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Crunchyroll acquired by Sony, BD acquired by Hyundai, Slack acquired by Salesforce...

Our economic system seems to have a natural tendency towards monopoly. This is happening before our eyes and we don't even realise it.

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In market based economies there will always be a general movement of capital to the top, because simply having money allow you to earn more money. It's a positive feedback loop. That's why it is important for an external force, which pretty much has to be a government, to tax the wealth at the top and move it back to the bottom. Otherwise the system gradually turns into feudalism by its very nature. A government that stops taxing the richest companies and citizens is failing in its duty to protect the health of the market.

Thats not at all correct. In the mid to long term money will move to the person allocating it most efficiently. This of course assuming a non corrupt government. And thats where I see the actual positive feedback loop: People like you want the government to have more power, with more power there is more room for corruption/lobbyism, people demand even more government power

The same holds truth for powerful companies. Even more so: While a powerful (democratic) government can be controlled by voters, powerful monopolistic companies can't if the government is weak.

Now I get the issue with a over-regulating bureaucratic government, but the real world is more complex than 'powerful government is bad'.

> In the mid to long term money will move to the person allocating it most efficiently

Is that so?

> In the mid to long term money will move to the person allocating it most efficiently

Not without protections for antitrust and other uncompetitive practices. Picture this: Google becomes an even larger behemoth, with their cash they acquire Facebook, Apple, Netflix, Amazon and a few other larger companies (as it's happened in a much smaller scale with IBM and some other old tech companies growing larger and acquiring competitors). There is no pushback from government, they are allowed because they have the cash, they hoard companies and markets.

Now you are going to try to compete with this. How? You can be as efficient as possible but you are small, they have trillions, how do you compete? Isn't this a corrupt system by definition? It's ingrained in it, if you have more money you don't really have to be hyper competitive, you can just buy out your competition.

So there is a point where government intervention is necessary to keep a fair market, if not then you are bound to the monopolistic tendencies of accumulation of capital.

> Thats not at all correct. In the mid to long term money will move to the person allocating it most efficiently.

Under what model? Having more capital at your disposal enables you to stake more and riskier positions, which allows you to outcompete a smaller, but more efficient rival.

Your second claim has a simple counter-argument: the government has allocated wealth so well in the past 100 years that they are responsible for some major tech innovations (nasa, CERN, every startup that began in a public college) and subsidise private industries that would die without them (Starlink, The corn industry).

1. Who defines whats „unnecessary“?

2. So going to the moon / CERN are particularly necessary? Besides that, a counter-argument to this doesn‘t work like: Lets pick some „good“ examples out of a big pool. This has to be viewed through the average and on average governments are beyond terrible at investments (some more than others)

Governments are great at investment. Its just they don't reap the rewards life a firm would. If every company had to 'license' the discoveries and tech funded by taxpayers there wouldn't be much of a private sector.

It is actually very much correct if you believe in data backed research and can read Capital in the 21st Century.

That's only true when people have money to allocate beyond necessities, and when they all have around the same amount of initial capital.

This doesn't seem to be true, biggest companies today weren't biggest companies 50 years ago. Even in IT, IBM is not giant that it was and was succeeded by newer companies.

I don't think the comment is referring to individual companies but the market as a whole. It's clear that wealth is and has always tended to accumulate to the richest when not checked.

This article does a great job laying out some examples. https://www.brookings.edu/blog/up-front/2019/06/25/six-facts...

> In fact, the top one percent alone holds more wealth than the middle class. They owned 29 percent—or over $25 trillion—of household wealth in 2016, while the middle class owned just $18 trillion.[iii]

> This has not always been the case. Before 2010, the middle class owned more wealth than the top one percent. Since 1995, the share of wealth held by the middle class has steadily declined, while the top one percent’s share has steadily increased.[iv]

Most capital is invested in businesses, it's not piles of money in banks, but it's embodied in factories, jobs, products, research efforts. The vast majority fo the wealth of billionaires is tied up in the businesses they control, and that's fine. That money is doing useful work. We don't want to take it away from people who have proven they are effective leaders and managers and hand it over to bureaucrats. Let the people who built the businesses and created the wealth manage it. Tax them yes, that's fine, but at a proportionate level.

The feedback loop in Capitalism is to direct capital towards people who discover more efficient way to provide goods and services, or provide better goods and services, to help them scale up, or give people with a proven track record more resources to devote to new enterprises. This is exactly what we want.

There are three main issues with this picture.

The first is rent seeking behaviour, where simply having capital enables growing more capital without productive activity. This is what we need to tax punitively. Capital that is not being used productively is dead weight on the economy.

Secondly, monopolistic behaviour is closely related to rent seeking, it's using market power to extract rents or exert unfair influence.

Finally inheritance is a problem because it's un-earned wealth. There's no reason to expect that those inheriting wealth are likely to manage it effectively. Inheritance taxes should be high, without being overly punitive after all one of the main incentives to work hard and accumulate wealth is to provide for the next generation. You want to allow successful business owners and investors to benefit their families without facilitating excess waste of resources.

>We don't want to take it away from people who have proven they are effective leaders and managers and hand it over to bureaucrats.

This sentence is so bizarre not even the opposite is correct. First off, 'effective leaders and managers' isn't an antonym to 'bureaucrat'. There are effective leaders and managers in bureaucracies. In fact that's kind of what bureaucracy means, effective and rational management of resources.

Furthermore, bureaucracies exist both in the private sector and public sector. Wealthy billionaires employ hundreds (if not more) of individuals doing nothing but managing their wealth in highly bureaucratic fashion. They don't run around and employ their billions in some sort of crazy act of pizza and dorm-room fuelled creative destruction, the deploy countless of institutions and non-profits and accountants and lawyers, the gates foundation looks more like the tax office or a defense department than a garage workshop.

>, or give people with a proven track record more resources to devote to new enterprises

No, the point of capitalism is to allocate capital to people who don't have any proven track record. Because that's the people who actually make new things. If you only want to distribute money to people with track records then a bureaucracy is the right address, because correctly licensing, testing, rewarding, and promoting people based on their track record is the very essence of the ideal Weberian bureaucracy. Keeping track of who does a good job is 90% of what bureaucracies are all about.

OK, that's fair to a point, I'm just saying taking away wealth from the people that built it in the first place and putting it under the control of people who have not demonstrated those skills (whatever skills they do have) isn't necessarily a good idea.

As long as the capital is being employed productively and managed by the most competent people to do so, we all benefit. I'm carefully trying to avoid a 'tax bad, government bad' position and the phrasing you pointed out quite reasonably might have given that impression.

> inheritance is a problem because it's un-earned wealth

> Inheritance taxes should be high, without being overly punitive

What's strange is that when you talk to people about inheritance tax they become instantly outraged at the idea of the government taking their money by force, yet they seem to have no problem with the government forcibly taking close to half of their salary.

It's a strange paradox and it seems that people just aren't used to the idea, despite it being much fairer. Tax the wealth of the dead rather than the earnings of the living.

If we could slash income tax in half but implement an inheritance tax of, for example, 50% above a certain threshold, it would be a win-win for everyone. The rich would still leave lots of money to their kids and the average person would get to keep more of their earned money. It's more meritocratic on every level.

Sadly, so many of our leaders now are very wealthy themselves, so this isn't a proposition they're likely to be enthusiastic about.

The problem with inheritance taxes is that corporations don't have to pass their assets onto their children in order to continue existing. They're a half measure.

That said this is an issue that for some reason has a lot of poor people who would never be affected taking up the torch in support of the very same billionaires that are currently screwing them over. It's really remarkable the power of propaganda.

Corporations don’t own themselves though, people do. Effective ownership and control are the main goals that benefit society, as long as the organisation is well run and generating useful goods and services, and employing people, we all benefit. Inheritance is an obstacle to that because it’s effectively random in terms of the competence of the inheritors, but there’s nothing random about the leadership of companies. By and large it’s based on merit. If it isn’t, then sure, corporate governance is a legitimate area for policy making.

I think you might be overestimating how much merit is a factor in the selection of board members. Corporate boards are incredibly incestuous. The most reliable way to get on a board is to be in an old money family and know other people on the board.

One could argue that the current system of selecting corporate executives produces no better result than the general election process used to select some government officials. Certainly there is no lack of poorly run companies in the modern world, especially when compared to highly competitive companies like Apple under Steve Jobs and Tesla/SpaceX under Elon Musk. The advantage to corporate boards is that candidates don't have to spend time and energy with public campaigning, but they gravitate towards conservative governance that is unable to adapt to changing times.

At any rate, the competence of the leadership at companies doesn't really matter. If they make money they can be taxed on that. How competent the leadership is may or may not impact how much money they make. Poorly managed companies may even make more money in the short term.

Well, badly run companies die and get eaten by their competitors. That’s fine. We do of course need to make sure markets are competitive and that incumbents aren’t unfairly privileged, so there is a role for regulation, but the basic competitive system is fine.

Inherited wealth is already taxed at source. Taxing it again is double taxation. What is being levied is basically a death tax. You are taxed because you died.

Your statement is a gross misunderstanding of tax codes. Inheritance should not only be protected from excessive taxation, it shouldn’t be taxed at all in the first place. It is literally taxing Death.

Why is “taxing Death” a problem?

A death tax says that the govt would gain/profit from someone dying. Family is the only way to remain immortal and inheritance is transferring assets to extensions of one’s own DNA. Because DNA..it can be argued is ‘property’.

The state can levy a small fee to retire identity of the deceased for legal purposes. But other than that, transfer of wealth being taxed is theft.

Don't confuse monopoly with consolidation.

When Salesforce goes out and gets a patent that says you can't have any client resembling Slack without paying them royalties , then you can consider that a monopoly.

And for fringe companies like BD, its honestly better that they get acquired by someone that can dump IRAD money into it cause the research that comes out of these is arguably more valuable than the products they produce.

Contrary to what you might have learned on hackernews, monopoly doesn't mean there is no alternative and having no alternatives is not the primary downside to monopolies.

> United States v. Grinnell Corp., 384 U.S. 563 (1966) Grinnell made plumbing supplies and fire sprinklers, and with affiliates had 87% of the central station protective service market. From this predominant share there was no doubt of monopoly power.

Sure, but none of the cases listed in the comment I replied to are close to having control like Grinnell+affiliates.

Alternative take: consumer behaviour that demands complex integrated products incentivizes the formation of large corporate bodies that can marshall the many skills and resources required to make them, with the economies of scale that make them viable.

Semi-facetious summary: there’s not a lot of demand for local, organic, artisan all-terrain robot packhorses.

Another take. I think that one of the forces that promote “monopolization” on the internet at least might be the issue of trust. It’s harder to trust “smaller” (or less known) businesses on the internet and vendors on platforms like Ebay, Etsy, Airbnb. Roughly speaking there’s quite a lot of scam and low quality products/services out there. Things work differently offline where physical location can in many situations create more sense of trustworthiness even for smaller businesses. Online – your brand is extremely important. And bigger companies tend to have better established brands.

Just a speculation (and not very related to BD in particular but to a situation where internet got overtaken by corporations instead of becoming that decentralized paradise we once hoped for).

But... I don't disagree with this. This is exactly what is happening, and it is yet still creating monopolies. Just because it is what people want does not mean it is a good thing.

That's true in the case of Boston Dynamics. Definitely seems less true in regards to a company like Crunchy Roll though.

It’s totally applicable. Crunchy Roll are a media aggregator - the more aggregated a service is, the better value. Consider consumer unwillingness to subscribe to 5-6 different streaming services, but toleration of having 2-3. In fact, consumers would prefer just to have one that does everything. In other words, a direct connection between consumer demand and monopoly creation.

Do you actually believe that?

Can you expand upon you thought? How do each of these acquisition make a case for the acquirer tending towards a monopoly?

It seems Boston Dyanmics is a solution looking for a problem. It can be a great company but it's going to take a long investment by Hyundai. It's been in the hands of some huge companies and none of them have been able to squeeze a profit out of it.

These are just 3 examples of thousands of acquisitions by big companies with dominance in their industry. The trend is very clear, a handful of companies buy out competition and own virtually every serious competitor in the market. There are ongoing lawsuits against tech companies for doing this, and unfortunately companies can lobby to keep the laws on their side. Also, businesses like BD are always going to tend to want to sell rather than compete, this is obvious.

I don't see how one could argue there is no natural tendency towards monopoly capital given these key facts.

This is a key point of Peter Thiel's in his talk at YC from some years ago. He expands on it to great effect in a few other videos too: https://www.youtube.com/watch?v=vtJ0C0UHFfE.

> Our economic system seems to have a natural tendency towards monopoly

We had this in post-War America. What broke it up? Activist investors. Corporate raiders. The stereotypical bad guys of 1990s media. (Also, antitrust action. The situation is a product of public and private sector failures combined.)

Money is historically cheap, it is time to leverage that and buy whenever it makes sense. That drives a lot of M&A.

BD is hardly the only one in the game. Even though they did sink in a lot of R&D that was likely done by Google..because remember BD was alphabet owned before SoftBank acquired it.

Ghost Robotics...DARPA funded.. are actually a tad cheaper but will likely only for govt and military contracts first.

Low interest rates make M&A attractive. Its very similar to real estate investing and using existing property as collateral for new property purchases. There's a low barrier for the project to result in a decent IRR.

Plenty of us are seeing it happen. Now we just have to figure out how to take action to redesign the system to stop and undo it or use the tools already avaiable to undo the damage.

When interest rates are low it makes sense for companies to acquire companies. COVID also exposed some companies, so the acquiring company can get a bargain.

It's certainly the dominant trend, but it's not new.

Lenin analysed it more than a century ago https://www.marxists.org/archive/lenin/works/1916/imp-hsc/

Monopoly is inherently the tendency of capitalism because price competition forces profit margins down, meaning you can only match your earlier gains by expanding your market. The easiest way to do that is to acquire competitors

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