9 ms·

This is happening to every industry. There is an obvious consolidation and massive wealth transfer still ongoing. Sickening

imglorp 5y ago
Independent physicians come to mind as another example. Many have gone to work for large providers that can negotiate better rates with insurance.
fsckboy 5y ago
front page headline above the fold in the pre-millenial Hunter Gatherer Times, > This is happening to every industry. Sickening the article goes on to say: There is an obvious consolidation and massive wealth transfer still ongoing. There are people among us settling down on plots of land and growing more food than they can eat themselves, putting both hunters and gatherers out of work. Some of those unemployed hunters and gatherers are now sitting around and making more mocassins than their families can wear, and trading them with the farmers. Since there is already too much food and footwear, still others are reduced to making purely decorative clay objects and toys and trading them for food and footwear! And what about our shamans? There's this guy Moses who's got all the rules carved in stone for easy reference instead of oral story telling. All in the name of productivity and efficiency, alien ideas in our lands. These are scary times!
beebmam 5y ago
Easy enough to solve: tax wealth and redistribute it with a UBI.
- animal_spirits 5y ago
  That is not easy to do
- disambiguation 5y ago
  expectations: UBI utopia. reality: Corporate welfare and record levels of poverty.
- HPsquared 5y ago
  Have the state pay everyone's wages and (eventually, with wealth tax) own all major industries... this is supposed to reduce consolidation how?
  - beebmam 5y ago
    What do you think reduces consolidation? Genuinely curious. I think there are other strategies that will work, but taxation is extremely effective at reducing variance of wealth distribution.
    - Negitivefrags 5y ago
      What reduces consolidation ultimately is a real recession. Not these fake ones we have had in recent times which get propped up with QE, but a real recession. The type that kills big companies. Then in the ashes you will get a verdant crop of new companies started by fresh people and a new period of massive growth with follow. Might not be a cost that people actually want to pay though.
- AnthonyMouse 5y ago
  > Easy enough to solve: tax wealth and redistribute it with a UBI. These are extremely independent problems. The problem with concentration isn't taxes, it's a regulatory environment that promotes concentration. You take money from Bezos, it doesn't change the size of Amazon. A UBI would help some by making it easier to start a small business, but unless you address the underlying regulatory problems that give every advantage to consolidated megacorps, that's not enough. One of the big problems is taxes though, specifically the taxation of dividends that get reinvested. Under the existing system, if you're Apple and you make iPhones and pay dividends to shareholders who invest them in a separate company that makes microprocessors, they pay more tax than if Apple keeps the money and makes its own microprocessors. And it works that way for everything, so corporations grow without bound and the tax system encourages that. The easy fix is to make investment a tax deduction but sale of an investment fully taxable instead of only on the gain. We already try to do this in a hundred places, 401k and Roth IRAs and not taxing gains until they're realized, because it's obviously a good idea and promotes investment. But because we specifically don't do it in the case where you take profits from one company and invest them into an independent one, we've been promoting indefinite corporate expansion for decades.
  - beebmam 5y ago
    - AnthonyMouse 5y ago
      What do you think their advantage comes from? Most regulatory compliance is a fixed cost. Amazon's lawyers get paid the same hourly rate to read the same regulations as yours, but they can amortize the cost over a billion customers. The more regulations there are, the larger the advantage to big corporations. Half their advantage comes from the complexity and stupidity of financial regulations that make it so small businesses have to subject themselves to the caprice of PayPal et al to accept payment for anything, when PayPal's business model is screwing over small businesses. The biggest reason third parties sell on Amazon is so they can use Amazon as a payment service.
      - 5y ago
- umvi 5y ago
  Seems like an ultra-simplistic hot take that doesn't address the mountain of side effects doing those things would cause.
tuatoru 5y ago
This process is intrinsic to capitalism, though. Every company has to get bigger by swallowing others, or instead be swallowed by another company that does it. The board game "Monopoly" is a pretty good simplified simulation of the system's structures and operation. Fun for all in the early stages, not so much in the end game.
- LAC-Tech 5y ago
  I feel like most governments speed up this process, ie by giving tax cuts to huge businesses to set up operations in their jurisdiction. Which in practice means actively punishing smaller businesses.
  - lotsofpulp 5y ago
    Technology speeds up the process.
- freedomben 5y ago
  I have gripes with capitalism, but this isn't one. Capitalism essentially allocates resources to where they are most efficient (although IMHO not as purely as most Austrian economists would argue, because people aren't all that rational and information asymmetry makes rationality impossible in many other cases). Sometimes (ok often) that goes to huge megacorps due to economies of scale, but in return you take on massive bureaucracy that makes you less efficient, opening the door for disruption. Disruption happens all the time to big players that don't continue doing the best for the least[1]. Now that said, as barriers of entry continue to accrete due to regulatory capture and deep tech, I do worry that the ability for startups and small business to compete may decline. Monopoly is a vastly over simplified model that doesn't consider much of modern economics. Interestingly, it was actually invented to demonstrate to people how evil capitalism is[2]. [1]: https://www.investopedia.com/terms/c/creativedestruction.asp https://www.investopedia.com/terms/c/creativedestruction.asp [2]: https://www.bbc.com/worklife/article/20170728-monopoly-was-invented-to-demonstrate-the-evils-of-capitalism https://www.bbc.com/worklife/article/20170728-monopoly-was-i...
  - 5y ago
tootie 5y ago
It's just economies of scale at play. When it comes to food it makes perfect sense. Gov policy is not about farmers, its about keeping food supply plentiful and prices low. Big Ag are better at absorbing shocks. People can complain about profits and wages because we have never had to worry about famine.
- freddie_mercury 5y ago
  I agree. Seems like a pretty obvious & inevitable transition to me. Corner bodegas got replaced by national chains. Local grocery stores got replaced by national chains. Local clothing manufacturers got replaced by national chains. Local bookstores got replaced by national chains. Local airlines got consolidated. Local car companies got consolidated. Local stock exchanges got consolidated. It is pretty hard to find many examples where there's still a widespread set of small producers successfully staving off national consolidation. It isn't clear to me how you, as a general matter, deal with the massive economies of scale that national chains have access to. Everything from much cheaper cost of capital to being able to cross-subsidize stores to better pricing power due to bulk buying to being able to simply hire better management due to have more free cash flow etc etc etc.

imglorp 5y ago

Independent physicians come to mind as another example. Many have gone to work for large providers that can negotiate better rates with insurance.

fsckboy 5y ago

front page headline above the fold in the pre-millenial Hunter Gatherer Times, > This is happening to every industry. Sickening the article goes on to say: There is an obvious consolidation and massive wealth transfer still ongoing. There are people among us settling down on plots of land and growing more food than they can eat themselves, putting both hunters and gatherers out of work. Some of those unemployed hunters and gatherers are now sitting around and making more mocassins than their families can wear, and trading them with the farmers. Since there is already too much food and footwear, still others are reduced to making purely decorative clay objects and toys and trading them for food and footwear! And what about our shamans? There's this guy Moses who's got all the rules carved in stone for easy reference instead of oral story telling. All in the name of productivity and efficiency, alien ideas in our lands. These are scary times!

beebmam 5y ago

Easy enough to solve: tax wealth and redistribute it with a UBI.

animal_spirits 5y ago
That is not easy to do
disambiguation 5y ago
expectations: UBI utopia. reality: Corporate welfare and record levels of poverty.
HPsquared 5y ago
Have the state pay everyone's wages and (eventually, with wealth tax) own all major industries... this is supposed to reduce consolidation how?
- beebmam 5y ago
  What do you think reduces consolidation? Genuinely curious. I think there are other strategies that will work, but taxation is extremely effective at reducing variance of wealth distribution.
  - Negitivefrags 5y ago
    What reduces consolidation ultimately is a real recession. Not these fake ones we have had in recent times which get propped up with QE, but a real recession. The type that kills big companies. Then in the ashes you will get a verdant crop of new companies started by fresh people and a new period of massive growth with follow. Might not be a cost that people actually want to pay though.
AnthonyMouse 5y ago
> Easy enough to solve: tax wealth and redistribute it with a UBI. These are extremely independent problems. The problem with concentration isn't taxes, it's a regulatory environment that promotes concentration. You take money from Bezos, it doesn't change the size of Amazon. A UBI would help some by making it easier to start a small business, but unless you address the underlying regulatory problems that give every advantage to consolidated megacorps, that's not enough. One of the big problems is taxes though, specifically the taxation of dividends that get reinvested. Under the existing system, if you're Apple and you make iPhones and pay dividends to shareholders who invest them in a separate company that makes microprocessors, they pay more tax than if Apple keeps the money and makes its own microprocessors. And it works that way for everything, so corporations grow without bound and the tax system encourages that. The easy fix is to make investment a tax deduction but sale of an investment fully taxable instead of only on the gain. We already try to do this in a hundred places, 401k and Roth IRAs and not taxing gains until they're realized, because it's obviously a good idea and promotes investment. But because we specifically don't do it in the case where you take profits from one company and invest them into an independent one, we've been promoting indefinite corporate expansion for decades.
- beebmam 5y ago
  - AnthonyMouse 5y ago
    What do you think their advantage comes from? Most regulatory compliance is a fixed cost. Amazon's lawyers get paid the same hourly rate to read the same regulations as yours, but they can amortize the cost over a billion customers. The more regulations there are, the larger the advantage to big corporations. Half their advantage comes from the complexity and stupidity of financial regulations that make it so small businesses have to subject themselves to the caprice of PayPal et al to accept payment for anything, when PayPal's business model is screwing over small businesses. The biggest reason third parties sell on Amazon is so they can use Amazon as a payment service.
    - 5y ago
umvi 5y ago
Seems like an ultra-simplistic hot take that doesn't address the mountain of side effects doing those things would cause.

tuatoru 5y ago

This process is intrinsic to capitalism, though. Every company has to get bigger by swallowing others, or instead be swallowed by another company that does it. The board game "Monopoly" is a pretty good simplified simulation of the system's structures and operation. Fun for all in the early stages, not so much in the end game.

LAC-Tech 5y ago
I feel like most governments speed up this process, ie by giving tax cuts to huge businesses to set up operations in their jurisdiction. Which in practice means actively punishing smaller businesses.
- lotsofpulp 5y ago
  Technology speeds up the process.
freedomben 5y ago
I have gripes with capitalism, but this isn't one. Capitalism essentially allocates resources to where they are most efficient (although IMHO not as purely as most Austrian economists would argue, because people aren't all that rational and information asymmetry makes rationality impossible in many other cases). Sometimes (ok often) that goes to huge megacorps due to economies of scale, but in return you take on massive bureaucracy that makes you less efficient, opening the door for disruption. Disruption happens all the time to big players that don't continue doing the best for the least[1]. Now that said, as barriers of entry continue to accrete due to regulatory capture and deep tech, I do worry that the ability for startups and small business to compete may decline. Monopoly is a vastly over simplified model that doesn't consider much of modern economics. Interestingly, it was actually invented to demonstrate to people how evil capitalism is[2]. [1]: https://www.investopedia.com/terms/c/creativedestruction.asp https://www.investopedia.com/terms/c/creativedestruction.asp [2]: https://www.bbc.com/worklife/article/20170728-monopoly-was-invented-to-demonstrate-the-evils-of-capitalism https://www.bbc.com/worklife/article/20170728-monopoly-was-i...
- 5y ago

tootie 5y ago

It's just economies of scale at play. When it comes to food it makes perfect sense. Gov policy is not about farmers, its about keeping food supply plentiful and prices low. Big Ag are better at absorbing shocks. People can complain about profits and wages because we have never had to worry about famine.

freddie_mercury 5y ago
I agree. Seems like a pretty obvious & inevitable transition to me. Corner bodegas got replaced by national chains. Local grocery stores got replaced by national chains. Local clothing manufacturers got replaced by national chains. Local bookstores got replaced by national chains. Local airlines got consolidated. Local car companies got consolidated. Local stock exchanges got consolidated. It is pretty hard to find many examples where there's still a widespread set of small producers successfully staving off national consolidation. It isn't clear to me how you, as a general matter, deal with the massive economies of scale that national chains have access to. Everything from much cheaper cost of capital to being able to cross-subsidize stores to better pricing power due to bulk buying to being able to simply hire better management due to have more free cash flow etc etc etc.