10 ms·

The Monopolization of America

98 points by NN88 8y ago

DCKing 8y ago
Isn't monopolization an inevitable consequence of Pikkety's observed behaviour that capital begets more capital and it's increasingly concentrating in fewer places? Not only can concentrations of capital in private companies enable them to gobble up smaller competition until there is nothing left, it also enables them to control legislation over it. I'm not sure if me observing this relation is correct, but if it is then politics must be very strong to resist the trend. I sure hope it is.
- petermcneeley 8y ago
  Only tangentially. I recently finished Pikkety's "Capital" and found it very much to be (as you said) about observed behavior not theory. His primary discussion is about labor vs capital return split of output (and its resulting effect on individual inequality). He does discuss observed economies of scale for returns on capital which could have monopolistic effects. (aka returns on 1 million might be 5% but for 100 million might be 7%)
- deleted 8y ago
  [deleted]
pitaj 8y ago
The power of monopolies and indeed of corporations in general is directly tied to the power of the State. It's no surprise to those who understand this that, as the federal government has grown in size, strength, and scope, corporations have followed. In fact, I'd go so far as to say that consumer-hostile monopolies cannot exist for any substantial amount of time without the backing of the State. Whether that be through IP law, limited liability, regulatory capture, or explicit utilization, monopoly in one industry requires the support of the largest monopoly there is: that on coercion, aka the State. Never have I seen evidence of a lasting consumer-hostile monopoly that existed without the involvement of the State. As far as I can tell, natural monopolies are a myth grown from mistaken economic theory.
- tonyedgecombe 8y ago
  Perhaps it's a sign of weak government, a strong government wouldn't allow monopolistic behaviour and America hasn't in the past.
  - openbasic 8y ago
    Do you happen to have a recipe for a corruption-free government? Please share.
    - pitaj 8y ago
      A litany of angels
    - RandomTisk 8y ago
      Easy first step: prosecute criminals even if they're in your own political party and especially if they aren't little people.
      - AnimalMuppet 8y ago
        Step zero is then to get people in power who are willing to do that. How do you propose we go about that step?
    - tonyedgecombe 8y ago
      You don't need to go far back in history to see when the US government broke up monopolies.
    - jryan49 8y ago
      Make lobbying illegal, and make representatives more accountable to their constituents? Decentralize the government more, and make it more state and local instead of federal?
- danharaj 8y ago
  https://en.wikipedia.org/wiki/Hanseatic_League https://en.wikipedia.org/wiki/Hanseatic_League
roenxi 8y ago
They aren't wrong about the timing. I cite bank mergers [0] as evidence, you can see they start becoming the norm about 1981. The inflation-adjusted numbers start exploding as well [1]. I'm a bit suspicious that the real advantage of large companies is more assets, more faith and better access to credit. From an economic perspective, I can recall many mergers and acquisitions that basically failed to make money. But on the other hand, maybe a good merger is a very low key event, I can name a few in tech specifically that worked - but usually that is because the network effects of online businesses are absurdly important. [0] https://en.wikipedia.org/wiki/List_of_bank_mergers_in_the_United_States https://en.wikipedia.org/wiki/List_of_bank_mergers_in_the_Un... [1] https://en.wikipedia.org/wiki/List_of_largest_mergers_and_acquisitions https://en.wikipedia.org/wiki/List_of_largest_mergers_and_ac...
dsfyu404ed 8y ago
Anyone know why the tire industry (bottom line of the graph) bucked the trend and decentralized over the time period displayed? My educated guess would be that something happened that caused value priced tires manufactured in Asia to suddenly increase in quality and capture some market share from buyers who previously shunned them but I'm really not familiar enough with the industry to put any confidence behind that claim.
- bluGill 8y ago
  All industry is in a constant cycle of centralize/decentralize. There are benefits to both so when you are at one extreme you look to the other. There generally isn't a middle ground that is easy to find.
- JKCalhoun 8y ago
  Only anecdotally: a couple Korean tire companies (Kumho, Hankook) I had never previously heard of started showing up in the U.S. in the past decade or two. They are of high quality and at a lower price than the U.S. tire manufacturers. So, foreign competition?
75dvtwin 8y ago
From the article: >"America was born as “a nation of farmers and small-town entrepreneurs,” the historian Richard Hofstadter once wrote, “anti-authoritarian, egalitarian and competitive.” Hostility to corporate bigness animated Thomas Jefferson and Teddy Roosevelt, as well as the labor movement, Granger movement, Progressive movement and more. " I disagree that Progressive Movement of today, is reflective of > "America was born as “a nation of farmers and small-town entrepreneurs,” Completely opposite, I think, what is called Progressive movement today -- is completely Pro-Monopoly. It is easier for a monopoly to lobby Federal government, it is easier for a monopoly to litigate complex issues, it is easier for a monopoly to control opinion of the masses. Therefore, it is absolutely, more desirable for monopolies to have more power concentrated within fewer individuals -- and that's done by making Federal government more and more powerful. Powerful monopolies a fuel for political corruption, by means adapting the 'veil of political-correctness' that hides bribery and money-laundry (through well known means of: 'book signing', ' paid speeches', and 'charitable foundations') So the self-feeding, snow-balling cycle of power is 'larger federal government' <--> 'more powerful monopolies' And today's progressive movement' is 'larger federal government' type of ideas.
- JimboOmega 8y ago
  This is why I didn't identify as liberal for a long time (even though I'm wildly socially liberal) - the more power the government has, the more it tends to wind up like that. Whether in the form of classic regulatory capture, the defense-industrial complex, or the student debt industry writing the law that covers itself... it's a troubling reality of "big govenment". However at some point, the party representing the conservative movement (i.e., the Republicans) completely abandoned this pretense, instead becoming baldly corporatist. Everybody gets their hands dirty (post Citizens United, how can you not?) but the Republicans don't even pay lip service to that idea any more. The platform is more or less what's good for big companies must be good for America. It raises employment after all! In that world, the one which we live in, the progressive movement (ie, the Democrats) starts to seem actually anti-corporate by comparison. Of course they have tons of their own issues and different corporate patrons, but in comparison they look great. Can you imagine a Republican saying the EPA should regulate CO2? Another way to look at it - from a progressive point of view, regulatory capture and more powerful monopolies are an undesirable side effect of attempts at regulation and reigning in the power of these companies. From the view of today's conservative, it's a desirable outcome; bigger more powerful companies means a bigger more powerful America with better jobs and fewer shipped overseas. Let them trample individual rights because they'll either do it here or do it there, and if they do it here at least it's good for employment.
nostromo 8y ago
Low central bank interest rates may have played a part in big business consolidation. Large mega corps can borrow money at extremely low rates. Because of this infinite access to capital, they can more easily acquire their competition. Even if a company uses equity to purchase a competitor, they can counteract the dilution with financed stock buy backs. Money may be too cheap for big companies and too scarce for small companies.
MrTonyD 8y ago
The concept of monopolies needs a complete overhaul. When I worked for Steve Jobs we were more focused on differentiators, since a differentiator defined a monopoly. You don't need to control an entire market or even be the major player in a segment - you can charge high prices and extract obscene profit from everyone if you have a good differentiator - especially if it is something they need. In some circles, these are referred to as "effective monopolies".

98 points by NN88 8y ago

Isn't monopolization an inevitable consequence of Pikkety's observed behaviour that capital begets more capital and it's increasingly concentrating in fewer places? Not only can concentrations of capital in private companies enable them to gobble up smaller competition until there is nothing left, it also enables them to control legislation over it. I'm not sure if me observing this relation is correct, but if it is then politics must be very strong to resist the trend. I sure hope it is.

petermcneeley 8y ago
Only tangentially. I recently finished Pikkety's "Capital" and found it very much to be (as you said) about observed behavior not theory. His primary discussion is about labor vs capital return split of output (and its resulting effect on individual inequality). He does discuss observed economies of scale for returns on capital which could have monopolistic effects. (aka returns on 1 million might be 5% but for 100 million might be 7%)
deleted 8y ago
[deleted]

pitaj 8y ago

The power of monopolies and indeed of corporations in general is directly tied to the power of the State. It's no surprise to those who understand this that, as the federal government has grown in size, strength, and scope, corporations have followed. In fact, I'd go so far as to say that consumer-hostile monopolies cannot exist for any substantial amount of time without the backing of the State. Whether that be through IP law, limited liability, regulatory capture, or explicit utilization, monopoly in one industry requires the support of the largest monopoly there is: that on coercion, aka the State. Never have I seen evidence of a lasting consumer-hostile monopoly that existed without the involvement of the State. As far as I can tell, natural monopolies are a myth grown from mistaken economic theory.

tonyedgecombe 8y ago
Perhaps it's a sign of weak government, a strong government wouldn't allow monopolistic behaviour and America hasn't in the past.
- openbasic 8y ago
  Do you happen to have a recipe for a corruption-free government? Please share.
  - pitaj 8y ago
    A litany of angels
  - RandomTisk 8y ago
    Easy first step: prosecute criminals even if they're in your own political party and especially if they aren't little people.
    - AnimalMuppet 8y ago
      Step zero is then to get people in power who are willing to do that. How do you propose we go about that step?
  - tonyedgecombe 8y ago
    You don't need to go far back in history to see when the US government broke up monopolies.
  - jryan49 8y ago
    Make lobbying illegal, and make representatives more accountable to their constituents? Decentralize the government more, and make it more state and local instead of federal?
danharaj 8y ago
https://en.wikipedia.org/wiki/Hanseatic_League https://en.wikipedia.org/wiki/Hanseatic_League

roenxi 8y ago

They aren't wrong about the timing. I cite bank mergers [0] as evidence, you can see they start becoming the norm about 1981. The inflation-adjusted numbers start exploding as well [1]. I'm a bit suspicious that the real advantage of large companies is more assets, more faith and better access to credit. From an economic perspective, I can recall many mergers and acquisitions that basically failed to make money. But on the other hand, maybe a good merger is a very low key event, I can name a few in tech specifically that worked - but usually that is because the network effects of online businesses are absurdly important. [0] https://en.wikipedia.org/wiki/List_of_bank_mergers_in_the_United_States https://en.wikipedia.org/wiki/List_of_bank_mergers_in_the_Un... [1] https://en.wikipedia.org/wiki/List_of_largest_mergers_and_acquisitions https://en.wikipedia.org/wiki/List_of_largest_mergers_and_ac...

dsfyu404ed 8y ago

Anyone know why the tire industry (bottom line of the graph) bucked the trend and decentralized over the time period displayed? My educated guess would be that something happened that caused value priced tires manufactured in Asia to suddenly increase in quality and capture some market share from buyers who previously shunned them but I'm really not familiar enough with the industry to put any confidence behind that claim.

bluGill 8y ago
All industry is in a constant cycle of centralize/decentralize. There are benefits to both so when you are at one extreme you look to the other. There generally isn't a middle ground that is easy to find.
JKCalhoun 8y ago
Only anecdotally: a couple Korean tire companies (Kumho, Hankook) I had never previously heard of started showing up in the U.S. in the past decade or two. They are of high quality and at a lower price than the U.S. tire manufacturers. So, foreign competition?

75dvtwin 8y ago

From the article: >"America was born as “a nation of farmers and small-town entrepreneurs,” the historian Richard Hofstadter once wrote, “anti-authoritarian, egalitarian and competitive.” Hostility to corporate bigness animated Thomas Jefferson and Teddy Roosevelt, as well as the labor movement, Granger movement, Progressive movement and more. " I disagree that Progressive Movement of today, is reflective of > "America was born as “a nation of farmers and small-town entrepreneurs,” Completely opposite, I think, what is called Progressive movement today -- is completely Pro-Monopoly. It is easier for a monopoly to lobby Federal government, it is easier for a monopoly to litigate complex issues, it is easier for a monopoly to control opinion of the masses. Therefore, it is absolutely, more desirable for monopolies to have more power concentrated within fewer individuals -- and that's done by making Federal government more and more powerful. Powerful monopolies a fuel for political corruption, by means adapting the 'veil of political-correctness' that hides bribery and money-laundry (through well known means of: 'book signing', ' paid speeches', and 'charitable foundations') So the self-feeding, snow-balling cycle of power is 'larger federal government' <--> 'more powerful monopolies' And today's progressive movement' is 'larger federal government' type of ideas.

JimboOmega 8y ago
This is why I didn't identify as liberal for a long time (even though I'm wildly socially liberal) - the more power the government has, the more it tends to wind up like that. Whether in the form of classic regulatory capture, the defense-industrial complex, or the student debt industry writing the law that covers itself... it's a troubling reality of "big govenment". However at some point, the party representing the conservative movement (i.e., the Republicans) completely abandoned this pretense, instead becoming baldly corporatist. Everybody gets their hands dirty (post Citizens United, how can you not?) but the Republicans don't even pay lip service to that idea any more. The platform is more or less what's good for big companies must be good for America. It raises employment after all! In that world, the one which we live in, the progressive movement (ie, the Democrats) starts to seem actually anti-corporate by comparison. Of course they have tons of their own issues and different corporate patrons, but in comparison they look great. Can you imagine a Republican saying the EPA should regulate CO2? Another way to look at it - from a progressive point of view, regulatory capture and more powerful monopolies are an undesirable side effect of attempts at regulation and reigning in the power of these companies. From the view of today's conservative, it's a desirable outcome; bigger more powerful companies means a bigger more powerful America with better jobs and fewer shipped overseas. Let them trample individual rights because they'll either do it here or do it there, and if they do it here at least it's good for employment.

nostromo 8y ago

Low central bank interest rates may have played a part in big business consolidation. Large mega corps can borrow money at extremely low rates. Because of this infinite access to capital, they can more easily acquire their competition. Even if a company uses equity to purchase a competitor, they can counteract the dilution with financed stock buy backs. Money may be too cheap for big companies and too scarce for small companies.

MrTonyD 8y ago

The concept of monopolies needs a complete overhaul. When I worked for Steve Jobs we were more focused on differentiators, since a differentiator defined a monopoly. You don't need to control an entire market or even be the major player in a segment - you can charge high prices and extract obscene profit from everyone if you have a good differentiator - especially if it is something they need. In some circles, these are referred to as "effective monopolies".