14 ms·

An Economy of Overfed Middlemen

196 points by connor11528 4y ago

ilaksh 4y ago
Decentralization is the answer. Look to peer to peer technologies.
paulryanrogers 4y ago
Sometimes I wonder if 'monopoly' in the US has become a no true Scotsman fallacy. The threshold of direct consumer harm is either so high or evidence requirements so onerous it's as if there is no more Sherman Antitrust Act. The monopolizing doesn't even have to be in a computer or layers of shell companies anymore.
- maerF0x0 4y ago
  I think that's why it's good that antitrust is more than just monopoly but also and other anticompetitive practices. I would like to see law begin to start with an implicit bias for the underdog, but unfortunately Citizens united and the general principle of money in politics means that larger entities will have disproportionate sway (due to Pareto principle of accrual).
  - nickff 4y ago
    The volume of law and regulation is a huge implicit subsidy to large corporations. The cost of compliance is challenging, and can be devastating to small-medium companies (which actually try to comply with the law). I think that getting rid of rules like the reporting on conflict minerals, (which don't seem to affect the ferocity or devastation in conflict regions,) which are numerous and surprisingly burdensome, would be very helpful.
  - anamax 4y ago
    Citizens United said that you and I have the same right to band together to engage in political speech as the New York Times.
    - maerF0x0 4y ago
      Sure, and it should have said New York Times is not a person and therefore gets no say in any matter. The Pareto bit I mentioned means even if we band together they ultimately have disproportionate resources. It's employees / shareholders et al can vote how they like, but that's different than the New York Times (or Russia for that matter), swaying an election.
      - anamax 4y ago
        Zuckerberg has more resources than me. Not letting me get together with other people helps Zuckerberg. As far as the NYT goes, feel free to argue against the 1st Amendment. CU just says that the NYT isn't special, that the 1st applies to using tools, not organizations who have named themselves after said tools. Govt regulation always favors the well-heeled.
        maerF0x0 4y ago
        > Zuckerberg has more resources than me. Yes but there is are rules & caps for political contributions: https://www.fec.gov/help-candidates-and-committees/candidate-taking-receipts/contribution-limits/ https://www.fec.gov/help-candidates-and-committees/candidate... I'm not arguing against 1st, I'm arguing that a business (not a person) has speech or a 1st right (which people absolutely do), and that the net result of acting like they do is really hurting the citizens of America.
        anamax 4y ago
        The NYT is not subject to said "rules or caps" when it advocates for candidates. Neither is Zuckerberg. Why should people who get together to do political speech be treated any differently?
        maerF0x0 4y ago
        I think we agree in principle, but are disagreeing in the resultant law. It sounds to me like you're advocating saying NYT, and rich people can give large sums of money, therefore why cant groups of people also do it? I'm advocating for NYT and rich people should not be allowed to give large sums of money, and neither should individuals beyond their individual contribution cap. The principle I am all for is that wealthy people and corporations should not be able to bring disproportionate resources to politics than their underlying democratic unit (a single unit vote in the case of a wealthy person, no votes in the case of a corporation). And therefore the caps for wealthy people should be the same as for middle/poor people, and caps for corporations should be 0 because they are not democratic political units. I'm listening to https://www.khanacademy.org/humanities/us-government-and-civics/us-gov-political-participation/us-gov-campaign-finance/v/citizens-united-v-federal-election-commission https://www.khanacademy.org/humanities/us-government-and-civ... to try and discern if maybe I have a completely broken idea of what citizens united is
- sylvain_kerkour 4y ago
  The passivity against monopolies has more to do with international competition and the fear of losing world domination.
  - danaris 4y ago
    Does it? Or does it have more to do with the massive industry capture of politics? Not to mention the right-wing ideology of, effectively, if you can make money doing it, and hide the negative effects from the public at least a little, you're a Real American Hero.
    - zeruch 4y ago
      "Massive industry" is the applicable term. The scale of both the capture, and the middle man loss to a more parochial/regional model is terrifying to 'captains of industry' and their political minions.
    - jmeister 4y ago
      There are many progressives who've come around to favouring mega businesses over "mom-and-pop" for: higher wages, stabler jobs, easier enforcement of regulations.. For example: Matt Yglesias
      - danaris 4y ago
        There are many people who have been steeped in our hypercapitalist society for decades and have simply accepted its premises as valid, regardless of their stated politics as a whole. It doesn't mean that the source of this ultimately deeply destructive ideology isn't the political right.
        WalterBright 4y ago
        > our hypercapitalist society for decades The US has been turning away from free markets for at least a century now.
- wrnr 4y ago
  It is the opinion of the EU Comission that monopolies are ok as long as they do not abuse their power and if they do they get slapped with a fine.
- arrosenberg 4y ago
  That was the entire point of the Borkist/Chicago school movement. The capitalists knew they'd never be able to repeal those laws legislatively, so instead they changed its enforcement by winning the minds and wallets of the judiciary. Now they can consolidate as much as they want to, no judge will stop them and most lawyers won't even try.
- robertlagrant 4y ago
  Are most monopolies not of government creation? Anything that has increasingly onerous regulations or other government requirements are the sorts of monopolies that need breaking. Any natural monopolies formed by just being really good at something and offering it at a low price are a waste of taxpayer money to try and disrupt.
  - a-user-you-like 4y ago
    Precisely. The regulatory environment in the US is astounding. People yell at Apple for being a monopoly but android exists and the consumers just don’t care. Amazon tried to launch a line of phones and no one cared. If things were really so oppressive the consumers would demand something else but they just don’t care.
    - porknubbins 4y ago
      How is Apple a monopoly (except for the app store, by definition)? Last time I checked there are many phone and personal computer choices.
  - paulryanrogers 4y ago
    Not all monopolies are natural. Those powerful enough to capture regulators are now a defacto government. The answer is not less regulation, it's a different kind to stop and reverse the consolidation of power. And benevolent monopolies can and do change over time.
    - robertlagrant 4y ago
      > Not all monopolies are natural Did you read my first paragraph?
      - paulryanrogers 4y ago
        Yes I did read it. Why do you suspect I had not? To be more explicit, I wouldn't agree it's most often the government making monopolies. There are plenty of cases where government regulators are captured by 'natural' monopolists (or otherwise large players) who then entrench themselves with regulatory moats, serving only their interests. And even government made monopolies aren't _well_ regulated IMO, for example telcos. A freer market would need controls to prevent consolidation from locking in customers by simply buying up all the spectrum and lobbyists.
- fleddr 4y ago
  Same for when you read about two large companies merging, pending regulatory approval. My immediate thought: it's going be allowed. Regulator after 6 months: it's allowed.
edmcnulty101 4y ago
One thing we have to ask is the monopolization the problem?? Do we want to break monopoly up in favor of a bunch of possibly shittier products? The real problem It's not the monopoly it's the Monopoly tax.
- eli_gottlieb 4y ago
  If a monopolist is efficient, then nationalization is efficient. Break them up or seize them.
  - AnimalMuppet 4y ago
    That does not follow. "The monopolist can do this efficiently" != "the government can do this efficiently". In particular, the monopolist has given evidence of knowing how to run that operation well. The government has given no such evidence. I'm not a fan of monopolies, but your position is flawed.
    - carschno 4y ago
      How do you come to conclude that Organisation A (monopolist) will magically be less good than Organisation A (owned by the state)? If the same organisation is profitable while but state-owned, it could also be an indicator that it's just not operating in a legit way. Note: I think you've also been confusing government and state, but I assume that was not intentionally.
      - AnimalMuppet 4y ago
        > Note: I think you've also been confusing government and state, but I assume that was not intentionally. Not intentionally, no. Given that the context was nationalization, what in your view is the difference between government and state?
        carschno 4y ago
        Ideally, a government (temporally) "steers" a state, which, again ideally, would be the property of its inhabitants.
Centigonal 4y ago
Everyone from Sam Altman to Peter Thiel has been talking about this for years. Capitalists are very straightforward about this - if you want to capture value, find a way to plant your flag in some emerging market and get a monopoly on one or more parts of the value chain. Marketplace operators are especially attractive to investors, because the financials are really pretty - the marketplace provider doesn't own significant assets, only pays for marketplace development costs and sales/marketing, and yet it can levy a tax on a potentially very large market. Uber, Lyft, Etsy, Doordash, Postmates, Shopify, Spotify, Yelp, Datarade, G2, Capterra, Turo - all are marketplace providers. They don't make a thing. they make the thing that lets a much larger class of thing-makers get in touch with the thing-buyers. The fervor for marketplace providers has gotten so intense that we're seeing more and more niche businesses get funded, e.g. https://swimply.com/ https://swimply.com/ Edit: ... and don't get me started on how companies (ab)use the 1099 designation to turn traditionally asset-heavy businesses into marketplace providers, generating a lot of paper value while not really innovating in terms of how the service is actually rendered. Looking at you, Arise!
- vsareto 4y ago
  They do some organizing of information via their apps, which has a tangible user experience (plus the apps themselves are definitely a thing they built). Building a good marketplace is also no small feat. In concept, they are all useful abstractions over the worst case scenario: individuals only finding and talking with other individuals to get goods or services. In practice, there are definitely abuses which come down to ineffective regulation.
  - pydry 4y ago
    >Building a good marketplace is also no small feat. Nope, but it's lavishly overcompensated and starved of competition for the markets who manage to get the network effect going. There is no really effective regulation to ameliorate this effect either. Wouldnt need much though. If, say, e.g. airbnb simply werent able to enforce parts of their ToS around scraping/contacting users then it would make the market vastly less dysfunctional.
  - 4y ago
softwaredoug 4y ago
The problem is users don’t necessarily want a fractured market. It’s convenient to have one vendor. In the short term, customers value the simplicity of having just one search engine or e-commerce experience. They don’t think about the long term harms to them / the economy.
- clairity 4y ago
  customers don't all want the same single vendor though, as we have varying needs (outside of true commodities).
  - bediger4000 4y ago
    Yeah. Tell that to Microsoft
- asdff 4y ago
  Specialized vendors usually deliver better products than generalist vendors though because its simply harder to have expertise in all domains than a fewer number.
  - flappyeagle 4y ago
    computers change that to a large degree - your youtube is different than my youtube... but it's all youtube.
rahimnathwani 4y ago
Middlemen (e.g. wholesalers and retailers) serve a valuable function. Imagine each consumer having to maintain relationships with hundreds of factory owners and tens of farmers.
- jollyllama 4y ago
  >Imagine each consumer having to maintain relationships with ... tens of farmers Farmers' markets are great.
  - deleted 4y ago
    [deleted]
  - jasode 4y ago
    >Farmers' markets are great. Fyi if you didn't already know... the farmers' markets are themselves a type of middlemen. (At least every one I've shopped at in the USA.) The farmers' market rents out the booth spaces to vendors (farmers). It's a real-world "platform" to bring together buyers and sellers. The farmers' cost to rent the space is embedded into the prices the consumers pay. A true individual relationship with a farmer would be something like driving to Joel Salatin's Polyface Farms and buying broiler chickens directly from him. This bypasses the middlemen of farmers' markets.
    - jollyllama 4y ago
      That's true. The farmers' market also acts as a advertising for that kind of direct relationship. Most of the vendors have cards with links or phone numbers where you can arrange that kind of thing, or even deliveries. I'd say the difference is the farmers' market allows for that, whereas at a grocery store I'm usually buying products labelled states away, if they even are from a farmer you could ever buy direct from at all.
    - clairity 4y ago
      > "...like driving to Joel Salatin's Polyface Farms and buying broiler chickens directly from him." reading omnivore's dilemma when it came out impulsively made me want to do that, but of course the impracticality of that quickly dawned on me. it's similarly why reading a book is a better than going and getting first-hand accounts for all our information. we've created socioeconomic structures for very good reasons, so we shouldn't want to burn them down for the tradeoffs, but rather we should address the negatives directly.
AtlasBarfed 4y ago
Almost all markets are now monopoly, duopoly, or cartel. Has been for a while. It's gigantic detriment to innovation, unemployment, wage suppression, prices. The end state of unregulated real world free markets is monopoly, because of the ability to establish market barriers, extract subsidies, state-level actor manipulation, dumping. Antitrust is dead in the US. Cartel economics is part of the oligarchical political control and the formalized power base of the rich. And economists and economics were puppeted on TV, think tanks, parroting the free market religion to enable this. And as part of this, we couldn't do anything (and still can't) about global warming. This will possibly doom us as a civilization.
powvans 4y ago
This article feels like a poor retread of what Ben Thompson has been writing [0] and podcasting [1] about for at least the last 5 years. Even the rough sketch diagrams feel like a poor copy of what Ben does at Stratechery. The conclusion that "if we just... <do something>" is vague, reductionist, and hand wavy. These aren't simple problems and the old antitrust tools weren't designed for monopolists who focus on the demand side rather than the supply side. [0] https://stratechery.com/aggregation-theory/ https://stratechery.com/aggregation-theory/ [1] https://exponent.fm/ https://exponent.fm/
deleted 4y ago
[deleted]
bediger4000 4y ago
If we didn't da anything about Microsoft ca 2000, we absolutely can't do anything about what Stoller writes about. Do we even know what Stoller's funding is? Propa... Material like this appeared around 1996 and continued to surface all through the Microsoft trial
- babyshake 4y ago
  It would be quite ironic if Microsoft was funding "Google is a monopoly" research.
  - bediger4000 4y ago
    But not out of character, or out of the question.
- intelVISA 4y ago
  The Gates deposition should be an art display somewhere, it could even be exhibited alongside antitrust's gravestone.
count 4y ago
This feels like he's copying Stratechery, down to the stick figure MS Paint diagrams (e.g. https://stratechery.com/2018/the-bill-gates-line/ https://stratechery.com/2018/the-bill-gates-line/)
- adamrezich 4y ago
  lots of blogs are like this though, using quick-and-dirty visually-accessible illustrations to convey ideas.
  - count 4y ago
    I mean, the concept and stuff too.
- carom 4y ago
  Ah, that is a distinct style. Do you think they commissioned an artist to perform such an exact copy?
  - intelVISA 4y ago
    The kerning on those stickmen... so that's where all the VC money went.
skybrian 4y ago
I wonder about the "Google extracts enormous rents" bit. Yes, in the aggregate, Google is earning lots of money from advertisers, but for the average advertiser, how big is this cost, and compared to what? (Genuine question - I don't know a lot about advertising.) Also, given the anti-advertising mindset on Hacker News, it seems weird to get all that upset about advertisers paying too much? "Who will think of the advertisers," say people who have probably installed ad blockers.
- manmal 4y ago
  I know a surgeon who invested €10k/month in Google ads for a while just to get a few patients per month. CPC was €10 or so. Absolutely nuts, you’d think. But one procedure nets him €8k, and he said that those ads are absolutely vital to him - without Google ads, his revenue suffered greatly. His campaign was setup wrong for a while and he immediately noticed because people stopped booking surgery with him.
semanticjudo 4y ago
Brokers (what the author calls "middlemen") have existed for ages and served all sorts of purposes in all sorts of economic activities. They serve a specific and valuable function in the economy. The author muddles the point by bringing this into the equation. The core, valid issue raised is monopoly power. Which will naturally be the end goal of any enterprise. It is governments job to bring reasonable power to bear to prevent monopolies. Ours is failing to do this due to crony capitalism - all of the benefits both sides of the political aisle reap by maintaining the status quo.
- effingwewt 4y ago
- taffronaut 4y ago
  I respectfully disagree. Brokers are a subset of middlemen. In many industries the role of a broker is well-defined and often regulated. A middleman can be a broker, an agent, a facilitator, price comparison site, wholesaler or any other intermediary mechanism. For organisations which seek to own all aspects of the intermediary space, and with a generally opaque representation of benefit to both suppliers and clients, the use of the term middleman seems more appropriate.
tomohawk 4y ago
Academic institutions are the most overfed middlemen. They've insinuated themselves into the ability to have a job in many fields. Has there ever been a winter that affects academic institutions? Ever been a need to cut back? Tighten the belt? They are like an overgrown jungle. They often peddle shoddy goods (degrees that will never pay off), to unsophisticated consumers (18 year olds and their parents). Any other industry would have laws and regulations attempting to protect the unwary, but somehow, only angels work in adademic institutions. They have choruses of shills (guidance councilers and others) telling anyone who will listen that if you don't go to college, your life will be ruined. See how indispensible they are? Can't afford it? Get a subsidized loan for which the institution has no skin in the game. Can't pay it off after? Not their fault! Institution needs more money? Just raise the rent.
darth_avocado 4y ago
Without reading the article and just the headline, I thought this was going to be an article on economy that has a bloated amount of over paid middle management. Was very disappointed.
fleddr 4y ago
"The text of the Sherman Act bars ‘monopolization,’ so to write that one is trying to build firms that can ‘monopolize’ is, well, remarkable." Perhaps remarkable to say it out loud, but other than that not remarkable at all and totally logical. Any company in a free market is incentivized to combat their number one threat: competition. You can combat competition with a good product, but also more hostile methods like outgrowing, acquisitions, patents, lobbying, cartels, etc. Competition is an existential threat so the incentives are very strong. Being the only one playing nicely means your business is dead. Monopolization in tech is even more incentivized as it's often trivial for competition to copy your approach/product. So "good product" just doesn't cut it. The only remarkable thing is an almost complete lack of regulation, Sherman act or not. The article is full of examples of monopolies that should not exist. But they do exist. Regulation is non-existing or 10 years late.
SomeHacker44 4y ago
NYC cooperative apartments are the worst kind of middlemen here too.

196 points by connor11528 4y ago

Decentralization is the answer. Look to peer to peer technologies.

Sometimes I wonder if 'monopoly' in the US has become a no true Scotsman fallacy. The threshold of direct consumer harm is either so high or evidence requirements so onerous it's as if there is no more Sherman Antitrust Act. The monopolizing doesn't even have to be in a computer or layers of shell companies anymore.

maerF0x0 4y ago
I think that's why it's good that antitrust is more than just monopoly but also and other anticompetitive practices. I would like to see law begin to start with an implicit bias for the underdog, but unfortunately Citizens united and the general principle of money in politics means that larger entities will have disproportionate sway (due to Pareto principle of accrual).
- nickff 4y ago
  The volume of law and regulation is a huge implicit subsidy to large corporations. The cost of compliance is challenging, and can be devastating to small-medium companies (which actually try to comply with the law). I think that getting rid of rules like the reporting on conflict minerals, (which don't seem to affect the ferocity or devastation in conflict regions,) which are numerous and surprisingly burdensome, would be very helpful.
- anamax 4y ago
  Citizens United said that you and I have the same right to band together to engage in political speech as the New York Times.
  - maerF0x0 4y ago
    Sure, and it should have said New York Times is not a person and therefore gets no say in any matter. The Pareto bit I mentioned means even if we band together they ultimately have disproportionate resources. It's employees / shareholders et al can vote how they like, but that's different than the New York Times (or Russia for that matter), swaying an election.
    - anamax 4y ago
      Zuckerberg has more resources than me. Not letting me get together with other people helps Zuckerberg. As far as the NYT goes, feel free to argue against the 1st Amendment. CU just says that the NYT isn't special, that the 1st applies to using tools, not organizations who have named themselves after said tools. Govt regulation always favors the well-heeled.
      - maerF0x0 4y ago
        > Zuckerberg has more resources than me. Yes but there is are rules & caps for political contributions: https://www.fec.gov/help-candidates-and-committees/candidate-taking-receipts/contribution-limits/ https://www.fec.gov/help-candidates-and-committees/candidate... I'm not arguing against 1st, I'm arguing that a business (not a person) has speech or a 1st right (which people absolutely do), and that the net result of acting like they do is really hurting the citizens of America.
        anamax 4y ago
        The NYT is not subject to said "rules or caps" when it advocates for candidates. Neither is Zuckerberg. Why should people who get together to do political speech be treated any differently?
        maerF0x0 4y ago
        I think we agree in principle, but are disagreeing in the resultant law. It sounds to me like you're advocating saying NYT, and rich people can give large sums of money, therefore why cant groups of people also do it? I'm advocating for NYT and rich people should not be allowed to give large sums of money, and neither should individuals beyond their individual contribution cap. The principle I am all for is that wealthy people and corporations should not be able to bring disproportionate resources to politics than their underlying democratic unit (a single unit vote in the case of a wealthy person, no votes in the case of a corporation). And therefore the caps for wealthy people should be the same as for middle/poor people, and caps for corporations should be 0 because they are not democratic political units. I'm listening to https://www.khanacademy.org/humanities/us-government-and-civics/us-gov-political-participation/us-gov-campaign-finance/v/citizens-united-v-federal-election-commission https://www.khanacademy.org/humanities/us-government-and-civ... to try and discern if maybe I have a completely broken idea of what citizens united is
sylvain_kerkour 4y ago
The passivity against monopolies has more to do with international competition and the fear of losing world domination.
- danaris 4y ago
  Does it? Or does it have more to do with the massive industry capture of politics? Not to mention the right-wing ideology of, effectively, if you can make money doing it, and hide the negative effects from the public at least a little, you're a Real American Hero.
  - zeruch 4y ago
    "Massive industry" is the applicable term. The scale of both the capture, and the middle man loss to a more parochial/regional model is terrifying to 'captains of industry' and their political minions.
  - jmeister 4y ago
    There are many progressives who've come around to favouring mega businesses over "mom-and-pop" for: higher wages, stabler jobs, easier enforcement of regulations.. For example: Matt Yglesias
    - danaris 4y ago
      There are many people who have been steeped in our hypercapitalist society for decades and have simply accepted its premises as valid, regardless of their stated politics as a whole. It doesn't mean that the source of this ultimately deeply destructive ideology isn't the political right.
      - WalterBright 4y ago
        > our hypercapitalist society for decades The US has been turning away from free markets for at least a century now.
wrnr 4y ago
It is the opinion of the EU Comission that monopolies are ok as long as they do not abuse their power and if they do they get slapped with a fine.
arrosenberg 4y ago
That was the entire point of the Borkist/Chicago school movement. The capitalists knew they'd never be able to repeal those laws legislatively, so instead they changed its enforcement by winning the minds and wallets of the judiciary. Now they can consolidate as much as they want to, no judge will stop them and most lawyers won't even try.
robertlagrant 4y ago
Are most monopolies not of government creation? Anything that has increasingly onerous regulations or other government requirements are the sorts of monopolies that need breaking. Any natural monopolies formed by just being really good at something and offering it at a low price are a waste of taxpayer money to try and disrupt.
- a-user-you-like 4y ago
  Precisely. The regulatory environment in the US is astounding. People yell at Apple for being a monopoly but android exists and the consumers just don’t care. Amazon tried to launch a line of phones and no one cared. If things were really so oppressive the consumers would demand something else but they just don’t care.
  - porknubbins 4y ago
    How is Apple a monopoly (except for the app store, by definition)? Last time I checked there are many phone and personal computer choices.
- paulryanrogers 4y ago
  Not all monopolies are natural. Those powerful enough to capture regulators are now a defacto government. The answer is not less regulation, it's a different kind to stop and reverse the consolidation of power. And benevolent monopolies can and do change over time.
  - robertlagrant 4y ago
    > Not all monopolies are natural Did you read my first paragraph?
    - paulryanrogers 4y ago
      Yes I did read it. Why do you suspect I had not? To be more explicit, I wouldn't agree it's most often the government making monopolies. There are plenty of cases where government regulators are captured by 'natural' monopolists (or otherwise large players) who then entrench themselves with regulatory moats, serving only their interests. And even government made monopolies aren't _well_ regulated IMO, for example telcos. A freer market would need controls to prevent consolidation from locking in customers by simply buying up all the spectrum and lobbyists.
fleddr 4y ago
Same for when you read about two large companies merging, pending regulatory approval. My immediate thought: it's going be allowed. Regulator after 6 months: it's allowed.

edmcnulty101 4y ago

One thing we have to ask is the monopolization the problem?? Do we want to break monopoly up in favor of a bunch of possibly shittier products? The real problem It's not the monopoly it's the Monopoly tax.

eli_gottlieb 4y ago
If a monopolist is efficient, then nationalization is efficient. Break them up or seize them.
- AnimalMuppet 4y ago
  That does not follow. "The monopolist can do this efficiently" != "the government can do this efficiently". In particular, the monopolist has given evidence of knowing how to run that operation well. The government has given no such evidence. I'm not a fan of monopolies, but your position is flawed.
  - carschno 4y ago
    How do you come to conclude that Organisation A (monopolist) will magically be less good than Organisation A (owned by the state)? If the same organisation is profitable while but state-owned, it could also be an indicator that it's just not operating in a legit way. Note: I think you've also been confusing government and state, but I assume that was not intentionally.
    - AnimalMuppet 4y ago
      > Note: I think you've also been confusing government and state, but I assume that was not intentionally. Not intentionally, no. Given that the context was nationalization, what in your view is the difference between government and state?
      - carschno 4y ago
        Ideally, a government (temporally) "steers" a state, which, again ideally, would be the property of its inhabitants.

Centigonal 4y ago

Everyone from Sam Altman to Peter Thiel has been talking about this for years. Capitalists are very straightforward about this - if you want to capture value, find a way to plant your flag in some emerging market and get a monopoly on one or more parts of the value chain. Marketplace operators are especially attractive to investors, because the financials are really pretty - the marketplace provider doesn't own significant assets, only pays for marketplace development costs and sales/marketing, and yet it can levy a tax on a potentially very large market. Uber, Lyft, Etsy, Doordash, Postmates, Shopify, Spotify, Yelp, Datarade, G2, Capterra, Turo - all are marketplace providers. They don't make a thing. they make the thing that lets a much larger class of thing-makers get in touch with the thing-buyers. The fervor for marketplace providers has gotten so intense that we're seeing more and more niche businesses get funded, e.g. https://swimply.com/ https://swimply.com/ Edit: ... and don't get me started on how companies (ab)use the 1099 designation to turn traditionally asset-heavy businesses into marketplace providers, generating a lot of paper value while not really innovating in terms of how the service is actually rendered. Looking at you, Arise!

vsareto 4y ago
They do some organizing of information via their apps, which has a tangible user experience (plus the apps themselves are definitely a thing they built). Building a good marketplace is also no small feat. In concept, they are all useful abstractions over the worst case scenario: individuals only finding and talking with other individuals to get goods or services. In practice, there are definitely abuses which come down to ineffective regulation.
- pydry 4y ago
  >Building a good marketplace is also no small feat. Nope, but it's lavishly overcompensated and starved of competition for the markets who manage to get the network effect going. There is no really effective regulation to ameliorate this effect either. Wouldnt need much though. If, say, e.g. airbnb simply werent able to enforce parts of their ToS around scraping/contacting users then it would make the market vastly less dysfunctional.
- 4y ago

softwaredoug 4y ago

The problem is users don’t necessarily want a fractured market. It’s convenient to have one vendor. In the short term, customers value the simplicity of having just one search engine or e-commerce experience. They don’t think about the long term harms to them / the economy.

clairity 4y ago
customers don't all want the same single vendor though, as we have varying needs (outside of true commodities).
- bediger4000 4y ago
  Yeah. Tell that to Microsoft
asdff 4y ago
Specialized vendors usually deliver better products than generalist vendors though because its simply harder to have expertise in all domains than a fewer number.
- flappyeagle 4y ago
  computers change that to a large degree - your youtube is different than my youtube... but it's all youtube.

rahimnathwani 4y ago

Middlemen (e.g. wholesalers and retailers) serve a valuable function. Imagine each consumer having to maintain relationships with hundreds of factory owners and tens of farmers.

jollyllama 4y ago
>Imagine each consumer having to maintain relationships with ... tens of farmers Farmers' markets are great.
- deleted 4y ago
  [deleted]
- jasode 4y ago
  >Farmers' markets are great. Fyi if you didn't already know... the farmers' markets are themselves a type of middlemen. (At least every one I've shopped at in the USA.) The farmers' market rents out the booth spaces to vendors (farmers). It's a real-world "platform" to bring together buyers and sellers. The farmers' cost to rent the space is embedded into the prices the consumers pay. A true individual relationship with a farmer would be something like driving to Joel Salatin's Polyface Farms and buying broiler chickens directly from him. This bypasses the middlemen of farmers' markets.
  - jollyllama 4y ago
    That's true. The farmers' market also acts as a advertising for that kind of direct relationship. Most of the vendors have cards with links or phone numbers where you can arrange that kind of thing, or even deliveries. I'd say the difference is the farmers' market allows for that, whereas at a grocery store I'm usually buying products labelled states away, if they even are from a farmer you could ever buy direct from at all.
  - clairity 4y ago
    > "...like driving to Joel Salatin's Polyface Farms and buying broiler chickens directly from him." reading omnivore's dilemma when it came out impulsively made me want to do that, but of course the impracticality of that quickly dawned on me. it's similarly why reading a book is a better than going and getting first-hand accounts for all our information. we've created socioeconomic structures for very good reasons, so we shouldn't want to burn them down for the tradeoffs, but rather we should address the negatives directly.

AtlasBarfed 4y ago

Almost all markets are now monopoly, duopoly, or cartel. Has been for a while. It's gigantic detriment to innovation, unemployment, wage suppression, prices. The end state of unregulated real world free markets is monopoly, because of the ability to establish market barriers, extract subsidies, state-level actor manipulation, dumping. Antitrust is dead in the US. Cartel economics is part of the oligarchical political control and the formalized power base of the rich. And economists and economics were puppeted on TV, think tanks, parroting the free market religion to enable this. And as part of this, we couldn't do anything (and still can't) about global warming. This will possibly doom us as a civilization.

powvans 4y ago

This article feels like a poor retread of what Ben Thompson has been writing [0] and podcasting [1] about for at least the last 5 years. Even the rough sketch diagrams feel like a poor copy of what Ben does at Stratechery. The conclusion that "if we just... <do something>" is vague, reductionist, and hand wavy. These aren't simple problems and the old antitrust tools weren't designed for monopolists who focus on the demand side rather than the supply side. [0] https://stratechery.com/aggregation-theory/ https://stratechery.com/aggregation-theory/ [1] https://exponent.fm/ https://exponent.fm/

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bediger4000 4y ago

If we didn't da anything about Microsoft ca 2000, we absolutely can't do anything about what Stoller writes about. Do we even know what Stoller's funding is? Propa... Material like this appeared around 1996 and continued to surface all through the Microsoft trial

babyshake 4y ago
It would be quite ironic if Microsoft was funding "Google is a monopoly" research.
- bediger4000 4y ago
  But not out of character, or out of the question.
intelVISA 4y ago
The Gates deposition should be an art display somewhere, it could even be exhibited alongside antitrust's gravestone.

count 4y ago

This feels like he's copying Stratechery, down to the stick figure MS Paint diagrams (e.g. https://stratechery.com/2018/the-bill-gates-line/ https://stratechery.com/2018/the-bill-gates-line/)

adamrezich 4y ago
lots of blogs are like this though, using quick-and-dirty visually-accessible illustrations to convey ideas.
- count 4y ago
  I mean, the concept and stuff too.
carom 4y ago
Ah, that is a distinct style. Do you think they commissioned an artist to perform such an exact copy?
- intelVISA 4y ago
  The kerning on those stickmen... so that's where all the VC money went.

skybrian 4y ago

I wonder about the "Google extracts enormous rents" bit. Yes, in the aggregate, Google is earning lots of money from advertisers, but for the average advertiser, how big is this cost, and compared to what? (Genuine question - I don't know a lot about advertising.) Also, given the anti-advertising mindset on Hacker News, it seems weird to get all that upset about advertisers paying too much? "Who will think of the advertisers," say people who have probably installed ad blockers.

manmal 4y ago
I know a surgeon who invested €10k/month in Google ads for a while just to get a few patients per month. CPC was €10 or so. Absolutely nuts, you’d think. But one procedure nets him €8k, and he said that those ads are absolutely vital to him - without Google ads, his revenue suffered greatly. His campaign was setup wrong for a while and he immediately noticed because people stopped booking surgery with him.

semanticjudo 4y ago

Brokers (what the author calls "middlemen") have existed for ages and served all sorts of purposes in all sorts of economic activities. They serve a specific and valuable function in the economy. The author muddles the point by bringing this into the equation. The core, valid issue raised is monopoly power. Which will naturally be the end goal of any enterprise. It is governments job to bring reasonable power to bear to prevent monopolies. Ours is failing to do this due to crony capitalism - all of the benefits both sides of the political aisle reap by maintaining the status quo.

effingwewt 4y ago
taffronaut 4y ago
I respectfully disagree. Brokers are a subset of middlemen. In many industries the role of a broker is well-defined and often regulated. A middleman can be a broker, an agent, a facilitator, price comparison site, wholesaler or any other intermediary mechanism. For organisations which seek to own all aspects of the intermediary space, and with a generally opaque representation of benefit to both suppliers and clients, the use of the term middleman seems more appropriate.

tomohawk 4y ago

Academic institutions are the most overfed middlemen. They've insinuated themselves into the ability to have a job in many fields. Has there ever been a winter that affects academic institutions? Ever been a need to cut back? Tighten the belt? They are like an overgrown jungle. They often peddle shoddy goods (degrees that will never pay off), to unsophisticated consumers (18 year olds and their parents). Any other industry would have laws and regulations attempting to protect the unwary, but somehow, only angels work in adademic institutions. They have choruses of shills (guidance councilers and others) telling anyone who will listen that if you don't go to college, your life will be ruined. See how indispensible they are? Can't afford it? Get a subsidized loan for which the institution has no skin in the game. Can't pay it off after? Not their fault! Institution needs more money? Just raise the rent.

darth_avocado 4y ago

Without reading the article and just the headline, I thought this was going to be an article on economy that has a bloated amount of over paid middle management. Was very disappointed.

fleddr 4y ago

"The text of the Sherman Act bars ‘monopolization,’ so to write that one is trying to build firms that can ‘monopolize’ is, well, remarkable." Perhaps remarkable to say it out loud, but other than that not remarkable at all and totally logical. Any company in a free market is incentivized to combat their number one threat: competition. You can combat competition with a good product, but also more hostile methods like outgrowing, acquisitions, patents, lobbying, cartels, etc. Competition is an existential threat so the incentives are very strong. Being the only one playing nicely means your business is dead. Monopolization in tech is even more incentivized as it's often trivial for competition to copy your approach/product. So "good product" just doesn't cut it. The only remarkable thing is an almost complete lack of regulation, Sherman act or not. The article is full of examples of monopolies that should not exist. But they do exist. Regulation is non-existing or 10 years late.

SomeHacker44 4y ago

NYC cooperative apartments are the worst kind of middlemen here too.