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Is centralization of resources really needed for a thriving economy though? Germany begs to differ [1]. [1] http://freakonomics.com/podcast/secrets-german-econ

by QML 9y ago

Is centralization of resources really needed for a thriving economy though? Germany begs to differ [1]. [1] http://freakonomics.com/podcast/secrets-german-economy-steal/ http://freakonomics.com/podcast/secrets-german-economy-steal...

jstewartmobile 9y ago
With the wild-west capitalism we worship and embrace, entropy propels us toward increasing centralization. Gates and Thiel called it clearly, a very long time ago, that most of these markets are natural monopolies (under our system). Not happy about it, and perhaps if we exercised a little sanity like the Europeans, we could reverse the trend. I'm not holding my breath.
- QML 9y ago
  1. It's more of a coastal thing it seems than a trend of the West (I say that jokingly). 2. Is it capitalism that leads to centralization, or the lack of it? I suppose it's how you define the term -- is it a passive accumulation of capital (like money that just sits in a bank), or is it the active use of money to attempt innovation and generate more wealth? In the latter case, I'd hope to imagine a cycle of continuous disruption and redistribution of capital that prevents centralization. 3. Are monopolies inherently bad? Or is it simply the lack of interoperability (i.e. lack of choices / cost of switching is too high for a consumer)? 4. Reverse the trend. What do you suggest then -- a break-up of tech monopolies? Or maybe forget all about the coasts, and try to emulate the German economy in the Midwest?
  - jstewartmobile 9y ago
    #2) I'd say it's the combo: the interaction of unregulated capitalism and specific types of business that can centralize, or "scale", nicely. Most of the trades are doing quite nicely right now because geography, licensing, and the bespoke nature of their work have somewhat protected them from the tech onslaught. Taxi drivers, not so much. Of course, more/less regulation would raise/lower the bar for what would be scalable. #3) Unregulated monopolies, certainly bad, not as much from a consumer perspective as from one of raw power. I don't really care if I don't have the latest shiniest gadget for the best price. I do care that Bill Gates probably has more say on how my kids are educated than I do. Regulated monopolies are another story. Like the power company, they're subject to far more rules and due process than the tech giants. Google can shut down a paying customer with impunity. Power company has to honor a process even for customers that are late on their bill. I like that aspect, but then there's the regulatory capture, so... Even under Obama, who is supposed to be the "liberal" guy, we had the "Holder Doctrine" of let's not enforce the law too hard if it costs US megacorps any money. This will probably have to get worse before it gets better. #4) I have no silver bullets. I was just disappointed that the top comment dismissed an entire region as a victim of its own foolishness, making little mention of all the other externalities, of which there are many. Thanks for hearing me out. Do you have any silver bullets?
- ThomPete 9y ago
  Europe has the same problems and no real engine for growth and innovation. There are plenty of innovative and brilliant companies and people in europe but the system kills most efforts because its so tightly regulated. I am not even talking banking sector here. Just in general.
  - jstewartmobile 9y ago
    Fair enough, but consider the US predicament. We have the coastal areas of high education, high income, and high costs that mostly end in a wash if you exclude the prestige of it all. Prices so high that people who do ordinary jobs can't even afford the place. We also have an incredible number of rural areas mired in meth and joblessness. The elites say "Invest more in education!" Where's the money when the tax base is jobless? Where are the students when the scholars packed their bags for greener pastures long ago? Where are the jobs when it only takes a few smart people to automate something for the entire world? I've been to factories where they only need two to satisfy the entirety of world demand, and there are only a handful of people there, and the second factory is just for redundancy... This is what "growth and innovation" have given us. Two unattractive monocultures. I like western europe better. To each his own. edit: If I were more awake, this probably could have been condensed into: Why speed up entropy?
    - ThomPete 9y ago
      Because of the expontantial growth of technology. Every technolocial advancement open up the door for a new competitor to become a threat to an incumbent. Very few european companies become global players which you have to to survive. You have no choice.
    - saturdaysaint 9y ago
      Why speed up entropy? -Quality of life for employees - there are plenty of economically stable regions across the midwest where you can get a 4 bedroom house in a great neighborhood for $200,000. -Political stability for the investor class. The tech industry effectively has 6 votes in the Senate right now, and they've realized what a vulnerability that is.
- thanatropism 9y ago
  Eh. Classical Christaller-Lösch theory holds that there are two patterns of spatial expansion, the hierarchical centers model and the moving frontier model. In the hierarchical center model, the balance between economies and diseconomies of agglomeration lead to a pattern where smaller centers linked to the big center emerge; then these centers become large in their own right and growth goes on recursively. This is usually more clearly seen in cities (look up on Google Maps with the satellite photo layer: Berlin, London, Tokyo, Sao Paulo....) but some nations like Germany will apear to have this pattern too. In the other model spatial growth is constrained on the one side by a coast or something like that, and has a vast, gradually developing frontier on the other hand. Brazil has one coast only and is like this. Rio de Janeiro is a major city next to a coast and is like this, Sao Paulo is the singular major city further inland and is the opposite of this (a cobweb). The US has two coasts. And for reasons, the west coast started developing on its own, not as a tributary to the east coast. Flyover country could have grown in the cobweb hierarchical centers fashion, but what's the undeniable capital of the Midwest? Not to mention farm belts etc. and an agrarian economy propped up by subsidies, etc.
  - muninn_ 9y ago
    Chicago would probably be the undeniable capital I would presume. Depending on where you center the geography, it's nice being a few hours away from Toronto as well. Agrarian economy propped up by subsidies? Meanwhile I hear a bunch of New Yorkers and Californians complaining about limits on mortgage deduction on their taxes which subsidize their housing costs. Look let's not attack each other. It doesn't get anywhere.
  - njarboe 9y ago
    The biggest reason the west coast jump started development on its own would be the California Gold rush.
  - jstewartmobile 9y ago
    I didn't know there was a name for that. Thanks! Civilization has typically been tied to the water. We have a Chicago-New Orleans-St. Louis triangle. My guess would be that the interstate highway system and container shipping have severely diminished its importance.
gilbetron 9y ago
Well, Germany is half the size of Texas with nearly 4x the population, so it could easily be argued that Germany does have centralization of resources...

by QML 9y ago

jstewartmobile 9y ago

With the wild-west capitalism we worship and embrace, entropy propels us toward increasing centralization. Gates and Thiel called it clearly, a very long time ago, that most of these markets are natural monopolies (under our system). Not happy about it, and perhaps if we exercised a little sanity like the Europeans, we could reverse the trend. I'm not holding my breath.

QML 9y ago
1. It's more of a coastal thing it seems than a trend of the West (I say that jokingly). 2. Is it capitalism that leads to centralization, or the lack of it? I suppose it's how you define the term -- is it a passive accumulation of capital (like money that just sits in a bank), or is it the active use of money to attempt innovation and generate more wealth? In the latter case, I'd hope to imagine a cycle of continuous disruption and redistribution of capital that prevents centralization. 3. Are monopolies inherently bad? Or is it simply the lack of interoperability (i.e. lack of choices / cost of switching is too high for a consumer)? 4. Reverse the trend. What do you suggest then -- a break-up of tech monopolies? Or maybe forget all about the coasts, and try to emulate the German economy in the Midwest?
- jstewartmobile 9y ago
  #2) I'd say it's the combo: the interaction of unregulated capitalism and specific types of business that can centralize, or "scale", nicely. Most of the trades are doing quite nicely right now because geography, licensing, and the bespoke nature of their work have somewhat protected them from the tech onslaught. Taxi drivers, not so much. Of course, more/less regulation would raise/lower the bar for what would be scalable. #3) Unregulated monopolies, certainly bad, not as much from a consumer perspective as from one of raw power. I don't really care if I don't have the latest shiniest gadget for the best price. I do care that Bill Gates probably has more say on how my kids are educated than I do. Regulated monopolies are another story. Like the power company, they're subject to far more rules and due process than the tech giants. Google can shut down a paying customer with impunity. Power company has to honor a process even for customers that are late on their bill. I like that aspect, but then there's the regulatory capture, so... Even under Obama, who is supposed to be the "liberal" guy, we had the "Holder Doctrine" of let's not enforce the law too hard if it costs US megacorps any money. This will probably have to get worse before it gets better. #4) I have no silver bullets. I was just disappointed that the top comment dismissed an entire region as a victim of its own foolishness, making little mention of all the other externalities, of which there are many. Thanks for hearing me out. Do you have any silver bullets?
ThomPete 9y ago
Europe has the same problems and no real engine for growth and innovation. There are plenty of innovative and brilliant companies and people in europe but the system kills most efforts because its so tightly regulated. I am not even talking banking sector here. Just in general.
- jstewartmobile 9y ago
  Fair enough, but consider the US predicament. We have the coastal areas of high education, high income, and high costs that mostly end in a wash if you exclude the prestige of it all. Prices so high that people who do ordinary jobs can't even afford the place. We also have an incredible number of rural areas mired in meth and joblessness. The elites say "Invest more in education!" Where's the money when the tax base is jobless? Where are the students when the scholars packed their bags for greener pastures long ago? Where are the jobs when it only takes a few smart people to automate something for the entire world? I've been to factories where they only need two to satisfy the entirety of world demand, and there are only a handful of people there, and the second factory is just for redundancy... This is what "growth and innovation" have given us. Two unattractive monocultures. I like western europe better. To each his own. edit: If I were more awake, this probably could have been condensed into: Why speed up entropy?
  - ThomPete 9y ago
    Because of the expontantial growth of technology. Every technolocial advancement open up the door for a new competitor to become a threat to an incumbent. Very few european companies become global players which you have to to survive. You have no choice.
  - saturdaysaint 9y ago
    Why speed up entropy? -Quality of life for employees - there are plenty of economically stable regions across the midwest where you can get a 4 bedroom house in a great neighborhood for $200,000. -Political stability for the investor class. The tech industry effectively has 6 votes in the Senate right now, and they've realized what a vulnerability that is.
thanatropism 9y ago
Eh. Classical Christaller-Lösch theory holds that there are two patterns of spatial expansion, the hierarchical centers model and the moving frontier model. In the hierarchical center model, the balance between economies and diseconomies of agglomeration lead to a pattern where smaller centers linked to the big center emerge; then these centers become large in their own right and growth goes on recursively. This is usually more clearly seen in cities (look up on Google Maps with the satellite photo layer: Berlin, London, Tokyo, Sao Paulo....) but some nations like Germany will apear to have this pattern too. In the other model spatial growth is constrained on the one side by a coast or something like that, and has a vast, gradually developing frontier on the other hand. Brazil has one coast only and is like this. Rio de Janeiro is a major city next to a coast and is like this, Sao Paulo is the singular major city further inland and is the opposite of this (a cobweb). The US has two coasts. And for reasons, the west coast started developing on its own, not as a tributary to the east coast. Flyover country could have grown in the cobweb hierarchical centers fashion, but what's the undeniable capital of the Midwest? Not to mention farm belts etc. and an agrarian economy propped up by subsidies, etc.
- muninn_ 9y ago
  Chicago would probably be the undeniable capital I would presume. Depending on where you center the geography, it's nice being a few hours away from Toronto as well. Agrarian economy propped up by subsidies? Meanwhile I hear a bunch of New Yorkers and Californians complaining about limits on mortgage deduction on their taxes which subsidize their housing costs. Look let's not attack each other. It doesn't get anywhere.
- njarboe 9y ago
  The biggest reason the west coast jump started development on its own would be the California Gold rush.
- jstewartmobile 9y ago
  I didn't know there was a name for that. Thanks! Civilization has typically been tied to the water. We have a Chicago-New Orleans-St. Louis triangle. My guess would be that the interstate highway system and container shipping have severely diminished its importance.

gilbetron 9y ago

Well, Germany is half the size of Texas with nearly 4x the population, so it could easily be argued that Germany does have centralization of resources...