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That was the norm up until IIRC reagan, Bush 1. The reason we switched off of it, was around that time, the idea was the allow more consolidation at the expens
by ep103 9y ago
That was the norm up until IIRC reagan, Bush 1.
The reason we switched off of it, was around that time, the idea was the allow more consolidation at the expense of competition.
The rationale was that the American marketplace was already significantly competitive, to the point that market growth was labor constrained, as opposed to today, where it is capital constrained. So by allowing more merges and decreasing overall competition, you could achieve multiple simultaneous goals. You could lessen the labor constraint on the market, allowing faster growth and more capital accumulation at the expense of labor, but without significantly impacting quality of life for the laborers. Additionally, the decrease in competition and increased allowance of outsourcing and international IP enforcement was expected to (and did) lower the cost of goods for many American products.
The end result was: The rich got richer. Everyone saw the price of goods drop (or the quality of goods increase, or the rate of inflation drop). And big companies became larger, faster, with minimal impact on quality of life for everyone.
The problem, is we've been doing that for 40 years now. We're back to a capital constrained economy, but capital interests have been keeping us pursuing the above agenda as if nothing has changed. Its absolutely a ripe time to go back to the pre-70s ideas about trust busting and etc, in the name of increased, local competition, as opposed to the current ideology of increased corporate merger in order to achieve greater economies of scale.
At least, this is how it was explained to me. I'm just a dev : )
- visarga 9y agoInteresting, I never thought of antitrust as a scale, or that it should adapt to the state of the economy. I just thought monopolies are bad.
- emmelaich 9y agoMonopolies are bad but "perfect competition only exists at the point of collapse" [1] A benevolent monopoly can be OK but both of the extremes of competition come with instability. [1] I put that in quotes because I thought it was a famous well-known quote but I can't find the original!
- ghthor 9y agoI think the 51% attack of bitcoin is a similar phenomenon. If someone owns 51% of the market, trust from outsiders/customers is basically destroyed. At that point the dominate player can systematicly destroy the competition through pure economic power.
- AnthonyMouse 9y agoAnd excessive competition creates stagnation at local maxima. If you're engaged in a price war you have no profits to invest in R&D. One of the things that works really well for this is to split monolithic national regulatory codes into less complicated region-specific ones. California needs earthquake rules, Florida needs hurricane rules, Colorado needs altitude rules, etc. If you have one national code containing all the rules, you give the advantage to huge conglomerates that can navigate them all at the same time. A small company in Colorado has to comply with all the irrelevant rules covering earthquakes and hurricanes, which puts them out of business. But if they each have only their own regulations, smaller companies can survive the ones in their home state -- and have more power there to address them if they're oppressive. So you get a different company in each region instead of one big national one. They put competitive pressure on each other because any who charged too much would make it worth it for one of the others to pay the regulatory cost of expanding into that region, but not so much pressure that everyone is locked in a price war and no one has any surplus to invest in the future.
- Denzel 9y agoWho explained this to you? Do you have any books, research papers, or documentaries I could look at on this topic? This has to be one of the most insightful comments I've read on the topic of large conglomerates and the American economy.
- jpster 9y agoNot OP but here is an overview of the (now deceased) architect of current US antitrust policy, Robert Bork. https://www.washingtonpost.com/news/wonk/wp/2012/12/20/antitrust-was-defined-by-robert-bork-i-cannot-overstate-his-influence/ https://www.washingtonpost.com/news/wonk/wp/2012/12/20/antit...
- deleted 9y ago[deleted]
- mc32 9y agoIt may have been accelerated by the fear of global multinationals besting American firms. NTT, Deutsche Bank, Siemens, RDShell, etc. American firms were being challenged by bigger international firms --and WTO/NAFTA encouraged firms to get bigger and compete overseas rather than just protect the home country from foreign competition as it had been up to that point.