America has a monopoly problem
thenation.com
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It is a dismissive comment from the senator, he should feel insulted. It is like saying "help I'm bleeding" and the guy next to you saying "its not that bad, get over yourself".
I'm not suggesting their is a spoken conspiracy. But when neither side benefits from direct competition, what's the word for that?
https://en.m.wikipedia.org/wiki/Trust_(business)
In the days of Rockefeller, these things were a little more formal. Nowadays companies know better than to put such silent agreements in writing.
This seems historically ignorant. Most systems of allocating power and resources have been tried at various times. The answer is likely at the end of a long, nuanced, and painful road of combining ideas from several of those systems: adjusting, revisiting, admitting failure, and correcting.
I would be skeptical of any "new system" that is not a result of reflection on historical economies.
Edit: to clarify about Flux, it's still using an existing system, i.e. Democracy although it is implemented as Direct and Delegate Democracy within a Representative Democracy system, but, my point was, that such system could be used as a political virus to change the system from within without bloodshed, and then a totally new system can be put in place.
The military is quite socialist as when you enlist you're given food, housing, equipment, medical care, and other things to perform your job, but it's also part of a large capitalist system where equipment and supplies are provisioned from a (theoretically) competitive marketplace.
What we need to do is find the right balance between dog-eat-dog individualism and insufferable collectivisim.
There are good things in both orders, we need to learn from them, but something in the middle we already have in EU, and it's not working so well.
The EU is not perfect, nor is the US, Canada, China, or anywhere else. We need to carefully analyze and experiment, not mash the reset button in the hope we get something better next time.
The difference between the EU and America is actually pretty slight on these two scales, but tiny shifts in policy can have a huge impact on society.
Edit: I'm saddened to find out that Jacque has recently passed away. I was planning to meet him in person as he was at an honorable age.
I think it would be like everyone living in and contributing to the US as an idea. The block chain of the "US" has a good social security net, good public non-profit infrastructure, ample opportunity etc... Or theoretically would/should anyway. In reality it's too prone to corruption and manipulation.
If smart contracts get stable and consistent enough (and build up a correspondingly large body of contract law) we end up being able to create entities of faith, things to believe in and rely on but are also fragile in that they need faith to persist as well. "gods" if you will.
We have a systemic corruption problem (manifested in lobbying) coupled with greed on scales we've never seen before. Everything else is just a symptom of that problem.
Amazon receiving 238 bids of localities falling over themselves to handover tax credits and other goodies is the example I've been thinking about recently.
https://www.reuters.com/article/us-amazon-com-headquarters/a...
How to fix it though?
Unfortunately the states are not turkeys voting for Christmas
Don't think we can. We're more likely to fix one of our other big, fundamental problems—the two party system + gerrymandering, for which proportional representation or any of several other schemes would be a good fix—than we are that, and I'd say the odds of our fixing that this century are maybe 50/50. We have no stomach (or mind...) for questioning such foundational premises of our system in the face of something as abstract and high-falutin' as a kind of political root-cause analysis, and aside from that we have too many states-can't-possibly-do-anything-right-ever-evidence-be-damned-no-really-I-proved-it-from-first-principles-it's-just-like-math folks running around.
I don't think you can save that many people when there are so many of them. It becomes cultural. Their identities are defined by their conviction. In earlier times, that would be the point where you leave the society and go somewhere else, but there is really no where left to go on Earth - every country has their own flavor of brooding fundamentalists supporting some faction of the government through propagandized anti-intellectualism.
This exists even though EU nation states have far more individual power than US states.
For example, Belgium recently updated certain tax laws to reduce the amount of withholding tax payable by certain major foreign investors, to keep the AB Inbev holding company in Belgium instead of letting the shareholders move their holding entity to the UK.
Yes, because such "subsidies" would create competition for companies from more developed EU countries, the same countries that drive the acceptance of new EU members. Removing these obstacles crushed local industry, which is why less developed countries ended up with close to zero industrial production after joining the EU (thus starting the social, employment and competitiveness problems most smaller EU nations are facing).
Nevertheless, EU nations keep subsidizing "selected" businesses, especially for big foreign companies outsourcing their operations, using tax benefits.
These sorts of talking points exist everywhere, in the West and in the East, state aid is one of the most attacked elements of the EU. Actually the talking point is near identical in the UK, that manufacturing has died because the government hasn't been able to step in (in effect, to prop up uncompetitive industries). Manufacturing has in fact plummeted in most developed countries, and it's easy for governments to pass the blame onto the EU.
Not really. The problem with most of the small-ish EU countries is that with the exception of Cyprus, Austria, Finland and Sweden, all the 13 countries that joined after GDR/BRD unification were former USSR or Yugoslavian countries + the GDR itself which was USSR allied. This means that their entire industry companys were either uncompetitive since decades (but kept artificially alive by the realo-socialist states) or got fleeced by local or foreign mafia (or, in the case of former GDR aka East Germany, by the Treuhand which has had its fair share of scandals) after the fall of the USSR.
In addition, there's a _massive_ wealth gap between the EU/EEA core (Germany, France, the Nordic states, Switzerland and UK), which bled all other EU nations dry of young people (they went off to study and stayed) and loads of working-age people (they went off to earn money to support their families at home, and stayed). The people "left behind" tend to be old-ish and politically conservative, which doesn't exactly help when everything around is changing at an unknown (for Soviet/Yugoslavia) pace... and what's left of young people today flees from the corruption and religious-conservative politicians.
What saddens me is that I have no idea if the situation can be fixed at all. Manufacturing or heavy industry isn't going to come back, no matter how hard Trump or his ideological "friends" try. It will stay in China or maybe migrate to Africa as soon as Chinese labor gets too expensive/the Chinese politics too restrictive. All that remains is agriculture (which is going to be more and more automated), tiny chunks of natural resources exploitation, and tourism. Maybe a bit of IT stuff, but people are highly skeptical of nearshoring/offshoring since the "big companies" (Accidenture, IBM, whatever) spoiled the well, and the local markets by far don't have as much demand...
Source: am half Croatian, half German (born and raised in Germany though).
If tax agencies would just stop accepting any "transfer pricing" BS from multinational corporations, and simply divide their total net profit (wherever) by the share of the national market and base corporate tax on that, I think that would be a start.
Localities competing for business is i.m.o. much less problematic: it's a one-time write-off, there is legislation, and it has to be "sold" to tax-payers.
Outside of those though, their are many cities of considerable size where local developers hold the most sway. These local developers behave and are motivated by different things then the mega corps.
That sounds a little too extreme. Has vertical integration never occurred without the help of tax law?
It's much more complicated that what the OP laid out.
This is, however, why you cannot just have a strict free market. Some industries emerge - and will emerge - that are naturally hard to enter and compete in. But at the same time, you need to have the lightest touch necessary, because the same regulatory apparatus can (and does in spades today) be abused to prevent competition by industry incumbents. But again, it is hard to accumulate the capital or scale to control government unless you have one of those non-competitive revenue streams.
The important historic realization is that we have failed to police businesses that had such extreme margins, probably because at the time those invested in such businesses felt it was just the success of the American market instead of being a wound in society that would grow infected.
Can you really tease those apart in our mixed economy? Look at ISP monopolies, or the bizarre state of the "deregulated" electricity market and what remains of the long-distance telephone market. Or take pharma, where tremendous resources are needed to comply with regulation. Or the -- tremendous scare quotes required -- "marketplace" for health care. In a mixed economy, monopoly exists because of state and market.
> In a mixed economy, monopoly exists because of state and market.
No. We live in global economy. Most companies have to compete globally. You might get favours from few countries but not most. Note whether your home country gives you a boost or not, is irrelevent. The success in a foreign country without its govt's blessing, is the question.
Though, USA is an exception, achived arguably due to history of low market intervention. I would not say that the MNC does not care but achieving global monopoly in heavely regulated industry is very hard. Case in point, in banking industry (the most regulated sector), there is no private (or even public) global monopoly.
Facebook will generate near $20 billion in earnings before tax for fiscal 2017. You're positing that if they pay $6 billion in taxes, instead of $4 billion, then their monopoly will unwind or somehow their competitors will finally be able to catch up (yeah, it's just not fair, the tax rate that Snap is paying).
Now apply the exact same thing to the other tech giants (Apple, Microsoft, Google, Oracle, Intel, Cisco, etc). It's just as far-fetched with them as it is Facebook.
You are flat wrong. The integration has already occurred. The corruption is currently ingrained. Being able to source from your own penny factories in another country put many of the behemoths into their market dominant position or solidified them. Facebook is an odd duck which leveraged capital wisely. Amazon had decades of massive loses (revenue-wise) until, roughly, AWS took off. The capital markets favor bigger players at almost every turn and smaller successful companies are consumed and destroyed at a shocking rate after they rise above a starting locality. Microsoft used to afford that kind of market attrition, but now it's been largely Yahoo, Google, Alibaba, etc.
It's laughable to think a country could solve any of those things through stricter legislation; that will simply encourage those companies to move more of their operations to jurisdictions with more advantageous laws/taxes/labor/etc.
So how do you "level the playing field"? One way would be bringing those advantages to smaller companies through businesses that exploit those same loopholes / tax strategies, providing them as services to companies who otherwise couldn't afford doing it themselves (i.e., exploiting legal loopholes as-a-service, international tax strategies as-a-service, etc).
Or, you embrace the global economy, specialize in what your country can do most efficiently (hint: it's not manufacturing anymore in the US), and make it advantageous for companies to keep operating domestically. You lower taxes for everyone, so even the companies with few resources can enjoy the eased financial burden of taxes that normally only the big guys could avoid. In short, you compete globally rather than stick your head in the sand pretending that your country is somehow isolated from the rest of the world and you can fix everything through legislation.
treat it like the olympics. if an athlete that takes a performance enhancing drug that has yet to be prohibited, they still loose their medals and cannot compete.
The US leverage is limiting access to US markets for companies that do that.
As bad as China is to foreign companies, they're still bashing away at the doors to be let in. Imagine any of GAFA being blocked from doing business in the US.
You have multinationals getting around a design flaw in the US tax system, by acquiring a foreign entity and going abroad.
Of course those companies will just search out another legal alternative to avoid paying taxes. And that is well within their rights.
In 1952 corporate tax in the US was 33% of total revenue. Today it’s less than 9%.
I’m also pessimistic but that doesn’t mean we should give up. There’s nothing about this that’s writ in stone.
I know it’s hard to believe, but the next 15 years will see a dramatic rise of government power and higher corporate taxes. This will happen very suddenly with one party taking complete control of all the branches of government along with having a dominant ideology at their back. Doesn’t really matter if Republicans or Democrats are in control, we can see the progressives on the left like Sherrod Brown, and populists like Steve Bannon on the right (who has spoken highly of Senator Brown), advocating shockingly similar proposals.
There's not much laws can do to change that, that is just the way having the flexibility to structure your business in whatever way you prefer works.
If you were to reduce the US corporate tax rate to 10%, a lot more profit would be booked in the US again.
Until other countries lower theirs, then it's just a race to the bottom, no?
Imo, it's smarter to tax shareholders more, and corporations less. Corporations are generally productive and having the statutory seat of a multinational company in your country leads to an increase of tax revenue, because 1) people will have jobs, 2) those people will pay income tax, sales tax, will spend at (mainly local) businesses whose shareholders will be taxed, etc.
Dividend and capital gain taxes are generally also harder to avoid for the wealthy. At best you can defer them, so you'll always have to pay some tax if you want to spend $1-2-5m a year. Corporate taxes and income taxes are (very) easy to avoid.
I wonder how much it would cost to completely eliminate corporate taxes but increase dividend and capital gain taxes to say, 35-40%. Now, that said, I don't think this will ever happen. People in power love their tax breaks too much.
Take that away and I have no incentive to invest in stability but have every reason to disrupt the market and take advantage of the swings. I'm not sure you want that.
> The reason long-term investments are taxed at a lower rate is because you want to incentivize long-term investing as it increases stability.
Since most equities are held by tax exempt entities (whether that is domestic or abroad, e.g. pension funds or hedge funds in a tax haven), this argument doesn't make sense. The stock price of AAPL or YELP is not going to tank because an individual investors sells (barring perhaps the CEO).
The tax rate is lower generally to account for inflation. But not all countries have sliding capital gains tax rates. The UK has a 28% rate, most capital gains are exempt in Belgium and the Netherlands (but the latter has a small wealth tax), France just introduced a 30% rate, etc.
The "race to the bottom" is the reason why free markets are so prosperous. Each business independently works to reduce costs and competition forces companies to share those savings with consumers.
The best example of the "race to the bottom" stopping are monopolies (often gov't supported) like Comcast where they can sit fat and happy raking in a ton of profits and telling consumers to shove it.
Have they increased in line with the larger national budgets required for basic public services?
Furthermore most major corporations have had government involvement to attain their status, whether in the forum of subsidy, bailout or military procurement. Unfortunately most people aren’t aware of this “corporate welfare”.
Basically corporations which are unaccountable concentrations of public power, should not be allowed to dictate to the government, which is at least in theory accountable to the public. Unfortunately the trend has been in the opposite direction.
Which would do what, exactly, for most people? Precisely nothing.
And they'd use loopholes to bring their tax burden down to 0 anyway.
If you want to lower or eliminate corporate taxes (with a positive effect for people), you would need to increase dividend and capital gains taxes to compensate. You don't need to collect more corporate tax than is collected today, but if you can create more jobs, that's a net win.
Comparing the corporate tax rate in 1952 to today is pointless. In 1952, the U.K. was a shell burned out from WWII. Today, it's a tax haven luring American companies to reincorporate there. You cannot fight this process with legislation--you'll just shoot yourself in the foot and drive companies out to other countries that will be happy to receive them. This isn't just a U.S. thing--even accounting for deductions and tax breaks, the U.S. has higher corporate tax rates than our competitor countries: http://www.npr.org/2017/08/07/541797699/fact-check-does-the-.... The "real" amount of taxes paid in the U.S. is about 18.6%, versus 8.5% for Canada, 11.2% for France, and 4.1% for South Korea.
It’s quite simple, with financial power comes political power. Elections cost a lot of money these days and if you look at the donor list of both parties it’s dominated by large corporations.
Edit: a more useful metric will be the percentage of total revenue paid by corporations. As can be seen the tax rate is misleading.
The government doesn't "permit" outsourcing of U.S. jobs. Thanks to the technology created by folks here on HN, there is nothing the government can really do if IBM decides to fire a worker in New York and hire one in Bangalore. The only thing the government can really do is offer concessions and incentives to reduce the bleeding.
> It’s quite simple, with financial power comes political power. Elections cost a lot of money these days and if you look at the donor list of both parties it’s dominated by large corporations.
The party that spent the most money just lost the most recent major election, so I'm not convinced money really matters much. In reality, we spend a minuscule amount on politics given the size of the country. About 0.0037% of GDP on Presidential elections, and 0.019% of GDP on lobbying. For context, we spend less on lobbying each year than we do on specialty coffee.
If money really bought elections, companies would spend a lot more of it trying to do so.
This scholarly study found that “economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence.“
Hardly a surprising fact. Polls show most Americans believe the government is dominated by a small group of special interests who are looking out for themselves.
https://www.cambridge.org/core/journals/perspectives-on-poli...
Even the threat of money buys politicians. Case in point: the repeal of Obamacare is wildly unpopular with the US public, but the Koch brothers got a majority of the house of representatives to vote for it. How? Simple: they threatened that any GOP representative who voted against it, would face a primary opponent in their district next year with $millions in funding. They don't even have to spend the millions (although they do), because simply the threat of a well funded primary challenger is enough for them to buy votes.
It's a great tragedy that the supreme court has effectively taken our democracy away from us by ruling that money is speech, and protected by the first amendment.
Also, you’ve got it backwards about Citizens United. The Supreme Court didn’t rule that money is speech. Instead, detractors are trying to convince people that speech (the case was about a political movie) is actually money.
They have influence on government because they pay politicians bribes that get them elected. Endless evidence to support that where companies or industries give money, politicians get elected, and politicians pass laws to give those companies benefits they want that aren't good for voters or even the voters money. The politicians get wealth and power in return. End of story.
The rest is narrative the politicians use to distract from that. Now, they do like bringing jobs and contracts into their districts to increase their votes. They operate on money, though. Recent example with ISP's:
https://www.theverge.com/2017/3/29/15100620/congress-fcc-isp...
The oil companies make it even more obvious. They're making insane profits but still get tax subsidies from the politicians they paid off.
https://www.theguardian.com/environment/2015/may/12/us-taxpa...
And this is one of the many reasons I despise the UK currently (I'm British). The citizenry do not benefit from these arrangements. If anything people seem to becoming more aware of it and more pissed off about it.
I love how the UK likes to torpedo any EU attempt to overhaul and address these greedy little sweetheart deals as well.
But I agree with you that you can't ignore corporations' outsized influence on corporate taxes.
I highly doubt that is true. I mean, there are only 3 basic economics sectors, and you just stroke an entire one out of the question.
It is way more likely that the reality is more nuanced, and the US can not efficiently manufacture some things, while keeping the lead on some other things.
You will always lose the fight against corruption in the long run because as the war goes on you get weaker and they get stronger.
This is a fundamental issue with organizational design (and democracy).
Highly recommended further reading/viewing:
Rules for rulers is very helpful at understanding this: https://www.youtube.com/watch?v=rStL7niR7gs
Iron law of Oligarchy (the deterministic outcome of democracy) https://en.wikipedia.org/wiki/Iron_law_of_oligarchy
I'm not sure this is proven yet. Certainly in the past, I'd have agreed, but with communication via the Internet making realtime decision-making between all members of a democracy possible, I think direct democracy is theoretically possible at least.
If not absolutely direct, then at least having the ability to instantly revoke a mandate from someone you have entrusted could go a low way to limiting the power of an oligarchy, as could entrusting different individuals and groups with a single person's vote, depending on the issue. For example, maybe I'd trust a particular economist to vote on my behalf for specific economic proposals, but I'd want Greenpeace to vote on my behalf for anything to do with, say, baby seal clubbing.
So long as the individuals can instantly take back the voting power they have entrusted to someone else, a reasonable semblance of direct democracy could work.
In practice, of course, it would be a hell of a mess to get everything functional, I just don't buy the notion that it's impossible in a world where everyone can communicate with everyone else essentially for free.
Picking on Facebook because they’re the biggest, but Twitter appears to be worse on every axis, as it continues to evolve to favor clout.
But would it be desirable? I don't think so.
If not absolutely direct, then at least having the ability to instantly revoke a mandate from someone you have entrusted could go a low way to limiting the power of an oligarchy, as could entrusting different individuals and groups with a single person's vote, depending on the issue.
The later seems like a very good idea. The former not at all. If you trust someone with a mandate, just allow the time needed to develop a consistent plan. Worrying too much about short term is exactly the opposite of good administration.
Our current issues have nothing to do with latency, they have to do with manipulation and propaganda. The internet has so far made that worse, not better. If every single Facebook trend, or 30 second clip from Fox and Friends had the potential to derail an international treaty, or modify healthcare on the fly, reality would be strictly more terrifying than it is now.
Show me web technology improving stability and deep thoughtfulness, and then we'll have something to talk about.
For a legislative vote where some actors have a lot to gain or lose from the outcome, I'd expect the manipulation to get even more egregious than people trolling polls for amusement.
For example, Suppose on average 1% signup for the military in high school. Next suppose we add an intervention, we add a sign in the lunchroom for military recruiting (touching on all the right emotions). The average in these schools goes up to 3%! We say, these additional recruits CHOSE to join, but we know they wouldn't have had we not added the sign.
It's in this way that I say that realtime voting doesn't solve the problem, because it doesn't look holistically enough, namely at influence. It's not just at the ballot box, but in your daily life. The question then becomes, who can influence and how much?
I agree that this is a big question. What are the divisions between manipulation, persuasion, coercion, influence, information, and education? Intent? Whether or not we agree with the position? I know that this can come off as flip, but it's not at all meant to.
In the case of the poster, what if there were two posters, an additional one for the local university. Average recruitment goes up 3%, and applications for the local university go up 3%. Does that change our perspective on what happened and the students' choices?
In this new scenario, students read the signs, the messages are brought to their attention, and of all the possible things they might do, the odds of choosing one of these two things increased some degree. In other words, the external forces in their environment have shaped their future state (choice).
I'd be curious to see a table of interventions, and the degree they pull out the entropy of what a person might do next. We might then make some categories, like you mentioned above.
When we appreciate the power of manipulation, for better or worse, perhaps we'll give it more serious consideration. This ought to undergird our thinking and decision making, whatever we may CHOOSE. ;)
In the lunchroom example, so long as lots of other folks are putting posters on the wall, and presumably some kids don't look at the lunchroom posters, I don't have a problem with either the college or the military changing behavior that way. There were many alternatives, and the poster wasn't forced on anyone. The influence we're seeing now is expensive (much higher proportional impact if you can pay), and effectively guaranteed (everyone is tuned to the same channel or two).
I hope we don't have to analyze individual interventions, I'd much rather just break up the channels, or increase the diversity of the programming. Mostly because I'm not sure how to (and I'm not sure we should) answer your question.
Yes! In all organizations, money and power buy influence. The internet briefly changed this, but it has reasserted itself.
What do we expect the powerful to do with their influence then? Rules for rulers says they must use it to increase their power for any other decision reduces their evolutionary fitness and long term survival.
Therefore in the long run altruism is strongly selected against and we would expect to see less of it.
The problem is that speech isn't free (as in free beer). It's a commodity. The wealthier or more powerful get more of it. When people see messages frequently they tend to believe them [1]. It doesn't matter how direct your democracy is if people can be strongly influenced to vote as desired.
I used to believe that a sufficiently intelligent and enlightened being could lead a democracy. Rules for Rulers says this is impossible, because the altruistic entity would always lose to the practical power-optimizing one.
[1] https://www.psychologytoday.com/blog/the-new-resilience/2012...
(This time we got Trump. Oops.)
Only that a system breakdown leads people to seek out extremes. In the late 19th and early 20th century there were ideologies in Europe and the U.S. that were available to cling on to, whether you were a union member, a soldier returned from a devastating war, or a deeply religious person, something was there to explain the order.
Today we have Facebook news (60%, is it, of Americans get their news primarily from there?). We have programmatic advertising, a feedback loop of information being sent to our attention and our behaviors being tracked and sending back datapoints for further optimized tracking... I'm not sure what this says about the state of ideology and the tremendous disunity in western society compared to 100 years ago, in the sense of people coming together under the banner of coherent ideas... But it'd make an interesting thesis paper.
Those who cannot remember the past are condemned to repeat it.
Firms like Microsoft led in the innovation in creating new barriers to entry. How could one compete with a browser provided at a zero price.
I think what happened to Microsoft is the perfect example of how to overcome a monopoly.
20 years ago, everyone thought that Microsoft’s monopoly was unassailable. Google barely existed, Facebook didn’t exist, Amazon was a bookseller and Apple was basically bankrupt.
20 years ago, Netflix had a few million DVD customers and AOL was the largest ISP.
Who knows what will happen in the next 20 years?
there is lot of movement by said members in Congress to invoke antitrust by drowning people in buzzwords and FUD. If anything the larger American based companies brought up as issues themselves face even greater competition from overseas. What we have to fear besides even more regulation on our own industries is having it turn into a trade war when overseas entities not burdened by the same restrictions start to compete.
Microsoft "saving" Apple is apocryphal at best. The $250 million that MS invested wouldn't have made a difference when Apple lost a billion the same quarter and spent $100 million buying out PowerComputings Mac license.
Microsoft tried aggressively to get into mobile, search, and the music business. They failed at execution.
I'm not saying that wireless is a good alternative for everyone but I know a lot of people that could get away with the "unlimited" plans that carriers offer. In the future it could provide real competition.
The plans aren't throttled any more - as soon as you reach limit they automatically cut you down to 2G speeds, you are "deprioritize". Meaning that if you are in a heavily congested area, your speed will be lowered to give lighter users full access.
When we were between renting and buying we were in a place with horrible internet and we used our phones on t-mobile for everything - including streaming to an Apple TV. We used 70-150Gb per month mostly at night with no noticeable speed issues.
For technical reasons, I'm more accepting of wireless data limits than wireline. No matter how much a wireless carrier spends, they can't beat physics. There is a limit of how much data can be delivered over a certain spectrum (Shannon-Hartley theorem?)
Off topic, but I was amazed/interested, so: https://en.wikipedia.org/wiki/Netflix#Founding_and_establish...
"Netflix was founded on August 29, 1997 ... Netflix was launched on April 14, 1998, with only 30 employees and 925 DVDs available ..."
So you're technically wrong, but not far off. I thought Netflix was closer to 10 years old than 20.
It just dawned on me while reading the article that this accurately describes the shift from licensed software to SaaS that has been happening in the past decade.
Rent-seeking is an attempt to obtain economic rent (i.e., the portion of income paid to a factor of production in excess of what is needed to keep it employed in its current use) by manipulating the social or political environment in which economic activities occur, rather than by creating new wealth. Rent-seeking implies extraction of uncompensated value from others without making any contribution to productivity. The classic example of rent-seeking, according to Robert Shiller, is that of a feudal lord who installs a chain across a river that flows through his land and then hires a collector to charge passing boats a fee (or rent of the section of the river for a few minutes) to lower the chain. There is nothing productive about the chain or the collector. The lord has made no improvements to the river and is helping nobody in any way, directly or indirectly, except himself. All he is doing is finding a way to make money from something that used to be free.[5]
Now maybe, the program used to be $40 and not free but switching to $20 a month is definitely rent-seeking.
As far as enterprise/business customers go, SaaS has been huge in reducing vendor lock-in and enabling customers to choose the best fit for their use case. SaaS has removed the huge costs of PoCs and initial adoption, meaning it's easier to evaluate vendors and switch when you're ready. You no longer have to buy the hardware to get the service up and running, or allocate as many employees to maintain the hardware and software. The explosion of vendors and competition in the SaaS space has forced more interoperability and customer-focused feature development than ever before.
SaaS has been great for pretty much all business customers. At this point, I don't think any but the largest companies, most specialized companies would rather build their own services at this point than try to purchase off the shelf when possible.
And I'm not talking about off-the-shelf vs built-in-house, I'm talking about billing method.
In many cases, the billing method has influenced the way the products work and how they're developed.
-Instead of buying a movie or a song, you stream it
-You don't own your data in the cloud
-You don't own the music you buy from Apple
-You can't even take the battery out of many newer model phones
n.
A political and economic system of Europe from the 9th to about the 15th century, based on the holding of all land in fief or fee and the resulting relation of lord to vassal and characterized by homage, legal and military service of tenants, and forfeiture.
Consider the inordinate attention (~homage) and data forfeiture which billions of people submit to those walled gardens (fiefs).
It seems symbolic that so many spend so much of their day with their heads bowed down towards their phone.
With software there is the added benefit of low-cost, highly scalable replication of the capital intensive product.
This is how all the stores selling IP make so much money, how all the streaming services are so profitable, etc all while not producing any original content themselves. And it applies to creators who direct sell themselves, because they aren't charging marginal costs on IP licenses - they are rent seeking their existing properties. Often to fund the creation of new ones, but I don't think many people argue the morality of rent seeking based on how the owner spends the rent. Any landlord can invest the rents they collect into new building construction, but that will still just lead to generating more rents.
Monopolies are not inherently bad. It's entirely possible to have a monopoly and have a great thing that everyone likes and is happy with and which keeps innovating. But under capitalism the primary incentive is the accumulation of capital which rarely lines up with creating something great long term.
I don't think this solution really works. For some folks, nothing is ever enough. Then you also need to consider that it is less about money for some and more about friends and power. Maybe I don't do what corporations ask because they are going to pay my campaign. Maybe I do it because it makes me feel like a big man being the person they all come to for favors. Maybe I do it to gain acceptance into an aristocracy. I don't know how you can compete against that on a government salary, no matter how big.
Donald Trump is supposedly worth $3.5 billion. Do you think paying him more money would change the way he governs? I only use him as an example because he is the richest US politician, but there aren't too many poor ones at the federal level.
I guess I just don't see how you could ever pay a politician enough to be "indifferent to corrupt forces".
How much do you figure you would have to pay Bill Gates to babysit? Unless you’re in his immediate circle that’s going to cost quite a lot of money. People react to incentives in relation to their current wealth. A chartered flight or sweatheart real estate deal will mean a lot less to someone making plenty for their job of representing the people. They’ll also be much more sensitive to scandals.
Not always. The share of wealth owned by the top 10% in the USA fell between 1932 and 1952, and again between 1962 and 1985 [1].
[1] http://gabriel-zucman.eu/files/SaezZucman2014.pdf#page56
On a global scale, where laws can't protect I.P. we will see innovation coming out from new sources. If America is happy to stagnate, we will see India and China leading the future.
* Criticism: https://medium.com/@petersimsie/why-peter-thiel-is-dead-wron...
* Alternate interpretation of Thiel's intent: https://www.quora.com/Peter-Thiel-claims-that-competition-is...
I like drawing parallels between economics and ecology... monopolies are farms, massive artificial monocultures that suppress natural competition and extract value for the profit of a few. They embody a cycle of growth and stagnation.
A healthy economy is more like a jungle, innumerable smaller competitors with diverse approaches to survival... an extremely resilient and constantly evolving ecosystem that leads to fascinating innovation.
I think you missed PT's point. The word "monopoly" has overshadowed his message. He wants people to pursue "blue ocean"[1] ideas to be innovative.
Instead of starting a company that makes another generic clone of aspirin, you pursue a drug that cures breast cancer. Or instead of building a business that broadcasts 150 characters (hey we offer you +10 more characters than Twitter), do something more innovative for society like building cheap flying cars.
I'd venture to guess that 99% actually agree with PT's underlying idea (innovation) but the distasteful word "monopoly" has completely drowned out the message. The term "blue ocean" is the same concept -- it just doesn't rile people up as much.
Theranos had promises of "blue ocean". No competition. This attracted investors like moths to a flame. (We now know they had no competitors because their technology was a fraud.) The investors would have been better off investing in a boring factory making generic aspirin ("red oceans of bloody competition").
Uber should be a case study that burning up billions in investor money (billions wasted on trying to underprice Didi in China) was a colossal mistake. How much of that bad strategy is blamed on Travis's vs investors is something we won't know until a tell-all book comes out.
What you're describing is a jungle. Niches with dominant players that share in a diverse resilient economy. Bees and hummingbirds compete for the same resources but they are not copycats.
A monopoly is a farm, an established entity that's taken control of the local system to suppress disrupters.
That's the part I was replying to. When you say "I agree" with parent post that disagreed that "[monopoly] is also good for society as a whole."
>A monopoly is a farm,...
I wasn't replying to this alternative analogy. I think we both agree that PT wasn't using "monopoly" in this manner. His usage of "monopoly" was closer to your "jungle" ecosystem. My point was that you may actually not be disagreeing with PT.
On the flip side, monopolies often have little incentive to invest in improving their products/services, and find they can profit from making their products cheaper/worse.
The crashing and burning of a big monopoly may very well be a healthy event; but oh the damage they do before then...
Comparing one very effective and interesting skunkworks lab with the incredible explosion in choices and service in telecommunication, as well as drastically lower prices, that came when the monopoly was broken up?
I think you're demonstrating the anti-monopoly point handily.
Government regulations that mandate some return (think telecommunications services for those in rural areas, pollution standards, etc.) can provide an incentive for monopolists/oligopolists to perform better according to some criteria. The problem is those mandates are not what we would always consider "innovative". By definition, they are often designed to incrementally improve on the status quo.
The game of politics has an important role. When there are oligopolies in many industries it is not unusual to see regulators getting jobs at the very companies they regulate. Think of the ties between the SEC and finance, CRTC in Canada and the communications sector, etc. Monopolists have a way of cementing their position in the economy and reducing the mandates that governments place on them.
I wonder what could make something like Comcast into a "good monopoly" though.
Another aspect is that commercial competition, while generally accepted as a system that in the end delivers superior results, seems woefully inefficient in terms of waste of resources, as opposed to something like academic competition, were people freely reuse competitors' previous work.
IMO, innovation is usually fueled by competition. Where there's lots of competition, the need to innovate is the necessity for survival. I mean, how innovative was Microsoft in the 90's when they essentially had a monopoly on desktop computing? That's how we got stuck with IE 6 for so long...
Academic institutions are hugely monopolistic...
> Where there's lots of competition, the need to innovate is the necessity for survival.
That's the theory. In practice, competition drives bean-counting efficiency. See, e.g., Thinkpads before and after the Lenovo acquisition. Pretty much the only place you see innovation in that space is among companies that can carve out a niche based on brand or differentiating factors (Apple), or among companies that have a monopoly on a key piece of the supply chain (Intel, Microsoft).