Comment by ethbr0 | Hacker News Reader

Comment by ethbr0 | Hacker News Reader

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This.

The problem is not that companies are able to increase prices and improve their margins. That's good!

The problem is that our institutions (government, journalism, small business entrepreneurship) have reneged on their role of promoting competition, leading to a lack of fear of competitors in companies, leading to an increased ability by them to increase prices.

There should be more self-reflection on why price increases are possible, and redress of those causes, versus attempting to treat the symptom.

#1 place to start looking -- how to balance the ultra-high efficiency of consolidated firms with their ability to deploy overwhelming capital in novel industries to crush competition.

Or in other words: "How do we make it so that starting up a Facebook or Google or Microsoft competitor today is a reasonable?"

E.g. instead of putting price caps on necessary-but-low-volume medications, look into why it was able to collapse into a single-supplier market

> The problem is not that companies are able to increase prices and improve their margins. That's good!

That's going a bit too far. Under perfect competition there aren't any profit margins: everything sells at marginal cost. Real-world markets won't be like this, but they can get reasonably close. If there are large and increasing profit margins, that's a sign something has gone wrong.

Also, we need to be realistic about natural monopolies. Sometimes the competition we want isn't in the cards, and treating the symptoms really is the right answer. If that necessary-but-low-volume medication has sharply declining costs with increasing production, as many things do, there just aren't going to be enough suppliers to build a competitive market. Competition policy is great, but it can't do everything.

Under perfect competition, no one will invest in anything. So it does not seem very desirable.

Under perfect competition there aren't any profit margins: everything sells at marginal cost.

True, but that includes the cost of capital, so liquidity theoretically remains adequate and capital provision/replacement is just a business function rather than the business function.

The problem with capitalism is that it's totalizing; the idea that the whole point of society should be making more and more wealth forever is kind of ridiculous when you think about it, like deciding that it'd be great for your social body to get diabetes. It's ridiculous in the same way that pure laborism would be (everyone should work hard, never mind at what) or pure consumerism (everyone should have all the stuff they want, all the time).

Point. I should have more accurately said "The problem is not that companies are attempting to increase prices and improve their margins..."

Obviously the goal of a functioning system would be that they run into competition restraining them from doing so.

And 100% agreed on natural monopolies, although I believe the classification should be the exception rather than risk being a rule for "things we don't like."

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