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I think I understand your proposal here; the idea is to discourage consumption at the megacorp level, and increase consumption at the small business level? A c
by curryst 5y ago
I think I understand your proposal here; the idea is to discourage consumption at the megacorp level, and increase consumption at the small business level?
A couple of thoughts here. Firstly, revenue is a bad way to measure this. Low-margin businesses like groceries will have high revenue for fairly low actual profits. It will benefit companies that have high profit margins. Google has high profit margins and will be less impacted than a grocery company of equivalent size.
Secondly, this will discourage economies of scale. The prices of goods will likely rise, because megacorps pay more for raw materials and small businesses are fairly inefficient for the most part. It would be hard to run a small business making cars, for example. Not big enough to afford all the expensive automation.
Third, I would worry that all this causes is an expensive to audit shell game. You create lots of small companies that funnel their income to a parent company. The only thing the parent company does is hold IP, which they lease to the small companies for a rate that is almost exactly their profit margins. The parent company has no need for raw materials (as R&D can be done in a small subsidiary funded by 0% interest loans from the parent company), so the tiering does nothing. Or we have to prevent that somehow, which likely means lots of complicated audits on how businesses are structured.
As for prior examples, Communism was a fairly different attempt to level the playing field (at least ideologically). It went poorly, but for reasons that I don't think impact your idea.
I think you're coming in at the wrong angle. To me, large corporations make sense in a lot of fields. One example is how Amazon got big enough that they had organically needed many of the underpinnings that led to AWS. Their economy of scale makes it possible to sell those services for profit, but not be outrageously expensive relative to doing it yourself for many cases.
The problem is that the way we structure companies leads to an extremely unequal distribution of the company's returns. One proposed solution has been to cap the maximum pay of anyone at the company based on the pay of the lowest paid person. So if it was theoretically 10x, if the janitor makes $7.25/hr then the CEO can't make more than $72.50/hr. If the CEO wants to make more, they'll have to raise the janitors pay. Of course, that's not without faults either. If they contract for janitorial services, then the lowest paid person might be an engineer. You also have to watch for alternative transfers of wealth; i.e. if the CEO owns the janitorial services company that they use, overcharges for it, and the board allows it as a form of kickback.
I personally like that because it doesn't prevent the CEO from making money, it just requires them to lift up everyone else as well to do it.