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Comment by giantg2 | Hacker News Reader

"It also establishes a precedent, allowing private companies to set opaque, moralizing, and arbitrary censorship terms without oversight."

Yes, this is done with other things as well.

On one hand, I think that the free market would create payment processors willing to work with the groups rejected by others.

On the other hand, it seems that many financial things are set by international organizations, which the processors would still need to follow to be included in the central systems, such as the coding (does adult content have its own code, or is it under entertainment?).

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Corporate consolidation made sure that a lot of important markets aren't free anymore. Vertical integration between corporations made that even worse - e.g. if Visa won't process your payments, people with Apple phones won't be able to pay either. These kind of things - there's too little competition across many markets so big players just itegrate with themselves and newcomers simply can't compete due to integration and network effects.

It's important to point out that this is a natural consequence of a market system, and it's exacerbated by allowing capital to rule those markets.

Until we recognize that, we're not going to be able to fix it. One can't just declare that "If only the market were truly free, it wouldn't be like this." We've seen this play out on the freest market that has ever existed (the early internet) and we ended up in the exact same place - with a few massive players buying up all their competitors and completely dominating their verticals. There was as little regulation or government interference in the early internet as there has ever been in just about any market. And we still got there.

Corporate consolidation is a consequence of free markets, not a corruption of them.

This statement is fundamentally flawed on two different core aspects.

First, the phenomenon you're referring to is "natural monopolies" which is a well understood situation which appears in every freshman-level Economics 101 class, but that only applies to certain industries. For instance, utilities are natural monopolies because it's far more efficient to run one set of wires to every house rather than try to have 10 competing companies all run their own power lines. But most products & services don't fall into this category.

Second, "free market" is a specific economic term which means markets which are free from governmental intervention in terms of price controls or subsidies, but are also free from monopolies, cartels or other anti-competitive behavior by any participant. Using the government to break up a monopoly or cartel moves the system towards a "free market". Having zero regulation which allows one or two participants to distort the market moves the system away from a "free market".

> First, the phenomenon you're referring to is "natural monopolies" which is a well understood situation which appears in every freshman-level Economics 101 class, but that only applies to certain industries. For instance, utilities are natural monopolies because it's far more efficient to run one set of wires to every house rather than try to have 10 competing companies all run their own power lines. But most products & services don't fall into this category.

I'm not referring to natural monopolies. While I concede many of the cases people would immediately think of in my description of the early internet (Google, Facebook, et al) could readily be classified as natural monopolies, we've seen plenty of consolidation in areas that most economists wouldn't classify as such - Amazon for instance, a bookstore or e-commerce site is not a natural monopoly. And we've seen the same consolidation off the internet everywhere. There are few significant verticals, at this point, that aren't dominated by a handful of giant consolidated players. Independent of how much regulation there is or isn't in that vertical.

> Second, "free market" is a specific economic term which means markets which are free from governmental intervention in terms of price controls or subsidies, but are also free from monopolies, cartels or other anti-competitive behavior by any participant. Using the government to break up a monopoly or cartel moves the system towards a "free market". Having zero regulation which allows one or two participants to distort the market moves the system away from a "free market".

And this is where economists trip over their own feet and fall face first into the mud of religion. This is a self-referential, recursive definition that allows you to pretend a major consequence of a system is not, in fact, an issue.

You realize that you just defined a "free market" to be a market that is free of regulation, but requires regulation to maintain its state as a free market?

> Amazon for instance, a bookstore or e-commerce site is not a natural monopoly

It is, in a way, because Amazon as an e-commerce site is really a fulfillment company which does tend towards a natural monopoly. It's inefficient to have dozens of companies with warehouses everywhere Amazon does to offer the same delivery guarantees.

E-commerce then trends towards a natural monopoly because Amazon has cheaper fulfillment than anyone else. AWS further cements that, by making their hosting costs cheaper than almost anyone else.

Without intervention, it's not shocking that whoever owns the natural monopoly on fulfillment would have a monopoly on e-commerce. In much the same way that whoever owns the rail lines would likely also dominate verticals largely defined by transportation costs.

>You realize that you just defined a "free market" to be a market that is free of regulation, but requires regulation to maintain its state as a free market?

Did you even read the comment? The only constraint he put on "government regulation" is that price controls and subsidies aren't allowed. That is a tiny subset of government regulation, and not equivalent to all possible government regulation.

Honestly, how long will it take people to realize that money and land are the two most distorting monopolies in the capitalist market that enforces the formation of monopolies in all other industries as only monopoly returns in the non monopoly sectors are able to get the "root" monopolists off your back? Companies often die not because of a lack of money but rather because of too much money and the resulting profitability expectations by the financial sector that cannot be met.

The solution to those problems is very easy. You implement a land value tax and a resource based tax to allocate both land and resources properly. Once you have that you can introduce negative interest rates based on at least a dozen theories you can pick your favourite one. Allowing negative interest rates defuses artificial profitability expectations and allows people and governments to pay off their debt.

The reason why a negative interest rate works is because money is a public institution and liquidity is a degree to how well accepted this public institution is. This means the owner of the money can sell this public service just like the owner of land can sell the convenient public services near his property as a perk. So the lender will always want to get paid interest for the public services the liquidity he holds onto provides and this then forces a profitability expectation on the borrower even of it is completely unreasonable during a recession for example.

In both cases the government is providing public services without asking for compensation, no wonder governments keep running out of money and fail to collect enough taxes, they massively subsidize the holders of land and money by not taxing them in proportion to how much they benefit from the government. These indirect subsidies can be sold for a profit which then effectively turns them into direct subsidies. Getting rid of subsidies is a type of regulation that is compatible with free markets. Meanwhile capitalism is inherently incompatible with free markets as it thrives on monopoly rents.

I don't think your comment has exposed any flaws in GPs point.

The first point doesn't refute anything GP said. If Amazon, Google, Meta, etc, are natural monopolies like utilities, then have the state regulate them as such. If they aren't, have them broken up like Standard Oil. You yourself have pointed up that monopolies are bad for the users.

Second, even if "free market" is used by (some) economists to mean a specific thing, that doesn't mean that GP, or most people for that matter, use it that way. For many, many people (including elected policy makers), a "free market" is a market without government intervention, and the less intervention, the more free it is. Nobody owns the official definition of the term, redefining it and then calling the argument which used it in a different way "fundamentally flawed" is not correct.

In what way are any of the those companies a monopoly? Maybe I could see an argument about Apple in the USA but I don't see it for those 3.

Google owns most people's window to the internet: from the browser and sometimes even the operating system all the way to what sites they get to see, and even the content itself. Amazon handles most online shopping in the US, may have an even larger share in other countries. Meta owns most of the social networking and messaging apps of the world. I'd argue there's plenty of evidence that each is a monopoly in its own category, aggressively eliminating any competition from the market.

The problem is all the people calling whatever we have a free market. It would be more appropriate to just call it market or capitalist market because there are also social market theories. The free market represents an unattainable utopia.

What pissess me off the most is that a lot of capitalists actually like monopolies and externalities and then shout and complain that the government is ruining the "free market".

It's late stage capitalism. It's how all 'free markets' end up eventually.

The biggest players gobbling up all of the competition and essentially having a monopoly.

All you have to do is drive through middle america to see the Ruby Tuesday/Strip Mall-ification effect on most of the United States.

I love capitalism when it's functioning it's the greatest system ever invented.

When it's just a market full of monopolies it's akin to dysfunctional communism from a consumer choice perspective.

I don't know what the solution is.

I am of the opinion that the solution is Free Market Socialism: a market economy where the businesses are governed by their workers. Capital is allowed a reasonable, regulated return on its investment (which takes the form of loans, not equity) and further financing can happen through crowd funding (since this system would naturally result in a much more even distribution of capital, an order of magnitude more people will have spare money to contribute to projects that interest them).

Workers have a much weaker incentive to consolidate than investors do, since the consolidation results in them losing voice and power and there are no big cash payments in return (no equity financing means no big equity sales). So this system would tend to work against monopolization.

In addition, workers have much deeper connections to the communities impacted by their business's operations than investors do - they usually live in them. So the tendency to externalize costs on to communities will be much lower (not gone, just reduced), since the workers will experience those costs along with the rest of their communities.

Unions become completely unnecessary in this system. The people doing the work are governing the business, they get to set their own working conditions.

And you still get all of the benefits of the free market - no government control, competition, the freedom to start new enterprises - with many of the rough edges sanded off.

> Unions become completely unnecessary in this system.

I don't think that's true. Unions exist to negotiate working conditions with management. Management doesn't disappear in the system that you're describing.

Some of the incentives for poor working conditions disappear, but not all of them. There are non-profits that have unionized due to worker abuses. Ironically, I've worked in VC-backed startups most of my career, and I've experienced much less abuse than friends who work at non-profits

Non-profits aren't usually governed by their workers. They're usually governed by an elected or appointed board.

What I'm describing is a system in which all businesses become what are currently known as "worker cooperatives". In that system, if management produces conditions that the workers don't like, the workers vote management out.

I'm not aware of any worker cooperatives that have unionized, though I believe Mondragon (one of the biggest, oldest, and most successful worker cooperatives) does have what amounts to a multicameral system with one of the councils filling the roll of the union in advocating for line workers. [1]

[1] https://en.wikipedia.org/wiki/Mondragon_Corporation

> It's late stage capitalism.

It's going to get so much worse. Years from now you'll look back at the 2020s and think "I though THAT was the late stage? Boy I had no idea."

why will it get worse? what's the model that predicts this?

There seems to be no limit to the insanity people will tolerate with sufficient conditioning, so there is no reason to think there is a natural limit to how bad any economic or political system, capitalism or otherwise, can degrade.

If you can't imagine how things could get even worse, then watch some science fiction or read some history books. Tearing people's hearts out to appease the sun god, or to repossess the organ after unpaid medical bills. We're not there yet, but that could be the sort of madness we're heading into.

I agree, people can adapt to basically anything, but we have pretty clear precedents about who does what when faced with this or that.

In the face of constant legally sanctioned/mandated exploitation the frequency of outlaw group appearances increases, similarly revolts start from time to time. (Not saying their success rate was any great.)

Repossessing organs doesn't sound scary. The fanatics do scare me more, after all North Korea and every other successful oppressive regime was built on that. But it remains to be seen if it's possible to scale up totalitarianism to bigger scales.

It will get worse because the US federal government will not be able to pay debt service indefinitely. This will either mean a lowering of interest rates and acceleration of both inflation and debt accumulation (merely delaying the collapse of the dollar system) or US federal default which will collapse the dollar system. When dollars quit flowing to the states in return for federal program enforcement there will be little incentive for state governments to continue adhering to federal rules. Warriors likewise don't usually fight for free, so there's unlikely to be a large military presence to hold it all together. From many perspectives, you could consider this to be not the end of capitalism in the USA, but the end of empire altogether. Of course, the politicians, bankers, and managerial elite of the USA have kept this going far longer than I thought possible, so it may not happen that way at all.

The spectrum between yaay everything is amazing and the dollar system collapses is ... pretty big.

"U.S. interest costs won’t rise catastrophically in the short term, and there’s not really a reason to expect interest rates to stay high for decades. Furthermore, inflation will itself erode some of the national debt, reducing long-term interest costs relative to GDP."

"Right now, interest payments haven’t even begun to rise as a percent of tax revenue, and one big reason is inflation. Interest rates are set in dollar amounts, and inflation increases the number of dollars in the economy, meaning that tax revenues increase in dollar terms as well."

+ debt rollover

"the weighted average duration is only about 4 years." (so about half of the debt has to be renewed in about 4 years)

"The Fed currently predicts that it will start cutting rates in 2023. And markets expect this to happen too."

https://noahpinion.substack.com/p/us-government-debt-is-not-... [sorry paywall]

"a growing surplus of savings worldwide."

https://www.fullstackeconomics.com/i/70962695/aging-populati...

> end of empire

that's unlikely though

https://www.youtube.com/watch?v=pKVQDUQR8I4

So, I wouldn't consider this late stage capitalism. I would consider it late stage republic. The government eventually attacks large commercial interests, as a result those large commercial interests purchase politicians. Any large commercial interest who refuses to bribe politicians will get attacked, so all of the large players do so. They then get entrenched, get bigger, get more powerful. Eventually, the line between government and corporation disappears. I do not believe that there is a way around this situation in any majoritarian government. In the USA, by the time McKinley was running for office, there'd already been two campaign finance reforms. It would seem that purchasing power is what always does and always will happen in majoritarianism. If you do not have regulatory capture, a monopoly should be impossible because any large amount of money being made is a signal that more resources are needed in a given market segment. If, otoh, you have a large interest purchasing politicians they can now erect barriers to entry preventing effective competition. Once those barriers are in place, people begin to accept them as necessary, right, proper, and true. Only once things begin to fall apart do people even begin to recognize how absurd it is that a license is required for a child's lemonade stand.

Unfortunately, Utopia is impossible. All systems suck because all people are flawed. Socialism, capitalism, communism, fascism, monarchism; they're all bad. Additionally, they all really boil down to being either monarchy or oligarchy and every other term is just window dressing. You either vest power into a single person or a small elite group, and then people try to use magical words on pieces of paper to control those individuals. It works for a short time, and then it all starts to fall apart. Eventually, the ruling class realizes that the words on paper are just words and not magic, mos maiorum is lost and society starts to unravel. Modern governments have been better in the sense that it has taken a few hundred years for them all to become dangerous to their constituencies, but it is happening none the less.

Capitalism and free market are inherently incompatible.

>I love capitalism when it's functioning it's the greatest system ever invented.

Capitalism is never functioning. It is inherently dysfunctional. The moment there is wealth and people should be happy, it breaks completely. It only "works" if the economy is growing or in other words, it only works if the economy has been recently destroyed by a war that justifies growth. What you might love is the market that capitalists eventually distort.

>When it's just a market full of monopolies it's akin to dysfunctional communism from a consumer choice perspective.

Capitalism is a monopoly based economic system. Getting rid of the monopolies gets rid of capitalism entirely and you are left with just a market based economy. I don't know what you are even talking about.

>I don't know what the solution is.

The solution is basically an liquidity theory (you could also consider it a trade theory of money) based approach that splits interest or as the Marxists call it "surplus value", into its individual parts and once you do so, you will realize that there is actually no room to compensate the owners of capital, only the owners of liquidity and liquidity is a public good, a service provided by the government and the public combined which then deserves to be taxed to bring costs and benefits in line.

Liquidity preference was Keynes greatest discovery and nobody gives a damn, not even the Communists, so what other option than perpetual inflation did he have?

I'm not convinced of this as a universal rule, rather than the results of specific details of our economy. A core assumption of capitalism is that capital is distributed. But our economy is highly centralized by design.

Specifically the government creates a bottomless supply of money to loan out, but only to highly-legible highly-centralized entities. As such, big business has an endless source of cheap capital to draw from to invest, whether it's devouring other businesses or building out thousands of cookie cutter stores. Small businesses can only access the money trough by going through a consumer bank with its higher fees and scrutiny of business plans. Individuals can only access the money trough by taking out collateralized loans on legible assets. For the individual market we can readily observe the resulting destructive individual-disempowering dynamic for the markets that have been financialized - chiefly housing and education.

A significant raising of interest rates would reign in this effect. Unfortunately it would take a long and protracted timeline for actual reform, as our economy has come to rely on the bottomless source of easy capital. But it's still worth keeping in mind the warped foundation our specific economy is built on, rather than characterizing the current moribund state as an inevitable end result of every market economy.

Having built a neobank. It’s fact that pornography is intertwined with sex trafficking, organized crime, revenge porn and other illegal activities. Regulators crack down on financial institutions if they are caught providing services for illegal activities.

HSBC wants you to think that but anybody with wikipedia can tell you it's not true in practice. It's not that they don't want your business, it's that the end users in these cause problems. They're happy to keep cartel money, one-to-many is easier than many-to-one, it's simple math.

Yeah, and it is a fact that cartel and authoritarian statist money laundering is intertwined with banking. See just about any story about Deutsche in the last decade.

I've worked with sex-related sites before. And you're right that there are sleazy people in that industry. But it really isn't hard to distinguish, especially when you can see their payment stream.

Without moralist obsessions with sex, nobody would care.

> Without moralist obsessions with sex, nobody would care.

That is an observably incoherent claim. Sex is a subject that virtually everyone obsesses over and cares about to a greater or lesser extent and literally everyone that does is moralist about it. You, for example, evidently hold the moral position that prostitution, pornography, and other sex-related commercial activity is either good or at least not bad.

I find that much more incoherent. It's absolutely possible to believe that things should be allowed without a moral component.

I believe woodworking should be allowed. Not because it's "good" or "bad", but because people want to do it and there aren't sufficient harms to warrant trying to ban it.

Some people feel the same about porn and sex work. It's something people want to do, they believe there aren't sufficient harms to warrant regulating it. Watching or performing in porn doesn't make someone better or worse, it's just a thing they do like how some people make canoes or birdhouses.

Many people who use the word "good" to describe porn and sex work are describing it in the beneficial sense, not the moral sense.

> I find that much more incoherent. It's absolutely possible to believe that things should be allowed without a moral component.

That’s a bit odd on account of claiming that something is morally neutral is clearly a moral assertion.

That being said, can you imagine why perhaps sex might have greater moral significance than canoe-making?

> Many people who use the word "good" to describe porn and sex work are describing it in the beneficial sense, not the moral sense.

That’s fascinatingly novel. Can you explain the difference or at least distinction between a “moral” “good” and a “beneficial” “good?”

Incidentally, talk of “beneficial” “good” makes me think of the classic Windows 2000 tagline: “New NT Technology.”

> That’s a bit odd on account of claiming that something is morally neutral is clearly a moral assertion.

Morally neutral and being without a moral component are different. Gravity lacks a moral component; it is neither good nor bad, it just exists. Moral neutrality contains opposing good and bad effects, with neither significantly outweighing the other. Killing someone in self-defense could be seen as morally neutral. Killing someone is bad, but saving people is good, causing a wash. Someone who kills another in self-defense isn't a bad person for doing so, but it also doesn't make them a better person.

> That being said, can you imagine why perhaps sex might have greater moral significance than canoe-making?

In the context of porn, genuinely not. Canoe-making seems like it has far greater moral significance. It's a practical skill and potentially a bonding experience with others. Porn is maybe a waste of time, but it's hardly alone there. It's like playing with a fidget spinner, which I don't find morally significant either.

> That’s fascinatingly novel. Can you explain the difference or at least distinction between a “moral” “good” and a “beneficial” “good?”

A beneficial good lacks a moral component, or is morally neutral as you would say. A scooter is a beneficial good; it allows people to get places faster, so they can do what they want. It's not morally good to own and use one, and it's not morally bad to not do so. Its merits are amoral. A moral good is something that has a clear moral component; feeding the homeless is morally good, not doing so is morally bad.

What's your point? Sans morals, nobody would care murder either.

If you kill someone I care about, I will want to see you punished. So many people agree with this that we have laws saying you can't kill people or else you'll be punished. But if you pay someone to have sex with them, so what? If both parties consent to everything, then who is harmed? Some people get mad because they think it's immoral, but not everyone.

> who is harmed

This is begging the question (assuming morality must be based on harm or consent). Not everyone agrees on the morality of all sorts of things. Human sacrifice has been licit in various times and places. Lending someone a high-interest payday loan is a consensual transaction but morally suspect according to many, and so on.

> Not everyone agrees on the morality of all sorts of things.

Well yeah, of course. My point is that the overwhelming majority of people agree that murder is bad and should be illegal. That's not the case with sex work, which is why people argue about it online all the time. When I asked who is harmed by sex work, I didn't mean to imply that no one is harmed, I just meant that the answer to that question varies a lot more than the answer to who is harmed by murder.

What I find interesting is that everyone critiquing my critique completely ignores the swipe I took at banks. It appears to be utterly banal and beneath concern that banks subvert legal and moral efforts against multinational drug cartels and abusive authoritarian regimes.

I guess even with morals, people don't care about murder.

>On one hand, I think that the free market would create payment processors willing to work with the groups rejected by others.

These already exist and are sometimes known as "high risk" processors. They charge a lot more for the privilege of accepting payments for what industry has deem high risk transactions due to larger rates of chargebacks. Typical examples are paid subscription to a porn site, but then the card owner claims it was not them that paid for it. CBD/Delta-8/Delta-10/Delta-9 sales are also considered high risk for various reasons with one due to their legality questionable in some states.

Chargeback risk in these industries is considerably higher than in other industries. If your wife/husband finds a porn subscription on your credit card bill, a lot of people take the approach of denying it and charging it back. Chargebacks are expensive, whether you fight them or accept them.

A lot of adult industry businesses also accept ACH transfers or crypto because there is no chargeback risk on either of these.

I just don't see a lot of users of porn sites submitting ACH transfers. Every ACH transfer I have ever been a part of takes 5 days for the balances to settle. What porn user subbing to a site is going to wait 5 days? Maybe brothels or similar adult businesses allow you to setup an account with them as part of their onboarding steps to allow these types of transfers?

I totally see crypto becoming more popular with the misconception of privacy.

I think the main thing holding crypto back is the instability and the ability of centralized entities to control the additon of "currency" (average people can't mine after a certain point).

They probably just grant access immediately and revoke it if the ACH transfer doesn't succeed.

Marginal costs are near zero, so the risk of giving immediate access is pretty low.

"They charge a lot more for the privilege of accepting payments for what industry has deem high risk transactions due to larger rates of chargebacks."

If they're doing lower volume and dealing with higher costs related to chargebacks, then it seems it would make sense they charge more. What is it, like 3% vs 6% or worse?

Also, some charge a steep monthly fee. One that I'm familiar with charges $100/month plus the higher % per transaction. So even if you have $0 in sales for a month, you still pay them $100. So it's not the greater of % per transaction vs monthly fee. It is always monthly fee + % per transaction.

Like 3% vs 12%

That's pretty high, but not astronomical.

Not astronomical? That could be the entire profit margin for some lines of business. Granted, maybe not the adult entertainment business specifically. Just food for thought on how high %12 could be

> "It also establishes a precedent, allowing private companies to set opaque, moralizing, and arbitrary censorship terms without oversight."

> Yes, this is done with other things as well.

Politics makes strange bedfellows.

Complain that twitter or facebook is censoring things and you'll get told that the government should not be able to dictate to private companies who can or cannot be excluded.

Allow private companies to exclude a significant chunk of the population, and those same groups will complain of censorship.

Both the Right and the Left have a common interest in forcing private companies to not exclude certain people.

Too bad that too few people see the value in regulating de-facto monopolies.

"Both the Right and the Left have a common interest in forcing private companies to not exclude certain people."

But they won't come together because it's good if I do it to you, but bad if you do it to me.

The (big) banks cannot fail because the government will bail them out. As such, the banks should be considered a de-facto government entity and be bound by the same limitations on censorship. There is no competition/market.

> On the other hand, it seems that many financial things are set by international organizations

Not organizations, governments. Financial rules set by governments to cut down on money laundering, terrorist funding and other "financial crimes" are why payment processing is rife with liabilities and why Visa and banks have such strict rules. Without these rules banks would happily work with anyone that has money.

> On one hand, I think that the free market would create payment processors willing to work with the groups rejected by others.

how open is the payment network willing to accept a new player when a site like onlyfans with billions of dollars in revenue would rather go down in flames only to be saved by public backlash rather than implementing their own payment processing service?

it's obviously not that simple.

You missed the reason that payment processers set these terms. It is not because they want to.

It is because there is a minority who think sex is dirty and only should be done in the family and they will take anyone who is even slightly helping sex workers to court. The only protection public companies would have is there was a law stopping these court actions but no lawmaker is going to do this as the same minority would attack them and the majority would see the company as helping sleaze and what that minority see as sin.

Note that any new payment processor would be hit in the same way.

The issue is that a minority can persuade the majority of things even if they are untrue or destructive.

The word "precedent" in that quote seems to be being used in order to deny that this is not already the case in many other contexts! Also strange that one of the examples given of this supposed "censorship" was a pornographer's difficulties in obtaining a loan due to the financial risk brought on, in part, by chargebacks, and not some supposed anti-pornography convictions held by the bankers.

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