21 ms·

Economic Termites: Monopolies not noticeable enough for most of us

455 points by passwordoops 2y ago

Mary984 2y ago
[flagged]
baggy_trough 2y ago
The provided examples don't hold a candle to the termite-gnawing power of the armies of government bureaucrats and lawyers that are the real source of the cost explosion.
- passwordoops 2y ago
  I hear this a lot whenever antitrust is brought up. Do you have concrete examples of how, say, the DMV or Kansas Board of Consumer Welfare costs society more that, say, UnitedHealth's price gouging, Microsoft's SaaS, or Google and Apple's backdoor deals with Apple or Amazon's practices?
  - willcipriano 2y ago
    War is probably the largest line item for most people. Losing decades long wars is expensive. You have the social decay that comes with focusing abroad rather than at home. Homelessness, drug addiction (my friends probably were killed by heroin made from poppies that a marine was tasked with protecting, maybe some of yours too) Running a close second (maybe first) is regulatory capture, things like patents and certificates of need. Requirements for patented safety features in cars, patents on medicine, copyright on characters your grandma grew up with.
  - VincentEvans 2y ago
    Haha, DMV… I just moved to North Carolina, and the next available appointment at the DMV to change the address on my driver license is in September (it’s beginning of June as I am writing this). When I moved the last time in a different state - the appointment to change my address on my driver license was same week and took about 15 mins, most of which I spent trying to get a decent picture. So I “know” it doesn’t take very long to print a plastic card.
    - Closi 2y ago
      Doesnt that likely demonstrate insufficient resource/capacity rather than OPs point that there are too many bureaucrats?
      - michaelt 2y ago
        In my country, you wouldn’t need an in person ‘appointment’ to merely change an address on a driving license. Seems rather inefficient to have offices all over the state, appointments, inefficiencies like missed appointments, and the waste of citizens’ time, for a process that can be done by mail.
        yuliyp 2y ago
        Moving states requires validating the information from the previous state too. It's not a matter of the new state just updating an entry in its database. It's an entirely new entry. Given that, in person validation makes sense. Moving within a state is simpler, and indeed can be done online in most states. Granted in many countries there's a national ID system. Also a part of the point of government-issued IDs is that there's more validation around its issuance, and many other parts of society take advantage of that.
      - teitoklien 2y ago
        Maybe there are too many bureaucrats that all the expenses are bloated and funding payroll of unproductive gov workers. Personally ive found that to be more true in most countries. Civil service/Gov workers get tons of new unnecessary roles with bloated titles for departments that barely do anything, just to maintain a cycle of promotion, to keep the gov workforce “motivated”. Not that i disagree that United Health is price gouging that there are way too many corrupt unnatural monopolistic companies preventing america from growing fast and allowing innovation to take place. I think both things are true at the same time. Talk to any gov department and they’ll often tell you, the budgeting is structured in a horrible way that it encourages them to do wasteful spending, they must keep spending entirety of their “budget” to retain a similar sized budget next year, “use it or lose it”, to avoid going through hassle of convincing politicians to re-boost budget later, departments resort to wasting money with meaningless expenses just to retain their budgets… Extrapolate that to a gov that spends more than a trillion dollars annually at times and this is a disastrous level of wasteful spending.
  - sneak 2y ago
    How about the wars the US is fighting directly in 13 different sovereign countries presently? That’s gotta be slightly costly.
    - tekla 2y ago
      Damn I must have missed this news. What countries is the US at war with?
      - sneak 2y ago
        None of it is declared war; it’s all just “special military operation” kinda stuff. It’s actually crazy how many different places the US has boots on the ground. More details in the ET podcast episode, in public rn and can’t find/transcribe. https://open.spotify.com/episode/2Fcid5hjKbdgLWmvHreOpV https://open.spotify.com/episode/2Fcid5hjKbdgLWmvHreOpV
      - deleted 2y ago
        [deleted]
  - luckylion 2y ago
    Some DMV would be a part of the government, it wouldn't be _the_ government. To not build up a straw man, you'd have to compare it to, say, Apple's battery quality control department or Amazon's warehouse maintenance team.
- passwordoops 2y ago
  Also, I forgot to ask specifically which army of government bureaucrats and lawyers? The ones who try to go after the private entities who profit from harming health and environment but outsource costs too greater society?
flightster 2y ago
You forgot vets and dentists!
- bearjaws 2y ago
  Let's not even start on healthcare and PE...
- Der_Einzige 2y ago
  And Chiropractors!
- dventimi 2y ago
  And attorneys!
spicyusername 2y ago
I very much agree with the premise that economists unduly focus on a few metrics of dubious quality - labor force participation, personal consumption expenditures, market capitalization, wage growth, etc - and overfit them to construct a coherent narrative about the "strength" of the economy and what the experience of living in that economy must be like. There's a story right now being peddled by all the talking heads that the economy is "great", but consumers keep reporting feeling terrible, so consumers must not understand something. I think this goes the other way around. Our method for understanding the economy is flawed and is not properly capturing what all consumers know intuitively, things kind of suck, even when you have a job and even when you're still buying things. We need to start thinking about what information needs to be captured and how it needs to be reported to start making better sense of what's broken and how to fix it.
- jprete 2y ago
  They're addicted to metrics instead of observation. Anything that isn't easily measured is considered to not exist, including how people feel about it. Now that I think about it, that's literal selection pressure for psychopathy.
- silverquiet 2y ago
  I agree with much of this and I'll add one of my biggest stressors - opaque pricing. One of the biggest "innovations" in the US in the last decade or so seems to be to add as many hidden fees as possible to every service imaginable. Obviously it's hardly a new idea; I'm sure that human nature being what it is, they had to deal with it in Mesopotamia. But it makes budgeting very difficult; I suppose it's like living in a corrupt country; you just have to add an overhead for bribes as part of day-to-day living. Perhaps it isn't "like" living in a corrupt country; perhaps it just is living in a corrupt country.
  - phkahler 2y ago
    >> I'll add one of my biggest stressors - opaque pricing. Economic "models" make assumptions like markets being efficient. Meanwhile in the business classes next door they teach how to avoid competition because it's a race to the bottom. They all learn the prisoners dilemma as an example because it's how you need to think to avoid overt collusion. I'd like an economic model as powerful as the laws of thermodynamics, where everything is included if not explicitly. But I haven't seen one.
throwaway63467 2y ago
I think in many areas the name of the game is to move the entire market to a place where no real competition is possible. Housing in most parts of the world is a good example, there’s no reason prices for housing should’ve gone up 300-400 % above inflation as we really haven’t run out of space in most places, yet here we are. I have a hard time believing this is just the outcome of unfortunate market conditions, it seems quite engineered to me.
- patrickmay 2y ago
  Housing costs are primarily due to zoning and other local and state government policies that limit or prohibit construction.
  - throwaway63467 2y ago
    And these policies come into place all by themselves?
    - patrickmay 2y ago
      Of course not, but the policies are driven by politics that prevent the market from providing what people want. High housing prices aren't a market failure, they are due to NIMBYism.
      - pixl97 2y ago
        This is a yes and no thing and can wildly vary. In states that have much lower rates of regulation, house prices are still up off the charts, yea, still way lower than California, but they have pushed prices out of reach of the people that live there, so there has to be multiple pieces occurring (for example low interest rates for a very long time).
  - pydry 2y ago
    Housing went up globally because of local policies all across the world all at the same time, huh? Perhaps housing went up because of a global increase in wealth inequality.
nv-vn 2y ago
>Today, Verisign is the single most profitable company in the stock market, a great example of an economic termite This is just blatantly false. VeriSign is in fact the 1215th most profitable company in the stock market [1]. By operating margin, it's 155th [2]. I find it hard to give an article much credit when I can't even get past the introduction without having to comb through citationless false/misleading statements. [1] https://companiesmarketcap.com/most-profitable-companies/page/13/ https://companiesmarketcap.com/most-profitable-companies/pag... [2] https://companiesmarketcap.com/top-companies-by-operating-margin/page/2/ https://companiesmarketcap.com/top-companies-by-operating-ma...
- snozolli 2y ago
  Verisign has a profit of around $1B with around 1k employees. Ingersoll Rand has around 18k employees. SBI holdings has around 19k. Beiersdorf has around 21k. I don't know what the author was thinking or why it was phrased that way, but Verisign seems vastly more profitable per employee than others on the list. Also, I have no idea why they even need ~1k employees.
  - nv-vn 2y ago
    Tbf, this is page 13 of the list. If you go to the first page, Saudi Aramco made $230B with 73k employees according to their website. This is still ~3x as much profits/employee as VeriSign. FAANGs are pretty comparable as well. It's definitely a very profitable company _per employee_, but I fail to find a metric where Verisign can be described as the most profitable public company
jensenbox 2y ago
Adobe
gmuslera 2y ago
Termites or some kind of blood-sucking parasite? Something bigger than fleas, maybe ticks? The effect is different, and ones are meant for i.e. buildings and the other for living thing. I see that as taxes, imposed by some private entity instead of the government, and without potential benefits for you as some taxes may be. And if is that role, there are more direct imposed players that somewhat suck money to let the system work, starting with some banking and insurance.
DarkContinent 2y ago
Re LinkedIn as an example of an economic termite: It's certainly true that LinkedIn is the go to for white collar professionals seeking to make their resumes visible passively to recruiters. But isn't life still easier with LinkedIn than in the before times, when recruiters would dig deep to get folks' phone numbers and then have to call each of those people individually? (I think the modern equivalent would be email addresses.) It's true that LinkedIn makes recruiting much easier to scale to a mass market. And it's also true that it has a monopoly on that scaling for professional employees. But is it fair to call them an economic termite when it's still possible to do sourcing in an admittedly clunky and old fashioned way? Just because they have a monopoly on scaled recruiting doesn't mean that they hold all the cards the way Linde (also in the profile) would in the gas market. This is particularly borne out by the existence of Indeed or Stack Overflow as options for posting your resume for recruiting.
- nutrie 2y ago
  Maybe it is, maybe it isn't. It's not the point. Lawyers tend to puff their smokescreens, convincing people antitrust agenda is difficult. It isn't. Once you start eating a certain amount of the pie, the rules of the game change for you, and you only, because you become too strong, causing imbalance and threatening stability. I'm sure LinkedIn's legal department employs an army of antitrust specialists frequently dealing with accusations from their competitors. That's a good thing. There's one position you never wanna be in: When you don't have a choice, and it doesn't matter whether you're a company or an individual. Autodesk is one prime example of a long-term nasty sales behavior significantly distorting the market. Last but not least, democratic governments around the globe have been failing to enforce these laws, not to mention these are in many cases too permissive in the first place.
- hobs 2y ago
  2022 Stack discontinued their job posting options as it was not viable.
  - marcosdumay 2y ago
    I wouldn't use Stack Overflow as an example of the market not being viable. 2022 SO had a horrible reputation problem, and their main value proposition (that is, qualifying the candidates) used a metric that was completely broken and probably counterproductive in practice (but we can't know that one for sure).
doe_eyes 2y ago
What I find odd about the article is that it does very little to substantiate its core claim - that the reason the economy is broken are small monopolists-but-not-really-monopolists who are trying to fleece you. It opens with the example of rising construction costs. The only remotely relevant example here is Autodesk, but by the article's own admission, "the cost of these products remains relatively minor". And that's an overstatement: they are negligible. I guess Assa Abloy is another example, but really - mini-monopolist power? It's one of countless lock manufacturers. You can buy Schlage, Kwikset, ABUS... In fact, no serious study of the construction industry pins cost increases on stuff like that. There are far more powerful factors at play. The laborers you hire want to be paid more than before (and the government is rising minimum wages). Compliance is getting costlier due to ever-evolving building codes, environmental and energy regulations, and zoning. Customer expectations are increasing (higher finish, more sqft). To the extent the materials are getting expensive, it's usually not your lumber mill being greedy. I don't expect every opinion piece to offer irrefutable proofs, but there is really no effort to build a case for that claim at all. Plus, I think the article falls for the classic trap of "rising prices are not inflation, it's <something else I don't like>".
- reaperman 2y ago
  The areas I might agree with this for construction would be something like lumbermills - where we have plenty of timber available but there’s a bottleneck of capital for mill capacity and they’ve been able to raise prices sharply in the past few years. Investors don’t want to pay to build enough capacity to bring prices down because then only older paid-off mills would win a pricing war if there were any excess capacity.
  - tomrod 2y ago
    Economic theory asserts that where there is profit to be made you will find entrants. So unless something stops entrants for mills (ie funding availability) we should anticipate economic profits to decrease.
    - nothercastle 2y ago
mistermann 2y ago
I'd be surprised if there is a single person in this comment section who would not defend to the death the root cause of all of this: fake democracy. I used to hate Moloch, and hope for him to die, slowly. I've given up and switched sides: I now cheer him on, I may be his very biggest fan. You all deserve what you get, and I hope it gets even worse. I hope your enjoyment level on this planet reaches parity with that of the people of Palestine. PS: I am very sorry for being political, I will try really hard to improve. After all, none of this is really a big deal, I am personally doing quite nicely for myself thank you very much so why should I complain? It is not rational. I will try to be more rational. https://slatestarcodex.com/2014/07/30/meditations-on-moloch/ https://slatestarcodex.com/2014/07/30/meditations-on-moloch/ https://vm.tiktok.com/ZMr8FGyBL/ https://vm.tiktok.com/ZMr8FGyBL/ https://vm.tiktok.com/ZMr8FgQeE/ https://vm.tiktok.com/ZMr8FgQeE/
photochemsyn 2y ago
The fundamental problem all these examples are linked to is the rise of centralized power in the economy, and the antidote has been known for a long time, see this 1952 book by John Galbraith: https://en.wikipedia.org/wiki/American_Capitalism https://en.wikipedia.org/wiki/American_Capitalism > "...private decisions could and presumably would lead to the unhampered exploitation of the public, or of workers, farmers and others who are intrinsically weak as individuals. Such decisions would be a proper object of state interference or would soon so become." Economists like Michael Hudson (I'm a fan) repeatedly refer to the rentier class in this context, and a rentier system (wiki) can be described as one in which > "productive investments are largely lacking, the highest possible share of income is skimmed off from ground-rents, leases and rents and thus in many developing countries, rentier capitalism is an obstacle to economic development. A rentier is someone who earns income from capital without working. (wiki)" Note that if you take capital and use it in a different way, e.g. to build a factory in which you are actively involved in design and production, you are not a rentier, but rather an industrial capitalist (I think we can safely put Elon Musk in this category, and Warren Buffett in the rentier group, for example). For more on this notion: https://thebaffler.com/salvos/dilemmas-of-the-rentier-class https://thebaffler.com/salvos/dilemmas-of-the-rentier-class There are several policies which undermine the power of the rentier class - antitrust in competetive industries is one, but equally important is the nationalization and state control of fundamental sectors that are non-competitive and thus fall under the natural monopoly heading - water, roads, ports, electrical grids, fiber optic networks, basic public health care and education, emergency services, etc. - basically the infrastructure that makes all other economic activity possible, and which the likes of Buffett - a noted utility investor - have had their fat fingers in for many decades. China has incorporated these concepts into its state capitalism model and that's why it is outperforming the USA and Europe when it comes to technological and economic development in almost all sectors, from solar panels to high speed rail to water projects, and now, chips. They're still behind in space tech, but that's really only due to the phenomenon of SpaceX.
- fallingknife 2y ago
  The utility sector has a 10% profit margin. Hardly an example of a monopoly abusing its position. If utilities were nationalized the maximum possible gain is 10% and the potential loss is the unlimited capacity of the government to waste resources.
teeray 2y ago
My most recent instance of this is online ordering with Dunkin’ Donuts. The app has no feedback to indicate what items are in stock, so it’s possible to order things that can’t be fulfilled. If you don’t want their substitute, the store cannot cancel the order. You have to call an 800 number and plead your case. Sure, it’s not a huge hardship, but it’s another instance of making the cancellation path more difficult to frustrate people into writing off the order.
- alephnerd 2y ago
  Dunkin's are franchises. What you're describing is an inventory cataloging issue caused by limited quality and inventory control from corporate over franchisees.
  - GiorgioG 2y ago
    Dunkin's are a franchise, but they're using Dunkin's hardware, software, etc. It's absolutely within their ability to track (and force franchisees to track) inventory. It's also within Dunkin Corp's ability to give stores the capability to provide refunds from the retail locations.
    - alephnerd 2y ago
      > It's absolutely within their ability to track (and force franchisees to track) inventory Depends on whether or not the franchisee has implemented inventory tracking correctly. > It's also within Dunkin Corp's ability to give stores the capability to provide refunds from the retail locations That's the franchisee's decision at that point. Dunkin's corporate was out of the loop in that transaction and as such is reticent. Dunkin's tends to hold its franchisees to a lower quality bar imo.
  - teeray 2y ago
    The comment was about stores not being empowered to cancel orders to the detriment of the customers, not about the reasons why that order was cancelled. The point stands if, say, the store was suddenly closed due to a burst pipe. Corporate is counting on there being enough friction in calling them on the phone to prevent people from doing it altogether.
barlines 2y ago
Economic Termite is a useful new term and I do hope it becomes more popular. Some other examples that the author didn't cover: Payment processors: VISA/ Mastercard have near monopoly over transaction fees Digital Ads: Google & Facebook are the Economic Termites in that space. Cloud Service Providers: The ET's here are AWS and Azure! Text book publishers: Prices always ever go up as the publishers control the market tightly.
- immibis 2y ago
  Americans will swear that Visa and Mastercard earn their transaction fees, but the EU simply mandated them much lower and they were suddenly much lower, and the cards still work here. You don't get rewards, but that's fine, because you're saving that money in fees.
torpfactory 2y ago
I have a theory that one of the core problems is that American businesses just expect to make too much money. Everyone seems to be aiming for 30% gross margin or more, and then working to get monopoly power or regulatory capture in order to achieve that. When I work with businesses in China they sort of expect cutthroat competition and I'm sure they're not seeing 30% margins. Low a behold stuff is a lot cheaper there, beyond what you'd expect given the labor price difference.
- alephnerd 2y ago
  Antitrust is different in China. State-Owned Enterprises and locally backed private conglomerates tend to help put downward price pressures on a lot of goods [0][1] plus there is a system of price ceilings depending on the commodity or product. Local subsidies and tax breaks also help with minimizing the upfront cost allowing for smaller margins being sustainable over a longer term. [0] - https://businesslawreview.uchicago.edu/print-archive/chinese-antitrust-paradox https://businesslawreview.uchicago.edu/print-archive/chinese... [1] - https://global.oup.com/academic/product/chinese-antitrust-exceptionalism-9780198826569?cc=us&lang=en& https://global.oup.com/academic/product/chinese-antitrust-ex...
  - chii 2y ago
    For a lot of commodity manufacturing stuffs (think screws, etc), it's actually true that china has a lot of internal competition which drives down costs.
- PartiallyTyped 2y ago
  > I have a theory that one of the core problems is that American businesses just expect to make too much money. If you pay attention to certain board meetings, earnings calls, and so on, or if you had the opportunity to work for certain companies, you'll find people talking about the growth of growth, i.e. second order. It seems that the notion of sustainable growth is just gone. Corporations chasing lofty goals in absurdly short timeframes.
  - 2y ago
talkingtab 2y ago
I have an axe to grind, so let me be clear: I believe there is strong evidence that we have moved from something approaching a democracy to a corpocracy. I expect many people will tune this out, but here is the question, crucial one. Who Benefits? Do the laws that are passed benefit the common people or corporations? You figure it out. Please do not bother with the whole trickle down nonsense, unless you want to buy this bridge I have. And who can use the law? Can you afford a lawyer? Who can? The author says ".. I want my money back!" Good luck with that. If common people cannot enact laws to their benefit and cannot use the courts to their right wrongs, then we are not a democracy. The article states: "the last four administrations choosing to ‘privatize’ domain registration". So why did that happen? It happened because we allow corporations to pay for our elections. You want to be elected or get funding to stay there? Lobby, aka bribe. This is legal because the US Supreme Court in *Citizens United v. FEC* granted personhood to corporations. We have a situation where our "elected" officials owe there election to corporations. In case you think this analysis is far-fetched here is an article on the American Bar Association site: https://www.americanbar.org/groups/crsj/publications/human_rights_magazine_home/we-the-people/we-the-people-corporations/ https://www.americanbar.org/groups/crsj/publications/human_r... The crucial issue, the emergency, is that these "termites" as the article calls them are now so pervasive that they threaten our society. Our government has decided to use the change in prices, inflation, as the crucial measure of well being. Their argument is that if the rate of change is low, there is no problem. However, wages are the major factor in the economic condition of common people. If common people cannot earn enough (low wages) enough to afford common costs of living we have a new term to add to 'enshitification', etc. It is 'enslavification'.
- palata 2y ago
  I think that we see everywhere that we are reaching the end of a system. Everything has been pushed to its limits.
- gruez 2y ago
  >This is legal because the US Supreme Court in Citizens United v. FEC granted personhood to corporations. This is a misunderstanding of Citizens United v. FEC. From wikipedia >The court held 5–4 that the freedom of speech clause of the First Amendment prohibits the government from restricting independent expenditures for political campaigns by corporations, nonprofit organizations, labor unions, and other associations. It didn't grant "personhood to corporations". That was already a recognized concept centuries before.
deskr 2y ago
I think this will definitely fuel the maker movement. Inevitably, some of those makers will start up a business. Small scale at first, but some might grow. I don't know if it'll grow into a real threat though. But I do know that most of MBA Termites I know don't give a damn if their current workplace tanks. As long they'll hit their bonus targets for the year, they are good. https://makercity.com/book/factoids/ https://makercity.com/book/factoids/
johnwatson11218 2y ago
This is the time for AI assisted efforts to merge with open source to deliver alternatives to all these Big Company type proprietary software solutions. I have been thinking of what it would cost to create enterprise workflow and document management but based on nodejs. Perhaps targeting the business markets of a smaller country such as Pakistan could be a way to get real world feedback before larger markets are targeted. Need all the documentation translated into Pashto? There is now an app for that. Seriously - how hard would it be to recreate the 80% of features that Autodesk is actually used for? Just to get something that is "good enough", using AI to architect it, design the test suites, the integration suites etc?
- losthalo 2y ago
  The problem is the cost to shift to a new product, not cost of the product.
  - johnwatson11218 2y ago
    Not sure what you guys are trying to say here but I have seen, with my own eyes, large enterprise software systems that end up being so fragile it makes you laugh. The incumbents in this space make dinosaurs look like spring chickens by comparison. There are millions upon millions of dollars being spent on stupid, outdated software that simply does not work. The main thrust of my original comment was that - "you thought open source was impressive? wait until the rise of AI powered open source". I think the highly arcane world of enterprise software is similar to being a travel agent in the mid to late 90s.
    - losthalo 2y ago
      Do you think AI is going to solve the problems of proprietary data formats and retraining entire workforces to whole new workflows? AI isn't, so far as I can tell, a universal Easy Button®. Open Source didn't scratch the surface of those problems, but AI will solve them somehow?
      - 2y ago
anonu 2y ago
Whatever happened to "your margin is my opportunity"?
- pseudalopex 2y ago
  "Competition is for losers"
- pixl97 2y ago
  Massive amounts of capital required to join the market. Especially where you can't directly sale to the customer (and yes, this includes selling on Amazon).
- CPLX 2y ago
  Anti-competitive pricing. This shouldn't really be confusing this is first hour first day stuff if you study how and why monopolies exist and can persist. Here's an instant example. Let's say I own every single gas station in your city, a thousand of them or so, and I charge 100% gross margins on gasoline. I do hundreds of millions of dollars in business. You want to open a gas station with lower margins and undercut me. You pick a good location and open it. Great, my location across the street can just sell below your cost unit you run out of money. Bye, see you later. Was that in your business plan? Where'd you get all that capital? What kind of return were they expecting, and how will you deliver it selling below cost for an indefinitely long period of time? Also where are you sourcing your gas? Maybe I have already locked up all the current deliveries given my buying power with the refinery. Also what happens when you find out that nobody will service your pumps because I've locked them all up too, and am paying more than you can afford. And you can't afford anything because you're selling every gallon at a loss. Meanwhile the last couple years of 100% margins have given me a giant pile of cash I can use to do all of these things. That's just a basic example. Sure yeah maybe you could somehow attack this market, with a bunch of capital, maybe there's like something you could do to compete with me. But you're an ambitious and aggressive entrepreneur and that is going to be a TON of work. Why not just, like, start a different business?
- lamontcg 2y ago
  Regulatory capture (in addition to all the other answers you got)
VyseofArcadia 2y ago
I used to work for a competitor to AutoDesk. Popular opinion was that we had, at least in a few key areas, a genuinely better product, but it was pretty discouraging trying to make headway against "but I already know Revit". Vendor lock-in in professional tools is an interesting topic. Sometimes it is active and malicious, but often it's just the natural tendency to keep using the tools you already know how to use.
dindobre 2y ago
I feel like the gist of this could have been "rent seekers bad", something I'd strongly agree with. A non-trivial part of society is checked out of real work and milking others dry because of existing conditions or acquired leverage.
- tinnet 2y ago
  I agree. It seems like an effort to criticize issues of late stage capitalism without sounding like a socialist. There’s also strong overlaps with Varoufakis’ “Technofeudalism”, I.e. construction companies living in autodesks fiefdom.
- losthalo 2y ago
  Has anyone done a real study on what value the financial industly adds?
Joel_Mckay 2y ago
removed due to obligatory disclosure liability
- CPLX 2y ago
  > Despite the botfly score of an 83% LLM poorly auto-generated article Can you explain what this comment means? This article is the personal writing of Matt Stoller, the most prominent writer on issues of monopoly and anti-trust. What do you think it is?
  - Joel_Mckay 2y ago
    removed due to obligatory disclosure liability
    - CPLX 2y ago
      And there’s some reason I should believe the assessment of some random LLM algorithm is more reliable than my own in trusting that I am reading a guy who I’ve met and talked to a couple times, who writes in a specific style and responds to people on Twitter every day, speaks in public regularly, and has been a prominent blogger with a consistent level of output for about 20 years?
theptip 2y ago
I do wonder if a better antitrust strategy would be to pursue a portfolio of actions against second- or third-tier companies like this; the current strategy of going up against Meta, Google, Apple is sound in terms of raw size of antitrust abuses going on, but they remain some of the most popular brands in the US and so it’s often hard to show consumer harm. As a counterpoint, I suspect building momentum by actually winning a bunch of smaller cases for companies like Autodesk or Verisign where the average consumer doesn’t have an opinion, could shift the Overton Window on the issue. I know you come into leadership positions at agencies like the FTC planning for only having 4 years, maybe the above is naive politically. Still, one can hope.
- CPLX 2y ago
  The FTC is doing that too all the time now. For obvious reasons they don't draw the same headlines.
adampencev 2y ago
Reading this as a European (Czechia) feels surreal. Every time a merger or an acquisition takes place, it has to get approved by the anti-monopoly bureau and it’s not uncommon they deny it or request some changes to the ownership structure.
- palata 2y ago
  The US don't (seriously) do antitrust, that's a problem indeed.
smsm42 2y ago
I am wondering about the Autodesk example. If they suck so much and the users hate them so much, why no competition have arisen? Are there some government induced barriers? We saw Microsoft has been an unassailable incumbent on browser market, OS market, personal computing market, etc. And yet, their perceived monopoly has been successfully attacked. It took big companies like Google and Apple and IBM, but it turned out not to be impossible. I'm sure some big companies wouldn't mind a chunk of CAD market - why it's not happening then?
- MrDrMcCoy 2y ago
  Real alternatives that cover the same features and often even support the same file types are available for most Autodesk/Avid/Adobe products. Businesses, universities and individuals need to adopt a mindset of "we're willing to use anything that can perform the task at hand, and should explore all the options" as opposed to "we need what everyone says is the only tool for the job".
- TheJoeMan 2y ago
  For starters the silicon valley types keep pitching cloud-only webbrowser-based tech stacks. Ex. for mechanical design OnShape et. al. Actually Solidworks is trying to push to web-based which few want…
EVa5I7bHFq9mnYK 2y ago
That's what Warren Buffett calls "moat". These are the companies one should invest in.
- amai 2y ago
  Investing in monopolies was always profitable. It just destroys the market. There should be a law that disallows investments into monopolies. But such a law doesn’t exit. Everyone just cares about her/his own profits. In the end most of society is suffering from high prices and stagnation and a few are making huge profits. Everyone hopes to belong to the few ones. This unlimited greed will destroy our society.
baxtr 2y ago
I learned this too late in life. You basically have 2 choices. Either you spend your time working for someone to increase the value of their asset. You get paid a salary, sometimes a very decent one. This is what society trains you for. Or you own assets.
toomuchtodo 2y ago
Is anyone interested in working together building a non profit to bid for and replace the Versign .com operational contract mentioned? Think Let’s Encrypt for the domain registry.
Animats 2y ago
Four. That's the magic number. There have to be four competitors of significant size before prices go down. There are both EU and US studies substantiating this. It's been seen in cellular phone networks, ISPs, drugstores, and banks. Drop below the threshold of four, and the magic happens. Prices go up, margins go up, and consumers lose. Four should be the basis of antitrust policy. Less than four, and there are two options - break up, or become a regulated public utility. Two or three isn't enough. Collusion happens. Explicitly or implicitly, price competition doesn't happen with only two or three players. Four seems to be enough that cartels usually break up on their own. Somebody won't play ball. Four.
- alexpetralia 2y ago
  How about Uber vs. Lyft, for example? Do you think there is competitive pricing here?
  - fire_lake 2y ago
    - they compete with local taxi firms - they compete with other modes of transport - prices have risen substantially after the VC land grab tailed off
    - WalterBright 2y ago
      [flagged]
      - JKCalhoun 2y ago
        It's like there was never a business model there then. Well, in a first world country anyway.
        johnnyanmac 2y ago
        For my area in Los Angeles, it wasn't viable because everyone (or someone you know) has a car. a friend ride is much cheaper than an Uber. I only download the Uber app when I need to get to the airport and am leaving for weeks at a time. Any other time, I take myself, ask a friend, or even consider what remnants we have of public transportation (e.g. instead of taking a horribly expensive uber in/out of LAX, take a shuttle to some smaller area and then hitch a ride. can easily save 4x the cost for a $5 bus ride and maybe 30-45 extra minutes)
pudwallabee 2y ago
The termites thing is kind of amusing. But isnt much of whats described in the article properly known as “rent seeking”? A monopoly might be the ultimate form of rent seeking. But for example a company that buys other companies/products in bulk to trap customers, but never improves or maintains those products and increases prices, is not only engaged in rent seeking but probably committing fraud. But expectation fraud is not a crime. I think theres a tipping point in economics that once rent seeking becomes a certain percentage of the economy, its pretty much over. Its economic corruption partnered with govt corruption.
- lamontcg 2y ago
  Yeah, it is just rent seeking behavior, often with regulatory capture. We don't need to invent new terms for it. And the sloppy presentation here with the 'clever' analogy clearly didn't do the topic well based on the upvoted comments.
berniedurfee 2y ago
They forgot Adobe. Oh, and Protools. And I’m sure many others.
- adzm 2y ago
  Protools has plenty of competition in my experience.
  - berniedurfee 2y ago
    Not in pro-studios. Most are stuck in Protools forever due to lack of interoperability with other software. You can run anything you want, until you need to send a session to another studio and they only use Protools.
Slava_Propanei 2y ago
[dead]
amai 2y ago
tldr; „Where did these economic termites come from? We decided four and a half decades ago that monopolies were good. After 1998, the Antitrust Division stopped bringing monopolization cases, and in 2005, the Supreme Court unanimously endorsed monopolization as foundational to the health of American economy. After twenty years of not bringing cases, business executives realized the best way to run a business was to create a tollbooth in some mostly unnoticed part of society. So now, each supply chain is made up of a bunch of different bottlenecks, too small to notice.“

455 points by passwordoops 2y ago

[flagged]

The provided examples don't hold a candle to the termite-gnawing power of the armies of government bureaucrats and lawyers that are the real source of the cost explosion.

passwordoops 2y ago
I hear this a lot whenever antitrust is brought up. Do you have concrete examples of how, say, the DMV or Kansas Board of Consumer Welfare costs society more that, say, UnitedHealth's price gouging, Microsoft's SaaS, or Google and Apple's backdoor deals with Apple or Amazon's practices?
- willcipriano 2y ago
  War is probably the largest line item for most people. Losing decades long wars is expensive. You have the social decay that comes with focusing abroad rather than at home. Homelessness, drug addiction (my friends probably were killed by heroin made from poppies that a marine was tasked with protecting, maybe some of yours too) Running a close second (maybe first) is regulatory capture, things like patents and certificates of need. Requirements for patented safety features in cars, patents on medicine, copyright on characters your grandma grew up with.
- VincentEvans 2y ago
  Haha, DMV… I just moved to North Carolina, and the next available appointment at the DMV to change the address on my driver license is in September (it’s beginning of June as I am writing this). When I moved the last time in a different state - the appointment to change my address on my driver license was same week and took about 15 mins, most of which I spent trying to get a decent picture. So I “know” it doesn’t take very long to print a plastic card.
  - Closi 2y ago
    Doesnt that likely demonstrate insufficient resource/capacity rather than OPs point that there are too many bureaucrats?
    - michaelt 2y ago
      In my country, you wouldn’t need an in person ‘appointment’ to merely change an address on a driving license. Seems rather inefficient to have offices all over the state, appointments, inefficiencies like missed appointments, and the waste of citizens’ time, for a process that can be done by mail.
      - yuliyp 2y ago
        Moving states requires validating the information from the previous state too. It's not a matter of the new state just updating an entry in its database. It's an entirely new entry. Given that, in person validation makes sense. Moving within a state is simpler, and indeed can be done online in most states. Granted in many countries there's a national ID system. Also a part of the point of government-issued IDs is that there's more validation around its issuance, and many other parts of society take advantage of that.
    - teitoklien 2y ago
      Maybe there are too many bureaucrats that all the expenses are bloated and funding payroll of unproductive gov workers. Personally ive found that to be more true in most countries. Civil service/Gov workers get tons of new unnecessary roles with bloated titles for departments that barely do anything, just to maintain a cycle of promotion, to keep the gov workforce “motivated”. Not that i disagree that United Health is price gouging that there are way too many corrupt unnatural monopolistic companies preventing america from growing fast and allowing innovation to take place. I think both things are true at the same time. Talk to any gov department and they’ll often tell you, the budgeting is structured in a horrible way that it encourages them to do wasteful spending, they must keep spending entirety of their “budget” to retain a similar sized budget next year, “use it or lose it”, to avoid going through hassle of convincing politicians to re-boost budget later, departments resort to wasting money with meaningless expenses just to retain their budgets… Extrapolate that to a gov that spends more than a trillion dollars annually at times and this is a disastrous level of wasteful spending.
- sneak 2y ago
  How about the wars the US is fighting directly in 13 different sovereign countries presently? That’s gotta be slightly costly.
  - tekla 2y ago
    Damn I must have missed this news. What countries is the US at war with?
    - sneak 2y ago
      None of it is declared war; it’s all just “special military operation” kinda stuff. It’s actually crazy how many different places the US has boots on the ground. More details in the ET podcast episode, in public rn and can’t find/transcribe. https://open.spotify.com/episode/2Fcid5hjKbdgLWmvHreOpV https://open.spotify.com/episode/2Fcid5hjKbdgLWmvHreOpV
    - deleted 2y ago
      [deleted]
- luckylion 2y ago
  Some DMV would be a part of the government, it wouldn't be _the_ government. To not build up a straw man, you'd have to compare it to, say, Apple's battery quality control department or Amazon's warehouse maintenance team.
passwordoops 2y ago
Also, I forgot to ask specifically which army of government bureaucrats and lawyers? The ones who try to go after the private entities who profit from harming health and environment but outsource costs too greater society?

flightster 2y ago

You forgot vets and dentists!

bearjaws 2y ago
Let's not even start on healthcare and PE...
Der_Einzige 2y ago
And Chiropractors!
dventimi 2y ago
And attorneys!

spicyusername 2y ago

I very much agree with the premise that economists unduly focus on a few metrics of dubious quality - labor force participation, personal consumption expenditures, market capitalization, wage growth, etc - and overfit them to construct a coherent narrative about the "strength" of the economy and what the experience of living in that economy must be like. There's a story right now being peddled by all the talking heads that the economy is "great", but consumers keep reporting feeling terrible, so consumers must not understand something. I think this goes the other way around. Our method for understanding the economy is flawed and is not properly capturing what all consumers know intuitively, things kind of suck, even when you have a job and even when you're still buying things. We need to start thinking about what information needs to be captured and how it needs to be reported to start making better sense of what's broken and how to fix it.

jprete 2y ago
They're addicted to metrics instead of observation. Anything that isn't easily measured is considered to not exist, including how people feel about it. Now that I think about it, that's literal selection pressure for psychopathy.
silverquiet 2y ago
I agree with much of this and I'll add one of my biggest stressors - opaque pricing. One of the biggest "innovations" in the US in the last decade or so seems to be to add as many hidden fees as possible to every service imaginable. Obviously it's hardly a new idea; I'm sure that human nature being what it is, they had to deal with it in Mesopotamia. But it makes budgeting very difficult; I suppose it's like living in a corrupt country; you just have to add an overhead for bribes as part of day-to-day living. Perhaps it isn't "like" living in a corrupt country; perhaps it just is living in a corrupt country.
- phkahler 2y ago
  >> I'll add one of my biggest stressors - opaque pricing. Economic "models" make assumptions like markets being efficient. Meanwhile in the business classes next door they teach how to avoid competition because it's a race to the bottom. They all learn the prisoners dilemma as an example because it's how you need to think to avoid overt collusion. I'd like an economic model as powerful as the laws of thermodynamics, where everything is included if not explicitly. But I haven't seen one.

throwaway63467 2y ago

I think in many areas the name of the game is to move the entire market to a place where no real competition is possible. Housing in most parts of the world is a good example, there’s no reason prices for housing should’ve gone up 300-400 % above inflation as we really haven’t run out of space in most places, yet here we are. I have a hard time believing this is just the outcome of unfortunate market conditions, it seems quite engineered to me.

patrickmay 2y ago
Housing costs are primarily due to zoning and other local and state government policies that limit or prohibit construction.
- throwaway63467 2y ago
  And these policies come into place all by themselves?
  - patrickmay 2y ago
    Of course not, but the policies are driven by politics that prevent the market from providing what people want. High housing prices aren't a market failure, they are due to NIMBYism.
    - pixl97 2y ago
      This is a yes and no thing and can wildly vary. In states that have much lower rates of regulation, house prices are still up off the charts, yea, still way lower than California, but they have pushed prices out of reach of the people that live there, so there has to be multiple pieces occurring (for example low interest rates for a very long time).
- pydry 2y ago
  Housing went up globally because of local policies all across the world all at the same time, huh? Perhaps housing went up because of a global increase in wealth inequality.

nv-vn 2y ago

>Today, Verisign is the single most profitable company in the stock market, a great example of an economic termite This is just blatantly false. VeriSign is in fact the 1215th most profitable company in the stock market [1]. By operating margin, it's 155th [2]. I find it hard to give an article much credit when I can't even get past the introduction without having to comb through citationless false/misleading statements. [1] https://companiesmarketcap.com/most-profitable-companies/page/13/ https://companiesmarketcap.com/most-profitable-companies/pag... [2] https://companiesmarketcap.com/top-companies-by-operating-margin/page/2/ https://companiesmarketcap.com/top-companies-by-operating-ma...

snozolli 2y ago
Verisign has a profit of around $1B with around 1k employees. Ingersoll Rand has around 18k employees. SBI holdings has around 19k. Beiersdorf has around 21k. I don't know what the author was thinking or why it was phrased that way, but Verisign seems vastly more profitable per employee than others on the list. Also, I have no idea why they even need ~1k employees.
- nv-vn 2y ago
  Tbf, this is page 13 of the list. If you go to the first page, Saudi Aramco made $230B with 73k employees according to their website. This is still ~3x as much profits/employee as VeriSign. FAANGs are pretty comparable as well. It's definitely a very profitable company _per employee_, but I fail to find a metric where Verisign can be described as the most profitable public company

jensenbox 2y ago

Adobe

gmuslera 2y ago

Termites or some kind of blood-sucking parasite? Something bigger than fleas, maybe ticks? The effect is different, and ones are meant for i.e. buildings and the other for living thing. I see that as taxes, imposed by some private entity instead of the government, and without potential benefits for you as some taxes may be. And if is that role, there are more direct imposed players that somewhat suck money to let the system work, starting with some banking and insurance.

DarkContinent 2y ago

Re LinkedIn as an example of an economic termite: It's certainly true that LinkedIn is the go to for white collar professionals seeking to make their resumes visible passively to recruiters. But isn't life still easier with LinkedIn than in the before times, when recruiters would dig deep to get folks' phone numbers and then have to call each of those people individually? (I think the modern equivalent would be email addresses.) It's true that LinkedIn makes recruiting much easier to scale to a mass market. And it's also true that it has a monopoly on that scaling for professional employees. But is it fair to call them an economic termite when it's still possible to do sourcing in an admittedly clunky and old fashioned way? Just because they have a monopoly on scaled recruiting doesn't mean that they hold all the cards the way Linde (also in the profile) would in the gas market. This is particularly borne out by the existence of Indeed or Stack Overflow as options for posting your resume for recruiting.

nutrie 2y ago
Maybe it is, maybe it isn't. It's not the point. Lawyers tend to puff their smokescreens, convincing people antitrust agenda is difficult. It isn't. Once you start eating a certain amount of the pie, the rules of the game change for you, and you only, because you become too strong, causing imbalance and threatening stability. I'm sure LinkedIn's legal department employs an army of antitrust specialists frequently dealing with accusations from their competitors. That's a good thing. There's one position you never wanna be in: When you don't have a choice, and it doesn't matter whether you're a company or an individual. Autodesk is one prime example of a long-term nasty sales behavior significantly distorting the market. Last but not least, democratic governments around the globe have been failing to enforce these laws, not to mention these are in many cases too permissive in the first place.
hobs 2y ago
2022 Stack discontinued their job posting options as it was not viable.
- marcosdumay 2y ago
  I wouldn't use Stack Overflow as an example of the market not being viable. 2022 SO had a horrible reputation problem, and their main value proposition (that is, qualifying the candidates) used a metric that was completely broken and probably counterproductive in practice (but we can't know that one for sure).

doe_eyes 2y ago

What I find odd about the article is that it does very little to substantiate its core claim - that the reason the economy is broken are small monopolists-but-not-really-monopolists who are trying to fleece you. It opens with the example of rising construction costs. The only remotely relevant example here is Autodesk, but by the article's own admission, "the cost of these products remains relatively minor". And that's an overstatement: they are negligible. I guess Assa Abloy is another example, but really - mini-monopolist power? It's one of countless lock manufacturers. You can buy Schlage, Kwikset, ABUS... In fact, no serious study of the construction industry pins cost increases on stuff like that. There are far more powerful factors at play. The laborers you hire want to be paid more than before (and the government is rising minimum wages). Compliance is getting costlier due to ever-evolving building codes, environmental and energy regulations, and zoning. Customer expectations are increasing (higher finish, more sqft). To the extent the materials are getting expensive, it's usually not your lumber mill being greedy. I don't expect every opinion piece to offer irrefutable proofs, but there is really no effort to build a case for that claim at all. Plus, I think the article falls for the classic trap of "rising prices are not inflation, it's <something else I don't like>".

reaperman 2y ago
The areas I might agree with this for construction would be something like lumbermills - where we have plenty of timber available but there’s a bottleneck of capital for mill capacity and they’ve been able to raise prices sharply in the past few years. Investors don’t want to pay to build enough capacity to bring prices down because then only older paid-off mills would win a pricing war if there were any excess capacity.
- tomrod 2y ago
  Economic theory asserts that where there is profit to be made you will find entrants. So unless something stops entrants for mills (ie funding availability) we should anticipate economic profits to decrease.
  - nothercastle 2y ago

mistermann 2y ago

I'd be surprised if there is a single person in this comment section who would not defend to the death the root cause of all of this: fake democracy. I used to hate Moloch, and hope for him to die, slowly. I've given up and switched sides: I now cheer him on, I may be his very biggest fan. You all deserve what you get, and I hope it gets even worse. I hope your enjoyment level on this planet reaches parity with that of the people of Palestine. PS: I am very sorry for being political, I will try really hard to improve. After all, none of this is really a big deal, I am personally doing quite nicely for myself thank you very much so why should I complain? It is not rational. I will try to be more rational. https://slatestarcodex.com/2014/07/30/meditations-on-moloch/ https://slatestarcodex.com/2014/07/30/meditations-on-moloch/ https://vm.tiktok.com/ZMr8FGyBL/ https://vm.tiktok.com/ZMr8FGyBL/ https://vm.tiktok.com/ZMr8FgQeE/ https://vm.tiktok.com/ZMr8FgQeE/

photochemsyn 2y ago

The fundamental problem all these examples are linked to is the rise of centralized power in the economy, and the antidote has been known for a long time, see this 1952 book by John Galbraith: https://en.wikipedia.org/wiki/American_Capitalism https://en.wikipedia.org/wiki/American_Capitalism > "...private decisions could and presumably would lead to the unhampered exploitation of the public, or of workers, farmers and others who are intrinsically weak as individuals. Such decisions would be a proper object of state interference or would soon so become." Economists like Michael Hudson (I'm a fan) repeatedly refer to the rentier class in this context, and a rentier system (wiki) can be described as one in which > "productive investments are largely lacking, the highest possible share of income is skimmed off from ground-rents, leases and rents and thus in many developing countries, rentier capitalism is an obstacle to economic development. A rentier is someone who earns income from capital without working. (wiki)" Note that if you take capital and use it in a different way, e.g. to build a factory in which you are actively involved in design and production, you are not a rentier, but rather an industrial capitalist (I think we can safely put Elon Musk in this category, and Warren Buffett in the rentier group, for example). For more on this notion: https://thebaffler.com/salvos/dilemmas-of-the-rentier-class https://thebaffler.com/salvos/dilemmas-of-the-rentier-class There are several policies which undermine the power of the rentier class - antitrust in competetive industries is one, but equally important is the nationalization and state control of fundamental sectors that are non-competitive and thus fall under the natural monopoly heading - water, roads, ports, electrical grids, fiber optic networks, basic public health care and education, emergency services, etc. - basically the infrastructure that makes all other economic activity possible, and which the likes of Buffett - a noted utility investor - have had their fat fingers in for many decades. China has incorporated these concepts into its state capitalism model and that's why it is outperforming the USA and Europe when it comes to technological and economic development in almost all sectors, from solar panels to high speed rail to water projects, and now, chips. They're still behind in space tech, but that's really only due to the phenomenon of SpaceX.

fallingknife 2y ago
The utility sector has a 10% profit margin. Hardly an example of a monopoly abusing its position. If utilities were nationalized the maximum possible gain is 10% and the potential loss is the unlimited capacity of the government to waste resources.

teeray 2y ago

My most recent instance of this is online ordering with Dunkin’ Donuts. The app has no feedback to indicate what items are in stock, so it’s possible to order things that can’t be fulfilled. If you don’t want their substitute, the store cannot cancel the order. You have to call an 800 number and plead your case. Sure, it’s not a huge hardship, but it’s another instance of making the cancellation path more difficult to frustrate people into writing off the order.

alephnerd 2y ago
Dunkin's are franchises. What you're describing is an inventory cataloging issue caused by limited quality and inventory control from corporate over franchisees.
- GiorgioG 2y ago
  Dunkin's are a franchise, but they're using Dunkin's hardware, software, etc. It's absolutely within their ability to track (and force franchisees to track) inventory. It's also within Dunkin Corp's ability to give stores the capability to provide refunds from the retail locations.
  - alephnerd 2y ago
    > It's absolutely within their ability to track (and force franchisees to track) inventory Depends on whether or not the franchisee has implemented inventory tracking correctly. > It's also within Dunkin Corp's ability to give stores the capability to provide refunds from the retail locations That's the franchisee's decision at that point. Dunkin's corporate was out of the loop in that transaction and as such is reticent. Dunkin's tends to hold its franchisees to a lower quality bar imo.
- teeray 2y ago
  The comment was about stores not being empowered to cancel orders to the detriment of the customers, not about the reasons why that order was cancelled. The point stands if, say, the store was suddenly closed due to a burst pipe. Corporate is counting on there being enough friction in calling them on the phone to prevent people from doing it altogether.

barlines 2y ago

Economic Termite is a useful new term and I do hope it becomes more popular. Some other examples that the author didn't cover: Payment processors: VISA/ Mastercard have near monopoly over transaction fees Digital Ads: Google & Facebook are the Economic Termites in that space. Cloud Service Providers: The ET's here are AWS and Azure! Text book publishers: Prices always ever go up as the publishers control the market tightly.

immibis 2y ago
Americans will swear that Visa and Mastercard earn their transaction fees, but the EU simply mandated them much lower and they were suddenly much lower, and the cards still work here. You don't get rewards, but that's fine, because you're saving that money in fees.

torpfactory 2y ago

I have a theory that one of the core problems is that American businesses just expect to make too much money. Everyone seems to be aiming for 30% gross margin or more, and then working to get monopoly power or regulatory capture in order to achieve that. When I work with businesses in China they sort of expect cutthroat competition and I'm sure they're not seeing 30% margins. Low a behold stuff is a lot cheaper there, beyond what you'd expect given the labor price difference.

alephnerd 2y ago
Antitrust is different in China. State-Owned Enterprises and locally backed private conglomerates tend to help put downward price pressures on a lot of goods [0][1] plus there is a system of price ceilings depending on the commodity or product. Local subsidies and tax breaks also help with minimizing the upfront cost allowing for smaller margins being sustainable over a longer term. [0] - https://businesslawreview.uchicago.edu/print-archive/chinese-antitrust-paradox https://businesslawreview.uchicago.edu/print-archive/chinese... [1] - https://global.oup.com/academic/product/chinese-antitrust-exceptionalism-9780198826569?cc=us&lang=en& https://global.oup.com/academic/product/chinese-antitrust-ex...
- chii 2y ago
  For a lot of commodity manufacturing stuffs (think screws, etc), it's actually true that china has a lot of internal competition which drives down costs.
PartiallyTyped 2y ago
> I have a theory that one of the core problems is that American businesses just expect to make too much money. If you pay attention to certain board meetings, earnings calls, and so on, or if you had the opportunity to work for certain companies, you'll find people talking about the growth of growth, i.e. second order. It seems that the notion of sustainable growth is just gone. Corporations chasing lofty goals in absurdly short timeframes.
- 2y ago

talkingtab 2y ago

I have an axe to grind, so let me be clear: I believe there is strong evidence that we have moved from something approaching a democracy to a corpocracy. I expect many people will tune this out, but here is the question, crucial one. Who Benefits? Do the laws that are passed benefit the common people or corporations? You figure it out. Please do not bother with the whole trickle down nonsense, unless you want to buy this bridge I have. And who can use the law? Can you afford a lawyer? Who can? The author says ".. I want my money back!" Good luck with that. If common people cannot enact laws to their benefit and cannot use the courts to their right wrongs, then we are not a democracy. The article states: "the last four administrations choosing to ‘privatize’ domain registration". So why did that happen? It happened because we allow corporations to pay for our elections. You want to be elected or get funding to stay there? Lobby, aka bribe. This is legal because the US Supreme Court in *Citizens United v. FEC* granted personhood to corporations. We have a situation where our "elected" officials owe there election to corporations. In case you think this analysis is far-fetched here is an article on the American Bar Association site: https://www.americanbar.org/groups/crsj/publications/human_rights_magazine_home/we-the-people/we-the-people-corporations/ https://www.americanbar.org/groups/crsj/publications/human_r... The crucial issue, the emergency, is that these "termites" as the article calls them are now so pervasive that they threaten our society. Our government has decided to use the change in prices, inflation, as the crucial measure of well being. Their argument is that if the rate of change is low, there is no problem. However, wages are the major factor in the economic condition of common people. If common people cannot earn enough (low wages) enough to afford common costs of living we have a new term to add to 'enshitification', etc. It is 'enslavification'.

palata 2y ago
I think that we see everywhere that we are reaching the end of a system. Everything has been pushed to its limits.
gruez 2y ago
>This is legal because the US Supreme Court in Citizens United v. FEC granted personhood to corporations. This is a misunderstanding of Citizens United v. FEC. From wikipedia >The court held 5–4 that the freedom of speech clause of the First Amendment prohibits the government from restricting independent expenditures for political campaigns by corporations, nonprofit organizations, labor unions, and other associations. It didn't grant "personhood to corporations". That was already a recognized concept centuries before.

deskr 2y ago

I think this will definitely fuel the maker movement. Inevitably, some of those makers will start up a business. Small scale at first, but some might grow. I don't know if it'll grow into a real threat though. But I do know that most of MBA Termites I know don't give a damn if their current workplace tanks. As long they'll hit their bonus targets for the year, they are good. https://makercity.com/book/factoids/ https://makercity.com/book/factoids/

johnwatson11218 2y ago

This is the time for AI assisted efforts to merge with open source to deliver alternatives to all these Big Company type proprietary software solutions. I have been thinking of what it would cost to create enterprise workflow and document management but based on nodejs. Perhaps targeting the business markets of a smaller country such as Pakistan could be a way to get real world feedback before larger markets are targeted. Need all the documentation translated into Pashto? There is now an app for that. Seriously - how hard would it be to recreate the 80% of features that Autodesk is actually used for? Just to get something that is "good enough", using AI to architect it, design the test suites, the integration suites etc?

losthalo 2y ago
The problem is the cost to shift to a new product, not cost of the product.
- johnwatson11218 2y ago
  Not sure what you guys are trying to say here but I have seen, with my own eyes, large enterprise software systems that end up being so fragile it makes you laugh. The incumbents in this space make dinosaurs look like spring chickens by comparison. There are millions upon millions of dollars being spent on stupid, outdated software that simply does not work. The main thrust of my original comment was that - "you thought open source was impressive? wait until the rise of AI powered open source". I think the highly arcane world of enterprise software is similar to being a travel agent in the mid to late 90s.
  - losthalo 2y ago
    Do you think AI is going to solve the problems of proprietary data formats and retraining entire workforces to whole new workflows? AI isn't, so far as I can tell, a universal Easy Button®. Open Source didn't scratch the surface of those problems, but AI will solve them somehow?
    - 2y ago

anonu 2y ago

Whatever happened to "your margin is my opportunity"?

pseudalopex 2y ago
"Competition is for losers"
pixl97 2y ago
Massive amounts of capital required to join the market. Especially where you can't directly sale to the customer (and yes, this includes selling on Amazon).
CPLX 2y ago
Anti-competitive pricing. This shouldn't really be confusing this is first hour first day stuff if you study how and why monopolies exist and can persist. Here's an instant example. Let's say I own every single gas station in your city, a thousand of them or so, and I charge 100% gross margins on gasoline. I do hundreds of millions of dollars in business. You want to open a gas station with lower margins and undercut me. You pick a good location and open it. Great, my location across the street can just sell below your cost unit you run out of money. Bye, see you later. Was that in your business plan? Where'd you get all that capital? What kind of return were they expecting, and how will you deliver it selling below cost for an indefinitely long period of time? Also where are you sourcing your gas? Maybe I have already locked up all the current deliveries given my buying power with the refinery. Also what happens when you find out that nobody will service your pumps because I've locked them all up too, and am paying more than you can afford. And you can't afford anything because you're selling every gallon at a loss. Meanwhile the last couple years of 100% margins have given me a giant pile of cash I can use to do all of these things. That's just a basic example. Sure yeah maybe you could somehow attack this market, with a bunch of capital, maybe there's like something you could do to compete with me. But you're an ambitious and aggressive entrepreneur and that is going to be a TON of work. Why not just, like, start a different business?
lamontcg 2y ago
Regulatory capture (in addition to all the other answers you got)

VyseofArcadia 2y ago

I used to work for a competitor to AutoDesk. Popular opinion was that we had, at least in a few key areas, a genuinely better product, but it was pretty discouraging trying to make headway against "but I already know Revit". Vendor lock-in in professional tools is an interesting topic. Sometimes it is active and malicious, but often it's just the natural tendency to keep using the tools you already know how to use.

dindobre 2y ago

I feel like the gist of this could have been "rent seekers bad", something I'd strongly agree with. A non-trivial part of society is checked out of real work and milking others dry because of existing conditions or acquired leverage.

tinnet 2y ago
I agree. It seems like an effort to criticize issues of late stage capitalism without sounding like a socialist. There’s also strong overlaps with Varoufakis’ “Technofeudalism”, I.e. construction companies living in autodesks fiefdom.
losthalo 2y ago
Has anyone done a real study on what value the financial industly adds?

Joel_Mckay 2y ago

removed due to obligatory disclosure liability

CPLX 2y ago
> Despite the botfly score of an 83% LLM poorly auto-generated article Can you explain what this comment means? This article is the personal writing of Matt Stoller, the most prominent writer on issues of monopoly and anti-trust. What do you think it is?
- Joel_Mckay 2y ago
  removed due to obligatory disclosure liability
  - CPLX 2y ago
    And there’s some reason I should believe the assessment of some random LLM algorithm is more reliable than my own in trusting that I am reading a guy who I’ve met and talked to a couple times, who writes in a specific style and responds to people on Twitter every day, speaks in public regularly, and has been a prominent blogger with a consistent level of output for about 20 years?

theptip 2y ago

I do wonder if a better antitrust strategy would be to pursue a portfolio of actions against second- or third-tier companies like this; the current strategy of going up against Meta, Google, Apple is sound in terms of raw size of antitrust abuses going on, but they remain some of the most popular brands in the US and so it’s often hard to show consumer harm. As a counterpoint, I suspect building momentum by actually winning a bunch of smaller cases for companies like Autodesk or Verisign where the average consumer doesn’t have an opinion, could shift the Overton Window on the issue. I know you come into leadership positions at agencies like the FTC planning for only having 4 years, maybe the above is naive politically. Still, one can hope.

CPLX 2y ago
The FTC is doing that too all the time now. For obvious reasons they don't draw the same headlines.

adampencev 2y ago

Reading this as a European (Czechia) feels surreal. Every time a merger or an acquisition takes place, it has to get approved by the anti-monopoly bureau and it’s not uncommon they deny it or request some changes to the ownership structure.

palata 2y ago
The US don't (seriously) do antitrust, that's a problem indeed.

smsm42 2y ago

I am wondering about the Autodesk example. If they suck so much and the users hate them so much, why no competition have arisen? Are there some government induced barriers? We saw Microsoft has been an unassailable incumbent on browser market, OS market, personal computing market, etc. And yet, their perceived monopoly has been successfully attacked. It took big companies like Google and Apple and IBM, but it turned out not to be impossible. I'm sure some big companies wouldn't mind a chunk of CAD market - why it's not happening then?

MrDrMcCoy 2y ago
Real alternatives that cover the same features and often even support the same file types are available for most Autodesk/Avid/Adobe products. Businesses, universities and individuals need to adopt a mindset of "we're willing to use anything that can perform the task at hand, and should explore all the options" as opposed to "we need what everyone says is the only tool for the job".
TheJoeMan 2y ago
For starters the silicon valley types keep pitching cloud-only webbrowser-based tech stacks. Ex. for mechanical design OnShape et. al. Actually Solidworks is trying to push to web-based which few want…

EVa5I7bHFq9mnYK 2y ago

That's what Warren Buffett calls "moat". These are the companies one should invest in.

amai 2y ago
Investing in monopolies was always profitable. It just destroys the market. There should be a law that disallows investments into monopolies. But such a law doesn’t exit. Everyone just cares about her/his own profits. In the end most of society is suffering from high prices and stagnation and a few are making huge profits. Everyone hopes to belong to the few ones. This unlimited greed will destroy our society.

baxtr 2y ago

I learned this too late in life. You basically have 2 choices. Either you spend your time working for someone to increase the value of their asset. You get paid a salary, sometimes a very decent one. This is what society trains you for. Or you own assets.

toomuchtodo 2y ago

Is anyone interested in working together building a non profit to bid for and replace the Versign .com operational contract mentioned? Think Let’s Encrypt for the domain registry.

Animats 2y ago

Four. That's the magic number. There have to be four competitors of significant size before prices go down. There are both EU and US studies substantiating this. It's been seen in cellular phone networks, ISPs, drugstores, and banks. Drop below the threshold of four, and the magic happens. Prices go up, margins go up, and consumers lose. Four should be the basis of antitrust policy. Less than four, and there are two options - break up, or become a regulated public utility. Two or three isn't enough. Collusion happens. Explicitly or implicitly, price competition doesn't happen with only two or three players. Four seems to be enough that cartels usually break up on their own. Somebody won't play ball. Four.

alexpetralia 2y ago
How about Uber vs. Lyft, for example? Do you think there is competitive pricing here?
- fire_lake 2y ago
  - they compete with local taxi firms - they compete with other modes of transport - prices have risen substantially after the VC land grab tailed off
  - WalterBright 2y ago
    [flagged]
    - JKCalhoun 2y ago
      It's like there was never a business model there then. Well, in a first world country anyway.
      - johnnyanmac 2y ago
        For my area in Los Angeles, it wasn't viable because everyone (or someone you know) has a car. a friend ride is much cheaper than an Uber. I only download the Uber app when I need to get to the airport and am leaving for weeks at a time. Any other time, I take myself, ask a friend, or even consider what remnants we have of public transportation (e.g. instead of taking a horribly expensive uber in/out of LAX, take a shuttle to some smaller area and then hitch a ride. can easily save 4x the cost for a $5 bus ride and maybe 30-45 extra minutes)

pudwallabee 2y ago

The termites thing is kind of amusing. But isnt much of whats described in the article properly known as “rent seeking”? A monopoly might be the ultimate form of rent seeking. But for example a company that buys other companies/products in bulk to trap customers, but never improves or maintains those products and increases prices, is not only engaged in rent seeking but probably committing fraud. But expectation fraud is not a crime. I think theres a tipping point in economics that once rent seeking becomes a certain percentage of the economy, its pretty much over. Its economic corruption partnered with govt corruption.

lamontcg 2y ago
Yeah, it is just rent seeking behavior, often with regulatory capture. We don't need to invent new terms for it. And the sloppy presentation here with the 'clever' analogy clearly didn't do the topic well based on the upvoted comments.

berniedurfee 2y ago

They forgot Adobe. Oh, and Protools. And I’m sure many others.

adzm 2y ago
Protools has plenty of competition in my experience.
- berniedurfee 2y ago
  Not in pro-studios. Most are stuck in Protools forever due to lack of interoperability with other software. You can run anything you want, until you need to send a session to another studio and they only use Protools.

Slava_Propanei 2y ago

[dead]

amai 2y ago

tldr; „Where did these economic termites come from? We decided four and a half decades ago that monopolies were good. After 1998, the Antitrust Division stopped bringing monopolization cases, and in 2005, the Supreme Court unanimously endorsed monopolization as foundational to the health of American economy. After twenty years of not bringing cases, business executives realized the best way to run a business was to create a tollbooth in some mostly unnoticed part of society. So now, each supply chain is made up of a bunch of different bottlenecks, too small to notice.“