3 ms·

Great way to kill off low margin important industries like steel

nine_k 4y ago
Subsidies would help then! Only half-ironic though. There is a problem with industries that are viable and important in the longer term, but are at risk of being shut down in shorter terms due to market fluctuation. Subsidies help them off the ground on one hand, but ossify their structure and skew the incentives (by definition) on the other hand.
cwkoss 4y ago
Steel just barely makes the list of top 100 US companies by revenue at #100. https://en.wikipedia.org/wiki/List_of_largest_companies_in_the_United_States_by_revenue https://en.wikipedia.org/wiki/List_of_largest_companies_in_t... Would steel consumers be better off if the largest steel companies were broken in to smaller pieces?
- spywaregorilla 4y ago
  > Steel just barely makes the list of top 100 US companies by revenue at #100. What does your imagined tax bracket structure look like if the top 100 companies aren't at the highest, most painful bracket? "Barely being in the top 100" means you're enormous. > Would steel consumers be better off if the largest steel companies were broken in to smaller pieces? Well pretty much everything in the economy runs on steel, and you're proposing removing their economies of scale and taxing them on revenue. Do you think they're going to be better off? Let's imagine it's a true perfect competition world. Steel producers make basically 0 profit on average (this is not the case). Next year supply crunch. Costs go up 10%. Steel producers need to raise prices by 10% to stay profitable. But wait, now their taxes are based on their revenues, so if they raise their prices by 10%, they take on at least 10% more taxes, so now they're losing money. They'll need to raise their prices high enough to earn enough revenue to offset the increased taxes. But wait, turns out other countries make steel too, and these companies are realistic enough to tax on profits only. So now American steel is too expensive to compete. When you have high fixed costs and low variable costs, a revenue tax is brutal because you need high revenues to even begin to break a profit.
- chongli 4y ago
  Would steel consumers be better off if the largest steel companies were broken in to smaller pieces? This would destroy economies of scale and cause the price of steel to skyrocket. It would send the entire economy into a tailspin. Low margin, large scale businesses are highly efficient from an economic standpoint. Doing anything to hurt these businesses would be disastrous to the economy. We want to encourage efficiency, not punish it.
ksec 4y ago
Not just Steel, but all commodity market. Which judging by the COVID and Supply Chain event. 99.9999% of HN knows very little to nothing about it.

Subsidies would help then! Only half-ironic though. There is a problem with industries that are viable and important in the longer term, but are at risk of being shut down in shorter terms due to market fluctuation. Subsidies help them off the ground on one hand, but ossify their structure and skew the incentives (by definition) on the other hand.

cwkoss 4y ago

Steel just barely makes the list of top 100 US companies by revenue at #100. https://en.wikipedia.org/wiki/List_of_largest_companies_in_the_United_States_by_revenue https://en.wikipedia.org/wiki/List_of_largest_companies_in_t... Would steel consumers be better off if the largest steel companies were broken in to smaller pieces?

spywaregorilla 4y ago
> Steel just barely makes the list of top 100 US companies by revenue at #100. What does your imagined tax bracket structure look like if the top 100 companies aren't at the highest, most painful bracket? "Barely being in the top 100" means you're enormous. > Would steel consumers be better off if the largest steel companies were broken in to smaller pieces? Well pretty much everything in the economy runs on steel, and you're proposing removing their economies of scale and taxing them on revenue. Do you think they're going to be better off? Let's imagine it's a true perfect competition world. Steel producers make basically 0 profit on average (this is not the case). Next year supply crunch. Costs go up 10%. Steel producers need to raise prices by 10% to stay profitable. But wait, now their taxes are based on their revenues, so if they raise their prices by 10%, they take on at least 10% more taxes, so now they're losing money. They'll need to raise their prices high enough to earn enough revenue to offset the increased taxes. But wait, turns out other countries make steel too, and these companies are realistic enough to tax on profits only. So now American steel is too expensive to compete. When you have high fixed costs and low variable costs, a revenue tax is brutal because you need high revenues to even begin to break a profit.
chongli 4y ago
Would steel consumers be better off if the largest steel companies were broken in to smaller pieces? This would destroy economies of scale and cause the price of steel to skyrocket. It would send the entire economy into a tailspin. Low margin, large scale businesses are highly efficient from an economic standpoint. Doing anything to hurt these businesses would be disastrous to the economy. We want to encourage efficiency, not punish it.

ksec 4y ago

Not just Steel, but all commodity market. Which judging by the COVID and Supply Chain event. 99.9999% of HN knows very little to nothing about it.