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The odd thing is that each company wants to grow far above the average for the economy, which doesn't add up. Their entire reason for existence is "exponential

The odd thing is that each company wants to grow far above the average for the economy, which doesn't add up. Their entire reason for existence is "exponential growth", which can't exist in nature for very long. Greed drives underhanded tactics and rewards conniving. It would be better to be satisfied with a handsome profit and a good life with interesting problems to solve and contributions to ones community. That's the way to build a resilient society. Whatever we are building, I fear it isn't resilient.

1123581321 5y ago
No, it does makes sense that the growth companies, and companies in a market that is rapidly changing, are expecting to grow faster than the economy. The rest of the economy is stable or in decline, which is how we end up with GDP of a few percentage points per year. It is indeed destabilizing to have overall GDP growth beyond a few percent but less so for select individual sectors to experience it. Greed is found just as much or more in stable industries. Belief that the pie is of a fixed size drives some craven behavior.
Joeri 5y ago
There is a fair argument to be made that whenever you see a company taking the lion’s share of a market, whether in customers or profit, you’re witnessing a form of market failure. A textbook healthy free market has enough competition that profits are low and the market is evenly divided between many entrants.
- jhanschoo 5y ago
  This depends on the market, though of course it's not the case that a market would naturally tend to the best kind of competitive environment serving it. For example, there is an argument that markets with one incumbent among several competitors can serve a market better, since the incumbent will have profits through it's economies of scale with which it can reinvest into R&D to serve the market better, that it needs to maintain its incumbency.
- jfengel 5y ago
  That leads to a different market failure: inefficiencies due to redundancy. The free market will, left to its own devices, become less free as the most efficient company dominates. It may buy up its competition or simply outcompete them. That will allow the same amount of goods for less money since the redundant overheads are eliminated. However, the ultimate end state of that is a monopoly, which frees them up to set prices wherever they want. In theory a new company could arise to undercut them, but in practice barriers to entry make that unlikely. So the free market is always in constant tension between healthy competition and unhealthy inefficiency. The balance of it depends on the ability to differentiate, customer choice, and external regulation -- as well as the overlapping dependencies from supply chains and nearby industries.

1123581321 5y ago

No, it does makes sense that the growth companies, and companies in a market that is rapidly changing, are expecting to grow faster than the economy. The rest of the economy is stable or in decline, which is how we end up with GDP of a few percentage points per year. It is indeed destabilizing to have overall GDP growth beyond a few percent but less so for select individual sectors to experience it. Greed is found just as much or more in stable industries. Belief that the pie is of a fixed size drives some craven behavior.

Joeri 5y ago

There is a fair argument to be made that whenever you see a company taking the lion’s share of a market, whether in customers or profit, you’re witnessing a form of market failure. A textbook healthy free market has enough competition that profits are low and the market is evenly divided between many entrants.

jhanschoo 5y ago
This depends on the market, though of course it's not the case that a market would naturally tend to the best kind of competitive environment serving it. For example, there is an argument that markets with one incumbent among several competitors can serve a market better, since the incumbent will have profits through it's economies of scale with which it can reinvest into R&D to serve the market better, that it needs to maintain its incumbency.
jfengel 5y ago
That leads to a different market failure: inefficiencies due to redundancy. The free market will, left to its own devices, become less free as the most efficient company dominates. It may buy up its competition or simply outcompete them. That will allow the same amount of goods for less money since the redundant overheads are eliminated. However, the ultimate end state of that is a monopoly, which frees them up to set prices wherever they want. In theory a new company could arise to undercut them, but in practice barriers to entry make that unlikely. So the free market is always in constant tension between healthy competition and unhealthy inefficiency. The balance of it depends on the ability to differentiate, customer choice, and external regulation -- as well as the overlapping dependencies from supply chains and nearby industries.