FDR came in and ruined the masterpiece of the free market that was the Great Depression? Or does the result of one of the most laissez-faire economic system a of all time not count because it ended bad?
> Can you show me a single successful enterprise that does not require any land?
Businesses often rent office space. Microsoft got its start from a rented building. As I mentioned before, Japan became a world economic power with very little land. South Korea is another example. South America has plenty of land, and is mired in poverty.
> Next are you going to tell us how the free market was so amazing before that rapscallion FDR came in and ruined the masterpiece of the free market that was the Great Depression?
WW1 showed that the free market had turned a nation of poor immigrants into a super power. The doughboys arrived taller than the Europeans, and far better equipped and fed.
The Great Depression was caused by the creation of the Fed in 1914. The Fed proceeded to the inflate the dollar, while keeping a fixed exchange rate with gold. The disparity led to what always happens with pegged currencies - collapse. The depression was deepened and lengthened by FDR not understanding what was going on.
> bootlickers
I suspect you've never heard the case for the free market before. It isn't taught in school or in college. Which is sad, because the schools graduate students into a market economy with little idea of how it works. For example, I saw some 12th grade history materials a few years ago that asserted that the middle class did not exist in the US before FDR. This is the nonsense taught in schools.
> amazing
Yes, it is amazing. The evidence is right in front of us. Feel free to refute the evidence I presented that free markets are the common thread in prosperity, not land nor slaves nor socialism.
If you want some more, look at the historical statistics of height in the US. It went up all through the 19th century, up to WW2 where it leveled out. That's pretty good objective evidence of growing prosperity. Remember that the US was peopled by immigrants who arrived with nothing.
Businesses often rent office space. Microsoft got its start from a rented building. As I mentioned before, Japan became a world economic power with very little land. South Korea is another example. South America has plenty of land, and is mired in poverty.
> Next are you going to tell us how the free market was so amazing before that rapscallion FDR came in and ruined the masterpiece of the free market that was the Great Depression?
WW1 showed that the free market had turned a nation of poor immigrants into a super power. The doughboys arrived taller than the Europeans, and far better equipped and fed.
The Great Depression was caused by the creation of the Fed in 1914. The Fed proceeded to the inflate the dollar, while keeping a fixed exchange rate with gold. The disparity led to what always happens with pegged currencies - collapse. The depression was deepened and lengthened by FDR not understanding what was going on.
> bootlickers
I suspect you've never heard the case for the free market before. It isn't taught in school or in college. Which is sad, because the schools graduate students into a market economy with little idea of how it works. For example, I saw some 12th grade history materials a few years ago that asserted that the middle class did not exist in the US before FDR. This is the nonsense taught in schools.
> amazing
Yes, it is amazing. The evidence is right in front of us. Feel free to refute the evidence I presented that free markets are the common thread in prosperity, not land nor slaves nor socialism.
If you want some more, look at the historical statistics of height in the US. It went up all through the 19th century, up to WW2 where it leveled out. That's pretty good objective evidence of growing prosperity. Remember that the US was peopled by immigrants who arrived with nothing.
> Chernobyl hid the fact that the reactor was highly unsafe, because it was too expensive to fix it.
And that is bad. But it is different.
> As for the benefits of capitalism, it's the only system that has managed to lift millions of poor people into the middle class and beyond.
That's because capitalists take credit for China. Take China out of it, and capitalism is a no-op.
And that is bad. But it is different.
> As for the benefits of capitalism, it's the only system that has managed to lift millions of poor people into the middle class and beyond.
That's because capitalists take credit for China. Take China out of it, and capitalism is a no-op.
So who was responsible for poverty reduction in the nineteenth century?
> But it is different.
Nope. Even socialism has to run at a net surplus (i.e. profit) because you cannot subsidize everything.
Nope. Even socialism has to run at a net surplus (i.e. profit) because you cannot subsidize everything.
This is like saying someone choked to death on celery once, therefore celery is just as bad for you as pork fat
Socialist/Communist countries have repeatedly killed off large segments of their own populations either due to mismanagement or straight-up murder. The magnitude of difference on this metric is so vast between capitalist and Communist countries that there really is no comparison.
I think that's why it's good that antitrust is more than just monopoly but also and other anticompetitive practices.
I would like to see law begin to start with an implicit bias for the underdog, but unfortunately Citizens united and the general principle of money in politics means that larger entities will have disproportionate sway (due to Pareto principle of accrual).
I would like to see law begin to start with an implicit bias for the underdog, but unfortunately Citizens united and the general principle of money in politics means that larger entities will have disproportionate sway (due to Pareto principle of accrual).
The volume of law and regulation is a huge implicit subsidy to large corporations. The cost of compliance is challenging, and can be devastating to small-medium companies (which actually try to comply with the law). I think that getting rid of rules like the reporting on conflict minerals, (which don't seem to affect the ferocity or devastation in conflict regions,) which are numerous and surprisingly burdensome, would be very helpful.
Citizens United said that you and I have the same right to band together to engage in political speech as the New York Times.
Sure, and it should have said New York Times is not a person and therefore gets no say in any matter. The Pareto bit I mentioned means even if we band together they ultimately have disproportionate resources.
It's employees / shareholders et al can vote how they like, but that's different than the New York Times (or Russia for that matter), swaying an election.
It's employees / shareholders et al can vote how they like, but that's different than the New York Times (or Russia for that matter), swaying an election.
Zuckerberg has more resources than me.
Not letting me get together with other people helps Zuckerberg.
As far as the NYT goes, feel free to argue against the 1st Amendment. CU just says that the NYT isn't special, that the 1st applies to using tools, not organizations who have named themselves after said tools.
Govt regulation always favors the well-heeled.
Not letting me get together with other people helps Zuckerberg.
As far as the NYT goes, feel free to argue against the 1st Amendment. CU just says that the NYT isn't special, that the 1st applies to using tools, not organizations who have named themselves after said tools.
Govt regulation always favors the well-heeled.
> Zuckerberg has more resources than me.
Yes but there is are rules & caps for political contributions: https://www.fec.gov/help-candidates-and-committees/candidate...
I'm not arguing against 1st, I'm arguing that a business (not a person) has speech or a 1st right (which people absolutely do), and that the net result of acting like they do is really hurting the citizens of America.
Yes but there is are rules & caps for political contributions: https://www.fec.gov/help-candidates-and-committees/candidate...
I'm not arguing against 1st, I'm arguing that a business (not a person) has speech or a 1st right (which people absolutely do), and that the net result of acting like they do is really hurting the citizens of America.
The NYT is not subject to said "rules or caps" when it advocates for candidates. Neither is Zuckerberg.
Why should people who get together to do political speech be treated any differently?
Why should people who get together to do political speech be treated any differently?
I think we agree in principle, but are disagreeing in the resultant law.
It sounds to me like you're advocating saying NYT, and rich people can give large sums of money, therefore why cant groups of people also do it?
I'm advocating for NYT and rich people should not be allowed to give large sums of money, and neither should individuals beyond their individual contribution cap.
The principle I am all for is that wealthy people and corporations should not be able to bring disproportionate resources to politics than their underlying democratic unit (a single unit vote in the case of a wealthy person, no votes in the case of a corporation). And therefore the caps for wealthy people should be the same as for middle/poor people, and caps for corporations should be 0 because they are not democratic political units.
I'm listening to https://www.khanacademy.org/humanities/us-government-and-civ... to try and discern if maybe I have a completely broken idea of what citizens united is
It sounds to me like you're advocating saying NYT, and rich people can give large sums of money, therefore why cant groups of people also do it?
I'm advocating for NYT and rich people should not be allowed to give large sums of money, and neither should individuals beyond their individual contribution cap.
The principle I am all for is that wealthy people and corporations should not be able to bring disproportionate resources to politics than their underlying democratic unit (a single unit vote in the case of a wealthy person, no votes in the case of a corporation). And therefore the caps for wealthy people should be the same as for middle/poor people, and caps for corporations should be 0 because they are not democratic political units.
I'm listening to https://www.khanacademy.org/humanities/us-government-and-civ... to try and discern if maybe I have a completely broken idea of what citizens united is
Actually, your mention of campaign contributions and "give money" suggests that you don't understand Citizens United. I write that because Citizens United had nothing to do with contributions to a politician's campaign.
The question in Citizens United was whether some folks can get together and make a movie advocating against a political candidate without being subject to campaign finance laws.
There's no question that the NYT (and unions) can advocate for/against a candidate in any way that it sees fit; the question in CU was "are other groups different?"
The CU decision was "there's no difference between the NYT and any other group. If you have a way of speaking, you can politic with that way as you see fit."
Feel free to explain why the NYT (and unions) shouldn't be limited but others should be. (Condo associations often put news in their newsletters, so ....)
Alternatively, explain how you're going to limit the NYT's ability to advocate for political candidates and causes without repealing the 1st amendment.
The question in Citizens United was whether some folks can get together and make a movie advocating against a political candidate without being subject to campaign finance laws.
There's no question that the NYT (and unions) can advocate for/against a candidate in any way that it sees fit; the question in CU was "are other groups different?"
The CU decision was "there's no difference between the NYT and any other group. If you have a way of speaking, you can politic with that way as you see fit."
Feel free to explain why the NYT (and unions) shouldn't be limited but others should be. (Condo associations often put news in their newsletters, so ....)
Alternatively, explain how you're going to limit the NYT's ability to advocate for political candidates and causes without repealing the 1st amendment.
Same for when you read about two large companies merging, pending regulatory approval.
My immediate thought: it's going be allowed. Regulator after 6 months: it's allowed.
My immediate thought: it's going be allowed. Regulator after 6 months: it's allowed.
It is the opinion of the EU Comission that monopolies are ok as long as they do not abuse their power and if they do they get slapped with a fine.
That was the entire point of the Borkist/Chicago school movement. The capitalists knew they'd never be able to repeal those laws legislatively, so instead they changed its enforcement by winning the minds and wallets of the judiciary. Now they can consolidate as much as they want to, no judge will stop them and most lawyers won't even try.
Are most monopolies not of government creation? Anything that has increasingly onerous regulations or other government requirements are the sorts of monopolies that need breaking.
Any natural monopolies formed by just being really good at something and offering it at a low price are a waste of taxpayer money to try and disrupt.
Any natural monopolies formed by just being really good at something and offering it at a low price are a waste of taxpayer money to try and disrupt.
Precisely. The regulatory environment in the US is astounding.
People yell at Apple for being a monopoly but android exists and the consumers just don’t care.
Amazon tried to launch a line of phones and no one cared.
If things were really so oppressive the consumers would demand something else but they just don’t care.
People yell at Apple for being a monopoly but android exists and the consumers just don’t care.
Amazon tried to launch a line of phones and no one cared.
If things were really so oppressive the consumers would demand something else but they just don’t care.
How is Apple a monopoly (except for the app store, by definition)? Last time I checked there are many phone and personal computer choices.
Not all monopolies are natural. Those powerful enough to capture regulators are now a defacto government. The answer is not less regulation, it's a different kind to stop and reverse the consolidation of power.
And benevolent monopolies can and do change over time.
And benevolent monopolies can and do change over time.
> Not all monopolies are natural
Did you read my first paragraph?
Did you read my first paragraph?
Yes I did read it. Why do you suspect I had not?
To be more explicit, I wouldn't agree it's most often the government making monopolies. There are plenty of cases where government regulators are captured by 'natural' monopolists (or otherwise large players) who then entrench themselves with regulatory moats, serving only their interests.
And even government made monopolies aren't _well_ regulated IMO, for example telcos. A freer market would need controls to prevent consolidation from locking in customers by simply buying up all the spectrum and lobbyists.
To be more explicit, I wouldn't agree it's most often the government making monopolies. There are plenty of cases where government regulators are captured by 'natural' monopolists (or otherwise large players) who then entrench themselves with regulatory moats, serving only their interests.
And even government made monopolies aren't _well_ regulated IMO, for example telcos. A freer market would need controls to prevent consolidation from locking in customers by simply buying up all the spectrum and lobbyists.
I thought you didn't read it because you said "Not all monopolies are natural", after I spent my first paragraph talking about non-natural monopolies.
Almost all markets are now monopoly, duopoly, or cartel. Has been for a while.
It's gigantic detriment to innovation, unemployment, wage suppression, prices.
The end state of unregulated real world free markets is monopoly, because of the ability to establish market barriers, extract subsidies, state-level actor manipulation, dumping.
Antitrust is dead in the US. Cartel economics is part of the oligarchical political control and the formalized power base of the rich.
And economists and economics were puppeted on TV, think tanks, parroting the free market religion to enable this.
And as part of this, we couldn't do anything (and still can't) about global warming. This will possibly doom us as a civilization.
It's gigantic detriment to innovation, unemployment, wage suppression, prices.
The end state of unregulated real world free markets is monopoly, because of the ability to establish market barriers, extract subsidies, state-level actor manipulation, dumping.
Antitrust is dead in the US. Cartel economics is part of the oligarchical political control and the formalized power base of the rich.
And economists and economics were puppeted on TV, think tanks, parroting the free market religion to enable this.
And as part of this, we couldn't do anything (and still can't) about global warming. This will possibly doom us as a civilization.
Everyone from Sam Altman to Peter Thiel has been talking about this for years. Capitalists are very straightforward about this - if you want to capture value, find a way to plant your flag in some emerging market and get a monopoly on one or more parts of the value chain. Marketplace operators are especially attractive to investors, because the financials are really pretty - the marketplace provider doesn't own significant assets, only pays for marketplace development costs and sales/marketing, and yet it can levy a tax on a potentially very large market.
Uber, Lyft, Etsy, Doordash, Postmates, Shopify, Spotify, Yelp, Datarade, G2, Capterra, Turo - all are marketplace providers. They don't make a thing. they make the thing that lets a much larger class of thing-makers get in touch with the thing-buyers.
The fervor for marketplace providers has gotten so intense that we're seeing more and more niche businesses get funded, e.g. https://swimply.com/
Edit: ... and don't get me started on how companies (ab)use the 1099 designation to turn traditionally asset-heavy businesses into marketplace providers, generating a lot of paper value while not really innovating in terms of how the service is actually rendered. Looking at you, Arise!
Uber, Lyft, Etsy, Doordash, Postmates, Shopify, Spotify, Yelp, Datarade, G2, Capterra, Turo - all are marketplace providers. They don't make a thing. they make the thing that lets a much larger class of thing-makers get in touch with the thing-buyers.
The fervor for marketplace providers has gotten so intense that we're seeing more and more niche businesses get funded, e.g. https://swimply.com/
Edit: ... and don't get me started on how companies (ab)use the 1099 designation to turn traditionally asset-heavy businesses into marketplace providers, generating a lot of paper value while not really innovating in terms of how the service is actually rendered. Looking at you, Arise!
> "Everyone...Peter Thiel..."
no, not this fake thought leader. business school literally teaches cornering markets (in strategy, but also marketing), and has for decades before those guys were even born. they literally recycled this information and presented it as if they were geniuses who came up with this miraculous approach all by themselves.
no, not this fake thought leader. business school literally teaches cornering markets (in strategy, but also marketing), and has for decades before those guys were even born. they literally recycled this information and presented it as if they were geniuses who came up with this miraculous approach all by themselves.
He's just the guy I heard say it. Unfortunately, John Rockefeller's estate and HBS don't put as much effort into marketing to startuppy-minded millenials in software like myself.
Not trying to endorse Peter Thiel's opinions or those of or anyone else in that mileau. I'm saying the folks funding all the tech companies have been using this playbook for decades.
Not trying to endorse Peter Thiel's opinions or those of or anyone else in that mileau. I'm saying the folks funding all the tech companies have been using this playbook for decades.
and that's why i commented. thiel is an idle opportunist, not an innovator or thought leader, and should be disregarded in such confines.
Thiel didn't claim to have invented this strategy. The reason why people associate him with monopolies is because he claimed that they're better for the consumers. And he wasn't the first to make that argument, either - it's straight from Bork's "The Antitrust Paradox" - Thiel just happened to be the most prominent "big tech" voice who openly embraced this notion.
he was one of the few because the idea that monopolies were good for consumers is about a 5th grader's level of thinking. in a perfect world where monopolies serve a single, narrow segment, don't overreach into adjacent markets or sociopolitics, and there's no general uncertainty or strife, you might argue they'd be a more efficient than multiple market participants, but we live in a dynamic and ever-changing world where that kind of thinking is laughably simplistic. monopolists can't resist distorting markets for their own benefit.
I'm not suggesting that he was right; quite the opposite, I blame the man for the sorry state of affairs today. But this idea was not restricted to "a few" - Bork's book was popular in circles around Reagan, and from there it became a part of modern Republican economic orthodoxy. What was unusual was a businessman, and in the industry that had already seen issues with monopolies at that, saying it openly.
i mean, the era of reagan was also the era of trickle down economics. it was all sorts of stupid--full of greedy, motivated reasoning, not reasonable, rational, or coherent thought.
as an independent, party affliation is a sure sign of vacuous thinking to me, where the cost of membership is leaving your brain at the door (and that's what thiel does btw). democrats are currently making this mistake with anti-federalism, trying to push through national laws that are squarely in the province of state control. this is expedient in the short run for their political careers but damaging to the foundations of the nation in the long run, as consolidation of power nationally is the quintessential threat to our democratic republic. it reeks of hypocrisy.
as an independent, party affliation is a sure sign of vacuous thinking to me, where the cost of membership is leaving your brain at the door (and that's what thiel does btw). democrats are currently making this mistake with anti-federalism, trying to push through national laws that are squarely in the province of state control. this is expedient in the short run for their political careers but damaging to the foundations of the nation in the long run, as consolidation of power nationally is the quintessential threat to our democratic republic. it reeks of hypocrisy.
They do some organizing of information via their apps, which has a tangible user experience (plus the apps themselves are definitely a thing they built). Building a good marketplace is also no small feat.
In concept, they are all useful abstractions over the worst case scenario: individuals only finding and talking with other individuals to get goods or services. In practice, there are definitely abuses which come down to ineffective regulation.
In concept, they are all useful abstractions over the worst case scenario: individuals only finding and talking with other individuals to get goods or services. In practice, there are definitely abuses which come down to ineffective regulation.
>Building a good marketplace is also no small feat.
Nope, but it's lavishly overcompensated and starved of competition for the markets who manage to get the network effect going.
There is no really effective regulation to ameliorate this effect either.
Wouldnt need much though. If, say, e.g. airbnb simply werent able to enforce parts of their ToS around scraping/contacting users then it would make the market vastly less dysfunctional.
Nope, but it's lavishly overcompensated and starved of competition for the markets who manage to get the network effect going.
There is no really effective regulation to ameliorate this effect either.
Wouldnt need much though. If, say, e.g. airbnb simply werent able to enforce parts of their ToS around scraping/contacting users then it would make the market vastly less dysfunctional.
Not saying what they're doing isn't challenging or valuable. Like pydry said, it's a business model with a cost/benefit asymmetry - if it succeeds, you get a nice little monopoly that's difficult to disrupt. That makes it attractive to investors and very sticky, which means we'll see more and more of them pop up unless something changes.
Aren't most of those examples famously unprofitable?
Capterra? Is that site really that useful practically?
Middlemen (e.g. wholesalers and retailers) serve a valuable function.
Imagine each consumer having to maintain relationships with hundreds of factory owners and tens of farmers.
Imagine each consumer having to maintain relationships with hundreds of factory owners and tens of farmers.
>Imagine each consumer having to maintain relationships with ... tens of farmers
Farmers' markets are great.
Farmers' markets are great.
>Farmers' markets are great.
Fyi if you didn't already know... the farmers' markets are themselves a type of middlemen. (At least every one I've shopped at in the USA.)
The farmers' market rents out the booth spaces to vendors (farmers). It's a real-world "platform" to bring together buyers and sellers. The farmers' cost to rent the space is embedded into the prices the consumers pay.
A true individual relationship with a farmer would be something like driving to Joel Salatin's Polyface Farms and buying broiler chickens directly from him. This bypasses the middlemen of farmers' markets.
Fyi if you didn't already know... the farmers' markets are themselves a type of middlemen. (At least every one I've shopped at in the USA.)
The farmers' market rents out the booth spaces to vendors (farmers). It's a real-world "platform" to bring together buyers and sellers. The farmers' cost to rent the space is embedded into the prices the consumers pay.
A true individual relationship with a farmer would be something like driving to Joel Salatin's Polyface Farms and buying broiler chickens directly from him. This bypasses the middlemen of farmers' markets.
That's true. The farmers' market also acts as a advertising for that kind of direct relationship. Most of the vendors have cards with links or phone numbers where you can arrange that kind of thing, or even deliveries. I'd say the difference is the farmers' market allows for that, whereas at a grocery store I'm usually buying products labelled states away, if they even are from a farmer you could ever buy direct from at all.
> "...like driving to Joel Salatin's Polyface Farms and buying broiler chickens directly from him."
reading omnivore's dilemma when it came out impulsively made me want to do that, but of course the impracticality of that quickly dawned on me. it's similarly why reading a book is a better than going and getting first-hand accounts for all our information. we've created socioeconomic structures for very good reasons, so we shouldn't want to burn them down for the tradeoffs, but rather we should address the negatives directly.
reading omnivore's dilemma when it came out impulsively made me want to do that, but of course the impracticality of that quickly dawned on me. it's similarly why reading a book is a better than going and getting first-hand accounts for all our information. we've created socioeconomic structures for very good reasons, so we shouldn't want to burn them down for the tradeoffs, but rather we should address the negatives directly.
We get about 2/3rds of our produce from a CSA (community-supported agriculture) share each week. The farmer drops off a load of whatever's ready to eat that week, and the members show up and take home their portion of what's there.
From a "commercial marketplace" POV, it's basically a farce. There's no security -- it's literally just a folding table full of food on someone's porch with a clipboard to mark that you've taken your share for the week -- and the supply varies with the weather, crop conditions, and even mundane things like "the delivery truck broke down this week; shares will be small and/or late."
And yet: everyone gets fed, the farmer gets paid, and it all ends up being price-competitive with a grocery store (much less a farmer's market).
We also patronize a farmer's market for the "showcase" products that succeed there: big pretty loaves of bread, flats of fruit, etc. It's still cheaper than any high-end grocery store, the shelf life is amazing b/c it hasn't traveled 1000 miles on a truck, and we get to interact directly with the folks who make the food.
The catch -- and it's a big one, in terms of classic microeconomic indicators -- is that we can't get an arbitrary amount of any chosen good at a competitive price right on the spot. Want peaches, but the stall sold out or bugs got this week's share? Sorry; hope cherries are okay this week. Don't like turnips or beets? Well, you might need to trade with someone who does, or find a new way to prepare 'em.
There's also no "economy of scale" to speak of; the largest vendors are probably a couple of bakers who make O(thousands) of loaves per day, or the ranchers and fishermen who show up with coolers full of frozen steaks and fillets (b/c one cow or fishing boat load actually feeds a lot of people).
Oh, and basically every farmer's market is also a localized barter economy. If you watch you can see the vendors roaming between stalls, offering trades and samples with other purveyors. After-hours, there are a _lot_ of boxes of food moving from one stall to another just before the left-overs get loaded back into the truck.
So yes, strictly speaking these are all "marketplaces". It's a far cry though from Amazon swooping in to undercut the successful products on their own platform, or any major store chain selling shelf space to the highest bidder to create -- rather than respond to -- consumer demand.
Obviously it doesn't work for every product or service, but there's definitely a space to accept a little less efficiency in favor of community-level resilience.
From a "commercial marketplace" POV, it's basically a farce. There's no security -- it's literally just a folding table full of food on someone's porch with a clipboard to mark that you've taken your share for the week -- and the supply varies with the weather, crop conditions, and even mundane things like "the delivery truck broke down this week; shares will be small and/or late."
And yet: everyone gets fed, the farmer gets paid, and it all ends up being price-competitive with a grocery store (much less a farmer's market).
We also patronize a farmer's market for the "showcase" products that succeed there: big pretty loaves of bread, flats of fruit, etc. It's still cheaper than any high-end grocery store, the shelf life is amazing b/c it hasn't traveled 1000 miles on a truck, and we get to interact directly with the folks who make the food.
The catch -- and it's a big one, in terms of classic microeconomic indicators -- is that we can't get an arbitrary amount of any chosen good at a competitive price right on the spot. Want peaches, but the stall sold out or bugs got this week's share? Sorry; hope cherries are okay this week. Don't like turnips or beets? Well, you might need to trade with someone who does, or find a new way to prepare 'em.
There's also no "economy of scale" to speak of; the largest vendors are probably a couple of bakers who make O(thousands) of loaves per day, or the ranchers and fishermen who show up with coolers full of frozen steaks and fillets (b/c one cow or fishing boat load actually feeds a lot of people).
Oh, and basically every farmer's market is also a localized barter economy. If you watch you can see the vendors roaming between stalls, offering trades and samples with other purveyors. After-hours, there are a _lot_ of boxes of food moving from one stall to another just before the left-overs get loaded back into the truck.
So yes, strictly speaking these are all "marketplaces". It's a far cry though from Amazon swooping in to undercut the successful products on their own platform, or any major store chain selling shelf space to the highest bidder to create -- rather than respond to -- consumer demand.
Obviously it doesn't work for every product or service, but there's definitely a space to accept a little less efficiency in favor of community-level resilience.
Farmers' markets are great, yes, as entertainment for wealthy consumers with spare time, me being one of those. As a sales channel they are extremely inefficient and all told probably bad for the environment.
As a sales mechanism for CSA boxes they aren't too bad
The efficiency is dependent on what you're measuring - food per land area? Food per energy input? Energy output per energy input?
The efficiency is dependent on what you're measuring - food per land area? Food per energy input? Energy output per energy input?
I was thinking of total energy (and maybe something like CO2) per food on the customer's table, including the waste that's produced.
For me personally it doesn't tract that reducing the supply chain between producer and consumer to the maximum will result in more energy expenditure:
The supplier has one trip to make to sell their current stock.
The consumer has one trip to make to buy multiple items that they're interested in (since this is a market).
The supplier has one trip to make to sell their current stock.
The consumer has one trip to make to buy multiple items that they're interested in (since this is a market).
Great quote on that from Vaclav Smil's new book: " each greenhouse-grown, supermarket-bought tomato has the equivalent of five tablespoons of diesel embedded in production"
But a marketplace is a classic example of a middle man. They facilitate sales between one group (the farmers) and another group (the buyers). The alternative is every buyer visiting every farm they want to make a purchase from. Farmers markets are a useful example of why middlemen often have a valuable role.
I never said they weren't. The takeaway would be middlemen can add different value. In this case the middleman is adding value by opening the door to direct relationships. So it's a gateway. In the case of a supermarket, they're adding something like distribution or logistics.
Your comment is phrased as if you disagree with a conclusion which I don't believe was posed in the GP.
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here in chicago most of them aren't even farmers. They are just middlemen.
It turns out manufacturing and distribution aren't the same business (food is a perfect example, there are used to be multiple layers of wholesalers, supermarkets took that all away...if you take them away, you get the layers of wholesalers...I will also say, farmer's markets aren't as clean, no-one today knows how unclean food used to be before supermarkets but that is another major reason why they exist).
You would have thought that a former policymaker/lobbyist would have known better than the market...he went to Harvard you known. But it turns out that there is a reason why businesses have been organized this way for the past three centuries.
You would have thought that a former policymaker/lobbyist would have known better than the market...he went to Harvard you known. But it turns out that there is a reason why businesses have been organized this way for the past three centuries.
Somehow people expect to buy straight from the farmers at the farmers market located in the downtown of a large city, ignoring the fact that the farmers do need to.. farm their land. Traveling with their goods back and forth within the city isn't really an efficient use of their time.
well if its called 'farmers market' then that's the assumption. Should be called 'random market' otherwise.
I grew up near a 'random' fresh produce market called 'Balham market'. It's since been renamed 'Hildreth Street Market' and, according to Time Out, it's "blossoming into a foodie’s paradise".
Yeah the point of the article is if you can monopolize that layer you can extract enormous rent, especially if you get yourself exempted from the law against kickbacks which pharmacy middlemen did.
How does Walmart (cited early in the article) fit into this overall narrative?
As a consumer, I feel like Walmart operates in a competitive market. I go to Walmart even less often than I go to Target.
As a consumer, I feel like Walmart operates in a competitive market. I go to Walmart even less often than I go to Target.
Target and Walmart have lots of control over sellers (technically as a Monopsony), if the don't carry your product, it doesn't get to consumers.
Also you may be lucky to have a choice, there are plenty of places where it's just a Walmart or target.
Also you may be lucky to have a choice, there are plenty of places where it's just a Walmart or target.
Consumers and producers can form cooperatives. They are middlemen, but not overfed ones.
I would struggle to define sub 5% profit margin retailers and wholesalers as overfed.
Poor starving Target investors with their stock being up 180% from 5 years ago
I mean Tesla investors are up far more and for what? they did nothing but buy the right stock at the right time. How did that action make the world a better place?
Are they middle men though? The stocks are basically unrelated to the business being done, unless the value gets so low that the underlying assets are worth more.
The only difference between a manufacturer’s online store and a retailer’s from customer point of view is that the retailer sells multiple brands. I guess maybe there’s some value if you want to browse different brands, but if you already know what you want then the middleman is not providing you any benefit at all over the manufacturer’s online store.
Brick and mortar is different because they’re actually maintaining a space to show the items and bringing them close to you which is a benefit to the buyer.
Brick and mortar is different because they’re actually maintaining a space to show the items and bringing them close to you which is a benefit to the buyer.
"Brick and mortar is different"
Not in the ways you describe:
"because they’re actually maintaining a space to show the items"
This is similar to Amazon's site browse/search experience.
"and bringing them close to you"
This is similar to Amazon's fulfilment network.
Not in the ways you describe:
"because they’re actually maintaining a space to show the items"
This is similar to Amazon's site browse/search experience.
"and bringing them close to you"
This is similar to Amazon's fulfilment network.
It’s a common experience to order something from a website and have its appearance be different from your expectations based on the photos and description. If you can see the appearance of the item you’re buying before buying that problem is impossible
I'm old enough to remember when most things I bought were bought in a physical store. I'd choose based on price, appearance and (for things like electronics) a textual description.
Today, I'll choose after reading several 2/3/4 star reviews for each of several alternatives.
This has resulted in a far lower rate of surprises and disappointments.
Today, I'll choose after reading several 2/3/4 star reviews for each of several alternatives.
This has resulted in a far lower rate of surprises and disappointments.
The internet was supposed to clear out all the middlemen. The websites consumers and factories use should be completely commodified and under strong competition, and with lots of innovation, like in the early days.
Very disappointing.
Very disappointing.
E-commerce isn't just about websites.
If I buy a charging cord from a factory owner, how long before I have it in my hand? And how much will shipping cost?
The fact that I can order a charging cord (or 10 different ones from 10 different manufacturers) and have them delivered tomorrow is innovation.
If I buy a charging cord from a factory owner, how long before I have it in my hand? And how much will shipping cost?
The fact that I can order a charging cord (or 10 different ones from 10 different manufacturers) and have them delivered tomorrow is innovation.
Market forces on a commodified, non-monopolized playing field should come up with all that innovation and bring us that charging cord faster and cheaper, and/or through a wider variety of curated market places and organic charging cord communities.
"organic charging cord communities"
I honestly cannot tell whether you're joking.
I honestly cannot tell whether you're joking.
I tried to be a little concise. These days we mostly wonder which Amazon review is fake, and which product might be counterfeit. In the earlier days of the internet niche forums surprised with exciting and on-point information and initiative. Back to your charging cord example, a store could innovate and stand out by offering reliable off-brand alternatives for things like charging cords. Such innovation is less likely when a monopolist is holding on to most of the market share.
Back to my main point: The basic logistics of distributing products around the world should be equally good or better in a world without monopolists - theoretically, monopolies extract a surplus (https://en.wikipedia.org/wiki/Monopoly#/media/File:Monopoly-...), intuitively it's obvious ("why try when you don't have to").
Back to my main point: The basic logistics of distributing products around the world should be equally good or better in a world without monopolists - theoretically, monopolies extract a surplus (https://en.wikipedia.org/wiki/Monopoly#/media/File:Monopoly-...), intuitively it's obvious ("why try when you don't have to").
Up to a point, yes. Utility tends to follow a sigmoid curve.
This feels like he's copying Stratechery, down to the stick figure MS Paint diagrams (e.g. https://stratechery.com/2018/the-bill-gates-line/)
lots of blogs are like this though, using quick-and-dirty visually-accessible illustrations to convey ideas.
I mean, the concept and stuff too.
"The text of the Sherman Act bars ‘monopolization,’ so to write that one is trying to build firms that can ‘monopolize’ is, well, remarkable."
Perhaps remarkable to say it out loud, but other than that not remarkable at all and totally logical.
Any company in a free market is incentivized to combat their number one threat: competition. You can combat competition with a good product, but also more hostile methods like outgrowing, acquisitions, patents, lobbying, cartels, etc. Competition is an existential threat so the incentives are very strong. Being the only one playing nicely means your business is dead.
Monopolization in tech is even more incentivized as it's often trivial for competition to copy your approach/product. So "good product" just doesn't cut it.
The only remarkable thing is an almost complete lack of regulation, Sherman act or not. The article is full of examples of monopolies that should not exist. But they do exist. Regulation is non-existing or 10 years late.
Perhaps remarkable to say it out loud, but other than that not remarkable at all and totally logical.
Any company in a free market is incentivized to combat their number one threat: competition. You can combat competition with a good product, but also more hostile methods like outgrowing, acquisitions, patents, lobbying, cartels, etc. Competition is an existential threat so the incentives are very strong. Being the only one playing nicely means your business is dead.
Monopolization in tech is even more incentivized as it's often trivial for competition to copy your approach/product. So "good product" just doesn't cut it.
The only remarkable thing is an almost complete lack of regulation, Sherman act or not. The article is full of examples of monopolies that should not exist. But they do exist. Regulation is non-existing or 10 years late.
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I wonder about the "Google extracts enormous rents" bit. Yes, in the aggregate, Google is earning lots of money from advertisers, but for the average advertiser, how big is this cost, and compared to what? (Genuine question - I don't know a lot about advertising.)
Also, given the anti-advertising mindset on Hacker News, it seems weird to get all that upset about advertisers paying too much? "Who will think of the advertisers," say people who have probably installed ad blockers.
Also, given the anti-advertising mindset on Hacker News, it seems weird to get all that upset about advertisers paying too much? "Who will think of the advertisers," say people who have probably installed ad blockers.
I know a surgeon who invested €10k/month in Google ads for a while just to get a few patients per month. CPC was €10 or so. Absolutely nuts, you’d think. But one procedure nets him €8k, and he said that those ads are absolutely vital to him - without Google ads, his revenue suffered greatly. His campaign was setup wrong for a while and he immediately noticed because people stopped booking surgery with him.
Academic institutions are the most overfed middlemen. They've insinuated themselves into the ability to have a job in many fields.
Has there ever been a winter that affects academic institutions? Ever been a need to cut back? Tighten the belt? They are like an overgrown jungle.
They often peddle shoddy goods (degrees that will never pay off), to unsophisticated consumers (18 year olds and their parents). Any other industry would have laws and regulations attempting to protect the unwary, but somehow, only angels work in adademic institutions.
They have choruses of shills (guidance councilers and others) telling anyone who will listen that if you don't go to college, your life will be ruined. See how indispensible they are?
Can't afford it? Get a subsidized loan for which the institution has no skin in the game. Can't pay it off after? Not their fault!
Institution needs more money? Just raise the rent.
Has there ever been a winter that affects academic institutions? Ever been a need to cut back? Tighten the belt? They are like an overgrown jungle.
They often peddle shoddy goods (degrees that will never pay off), to unsophisticated consumers (18 year olds and their parents). Any other industry would have laws and regulations attempting to protect the unwary, but somehow, only angels work in adademic institutions.
They have choruses of shills (guidance councilers and others) telling anyone who will listen that if you don't go to college, your life will be ruined. See how indispensible they are?
Can't afford it? Get a subsidized loan for which the institution has no skin in the game. Can't pay it off after? Not their fault!
Institution needs more money? Just raise the rent.
The problem is users don’t necessarily want a fractured market. It’s convenient to have one vendor. In the short term, customers value the simplicity of having just one search engine or e-commerce experience. They don’t think about the long term harms to them / the economy.
customers don't all want the same single vendor though, as we have varying needs (outside of true commodities).
Yeah. Tell that to Microsoft
Specialized vendors usually deliver better products than generalist vendors though because its simply harder to have expertise in all domains than a fewer number.
computers change that to a large degree - your youtube is different than my youtube... but it's all youtube.
Without reading the article and just the headline, I thought this was going to be an article on economy that has a bloated amount of over paid middle management. Was very disappointed.
Decentralization is the answer. Look to peer to peer technologies.
NYC cooperative apartments are the worst kind of middlemen here too.
One thing we have to ask is the monopolization the problem??
Do we want to break monopoly up in favor of a bunch of possibly shittier products?
The real problem It's not the monopoly it's the Monopoly tax.
Do we want to break monopoly up in favor of a bunch of possibly shittier products?
The real problem It's not the monopoly it's the Monopoly tax.
There's a large body of economic literature arguing that competition breeds efficiency and better service. Granted it's only starting to grapple with the question of how to regulate the new economy - c.f. Lina Khan's paper on Amazon which made quite an impression [1]
So it's not clear that breaking up a digital marketplace monopoly would result in shittier products, tho I agree that the theory is less clear cut than in the case of more traditional businesses.
[1] https://web.archive.org/web/20170405144903/http://www.yalela...
So it's not clear that breaking up a digital marketplace monopoly would result in shittier products, tho I agree that the theory is less clear cut than in the case of more traditional businesses.
[1] https://web.archive.org/web/20170405144903/http://www.yalela...
This is one of those weird things where in principle, a monopoly should be both interested in providing the best possible service (to keep their position indefinitely, even through technology shifts), and in a unique position to invest in research to make it so (under competition, it's harder to invest in research.)
In practise, that's not what happens.
In practise, that's not what happens.
Why would a monopoly be interested in providing the near possible service? They can simply lobby to make upstarts impossible, or buy them, or bleed them dry with localised dumping prices, or steal all of their best ideas given they have more resources. All of these have much higher margins.
It's not a "weird thing" it's the inherent reason why anti trust laws and regulations are required for efficient markets, and why rent seekers always argue for free markets
It's not a "weird thing" it's the inherent reason why anti trust laws and regulations are required for efficient markets, and why rent seekers always argue for free markets
That's not even true in principle. A monopoly's interest is in moatbuilding and maintaining their monopoly. If service and research achieve that, then fine, but if they don't that's also fine.
It doesn't matter how good at what they do a particular company is; we still don't let them take over everything.
If we were to be organizing our economy based on what is maximally efficient, it would be much more effective to do so with the government in charge...but somehow, the people who talk about letting one efficient company take over everything never seem to think that letting the government do the same thing, but without taking massive profits, would be good.
If we were to be organizing our economy based on what is maximally efficient, it would be much more effective to do so with the government in charge...but somehow, the people who talk about letting one efficient company take over everything never seem to think that letting the government do the same thing, but without taking massive profits, would be good.
> One thing we have to ask is the monopolization the problem??
It's a good point. My problem with monopolies is that they minimize risk and maximize reward, basically becoming a tax authority. Once you become a monopoly, you should graduate to nationalization.
It's a good point. My problem with monopolies is that they minimize risk and maximize reward, basically becoming a tax authority. Once you become a monopoly, you should graduate to nationalization.
What this viewpoint always misses is the labor market. That's a real market with real consequences, and when monopolies roll up entire industries, that's market power that gets used _against_ workers and their wages.
I don't think it's worth ignoring that or the loss in real innovations in the name of being deferential to established business and the imagined value of the quality products they create.
I don't think it's worth ignoring that or the loss in real innovations in the name of being deferential to established business and the imagined value of the quality products they create.
If a monopolist is efficient, then nationalization is efficient. Break them up or seize them.
That does not follow. "The monopolist can do this efficiently" != "the government can do this efficiently". In particular, the monopolist has given evidence of knowing how to run that operation well. The government has given no such evidence.
I'm not a fan of monopolies, but your position is flawed.
I'm not a fan of monopolies, but your position is flawed.
If we go from a generic concept of monopoly as consolidation of power instead of a specific instance of monopoly - this company has consolidated power - then it follows that if consolidation of power is more efficient we should just consolidate power.
But sure, if it's specific instances of consolidation that are more efficient then you are correct, the specific company has shown it can do it efficiently and thus it does not follow that consolidation with the government would be efficient.
but if you have a situation that what determines if a monopoly is efficient is that it is a monopoly and controls its industry then it seems we have just in a round about way gotten back to any consolidation of power is efficient and the government should do it. Unless you can show inefficient consolidation of power that is inefficient in some way other than by losing the power then it seems the argument for nationalization is back on.
on edit: on the other hand if you can show an inefficient consolidation of power, like consolidation of majority of shopping through one portal that is yet unable to keep counterfeit products out, then it argues that inefficient consolidation of power should be broken up because it's inefficiencies will not be solved as long as the power is consolidated and competition will hopefully help.
But sure, if it's specific instances of consolidation that are more efficient then you are correct, the specific company has shown it can do it efficiently and thus it does not follow that consolidation with the government would be efficient.
but if you have a situation that what determines if a monopoly is efficient is that it is a monopoly and controls its industry then it seems we have just in a round about way gotten back to any consolidation of power is efficient and the government should do it. Unless you can show inefficient consolidation of power that is inefficient in some way other than by losing the power then it seems the argument for nationalization is back on.
on edit: on the other hand if you can show an inefficient consolidation of power, like consolidation of majority of shopping through one portal that is yet unable to keep counterfeit products out, then it argues that inefficient consolidation of power should be broken up because it's inefficiencies will not be solved as long as the power is consolidated and competition will hopefully help.
The monopolist isn't a person per se, unless you imagine Jeff Bezos micromanaged every aspect of Amazon.
'Run well' like 'efficiently' is up for debate. Amazon is efficient because of its distribution model and allegedly because it exploits its workers to some degree. Many labor practices would be incompatible with standards of government employment, for the good reason that government should uphold the very labor standards it extols to the market. So if Amazon's retail distribution were nationalized, either it would run less efficiently or we'd have to admit that it's profitability depends on practices many consider unsavory or unethical.
But let's take ethics out of the equation and suppose you have a highly efficient operation run entirely by robots, which is also a monopoly. In a competitive environment margins should fall within the range of normal profits, but if it's a monopoly then the owner can continue to extract economic rents and you're essentially back to landlordism. In that case there isn't a good argument against nationalization or jacking the marginal tax rate sky high.
'Run well' like 'efficiently' is up for debate. Amazon is efficient because of its distribution model and allegedly because it exploits its workers to some degree. Many labor practices would be incompatible with standards of government employment, for the good reason that government should uphold the very labor standards it extols to the market. So if Amazon's retail distribution were nationalized, either it would run less efficiently or we'd have to admit that it's profitability depends on practices many consider unsavory or unethical.
But let's take ethics out of the equation and suppose you have a highly efficient operation run entirely by robots, which is also a monopoly. In a competitive environment margins should fall within the range of normal profits, but if it's a monopoly then the owner can continue to extract economic rents and you're essentially back to landlordism. In that case there isn't a good argument against nationalization or jacking the marginal tax rate sky high.
How do you come to conclude that Organisation A (monopolist) will magically be less good than Organisation A (owned by the state)? If the same organisation is profitable while but state-owned, it could also be an indicator that it's just not operating in a legit way.
Note: I think you've also been confusing government and state, but I assume that was not intentionally.
Note: I think you've also been confusing government and state, but I assume that was not intentionally.
> Note: I think you've also been confusing government and state, but I assume that was not intentionally.
Not intentionally, no. Given that the context was nationalization, what in your view is the difference between government and state?
Not intentionally, no. Given that the context was nationalization, what in your view is the difference between government and state?
Ideally, a government (temporally) "steers" a state, which, again ideally, would be the property of its inhabitants.
Monopolists are non-representative governments.
The monopolist is just some asshole with advisors. If the government can't hire advisors, shut it down, it's pointless.
Not all monopolists are equally efficient at managing their monopolies. Especially monopolies that can bail themselves out by forcing people to subsidize their losses.
I agree, but I'm also making a point: a truly natural monopoly, one created by circumstances or structural factors, doesn't really require a monopolist, per se. This has been the traditional argument for state ownership or heavy regulation of utility companies, for instance.
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Brokers (what the author calls "middlemen") have existed for ages and served all sorts of purposes in all sorts of economic activities. They serve a specific and valuable function in the economy.
The author muddles the point by bringing this into the equation. The core, valid issue raised is monopoly power. Which will naturally be the end goal of any enterprise. It is governments job to bring reasonable power to bear to prevent monopolies. Ours is failing to do this due to crony capitalism - all of the benefits both sides of the political aisle reap by maintaining the status quo.
The author muddles the point by bringing this into the equation. The core, valid issue raised is monopoly power. Which will naturally be the end goal of any enterprise. It is governments job to bring reasonable power to bear to prevent monopolies. Ours is failing to do this due to crony capitalism - all of the benefits both sides of the political aisle reap by maintaining the status quo.
I respectfully disagree. Brokers are a subset of middlemen. In many industries the role of a broker is well-defined and often regulated. A middleman can be a broker, an agent, a facilitator, price comparison site, wholesaler or any other intermediary mechanism. For organisations which seek to own all aspects of the intermediary space, and with a generally opaque representation of benefit to both suppliers and clients, the use of the term middleman seems more appropriate.
If we didn't da anything about Microsoft ca 2000, we absolutely can't do anything about what Stoller writes about.
Do we even know what Stoller's funding is? Propa... Material like this appeared around 1996 and continued to surface all through the Microsoft trial
Do we even know what Stoller's funding is? Propa... Material like this appeared around 1996 and continued to surface all through the Microsoft trial
The Gates deposition should be an art display somewhere, it could even be exhibited alongside antitrust's gravestone.
It would be quite ironic if Microsoft was funding "Google is a monopoly" research.
But not out of character, or out of the question.
This article feels like a poor retread of what Ben Thompson has been writing [0] and podcasting [1] about for at least the last 5 years. Even the rough sketch diagrams feel like a poor copy of what Ben does at Stratechery. The conclusion that "if we just... <do something>" is vague, reductionist, and hand wavy. These aren't simple problems and the old antitrust tools weren't designed for monopolists who focus on the demand side rather than the supply side.
[0] https://stratechery.com/aggregation-theory/
[1] https://exponent.fm/
[0] https://stratechery.com/aggregation-theory/
[1] https://exponent.fm/