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This opinion piece articulates something I've felt for a long time... consolidation is the biggest problem in America right now, scratch that, in the World. On

by ivan_ah 12y ago

This opinion piece articulates something I've felt for a long time... consolidation is the biggest problem in America right now, scratch that, in the World. One thing that I can't comprehend is how right-wing free-market ideologues can get behind all the consolidation. Cant they see that consolidation is just like communism? Only a competitive market with many players can ensure progress continues.

grondilu 12y ago
The answer is simple : economic freedom. If companies have the right to merge, it's not because "right-wing free-market ideologues" think it is best for the economy, it's because it is their business and they are free to organize it as they will. Saying that only "many players can ensure progress continues" and thus prohibiting companies to merge is interfering with economic freedom in the name of "I know better", and that is planned economy. And that, is "just like communism", as you put it.
- ivan_ah 12y ago
  > The answer is simple : economic freedom. I'm all for freedom, and that is precisely why I'm opposed to consolidation. There are a couple of components required to make the free market work: (1) freedom for companies to grow [--> efficiency], (2) freedom for new companies to enter the market [--> competition], and (3) freedom for customers to choose from different offerings [--> competition]. Consolidation is all about (1) at the expense of (2) and (3). To clarify, when I said "communism" I meant "central planning" (not totalitarianism), which is what happens when a single corporation controls most of a market. Apologies for using this emotionally-charged term loosely. > prohibiting companies to merge I'm not sure what wing that puts me in, but I think we should prohibit large companies from merging and also dismantle existing large companies as well. The way I see it, a world with many small and medium-sized companies will run much smoother than one with a single large company. Specifically, keeping the chain of command short (height of the corporate pyramid < 7) will ensure informed decisions are made (instead of decisions based on office politics, and personal vision---the corporate version of "I know better"). Except for some exceptions (e.g. you need a pretty big company to manufacture planes) this would be possible.
- brazzy 12y ago
  You could not possibly be more wrong. Monpolies are the exact opposite of economic freedom and amount to a planned economy, except the plan is not even nominally for the good of everyone.
  - watwut 12y ago
    While I agree with you, I would point out that planned economy plans are rarely "for the good of everyone". Planmakers tend to enrich themselves and their buddies. I'm tempted to write never, but there might have been that one historical event when it went right.
    - brazzy 12y ago
      That's why I wrote "not even nominally for the good of everyone" - explicit economic plans, at least the socialist variety are usually for the good of all in theory but not in practice. A monopoly-based plan would not even claim to be. Also, I don't think the biggest problem with plans is self-enrichment by the plan makers, but inflexibility, the lack of good information, misaligned incentives and unintended consequences. And the biggest strength of a market economy is not the absence of any of these problems, but that they don't effect everything euqally and the companies that are affected the most just fail without dragging down everything.
    - crdoconnor 12y ago
      >While I agree with you, I would point out that planned economy plans are rarely "for the good of everyone". This is exactly how it works under our system too. Instead of economic planning being set in motion by the nomenklatura, it's done by the heads of major banks.
  - grondilu 12y ago
    I have not used the word monopoly and was merely talking about the right for people to work together. Do you have anything against that?
    - brazzy 12y ago
- dougabug 12y ago
  Corporations are legal fictions. They exist through the power and authority of the State, their contracts are enacted and enforced through agents of the Courts. Corporations are manifestly not free to organize as they will. Is it economic freedom to have one choice for Internet broadband? For healthcare? Unregulated monopolies should supply us with food, water, power, and all other essential utilities/needs? Welcome to the age of thousand dollar a pill medicine. Every communication, location, every purchase, every mouse click or swipe duly tracked, recorded, and data mined. To imagine that as freedom merges the Dickensian with the Orwellian.
  - NoPiece 12y ago
    Welcome to the age of thousand dollar a pill medicine. Every communication, location, every purchase, every mouse click or swipe duly tracked, recorded, and data mined. You are exactly describing the world today, as provided by our big government.
    - willvarfar 12y ago
      How would "small" government change it? Being a European living in a country with a "bigger" relative government (as I understand the way Americans use the term) but with free healthcare and a big data mining debate ongoing, I'm a bit at a loss...
      - NoPiece 12y ago
        A smaller government wouldn't have a $52.6 billion budget for the NSA & CIA to data mine. A drug company can only charge a $1000 for a pill because the government is blocking competition by granting patents. Effectively creating a micro monopoly. Small government with extremely limited or no patents would allow competition to fix the $1000 pill. It is industries like healthcare and telecom, where the US has both very large companies and very big government that we have the worst outcomes.
    - sergiosgc 12y ago
      Small countries, like mine (.pt), kind of disprove this idyllic vision of small government. Small governments easily fall prey to large multinationals. USA's woes with oligopolies may have many causes. A government concentrated at the federal level isn't probably one of them.
nl 12y ago
I think it would be more reasonable to complain about consolidation combined with regulatory capture being a big problem. In some parts of the world regulation of corporate behaviour is an adversarial process. In the US it is often designed to improve the market for large companies. (I also find it difficult to view a statement like "consolidation is the biggest problem in the world" as anything but lacking some perspective. I suspect you may like to revisit that idea)
brc 12y ago
Except that it is nothing like communism. Communism is defined by a complete lack of freedom to change the status quo. In turn, the lack of freedom to change the status quo means that development and progress is dramatically slowed, slowing down improvements in quality of life - as people themselves would prefer. Consolidation only persists where it is either an effective way to deliver value (Walmart) or regulatory capture has occured (eg taxi licences, car dealerships). Todays consolidated behemoth is tomorrows has-been company - as long as the laws allow them to fall apart when they can no longer innovate and compete. Inequality of income to me seems as though an economy is functioning well at the creating-value part. A lack of inequality (too much equality) is a danger sign that the creation of wealth and progress has been halted, most likely due to lack of freedom for individuals to pursue their own interests. It's a misunderstanding to think that competition requires many players to be effective. In many cases, you only need two players and threat of entry to any others for competition to be successful at optimal use of resources. You only need two fighters and some contenders for a world champ boxing match to make them the best available at the time. And a fair referree. I'll be the first to admit that the last part is the most difficult to achieve, but it's no reason to abandon the concept of the game.
- audunw 12y ago
  "Communism is defined by a complete lack of freedom to change the status quo." Communism is as diverse as capitalism, and this is neither the text-book definition, nor the real-world definition. Is the definition of capitalism a complete lack of freedom to change the status quo because that was the case under Pinochet? The text-book definition is the common ownership of the means of production. Is China still communist? The definition still applies somewhat in that they still have a lot of state owned businesses, and the banks which borrows capital to private business are state-owned. It can be argued. Does China have a complete lack of freedom to change the status quo? Only from a naive western perspective. There is only one party, but China's way is, if you want to change the state you join the party or work for the government (membership is not necessary to hold a government position). In other words, they consider it democracy through participation. A single person certainly has the ability to change the status quo, basically in the same way as in the west. Who really thinks voting actually matters much any more? I don't condone China's way. I think the lack of acceptance for political dissent is disgusting. But that's besides the point. Point is, we can't fool ourselves into thinking China is like a dictatorship. They have other processes, but still achieves a decent meritocracy. I'm beginning to think that democracy is a failure at the federal/union level. Look at the US and the EU. How functional is the democracy at that level these days? Maybe having so many people vote for a single/a few position makes democracy ineffective? I think these observations is why China is not jumping on the democracy bandwagon at the top level (they have implemented local elections).
danmaz74 12y ago
The absolute belief that the free-market will always correct itself for the benefit of everybody is very much like the absolute belief of communists that in a communist world everybody will work at his/her best for the benefit of everybody. In many markets, the only way to avoid monopolies or tight oligopolies is with anti-trust legislation, but recognizing this is impossible for those who believe that all regulation is evil.
- collyw 12y ago
  Exactly. Too little in politics is based on evidence. (I think) I would vote for the first politician to admit that they are not sure what the outcome will be. Unfortunately in politics, and honest attitude is not well received.

by ivan_ah 12y ago

grondilu 12y ago

The answer is simple : economic freedom. If companies have the right to merge, it's not because "right-wing free-market ideologues" think it is best for the economy, it's because it is their business and they are free to organize it as they will. Saying that only "many players can ensure progress continues" and thus prohibiting companies to merge is interfering with economic freedom in the name of "I know better", and that is planned economy. And that, is "just like communism", as you put it.

ivan_ah 12y ago
> The answer is simple : economic freedom. I'm all for freedom, and that is precisely why I'm opposed to consolidation. There are a couple of components required to make the free market work: (1) freedom for companies to grow [--> efficiency], (2) freedom for new companies to enter the market [--> competition], and (3) freedom for customers to choose from different offerings [--> competition]. Consolidation is all about (1) at the expense of (2) and (3). To clarify, when I said "communism" I meant "central planning" (not totalitarianism), which is what happens when a single corporation controls most of a market. Apologies for using this emotionally-charged term loosely. > prohibiting companies to merge I'm not sure what wing that puts me in, but I think we should prohibit large companies from merging and also dismantle existing large companies as well. The way I see it, a world with many small and medium-sized companies will run much smoother than one with a single large company. Specifically, keeping the chain of command short (height of the corporate pyramid < 7) will ensure informed decisions are made (instead of decisions based on office politics, and personal vision---the corporate version of "I know better"). Except for some exceptions (e.g. you need a pretty big company to manufacture planes) this would be possible.
brazzy 12y ago
You could not possibly be more wrong. Monpolies are the exact opposite of economic freedom and amount to a planned economy, except the plan is not even nominally for the good of everyone.
- watwut 12y ago
  While I agree with you, I would point out that planned economy plans are rarely "for the good of everyone". Planmakers tend to enrich themselves and their buddies. I'm tempted to write never, but there might have been that one historical event when it went right.
  - brazzy 12y ago
    That's why I wrote "not even nominally for the good of everyone" - explicit economic plans, at least the socialist variety are usually for the good of all in theory but not in practice. A monopoly-based plan would not even claim to be. Also, I don't think the biggest problem with plans is self-enrichment by the plan makers, but inflexibility, the lack of good information, misaligned incentives and unintended consequences. And the biggest strength of a market economy is not the absence of any of these problems, but that they don't effect everything euqally and the companies that are affected the most just fail without dragging down everything.
  - crdoconnor 12y ago
    >While I agree with you, I would point out that planned economy plans are rarely "for the good of everyone". This is exactly how it works under our system too. Instead of economic planning being set in motion by the nomenklatura, it's done by the heads of major banks.
- grondilu 12y ago
  I have not used the word monopoly and was merely talking about the right for people to work together. Do you have anything against that?
  - brazzy 12y ago
dougabug 12y ago
Corporations are legal fictions. They exist through the power and authority of the State, their contracts are enacted and enforced through agents of the Courts. Corporations are manifestly not free to organize as they will. Is it economic freedom to have one choice for Internet broadband? For healthcare? Unregulated monopolies should supply us with food, water, power, and all other essential utilities/needs? Welcome to the age of thousand dollar a pill medicine. Every communication, location, every purchase, every mouse click or swipe duly tracked, recorded, and data mined. To imagine that as freedom merges the Dickensian with the Orwellian.
- NoPiece 12y ago
  Welcome to the age of thousand dollar a pill medicine. Every communication, location, every purchase, every mouse click or swipe duly tracked, recorded, and data mined. You are exactly describing the world today, as provided by our big government.
  - willvarfar 12y ago
    How would "small" government change it? Being a European living in a country with a "bigger" relative government (as I understand the way Americans use the term) but with free healthcare and a big data mining debate ongoing, I'm a bit at a loss...
    - NoPiece 12y ago
      A smaller government wouldn't have a $52.6 billion budget for the NSA & CIA to data mine. A drug company can only charge a $1000 for a pill because the government is blocking competition by granting patents. Effectively creating a micro monopoly. Small government with extremely limited or no patents would allow competition to fix the $1000 pill. It is industries like healthcare and telecom, where the US has both very large companies and very big government that we have the worst outcomes.
  - sergiosgc 12y ago
    Small countries, like mine (.pt), kind of disprove this idyllic vision of small government. Small governments easily fall prey to large multinationals. USA's woes with oligopolies may have many causes. A government concentrated at the federal level isn't probably one of them.

nl 12y ago

I think it would be more reasonable to complain about consolidation combined with regulatory capture being a big problem. In some parts of the world regulation of corporate behaviour is an adversarial process. In the US it is often designed to improve the market for large companies. (I also find it difficult to view a statement like "consolidation is the biggest problem in the world" as anything but lacking some perspective. I suspect you may like to revisit that idea)

brc 12y ago

Except that it is nothing like communism. Communism is defined by a complete lack of freedom to change the status quo. In turn, the lack of freedom to change the status quo means that development and progress is dramatically slowed, slowing down improvements in quality of life - as people themselves would prefer. Consolidation only persists where it is either an effective way to deliver value (Walmart) or regulatory capture has occured (eg taxi licences, car dealerships). Todays consolidated behemoth is tomorrows has-been company - as long as the laws allow them to fall apart when they can no longer innovate and compete. Inequality of income to me seems as though an economy is functioning well at the creating-value part. A lack of inequality (too much equality) is a danger sign that the creation of wealth and progress has been halted, most likely due to lack of freedom for individuals to pursue their own interests. It's a misunderstanding to think that competition requires many players to be effective. In many cases, you only need two players and threat of entry to any others for competition to be successful at optimal use of resources. You only need two fighters and some contenders for a world champ boxing match to make them the best available at the time. And a fair referree. I'll be the first to admit that the last part is the most difficult to achieve, but it's no reason to abandon the concept of the game.

audunw 12y ago
"Communism is defined by a complete lack of freedom to change the status quo." Communism is as diverse as capitalism, and this is neither the text-book definition, nor the real-world definition. Is the definition of capitalism a complete lack of freedom to change the status quo because that was the case under Pinochet? The text-book definition is the common ownership of the means of production. Is China still communist? The definition still applies somewhat in that they still have a lot of state owned businesses, and the banks which borrows capital to private business are state-owned. It can be argued. Does China have a complete lack of freedom to change the status quo? Only from a naive western perspective. There is only one party, but China's way is, if you want to change the state you join the party or work for the government (membership is not necessary to hold a government position). In other words, they consider it democracy through participation. A single person certainly has the ability to change the status quo, basically in the same way as in the west. Who really thinks voting actually matters much any more? I don't condone China's way. I think the lack of acceptance for political dissent is disgusting. But that's besides the point. Point is, we can't fool ourselves into thinking China is like a dictatorship. They have other processes, but still achieves a decent meritocracy. I'm beginning to think that democracy is a failure at the federal/union level. Look at the US and the EU. How functional is the democracy at that level these days? Maybe having so many people vote for a single/a few position makes democracy ineffective? I think these observations is why China is not jumping on the democracy bandwagon at the top level (they have implemented local elections).

danmaz74 12y ago

The absolute belief that the free-market will always correct itself for the benefit of everybody is very much like the absolute belief of communists that in a communist world everybody will work at his/her best for the benefit of everybody. In many markets, the only way to avoid monopolies or tight oligopolies is with anti-trust legislation, but recognizing this is impossible for those who believe that all regulation is evil.

collyw 12y ago
Exactly. Too little in politics is based on evidence. (I think) I would vote for the first politician to admit that they are not sure what the outcome will be. Unfortunately in politics, and honest attitude is not well received.