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We should let failing businesses fail. Everyone would have learned their lessons a long time ago and we would have less corporate greed/corpo-political corrupti

by caseyy 2y ago

We should let failing businesses fail. Everyone would have learned their lessons a long time ago and we would have less corporate greed/corpo-political corruption. And people should be angry at them for failing and causing economic disruption (assuming it would even be as bad as prophets of doom say). Their suffering should be publicly attached to its harbingers — greedy and incompetent executives. People responsible and accountable for the current situation would face natural consequences of their actions. But of course, I don’t think it will happen. We bought into the delusion that executives and big business can do no wrong, and that they somehow shouldn’t face the results of their actions. Their employees, stakeholders, and the broader economy just keep being “affected by difficult times”. But neither these companies would be “difficult times” nor subprime mortgage lenders and CRA’s were “difficult times”. They are and were just groups of greedy executive sociopaths getting a free ride off society, knowing full well the negative externalities of their actions. We keep letting weeds grow in our proverbial garden unchecked and then say “if we take out the weeds then there will be no more garden”. Well guess how that happened, and guess what’s the only way to get a sustainable garden back. Except with weeds, dealing with them requires action, effort. With large corrupt businesses, we don’t need to do anything — just allow natural consequences.

alephnerd 2y ago
> We should let failing businesses fail. Everyone would have learned their lessons a long time ago and we would have less corporate greed/corpo-political corruption In most cases I agree, but for extremely CapEx heavy industries, this is a death sentence. For example, the entire semiconductor industry in Taiwan, South Korea, and Japan would not exist without industrial strategy and capital provided by local and central government. In fact, unlike in the US and Europe, anti-trust never had significant mindshare in Asian economies, and much of the economy in these countries are largely split among a couple dozen conglomerates or holding companies. This is the model that China is using, as it was Taiwan, Japan, and South Korea that played the largest role in making China a multi-trillion economy by investing in China decades before the US and the rest of the West began investing in the early 2000s. A purely profit driven incentive structure is diametrically opposed to commodification (which is the ultimate form of production at scale) because the margins pressures would be too severe. This is exactly what caused the entire semiconductor fabrication industry to collapse in the US in the 2000s-2010s, while Asian countries continued to spend tens of billions subsidizing a handful of conglomerates that represented these industries.
- deleted 2y ago
  [deleted]
- seo-speedwagon 2y ago
  These companies exist as capitalist organizations, they don’t build planes and chips out of patriotic noblesse, they do it to turn a profit. In such a system, failed companies go out of business. It really is that simple, anything else leads to bailouts that socialize losses for companies that privatize profits. If they’re so important, then they should be nationalized.
  - alephnerd 2y ago
    Nationalization is not ideal because the operation of SOEs can be tainted by the whims of political incentives instead of operational incentives. There is a reason why formally socialist China and India are trying to develop private sector players in these fields - a private corporation has the ability to be much more nimble around hiring and capital allocation unlike an SOE. Also, your argument does not challenge my point how Taiwan, Japan, and South Korea leverage massive conglomerates instead of SOEs or small businesses to cement their lead in the Semiconductor Industry.
    - maeil 2y ago
      > There is a reason why formally socialist China and India are trying to develop private sector players in these fields - a private corporation has the ability to be much more nimble around hiring and capital allocation unlike an SOE. Are they? After Chinese private tech companies got too big, they reigned them in and made them closer to the state than ever. I'd love to see actual proof that China is really lessening it's involvement in companies, because I haven't seen such a trend in a significant manner. > Also, your argument does not challenge my point how Taiwan, Japan, and South Korea leverage massive conglomerates instead of SOEs or small businesses to cement their lead in the Semiconductor Industry. I happen to be based in Korea and be familiar with the insides of the conglomerates. None of the conglomerate subsidiaries have a monopoly in any sector or country like, for example, Google does in ads and search, or Intel did in CPUs for a decade or so, with >80% market shares. Hyundai Auto is kind of getting there domestically, but that's it, and it's the exception plus the domestic market is only a small part of their revenue. Similarly, the overwhelming majority of the subsidiaries are not "too big to fail". During the IMF crisis in the late 90s and in its aftermath, several conglomerates failed. As a result, to this day, the financials of the subsidiaries are not particularly intertwined with each other. Sure, they sometimes give each other contracts (why wouldn't you), but that's always just a small part. They're run very independently. And it still happens that they "fail", or at least do poorly enough that the conglomerate wants to get rid of them, in which case there's usually a buyer looking to snap it up and turn things around.

by caseyy 2y ago

alephnerd 2y ago

> We should let failing businesses fail. Everyone would have learned their lessons a long time ago and we would have less corporate greed/corpo-political corruption In most cases I agree, but for extremely CapEx heavy industries, this is a death sentence. For example, the entire semiconductor industry in Taiwan, South Korea, and Japan would not exist without industrial strategy and capital provided by local and central government. In fact, unlike in the US and Europe, anti-trust never had significant mindshare in Asian economies, and much of the economy in these countries are largely split among a couple dozen conglomerates or holding companies. This is the model that China is using, as it was Taiwan, Japan, and South Korea that played the largest role in making China a multi-trillion economy by investing in China decades before the US and the rest of the West began investing in the early 2000s. A purely profit driven incentive structure is diametrically opposed to commodification (which is the ultimate form of production at scale) because the margins pressures would be too severe. This is exactly what caused the entire semiconductor fabrication industry to collapse in the US in the 2000s-2010s, while Asian countries continued to spend tens of billions subsidizing a handful of conglomerates that represented these industries.

deleted 2y ago
[deleted]
seo-speedwagon 2y ago
These companies exist as capitalist organizations, they don’t build planes and chips out of patriotic noblesse, they do it to turn a profit. In such a system, failed companies go out of business. It really is that simple, anything else leads to bailouts that socialize losses for companies that privatize profits. If they’re so important, then they should be nationalized.
- alephnerd 2y ago
  Nationalization is not ideal because the operation of SOEs can be tainted by the whims of political incentives instead of operational incentives. There is a reason why formally socialist China and India are trying to develop private sector players in these fields - a private corporation has the ability to be much more nimble around hiring and capital allocation unlike an SOE. Also, your argument does not challenge my point how Taiwan, Japan, and South Korea leverage massive conglomerates instead of SOEs or small businesses to cement their lead in the Semiconductor Industry.
  - maeil 2y ago
    > There is a reason why formally socialist China and India are trying to develop private sector players in these fields - a private corporation has the ability to be much more nimble around hiring and capital allocation unlike an SOE. Are they? After Chinese private tech companies got too big, they reigned them in and made them closer to the state than ever. I'd love to see actual proof that China is really lessening it's involvement in companies, because I haven't seen such a trend in a significant manner. > Also, your argument does not challenge my point how Taiwan, Japan, and South Korea leverage massive conglomerates instead of SOEs or small businesses to cement their lead in the Semiconductor Industry. I happen to be based in Korea and be familiar with the insides of the conglomerates. None of the conglomerate subsidiaries have a monopoly in any sector or country like, for example, Google does in ads and search, or Intel did in CPUs for a decade or so, with >80% market shares. Hyundai Auto is kind of getting there domestically, but that's it, and it's the exception plus the domestic market is only a small part of their revenue. Similarly, the overwhelming majority of the subsidiaries are not "too big to fail". During the IMF crisis in the late 90s and in its aftermath, several conglomerates failed. As a result, to this day, the financials of the subsidiaries are not particularly intertwined with each other. Sure, they sometimes give each other contracts (why wouldn't you), but that's always just a small part. They're run very independently. And it still happens that they "fail", or at least do poorly enough that the conglomerate wants to get rid of them, in which case there's usually a buyer looking to snap it up and turn things around.