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In almost all USA industries, there is increasing amount of consolidation. The top 4 companies' in almost any industry has a larger share of the total market: h

In almost all USA industries, there is increasing amount of consolidation. The top 4 companies' in almost any industry has a larger share of the total market: https://www.economist.com/briefing/2016/03/26/too-much-of-a-good-thing https://www.economist.com/briefing/2016/03/26/too-much-of-a-... Some consolidation is natural, but a huge part is caused by mergers and acquisitions (M&A) fulled by Private Equity. The M&A benefits the shareholders of participating companies at the expense of consumers, employees, and other companies.

take_a_breath 6y ago
There are fewer publicly traded companies and the ones that do exists are larger than ever. From Bloomberg: ==About 3,600 firms were listed on U.S. stock exchanges at the end of 2017, down more than half from 1997.== https://www.bloomberg.com/opinion/articles/2018-04-09/where-have-all-the-u-s-public-companies-gone https://www.bloomberg.com/opinion/articles/2018-04-09/where-...
- lotsofpulp 6y ago
  This article also has some good statistics: https://www.nytimes.com/2018/08/04/business/shrinking-stock-market.html https://www.nytimes.com/2018/08/04/business/shrinking-stock-...
sokoloff 6y ago
What is PE fueled by? IMO, in large part by zero interest rate policies.
- JamesBarney 6y ago
  I think the cause and the effect is reversed. There is more money for investment now than ever before (due to an aging population, and increased inequality) which leads to both a low/zero interest rate, and lots of money for PE. If it was an artificially low interest rate we'd see wage inflation, as opposed to just asset inflation.
  - phkahler 6y ago
    Interest rates are artificial. IMHO they are currently way too low. I dont even think the absolute rate is what affects the economy, its rate of change in interest rates that causes change. Declining rates stimulate the economy while rising ones act as a brake. The absolute level of the rates determine where money flows and inversely affects the price of big things like housing and cars. Low rates lead to inequality and hardship. These are just thoughts and observations, I would love to build a good mathematical model.
    - JamesBarney 6y ago
      I think you're right that low interest rates boost wealth inequality due to rising asset prices, but they also reduce income equality because of the tight labor market. And by artificially low I meant below the natural interest rate or NAIRU.
    - nostrademons 6y ago
      Nominal interest rates are artificial. Real interest rates (nominal rates - inflation) are not. If central banks set nominal interest rates too low you get inflation which negates the purchasing power of the borrowed money. That's what the grandparent poster was alluding to. (The mathematical model - and the proof - for this is taught in most introductory macroeconomics courses. So is monetarism, which is the "declining rates = stimulus" that you mention.) It's been a persistent question why the super-low nominal interest rates that central banks have set for the last decade haven't resulted in consumer inflation, and there's no consensus among experts for it. My personal theory is that it comes from the entry of China and other large developing nations into the world economy, which a.) has dramatically lowered the price of labor-intensive consumer manufacturing, offsetting much of the inflation caused by the large money supply and b.) changed the mix of savers in the world economy; Chinese people are much more in the habit of saving large fractions of their income than Americans are, which leads to a glut of savings, which lowers the real interest rate.
- ErikVandeWater 6y ago
  And tax policy, the specifics of which I am not qualified to explain. Someone else care to give their take?
- jtolmar 6y ago
  It's just a natural product of capitalism[1]. When you can buy a chunk of a business and own that chunk of its profits, you can use those profits to buy a larger chunk of the business, repeat ad nauseum, until you have so much money that your needs for more profit aren't satisfied by any one business, but you have enough money to perform multi-business maneuvers. Higher interest rates might make some of these maneuvers less possible in the short term, but that would just delay the problem until the wealthiest capital-owners accumulate enough money that they can put forth more collateral to get better loans. [1] By capitalism I mean private ownership specifically, not the usual HN definition of something something markets something something competition.
deleted 6y ago
[deleted]
pcurve 6y ago
Consolidation and vertical integration in healthcare space has bee pretty frightening. Feels like ordinary folks don’t know.
baby 6y ago
Watching Super Size Me 2 you realize that the same thing happened to the chicken industry. It’s frightening. It’s like we have a democracy (so far) and under that a lot of smaller authoritarian organizations that are hard to notice or dismantle. Some of the farmers were basically slaves, in huge debts to these companies way of running things. Unbelievable.
- jtr1 6y ago
  This is an argument a lot of non-authoritarian socialists make: democracy only governs the few hours when people are not sleeping or at work, so a deeper, fuller democracy would include running workplaces democratically as well. Whether by employee-elected boards, cooperatives, democratically run unions (a necessary distinction), or some other form of collective control, that the consent of the governed is a question for all situations in which people find decisions about their lives being made.
  - technotony 6y ago
    This comes up a lot, nobody is literally chained to their desks. Democracy in the workplace comes from voting with your feet and taking another job at another company. It's not perfect, particularly for lower income people, but it's also not slavery and generally the arc of worker rights is improving through time. You could make a case that some of the current anger in the united states is because COVID's destruction of the economy has removed that freedom to switch jobs (as the jobs have gone) demonstrating how important it is.
    - dangus 6y ago
      It is far beyond imperfect. Let’s say I work at Kroger. I don’t like the way I’m treated, so I quit. Now the remaining grocery stores I can work for owned by Albertsons or Amazon. What kind of choice is that? Pick any other industry and you’re likely to find similar problems. It would be really interesting to see what mandatory democratic corporate governance might look like. Or, perhaps, fixing union regulations so that unions don’t have a bunch of downsides for the employee or other regulatory issues that seem to have directly led to their decline.
snarf21 6y ago
The SEC and FTC have failed us. Even 2008 was largely fueled by M&A so banks could lever even harder.
dcolkitt 6y ago
Monopolization almost certainly is occurring. The left usually cites weak antitrust enforcement. The right usually cites regulatory barriers that make it expensive to compete without economies of scale. I actually think both sides are at least partially correct. However what almost everyone overlooks is the demographic transition. The US, along with every other developed economy, is significantly older today than it was 40 years ago. And the fact of the matter is that an older work force almost certainly leads to an economy with larger, older firms. Most entrepreneurial activity is disproportionately carried out by younger people. Young workers are much more likely to work for small, young, growing firms. That makes sense because they have longer horizons and can take more risks. Older workers, who have higher fixed expenses and are closer to retirement, prefer the stability of a stable, large company with low employee turnover. Macroeconomists who have attempted to quantify this impact, generally find that the average firm age in an economy linearly increases with the average worker's age.[1] Since older firms, tend to be larger, slower growing, and less competitive, it's not wonder we've seen an increase in monopolization. [1] https://www.nber.org/papers/w25382 https://www.nber.org/papers/w25382
- WalterBright 6y ago
  > Since older firms, tend to be larger, slower growing, and less competitive, it's not wonder we've seen an increase in monopolization. This is self-contradictory.
  - chrischen 6y ago
    Not if you consider that older larger firms can use their position to artificially suppress competition.
    - WalterBright 6y ago
      The government is the tool used to suppress competition. This is why the solution of making the government ever more powerful isn't going to work.
      - 6y ago
xchaotic 6y ago
Actually M&A companies underperform in the stock market so it mostly benefits the executives doing the merge.

take_a_breath 6y ago

There are fewer publicly traded companies and the ones that do exists are larger than ever. From Bloomberg: ==About 3,600 firms were listed on U.S. stock exchanges at the end of 2017, down more than half from 1997.== https://www.bloomberg.com/opinion/articles/2018-04-09/where-have-all-the-u-s-public-companies-gone https://www.bloomberg.com/opinion/articles/2018-04-09/where-...

lotsofpulp 6y ago
This article also has some good statistics: https://www.nytimes.com/2018/08/04/business/shrinking-stock-market.html https://www.nytimes.com/2018/08/04/business/shrinking-stock-...

sokoloff 6y ago

What is PE fueled by? IMO, in large part by zero interest rate policies.

JamesBarney 6y ago
I think the cause and the effect is reversed. There is more money for investment now than ever before (due to an aging population, and increased inequality) which leads to both a low/zero interest rate, and lots of money for PE. If it was an artificially low interest rate we'd see wage inflation, as opposed to just asset inflation.
- phkahler 6y ago
  Interest rates are artificial. IMHO they are currently way too low. I dont even think the absolute rate is what affects the economy, its rate of change in interest rates that causes change. Declining rates stimulate the economy while rising ones act as a brake. The absolute level of the rates determine where money flows and inversely affects the price of big things like housing and cars. Low rates lead to inequality and hardship. These are just thoughts and observations, I would love to build a good mathematical model.
  - JamesBarney 6y ago
    I think you're right that low interest rates boost wealth inequality due to rising asset prices, but they also reduce income equality because of the tight labor market. And by artificially low I meant below the natural interest rate or NAIRU.
  - nostrademons 6y ago
    Nominal interest rates are artificial. Real interest rates (nominal rates - inflation) are not. If central banks set nominal interest rates too low you get inflation which negates the purchasing power of the borrowed money. That's what the grandparent poster was alluding to. (The mathematical model - and the proof - for this is taught in most introductory macroeconomics courses. So is monetarism, which is the "declining rates = stimulus" that you mention.) It's been a persistent question why the super-low nominal interest rates that central banks have set for the last decade haven't resulted in consumer inflation, and there's no consensus among experts for it. My personal theory is that it comes from the entry of China and other large developing nations into the world economy, which a.) has dramatically lowered the price of labor-intensive consumer manufacturing, offsetting much of the inflation caused by the large money supply and b.) changed the mix of savers in the world economy; Chinese people are much more in the habit of saving large fractions of their income than Americans are, which leads to a glut of savings, which lowers the real interest rate.
ErikVandeWater 6y ago
And tax policy, the specifics of which I am not qualified to explain. Someone else care to give their take?
jtolmar 6y ago
It's just a natural product of capitalism[1]. When you can buy a chunk of a business and own that chunk of its profits, you can use those profits to buy a larger chunk of the business, repeat ad nauseum, until you have so much money that your needs for more profit aren't satisfied by any one business, but you have enough money to perform multi-business maneuvers. Higher interest rates might make some of these maneuvers less possible in the short term, but that would just delay the problem until the wealthiest capital-owners accumulate enough money that they can put forth more collateral to get better loans. [1] By capitalism I mean private ownership specifically, not the usual HN definition of something something markets something something competition.

deleted 6y ago

[deleted]

pcurve 6y ago

Consolidation and vertical integration in healthcare space has bee pretty frightening. Feels like ordinary folks don’t know.

baby 6y ago

Watching Super Size Me 2 you realize that the same thing happened to the chicken industry. It’s frightening. It’s like we have a democracy (so far) and under that a lot of smaller authoritarian organizations that are hard to notice or dismantle. Some of the farmers were basically slaves, in huge debts to these companies way of running things. Unbelievable.

jtr1 6y ago
This is an argument a lot of non-authoritarian socialists make: democracy only governs the few hours when people are not sleeping or at work, so a deeper, fuller democracy would include running workplaces democratically as well. Whether by employee-elected boards, cooperatives, democratically run unions (a necessary distinction), or some other form of collective control, that the consent of the governed is a question for all situations in which people find decisions about their lives being made.
- technotony 6y ago
  This comes up a lot, nobody is literally chained to their desks. Democracy in the workplace comes from voting with your feet and taking another job at another company. It's not perfect, particularly for lower income people, but it's also not slavery and generally the arc of worker rights is improving through time. You could make a case that some of the current anger in the united states is because COVID's destruction of the economy has removed that freedom to switch jobs (as the jobs have gone) demonstrating how important it is.
  - dangus 6y ago
    It is far beyond imperfect. Let’s say I work at Kroger. I don’t like the way I’m treated, so I quit. Now the remaining grocery stores I can work for owned by Albertsons or Amazon. What kind of choice is that? Pick any other industry and you’re likely to find similar problems. It would be really interesting to see what mandatory democratic corporate governance might look like. Or, perhaps, fixing union regulations so that unions don’t have a bunch of downsides for the employee or other regulatory issues that seem to have directly led to their decline.

snarf21 6y ago

The SEC and FTC have failed us. Even 2008 was largely fueled by M&A so banks could lever even harder.

dcolkitt 6y ago

Monopolization almost certainly is occurring. The left usually cites weak antitrust enforcement. The right usually cites regulatory barriers that make it expensive to compete without economies of scale. I actually think both sides are at least partially correct. However what almost everyone overlooks is the demographic transition. The US, along with every other developed economy, is significantly older today than it was 40 years ago. And the fact of the matter is that an older work force almost certainly leads to an economy with larger, older firms. Most entrepreneurial activity is disproportionately carried out by younger people. Young workers are much more likely to work for small, young, growing firms. That makes sense because they have longer horizons and can take more risks. Older workers, who have higher fixed expenses and are closer to retirement, prefer the stability of a stable, large company with low employee turnover. Macroeconomists who have attempted to quantify this impact, generally find that the average firm age in an economy linearly increases with the average worker's age.[1] Since older firms, tend to be larger, slower growing, and less competitive, it's not wonder we've seen an increase in monopolization. [1] https://www.nber.org/papers/w25382 https://www.nber.org/papers/w25382

WalterBright 6y ago
> Since older firms, tend to be larger, slower growing, and less competitive, it's not wonder we've seen an increase in monopolization. This is self-contradictory.
- chrischen 6y ago
  Not if you consider that older larger firms can use their position to artificially suppress competition.
  - WalterBright 6y ago
    The government is the tool used to suppress competition. This is why the solution of making the government ever more powerful isn't going to work.
    - 6y ago

xchaotic 6y ago

Actually M&A companies underperform in the stock market so it mostly benefits the executives doing the merge.