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> They aren’t even aware wealth inequality is the problem. "Wealth inequality" in the sense that there are several billion people and the net worth of each and

> They aren’t even aware wealth inequality is the problem. "Wealth inequality" in the sense that there are several billion people and the net worth of each and every one of them is not exactly the same? That can't be it. "Wealth inequality is increasing over time" seems like it could be a bad thing, but if that's the problem then what's the cause? Let's consider how that happens: When you buy something for $100, part of that money goes to labor (the employees who made or distributed it etc.) and part goes to capital (the investors who own the company). Employees generally spend all of their income, so that's not an issue. As it turns out, so do most investors, by population count, because most businesses are small businesses. The owner of the local salon might be getting a dividend from the place but she's using that to buy groceries. Then there's Larry Ellison. Screw that guy, am I right? Somehow that asshole has more money than it would take to buy the entirety of Boeing with enough left over to buy General Motors and Halliburton put together. And he's not spending it fast enough to make the number go down instead of up. But wait, how did that happen? He definitely didn't end up with $200B by investing $100 in the Dow and letting it compound for 50 years. His company did, however, get billions of dollars in government contracts and in general makes its money by selling copyright licenses to its 50 year old database software. In fact, if you look at the list of companies minting all of these billionaires, they're almost all tech companies, relying on a government-granted copyright monopoly that originally expired after 14 years. And if you look at the ones that aren't tech, they're drug companies (another government-granted monopoly and an industry that has thoroughly captured the regulators) and finance companies (possibly the only industry with more regulatory capture than medicine). From this we can notice a trend. You get billionaires when the laws impair competition in their industry and the industry consolidates into megacorps. So that's the cause. That's what you need to prevent.

alexashka 2y ago
This is an excellent post. I think the competition idea works at the level of a country if people by and large play by the rules (a big if). It does not work at the level of macro economics. If you (as a country) insist on competition and absence of mega corps in your country while a country next to you subsidizes mega corps that outcompete your smaller companies - you will lose. Thus in a world of competition, every country will strive to get nuclear weapons to be able to compete militarily and then given that we're human, we will have conflict sooner or later and it will result in nuclear holocaust. If you think fair enough but nuclear holocaust is just the price we pay and it's worth it to continue doing competition, then alright. I don't think it's worth it, so there needs to be a fundamental re-think how we approach these problems. --- Regarding wealth inequality specifically - I agree with Aristotle who made the distinction of Aristocracy vs Oligarchy. Aristocracy being the rule of the few for the common interest and Oligarchy being rule of the few for the interest of the rulers. Somebody will rule, it's the intention and overall direction that matters. I'm not sure that just re-distributing wealth addresses the problem - it does strike me as something an Aristocracy would surely do if one were to appear, so that much is well and good.
- AnthonyMouse 2y ago
  > If you (as a country) insist on competition and absence of mega corps in your country while a country next to you subsidizes mega corps that outcompete your smaller companies - you will lose. The assumption here is that megacorps are a competitive advantage. Let's look at a counterexample. Suppose solar manufacturing is a growth industry. China wants to dominate it, so they subsidize it. Is there now a single megacorp in China that makes all the solar panels? No, it's a competitive industry there, but because of the subsidies that industry outcompetes the industries in other countries, with the result that China as a whole makes 80% of the world's solar panels. Others can't compete because of the subsidies, not because of a monopolist. Or, after the subsidies have existed for long enough, because the whole supply chain ends up in that country and other countries don't have the local knowledge or infrastructure to even do it anymore. So that kind of subsidization is a problem, but it's a different problem and "you need your own megacorps" is no solution. Now let's go back to Oracle. How is it that they make so much money? The premise of copyright is you get a temporary monopoly in exchange for creating something and that allows you to recover your costs. Originally this was 14 years; it's not so temporary anymore. Also, the premise was that you sell a copy and get money and then if you want more money you need to create more works. How does Oracle actually work? They don't sell you a copy, they sell you a license. The law allowing this was a choice, and a bad one. Having a monopoly isn't illegal under the antitrust laws; abusing one is. But doing that with the copyright monopoly is largely ignored, which is what license terms more restrictive than the copyright statue do. So instead of buying some database software for a one-time fee and then being able to use it as long as you're satisfied with that version of it, you get a temporary license that expires if you stop paying a recurring fee. Meanwhile your data is now in a proprietary database with high costs to extricate it, so you're locked in. Is Oracle then out-competing all of their smaller competitors? Not really. Tons of people use Postgres or MariaDB or SQLite, and there are several other proprietary databases as well. But Oracle still gets to stick it to all the organizations that are locked in to Oracle, because the industry lobbied for laws that allow them to. And then you also see Oracle sticking it to organizations in e.g. Europe. Is that because Oracle's size allows them to outcompete smaller companies this time? No, the same competitors are still there, it's because Europe has similar laws that allow the company screw their customers in similar ways, instead of limiting copyright to the selling of copies. By contrast, if you look at something like Visa and Mastercard, that's a major duopoly in the US. And those cards are accepted in many other countries, but they often have competitors there, when those countries have laws that facilitate competition. Because the companies get big by laws that thwart competition, but when that's their advantage, the advantage doesn't stick where those laws don't exist. If anything it puts them at a disadvantage because being insulated from competitive pressure domestically makes them unresponsive and inefficient. Which is why corporations are always lobbying to have the laws that prop up their concentrated markets enshrined into international treaties. > Somebody will rule This is the assumption most in need of being challenged. "There must be a king" is a fallacy. There will either be a king, or there will be a population of people dedicated to preventing anyone from establishing a throne. The latter is what you get from a system of well-devised checks and balances, one of which is competitive markets. Emphasis on competitive.

alexashka 2y ago

This is an excellent post. I think the competition idea works at the level of a country if people by and large play by the rules (a big if). It does not work at the level of macro economics. If you (as a country) insist on competition and absence of mega corps in your country while a country next to you subsidizes mega corps that outcompete your smaller companies - you will lose. Thus in a world of competition, every country will strive to get nuclear weapons to be able to compete militarily and then given that we're human, we will have conflict sooner or later and it will result in nuclear holocaust. If you think fair enough but nuclear holocaust is just the price we pay and it's worth it to continue doing competition, then alright. I don't think it's worth it, so there needs to be a fundamental re-think how we approach these problems. --- Regarding wealth inequality specifically - I agree with Aristotle who made the distinction of Aristocracy vs Oligarchy. Aristocracy being the rule of the few for the common interest and Oligarchy being rule of the few for the interest of the rulers. Somebody will rule, it's the intention and overall direction that matters. I'm not sure that just re-distributing wealth addresses the problem - it does strike me as something an Aristocracy would surely do if one were to appear, so that much is well and good.

AnthonyMouse 2y ago
> If you (as a country) insist on competition and absence of mega corps in your country while a country next to you subsidizes mega corps that outcompete your smaller companies - you will lose. The assumption here is that megacorps are a competitive advantage. Let's look at a counterexample. Suppose solar manufacturing is a growth industry. China wants to dominate it, so they subsidize it. Is there now a single megacorp in China that makes all the solar panels? No, it's a competitive industry there, but because of the subsidies that industry outcompetes the industries in other countries, with the result that China as a whole makes 80% of the world's solar panels. Others can't compete because of the subsidies, not because of a monopolist. Or, after the subsidies have existed for long enough, because the whole supply chain ends up in that country and other countries don't have the local knowledge or infrastructure to even do it anymore. So that kind of subsidization is a problem, but it's a different problem and "you need your own megacorps" is no solution. Now let's go back to Oracle. How is it that they make so much money? The premise of copyright is you get a temporary monopoly in exchange for creating something and that allows you to recover your costs. Originally this was 14 years; it's not so temporary anymore. Also, the premise was that you sell a copy and get money and then if you want more money you need to create more works. How does Oracle actually work? They don't sell you a copy, they sell you a license. The law allowing this was a choice, and a bad one. Having a monopoly isn't illegal under the antitrust laws; abusing one is. But doing that with the copyright monopoly is largely ignored, which is what license terms more restrictive than the copyright statue do. So instead of buying some database software for a one-time fee and then being able to use it as long as you're satisfied with that version of it, you get a temporary license that expires if you stop paying a recurring fee. Meanwhile your data is now in a proprietary database with high costs to extricate it, so you're locked in. Is Oracle then out-competing all of their smaller competitors? Not really. Tons of people use Postgres or MariaDB or SQLite, and there are several other proprietary databases as well. But Oracle still gets to stick it to all the organizations that are locked in to Oracle, because the industry lobbied for laws that allow them to. And then you also see Oracle sticking it to organizations in e.g. Europe. Is that because Oracle's size allows them to outcompete smaller companies this time? No, the same competitors are still there, it's because Europe has similar laws that allow the company screw their customers in similar ways, instead of limiting copyright to the selling of copies. By contrast, if you look at something like Visa and Mastercard, that's a major duopoly in the US. And those cards are accepted in many other countries, but they often have competitors there, when those countries have laws that facilitate competition. Because the companies get big by laws that thwart competition, but when that's their advantage, the advantage doesn't stick where those laws don't exist. If anything it puts them at a disadvantage because being insulated from competitive pressure domestically makes them unresponsive and inefficient. Which is why corporations are always lobbying to have the laws that prop up their concentrated markets enshrined into international treaties. > Somebody will rule This is the assumption most in need of being challenged. "There must be a king" is a fallacy. There will either be a king, or there will be a population of people dedicated to preventing anyone from establishing a throne. The latter is what you get from a system of well-devised checks and balances, one of which is competitive markets. Emphasis on competitive.