> Corporations should never be allowed to get this large.
Why?
Bonus question: Why should governments be allowed to get that big?
Why?
Bonus question: Why should governments be allowed to get that big?
Good government is hard, but it's certainly better than a corporation that is legally obligated to put profit ahead of anything else.
There is no legal obligation to maximize shareholder value.
The shareholders want profit maximised, and with that end, decide upon the board of directors, who decide upon the CEO. If the CEO does not maximise profits, the CEO will not remain the CEO. Therefore, the CEOs of (publicly-traded) companies are obliged to maximise profits – those who do not feel such an obligation are not CEOs.
I do believe that there are people who claim that companies have that legal obligation, which is what you said you’d not observed.
And if you think it's bad now, it's going to get dramatically worse yet. The largest groups that make up the US today, that dominate its politics and culture, have absolutely nothing in common with eachother and will grow further apart as the years pass. The rancor will get much worse. The populism will get worse. The end result is obvious and unavoidable (and I'm not talking about civil war, that's a redneck fantasy; it's tyranny, oppression, endless strife, and ever worsening dysfunction as the Feds try to contain the unspooling and get ever more paranoid).
Like it or not, there's always going to be some powerful entity who you cannot escape because it rules the land. The only question is what shape you want that entity to have. Accountability matters, and so democracy is generally a good place to start.
Also "exhausts their budget every fiscal quarter and successfully demands more" applies just as much to corporate projects. And given we gov agencies rarely can solve the whole problem, why expect them not to exhaust their budget?
This may or may not include specified behaviors, tasks, growth, marketing, sales, profits, goods, services, employees, competitors, etc.
Even corporations without any shareholders are common, found in the non-profit sector, but you do need corporate officers regardless.
Would it be better if there were a couple non-profit corporations with one or two million employees each the size of Amazon or Wal-Mart, to go along with what we have now?
I don't know if this is true, but you'll only talk past each other if you don't acknowledge it.
Governments aren't defined by a market cap, but rather by the services they provide to their citizens.
Consider that a private company's only goal is to enrich its shareholders, and they have no responsibility to the people or places around them. They are only accountable to their shareholders and the government.
A governments responsibility is solely to its citizens who also control it by vote.
The bigger your biggest companies are, the more powerful your government must become to keep them in line - to ensure they don't break the rules. If you want a small government that is able to retain order and fairness, you must also limit the size of the companies within its purview.
The natural state of a company is a monopoly. Once you are a monopoly, you don't need to worry about getting "re-elected" any more than a despot does.
The free society exists only in the space between these two clashing titans.
Corporate monopolies usually only persist due to two reasons: regulatory barriers or technological stagnation. Both are solvable.
Why does the government needs to be big (in size?).
It just needs to be strong enough and really connected to its people it represents. Then also a very small country (with a small government) can set up and enforce clear rules on multinational companies, doing buisness within that country.
The rules just need to be simple. If they are complicated, it just means, those with the best lawers will win and they are usually working for the corporations.
With numbers come also internal struggles, that weaken the whole system.
Look at switzerland or norway for example. They are small in numbers, but don't get really screwed by big corporations either.
Roughly speaking they coordinate on all major rules and policies and practices with the entire rest of the EU and therefore are effectively part of the EU for regulatory and trade purposes.
The UK on the other hand, obviously just wrapped up its Seppuku process of leaving the EU, and we're already seeing the relative increase in their being taken advantage of by corporate interests due to their much weaker position.
Switzerland and Norway take advantage of the power of the EU to push back on corporate interests, and the UK is getting kicked around as its negotiating power just went down by a factor of 10.
[1] https://ec.europa.eu/trade/policy/countries-and-regions/coun...
[2] https://ec.europa.eu/trade/policy/countries-and-regions/coun...
Even in relatively liberal democracies, governments are clearly more beholden to forces other than citizens and their vote. There's a reason why US governments did little to respond to massive BLM protests this summer, as government viewed its responsibility as more aligned to police unions than citizens.
Without a government to enforce monopoly rules, it'll just aggregate all its competition into one big blob, and you won't have any choice. Efficiencies of scale mean there's a natural pressure towards consolidation. The terminal state is always one blob that owns everything.
Once they do, they can smash any new upstarts, by undercutting prices, or by just buying them too.
> A corporation generally doesn't shoot dissatisfied customers.
Sure does shoot dissatisfied union leaders though [1] and enslave children to farm cocoa [2], and take down a democratically elected government kickstarting a 36 year long civil war [3]. Also substantially all of the trans-atlantic slave trade [4, 5].
These things were all allowed to happen because the governments in those respective jurisdictions weren't (and in the case of child slave labor, aren't) strong enough to stop them.
The idea that "a corporation generally doesn't shoot dissatisfied [people]" is a privileged western position to take based on the current system working pretty well. In places that have weak government, your statement simply does not hold.
[1] https://prospect.org/features/coca-cola-killings
[2] https://www.washingtonpost.com/graphics/2019/business/hershe...
[3] https://www.umbc.edu/che/tahlessons/pdf/historylabs/Guatemal...
[4] https://www.britannica.com/topic/East-India-Company
[5] https://dutchreview.com/culture/history/voc-dutch-east-india...
Thats not really true. There are tons of industries out there that are highly competitive, and are not aggravating into a monopoly, and those industries are highly competitive without much action from the government.
Sure, there are some industries that have huge network effects, such as telecom, that have a tendency towards monopolies.
But such industries are not the rule. There are instead many industries where monopolies are not forming, competition is working on its own, without the government doing much to enforce that competition.
Are restaurants a monopoly? Obviously not.
Cars? There are lots of options for cars
grocery stores? There are certain some big players, but the 10 corner stores, target, safeway, and whole foods within 5 blocks of where I live show that it is not a monopoly. MAYBE you could argue geographic monopoly for grocery stores, in certain limited exceptions in a few small towns, but that is not the vast majority of people.
Housing? There are 10s (or Hundreds?) of millions of people own their own home, or rent it to others. Clearly That is pretty competitive
Lets now pick some random things that I see within eyesight of me.
What about refrigerators? There are multiple refrigerator companies.
Furniture? Probably a lot of companies make furniture.
What about shoes? Clothing? There are lots of clothing companies.
And before someone says it, yes I am sure that every example that I gave has some big players in the market.
But my main point is that I simply do not consider the existence of some big players in a market, to be anywhere even close to the same thing as a monopoly or similarly non-competitive market. There is a huge gap between those two things.
The only major exception to all of these examples, is some of the new tech companies that have significant network effects in winner take all markets. Sure, maybe there is an argument that Google is getting to the point where it almost has a monopoly on ads.
But, just looking around my room, and looking at the main things that I buy in my life, which is food, shelter, transportion, and clothing, it seems pretty clear that most of these things have lots of competition, even if there are some big players in these markets.
That is unless someone is going to make a silly argument that the only markets that could be considered "competitive" are ones in which there are 10 thousands small businesses of equal size or something.
The trend however is clear.
It's extra clear in a market like air travel. Just two decades ago the US domestic airline market was actually competitive until...
1. 2001 saw TWA fold into AA.
2. 2005 saw America West fold into US.
3. 2008 saw ATA fold into SouthWest.
4. 2008 saw Northwest fold into Delta.
4. 2009 saw Midwest fold into Frontier.
5. 2010 saw United fold into Continental to form "United".
6. 2010 saw AirTran fold into SouthWest.
7. 2013 saw US Airways (and by extension America West and TWA) fold into AA.
8. 2016 saw Virgin America fold into Alaska.
When the government is asleep at the wheel, consolidation happens. The only reason the Big 4 aren't the Big 3 is because of regulators.
Out of your identified markets, the trend towards consolidation is very clear - except where no meaningful economy of scale efficiencies can be realized (such as real estate, or taxis).
Cars, for instance, consolidated to such an extent that only 14 car companies control 54 brands [1]. Again the only reason there isn't more consolidation is because of regulators.
Fridges are another great example. The market has seen huge quantities of consolidation, and likely the only reason it has hasn't progressed further at this time is because of regulators. [2]
You're mistaking the system working for it not being there at all.
[1] https://www.visualcapitalist.com/14-companies-control-entire...
Sure, that is a market with large amounts of geographic network effects. I already said that markets with large network effects could have competition problems.
IE, with air travel, on any given route between two cities, there might only be 1 or two airlines servicing it. So yes, thats a problem.
Most things that people spend their money on do not have much network effects, so my original point stands.
> to such an extent that only 14 car companies control 54 brands
So not a winner take all market then? Got it. I already said that it would be ridiculous to claim that a market would need to have 10,000 companies of equal size, in order to be considered "competitive".
So yes, I consider the car market to be fairly competitive, and not one where you only have "no choice".
> Fridges are another great example.
You just posted a link that shows that there are a bunch of competitors, and that it is not a winner take all market.
So I stand by my point that neither cars nor fridges are in any way similar to something like internet service, where someone might only have 1 or 2 choices, or something like the Google ads business, where Google has a huge amount of power in the market that is no way comparable to the fairly competitive car market.
Cars went from 54 to 14 establishing clear directionality and benefit. It's not going from 14 to 1 only because of laws against further consolidation in the space. Regulators would simply deny their request to consolidate further. Stopping at 14 isn't some magical constant or some natural end state.
My point is that the natural direction in each of these markets is consolidation, then at a point it hits a dead stop. Why is consolidation only useful up to a certain threshold? It's not. Regulation steps in and keeps it competitive.
No, because these markets don't have some huge geographic network effect.
The markets are pretty different than something like home internet service.
The traditional example being that of water pipes, where there is zero benefit to laying the pipes twice to a house.
You should be able to see how a situation where laying the pipes twice to a house is pretty different than a situation where there absolutely could be benefits to another car company being created, to manufacture new cars.
> Regulation steps
I am not sure how you can claim with with a straight face, that anti-trust laws/regulation is being strongly enforced these days, and that this is the reason why most industries are not turning into monopolies.
Anti-trust law isn't really enforced even in obvious cases where it should be enforced these days , and yet I see a world where there is lots of new companies entering markets, and lots of competition, in most markets, despite regulators failing to enforce regulation in the exceptional and rare cases where it should be doing so.
It is quite clear that regulation is not stepping in, even in the obvious cases. So no, I do not believe that the non-existent enforcement of regulation is doing anything. Instead, we are living in a world that has lots of competition, despite the fact that the regulators aren't doing anything even in the blatant and exceptional cases where it should, such as in telecom/internet/app stores/ect.
As I said, my analysis applies to companies that have demonstrated economies of scale.
Mergers are rejected all the time, and further, you can't discount the mergers that weren't requested in the first place because of the regulators.
I would say in the US mergers tend to skate through, but in if that company operates in other jurisdictions they need approval from all global regulators, and the EU has no such objections to saying no.
You haven't posited a theory at all for why consolidation is good up to 14 players in the automotive space but 13 is just a bridge too far. It's not. There's external pressure. Competition is bad for companies because it reduces margin. Consolidation removes competition and improves margins. That's just fact. Companies don't care about capitalism, competition or free markets. They care about making more money.
I really would not consider the current situation to be one where regulators are doing strong enforcement of anti-trust law.
Regulators are really not doing much regulating right now, on the anti-trust and anti-competition front, and regulators not doing much regulating in these new markets where they definitely should be.
I am not sure how you could possibly look at the current state of some of these rare expectations of monopoly behaving companies, and claim that regulators are doing their job.
> I would say in the US mergers tend to skate through
Well then this concession is good enough to support my point.
> You haven't posited a theory at all for why consolidation
Well I don't need to. All I have to do is point to the existence of lots of markets that are competitive, and point out that regulators that aren't regulating. The reason doesn't matter as long as I point to the clearly true fact that regulators aren't doing much regulating in some of these markets.
But, one possible theory is that consolidation also reduce competition, and can cause companies to stagnate, and can reduce innovation in that market. You would have to argue that no startups ever could succeed in the face of "scale" (something that is clearly not true. Startups suceed all the time), if you are going to argue that scale is such an overwhelming advantage that inevitably causes every single company in that market to join together.
Also, different companies run differently, and this can give them advantages in some things, and disadvantages in others, allowing them to overcome scale problems, due to the advantage/disadvantage of merely being different. Heterogeneity in companies allows them to target niches and stay in the market.
So that already establishes the point.
I would really recommend that you become more informed on the issue of EU anti-trust enforcement. I just did a bunch of research myself.
Here is a source from quoting the EU president himself.
https://www.reuters.com/article/us-eu-competition-juncker/ju...
"Juncker said the Commission had only ever blocked 30 mergers and approved more than 6,000."
https://www.jonesday.com/en/insights/2020/06/eu-court-raises...
Source showing how weak EU anti-trust enforcement is
After doing more research, is clear that the EU is doing much less enforcement against merges than even I previously thought, and I am now going to claim that the EU regulators aren't doing much enforcement either.
Really I am quite surprised at how little the EU is doing, and should have looked that up much earlier, instead of taking your initial claim at face value.
Furthermore, I can only find a single example, in the history of EU anti-trust law, of the EU blocking a US merger. And that was in 2001 regarding a GE acquisition.
If there is only a single example, in the history of EU anti-trust law, of the EU blocking a EU merger, a whole 20 years ago, then it is pretty clear that the EU is not doing much enforcement against US mergers.
So my point stands. You concede that the US is not doing much enforcement of anti-trust law. And the fact that the EU has only ever been successful in doing so a single time, 20 years ago, means that the EU is pretty irrelevant to this conversation as well.
Again, the number of blocked vs approved isn't particularly relevant. What matters is also the number that weren't tabled in the first place, and obviously, the number of things that didn't happen is a particularly challenging set to count. Companies aren't fond of public failure, and so they'll try and suss out whether regulators would be amenable to a merger before making it public.
6,000 vs 30 is a meaningless metric, because 6,000 small companies merging into 3,000 small/midsize companies isn't relevant to this discussion as it doesn't do much to alter the competitive landscape. 30 mega-caps merging into 15 giga-caps is what I'm talking about.
I'm not saying companies should never merge, that's fine, it's in their competitive interest to do so. Mergers are good for companies because they reduce competition and improve margins.
Again, what you haven't explained is why a small company merging into a small company is advantageous, a mid size into a midsize is advantageous, but a giant into a giant just wouldn't ever work. Of course it would work, the same dynamic continues to exist. Regulators are why.
T-Mobile just acquired Sprint, right? So we know there's certainly an advantage on the business front to consolidate these businesses. So why doesn't AT&T buy T-Mobile to form AT&T&T? Well, they tried in the early 2010s and the DOJ filed suit is why. [1] Further AT&T had to pay a huge amount of cash to T-Mo when it all unwound.
[1] https://som.yale.edu/sites/default/files/ATT%20-%20T-Mobile%...
Even if you think that, the metric of only a single american merger ever being prevented, and it happening 20 years ago, is still pretty relevant.
If the regulators in Europe have only blocked a single merger in America, ever, then European regulators are simply not relevant to the conversation, and you have already conceded that American regulators aren't doing much.
You cannot handwave away the true fact that the EU has only stopped a single American merger, one time, 20 years ago. And that this is pretty good evidence that European regulators are not doing much to prevent American mergers.
> T-Mobile just acquired Sprint
Huh. And I guess European regulators didn't do anything about that, did they? In the clear and obvious cases of geographic network effects in the industry of Telecom, which I have already stated is one of the few exceptions where regulation is definitely needed (Telecom, has huge geographic network effects. It is the same problem as internet, or electricity, or water pipes, and I have already said that network effects are the one major area that consolidation will definitely happen), we see that European regulators didn't stop such a clear an obvious thing that should have been stopped.
> 6,000 small companies merging
Well, in one of the cases of large telecoms companies, such as t-mobile/sprint we see that it wasn't blocked!
> so they'll try and suss out whether regulators would be amenable to a merger before making it public.
Well they didn't stop the clear and obvious example that you just brought up regarindg T-Mobile/sprint. Looks like European regulators are doing much of anything.
So no, European regulators are not doing much of anything at all, to prevent American companies from merging, using an example that you brought up.
> Well, they tried in the early 2010s and the DOJ filed suit is why
As I said, before, businesses that have huge geographic network effects are one of the few exceptions where there is a huge advantage to consolidation. But even IN these clear and extremely obvious cases, only sometimes will regulators take action. But sometimes they won't either.
The fact that nobody blocked the t-mobile/sprint situation is clear evidence that regulators aren't doing much to stop mergers, even in the rare and obvious cases where they should step in.
If they failed to stop such an obvious case, then is strong evidence that they aren't doing anything.
But whatever. Going to move on from this thread because it is clear that you know that this example is a clear cut example of how the EU isn't doing much to regulate anything, which is why you completely ignored it.
The complete dodge on that shows that you understand how much it disproves your point, and shows that the EU isn't doing much, which is why you completely ignored it.
So that dodge is good enough evidence for me, to show me that you understand this.
All we know is there is clear pressure in industry to consolidate, that at some point they stop, and that regulations to preclude further consolidation exist.
Someone has to have a monopoly on violence or you're going to have a bad time.
Meeting customer demands is only one way to compete. A better facebook is going to still have a hell of a time not being out-competed by facebook. Likewise with amazon sometimes throwing its weight around to take a loss to undercut competitors until they starve.
And most Western governments are now abdicating this responsibility in the name of political ideals and the stated notion that non-citizens have the right to demand a place in the nation of their choosing.
Nobody is doing that. However, I'd suggest that even if they were, it wouldn't invalidate anything I'm saying.
Non-citizens are permitted to immigrate under various circumstances, defined under naturalization law. Sometimes that's on the basis of being refugees. Sometimes its on the basis of skills and needs. Sometimes its granted in the face of exigent circumstances.
In the case of the DREAMers, it's based on the notion that if you're brought into the country as a toddler, then you didn't intentionally commit a crime and the fair thing to do is to let you remain - in no small part due to the huge role these folks play in the economy. The parents who committed those crimes are not granted any sort of amensty.
Private companies' only effective means to do anything are to produce a product that people freely choose to buy and attract people to work for them (absent a few rare exceptions).
Governments have effectively unlimited means to compel people. They can spy on anyone, fine them, throw them in jail, kill them, all for as much and as long as they feel like.
> National net wealth, also known as national net worth, is the total sum of the value of a nation's assets minus its liabilities. It refers to the total value of net wealth possessed by the citizens of a nation at a set point in time.
Given that multi-national corporations exist, it seems obvious that companies will have greater wealth than nations.
That doesn't follow because every non-totalitarian country has multiple corporations operating in it, in most countries a much larger number than the maximum number of countries a corporation could possibly operate in.
I would argue that most of our current problems are happening because our governments are small, ineffective, and corrupt. I would prefer big, effective, smart, and transparent governments that can take decisive action any day of the week. I'd go so far as to abolish state governments entirely and split their powers between counties and the federal government; they were made for a time when our communications were limited by the speeds of our fastest horses.
Personally I'm a 'taxation makes civilization possible' man myself, and I find that the 'taxation is theft' people rarely make meaningful contributions to society.
I tell you what, though. You design an effective, smart and transparent government and I'll never say a word about how big you would like it to be.
How do we define 'far away'? I can have a face to face conversation with someone at the opposite end of the country with near-zero effort.
> with so little in common with ourselves and our way of lives.
I strongly disagree with this. Partisan politics try to paint people from different regions of the US as being wildly different, and I flatly reject this notion. I've lived in urban, rural, and in areas separated by thousands of miles. Americans are far more alike than different. There are the same (minor) cultural differences within the average state as between states on opposite ends of the country.
> I tell you what, though. You design an effective, smart and transparent government and I'll never say a word about how big you would like it to be.
I don't have all the answers, but I would start by outlawing the bribery of public officials via campaign donations, and I'd put the legislative process in version control.
Now that both corporations and government are so big and intrusive that they're somewhere between a nuisance and prohibitive toward small-scale enterprise, we should at least think about ways to sic them on each other.
Corporations exist to enrich shareholders and nothing more.