Declining worker power vs. rising monopoly power: explaining recent macro trends | Hacker News Reader

Declining worker power vs. rising monopoly power: explaining recent macro trends

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409 pointshhs454 comments

In almost all USA industries, there is increasing amount of consolidation. The top 4 companies' in almost any industry has a larger share of the total market: https://www.economist.com/briefing/2016/03/26/too-much-of-a-...

Some consolidation is natural, but a huge part is caused by mergers and acquisitions (M&A) fulled by Private Equity. The M&A benefits the shareholders of participating companies at the expense of consumers, employees, and other companies.

Monopolization almost certainly is occurring. The left usually cites weak antitrust enforcement. The right usually cites regulatory barriers that make it expensive to compete without economies of scale. I actually think both sides are at least partially correct.

However what almost everyone overlooks is the demographic transition. The US, along with every other developed economy, is significantly older today than it was 40 years ago. And the fact of the matter is that an older work force almost certainly leads to an economy with larger, older firms.

Most entrepreneurial activity is disproportionately carried out by younger people. Young workers are much more likely to work for small, young, growing firms. That makes sense because they have longer horizons and can take more risks. Older workers, who have higher fixed expenses and are closer to retirement, prefer the stability of a stable, large company with low employee turnover.

Macroeconomists who have attempted to quantify this impact, generally find that the average firm age in an economy linearly increases with the average worker's age.[1] Since older firms, tend to be larger, slower growing, and less competitive, it's not wonder we've seen an increase in monopolization.

[1] https://www.nber.org/papers/w25382

> The left usually cites weak antitrust enforcement.

Personally for a left view I would add cash/capital accumulation. It's kind of the same thing happening for individuals with wealth and real estate. Regulation is failing to bring the balance between the revenues of capital (which are exponential unregulated) vs the revenues of work. At one point you can't even compete anymore if you start from scratch. Competitors with billions in cash can pretty much "kill" any new business they want.

> Since older firms, tend to be larger, slower growing, and less competitive, it's not wonder we've seen an increase in monopolization.

This is self-contradictory.

how is this contradictory?

Firms that are monopolistic are less competitive, larger, and slower growing. Reducing monopolistic tendencies increases capital growth, competition, and reduces average firm size. This is well understood economics.

Monopolies arent' some hypercompetitive ultra capitalist battlespace, they're fat and happy, and the most impactful teams they employ are lobbyists and policy folks in DC. Look at like, comcast and what they did with the FCC.

Those attributes stem from them being a monopoly, they don't create it in the first place. He's questioning the implication that being less competitive and slower growing would allow you to obtain more of a monopoly.

The large, lumbering not-yet-a-monopoly has no method to increasing market share other than buying smaller competitors; thus leading to monopolization.

Not if you consider that older larger firms can use their position to artificially suppress competition.

The government is the tool used to suppress competition.

This is why the solution of making the government ever more powerful isn't going to work.

The government directed Facebook to suppress Snap?

https://techcrunch.com/2019/10/04/snap-ceo-isnt-expecting-mu...

Think about your local ISP. They usually have a local monopoly because they use the government to make competition illegal.

Yes, regulatory capture is a problem, but it's somewhat ludicrous to make a blanket statement like "government is the tool used to suppress competition". It's one tool in the toolbox, perhaps a significant one, but hardly the only one.

Health care is another example. The government empowers the AMA to strictly control the number of seats in medical school, thereby restricting the supply of doctors and competition.

Licensing, permits, etc, are all ways to limit and prevent competition.

I could ask any surfer on the beach right now and even they'd be able to identify that you've now entered a kind of argumentation where, if government is at all involved, government is the problem, no matter how it's involved.

"The AMA strictly controls the number of seats, and the government has a medical licensing process, therefore the AMA's actions are the government's fault."

Nope.

Before dismissing this out of hand, see "Competition and Monopoly in Medical Care" by Frech.

https://www.amazon.com/Competition-Monopoly-Medical-Care-Fre...

Plenty of evidence and cites.

Again, I do not deny that governments have been used as a tool for monopolies to form, but it is dubious that they are the only tool used by bad actors, nor is regulatory capture the only method for anticompetitive behavior.

I did not say "only".

You didn't, but your phrasing certainly implied it. "The government is the tool used to suppress competition" is a very stark statement. Next time, say "a" or "one of the" tools.

A simple alternative ingredient could be that firing (read "punishing") employees on a small scale has a large chilling effect. Relaxing labor laws/job security may have a much larger long term effect. If I ask for a raise, will I get fired first either way?

You need government to build an ISP in the first place. No private company would be able to negotiate with that many land owners to build out fiber on a large scale.

And once a company does build a network, absent government regulation requiring them to let other companies use it, the existing infrastructure is an enormous barrier to entry.

> No private company would be able to negotiate with that many land owners to build out fiber on a large scale.

Before the government stepped in to anoint winners and losers in the phone business, companies sprang up everywhere and strung their own wires.

Telephone lines were almost always built following existing public roads or private railroads (that were built with government assistance and government land grants) even in the early days.

There is no history of a successful, large scale infrastructure project built without government assistance. Either directly or due to the fact that much of it was built on government land.

(unless maybe you consider some case where private infrastructure was built in one large area controlled by a small group of owners, but that's basically just a government by another name and doesn't apply to modern America.)

An awful lot of railroads were built without government assistance. Of course, it was easier to build them if one got government financing.

Even so, a railroad is private property and they can choose to allow or not someone stringing wires along it.

railroads were given the go-ahead by the federal government back when they were built, because the federal government granted the land to both sides of the rails to the rail builders (if they built it).

It's hard to argue that the railroad builders were not given "assistance" (the granting of land).

It goes way beyond government financing. The government gave them the damn land.

Could you give an example of this?

When Google tried to lay fiber in various municipalities, they failed because those municipalities would not permit it.

Those were all local municipalities, responsive to their electorate - if the surfers in a community wanted Google fiber huts, they could elect councils who would allow them.

I think it's reasonable that people should have local control over their city environs, even if it means a multinational like Google can't come in and build new infrastructure. It's not a "will of the people, unless Google wants to build fiber huts everywhere" kind of society. Maybe they should just go surfing instead.

>Those were all local municipalities, responsive to their electorate - if the surfers in a community wanted Google fiber huts, they could elect councils who would allow them

This is an idealistic line of thinking, but as a practical matter, is completely untrue. Essentially 0% of America understand their county commissioners' stance on ISP competition, myself included. No one campaigns on those things.

It's a lot like saying that electorates are responsible for police violence because sheriffs are elected officials after all.

Not doing your civic duty is not illegal, but the residents has to take ultimate responsibility for failing to do their civic duties.

Representation is an outdated system that was great in de pony express days.

> The government is the tool used to suppress competition.

Oh? Network effects don't exist? Economies of scale don't exist? Dumping doesn't exist? Branding doesn't exist? The only kind of moat in existence is regulatory capture?

Regulatory capture is real, but it's one of many tools that suppress competition. I can think of one single solitary competitive analysis I've been party to where we decided it was the largest factor.

If only fixing anticompetitive markets were as easy as "drowning the government in a bathtub" we'd have solved this problem ages ago.

> only

I didn't say "only".

You didn't call the government "a tool" used to suppress competition, you called it "the tool" used to suppress competition.

"the tool" meaning it was the first tool they reached for, not the only tool.

For example, if I said "Star Wars" was "the movie" to see in 1977, I obviously did not mean it was the only movie.

If I meant it was the only tool, I would have written "the only tool".

If you need to insert the words "only", "always", "never", "100%" into my words in order to argue, you should reconsider the strength of your argument.

Nah, I heard what you said and you said what you meant.

Even so, I'm happy to engage with your new argument: that regulatory capture is the first tool companies reach for to unfairly suppress competition. That's still wrong. Regulatory capture is slow, unwieldy, and opportunistic. The first tool a company reaches for is typically either M&A or dumping.

When WhatsApp was getting popular, did Facebook respond by crafting legislation with a plausibly deniable dual purpose, cultivating connections with campaign contributions and a held-open revolving door, wait for a wave of public sentiment that could carry their law up the priority list, through congress, and onto the books, and then sit back and pray that the resulting wind blowing at their backs and in WhatsApp's face would tip the balance enough to keep them on the throne? No, of course not! Facebook bought WhatsApp. Where there were two competitors, a free market exchange happened, and then there was one competitor. See also: banks. Yeah, they need FTC approval, but the free-er the M&A market, the easier it is for competitors to just merge together, and the more anti-competitive the result.

As for dumping, you'll often hear people blame legislation for the big ISP monopolies we have. Certainly there are no shortage of legislative failures in this space, yet it's not illegal to start an ISP. If you set out to create an ISP of your own, you'll probably be able to find a municipality willing to deal with you. The actual trouble will appear when you start selling your service. Your first few customers will gladly switch in order to take advantage of the better deal you're offering, but once the regional ISP monopoly notices the churn, suddenly you'll find that all of your prospective customers recently received a promotional discount from the monopoly and are no longer interested in your service. Then you go out of business, and customer rates go back up. It wasn't a law that kept you out of the market, it was the fact that your competitor had a larger war chest.

In both cases, more market freedom = less competition. Certainly, regulatory capture also exists and is also a problem, and in that case more market freedom = more competition. In some cases, it's even more complicated: economies of scale create genuine value by amortizing costs across volume, but they also create an anticompetitve moat. They have good aspects and bad aspects that are inextricably linked and inseparable from each other.

Still, focusing exclusively on regulatory capture will lead you to misdiagnose most markets. The cure will appear obvious, but where your diagnosis is incorrect, it won't work.

Government has funds, land, resources and tons of attention. A competent business man should be able to forge large numbers of jobs out of this. If done on sufficient scale elaborate services and infrastructure can be build that gives corporations a huge advantage. These jobs can remove people from the labor pool and create a kind of cabin in the woods "exit" strategy that will eventually drive up wages and the value of training/education.

The situation is far more nuanced. If you said instead "The government can be a tool used to suppress competition," I think most would agree with you.

The distinction is that there are plenty of other tools companies can use to suppress competition, and Government also can be used as a tool to encourage competition.

A strict black and white view point that more government = less competition is absurd.

> A strict black and white view point that more government = less competition is absurd.

Yes, and fortunately I didn't say otherwise.

Large businesses use government as a tool to suppress competition, sure.

Take away the government's power to suppress competition, and they'd still have and use many other tools.

Attacking the government is a distraction that's quick, easy, and wrong, like blaming surfers for the tsunami washing over the city.

> The US, along with every other developed economy, is significantly older today than it was 40 years ago.

Looking only at average age doesn't give a full picture, how does this square with the Millenials recently becoming the largest generational cohort? By your logic shouldn't there be a massive wave of young growing companies.

Millenials aren't that young. The oldest ones are hitting their 40s.

> The US, along with every other developed economy, is significantly older today than it was 40 years ago. As employees are squeezed out of profit, life gets more expensive and it gets harder to have kids.

Watching Super Size Me 2 you realize that the same thing happened to the chicken industry. It’s frightening. It’s like we have a democracy (so far) and under that a lot of smaller authoritarian organizations that are hard to notice or dismantle. Some of the farmers were basically slaves, in huge debts to these companies way of running things. Unbelievable.

Corporate governance is authoritarian. Period.

And its growing ever more unavoidable in daily life for anyone trying to live.

Pretty much everyone is becoming subject to these authoritarian regimes (corporate structures) as they invade and carve away at our democracy through financial influence, regulatory capture, etc.

This should be actively fought every step of the way. We don't have to allow any corporation to do anything, they belong to the people who believe and give them power. Everything can be taken away, and everything can be burned.

I've been playing with the idea of equity cash lately.

Something where the more money you've spent at a place, the more say you have in how it is run.

Not really sure of what way that could be done, but the premise feels right so far.

See this post.. https://news.ycombinator.com/item?id=23414911

haha literally like tangentially above yours...

Is there a way a startup could set up this business model, or would it necessarily require all the tax and legal implications of a publicly traded company?

This is how cooperative supermarkets work - they're consumer co-ops.

Like REI?

HOAs too. As if municipal codes and such aren’t enough for people.

I've heard HOAs called "4th level of government"

(fed / state / local / HOA)

The real Fourth Estate!

The more powerful the government is, the more it can be corrupted.

But that's an extra hoop. Without joining together in governance, what stops corporations from exercising their power on individuals directly?

And what keeps corporations from becoming governments unto themselves?

The libertarian argument generally goes that competition will keep them all in check, but history has shown again and again how it doesn't work in the general case.

If you want to see what small government/strong corporate control is like, look back a century in American history. Corporations controlled much more of American life than they do even now, and the 20th century regulatory state is all very much a direct response to all that.

Lot less time to go surfing back then, too.

This is an argument a lot of non-authoritarian socialists make: democracy only governs the few hours when people are not sleeping or at work, so a deeper, fuller democracy would include running workplaces democratically as well. Whether by employee-elected boards, cooperatives, democratically run unions (a necessary distinction), or some other form of collective control, that the consent of the governed is a question for all situations in which people find decisions about their lives being made.

Democracy is not an efficient way of running a business. Look at the multi-trillion dollar deficit as an example. Workers are incentivized to choose themselves over the health of the company or the customer.

Also, people overwhelmingly would rather exchange their stake in the company for the equivalent value in cash. It's only when the company's valuation skyrockets when they retroactively declare this to be unfair.

>Democracy is not an efficient way of running a business

Have any data to back that up? Comparing a democratically run corporation to the US government is a non sequitur. Outside VC there is no business model that will allow you to run at a loss for decades. So it's a scenario that's not even possible hypothetically.

Somewhat anecdotal but there is a Worker Co-op in Spain, Mondragon, that's been a very competitive corporation for over 50 years. It can clearly work long term and it leads to better outcomes for employees and the communities they work in.

I often hear people complain about others making money in the stock market, so I suggest they invest in stocks, too. They respond saying it's too risky.

> Workers are incentivized to choose themselves over the health of the company or the customer.

And maybe that is how it should be? Maybe life shouldn't be about the most efficient way to run a business.

As we've seen in recent cases, corporate management has become incentivized to choose the interests of the investors over the health of the company or the customer or their workers, making short-term decisions that look good in quarterly reports.

It seems that all the forms of collective control you listed are perfectly legal. If the majority of workers prefer workplaces like that then those places will thrive.

What you are implying though, is that the government forces all workplaces to conform to your desired control scheme. So fuller democracy equals government limiting choice, as long as it is your desired choice.

That's a bit like saying "Here we are in 1650 under an absolute monarchy. The people are the majority, they could topple our illegitimate hereditary government and make it a democracy, but they haven't done it yet because they certainly prefer things this way".

Not at all. If the people tried to topple the monarchy, they would be actively in conflict with the military. I am pretty sure you can start a co-op without risking conflict with the military.

Can you tell me the exact things the government is preventing people from doing in this case?

I don't know - there are cooperatives - it is not like you need to risk your life to work at one. Somehow they are not that popular. There are also partnerships - which are kind of close to cooperatives, when they employ only the partners and for example outsource office cleaning and stuff. In some industries they do pretty well - for example in law.

Why cooperatives do poorly? Maybe people usually are not very good at governance, that's understandable, you can have trade-offs - slightly worse pay for better working conditions, or better dignity. Does it work like this?

>If the majority of workers prefer workplaces like that then those places will thrive

The majority of workers have probably never even heard of worker coops and those that have probably imagine it to be related to socialism and therefore un-American.

>So fuller democracy equals government limiting choice, as long as it is your desired choice

So more democracy actually == more authoritarian. Astounding logic.

So people are dumb, they just need to listen to me.

That is the lazy way. If people are uniformed, we need to do more to inform them. People have power to choose where they work and where they spend their time and money. No one needs to come in and force Amazon into becoming a co-op. If top talent wants to work for co-ops and consumer prefer to get their good from co-ops, Amazon will adapt or die.

The 4-Hour Life problem.

This comes up a lot, nobody is literally chained to their desks. Democracy in the workplace comes from voting with your feet and taking another job at another company. It's not perfect, particularly for lower income people, but it's also not slavery and generally the arc of worker rights is improving through time.

You could make a case that some of the current anger in the united states is because COVID's destruction of the economy has removed that freedom to switch jobs (as the jobs have gone) demonstrating how important it is.

> It's not perfect, particularly for lower income people...

I don't think many minimum-wage retail or service workers can just "vote with their feet" and easily get another job, especially if you don't consider major changes in location and hours to be a non-starter.

For folks with kids, or who depend on public transit to get to work, "up and moving" isn't really an option. If you're one missed paycheck away from eviction, bankruptcy, or arrest due to missed fines or court fees then you can't play "hardball" with your employer.

Saying the arc of history improves overall cruelly glosses over the reality today for millions of Americans.

It is far beyond imperfect.

Let’s say I work at Kroger. I don’t like the way I’m treated, so I quit.

Now the remaining grocery stores I can work for owned by Albertsons or Amazon. What kind of choice is that?

Pick any other industry and you’re likely to find similar problems.

It would be really interesting to see what mandatory democratic corporate governance might look like.

Or, perhaps, fixing union regulations so that unions don’t have a bunch of downsides for the employee or other regulatory issues that seem to have directly led to their decline.

>Democracy in the workplace comes from voting with your feet and taking another job at another company.

Democracy is about voice, not exit.

I don't think, "we've mostly gotten rid of actual leg irons" is the paen to worker's rights you think it is. To the extent slavery was outlawed, that happened 150 years ago. In many ways, things have gotten worse for the average worker since that era. (If you don't believe me, read Lincoln himself. [1])

Fair conditions grow out of equal power. But a fundamental problem with managerialist capitalism is an imbalance of power that will never be solved with vote-with-your-feet slogans. You have one job. A CEO has tens, hundreds, thousands of employees. It's always easier for a boss to fuck you over than it is for you to push back. Individual action is not enough to fix that.

[1] Foner's "The Firey Trial" is a good look at Lincoln's ideas, including what he has to say about labor. https://www.amazon.com/gp/product/B0044XV6G6/

Personally, I'd love it if everyone could easily vote with their feet. I think there's more overlap between certain libertarian and socialist visions of the economy than most people realize. In our current system, there's a lot of factors that prevent people from voting with their feet: healthcare, location, switching costs, and availability of jobs being chief among them, but also newer phenomena like non-compete contracts.

There are fewer publicly traded companies and the ones that do exists are larger than ever.

From Bloomberg: ==About 3,600 firms were listed on U.S. stock exchanges at the end of 2017, down more than half from 1997.==

https://www.bloomberg.com/opinion/articles/2018-04-09/where-...

This article also has some good statistics:

https://www.nytimes.com/2018/08/04/business/shrinking-stock-...

Consolidation and vertical integration in healthcare space has bee pretty frightening. Feels like ordinary folks don’t know.

What is PE fueled by? IMO, in large part by zero interest rate policies.

I think the cause and the effect is reversed. There is more money for investment now than ever before (due to an aging population, and increased inequality) which leads to both a low/zero interest rate, and lots of money for PE.

If it was an artificially low interest rate we'd see wage inflation, as opposed to just asset inflation.

Interest rates are artificial. IMHO they are currently way too low. I dont even think the absolute rate is what affects the economy, its rate of change in interest rates that causes change. Declining rates stimulate the economy while rising ones act as a brake. The absolute level of the rates determine where money flows and inversely affects the price of big things like housing and cars. Low rates lead to inequality and hardship. These are just thoughts and observations, I would love to build a good mathematical model.

Nominal interest rates are artificial. Real interest rates (nominal rates - inflation) are not. If central banks set nominal interest rates too low you get inflation which negates the purchasing power of the borrowed money. That's what the grandparent poster was alluding to.

(The mathematical model - and the proof - for this is taught in most introductory macroeconomics courses. So is monetarism, which is the "declining rates = stimulus" that you mention.)

It's been a persistent question why the super-low nominal interest rates that central banks have set for the last decade haven't resulted in consumer inflation, and there's no consensus among experts for it. My personal theory is that it comes from the entry of China and other large developing nations into the world economy, which a.) has dramatically lowered the price of labor-intensive consumer manufacturing, offsetting much of the inflation caused by the large money supply and b.) changed the mix of savers in the world economy; Chinese people are much more in the habit of saving large fractions of their income than Americans are, which leads to a glut of savings, which lowers the real interest rate.

I think you're right that low interest rates boost wealth inequality due to rising asset prices, but they also reduce income equality because of the tight labor market.

And by artificially low I meant below the natural interest rate or NAIRU.

And tax policy, the specifics of which I am not qualified to explain. Someone else care to give their take?

It's just a natural product of capitalism[1]. When you can buy a chunk of a business and own that chunk of its profits, you can use those profits to buy a larger chunk of the business, repeat ad nauseum, until you have so much money that your needs for more profit aren't satisfied by any one business, but you have enough money to perform multi-business maneuvers. Higher interest rates might make some of these maneuvers less possible in the short term, but that would just delay the problem until the wealthiest capital-owners accumulate enough money that they can put forth more collateral to get better loans.

[1] By capitalism I mean private ownership specifically, not the usual HN definition of something something markets something something competition.

Actually M&A companies underperform in the stock market so it mostly benefits the executives doing the merge.

The SEC and FTC have failed us. Even 2008 was largely fueled by M&A so banks could lever even harder.

I find it very disappointing that the most reliably lucrative career arc for a programmer nowadays is to get hired by a tech giant and stay there as long as possible. And the second most is probably to go to work for a company that could get gobbled up by a tech giant.

I've made a career out of small startups, and I wouldn't trade it for a thing. On the other hand, if I'd gone to work for Amazon straight out of college, I'd probably have a boat by now.

And what kills me about this is it almost seems like the big tech companies are just grabbing up engineers to no purpose. When I hear stories about what people are actually doing at larger companies, it often seems somewhere between miniscule and just plain empty. And it's not like a lot of the people telling these stories don't understand that. But they're happy enough wasting a third of their day at that salary.

I'll just share an anecdotal experience:

Earlier this year (before COVID), I interviewed with Microsoft, as they were looking for people with security clearances to work on Azure services. I apparently passed at least one of the four interviews, as they made me an offer. However... the offer contained minimal details on what I would be working on or doing, just a vague description that it was an Azure infrastructure service team. The recruiter himself didn't have any information to answer my questions. If I were just coming out of college, I'd be fine with that level of unknown, but as someone with about ten years of experience and who knows what he likes to work on, I wasn't going to take the risk of ending up on a miserably boring project (again).

Thankfully we have modern Agile/Scrum with all its process and meetings to soak up that time and give us the feeling of business.

There was this cartoon about a guy graduating top of his class in a CS program and the hoopla of him being hired at a "Big Tech" firm. Then he discover that his role was basically to keep someone on a web page for a half second longer...

> But they're happy enough wasting a third of their day at that salary.

Who wouldn't be with those salary levels? You basically have the golden ticket in your hand.

I worked for a brilliant but ruthless businessman at one point in my career who very openly "stabled PhDs" (his words) in the field (RF engineering / DSP). He'd give them some research projects to play with for years on end just to keep them away from the competition.

I'd guess no one's really happy being bored all day. People get into a position where they feel like their life is settled, and unless they do something really horrible 'the good life' is all but guaranteed. Leaving something like that for uncertainty will calculate out to insanity for most people, because the value of 'the good life' is either very high or people under value their chances of success.

A big problem with filthy rich outfits is that they can simply afford to do this. My two highest-paying jobs were almost sinecures. The teams were massively overstaffed, and it could be quite difficult to find productive things to work on. I spent a lot of time simply waiting, which is to say killing time.

If your goal in life is to be rich, it's not bad, I guess. If you really love doing good tech, it's stultifying.

Well yeah usually the more fun job pays less. That’s just basic economics. Life is all about trade offs.

There is nothing inherent in "basic economics" that postulates that fulfilling or fun jobs pay less.

I also find the idea of "basic economics" laughable given how impossible economics is in the first place. I mean, yes, if you assume spherical cows...

wow, check out this guy who figured it out. damn, never thought about that. i guess all the people who get paid alot to do fun things, and all the people who get paid shit to do horrible stuff were in my imaginiation.

> On the other hand, if I'd gone to work for Amazon straight out of college, I'd probably have a boat by now.

Anyone who'd bought AMZN probably has a boat by now.

Depending on when you graduated from college, that may or may not have fallen into the big company or startup bucket.

The delayed liquidity of the extremely long startup adolescence in recent years ("startups" that are 10+ years old and where almost all of the big value growth is in the rear-view mirror) is, IMHO, a big part of this.

Was not the case for most careers out there? If you want a comfortable 9-5 job you generally join a giant and stay as long as possible.

that's not what he's saying. He's saying higher overall income, and it comes with lower risk than startups.

Emphasis on "reliably". I have two classmates who went the startup route and retired around 30 (and not on a beach in Thailand).

Why would anyone ever work for the big company if startups were both more potentially lucrative and more reliable?

Why is that disappointing?

That's the "pro" of going with an established company - having reliably high compensation.

The "pro" of going with a startup is the low chance of exceptional pay and the fulfilling work.

Was this ever not the case for the majority of software engineers?

I'm not a historian or anything, but I've seen it ebb and flow over the years. There have definitely been periods where the best opportunities were at small, innovative businesses.

I think we've reached a point in the industry where innovation has slowed enough to allow the biggest companies to catch up. Combined with the natural advantages that big companies have (monopoly, regulatory capture, etc.), it's just really hard to go toe-to-toe with them these days.

Trying to break the conditioning here but government should always tax in a way that it incentive WORK. The way things are Wealth is no longer being produced, so those who have it will be on top because income will never be enough to prop you up.

Therefore we should want a Growth market so that more wealth is produced and risk averse people will still be rich but more people will become as rich as them.

To resolve Inequality we can't just have the mindset of punish the rich for creating wealth. We need to grease up our economy so that everyone else can be rich as well.

Different mindset but this problem is super hard to solve and I don't think anyone has a decent solution for it.

I've long argued for massive estate taxes on the very rich that forces a partial reset on wealth and avoid medieval times when land ownership was just passed down generation to generation. It's the only fair and practical wealth tax I can think of. I have no problem at all with Bezos being filthy rich, however, I have a giant problem with his kids and all descendants being billionaires. A huge estate tax would also massively incentivize charitable giving as wealthy people donated money to avoid the government taking it all. I'm sure consumption would rise some also, but the more money you have the harder it gets to spend on consumption, hence many of today's problems. The point is, knowing it will mostly go to the government upon death, the extremely wealthy would be motivated to do stuff with the capital. I'm still baffled why no one has seriously floated this idea though.

The bigger problem with estate taxes (and btw estate taxes often imply death taxes in US law) that you may not see is how they effect smaller players. One of the things fueling corporate consolidation is asset liquidation upon death. If I start and own a small company that’s worth $10million, when I die, there is likely a strong desire to liquidate that company in order to allow for some inheritance to multiple people. This likely means selling the business to another player. If there’s an estate tax, then you must sell. My understanding is this has been a very real problem for farmers for many generations, and they have been the largest opponents for estate taxes.

I suspect the bigger problem isn’t the Bezos’s of the world consolidating money and power generationally, it’s the big corporations getting bigger, with corporate taxation disproportionately hurting the smaller players rather than the bigger players. We would have a much healthier economy if the incentive structures hurt companies more the bigger they get to discourage things like vertical integration. A company doesn’t have to pay taxes on the intermediary steps of production but might have to (sales or B&O tax) if they were to purchase the same goods from a third party. This tends to distort markets away from lots of smaller players to a few big players.

> My understanding is this has been a very real problem for farmers for many generations, and they have been the largest opponents for estate taxes.

Your understanding is a talking point created by the Republican party and has no real basis in reality.

https://www.factcheck.org/2017/09/death-tax-talking-point-wo... https://www.cbpp.org/blog/the-myth-that-the-estate-tax-threa... https://money.cnn.com/2017/10/10/news/economy/farmers-estate... https://www.chicagotribune.com/opinion/commentary/ct-perspec... https://www.tampabay.com/archive/2001/04/09/debunking-the-my...

I will also point out that estates benefit from step-up basis which avoids Capital Gains taxes on unrealized gains, which is hugely beneficial to most estates. This way of taxing is meant as a compromise to allow fairly large estates to pass tax exempt --currently up to $11MM if held by a single person, $22MM for a married couple-- while applying taxes to estates that all but guarantee that you could retire instantly collecting an income that puts you in the top 1% of household earnings in the US with highly favorable capital gains tax treatment. Also, the IRS will work with anyone that has a large illiquid estate and allow taxes to be paid over a decade after an initial grace period, with an appropriate interest rate.

Yeah, you may be right about the republican talking point with farmers. I have no direct anecdotes with farmers, and with the one friend I have in the agriculture world, the topic never came up. The main anecdotes I have are with people who have estates that were big enough to have to worry about what would happen to their businesses when they died, since they couldn't just pass on the business to their heir. This is a hard problem even without the threat of a government wanting their cut, since companies don't have a tendency to survive their founders leaving.

Also, make no mistake, I'm not trying to apologize for people who are already extremely wealthy, who have to deal with this problem. I would love to have the problem of what to do with a company big enough to need to sell it upon my death. I'm merely trying to point out, that estate taxes do have a consolidating effect that feeds mega corporations. What I don't know is if this effect is as big as I suspect it is, or if it's simply dwarfed by other factors, like the general desire to sell out for a big payday.

Personally, I hate the idea of corporate income taxes - they're literally stupid. You can't tax corporations, you can only tax people. At the end of the day, it's always a person somewhere that is paying the tax, whether it's an employee, supplier, shareholder...and that person is already paying their own income taxes. Also, the tax code favors big companies at the expense of small ones, it's a system that can be gamed in a bunch of ways. I say get rid of it, it's dumb.

I would put some limits on estate tax rates at certain thresholds. Like, anything above $50 million, tax at 90%. And hey, the kids will still be rich, just not crazy billionaires. For private companies this gets tricky and for many companies they would be forced sellers, that's one of the big trade offs. Exempt farms if necessary?

Your argument is based on corporations existing within a closed system within the country. But you're ignoring the ability of money leaving the country without being taxed.

> Personally, I hate the idea of corporate income taxes - they're literally stupid. You can't tax corporations, you can only tax people.

but according to law, corporations are "people" arent they?

Why not just split the estate? A single person should not inherit more than 50% of the value of the estate.

In businesses, including farming, splitting it wholesale can kill the business while diluting control can paralyze it.

I think a large portion of people would not bother building an estate if it could not be passed on to teir children. Most people work hard and build businesses for the benifit of their family.

Puerto Rico has constraints like that. It is also the poorest part of the Union.

Sounds like the workers should own the company, not private individuals.

you do understand why private individuals own the company and not the workers themselves right? In order for any productive venture to start that are three components, raw materials, labor and capital. Workers only provide labor. Workers may be able to provide raw materials, but that's ridiculously prohibitive to become a worker.

Similarly, you are wishing that the workers must also provide capital, but again it requires workers to have savings. Now obviously I know you don't think of these things like that, you just have a wishful desire that somehow the profits are distributed to the workers and not to some random individual. But the truth is this is the precise reason why the prophets go to the individual who supplied the production process with their savings (just supplying them with savings isn't enough that would only allow you to earn the original money plus interest, but in order to benefit from the profits you must undertake the risk associated with the productive process).

By separating the people who work in a company and the people who undertake the risk associated with the productive venture, you benefit everyone.

>I'm still baffled why no one has seriously floated this idea though.

It's not even a fringe idea that government policy is dictated by the wealthy class. What incentive do they have to do this?

The only way that it will happen is by regular people making it policy, and our current system doesn't give us a voice on what happens.

Frankly, this wouldn't do much. Most familial wealth in america ends up getting lost. https://www.marketwatch.com/story/heres-why-90-of-rich-peopl....

Three things. First, this is only true of the past and doesn't saying anything about the future. Second, this "study" isn't weighted based on the size of the estate. Third, that 10% matters far more than you could imagine.

> First, this is only true of the past and doesn't saying anything about the future.

Well, I can say that about anything. Oh... the rate of return on capital is higher than the rate of return on labor? Well that's only true of the past, no study has studied the concrete data of what is going to happen in the future (Hint: it's because there is none).

There are tons of loop holes. In the end, if said legislation passes both floors the only ones got hit are the middle class people who don't have the knowledge and means to use those loopholes.

Estate taxes on the Federal level have never even come close to being applicable to middle-class estates.

I'm with you but substitute WORK for Value Creation. It's way to easy to "create jobs" which are essentially busy-work with 0 to negative productivity. In the coming decades, economic productivity will become more and more important as gains from elsewhere start to taper out.

Agreed. Value Creation is a better word. Idea world is to have everyone getting rid off the necessary of repetitive work (of course he can still do it if he wants) and everyone is motivated to create value, in one way or another, and people generally don't say things like "Hey because I build rockets/control banks I should have a much more lucrative life than the rest of you guys".

If we look at history, most of the stuffs that improve human civilization were indeed funded by "VC" of the time, but the core motive is not to earn profit, but to solve problems and satisfy personal interest. Now if you can remove VC from the picture, you pretty much get a society in which everyone is automatically doing things that are beneficial to the collective. Anyone who wants to just be super lazy will get bored easily and will start doing things sooner or later, especially when all of his friends are creating value.

Sounds familiar somehow.

Isn't "Value Creation" just another one of those buzzwords used to bamboozle investors? It's not that it doesn't exist, but it's so abstract & academic as to be impossible to measure.

> It's way to easy to "create jobs" which are essentially busy-work with 0 to negative productivity.

If firms have workers with negative productivity, aren't executives incentivized to fire them?

And if so, why are there negative-productivity workers?

Lots of executives aren't judged on their final contribution to the bottom line but the size of their 'empire' or project 'successes' they can point to.

There are also plenty of examples of work that is profitable to a company but that doesn't create value to consumers:

* Campaign Donations / Lobbying for favourable regulations.

* Softbank style monopoly creation (it's just moving investor money to consumers).

* Patent Trolls and lots of semi-patent trolling games. (Think Amazon buying Kiva)

* Misleading / Emotive advertising. (Which I'd argue is the majority of it.)

If you're hell bent on thinking markets are inherently fair you can contort yourself to show these things _can_ be productive but to think they're always productive?

> Lots of executives aren't judged on their final contribution to the bottom line but the size of their 'empire' or project 'successes' they can point to.

Who is incentivized to hold executives responsible for the bottom line, board members and shareholders?

> If you're hell bent on thinking markets are inherently fair you can contort yourself to show these things _can_ be productive but to think they're always productive?

I agree, insomuch that many 'profitable ventures' don't increase the aggregate material wealth of the country.

I can think of a number of reasons:

1. The firm has enough growth to cover it up (downturns can finally bring about layoffs here)

2. Measurement is difficult or not practiced at certain firms vs others

3. Subsidies or contracts from the government specifically cancel out negative productivity and so make it worth it

etc

Another word for negative productivity is overhead.

Many administrative, HR and IT workers are overhead, but still needed.

They are not negative productivity. Internally consumed product is still product.

Why should everyone have to work? We are 100% capable of creating a society where everyone's basic needs are met with the automation and technology we have today. The idea that a person is only worth something if they work needs to be deeply reexamined.

While I agree with the overall sentiment, the idea that we are capable of creating a society where all basic needs are met entirely through automation is a pretty damned bold assertion.

Fair. There's a lot we could do.

No, we aren't. Not even close.

Because of attitudes like this. There is enough money out there to solve many problems but it is hoarded by a certain amount of people and then a bunch of people go around saying, "better things aren't possible."

Because if you cannot offer anything of value, someone else will offer that value on your behalf, making you an extraneous cost which anyone in their right mind would want to remove. And then you are but a slave to whomever you are useful to, meaning whoever controls you, and whoever has the power, and who grants you the means to get those basic needs. If someone is giving you bread for free, you can be sure it's because they don't want you to rebell. But then that is also your only value to them, which is a very dangerous proposal, because it means you're expendable, and that the guy giving you that bread might not want to continue such a fruitless endavour. That is why an economy must rely on the basis of voluntarily offering something of value. Because the alternative is literal enslavement.

> If someone is giving you bread for free, you can be sure it's because they don't want you to rebell.

There's no other reason you could think of to feed a hungry person?

> That is why an economy must rely on the basis of voluntarily offering something of value. Because the alternative is literal enslavement.

You don't see the irony in saying that a person must volunteer their value or be enslaved?

> making you an extraneous cost which anyone in their right mind would want to remove

Wanting to remove people for being "extraneous costs" is not right-minded. It is extreme sociopathy.

We will never automate "basic needs" unless we automate medicine.

We'll never automate medicine because everyone wants to live even longer.

I don't know about the should part, but I think everyone needs a reason to get out of bed in the morning, to know that they're contributing to their family and their society as a whole. Imagine how unpleasant it would ultimately be to be told that your needs would be well met, but you would no longer be allowed to carry out productive work.

I’ve been on paternity leave for 4 months out of 6 just playing with my kids. It’s awesome.

I would love to not work and just play with my kids.

Because the only way to increase the standard of living is to increase productivity. You cannot inflate your way to prosperity. It is a mathematical impossiblity.

no reexamination necessary, I'm drawn to emulate and recommend the humans that work hard toward long term goals. I like when Darwinism shows tangible progress against entropy rather than producing viruses that leech off of life.

What long term goal is slaving away at McDonalds or Wal-Mart accomplishing? All the people advancing society are being paid pittances compared to the true leeches (landlords and shareholders).

People should not be required to work to survive. People should be required to work to make the world a better place. Most people work bullshit jobs that do not advance anything but the wealth of the 1%.

I think your point mirrors Scott Galloway's and Warren Buffet's philosophies. Why is sweat, regular labor, taxed much more than capital gains? Why do CEOs who are fantastically rich need lower taxation rates than the 100s of laborers their lifestyle relies upon? We tax sweat, we let riches run free.

I was always told the reason was to encourage investing, to increase the velocity of money. Interest income from parking your money in the bank is taxed as ordinary income; lower taxes on investment income (capital gains) helps make investing more attractive vs parking the money.

This may not make a lot of sense right now when interest rates are close to zero, but there was also a time when interest rates were 20%.

Capital gains -- gains from dividends or retained earnings -- are taxed at the corporate tax level before being distributed. I don't think we should retax them at all. I think dividends should be untaxed, and so should the retained earnings portion when selling a stock, but all capital gains attributed purely to increase in speculative valuation can be taxed more, sure. Just a small nitpick.

I think the exact opposite. Taxing capital gains and eliminating corporate taxes would incentivise value creation. Low tax dividends and capital gains benifit individuals without active participation in the value creation.

Is this regardless of legal structure? The choice to incorporate as a corporation comes with a side effect of double taxation but the sole proprietorship doesn't...

Not sure where you're based, but do the recent economic events in the US change your tune here at all? Given 'too big to fail' how do you prevent organizations from retaining zero earnings and then asking for loans when liquidity dries up? Double taxation is an incentive against this behavior

You can't solve the problem in conventional ways because rich people as well as large funds and corporations control legislation. You can vote 100 tines and be guaranteed that the outcome won't be different in that perspective.

I'm not sure if ycombinators like the alternative way.

BTW I agree to your idea in general, just want to say that I'd substitute WORK with anything that benefits human being.

The underlying problem is that money buys policy. That's not how democracy is supposed to work.

But as long as that's true, you're going to get increasing disparities of both wealth and power - because you have a nice tight political and economic engine that cycles by turning one into the other, and back again.

Redefining value as "social value" - of some kind - won't change this on its own, because that process is just the on-ramp to the main cycle.

And unfortunately it's not the only on-ramp - it's just the most obvious one.

As long as the state, or whoever manage and control the state machine, utilize "money" to purchase man power (to get whatever tasks they need to accomplish or whatever goods they need to build), it's impossible to bar money from the system. It is part of the system.

Democracy has always been like this, or worse, when it is not judged by money, but by your ancestors. Capitalism smashes Feudalism by bringing power to a lot of people than the Feudal lords agreed with, and then it's pretty much "money buys everything" mode.

I'm with this argument. Capital gains should at least be taxed as much as earned income.

But then if you want to help people build wealth that don’t have it, you make it much harder.

I really feel like people need to look into land taxes a la Henry George: https://en.wikipedia.org/wiki/Henry_George

Taxing things like capital gains differently or implementing a generic wealth tax can actually hurt those we want to help to build wealth as well as incentivize things like expatriation of wealth. Can’t expatriate land.

Taxes are not punishment. Taxes exist because a certain amount of wealth is required to maintain a state.

I understand that the financial/business world has been trying to convince people otherwise since the mid 1970s, but they are still as wrong today as they were then.

Tax “fairness” is therefore simple. He who earns the most should pay the most.

You cannot expatriate dollars. The currency is issued by the state and the state can seize it. Chinese factory? Great, tariff on iPhones at the dock. Baseline tax = difference in currency value between country of origin and country of destination on that day. HQ in Ireland? Super, you owe the US the difference between the tax you paid there and the equivalent rate here. Don’t like it? No security sales in US markets. Sell bonds and stock somewhere else.

These aren’t hard problems.

Why not all? Tax land, capital gains, and wealth. Adjust brackets prudently.

Should social security and medicare taxes apply to capital gains? Should these taxes apply beyond the current caps, which are a bit over $100k? If not, there would be very little impact since most investment income is earned by people who also have six figures of wage income. And if so, then we'd have to levy these 'taxes' (they're not quite taxes, to the extent that these are paid in exchange for later services/payments that the taxpayer receive) on all wage income.

Why do taxes besides social security and medicare have very little impact? Taxing capital gains like income would have a significant impact.

Federal income tax caps out 37% and california income tax caps out out 13%.

I completely agree with this in theory, we ought to just make capital gains be taxed at the same progressive tax brackets as income.

That being said, how do we prevent people from just selling small amounts of capital every year, so as to stay below bracket thresholds?

Why do we want to prevent people from doing that?

That has not worked, capital has moved elsewhere to low tax domiciles.

> To resolve inequality we can't just have the mindset of punish the rich for creating wealth.

I would argue that millions (if not billions) are injected into corr^Wlobbying to make sure that we never fully have this mindset, indeed.

Meanwhile, the rich are way less taxed (proportionally) than the middle class, and in my opinion, that's a problem that stifle Western economies.

Let's not gloss over the hilarious assumption that wealth is fairly apportioned based on who "creates" it.

> Meanwhile, the rich are way less taxed (proportionally) than the middle class, and in my opinion, that's a problem that stifle Western economies.

Is this actually true? According to the IRS, in 2018 the top 10% of income earners paid 69.47% of total income tax collected.

Source: https://taxfoundation.org/summary-latest-federal-income-tax-...

Apparently, they own 69.4% of the wealth as well, so it would seem to be proportional.

That number feels wrong, given it's exactly the same as the tax one, but I couldn't find another source. https://www.statista.com/chart/amp/19635/wealth-distribution...

The 80's called. They want their 'trickle down' back.

It's impossible for everyone to be rich. This doesn't mean we should punish the rich for being rich, but you aren't going to reduce inequality by increasing the number of rich people - you need to increase the income of low and average earners compared to the rich.

It's not impossible, anyone and everyone can become rich, it's just that we don't have a common definition of rich.

I came across this very relevant article earlier today: "Computers Don't Kill Jobs, People Do: Technology and Power in the Workplace"[0] It was written in 1996 but many of the observations affirm these trend:

> Technology undoubtedly contributes to productivity, which should, of course, make more available to all. But buried (not too deeply) in the very innovations that increase productive capacity of the workforce are factors that serve to deny the workforce the bargaining power to gain their share of the output.

It argues that the people who drive innovation and technological advancement in the workplace tend to do so for the benefit of a small minority (i.e. the owners/buyers rather than the worker/users) which itself contributes to an increasing inequality of power.

[0] - https://www.jstor.org/stable/1047971

To me it's pretty easy to understand. It's far easier for state organs to control large corporations, than many small and independent businesses. Meanwhile, it's far easier for coroporations with means to lobby for legislation that makes it difficult for smaller, i.e. competing, businesses to thrive. They can do this, because they can afford the armies of lawyers and lobbyists needed to uphold and exploit all those rules. Just add revolving doors. It's particularly conspicuous that this is going on to such a degree in the USA. In effect, it means the USA is increasingly ending up with a new kind of aristocracy not dissimilar from the royal rule they once rebelled against.

I'd argue it's simpler for governments to foster a free and competitive market than try to work against massive vertically integrated companies with tons of lobbyists and power.

Are you suggesting the US has any control over the tech giants? It's clearly not the case, most politicians talk the talk, but they take massive donations in private events and then craft legislation to favor big tech. What we need is more companies, more competition, government needs to bust up the big players and disallow M&A.

Bureaucracies don't like working with a bunch of small companies; they want to work with a few large companies with specialized departments that make it easy to get what they want. The rules and regulations are all written for large corporations with inside counsel and compliance departments, not small independent companies.

source: I work at a small company, and have dealt with such bureaucrats

No sane person should ever listen to Larry Summers again. This weasel looted America; even looted Russia with his pals at Harvard -anything he has to say that isn't a groveling apology for his life of treachery and destruction isn't worth listening to.

It's a bit funny watching all of these economists backpedal and attempt to explain why the policies they promised would be so great for the average American have failed.

Summers has been talking elsewhere about how America needs a new approach to China that is more aligned with America's economic interests. Of course, he doesn't mention that he helped shape America's approach to China originally.

I'm unfamiliar with this scandal and am having trouble researching it on Google. Can you explain it in simple-ish terms (I'm weak on economics) and/or provide a source?

I'm not sure that Larry Summers would call the people at Harvard his 'pals'; my understanding is that Summers was forced out of his position there.

Andrei Shleifer was definitely his pal, definitely helped loot Russia, is STILL at Harvard, despite their settling a lawsuit over insider trading related to his activities, and Summers was not forced out from his position there for any malfeasance. He was forced out for saying things. Which shows you where Harvard is at; commit crimes, loot multiple countries? No problemo; just don't say things which trigger people.

I think this plays into the current social unrest as well. People have been trying to separate the looters and protestors, but they seem to completely ignore the extreme inequality that exists throughout the US, especially in this period of high unemployment.

People at the bottom have it bad, very bad. Being ignorant of that problem is just going to make it worse. Lashing out at fancy retailers in fancy neighbourhoods makes a lot of sense as a way of sending a message to rich people, whether you like it or not.

In all likelihood lashing out at fancy retailers will be effective. Additional police powers and crackdowns will be paired with throwing the rioters a few bones (e.g. greater checks on police powers and throwing the book at George Floyd's murderers).

Of course, the elites will pretend that they meant to throw that bone all along and will vehemently deny it has anything to do with a smashed up Gucci store in Beverly Hills and a lot of Americans (perhaps most) will believe this denial.

Wait, so if there were some elites in charge of everything, and if they felt personally threatened, you are suggesting that their response would be to decrease the power of their security forces? Wouldn't they want to make the police even more powerful?

> Wouldn't they want to make the police even more powerful

Civilians outnumber police 500-1. The people who were lead to the guillotines also wanted more police power but you have to throw a bone to the civilians to make them think 'you care'.

Here's $2 extra to come to work and risk coronavirus and we totally won't cancel your insurance when you get sick.

Military outnumber people on tanks/drones/helicopers/missiles/secret weapons by 1:0.

Yes of course they'd want that, but compromise is often a necessity to prevent things from spiraling totally out of control.

The French and Russian revolutions are a testament to what happens when the ruler tries to effect the appearance of compromise without actually doing it (e.g. Constitution of 1906). It ended very badly for the rulers in both of those cases.

They fucked up a lot more than just that, but that was a key contributing factor to their deaths.

The difference is in the times of the French revolution, the elite lived only mere miles away from the angry poor, within striking reach of their wrath whereas now the elites can move to super safe heavens, isolated from the mess they created and suffer no consequences from the angry masses.

Jeff Bezos and Warren Buffett can move with their families to some private island in the Caribbean and wait while things cool down while running their gigs remotely.

The French elite had no such luxury.

Indeed, peaceful protests are good for the status quo because they're easy to ignore. They want you to sit down and be quiet so they can ignore you. Once you start to inconvenience rich people, or god forbid cause the stock market to go down, real change will begin to happen.

This is really wrong.

Destroying retail will just destroy retail. When it's gone it's gone.

If you think shopkeepers control the Police, you are hopelessly confused.

Gucci doesn't control the police, no. People who shop at Gucci do.

Do you think that they are not going to see the smashing of their favorite shop as an implicit threat against them personally?

Gucci is a powerful symbol of unchecked gaudy wealth as much as it is a retail establishment. The handbags themselves aren't really the point, which they'd be the first to admit to.

We disagree on several things:

I'm not sure anyone controls the police. They look a lot like self ruling autonomous entities to me. The mayor of New York, supposedly their boss, is in a conflict with NYPD, and is mostly losing, from what I hear.

The current "looting" is in no way confided to Gucci type stores. All retail with anything of value is being plundered.

But even in a world where the gaudy rich control the police, and only their favorite stores were destroyed, I can't imagine that leads to police reform.

If people attack something you hold dear and makes demands on you, few people just give in. The normal reaction is to fight back as hard as you can, ignoring costs, until your enemy is defeated. I offer the US reaction to 9/11 as an example.

In your model, the Gucci customers are extremely powerful, so they can mount very strong counter attacks.

The pandemic demonstrated that luxury retail is non-essential (you can still buy your Gucci bags online). When luxury retail was closed the world did not fall apart. Nobody is protesting because they can't shop at the Apple store.

Plenty of people complain that not enough stores like Target open up in low income areas and riots are only going to make this worse.

Do you really think so? These stores all have insurance. The deductibles will hurt a little but I don't think it's going to be game changing, especially for any national or international chains.

Yes. I don't think it's a problem for them financially, it's just it's a a powerful symbol of the control that they have lost.

That's why they'll pull out all of the stops including heavy handed propaganda, agent provocateurs, sending in the army (if it gets much worse) and even (finally, with gritted teeth), appeasement.

Historically riots have often presaged regime change as it can uncover how dangerously exposed the elites are and how little support the elites have. Unlikely in this case, but it's still the same process that scares the bejesus out of most regimes.

We're already seeing agent provocateurs in the current protests. White nationalists are purposely trying to incite violent riots throughout the U.S. as part of their "accelerationist" plans. The regrettably widespread opinion that the original, peaceful protest against police brutality is per se violent and thus to be opposed is very much a false and racist claim.

They will keep getting smashed up. People don't like to shop for luxury goods in a shop with boarded up windows.

It hurts insurance companies, but it's great for anyone who fixes or repairs windows.

Until the businesses don’t exist anymore because it’s not possible to insure at a price where people will still buy product.

It's easy to see this in graph form. 100K+ COVID deaths, 15%+ unemployment, wide spread homelessness, unaffordable housing crisis, riots and curfew in every major American city.

Google DJIA to see a graph of how this has affected the wealthy...

I am not blaming the players (well some), but the game is rigged.

And this is all _before_ evictions and foreclosures are allowed to start again. With the number of people already behind on rent and the number of people paying rent on credit cards it could get really ugly without any policy to mitigate this.

The Federal Reserve injected trillions of free money into the markets, so naturally they went up.

This IMHO defends, not defuses the preceding argument. When there was risk of the market crashing, the federal government injected trillions _into the market_. This primarily benefits those with significant capital investments, not those whose ability to provide for themselves and their families is tied directly to regular employment.

Small business, retail and service workers, and employees whose jobs can't be trivially moved online are in desperate straights right now. The Fed's action did almost nothing for them.

Someone commented and deleted, but in response I'll leave this here: https://www.youtube.com/watch?v=JNfqr-rzj5I

It's an interview with Cornel West. You may not agree with his political philosophy, but he "gets it" with regard to the current social unrest. If you want to understand what's happening, you should try to empathize with what he's talking about.

Politicians, police, corporations, media... the institution is trying to pushing the idea that protestors == looters. And therefore the protests should be quelled. Several states even went so far as to declare, without any evidence, that the majority of the people in the protests were from out-of-state troublemakers... which makes no sense. Even more fitting, President Trump called the protestors thugs and terrorists. It's all part of a design to stop the momentum of these protests.

It's not the people who are 'ignoring' the inequalities. With 40+ million unemployed, unable to feed or pay rent, watching their tax dollars get gulped up by big corporations from the 'small business loan program', unable to get their unemployment checks, and getting beaten by police for no reason other than race and deep pocket money from politicians/rich elites. People at the bottom know exactly what's happening, because it affects their personal livelihoods very deeply, and the combination of those issues is why they are on the streets protesting day and night, while computer people like HNers who are generally well off are still behind a corporate desk with no unions, and only observing from afar.

It’s a protest! You want someones attention. What good would it do to shout slogans in some hick town in the middle of nowhere. Of course You want to go somewhere where someone actually notices. So people protesting out of state/town/county makes perfect sense to me.

That said, completely agree that narrative around ‘trouble makers coming out of town’ was overblown and likely put out to take attention away from real issues at hand.

>Politicians, police, corporations, media... the institution is trying to pushing the idea that protestors == looters.

You cannot say that corporations are doing that when Google, Sony, Target, Home Depot, EA, Square Enix, Ubisoft, Facebook, Apple, Intel, Levi's, Banana Republic,Amazon, Spotify, Snap, Netflix, Microsoft, Zillow and Disney are in favor of the protests/riots. And those are the ones I found on the first article I clicked.

I was under the impression that Trump called the rioters thugs and terrorists which is a little different.

Those are loaded terms. When you conspire to conflate protesters and looters as the latter, then it doesn't make a difference.

I know a few rich people. They basically want Trump to just shoot all the protesters. I don't see any message being received.

Agreed, I (unfortunately) know many of these people. They simply don't understand the problem, and do not want to empathize with "the other side".

It's worth trying to help others understand why people are angry. People need real help, police need to be held accountable, and we can't just keep shoveling cash into the pockets of the rich.

Not exactly. They know, but don't care. They believe they are disconnected from the consequences.

Well, history shows us where that kind of disdain for the poor will eventually lead. It isn't gonna be good for the rich.

The problem is that change can take decades or centuries and the end result may not be better or even worse.

... or the poor.

Most commentators here are the "rich people" in the scheme of American wealth inequality. Sure, not the tippy tippy top but members of the relatively affluent professional class.

Same

This paper still dances around the real issue.

Why has worker power decreased? Yes, we can say that capital owners capitalised on the fact that workers were willing to give up more. But why were they? Unions can explain some of it, but why did Unions go away? Why is it, when two workers sit in two rooms with two managers, one of them is willing to take less than the other?

Consumer credit is why. Because of consumer credit, the person who is able to and willing to overextend their financial position "wins", which is an awful race to the bottom.

The essential purpose of work is to provide a lifestyle. If you cannot achieve the lifestyle you want with your job, you will demand more money. Why work at all if you're just scraping by, and not able to enjoy any of life?

But, wait, here's a credit card. Now you can have that lifestyle you want, and you don't really _need_ to demand more from your employer. Or maybe you do, but you know the next guy has one too, and you know that he'll take less because he can, and maybe he's less financially intelligent than you are. So you feel like you have less bargaining power at the table.

Would unions help with this? Maybe. But lifestyle is what drives us at our core. If greed is a core component of demand, then we need to make it so that we can't quench greed with false financial mechanisms.

Is there any research that supports this claim that access to consumer credit is primarily responsible for decreasing worker power?

The big issue is supply and demand. With increasing automation and global supply chains, there is a huge amount of labor available relative to the need.

In the past, a union strike at a plant would see a generous long-term contract and benefits for the workers. Now, it is likely for the plant to be moved or workers replaced with automation.

Larry Summers is simply not credible. This is an "oh fuck things are about to get out of hand, let's try to insert ourselves into the debate so we don't get locked out" paper.

Here is Larry Summers from his 1998 speech "The Challenges of Success".

" The world looks very different than it did at the beginning of this decade, a time when America was said to be in decline. It is now clear that America will grow faster in this decade than Japan and Europe. Their four-decade-long story of convergence has ended and America is pulling further ahead. Why this success? A large share of the credit must go to the two forces that this conference brings together: technology and finance.

The twin forces of intonation technology and modern competitive finance are moving us toward a post-industrial age. And if you think about what this new economy means - whether it is AIG in insurance, McDonald's in fast-food, Walmart in retailing, Microsoft in software, Harvard University in education, CNN in television news - the leading enterprises are American. "

Edit:

I tried deleting this, because it is an ad-hominem, which feels good but adds nothing.

It is just endlessly frustrating that one of the principle architects of the current status-quo demands so much attention.

Summers helped structure post-Soviet Russia, viciously attacked Brooksley Born when she sought to regulate the swaps market, among many many other serious lapses in judgement.

And yet, when he and his students come up with another insane policy proposal we have to take it seriously and challenge it on the merits.

It feels a lot like the allied strategy during WW2 of saturating enemy air defenses.

[1] https://mattstoller.substack.com/p/how-bill-clinton-and-amer...

I'm not hugely surprised that the OCR of the scan of the transcript of the speech says "intonation technology", but i'm mildly amused that both Stoller and you copy-and-pasted it without question.

Adding Stoller's 'Goliath" 100 years of monopoly vs democracy book. Highly recommend along with his substack and strongly agree with @rmrfstar

https://www.simonandschuster.com/books/Goliath/Matt-Stoller/...

What did he get wrong in the excerpt you quoted?

There is a lot to unpack, but here is one example.

He holds out AIG as a world-leader to be emulated.

In the same year he gave that talk, he attacked CFTC chair Brooksley Born when she proposed margin rules for OTC swaps. She made this proposal in the aftermath of the LTCM collapse. Summers/Greenspan/Rubin said that banks were so "sophisticated" that they didn't need margin rules, and that these rules would somehow cause a financial crisis.

Ten years later, AIG almost collapsed because it had a division making massive directional bets on credit markets using un-margined swaps. Were it not for a $200bn loan from the public, AIG would have collapsed.

Automation is a drop in the ocean compared to the effects of trade agreements that resulted in jobs being exported.

Another way to phrase jobs being exported is the rise in imports of partially completed goods for final assembly locally. This is how the USA "manufacturing output" continues to go up while employment goes down - we no longer smelt steel, cast parts, weave textiles, pick-n-place electronic components, etc in the amount that we used to. Those things are done overseas where environmental and worker regulations are laxer and then the parts are imported for final assembly, and then in many cases re-exported.

Data to back this argument up is available on FRED if you're interested.

Jobs exported to countries where the violent suppression of workers rights and of any kind of actual democracy wouldn't cause a fuss at home.

What the US establishment refers to as keeping a country 'business-friendly'.

And of course environmental regulation.

Could you back that up with data? I'm curious to know by how much and how you reached that conclusion.

I would like to see someone back up the data with regards to automation. Why is the burden of truth on the other side? Fact of the matter is Chinese factories that produce the world's gadgets employ millions. This is reality and not some mythical fully automated factories.

Globalism made the very poor in China/Mexico/etc. richer, created their middle class and it made the very rich in US/EU even richer at the cost of US/EU middle class.

Saying how that is irrelevant now because of automation just smells like new propaganda to replace the old one so that the rich can get richer and the rest of us arguing propaganda.

I'd argue the underlying cause is poor wealth distribution. There's lots of demand for labour, just not from people/companies/industries that have the means to the pay for it.

> There's lots of demand for labour, just not from people/companies/industries that have the means to the pay for it.

I agree, but I think you mean income distribution and latent demand. The idea is that a lot of people would be consuming more goods and services if they weren't so cash strapped. Some of this is also affected by wealth distribution also, though.

Latent demand and wealth distribution interact strangely.

There's a bunch of work no one wants to do that gets dumped on people who need the money by everyone who can afford it. Elder Care is an obvious examples in the US, along with Child Care to a lesser extent. Lots of people consume free or budget versions of these services with which they're dissatisfied, and the root of their dissatisfaction is often that they can't pay enough to get the people providing the service to accept micromanagement, either because there aren't enough of them to implement it, or because they don't need the money enough to put up with it.

I guess the flat-wealth-distribution case is most people grudgingly using some economy-of-scale option leveraging the people with more patience for this kind of work, and a few control freaks either doing it themselves or economizing elsewhere to pay for a boutique option.

Labor is not as simple as supply and demand; a huge portion of a worker's value is in their knowledge and ability to train other workers. When they strike, they are unavailable to train replacements.

Most of the people reading this are likely to be tech workers, so imagine what it would be like to try to join a company that was on strike[1]. How do you log in to your computer? Where's the bug tracker? What are the current goals? Where is the code stored? What part of this code base is actually relevant to what you're doing? What five year old architectural decision means that you can't just do this the obvious way? How do you deploy code? How do you roll back deployments? How do you find the metrics for what went wrong? Imagine trying to figure out the answers to any of these questions without senior engineers around, and in fact nobody around except other strikebreakers with the same questions. When I was at Google it was generally accepted that a new hire would take 3-6 months before the were productive, and that was with considerable help from the rest of the engineers.

Tech is a particularly severe instance of this, but all labor is more complex than it appears on the surface. As any roboticist will tell you, the real world is overwhelmingly detailed.

[1] Don't do this by the way, it's called being a scab, and it's against your own long-term interests. If a strike in your industry succeeds, it raises the average conditions of people in your industry.

"a huge portion of a worker's value is in their knowledge and ability to train other workers. When they strike, they are unavailable to train replacements."

Which would make them more valuable to employers and more in demand. You're proving that wages are a product of supply and demand

"In the past, a union strike at a plant would see a generous long-term contract and benefits for the workers."

Based on what I've read about the history of blue collar strikes in America, this scenario is far more often the exception than the rule.

Unions are great, but strikes are actually pretty rare. In the short term, they’re bad for workers, too! Striking is always a last resort.

Unions have been on a serious decline the past several decades, but striking isn’t their only power. It’s just the only one you see on the 5 o’clock news, or in Hollywood movies, because it’s the most dramatic.

I agree with this very much. Despite the observations (and people's incorrect intuition about tight labor, before this virus at least), there is a surplus of willing labor to do work. To the extent that part-time gig work has become a necessity for people to stay afloat. You cannnot fundamentally change the situation or get wages/labor power to increase by restricting who can work, artificially raising wages, etc. The mass action of people numbers is hard to counteract, and as long as there are way more people than required for the demand for labor, we will be in this situation.

I'm suprised there isn't any mention of the relation between monopoly power and declining worker power. I'm not an economist, but it seems like if a company gets a monopoly on an industry, it most likely also has a monopsony on workers in that industry, thus reducing the negotiating power of those workers, since they can't go work for another company if their employer treats them badly. At least, not without having to be re-trained to work in a different industry.

It’s sad to see elite American economists fumbling around with productivity and employment issues that Swedish economists like Wigforss, Karleby, Sandler, and the Myrdahls had worked out in the 1930s and 1940s.

It's a feature not a bug. Things that were figured out in the 30's (such as Keynes) were actively fought against by people who didn't like the policy those economic conclusions led to. Mainly because those policies interfered with their plans to gobble everything up.

Entire erroneous economic theories were concocted to wage their war.

+1 Comparing wages to corporate profitability, valuations. Drives me nuts when these aspects are treated as completely unrelated.

I'm still deeply ambivalent about redistribution, cashectomies, etc. But it'd a lot easier to remain neutral if there was (a lot) more profit sharing.

Also, I have a hunch that gross inequity is related to the "missing productivity". I'm hoping someone is researching this.

AIUI, profits do not really explain inequality. It's a wages dynamic, where the premium that's paid for highly-skilled work tends to grow over time. Separately, wages in highly-regulated sectors (such as law and healthcare) also show significant growth, even though skill requirements haven't changed all that much in these occupations.

I still have zero intuition about cost disease. https://en.wikipedia.org/wiki/Baumol%27s_cost_disease The only notion that makes any sense to me (so far) is Graeber's bullshit jobs thesis.

Being a life long patient, my observation is that healthcare workers have become A LOT more skillful, knowledgeable, educated. The natural trend towards ever greater specialization and all that.

I know nothing about lawyers, so can't comment.

It's a structural issue. Corporations are designed to extract as much value for shareholders as possible, paying employees as little as possible is a part of that. That includes all levels of compensation, such as awarding shares to employees.

Are you defending or explaining?

This is co-authored by Larry Summers, whose main ideological bent is that economic activity is good only as long as it serves US interests and can be directed by the US. He is on record as saying that African countries are underpolluted.

This is not to disavow any of the conclusions in the document, but only to provide a framing and context for the kinds of problems he is capable of identifying and the kinds of solutions he is comfortable proposing.

Although the economy is a complex system and it's dangerous to try to over-simplify, my personal opinion is that there are two main and intertwined causes:

1) the cost to participate in the US court system.

2) the abuse of copyright, patent, trademark, and contract[1] law to divorce workers from their experience and treat employee knowledge as company property.

The time and money involved in both pursuing and defending court cases favors larger entities with armies of lawyers and large war chests. Intellectual "property" cases take especially vast amounts of resources because of the fuzziness involved. Meanwhile, treating workers as fungible producers of ideas that can be bought and sold both reduces the bargaining power of individual workers while empowering companies that can amass large portfolios of patents, etc. to use in litigation.

Not sure about reforms for the court system, but patent and copyright reform, combined with restrictions on unfair employment contracts, would go a long way to improving the situation.

[1] NDAs, NCAs, etc.

Monopolies and centralization drive fear.

Fear controls populations, and protects power.

We need to start taking decentralization far more seriously than we have been.

https://twitter.com/asculthorpe/status/1268265854648700930

TIL: NAIRU. Non-Accelerating Inflation Rate of Unemployment refers to a theoretical level of unemployment below which inflation would be expected to rise. It was first introduced as NIRU (non-inflationary rate of unemployment) by Franco Modigliani and Lucas Papademos in 1975, as an improvement over the "natural rate of unemployment" concept which was proposed earlier by Milton Friedman.

In the United States, estimates of NAIRU typically range between 5 and 6%.

Monetary policy conducted under the assumption of a NAIRU typically involves allowing just enough unemployment in the economy to prevent inflation rising above a given target figure. Prices are allowed to increase gradually and some unemployment is tolerated.

https://en.wikipedia.org/wiki/NAIRU

It’s a fascinating thing to realize that policymakers consider zero unemployment to be too low. The economy is built on the idea that some people at the bottom will be desperate enough to keep minimum wages low.

Zero unemployment would be bad because it would imply there’s no churn of people leaving one job for another. Back last year when unemployment was 3.5% most of that is people choosing to leave a job to find a new one.

It is not necessary to be unemployed for an extended amount of time in order to change jobs.

Unemployment to some degree is functionally a form of a buffer or reserve of labor. Obviously there is also a measure of skill mismatch, lag time, and similiar as well but lacking a reserve leads to disruptions which interupt growth and advancement.

While there is a bias against raising minimium wage there is also a fundamental constraint - if a job can't pay for itself in value generation it isn't sustainable.

But why did worker power decline?

I think that a major factor is the increasing number of roles occupied by workers. Workers were easier to organize when large numbers performed similar job functions in large manufacturing industries. Now manufacturing that requires a large number of one type of worker has been offshored. The residual manufacturing is either highly automated, or it is producing a large array of higher-tech products requiring a wider variety of skill sets.

The new service economy also requires a vast number of different roles fitting into partially automated business processes. As the degree of automation shifts, roles change rapidly. This makes it difficult to engage in union bargaining to arrive at contracts that define wages and benefits for specific jobs.

Nope, it was a political battle that labor lost.

One thought: US centric.

Economies of scale from computing power and reduced demand for labor due to automation is not US specific.

> But the decline in the labour share has been much more pronounced in the US than in other industrialised economies which are arguably similarly exposed to globalisation and technological change

From the linked article

The US happens to have a huge population speaking the same language and dealing with roughly the same regulations, so the economies of scale are even better. But, as the article says, labor everywhere faces the same risks.

If compared to European countries the US has higher wages generally, is it possible this effect is due to wages in those economies being at or near the wage floor already?

The problem is not just consolidation, which is certainly happening.

The real problem is that certain industries (e.g. airlines) supposedly compete on prices and service, but large chunks of their stocks are owned by the same investors. It doesn't take a smart brain to imagine what happens behind the scenes...

Could it be that Larry Summers, proponent of deregulation and globalization, could have contributed to the destruction of the American worker? Ironically, no mention of those policies here.

There's also his 1998 attack on Brooksley Born and her proposal to regulate swaps. This proposal would have likely avoided or mitigated the 2008 crisis [1,2].

If I made an error that big, it would take some huge new insight for my research to be taken seriously again.

[1] https://www.nytimes.com/2008/10/09/business/economy/09greens...

[2] https://en.wikipedia.org/wiki/Brooksley_Born

Depends so much on what deregulation you mean. If you mean deregulating from an antitrust perspective, sure that could be blamed. I don’t know specifically of him doing so, though, it’s completely possible.

However, have you ever tried to open or run a small business? The regulations are INSANE especially if you want a physical location. Go try and build housing in the city that needs it most. Good luck. Free the fucking markets a bit. It works.

Does anybody here know of a good modern book about land value tax or Georgist economics in general? Any (constructive) opinions would also be welcome.

"Radical Markets" by Weyl and Posner (2018) is a very accessible summary of what you might call "neo-Georgist" thinking.

George's essential political idea was that society is not a struggle between labor (workers) and capital (entrepreneurs, investors, landowners, etc), but between rentiers - paradigmatically landlowners, but in neo-Georgist thought all "owners" - and the "productive" classes (labor and entrepreneurial capital). For George, the general interest can always be identified with capital accumulation. Rentiers stand in the way of capital accumulation, and thus in the way of the general interest.

Many software developers feel the line between entrepreneurial capital and highly remunerated wage work is quite blurry because, for at least two decades, they have seen a significant amount of upward and downward mobility. Who doesn't know someone who started a "lifestyle business", retired early, or cashed out some stock options and played the VC game a bit? Combine this with the obvious dysfunctionality of the Bay Area housing market, VC excess, etc. and Georgism seems entirely natural.

The difficult questions for the neo-Georgists include: Can capital accumulation really be identified with welfare? Given how stagnant labor productivity enhancing technological development has been for two decades, can we really assume institutional changes will boost it? If they can't, doesn't this make the normative questions all the more difficult?

https://www.amazon.com/New-School-Economics-Platform-Physioc...

The New School of Economics (2018)

I fail to see this in High Tech Companies, let's take FANG for example, by various measure we can call these monopolies, now if you look at their worker's earning, they earn by far the highest in the industry for same type of job. So that seems to have failed the premise of this argument "Declining worker power vs. rising monopoly power:"

In a bubble, yes. But if you compare them to the top paying jobs of prior generations (say finance jobs of 20 years ago) they are actually pretty paltry wages in comparison. Plus, 250K in San Francisco where the average home is over a million dollars is not really that great.

this statement by the authors is silly on it's face...

They claim that the US has seen a falling labor share due to the following --- "the decline in worker power – as private sector unionization and union power fell, the real value of the minimum wage declined, shareholder activism increased, and ‘ruthless’ management tactics became widespread"

The authors are either locked up in their academic high tower and out of touch or they are writing to serve a political agenda.

Unions served a valuable purpose when management was truly "ruthless", however nothing in current work culture remotely approaches "ruthless" anymore.

Unions are effective at increasing pay in return for less production. it's sad but true. There are few unions left that actually have anything resembling an ethic of hard work when compared to non-union norms. These remnants of hard working union types are only found in the blue collar "gloves and sweat" industries.

That point aside, America has lost it's blue collar labor force because we have developed a technocratic, first world, entitlement culture that considers physical labor as an untenable acquaintance.

Meanwhile, the rest of the world has to fight and struggle to survive and hard work is a fact of life and a measure of worth. Consequently, Americas blue collar workforce is simply out worked by the rest of the world and if not for the immigrant work force, that bring the drive and desire to work hard with them, American labor would be in an even worse predicament.

Pricing power for the workforce does exist in America and examples abound. However, it is these unionized parts of the economy that have contributed to the downward trend in labor share by offering less production in return for extorted compensation increases.

American born workforce has lost the cultural sponsorship of physical labor and each generation laments the laziness of the next. This is the underlying reason that America's share of world labor has declined.

Academics are laughingly stupid sometimes.

The law of increasing concentration of capital is probably the most successful prediction made by Karl Marx until now. Just another sample:

"Since the 1950s, food retailing in the UK has undergone a massive shift from high streets, covered markets and district centres full of small independent specialist food shops; grocers, greengrocers, bakers and butchers, to the domination of food retailing by the "big four" supermarket chains; Tesco, Asda, Sainsbury's and Morrisons. In 1960 small independent retailers had a 60% share of the food retail market, supermarkets about 20%. Now the small independents share is reduced to 6%, while the multiples' share has increased to 88%.7"

This related video pops to mind TL;DR buybacks and CEOs bonuses based on share value, create an incentive not to invest in the worker force https://youtu.be/ylLTMYt24lA

Marx literally wrote about this in Das Kapital over a 100 years ago laying out the mechanisms of capitalist consolidation:

The splitting-up of the total social capital into many individual capitals or the repulsion of its fractions from one another, is counteracted by their attraction. This last does not mean that simple concentration of the means of production and of the command over labour, which is identical with accumulation. It is concentration of capitals already formed, destruction of their individual independence, expropriation of capitalist by capitalist, transformation of many small into few large capitals. This process differs from the former in this, that it only presupposes a change in the distribution of capital already on hand, and functioning; its field of action is therefore not limited by the absolute growth of social wealth, by the absolute limits of accumulation. Capital grows in one place to a huge mass in a single hand, because it has in another place been lost by many. This is the centralization proper, as distinct from accumulation and concentration.

The laws of this centralization of capitals, or of the attraction of capital by capital, cannot be developed here. A brief hint at a few facts must suffice. The battle of competition is fought by cheapening of commodities. The cheapness of commodities depends, coeteris pribus, on the productiveness of labour, and this again on the scale of production. Therefore, the larger capitals beat the smaller. It will further be remembered that, with the development of the capitalist mode of production, there is an increase in the minimum amount of individual capital necessary to carry on a business under its normal conditions. The smaller capitals, therefore, crowd into spheres of production which Modern Industry has only sporadically or incompletely got hold of. Here competition rages in direct proportion to the number, and the inverse proportion to the magnitudes, of the antagonistic capitals. It always ends in the ruin of many small capitalists, whose capitals partly pass into the hand of their conquerors, partly vanish. Apart from this, with capitalist production an altogether new force comes into play - the credit system.

In its beginnings, the credit system sneaks in as a modest helper of accumulation and draws by invisible threads the money resources scattered all over the surface of society into the hands of individual or associated capitalists. But soon it becomes a new and formidable weapon in the competitive struggle, and finally it transforms itself into an immense social mechanism for centralization of capitals.

Well, Marx predicted that : https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit... . The exact opposite of what we are looking at.

Except that the rate of profit has fallen and is falling, with small fluctuations year over year.

It is possible for monopoly and industry power to crush worker power, while the rate of profit increases. In fact, this is exactly what he predicted.

The mechanism for this to happen is simply accumulation of capital.

Another reality is that the profits of many industries such as the financial industries are not predicted to fall according to Marx, only that of commodity-producing industries. An absolutely huge part of modern profits is not profits according to the definition used at the time, and not realizable or even intangible. If you look at the rate of profit in commodity-producing industries, you will find that it is exceedingly thin in a great many cases, and that often profit is only realized via financial instruments (for example, the sale of new cars).

I am not an economist. Compared with the hard sciences (physics, biology, chemistry, mathematics) economics is still quite new and I suspect there would be more people seeing these trends and offer other models trying to explain them.

From a libertarian acquaintance the root cause is clear. Going off the Gold standard[1] in the US. I am not completely convinced.

[1] https://wtfhappenedin1971.com/

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