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America has a monopoly problem
- pc86 9y agoWeb link doesn't work if you've already visited the site, including incognito.
- autopoiesis 9y agoArchive link: http://archive.is/02i6P http://archive.is/02i6P
- brndnmtthws 9y agoPeter Thiel (who works with YC) will tell you that monopolies are good for the world.
- hanklazard 9y agoAny links you could recommend? I’d like to read more as I disagree strongly.
- losteric 9y ago* Peter Thiel's WSJ article: https://www.wsj.com/articles/peter-thiel-competition-is-for-losers-1410535536 https://www.wsj.com/articles/peter-thiel-competition-is-for-... * Criticism: https://medium.com/@petersimsie/why-peter-thiel-is-dead-wrong-about-monopolies-390d316180bd https://medium.com/@petersimsie/why-peter-thiel-is-dead-wron... * Alternate interpretation of Thiel's intent: https://www.quora.com/Peter-Thiel-claims-that-competition-is-for-losers-and-that-monopolies-are-the-way-to-go-Does-this-mean-that-I-should-stop-with-my-start-up-idea https://www.quora.com/Peter-Thiel-claims-that-competition-is...
- emodendroket 9y agoI mean, in the narrow sense he's of course right -- if you're a business owner or investor the logical thing to do is to aim to create a monopoly. Where I depart is the claim that this is also good for society as a whole.
- losteric 9y agoI agree - didn't feel it was worth mentioning considering the original and the criticism I linked to :) I like drawing parallels between economics and ecology... monopolies are farms, massive artificial monocultures that suppress natural competition and extract value for the profit of a few. They embody a cycle of growth and stagnation. A healthy economy is more like a jungle, innumerable smaller competitors with diverse approaches to survival... an extremely resilient and constantly evolving ecosystem that leads to fascinating innovation.
- jasode 9y ago>A healthy economy is more like a jungle, innumerable smaller competitors ... that leads to fascinating innovation. I think you missed PT's point. The word "monopoly" has overshadowed his message. He wants people to pursue "blue ocean"[1] ideas to be innovative. Instead of starting a company that makes another generic clone of aspirin, you pursue a drug that cures breast cancer. Or instead of building a business that broadcasts 150 characters (hey we offer you +10 more characters than Twitter), do something more innovative for society like building cheap flying cars. I'd venture to guess that 99% actually agree with PT's underlying idea (innovation) but the distasteful word "monopoly" has completely drowned out the message. The term "blue ocean" is the same concept -- it just doesn't rile people up as much. [1] https://en.wikipedia.org/wiki/Blue_Ocean_Strategy https://en.wikipedia.org/wiki/Blue_Ocean_Strategy
- emodendroket 9y agoDoes the typical investor really care if the idea is a cure for breast cancer or "driving all existing providers in some space out of business and then mopping up the market"?
- rayiner 9y agoThey often are, because companies in highly competitive industries don’t have the excess profits to reinvest in research. Computing as we know it is largely the story of monopolies. Bell Labs bankrolled by the AT&T monopoly. Xerox PARC bankrolled by the Xerox copier monopoly. The Internet bankrolled by the ultimate monopoly (the military). The modern web bankrolled by the Google/Apple duopoly.
- wu-ikkyu 9y ago>companies in highly competitive industries don’t have the excess profits to reinvest in research. On the flip side, monopolies often have little incentive to invest in improving their products/services, and find they can profit from making their products cheaper/worse.
- emodendroket 9y agoOr outright killing research that threatens their main revenue drivers. Like, OK, we eventually got digital cameras, but Kodak didn't do anything with it for a long time because they wanted to keep selling film. With graver consequences, Exxon decided to suppress its own findings about climate change.
- kazagistar 9y agoAnother ongoing example: suppression of research into male birth control due to fears of cutting into profits from the cash cow that is female birth control.
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- titzer 9y agoYet all of those monopolies either imploded, had their markets simply dry up, were out-innovated by smaller competitors, or investors just moved onto hotter fads. The crashing and burning of a big monopoly may very well be a healthy event; but oh the damage they do before then...
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- twobyfour 9y agoOh, heavens, no! Nobody associated with YCombinator (especially a demi-god like Thiel) is ever wrong about any topic involving our economic (or socioeconomic) system. Ever.
- dang 9y agoPlease don't post unsubstantive comments here. (Whether about YC or anything else, doesn't matter.)
- grzm 9y agoThere may be an interesting discussion here somewhere, but as constructed your comment is less likely to produce such. Do you have specifics regarding Thiel’s position and how it compares with that of the article? As is, it appears you’re looking to provoke a reaction rather than promote a productive discussion.
- newmanships 9y agoHe gave a talk about his thoughts to a Stanford class: https://www.youtube.com/watch?v=z6K8PZxyQfU https://www.youtube.com/watch?v=z6K8PZxyQfU His slide on monopolies is around 4:40
- ZeroGravitas 9y agoMy take is that he's basically saying capitalism doesn't work (edit: at least there's big problems within it) and if you want to get rich you should know how to play the system because just providing large amounts of social value isn't sufficient. I'm not sure that's his intended message though, since he often presents himself as a libertarian with the implicit message that capitalism and getting rich is a sign of providing social value.
- frgtpsswrdlame 9y agoHe's also wrong.
- atom-morgan 9y agoReferring to natural monopolies or monopolies created and enforced by the government?
- buttcoinslol 9y agoArgument consists of: Appeal to Authority fallacy Grade: F (see me after class)
- buttcoinslol 9y agoNot sure why I'm being downvoted? OP throws out "Peter Thiel says monopolies are good," which is an appeal to authority and a post meant to cause controversy.
- emodendroket 9y agoI think the point was probably more an attack on Thiel than an appeal to authority.
- chimprich 9y agoThe OP wasn't necessarily agreeing with Thiel, just highlighting something of a counter-opinion. Your reply was a bit uncivil and didn't really add anything.
- maxxxxx 9y agoI remember reading his quote and I understood it to mean that a monopoly is good for the company that has it and a company should try to achieve a monopoly. I don't think he said that it's for the greater good.
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- OtterCoder 9y agoThis is brilliant. I recently wrote in to my senator about net neutrality. His reply was a breathtakingly convoluted justification of not regulating companies like Comcast because antitrust laws would take care of it. I've never felt so insulted.
- chrisseaton 9y agoYou felt insulted because he has a different opinion to you? Or did he write something insulting in his reply?
- nnash 9y agoYou can count the number of companies that own all American media on one hand. How is it that anti-trust is "taking care of it" again?
- chrisseaton 9y agoMaybe he thinks more than one company is sufficient then? But that’s still just a civil difference of opinion! It’s not insulting to be disagreed with I’m afraid.
- zanny 9y agoExcept in the context he is speaking of, extremely few Americans have more than one company supplying them with Internet access. It is definitionally a monopoly, and to say existing anti-trust legislation is sufficient is saying the monopolies as they exist now are acceptable and nothing needs to be done. It is a dismissive comment from the senator, he should feel insulted. It is like saying "help I'm bleeding" and the guy next to you saying "its not that bad, get over yourself".
- thisacctforreal 9y agoor him saying “it’s ok, wait a little longer and a hearse will come help.”
- whistlerbrk 9y agoAmerica has a corruption problem. The ability for companies to vertically integrate and essentially make smaller businesses non-competitive can only occur when you don't have to pay the taxes your smaller competitors have to pay and don't have to obey the same laws your competitors have to obey. We have a systemic corruption problem (manifested in lobbying) coupled with greed on scales we've never seen before. Everything else is just a symptom of that problem.
- emodendroket 9y agoWell, I wouldn't say that. One problem with monopolies is they eventually grow so huge that they have tremendous influence on politics.
- ashark 9y agoOur preference for (relatively) high levels of local control (and the resulting tiered cake of tax jurisdictions and regulatory domains) makes our system incredibly vulnerable to race-to-the-bottom behavior when confronted with powerful non-state actors (corporations). Our fear of a hypothetical (though, to be clear, in other times and places realized) evil state leaves us with a host of real, everyday stresses, annoyances, and inefficiencies. It's a drag on GDP and, especially, on quality of life.
- dforrestwilson 9y agoYup. Amazon receiving 238 bids of localities falling over themselves to handover tax credits and other goodies is the example I've been thinking about recently. https://www.reuters.com/article/us-amazon-com-headquarters/amazon-receives-238-proposals-for-its-second-headquarters-idUSKBN1CS21O https://www.reuters.com/article/us-amazon-com-headquarters/a... How to fix it though?
- walshemj 9y agounfortunetly you would have to radically reform the entire political system and take a lot of powers away from states eg single sales tax, a single set of employment law. Unfortunately the states are not turkeys voting for Christmas
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- athenot 9y ago> We have become a rent-seeking society It just dawned on me while reading the article that this accurately describes the shift from licensed software to SaaS that has been happening in the past decade.
- savanaly 9y agoThat's not what rent seeking means in this context. https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking
- frgtpsswrdlame 9y agoEh, it still applies. There's plenty of articles that have been posted here talking about how the real way to make money is SaaS, not on-prem. In that context, the provider is making more profit with no further innovation, in fact the only thing they've added is a limitation. To quote from your link: Rent-seeking is an attempt to obtain economic rent (i.e., the portion of income paid to a factor of production in excess of what is needed to keep it employed in its current use) by manipulating the social or political environment in which economic activities occur, rather than by creating new wealth. Rent-seeking implies extraction of uncompensated value from others without making any contribution to productivity. The classic example of rent-seeking, according to Robert Shiller, is that of a feudal lord who installs a chain across a river that flows through his land and then hires a collector to charge passing boats a fee (or rent of the section of the river for a few minutes) to lower the chain. There is nothing productive about the chain or the collector. The lord has made no improvements to the river and is helping nobody in any way, directly or indirectly, except himself. All he is doing is finding a way to make money from something that used to be free.[5] Now maybe, the program used to be $40 and not free but switching to $20 a month is definitely rent-seeking.
- yannyu 9y agoTo universally label the move from on-prem, perpetual licensing to SaaS as pure rent-seeking is to misunderstand how different kinds of software products are purchased and used by different users. As far as enterprise/business customers go, SaaS has been huge in reducing vendor lock-in and enabling customers to choose the best fit for their use case. SaaS has removed the huge costs of PoCs and initial adoption, meaning it's easier to evaluate vendors and switch when you're ready. You no longer have to buy the hardware to get the service up and running, or allocate as many employees to maintain the hardware and software. The explosion of vendors and competition in the SaaS space has forced more interoperability and customer-focused feature development than ever before. SaaS has been great for pretty much all business customers. At this point, I don't think any but the largest companies, most specialized companies would rather build their own services at this point than try to purchase off the shelf when possible.
- wiremine 9y agoAmerican has an optimism problem. Or rather, optimism seems to be unequally distributed. Feels like we need some leadership to raise our eyes to all the opportunities out there, and how we can get to a better spot.
- irrational 9y agoSo, we need someone to show us how to make America great again?
- kerbalspacepro 9y agoI don't need to know what privilege you have to say, "check your privilege".
- scarface74 9y agoFrom the article Firms like Microsoft led in the innovation in creating new barriers to entry. How could one compete with a browser provided at a zero price. I think what happened to Microsoft is the perfect example of how to overcome a monopoly. 20 years ago, everyone thought that Microsoft’s monopoly was unassailable. Google barely existed, Facebook didn’t exist, Amazon was a bookseller and Apple was basically bankrupt. 20 years ago, Netflix had a few million DVD customers and AOL was the largest ISP. Who knows what will happen in the next 20 years?
- Shivetya 9y agothis whole topic is because of political considerations and if you just look around you will see nearly all members coming from the same party parroting the same lines. throw in lots of google money which was the basis for a story recently bemoaning Amazon's influence and you can see its all for naught. there is lot of movement by said members in Congress to invoke antitrust by drowning people in buzzwords and FUD. If anything the larger American based companies brought up as issues themselves face even greater competition from overseas. What we have to fear besides even more regulation on our own industries is having it turn into a trade war when overseas entities not burdened by the same restrictions start to compete.
- marinman 9y agoBut importantly, the government went after Microsoft for anti-trust and actually won even if they didn't break them up. It's impossible to really know the counter-factual of what would have happened if it wasn't sued for anti-trust. But, you can safely say it wouldn't have thrown a lifeline to Apple with the investment and it may have been much more aggressive in these emerging spaces. I still think it was still not fundamentally "ready" for the Internet and mobile but I do think that lawsuit made it much, much friendlier to newcomers.
- scarface74 9y agoBut, you can safely say it wouldn't have thrown a lifeline to Apple with the investment and it may have been much more aggressive in these emerging spaces. Microsoft "saving" Apple is apocryphal at best. The $250 million that MS invested wouldn't have made a difference when Apple lost a billion the same quarter and spent $100 million buying out PowerComputings Mac license. Microsoft tried aggressively to get into mobile, search, and the music business. They failed at execution.
- thecombjelly 9y agoAmerica has a capitalism problem. What the article fails to address is that the root cause is really capitalism. Under capitalism wealth and power always concentrates, which in the case of businesses, that eventually means bad monopolies. Under a representative democracy that also means politics will always be corrupted because those with money and power will always be benefited by controlling politics, and they have the money and power to do so (who owns the news media? who can afford to buy off politicians, whether they start corrupt or not?). While the power of monopolies ebbs and flows as those without capital get angrier, the monopolies will always come back because that's what capitalism does. Monopolies are not inherently bad. It's entirely possible to have a monopoly and have a great thing that everyone likes and is happy with and which keeps innovating. But under capitalism the primary incentive is the accumulation of capital which rarely lines up with creating something great long term.
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- ianai 9y agoI can think of at least one way to diminish companies power over legislatures. Pay representatives enough that they’re indifferent to corrupt forces. It’s not like there an expectation for representives to be broke.
- thecombjelly 9y agoAt that point it seems you would have just promoted politicians in to the capital class without the middle-person, but again they now represent the capital class and all their non-politician capital class buddies at the cocktail parties, instead of representing those without much capital.
- ianai 9y agoThey’re already there. And in order to obtain and maintain that status they chose special interests over constituent needs. Lobbyists pay better than the people.
- menerva 9y agoCapitalism on a smaller scale is broken. Once you have achieved a monopoly they become entrenched in the socio-political system. On a global scale, where laws can't protect I.P. we will see innovation coming out from new sources. If America is happy to stagnate, we will see India and China leading the future.
- nikolay 9y agoMonopolies are a natural phenomenon in capitalism. I'm not sure why people glorify capitalism as much, given the fact that competition is impossibly hard in many areas, and that to reduce costs, and remove competitive pressure, companies tends to consolidate, i.e. reduce competition. Neither socialism nor capitalism makes sense today. We need a totally new system, but it's really hard to make a dent into the status quo, which is well-entrenched, and would resist any change!
- oconnore 9y ago> We need a totally new system This seems historically ignorant. Most systems of allocating power and resources have been tried at various times. The answer is likely at the end of a long, nuanced, and painful road of combining ideas from several of those systems: adjusting, revisiting, admitting failure, and correcting. I would be skeptical of any "new system" that is not a result of reflection on historical economies.
- nikolay 9y agoNo, I think your opinion is arrogant and ignorant. All existing systems are based on the technical limitations of the past time. In Australia, for example, there's a good start to integrate new ideas into the existing system - it's called Flux [0]. Edit: to clarify about Flux, it's still using an existing system, i.e. Democracy although it is implemented as Direct and Delegate Democracy within a Representative Democracy system, but, my point was, that such system could be used as a political virus to change the system from within without bloodshed, and then a totally new system can be put in place. [0]: https://voteflux.org/ https://voteflux.org/
- astrodust 9y ago"Socialism" and "capitalism" are not switches you turn either on or off, they're a set of policies and practices you can apply to varying degrees and extremes. The military is quite socialist as when you enlist you're given food, housing, equipment, medical care, and other things to perform your job, but it's also part of a large capitalist system where equipment and supplies are provisioned from a (theoretically) competitive marketplace. What we need to do is find the right balance between dog-eat-dog individualism and insufferable collectivisim.