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> In the sense of benefit to the overall economy, to the society in which that economy sits, or to humanity in general, virtually all economies of scale are act

• Anotheroneagain 3y ago
  I'm not sure about that though. Ready to wear clothing is obviously inferior to tailored clothes, and it's not clear to what extent it's actually cheaper, and how much it abuses cheap labor. There may be an optimal scale for everything, and you start losing once you exceed it.
  • jakewins 3y ago
    Tailored vs ready-made is a rounding error in the economies of scale involved in making clothes - both will use factory made fabric, dyed with factory dyes, woven from factory thread, made from factory farm cotton, grown from factory fertilizer, made from massive scale fracked natural gas, produced with millions of tonnes of factory steel, mined from factory mines.. The economies of scale that put food on your table and mine and clothe our kids - for all the horrors - will not be replaced by artisans doing small batch t-shirts from yard-grown cotton using hand made tools.
    • Anotheroneagain 3y ago
      "will not be replaced by artisans doing small batch t-shirts from yard-grown cotton using hand made tools." That isn't what I'm talking about. There is a lot between that and transporting everything multiple times across the globe just for the sake of making it as large scale as possible. What is the gain after you can reliably feed a few looms? There are no better tools by the way. It's people sitting behind sewing machines, just on the other side of the planet.
      • jakewins 3y ago
        Sorry I’m having a crap day; you’re totally right there’s a ton of gradients between “one mega factory makes all t-shirts” and “we all make clothes ourselves with hand made cotton thread.” I think my argument was mostly like - don’t throw out the baby with the bath water; economies of scale are a real thing that brings us real benefits, and that should go in the scale too.
    • deleted 3y ago
      [deleted]
    • kombookcha 3y ago
      You're framing the above poster as an anarcho-primitivist for saying that we would be better off with 5 global conglomerates controlling t-shirt production than 2. I don't think obfuscating "there is a dropoff point in size where economies of scale stop being better for humanity and start getting worse" with "we must switch to artisinal backyard t-shirt making" is really steelmanning here.
      • XorNot 3y ago
        No he's pointing out the poster hasn't defined any of their terms accurately enough to really be saying anything. The sheer size and scale of the economy we live in, and it's benefits, is so big that people tend to make sweeping pronouncements without really understanding their impact. The point about industrially produced cotton is exactly right: people pick some niche thing they view as "wasteful" and vastly over estimate it's importance or impact.
      • ric2b 3y ago
        The poster is against oligopolies but is using the term "economy of scale" instead, which is incorrect and causes confusion.
        • Anotheroneagain 3y ago
          I wasn't talking about "oligopolies". I was saying that economies of scale doesn't imply that bigger is better, but there is an optimal size that may not really be that big for most kinds of business.
  • exe34 3y ago
    Why stop at tailoring? How about the loom? Or spinning? Or collecting the cotton? Or growing it?
    • Anotheroneagain 3y ago
      Yes. How big do you need to go for that? When will the cost of transport and distribution overtake any gains? What is there to gain after all that gets big enough to produce a reasonable assortment of fabrics?
• BrenBarn 3y ago
  I guess I forgot to repeat the part about "extremely large" there. But I mean like "all economies of scale beyond a certain point". In any case, I'm not sure I agree that economies of scale are the thing keeping food on the table. Like, yes, we want nails to be made in some efficient way, but that's not what I mean by "economies of scale". What I'm talking about is the size of the companies involved. If there are 10 factories making nails, I'd rather have them be run by 10 different companies than one. And you might be able to convince me that 9 or 8 or even 5 companies is reasonable, but not one or two. The process that the companies use can involve something that you might call an "economy of scale" in the sense that you need to be making X number of nails before it becomes feasible to shift from artisans to factories. But you have to make sure that the economies of scale are facilitating the making of nails rather than the making of money for the nail companies.
  • jakewins 3y ago
    I’m being unnecessarily confrontational because I’m having a bad day, sorry, that’s not helpful. I would say this: I agree with you that massive faceless monopolies with no accountability are terrible, and often a direct consequence of economies of scale. It is also, simultaneously, true that the labour saving effects - human hours spent per calorie of food or pair of socks - is a number of orders of magnitude such that modern society (ie the not starving/not freezing part of it) could not exist without it. These two things are simultaneously true, which is what makes the problem hard; we want one effect of economies of scale and not the other.
    • politician 3y ago
      A way out: Does your example apply beyond the necessities of basic survival? We can take it as an axiom that it would not serve humanity for oxygen to be distributed on credit on the Moon.
    • BrenBarn 3y ago
      I mean, again, I think that's true, but only up to a point. Basically what I'm saying is that up to a certain point economies of scale are good for production, and beyond that they mostly just become good for profit. I feel like the main problem people are having with my comment is I said "virtually all" economies of scale and forgot to say "beyond a certain point". By "all" I meant "across all domains" (as opposed to just content moderation), not "of every possible size all the way down to individual artisans". I agree that there is some level of economy of scale that is probably required for things like production of clothes, but I think we should try to keep companies close to that level.
• AnthonyMouse 3y ago
  > Economies of scale in commodities is the thing that makes it so we don’t have to do sustenance farming and everyone gets to have sewn clothes on :) There are really two different kinds of economies of scale. One is the one you ordinarily think of, where you're big enough to amortize certain fixed costs over a lot of units so the fixed costs become a small part of the price. But the scale you need for this isn't all that large in most cases, and more than that leads to rapidly diminishing returns. The other is market power. You're so big that suppliers and customers and governments have no choice than to deal with you and then you can dictate terms. This is where we're supposed to have antitrust laws, and not have regulatory capture by industry incumbents, and on that front we've failed spectacularly.
  • Const-me 3y ago
    I agree in general, but note some industries are exceptions from that rule. For example, for Boeing and Airbus these two scales are pretty close because modern airliners are very expensive per unit, and fixed R&D and tooling costs are sky high. Another example is TSMC. However, none of that applies to internet search, social networks, web services, and most other goods and services.
    • AnthonyMouse 3y ago
      > I agree in general, but note some industries are exceptions from that rule. Not as many as you might think. > For example, for Boeing and Airbus these two scales are pretty close because modern airliners are very expensive per unit, and fixed R&D and tooling costs are sky high. Things that are very expensive per unit are where you don't need economies of scale, because the unit cost can absorb a lot of bespoke custom work. What's going on in the airline industry is regulatory capture. Instead of training pilots how to fly "planes" and requiring planes to have standardized controls, the law requires them to be trained on a specific plane from a specific manufacturer. So the law requires the pilots to have "economies of scale" in order to make new design viable, even though a given pilot is generally going to be flying the same type of plane all the time or only one of a very small number and individual pilot training is extremely expensive (also as a result of regulatory rules). The incumbents like this because it makes it hard for anyone new to enter the market because customers don't want to recertify their pilots on a new type of plane. The rationale for this is nominally safety, but it's not accidentally structured in a way that creates a regulatory barrier to entry, and it's the thing that led to the 737 MAX debacle, which is not an instance of safety occurring. You also have design vs. manufacturing. Boeing doesn't have to be a vertically integrated conglomerate. One company could design a plane and then license the design to arbitrarily many others to manufacture them. The manufacturing companies themselves wouldn't have to be vertically integrated, you could have separate companies each making screws and fuselages and doing final assembly. The designs could be protected by patents which then expire, so that anyone could manufacture the already-certified design of a plane once the patents expire. This is all happening the way it is because the laws are purposely structured to make it happen, not because of any intrinsic characteristic of the underlying economics. > Another example is TSMC. This is plausibly the best real example, but it's also kind of not. TSMC currently has the best process, but it's only marginally better than Intel or Samsung. There are instances where that matters, but even more instances where it doesn't, and it wouldn't be two years of TSMC resting on their laurels before they were overtaken. And there are a lot more companies in semiconductor manufacturing than even those three: Global Foundaries, Nanya, SK Hynix, Micron, SMIC, Kioxia, etc. What's really happening there is that it's a highly competitive industry where spending more on R&D yields an advantage. That isn't exactly economies of scale, it's more like the other way around. You get lots of scale if you have a competitive process that customers want. Conversely, you get a competitive process by spending a lot of money, which is fungible and doesn't inherently need to come from having any scale at all in the existing industry. People speculate about Apple designing their own semiconductor process even though they don't currently even have their own fabs, and they could viably do it, not because they have extensive existing internal fabrication volume but only because they have money. And Apple gets their money from having a lot of scale in another industry, but you don't even need that. All it would take is a charismatic CEO capable of getting the investment spigot open and then the money comes from telling a story to investors rather than any existing business of the company. Compare this to, say, auto manufacturing. There are typically only one or two fabs on the world's best process node at any given time and if you built one you'd be the new TSMC as fast as you could tell anyone about it. Whereas Tesla has car designs that people are willing to buy, but it will probably be a decade from the release of the Model 3 before they can manufacture as many cars as Toyota does, and as a result they currently have to amortize their R&D over fewer units.
• HeatrayEnjoyer 3y ago
  Economy of scale also applies to the ability to exploit the common person. From society today we can see that when unilaterally driven entities become too large the economy of scale stops benefiting the regular individual and becomes a weapon against them.