8 ms·

Are megacorp really more efficient than many smaller scale and local businesses?

by boudin 4y ago

Bayart 4y ago
Yes. Economies of scale is a large reason behind how we can feed 8 billion people where we had half a billion before the Industrial Revolution (the other is probably petroleum). Countries where land reforms consolidated arable land into large industrialized plots are far more productive than countries where the land is fragmented, all ecological and social considerations aside.
- ulfw 4y ago
  And how much more efficiency did we gain since then through better machinery? I don't see how 1000 companies couldn't feed us but ten 100x-larger companies can. What you gain in economies of scale you lose on competitive edge.
  - snowpid 4y ago
    10 companies can be a very competitive market. e.g. German supermarket market.
- pjmlp 4y ago
  We could still feed them before, the difference being not everyone had access to the latest goodies, which by the way many still don't as the Industrial Revolution isn't evenly distributed.
  - Bayart 4y ago
    Human population is a function of the species' calorific output. We can produce at least 16 times more calories on aggregate than we did 500 hundred years ago.
    - pjmlp 4y ago
      I think it is more a side effect of something else.
      - CalRobert 4y ago
        What is it, actually? It seems like humans are complex animals and we achieve equilibrium in different ways than many others. Japan's population isn't shrinking due to a shortage of calories or surplus of predators (thankfully!)
        pjmlp 4y ago
        A bee lands on a flower,...
  - 323 4y ago
    > We could still feed them before What do you mean by that? Before the industrial revolution starvation was widespread in human populations.
    - pjmlp 4y ago
      Just like it is in many parts of the world today. What I mean is that you don't have to eat nice steaks and a full fish every day, sometimes twice a day.
      - mcalus3 4y ago
        > Just like it is in many parts of the world today. It's not true, despite population increase number of people dying of starvation goes down https://sites.tufts.edu/wpf/famine/ https://sites.tufts.edu/wpf/famine/ the reason of starvation in modern times is political, not production shortage.
        pjmlp 4y ago
        So in all the thousand years mankind has been around we had to wait for the 1800 to be rescued from all famine waves, yet 3 centuries, a large portion of countries still hasn't managed to have been saved from such trends. How many farming fields and insects have been destroyed with chemicals and genetic modifications from that wonderfull revolution?
        pixl97 4y ago
        Your getting your own points confused. Chemicals (generally salt) destroyed plenty of farmland in the past leaving places desolate. Humans have been destroying habitats for as long as we find ourselves in the fossil record.
        mrguyorama 4y ago
        Never forget, Europe used to be covered in forests! Big, old, sturdy ones!
- guerrilla 4y ago
  If that were really true then wouldn't most theories about the USSR's economy be wrong? You can't have it both ways... Isn't the claim that decentralized free trade facilitated by delegation is more efficient? If not, I think we need a new theory of why the USSR failed as there seems to be a contradiction here.
  - pixl97 4y ago
    The USSR was typically very efficient in keeping the authoritarian figurehead in power for long periods of time, not doing anything useful for the average person. The fitness function of attempting to keep an authoritarian leader in power for long periods of time typically fails as it's inefficient, but that doesn't mean such systems cannot last for long periods of time in the right environment.
  - mrguyorama 4y ago
    The USSR failed because it's only purpose was to enrich and empower the single leader. That's why Lenin sticking around wouldn't have actually improved things, either for the USSR or communism in general. He still believed murdering large swathes of the population for "the good of communism" (read "Whatever I like"). In Russia, turns out large portions of the populace can be stolen from, murdered, oppressed, starved, etc without a danger to the god emperor. Any system, bureaucracy, TTRPG ruleset, etc that prioritizes a single figure over the whole will inevitably erode the value the whole produces in favor of empowering the single figure. It's a matter of accountability. In a single figure system, the only accountability is to the single figure's personal whims.
- citrin_ru 4y ago
  Economy of scale helps only up to a point. A medium size company likely will be be more efficient than a small one, but a big corp only marginally more efficient. A big company can even be less efficient because of internal bureaucracy and difficulties in scaling management. The scale when it is no longer beneficial to increase size depends on the industry and can vary a lot.
  - 323 4y ago
    But a medium size company cannot afford building an industrial plant and recoup the money in a reasonable time frame. Like in software: a 5 developer team is more efficient and has less overhead than Facebook, but a 5 dev team can't build a Facebook.
    - bmelton 4y ago
      Always interested in claims like this. I'm not remotely trying to falsify or even challenge the claim, but given modern times, a lot of what Facebook has built has now been offloaded to open source packages, some of which have sprung up startups in the "${x} as a service" mold, meaning that those measurements on things like "headcount" get fuzzier. I'm confident that I could build a social network that scales with a 3 person team. In fact, I've done it before, but it relied on hosting and data providers and frontend frameworks and languages that I definitely could not have developed the entirety of as a 2-person team. Do those factor into the count, or are we in the "if you do everything yourself, a cup of coffee actually costs $300,000?" At what point does labor specialization come into play? Because there's the guy who does everything "from scratch" and realizes exorbitant costs for small things, and on the other end of the spectrum is the guy who started a profitable coffee company with $1800 of seed capital, down to the practical reality of the median cup of drip coffee, brewed at home, costs approximately $0.30.
    - jacobr1 4y ago
      What are you presuming with a "medium-sized" company? Modern financing might very well allow a company big enough to operate only a single factory, to invest in new technologies, or to purchase them from specialized firms doing innovative research. Similarly, sure a 5-dev team probably couldn't build and operate the full-scope of FB (unlike the clone someone could build in a weekend that doesn't take into account hundreds of small capabilities) - but maybe a 500-dev group could, rather than needing 5000-devs. Especially with a narrower focus on scope and outsourcing various problems (such as do they need to operate their own video hosting platform vs partnering). There are advantages to scale, but also costs, and at a certain point scale tends to be horizontal rather than vertical. More products/features/adjacencies that now need to be coordinated, rather than a solid core and leverging the market for the rest.
LAC-Tech 4y ago
hard to tell. megacorps tend to get tax breaks and have political influence small businesses could never dream of. the playing field is tilted in their favour.
refurb 4y ago
I mean, that's where law of "economy of scale" comes from.
WeylandYutani 4y ago
People in my country are spending less of their monthly income on food than they did before supermarkets existed. Also I prefer my food coming from megacorps clean rooms. Food poisoning is no fun- as anyone who's ever been to India can tell you.
- thisGuyFlicks 4y ago
  > Also I prefer my food coming from megacorps clean rooms. Those clean rooms exist because of government regulations - not because of the existence of megacorps.
  - fragmede 4y ago
    Depends why you think those regulations were enacted, but once school of thought is those megacorps made food in dirty disgusting factories and only cleaned up due to government regulation, but that family friendly small businesses would not have cut those same corners and we'd not need those regulations without megacorps. There's another school of thought that believes in regulatory capture and says those regulations are there to make it harder for someone to compete in the market, and that safety is further down the list than making money is.

Are megacorp really more efficient than many smaller scale and local businesses?

by boudin 4y ago

Are megacorp really more efficient than many smaller scale and local businesses?

Yes. Economies of scale is a large reason behind how we can feed 8 billion people where we had half a billion before the Industrial Revolution (the other is probably petroleum). Countries where land reforms consolidated arable land into large industrialized plots are far more productive than countries where the land is fragmented, all ecological and social considerations aside.

ulfw 4y ago
And how much more efficiency did we gain since then through better machinery? I don't see how 1000 companies couldn't feed us but ten 100x-larger companies can. What you gain in economies of scale you lose on competitive edge.
- snowpid 4y ago
  10 companies can be a very competitive market. e.g. German supermarket market.
pjmlp 4y ago
We could still feed them before, the difference being not everyone had access to the latest goodies, which by the way many still don't as the Industrial Revolution isn't evenly distributed.
- Bayart 4y ago
  Human population is a function of the species' calorific output. We can produce at least 16 times more calories on aggregate than we did 500 hundred years ago.
  - pjmlp 4y ago
    I think it is more a side effect of something else.
    - CalRobert 4y ago
      What is it, actually? It seems like humans are complex animals and we achieve equilibrium in different ways than many others. Japan's population isn't shrinking due to a shortage of calories or surplus of predators (thankfully!)
      - pjmlp 4y ago
        A bee lands on a flower,...
- 323 4y ago
  > We could still feed them before What do you mean by that? Before the industrial revolution starvation was widespread in human populations.
  - pjmlp 4y ago
    Just like it is in many parts of the world today. What I mean is that you don't have to eat nice steaks and a full fish every day, sometimes twice a day.
    - mcalus3 4y ago
      > Just like it is in many parts of the world today. It's not true, despite population increase number of people dying of starvation goes down https://sites.tufts.edu/wpf/famine/ https://sites.tufts.edu/wpf/famine/ the reason of starvation in modern times is political, not production shortage.
      - pjmlp 4y ago
        So in all the thousand years mankind has been around we had to wait for the 1800 to be rescued from all famine waves, yet 3 centuries, a large portion of countries still hasn't managed to have been saved from such trends. How many farming fields and insects have been destroyed with chemicals and genetic modifications from that wonderfull revolution?
        pixl97 4y ago
        Your getting your own points confused. Chemicals (generally salt) destroyed plenty of farmland in the past leaving places desolate. Humans have been destroying habitats for as long as we find ourselves in the fossil record.
        mrguyorama 4y ago
        Never forget, Europe used to be covered in forests! Big, old, sturdy ones!
guerrilla 4y ago
If that were really true then wouldn't most theories about the USSR's economy be wrong? You can't have it both ways... Isn't the claim that decentralized free trade facilitated by delegation is more efficient? If not, I think we need a new theory of why the USSR failed as there seems to be a contradiction here.
- pixl97 4y ago
  The USSR was typically very efficient in keeping the authoritarian figurehead in power for long periods of time, not doing anything useful for the average person. The fitness function of attempting to keep an authoritarian leader in power for long periods of time typically fails as it's inefficient, but that doesn't mean such systems cannot last for long periods of time in the right environment.
- mrguyorama 4y ago
  The USSR failed because it's only purpose was to enrich and empower the single leader. That's why Lenin sticking around wouldn't have actually improved things, either for the USSR or communism in general. He still believed murdering large swathes of the population for "the good of communism" (read "Whatever I like"). In Russia, turns out large portions of the populace can be stolen from, murdered, oppressed, starved, etc without a danger to the god emperor. Any system, bureaucracy, TTRPG ruleset, etc that prioritizes a single figure over the whole will inevitably erode the value the whole produces in favor of empowering the single figure. It's a matter of accountability. In a single figure system, the only accountability is to the single figure's personal whims.
citrin_ru 4y ago
Economy of scale helps only up to a point. A medium size company likely will be be more efficient than a small one, but a big corp only marginally more efficient. A big company can even be less efficient because of internal bureaucracy and difficulties in scaling management. The scale when it is no longer beneficial to increase size depends on the industry and can vary a lot.
- 323 4y ago
  But a medium size company cannot afford building an industrial plant and recoup the money in a reasonable time frame. Like in software: a 5 developer team is more efficient and has less overhead than Facebook, but a 5 dev team can't build a Facebook.
  - bmelton 4y ago
    Always interested in claims like this. I'm not remotely trying to falsify or even challenge the claim, but given modern times, a lot of what Facebook has built has now been offloaded to open source packages, some of which have sprung up startups in the "${x} as a service" mold, meaning that those measurements on things like "headcount" get fuzzier. I'm confident that I could build a social network that scales with a 3 person team. In fact, I've done it before, but it relied on hosting and data providers and frontend frameworks and languages that I definitely could not have developed the entirety of as a 2-person team. Do those factor into the count, or are we in the "if you do everything yourself, a cup of coffee actually costs $300,000?" At what point does labor specialization come into play? Because there's the guy who does everything "from scratch" and realizes exorbitant costs for small things, and on the other end of the spectrum is the guy who started a profitable coffee company with $1800 of seed capital, down to the practical reality of the median cup of drip coffee, brewed at home, costs approximately $0.30.
  - jacobr1 4y ago
    What are you presuming with a "medium-sized" company? Modern financing might very well allow a company big enough to operate only a single factory, to invest in new technologies, or to purchase them from specialized firms doing innovative research. Similarly, sure a 5-dev team probably couldn't build and operate the full-scope of FB (unlike the clone someone could build in a weekend that doesn't take into account hundreds of small capabilities) - but maybe a 500-dev group could, rather than needing 5000-devs. Especially with a narrower focus on scope and outsourcing various problems (such as do they need to operate their own video hosting platform vs partnering). There are advantages to scale, but also costs, and at a certain point scale tends to be horizontal rather than vertical. More products/features/adjacencies that now need to be coordinated, rather than a solid core and leverging the market for the rest.

LAC-Tech 4y ago

hard to tell. megacorps tend to get tax breaks and have political influence small businesses could never dream of. the playing field is tilted in their favour.

refurb 4y ago

I mean, that's where law of "economy of scale" comes from.

WeylandYutani 4y ago

People in my country are spending less of their monthly income on food than they did before supermarkets existed. Also I prefer my food coming from megacorps clean rooms. Food poisoning is no fun- as anyone who's ever been to India can tell you.

thisGuyFlicks 4y ago
> Also I prefer my food coming from megacorps clean rooms. Those clean rooms exist because of government regulations - not because of the existence of megacorps.
- fragmede 4y ago
  Depends why you think those regulations were enacted, but once school of thought is those megacorps made food in dirty disgusting factories and only cleaned up due to government regulation, but that family friendly small businesses would not have cut those same corners and we'd not need those regulations without megacorps. There's another school of thought that believes in regulatory capture and says those regulations are there to make it harder for someone to compete in the market, and that safety is further down the list than making money is.