10 ms·

They don't even need to "collude". They can just look at what their "competitors" are doing. I raise my prices a little bit. You see me raise the prices a litt

by otikik 4y ago

They don't even need to "collude". They can just look at what their "competitors" are doing. I raise my prices a little bit. You see me raise the prices a little, and you raise them a little. And then I see that and raise them a little more. Then I do a tiny round of layoffs. You also layoff some people. Then I do a bigger round of layoffs and communicate big profits publicly. And you follow suit. You and I never talk, never "collude". But we are effectively communicating through our numbers. As long as we have captured a big enough market, we don't need to talk, and we both benefit. I don't know if there's even a term for this kind of "tacit collaboration". Perhaps "anticompetition"?

camgunz 4y ago
Yeah exactly. What we're looking at here are similar actors reacting to the same incentives. Pepsi raised prices because they can and their shareholders demanded it. Coke raised prices because they can and their shareholders demanded it. Thus 80% (or whatever) of soda worldwide increased in price, without collusion. So you have the failure case of collusion without the cause, which sucks because we didn't really consider that this failure case might have two causes (which, I would argue that we should have, probably back in like 1920). It's an important first step to realize this is happening. Larry Summers was like, "I don't think suddenly corporations got more greedy", implying that because corporations have been maximally greedy the whole time that that can't be the cause of additional inflation. But it can be that it causes a new, unfortunate reaction with a new set of incentives, and this is exactly the situation we find ourselves in. It used to be OK (well, not really but let's stipulate) for corporations to be maximally greedy, but now it's not. So what's the next step? I don't really know. People float stuff like a tax on profits or price controls. I generally think those are probably too blunt, though I could get behind a tax on profits I guess. I might prefer some kind of blanket industry regulation ("Hi Coke, Pepsi, we know you didn't mean to exactly but you inadvertently increased the price of 80% of world soda by 20%--please stop") because this kind of thing seems like it can be nuanced and tailored to a specific situation. Maybe also a prohibition on stock buybacks to lower investor pressure to juice short-term profits--but I haven't thought this one through very much.
- mordae 4y ago
  Corporations were always maximally greedy, but there were times where the markets were not 200% saturated and new demand did not had to be created artificially by mass indoctrination. I mean, everybody who have seen their neighbor's electric / gas stove wanted one for themselves very quickly to avoid the need to lug wood. And when radio and TV came? Don't even get me started. Fridge, washing machine, dishwasher, vacuum cleaner, camera, car, phone, portable music player, PC, laptop, cell phone... It all sells / sold really easily just by word of mouth and you just needed to run slightly faster than competitors to capture higher portion of the market. So the incentives were mostly aligned and capitalism delivered value (in those areas). Now there is no easy way to create a good or service that will instantly save multiple hours per week for almost everybody. No easy way to make luxuries of past like having oneself painted or being served a meal (women must have loved that) available to masses. But still, some that provide meager improvements managed to take off. Robotic vacuums, food (and grocery) delivery services come to mind. Hence the rush to convert the market shares into an enduring rent. Eventually corporate landlords will realize that they have the ultimate power and just tax everyone so high that only the basic subsistence is possible, with zero luxury. Maybe then the public will finally reconsider the arrangement.

by otikik 4y ago

camgunz 4y ago

Yeah exactly. What we're looking at here are similar actors reacting to the same incentives. Pepsi raised prices because they can and their shareholders demanded it. Coke raised prices because they can and their shareholders demanded it. Thus 80% (or whatever) of soda worldwide increased in price, without collusion. So you have the failure case of collusion without the cause, which sucks because we didn't really consider that this failure case might have two causes (which, I would argue that we should have, probably back in like 1920). It's an important first step to realize this is happening. Larry Summers was like, "I don't think suddenly corporations got more greedy", implying that because corporations have been maximally greedy the whole time that that can't be the cause of additional inflation. But it can be that it causes a new, unfortunate reaction with a new set of incentives, and this is exactly the situation we find ourselves in. It used to be OK (well, not really but let's stipulate) for corporations to be maximally greedy, but now it's not. So what's the next step? I don't really know. People float stuff like a tax on profits or price controls. I generally think those are probably too blunt, though I could get behind a tax on profits I guess. I might prefer some kind of blanket industry regulation ("Hi Coke, Pepsi, we know you didn't mean to exactly but you inadvertently increased the price of 80% of world soda by 20%--please stop") because this kind of thing seems like it can be nuanced and tailored to a specific situation. Maybe also a prohibition on stock buybacks to lower investor pressure to juice short-term profits--but I haven't thought this one through very much.

mordae 4y ago
Corporations were always maximally greedy, but there were times where the markets were not 200% saturated and new demand did not had to be created artificially by mass indoctrination. I mean, everybody who have seen their neighbor's electric / gas stove wanted one for themselves very quickly to avoid the need to lug wood. And when radio and TV came? Don't even get me started. Fridge, washing machine, dishwasher, vacuum cleaner, camera, car, phone, portable music player, PC, laptop, cell phone... It all sells / sold really easily just by word of mouth and you just needed to run slightly faster than competitors to capture higher portion of the market. So the incentives were mostly aligned and capitalism delivered value (in those areas). Now there is no easy way to create a good or service that will instantly save multiple hours per week for almost everybody. No easy way to make luxuries of past like having oneself painted or being served a meal (women must have loved that) available to masses. But still, some that provide meager improvements managed to take off. Robotic vacuums, food (and grocery) delivery services come to mind. Hence the rush to convert the market shares into an enduring rent. Eventually corporate landlords will realize that they have the ultimate power and just tax everyone so high that only the basic subsistence is possible, with zero luxury. Maybe then the public will finally reconsider the arrangement.