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There are coherent, legitimate reasons for some degree of consolidation within industries. Technology sharing, combining assets, reducing the overhead from sepa

There are coherent, legitimate reasons for some degree of consolidation within industries. Technology sharing, combining assets, reducing the overhead from separate operations and larger scale in theory lead to a more efficient business, enabling cost reductions that create both profits and a competitive advantage. Consolidated industries can be highly competitive. An industry with multiple large players is more competitive compared to a single large player surrounded by many small players. I acknowledge this is not uniformly the case. Mergers do definitionally eliminate competition between the merged players and efficiency gains do not always materialize. But, the broad theory is well established and has shown success across practically any industrial vertical.

Kinrany 5y ago
It's worse: every possible advantage of mergers is a good thing made impossible by competition. Mergers are a sign of the market itself being inefficient.
- danaris 5y ago
  While this is true, to some extent, it also implies that "being inefficient" is necessarily bad. Optimizing for efficiency has led to some of the worst problems we've seen in recent years. Just off the top of my head, "lean staffing", which is an abusive management practice, and the inability to comfortably withstand shocks to the system, as we saw when COVID hit.
bsder 5y ago
A merger is an admission that a company has no better internal development project to put money into. (This also applies to stock buybacks.) This is an admission that the management has failed. Doubly so if they simply shut down the acquired business. The proper "capitalistic" solution would be to allow the competitor to grow big and kill the dinosaur. We need to block mergers even from a purely "capitalist" viewpoint because it prevents the efficient new competitors from displacing the old inefficient ones.
- zeruch 5y ago
  It's also a testament to how "endless growth" has become an unquestioned, but ever more stupid 'goal'. If you can innovate at a certain scale, stay successful within x standard deviations year over year, paying dividends and making profits...why MUST it always end up being underpinned by 'the market' demanding endless scaling. If what you want is to expand horizontally or the so-called pie gets bigger and more to gain? Fine. But that, as the end all and be all itself, is growing quite daft. It's goddamn inane.

Kinrany 5y ago

It's worse: every possible advantage of mergers is a good thing made impossible by competition. Mergers are a sign of the market itself being inefficient.

danaris 5y ago
While this is true, to some extent, it also implies that "being inefficient" is necessarily bad. Optimizing for efficiency has led to some of the worst problems we've seen in recent years. Just off the top of my head, "lean staffing", which is an abusive management practice, and the inability to comfortably withstand shocks to the system, as we saw when COVID hit.

bsder 5y ago

A merger is an admission that a company has no better internal development project to put money into. (This also applies to stock buybacks.) This is an admission that the management has failed. Doubly so if they simply shut down the acquired business. The proper "capitalistic" solution would be to allow the competitor to grow big and kill the dinosaur. We need to block mergers even from a purely "capitalist" viewpoint because it prevents the efficient new competitors from displacing the old inefficient ones.

zeruch 5y ago
It's also a testament to how "endless growth" has become an unquestioned, but ever more stupid 'goal'. If you can innovate at a certain scale, stay successful within x standard deviations year over year, paying dividends and making profits...why MUST it always end up being underpinned by 'the market' demanding endless scaling. If what you want is to expand horizontally or the so-called pie gets bigger and more to gain? Fine. But that, as the end all and be all itself, is growing quite daft. It's goddamn inane.