An Economy of Overfed Middlemen
mattstoller.substack.com
mattstoller.substack.com
They will also be financially entangled with elites in former colonies, and the operators of extractive industries in weak countries that depend on outside investments, and with everyone in the financial industry globally. They're also financially entangled with family members and friends.
The only people anti-monopoly legislation helps are people who are less connected and less influential. The only place it will be supported (by the well-connected and influential) is in countries who are trying to protect domestic industries. Once the protectionism (or the nationalized industries) are destroyed, then monopoly becomes ok in time to get control over entire sectors of the economy and raise prices to maximize profit extraction.
Any concern about whether the US is dominating the world or not is only practical. It's useless to sic the US against a country that is being protectionist or refuses to denationalize if the US doesn't have the strength to properly make the people who reside in those countries miserable enough to support the opposition.
A geographically contiguous group of people who see themselves as having a common culture and values, combining for economic/military coordination and centralized decision-making for certain kinds of decisions certainly seems like a natural unit for humans to organize themselves.
https://en.wikipedia.org/wiki/The_Antitrust_Paradox
Before then, things were very different. Here's an example of an anti-trust court case against a company selling shoes - read the court's rationale for applicability of regulation, and consider how many of them would apply to any of the large tech companies today:
1) having real international influence without resorting to military action
2) being resilient against international influence from others
The trillion dollar question is how to effectively keep private businesses in check without sacrificing on those points.
For example: Matt Yglesias
I'm neither for or against this strategy. I only wish, quixotically, the misc belligerents in policy debates would be intellectually honest.
It's ridiculous to use liberation theology terms, eg "freedom markets", when referring to Fortune 500 corporations.
If the people you have seen spouting what seems like the most progressive rhetoric do work at such places, that doesn't mean they're representative of all people who believe in progressive ideology.
It doesn't mean that the source of this ultimately deeply destructive ideology isn't the political right.
Scale and logistics are good. I think they should be managed by federation (and through regulation), but I'm sick of having bosses who see my salary (rationally) as something directly coming out of their bank account. I prefer a little indirection and mediation in the relationship.
Efficiency is good for everyone. The more time and effort you save, the more time and effort you have to waste. There are scales that are ideal for particular businesses, and that scale doesn't always coincidentally coincide with the scale a small-business owner can handle. Business should be as big as real (not paper or regulatory) efficiencies can be found at, and against those efficiencies we should maximize the flexibility and ability to innovate of individual businesses and workers.
Instead we just subsidize the biggest businesses most, and through legislation create false efficiencies to subsidize them even more (and guard them from any externalities.)
Maximizing for efficiency is not. It leads to a variety of problems, including (but not limited to) a strong tendency toward consolidation of power in too few hands (thus leading to abuses), and fragile systems that break down when a shock comes (like we saw with the supply chain issues during the height of COVID lockdowns).
The US has been turning away from free markets for at least a century now.
Anarcho-syndicalists that argue for workers councils run by experts basically got that but it comes coupled to outdated story of ownership.
In real terms the logistics and infrastructure are determined by experts but with the extra steps of getting validation from financiers who have no experience with the engineering methods, but their name is on some paperwork somewhere saying “they own that”.
I am cool with centralization effort to minimize duplication of effort. Not the kowtowing to some financier who lucked into money in the past in unrelated business, picking and choosing what I work on today as an engineer with nearly 30 years experience ranging from hardware design to kernel hacking, onto web app stacks with everyone else.
The ownership story is political double speak and corrupt expropriation of agency; replacing pols has improved economic gains for public and flushed corruption: https://www.nber.org/papers/w29766
Has there ever been a socialist operation (or any other operation) that didn't also do this?
Like, say, Chernobyl?
edit: I think Communism, or at least Soviet communism, is as bad or worse for the environment as capitalism. The difference is that the benefits of Soviet environmental disasters flowed to the nation in general. The benefits under capitalism generally go to fewer people than I could fit in my bathroom.
As for the benefits of capitalism, it's the only system that has managed to lift millions of poor people into the middle class and beyond.
If you consider the settler colonial projects like the USA, the wealth comes from ignoring the property ownership of the indigenous people, and then also the slavery, and the ignoring or intellectual property for inventions and arts.
If you look at Europe, there's the extreme wealth transfer of living and shifting the Indian economy into Europe, along with you know, stealing the world's gold, silver, and other valuables.
For more modern times, you also need to contend with unions and government regulations(including socialist policies), along with more wealth redistribution from things like the GI Bill. The people(and descendents) who benefited from the GI Bill are significantly wealthier than the people who didnt.
Wealth and land redistribution, especially at the expense of poorer people gives a clearer direction for what has lifted people out of poverty.
1. if wealth comes from owning property, why weren't the indigenous people wealthy?
2. In South America, the indigenous people were pushed off their land, too. Why did South America remain poor up to the present?
3. How did Japan become such an incredible economic power despite having little land and no natural resources?
4. The American slave states were never particularly wealthy, and what wealth there was was erased in the Civil War. Literally burned to the ground. Slavery did not build the wealth in the US.
5. The GIs earned the benefits from the GI bill. It is not wealth redistribution. They risked everything for yours and my freedoms.
6. The Spanish indeed took tons of gold & silver from S. America. Do you know what happened? Inflation! The same thing that happened after every gold rush. The reason is simple - gold is not wealth. Gold represents wealth.
https://en.m.wikipedia.org/wiki/Greater_East_Asia_Co-Prosper...
What they did after WW2 was adopt a free market.
Property might not be 100% of what causes wealth cause you know, gotta mix capital with labor, but are you really arguing that America didn’t benefit off the stolen wealth of other nations? Is all the land that was taken from them valued at 0?
Land by itself does nothing. Japan proved that land is not a crucial factor.
Bill Gates' wealth didn't come from land.
> mix capital with labor
This is also not necessarily true. Slavery was certainly applied, but the wealth created thereby was minimal.
The common factor with wealth creation is free markets. None of the other factors you mentioned.
Can you show me a single successful enterprise that does not require any land?
> This is also not necessarily true. Slavery was certainly applied, but the wealth created thereby was minimal.
> The common factor with wealth creation is free markets. None of the other factors you mentioned.
Jesus Christ guy, I’ve seen free market bootlickers before but this is a new, amazing level. Next are you going to tell us how the free market was so amazing before that rapscallion FDR came in and ruined the masterpiece of the free market that was the Great Depression? Or does the result of one of the most laissez-faire economic system a of all time not count because it ended bad?
Businesses often rent office space. Microsoft got its start from a rented building. As I mentioned before, Japan became a world economic power with very little land. South Korea is another example. South America has plenty of land, and is mired in poverty.
> Next are you going to tell us how the free market was so amazing before that rapscallion FDR came in and ruined the masterpiece of the free market that was the Great Depression?
WW1 showed that the free market had turned a nation of poor immigrants into a super power. The doughboys arrived taller than the Europeans, and far better equipped and fed.
The Great Depression was caused by the creation of the Fed in 1914. The Fed proceeded to the inflate the dollar, while keeping a fixed exchange rate with gold. The disparity led to what always happens with pegged currencies - collapse. The depression was deepened and lengthened by FDR not understanding what was going on.
> bootlickers
I suspect you've never heard the case for the free market before. It isn't taught in school or in college. Which is sad, because the schools graduate students into a market economy with little idea of how it works. For example, I saw some 12th grade history materials a few years ago that asserted that the middle class did not exist in the US before FDR. This is the nonsense taught in schools.
> amazing
Yes, it is amazing. The evidence is right in front of us. Feel free to refute the evidence I presented that free markets are the common thread in prosperity, not land nor slaves nor socialism.
If you want some more, look at the historical statistics of height in the US. It went up all through the 19th century, up to WW2 where it leveled out. That's pretty good objective evidence of growing prosperity. Remember that the US was peopled by immigrants who arrived with nothing.
> Businesses often rent office space. Microsoft got its start from a rented building. As I mentioned before, Japan became a world economic power with very little land. South Korea is another example. South America has plenty of land, and is mired in poverty.
Just to be clear, I am taking that as no, you cannot show a single successful enterprise that does not require land. Redefining renting land as not requiring land does not pass any sort of logical muster.
As for the rest of your comments, I'm not going to engage with your Gish Gallop when you cant even pretend to deal with the very first point. It's obvious you have an opinion and you are going to work your way backwards to any argument that supports your conclusion
Edit: Oh god, I was just going through other comments I had this week and realized you are the guy who was arguing that seatbelts are dangerous and shouldn't be required. I legitimately think you might be having a schizophrenic breakdown and you should seek therapy.
You're engaging in reductio ad absurdum, because the space every person occupies is required for them to exist. Your argument is simply silly. A land-based business would be one that farms or mines or puts a racetrack on the land. Two businesses can be contained in offices right next to each other, and one goes bust and the other gets rich. The office is irrelevant.
> you are the guy who was arguing that seatbelts are dangerous and shouldn't be required.
That's a gross misrepresentation of what I argued. You got that one so wrong, perhaps you should try carefully reading my posts again in this thread.
> I legitimately think you might be having a schizophrenic breakdown and you should seek therapy.
Insulting others is not a convincing argument.
It is not a reductio ab absurdum argument to ask you to give proof to a statement that you declared.
I have already been warned about engaging in flame war arguments, so I will not respond to your other points unless you can provide evidence for what I consider your very incendiary claims that the land taken from other peoples was not in involved in wealth creation.
At best, we simply do not agree on basic interpretations of reality if you are pro free markets and capitalism but also don’t think plundered land had anything to do with wealth creation
Instead, posted insults. But it's fine if you want to start taking the high road. I'll forgive you :-)
> your very incendiary claims that the land taken from other peoples was not in involved in wealth creation.
First off, if you read the known history of the indigenous peoples of America, they were constantly engaged in taking land from each other. (For example, read "The Commanche Empire" by Pekka Hamalainen.) Secondly, they lived at a subsistence level. This is not much in the way of wealth creation.
The Aztecs, Mayans, and Incas did go much further, and did create wealth from the land, but far less effectively than the Europeans did. They were also in Central and South America, not North America.
> also don’t think plundered land had anything to do with wealth creation
This is not what I wrote. I wrote that land is not required for wealth creation. It is not the common factor among wealthy economies. And whether it was plundered or not is irrelevant. (All land has been taken at some point in time.)
> It is not a reductio ab absurdum argument to ask you to give proof to a statement that you declared.
That's a misrepresentation of what I wrote about an office requiring land. Also, it is impossible to prove anything about economics. But what we can do is examine history. When we do, the common theme for highly wealth creating economies is free markets. Not land.
And that is bad. But it is different.
> As for the benefits of capitalism, it's the only system that has managed to lift millions of poor people into the middle class and beyond.
That's because capitalists take credit for China. Take China out of it, and capitalism is a no-op.
Nope. Even socialism has to run at a net surplus (i.e. profit) because you cannot subsidize everything.
I would like to see law begin to start with an implicit bias for the underdog, but unfortunately Citizens united and the general principle of money in politics means that larger entities will have disproportionate sway (due to Pareto principle of accrual).
It's employees / shareholders et al can vote how they like, but that's different than the New York Times (or Russia for that matter), swaying an election.
Not letting me get together with other people helps Zuckerberg.
As far as the NYT goes, feel free to argue against the 1st Amendment. CU just says that the NYT isn't special, that the 1st applies to using tools, not organizations who have named themselves after said tools.
Govt regulation always favors the well-heeled.
Yes but there is are rules & caps for political contributions: https://www.fec.gov/help-candidates-and-committees/candidate...
I'm not arguing against 1st, I'm arguing that a business (not a person) has speech or a 1st right (which people absolutely do), and that the net result of acting like they do is really hurting the citizens of America.
Why should people who get together to do political speech be treated any differently?
It sounds to me like you're advocating saying NYT, and rich people can give large sums of money, therefore why cant groups of people also do it?
I'm advocating for NYT and rich people should not be allowed to give large sums of money, and neither should individuals beyond their individual contribution cap.
The principle I am all for is that wealthy people and corporations should not be able to bring disproportionate resources to politics than their underlying democratic unit (a single unit vote in the case of a wealthy person, no votes in the case of a corporation). And therefore the caps for wealthy people should be the same as for middle/poor people, and caps for corporations should be 0 because they are not democratic political units.
I'm listening to https://www.khanacademy.org/humanities/us-government-and-civ... to try and discern if maybe I have a completely broken idea of what citizens united is
The question in Citizens United was whether some folks can get together and make a movie advocating against a political candidate without being subject to campaign finance laws.
There's no question that the NYT (and unions) can advocate for/against a candidate in any way that it sees fit; the question in CU was "are other groups different?"
The CU decision was "there's no difference between the NYT and any other group. If you have a way of speaking, you can politic with that way as you see fit."
Feel free to explain why the NYT (and unions) shouldn't be limited but others should be. (Condo associations often put news in their newsletters, so ....)
Alternatively, explain how you're going to limit the NYT's ability to advocate for political candidates and causes without repealing the 1st amendment.
My immediate thought: it's going be allowed. Regulator after 6 months: it's allowed.
Any natural monopolies formed by just being really good at something and offering it at a low price are a waste of taxpayer money to try and disrupt.
People yell at Apple for being a monopoly but android exists and the consumers just don’t care.
Amazon tried to launch a line of phones and no one cared.
If things were really so oppressive the consumers would demand something else but they just don’t care.
And benevolent monopolies can and do change over time.
Did you read my first paragraph?
To be more explicit, I wouldn't agree it's most often the government making monopolies. There are plenty of cases where government regulators are captured by 'natural' monopolists (or otherwise large players) who then entrench themselves with regulatory moats, serving only their interests.
And even government made monopolies aren't _well_ regulated IMO, for example telcos. A freer market would need controls to prevent consolidation from locking in customers by simply buying up all the spectrum and lobbyists.
It's gigantic detriment to innovation, unemployment, wage suppression, prices.
The end state of unregulated real world free markets is monopoly, because of the ability to establish market barriers, extract subsidies, state-level actor manipulation, dumping.
Antitrust is dead in the US. Cartel economics is part of the oligarchical political control and the formalized power base of the rich.
And economists and economics were puppeted on TV, think tanks, parroting the free market religion to enable this.
And as part of this, we couldn't do anything (and still can't) about global warming. This will possibly doom us as a civilization.
Uber, Lyft, Etsy, Doordash, Postmates, Shopify, Spotify, Yelp, Datarade, G2, Capterra, Turo - all are marketplace providers. They don't make a thing. they make the thing that lets a much larger class of thing-makers get in touch with the thing-buyers.
The fervor for marketplace providers has gotten so intense that we're seeing more and more niche businesses get funded, e.g. https://swimply.com/
Edit: ... and don't get me started on how companies (ab)use the 1099 designation to turn traditionally asset-heavy businesses into marketplace providers, generating a lot of paper value while not really innovating in terms of how the service is actually rendered. Looking at you, Arise!
no, not this fake thought leader. business school literally teaches cornering markets (in strategy, but also marketing), and has for decades before those guys were even born. they literally recycled this information and presented it as if they were geniuses who came up with this miraculous approach all by themselves.
Not trying to endorse Peter Thiel's opinions or those of or anyone else in that mileau. I'm saying the folks funding all the tech companies have been using this playbook for decades.
as an independent, party affliation is a sure sign of vacuous thinking to me, where the cost of membership is leaving your brain at the door (and that's what thiel does btw). democrats are currently making this mistake with anti-federalism, trying to push through national laws that are squarely in the province of state control. this is expedient in the short run for their political careers but damaging to the foundations of the nation in the long run, as consolidation of power nationally is the quintessential threat to our democratic republic. it reeks of hypocrisy.
In concept, they are all useful abstractions over the worst case scenario: individuals only finding and talking with other individuals to get goods or services. In practice, there are definitely abuses which come down to ineffective regulation.
Nope, but it's lavishly overcompensated and starved of competition for the markets who manage to get the network effect going.
There is no really effective regulation to ameliorate this effect either.
Wouldnt need much though. If, say, e.g. airbnb simply werent able to enforce parts of their ToS around scraping/contacting users then it would make the market vastly less dysfunctional.
Imagine each consumer having to maintain relationships with hundreds of factory owners and tens of farmers.
Farmers' markets are great.
Fyi if you didn't already know... the farmers' markets are themselves a type of middlemen. (At least every one I've shopped at in the USA.)
The farmers' market rents out the booth spaces to vendors (farmers). It's a real-world "platform" to bring together buyers and sellers. The farmers' cost to rent the space is embedded into the prices the consumers pay.
A true individual relationship with a farmer would be something like driving to Joel Salatin's Polyface Farms and buying broiler chickens directly from him. This bypasses the middlemen of farmers' markets.
reading omnivore's dilemma when it came out impulsively made me want to do that, but of course the impracticality of that quickly dawned on me. it's similarly why reading a book is a better than going and getting first-hand accounts for all our information. we've created socioeconomic structures for very good reasons, so we shouldn't want to burn them down for the tradeoffs, but rather we should address the negatives directly.
From a "commercial marketplace" POV, it's basically a farce. There's no security -- it's literally just a folding table full of food on someone's porch with a clipboard to mark that you've taken your share for the week -- and the supply varies with the weather, crop conditions, and even mundane things like "the delivery truck broke down this week; shares will be small and/or late."
And yet: everyone gets fed, the farmer gets paid, and it all ends up being price-competitive with a grocery store (much less a farmer's market).
We also patronize a farmer's market for the "showcase" products that succeed there: big pretty loaves of bread, flats of fruit, etc. It's still cheaper than any high-end grocery store, the shelf life is amazing b/c it hasn't traveled 1000 miles on a truck, and we get to interact directly with the folks who make the food.
The catch -- and it's a big one, in terms of classic microeconomic indicators -- is that we can't get an arbitrary amount of any chosen good at a competitive price right on the spot. Want peaches, but the stall sold out or bugs got this week's share? Sorry; hope cherries are okay this week. Don't like turnips or beets? Well, you might need to trade with someone who does, or find a new way to prepare 'em.
There's also no "economy of scale" to speak of; the largest vendors are probably a couple of bakers who make O(thousands) of loaves per day, or the ranchers and fishermen who show up with coolers full of frozen steaks and fillets (b/c one cow or fishing boat load actually feeds a lot of people).
Oh, and basically every farmer's market is also a localized barter economy. If you watch you can see the vendors roaming between stalls, offering trades and samples with other purveyors. After-hours, there are a _lot_ of boxes of food moving from one stall to another just before the left-overs get loaded back into the truck.
So yes, strictly speaking these are all "marketplaces". It's a far cry though from Amazon swooping in to undercut the successful products on their own platform, or any major store chain selling shelf space to the highest bidder to create -- rather than respond to -- consumer demand.
Obviously it doesn't work for every product or service, but there's definitely a space to accept a little less efficiency in favor of community-level resilience.
The efficiency is dependent on what you're measuring - food per land area? Food per energy input? Energy output per energy input?
The supplier has one trip to make to sell their current stock.
The consumer has one trip to make to buy multiple items that they're interested in (since this is a market).
You would have thought that a former policymaker/lobbyist would have known better than the market...he went to Harvard you known. But it turns out that there is a reason why businesses have been organized this way for the past three centuries.
As a consumer, I feel like Walmart operates in a competitive market. I go to Walmart even less often than I go to Target.
Also you may be lucky to have a choice, there are plenty of places where it's just a Walmart or target.
Brick and mortar is different because they’re actually maintaining a space to show the items and bringing them close to you which is a benefit to the buyer.
Not in the ways you describe:
"because they’re actually maintaining a space to show the items"
This is similar to Amazon's site browse/search experience.
"and bringing them close to you"
This is similar to Amazon's fulfilment network.
Today, I'll choose after reading several 2/3/4 star reviews for each of several alternatives.
This has resulted in a far lower rate of surprises and disappointments.
Very disappointing.
If I buy a charging cord from a factory owner, how long before I have it in my hand? And how much will shipping cost?
The fact that I can order a charging cord (or 10 different ones from 10 different manufacturers) and have them delivered tomorrow is innovation.
I honestly cannot tell whether you're joking.
Back to my main point: The basic logistics of distributing products around the world should be equally good or better in a world without monopolists - theoretically, monopolies extract a surplus (https://en.wikipedia.org/wiki/Monopoly#/media/File:Monopoly-...), intuitively it's obvious ("why try when you don't have to").
Perhaps remarkable to say it out loud, but other than that not remarkable at all and totally logical.
Any company in a free market is incentivized to combat their number one threat: competition. You can combat competition with a good product, but also more hostile methods like outgrowing, acquisitions, patents, lobbying, cartels, etc. Competition is an existential threat so the incentives are very strong. Being the only one playing nicely means your business is dead.
Monopolization in tech is even more incentivized as it's often trivial for competition to copy your approach/product. So "good product" just doesn't cut it.
The only remarkable thing is an almost complete lack of regulation, Sherman act or not. The article is full of examples of monopolies that should not exist. But they do exist. Regulation is non-existing or 10 years late.
Also, given the anti-advertising mindset on Hacker News, it seems weird to get all that upset about advertisers paying too much? "Who will think of the advertisers," say people who have probably installed ad blockers.
Has there ever been a winter that affects academic institutions? Ever been a need to cut back? Tighten the belt? They are like an overgrown jungle.
They often peddle shoddy goods (degrees that will never pay off), to unsophisticated consumers (18 year olds and their parents). Any other industry would have laws and regulations attempting to protect the unwary, but somehow, only angels work in adademic institutions.
They have choruses of shills (guidance councilers and others) telling anyone who will listen that if you don't go to college, your life will be ruined. See how indispensible they are?
Can't afford it? Get a subsidized loan for which the institution has no skin in the game. Can't pay it off after? Not their fault!
Institution needs more money? Just raise the rent.
Do we want to break monopoly up in favor of a bunch of possibly shittier products?
The real problem It's not the monopoly it's the Monopoly tax.
So it's not clear that breaking up a digital marketplace monopoly would result in shittier products, tho I agree that the theory is less clear cut than in the case of more traditional businesses.
[1] https://web.archive.org/web/20170405144903/http://www.yalela...
In practise, that's not what happens.
It's not a "weird thing" it's the inherent reason why anti trust laws and regulations are required for efficient markets, and why rent seekers always argue for free markets
If we were to be organizing our economy based on what is maximally efficient, it would be much more effective to do so with the government in charge...but somehow, the people who talk about letting one efficient company take over everything never seem to think that letting the government do the same thing, but without taking massive profits, would be good.
It's a good point. My problem with monopolies is that they minimize risk and maximize reward, basically becoming a tax authority. Once you become a monopoly, you should graduate to nationalization.
I don't think it's worth ignoring that or the loss in real innovations in the name of being deferential to established business and the imagined value of the quality products they create.
I'm not a fan of monopolies, but your position is flawed.
But sure, if it's specific instances of consolidation that are more efficient then you are correct, the specific company has shown it can do it efficiently and thus it does not follow that consolidation with the government would be efficient.
but if you have a situation that what determines if a monopoly is efficient is that it is a monopoly and controls its industry then it seems we have just in a round about way gotten back to any consolidation of power is efficient and the government should do it. Unless you can show inefficient consolidation of power that is inefficient in some way other than by losing the power then it seems the argument for nationalization is back on.
on edit: on the other hand if you can show an inefficient consolidation of power, like consolidation of majority of shopping through one portal that is yet unable to keep counterfeit products out, then it argues that inefficient consolidation of power should be broken up because it's inefficiencies will not be solved as long as the power is consolidated and competition will hopefully help.
'Run well' like 'efficiently' is up for debate. Amazon is efficient because of its distribution model and allegedly because it exploits its workers to some degree. Many labor practices would be incompatible with standards of government employment, for the good reason that government should uphold the very labor standards it extols to the market. So if Amazon's retail distribution were nationalized, either it would run less efficiently or we'd have to admit that it's profitability depends on practices many consider unsavory or unethical.
But let's take ethics out of the equation and suppose you have a highly efficient operation run entirely by robots, which is also a monopoly. In a competitive environment margins should fall within the range of normal profits, but if it's a monopoly then the owner can continue to extract economic rents and you're essentially back to landlordism. In that case there isn't a good argument against nationalization or jacking the marginal tax rate sky high.
Note: I think you've also been confusing government and state, but I assume that was not intentionally.
Not intentionally, no. Given that the context was nationalization, what in your view is the difference between government and state?
The author muddles the point by bringing this into the equation. The core, valid issue raised is monopoly power. Which will naturally be the end goal of any enterprise. It is governments job to bring reasonable power to bear to prevent monopolies. Ours is failing to do this due to crony capitalism - all of the benefits both sides of the political aisle reap by maintaining the status quo.
Do we even know what Stoller's funding is? Propa... Material like this appeared around 1996 and continued to surface all through the Microsoft trial