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I agree with some of the points being made in this article, but there's definitely better resources on this topic. The paper mentioned in the article, "Amazon'
by nabnob 8y ago
I agree with some of the points being made in this article, but there's definitely better resources on this topic.
The paper mentioned in the article, "Amazon's Antitrust Paradox", is very thorough and easy to read even for someone (like me) who doesn't have a background in economics.
The key point made in that paper is that modern antitrust legislation only looks at price when determining whether a monopoly is harming the consumer, and doesn't consider scale or the effects on the overall market and competition.
>This Note argues that the current framework in antitrust—specifically its pegging competition to “consumer welfare,” defined as short-term price effects—is unequipped to capture the architecture of market power in the modern economy. We cannot cognize the potential harms to competition posed by Amazon’s dominance if we measure competition primarily through price and output. Specifically, current doctrine underappreciates the risk of predatory pricing and how integration across distinct business lines may prove anticompetitive. These concerns are heightened in the context of online platforms for two reasons. First, the economics of platform markets create incentives for a company to pursue growth over profits, a strategy that investors have rewarded. Under these conditions, predatory pricing becomes highly rational—even as existing doctrine treats it as irrational and therefore implausible. Second, because online platforms serve as critical intermediaries, integrating across business lines positions these platforms to control the essential infrastructure on which their rivals depend. This dual role also enables a platform to exploit information collected on companies using its services to undermine them as competitors.
Even though I'm a software engineer, I'm skeptical of claims that technology can help fix social, economic, or environmental problems. I support green technology, but they're not a panacea. In articles pushing green tech and sustainable energy, there seems to be this implicit assumption that we can maintain our current standard of living in a "sustainable" way. Solar panels and electric cars aren't going to prevent climate catastrophe if only 5% of people can afford them. Rather than relying on individual consumers to make ethical choices (opting into living sustainably) we need drastic changes at a state-wide level (so that choosing not to be sustainable is opt-out).
>Income inequality can be solved by educating or retraining workers for the high-tech jobs of the future.
This statement doesn't make any sense. If you increase the number of software engineers, the average wage will decrease.
Edit: Forgot to mention that tech is absolutely automating away a large number of jobs.
- rizzom5000 8y ago> This statement doesn't make any sense. If you increase the number of software engineers, the average wage will decrease. It also assumes that there will be jobs available. Increasing the supply software engineers does not mean the demand will increase. I see this logic error all the time when people discuss solutions to income and wealth inequality. Actually, the solutions are taxation and estate taxes; but those proven solutions are rarely mentioned.
- api 8y agoAnother thing the pricing test favored by the Chicago School doesn't consider is the effect of consolidation on entrepreneurship. Huge consolidated companies become de-facto standards that are hard to compete with for many many reasons and that have the resources to simply buy or clone any competitor in its crib. In the computing world they also tend to become platform monopolies with strong lock-in from APIs and network effects. You also get a huge problem with regulatory capture due to the massive budgets these companies have for lobbying and revolving door deals. If the mega-corps get big enough and exist long enough they start to effectively merge with the state. The price to the consumer might not change a lot, but a lot of innovation doesn't happen when the market gets dominated by players like that. Back to inequality -- this effect also leads to consolidation of more and more wealth at the top by these companies and to geographic consolidation of wealth in the cities where these monster companies are headquartered or have major operations. Today that's San Francisco, Seattle, Los Angeles, and New York. Due to the "law of rent" this forces up real estate costs in these cities, further making it hard for middle class people to build wealth regardless of where they live. Geographic wealth concentration means you face a choice between poor career prospects and living in a city where the real estate market takes all your surplus due to the natural spatial supply limits (land, commute times) that exist for housing. Entrepreneurship is a major vehicle for geographic wealth dispersal and for class mobility from the middle class upward. Without entrepreneurship the ranks of the very wealthy become incredibly stagnant and almost like a generational nobility. (Europe has this problem too, though for very different reasons. In Europe the problem is too much cumbersome regulation making it too hard to start new businesses. So Europe has too much government and America has unstoppable mega-corps that crush everything new.)
- 8y ago