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.
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.
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."
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.
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.
"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
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.
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
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]
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.
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.
>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?
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".
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?
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.
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.
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.
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".