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Comment by piva00 | Hacker News Reader

Corporate consolidation has been going strong since the late 90s/early 2000s, at least in my lifetime I saw the dwindling number of actual independent companies, the vast majority of big companies I was a customer during my lifetime have coalesced into some large conglomerate-ish... And in multiple countries, it really feels it's happening everywhere, even though seems more prominent in the USA.

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This is a natural consequence of markets (and proof that economies of scale work). On a long enough timeline, they trend towards consolidation. This is why constant government intervention is necessary, to break up monopolies and restore competition. A government that refuses to engage in trust-busting is broken.

It's also the result of a low tax and low interest rate environment. When you can borrow money for free, or functionally for less than your rate of profit, why wouldn't you buy out your competitors?

I’m not so sure. The US has markets that are resistant against consolidation.

I think this is a natural consequence of letting the biggest companies control the politicians that set the rules.

(What you say is true for pure free markets, but the banking industry is incredibly regulated, and the government routinely picks winners and losers in it.)

> The US has markets that are resistant against consolidation.

I don't see why they are special and the trends are clear, despite the claim. If govt regulation results in a few winners who have played by the rules and are seen as more reliable or it's free market monopolists (or duo, etc), the result is the same.

> This is why constant government intervention is necessary, to break up monopolies and restore competition. A government that refuses to engage in trust-busting is broken.

Conversely, more regulations mean more monopolies due to larger first-mover advantages, and the only viable route is to build until you get bought by a parent company who can sort out the admin.

Constant government intervention isn't what makes competition. It being worth it to start and build a company without, in the slim chance you make it, being a verbal and financial punching bag for future politicians, is.

The fact that economies of scale exist means that even unregulated markets will consolidate. Regulation is an orthogonal concept. On the spectrum of market competitiveness, one extreme end (perfect competition) is an unstable state, and the other extreme end (monopoly) is a stable state. As consumers we benefit from competition, but free markets abhor competition. Something needs to intervene to reintroduce competitiveness into monopolized markets, and that something is going to be indistinguishable from a government.

I agree that even less regulated industries have monopolies, you're right, but those will tend to be companies that either have a natural monopoly (e.g. they own some land) or are so competitively priced enough for their customers that there's no obvious way to create a competitor that can take market share from them. I don't see either of those situations being improved by constant government interference.

I'd argue it's the opposite, government intervention and existence explicitly favors the biggest players and nudges the market into oligopolies and monopolies

Are you disagreeing with parent comment? I’m having a hard time parsing.

Are you claiming that economies of scale don’t exist, or that they are trivial to the composition of markets?

I'm claiming we need less government intervention

I guess that’s my question.

Are you arguing that, if markets are left alone, economies of scale are more or less irrelevant, and we wouldn’t see consolidation in banking?

Seems like a dubious claim to me. More driven by ideology rather than evidence.

Economies of scale aren't the only thing that matters

Banking is already one of the most regulated industries, regulation takes out smaller companies and leaves out only the ones that are big enough.

It seems to me way more dubious to claim that more regulations would solve this problem in an already incredibly regulated industry

Regulations by and large have solved the problem.

Bank failures were incredibly common in 19th and early 20th century America. Today they are next to non existent.

Again, take a step back from the ideology and look at the evidence. The count of bank failures before 1930s era regulations vs post speaks to the effectiveness of government intervention.

Bank failure is a different problem than bank consolidation, of course it would happen less when you don't allow small banks to exist and just give money to the ones that do so that they don't fail, making them richer and protecting them from their mistakes

That's a bit of a circular argument, since there are radically fewer banks now than there were in the past. Just in the last 20 years the number of banks in the US was cut down in half; and back in the 1930s, there were almost four times as many banks as we have now. Fewer banks mean fewer bank failures.

A fairer comparison perhaps would be to see how many dollars of deposits (in some adjusted manner, like per capita, percentage of GDP, or percentage of circulating money) were imperiled as a result of bank failures back then versus now? A hundred banks failing in the 19th century each serving a few thousand customers each would be a much smaller impact than, for example, the hypothetical failure of Bank of America.

That's how we get wonderful things like the East Palestine Disaster. Let's deregulate biotech! Coming up next after Shark Week -- Lab Leak Week! Let's deregulate environmental pollutants! You don't need clean drinking water! /s

It's really easy to say something dumb, but it's hard to actually think about the subject.

I don't really know what happened in East Palestine, but I haven't found anyone saying it was because of deregulation

then you havent looked

Maybe you should point me to a source

Diseconomies of scale also exist and are very real, and I theorize that many organizations try to overcome it by applying political pressures on smaller peers.

Banking as well as food industry. Almost all of food industry seems to be captured by a couple of mega conglomerates.

Here’s the best article I found on that topic: https://www.theguardian.com/environment/ng-interactive/2021/...

At least banking has credit unions everywhere, although the ones around me in Canada are also consolidating rapidly.

At least credit unions remove the profit motive --- I wish that there was a similar movement to farmer's co-operatives, or setups like "Southern States", which is a farmer-owned co-operative for supplies.

With time they'll all fusion into one mega-corp.

The Earth Corporate.

Or E[vil]-corp for short.

Edit: I realised a missed opportunity for a Mr. Robot reference.

Buy-n-Large

Semi—Automated Luxury Communism, Inc

More like Communo-Capitalism, i.e: quasi-communism operating within a nominally capitalist system

that's called socialism

It would be a type of socialism, as is the case with any variant of communism

Socialism is a _very_ broad term that ranges from anarcho syndicalism and libertarian socialism to democratic socialism, market socialism and many others. The key commonality of these is that you have some form of worker owned economy AKA you have some say and direct responsibility in all aspects of life, including your work.

What is described here is some variant of state capitalism or state monopoly capitalism, which is an extremely controversial form in socialist circles: https://en.wikipedia.org/wiki/State_capitalism

Googlezon (From the short film Epic 2014)

Chaebol.

E Corp

Zorg Industries

Omni Consumer Products

Maibatsu Corporation

And people are still joking about the New World Order and One World Government

Weyland-Yutani

I was sort of hoping the user themselves would say this one

Tessier-Ashpool

Brawndo

Mr. Lee's Greater Hong Kong

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