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Comment by cute_boi | Hacker News Reader

Hmm, Many corps, government, humans etc. aim to become bigger and global. So, there is no easy way to keep them local, small and diverse. And once they grow big most of them turns blind eye on small local companies just like how amazon is doing now.

This is a problem that will prevail forever and can't be solved easily. We can experience today too in china the government do crackdown but most of us hate it right? If they don't regulate they grow beyond party.

(Taking example of china because I don't know other country which does crackdown on big giants like this)

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You can largely achieve this by barring companies from managing or owning even pieces of other companies directly or indirectly and taxing based on number of employees. Add a scaling tax on assets including IP and it becomes very hard to have Walmart sized mega corporations.

It’s a more interesting question to ask if this would be more economically efficient.

I'd like to just see them distribute their actual profits instead of being allowed to "hoard" it. That would also go a long way in fixing the stock markets supposed "growth by any means" criticism. I'd argue that the hoarded profits are one of the main drivers of all these acquisitions that reduce competition and lead to consolidation.

> "It’s a more interesting question to ask if this would be more economically efficient."

it's almost self-evident that it would be more efficient. the more interesting questions are how and why. fair and efficient markets at steady-state would largely be composed of a few medium-sized companies and a bunch of small companies, with new entrants occasionally. that would enable healthy competition that would drive progress while keeping chaotic upheavals mostly at bay. it would also distribute wealth more widely, which means we'd get more diverse ingenuity and more interesting entrepreneurship, rather than having the capable simply stowing away at large companies taking their safe and boring little toll on the income river.

I don’t think it’s clear because economies of scale do exist. Honda can simply spend more on R&D than a company 1/10th it’s size. Large companies definitely have their own issues, but there isn’t some clear maximum size where companies universally become less efficient at say 1,000 employees. It’s more a question of management overhead and flexibility etc.

economies of scale taper off because other effects (like coordination problems) tend to overwhelm it with scale. also, capital becomes less efficient at scale due to opportunity costs and the innovator’s dilemma, for instance. there are many more reasons why economies of scale aren’t the be all and end all of market economics.

I agree, my point was it depends on industry. You can’t build a modern Fab for a 100 million it simply takes billions to be competitive. Further, you need a pipeline of Fab’s to afford the R&D etc. At the other end a McDonalds franchise can be as profitable as their corporate restaurants.

there's no intrinsic reason a capital-intensive industry can only be winner-take-all. capital-intensiveness is primarily a financing issue, and assuming capital finance has been corralled into being a competitive market, it isn't a particularly insurmountable problem. tokyo public transportation is an example of a capital-intensive market that still has competitive dynamics.

It’s not just about capital, my point was the benchmarks where different between industries. You can scale a soda bottling plant in the way you can’t scale a single sit down a restaurant simply because you can ship soda hundreds of miles without issue.

Fab’s are built at such scale in part because finished chips are really easy to ship being both durable and value dense. They also benefit from that scale because of the nature of the lithography process which has many individual steps which need to be done in the same factory, but each step is very fast and operates on a full wafer at the same time. Millions of chips per year is basically the minimum scale that’s in any way reasonable.

sure, the scales of various industries can be very different, but that doesn't imply that economies of scale (or other economies, like scope) will necessarily dictate winner-take-all dynamics in any of them.

A competitive market sure, but you can’t have 100+ competitive and independent companies running Fab’s worldwide while you can have literally 100,000+ competitive farms, restaurants, etc.

That’s a small enough pool that individual failures starts to seriously consolidate the market. It’s already down to a handful of companies that can currently manufacture modern chips and if anything that number is likely to shrink rather than grow.

> So, there is no easy way to keep them local, small and diverse

I was lately thinking about some kind legislative action against network effects. Let's make it easy to migrate to other platforms.

Obvious way to do this is to require big companies to implement "data export" feature with specification.

The GDPR pretty much requires that already. You need to be able to export your data and another service must be able to parse them automatically, if reasonably possible.

This has limited utility in practice because the data models reflect the underlying implementation and architectural details, particularly in the kinds of scalable systems big companies have. Specific tradeoffs are made in data models that reflect the tools available to the designer that might not apply to your environment. Moving data models between two systems that were not designed together can create a several order of magnitude difference in performance, cost, etc in using that data model.

It is a common problem for data model migration, even outside the context of the big tech companies. I've had cases where the systems were effectively not replicable even though the data was made available because the source system relied on some bespoke piece of data infrastructure software that no one else was likely to replicate. (Even hypothetically open sourcing this infrastructure isn't that helpful because it is usually extremely specific to the operational environment for which it was designed -- you can't drop it into your operational environment.)

All of which adds so much asymmetric friction and cost, which the source provider does not incur, that merely making data models exportable tends to generate limited user value in data models that inherently encode network effects.

Not easily, I agree, but it could be done. For example, there could be higher taxation rates for larger companies.

I wonder how this would work, considering higher tax rates hurt the profitability of a company.

Sure, but do we want to optimize for creating trillion-dollar companies? They can hardly even find ways to spend their fortunes; we could tax quite a bit from them before anyone except accountants notices. And that money could be used for social good.

The interesting thing about big tech in that regard, is a 50% income tax rate wouldn't be enough to stop them.

Big tech piles up large amounts of cash as it is and they have no idea what to do with it (other than shovel it back to shareholders). They have far beyond the margins they need to keep expanding, even with a 50% income tax. So the first thing it would do is cut into shareholder returns (less cash), their multiples would contract as investors would find them less appealing. Half of America is invested in big tech (in one form or another), and those are by far the most active voters. If they see their portfolios tank due to a huge hike in corporate income taxes, they'll promptly punish the politician/s that are responsible for it. Big tech would keep growing at 50%, so what's the alternative? 70%-80%? It's unlikely to ever have the support required to get it passed, it just plain sounds very egregious as a policy. At very high levels it comes across as: we like to punish success; and that's how it would be run against politically by the other side (Republicans).

50% income tax is the standard upper echelon tax rate for individuals in the developed world.

It's always interesting how people view taxation as punishment, as if the money just disappears into a black hole instead of being used for bettering the lives of everyone in the country. America could easily fund universal health care, which would be a massive boost to quality of life, if they taxed bigtech a bit more.

Instead you have Americans refusing to go to the doctor because they're afraid of the bill.

The us government already could fund universal health care and chooses not too. People in the US are wary about taxation because we already have a comparable tax rate to other developed nations, with more prosperity, and yet we get comparatively far fewer public goods in return. It's a raw deal. Where's our high speed rail, our public transit, our health care, our public bathrooms? Why is that money going to Raytheon instead?

Could it?

> https://www.thebalance.com/u-s-federal-budget-breakdown-3305...

Total Revenue is $4T, Total Spending is $6T, and

> Social Security will be the biggest expense, budgeted at $1.196 trillion. It's followed by Medicare at $766 billion and Medicaid at $571 billion.

That is $1.35T spent on healthcare just for old people (over 65) and poor people. And it is not even the whole amount, since most 65+ people still have to buy insurance. Even if you cut out the 5% profit margins of managed care organizations, or even 15% assuming their function is wholly unnecessary, it still seems unlikely universal health can be offered without increasing tax revenues.

In 2019, total healthcare spend for all of US was $3.9T.

https://www.cms.gov/files/document/highlights.pdf

> That is $1.35T spent on healthcare just for old people (over 65) and poor people.

Aged, blind, disabled, and poor, plus less poor children and pregnant women.

And notably, many of those categories have disproportionately high medical costs.

True, but somehow still only $1.35T out of $4T total healthcare spending.

The original claim by smus was that the US could pay for all healthcare, presumably without increasing taxes. I find that hard to agree with. Even if we assume we can cut 25% overhead from the $4T total, the US would still need to come up with $1.5T+ to meet $3T total healthcare spending.

I do not see it happening without increasing taxes. Which may not make any effective difference other than to redudant employees of managed care organizations (MCOs) who get laid off, because presumably the premiums currently getting paid to the MCOs simply get collected as taxes.

Yeah, I don't have a strong opinion on the original claim. I don't think it's clear that it's impossible to fund the kind of universal healthcare we'd want without raising taxes but I do think that's likely. I think it's probably "easy" (in terms of having the money available in theory, not politically) to fund universal healthcare at the level we'd want while raising taxes on each individual by less than they were paying for private care. But these are guesses.

> True, but somehow still only $1.35T out of $4T total healthcare spending.

The federal share is not the whole public cost; Medicaid is a state/federal cost sharing program.

https://www.visualcapitalist.com/u-s-spends-public-money-hea...

We already spend more per Capita than countries with socialized medicine, so it stands to reason we should be able to socialize our medicine with a reasonable increase in expenditure on health care.

That extra money doesn't need to come from raising taxes. It can come from our incredibly bloated "defense" budget

it's not that weird. no one talks about raising taxes for the people who would see a net benefit from more public services.

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