The free market's great IF there's competition. If the market's dead, it's time to reinject some life and keep the cogs turning.
Scale's great, but it often comes with a societal cost. For every efficiency made, there's less agency and decent jobs to go round.
Seems unfair to make such decisions ad-hoc though, and string it out through years of court cases and m/billions of lawyer fees.
Why not establish rules of the market where once a company gets x% market share, the company 'wins', the CEO gets the ability to run for high office, the nation thanks shareholders and gives them a big payoff for supporting innovation, and those 1 run down the food chain get to spin off their own companies and go for gold.
Life and death is a part of everything sustainable in life. We should embrace these cycles and utilise them, not let old hat stagnation strangle and squeeze all what's good from life.
Sort of playing devil's advocate here, but well run companies with near monopolies have on many occasions provided massive benefits that would not have been possible at smaller scale.
Think of Bell Labs.
Google has a number of Bell Labs style projects ongoing that massively benefit scientific research. Transformers, AlphaFold, etc.
It's hard to see how a smaller, more focused company would be able to justify that type of R&D.
That said, I do see an issue where some of the smartest people get sucked up by big tech. Instead of working on fundamental advances in image processing they end up working on beauty filters for Instagram. That can't be right.
> It's hard to see how a smaller, more focused company would be able to justify that type of R&D.
Typically that's solved with R&D happening in academia or semi-public space.
How much this happens depends on the opportunities to do it in private companies, so entities like Google paying big salaries for R&D probably means we don't see what alternatives they would be if they stopped doing so.
> Typically that's solved with R&D happening in academia or semi-public space.
It was, but not any more. The crazy capital investments often come from private companies as well. And that's not a problem. They're spending their money rather than your money.
> They're spending their money rather than your money.
Ok, and from whom did their money come? They didn’t magic it into existence.
Google spending money that came from advertisers who got it from people buying their products isn’t much different than a research team spending public money, just with fewer middle men and a (generally) lower negative impact on society.
The money came from people selling (or trying to sell) products that other people want to buy for the price that includes the ads, as it's valuable. This is far better than the old school ad industry, which made advertising much more expensive and products more expensive.
$400 billion was spent on advertising alone in the US in 2023. In 1970, that number was $19 billion ($150 billion in 2023 dollars). Relative to GDP, that’s and 0.014% and 0.018% respectively. Depending on how you want to argue, there is either more spending on advertising (in dollars) than there was 50 years ago, or about the same (in relative GDP). Neither would account for products in the past being substantially more expensive than they are today.
That is ignoring the many moral arguments against targeted advertising, unnecessary consumerism, etc.
They could still spend the money in academia if they didn't the option to spend it themselves. When I was in college we had labs named after different companies, and those companies sponsored the research in those labs and had first dibs on commercialization.
I don't think it would be the company that focused on those Moonshots. The founder types with $Billions get bored and start new things that try these instead.
> That said, I do see an issue where some of the smartest people get sucked up by big tech. Instead of working on fundamental advances in image processing they end up working on beauty filters for Instagram. That can't be right.
Can't you say the same thing if you go back 80 years and talk about the smartest minds in the world instead of working on energy for the masses they're working on the atomic bomb?
Kind of... but the atomic bomb required progressing multiple fields substantially and resulted in some very important technological improvements that are genuinely good (the most stable non-carbon power generation).
What is the possible societal-positive outcome of another social media filter? Or improved ad targeting algorithm? Or more attention-grabbing social media feed?
> What is the possible societal-positive outcome of another social media filter? Or improved ad targeting algorithm? Or more attention-grabbing social media feed?
I could have asked the same thing about a weapon of mass destruction 80 years ago. I don't have an answer for how we can use those things in ways to better society. But I'm not convinced that there are _none_.
It was well known even to the general public in the 1940s that the mechanism behind the nuclear bomb could generate vast amounts of cheap energy. It was known by nuclear scientists in the late 1930s that massive amounts of energy were released upon nuclear decay, and that chain reactions were possible, but that harvesting the energy for power generation would take some time.
I don’t believe there is anyone in the general public or who is an expert in any of the aforementioned fields (which have been around for 1-3 decades) that truly believes they are net positives.
Exactly, it's "just" the market setting the price.
The issue is that these are near monopolies, so the market isn't efficient.
In other words, if those companies didn't have monopoly power, other businesses (or non-commercial entities) might be able to afford to hire some of these people as well, which might be beneficial overall for innovation.
That's the economic argument and it's pretty clean imo.
But as far as I'm concerned personally, I would really prefer to live in a world in which smart people work on human flourishing... rather than whatever that is.
The problem with your ideals is that every one has different ideas on what "human flourishing" looks like. One way or the other, if it is Government that is in charge of "human flourishing", then some group of people are going to benefit at the expense of another group of people, at the discretion of whoever currently has the most political clout.
I think that's exactly the point I was getting it. Who decides what efficient is, and what do they measure. You might care about vision algorithms, and I might care about hamburgers.
From the economics perspective, something being Monopoly doesn't mean it's inefficient.
Depending on the situation, they can be far more efficient then diverse companies, or much less
> From the economics perspective, something being Monopoly doesn't mean it's inefficient.
From an economics perspective, if there is a monopoly, there is no free market, so you can't rely on the market for efficiency. A monopoly can be efficient, but it can also be arbitrarily inefficient and still keep its position.
I was trying to make the point that monopoly isnt defined by inefficiency, either by the technical definition or the colloquial one.
Rality is complex, and few monopolies can be arbitrarily inefficient. I think this is where a lot of the public confusion about monopiles comes from.
If you have the only grocery store or gas station in town, it might seem like there is a monopoly. There is probably a wide leeway to raise prices or be inefficient, but not without limit or else someone would compete.
If Amazon, Google, or whomever 10X'd their prices, competitors would arise.
Capital markets don't perfectly account for all positive and negative externalities in the world, not even close. For example think of a company that invents a miracle drug that only costs $1 to produce. The net benefit to humanity would be to open up production and sell it to everyone who needs it for a few bucks, but of course the company will do everything it can to maintain a monopoly and sell the drug for $X0000/dose, even if relatively few people can obtain it. Lawyers and lobbyists will get paid a lot of money to get the second outcome, even though they're producing negative value overall.
> sell the drug for $X0000/dose, even if relatively few people can obtain it
A rational company would lower the price if that broadened the market and netted more profit by volume. Drugs aren't Veblen goods.
The impetus for jacking up drug prices is that the market is captive, and those who need the drug will obtain it. That and insurance/government is often the payor.
No, because once those people take the drug then cash flow disappears, because they're cured. It's ideal to stretch out the adoption of the drug as much as possible in that situation.
It's the same reason SAAS took off so much. If you sell the product and consumers are (relatively) happy, now what? They might come back and buy another version in 5-10 years, but how do you generate enough cash flow between now and then to stay afloat?
Thats not very true for drugs, especially a theoretical cure all.
The time value of money means you want to sell every dose as soon as possible. with a 10% annual return, $1,000 today is better than $2,600 in 10 years.
Additionally, each day that passes, someone else can come in and outperform you or undercut your price.
Right, but in some cases volume doesn’t make up for the price drop. Or the source materials are the bottleneck. Even if the societal benefit was greater.
If the drug is needed by 1 million people, selling it for $1 will net you $1 million (let's assume all the 1 million can afford $1). If they instead sell it for $1000 and only 2000 people who need it can afford it, they'll make $2 million, so it's much more economically efficient.
Do you realize what the cost was to society to have a Bell Labs? Telephone service was expensive as hell and you couldn't even own your own telephone. There was no incentive for innovation in many areas like answering machines, cell phones etc
Is it? As consumers you may be noticing the impact now but as a developer I've felt the impact of Google's "scale" for years and it has not been pleasant.
I think that's exactly because too much of a good thing became bad. Scale was good for consumers when it increased efficiency, and decreased cost. But once the lower hanging scale effects were taken, the drawbacks (regulatory capture, monopoly,...) became more noticeable.
I think you're partly describing nationalisation of a business when it becomes so big it can't be left alone and needs to be readjusted to help the market.
It's bought by the gov ("payout to the shareholders"), regulations are enacted to delimit what it can and can't do, and the whole thing is setup to make sure it's for the benefit of the larger public, with additional consideration on how to reintroduce competition on part of its mandate.
We' ve seen it with postal services and telecom, and if the whole thing becomes outdated it can spun out as a private entity again.
Thiel himself said competition is for losers. He also said he thinks democracy and freedom are incompatible. His cohort doesn't want a free market, it wants godlike technofeudalism.
Interesting term. On a geopolitical scale, how is the US/NATO’s position any different? There are export controls around advanced semiconductors and encryption algorithms.
Is it okay to do this between countries but not within societies? (Genuine question. I really don’t know where I stand on this, for either side.)
Every entity with any weight to throw around in a geopolitical sense wants an omniscient and omnipotent surveillance state, which necessarily becomes a fusion of government and corporate power, even if it was not done intentionally. They've always wanted it, it's just that now it doesn't seem like a fantasy, but rather a reality a decade away.
Your citizens/consumers/users are utterly dependent on your services and your goodwill, and you have an absolute, unquestionable, non-negotiable lifetime monopoly on the means necessary to exist in a modern, always-connected society. You can provide as little, terrible service as you want, because if anyone complains, you shadowban them from being able to exist in society, and they die, which is much easier than actually making good changes. And you don't even have to go to the effort of legal kabuki theater now, because you are the law.
If this sounds absurd, remember that power increases sociopathy and that bunker bros contemplate bomb-collars to ensure the compliance of their security forces after the apocalyptic "event" they're engineering, even if it truly is inadvertent, and in the meantime we have Epstein and child miners in the Congo and social media companies running world-scale psychological experiments and sometimes they pay a little fine for it to show how sorry they are for enabling one genocide or another.
The two most likely outcomes are a 1984-like state of the world, with a contrived stalemate because no one bloc can gain an edge, or, more worryingly, a 1984-like world state, because one of these blocs managed to either destroy or devour the others.
That game already exists. Intel and Amd had an odd relationship for years when Intel needed Amd so they could claim that competition existed. Cross licensing instruction sets and the like.
That would have interesting implications. Companies would have to grow by aggressive diversification into other markets. Instead of a Google or Appple that controls your digital life, you'd have an endgame with a few ACMEs that attempt to lock you in in every aspect of your life: Your pots would work best with a stove from the same company. Your washing machine and detergent only do a good on a specific brand of clothes etc. A completely different kind of market regulation would be required.
If you have a free market finding competition isn't an issue, but maintaining profitability is. If we had a free market when Google came onto the scene, everyone else would have copied PageRank the next day, and then you'd have hundreds of search engines all as good as each other, each sharping their pencils sharper and sharper in an attempt to win customers over on a price basis until there is nothing left. At which point there is nothing left to further innovation.
To combat that, we grant short-term monopolies over technology to allow their inventors time to build up a decent business before opening the flood gates, with the intent to balance what makes mixed-market economies great without ending up with no competition. The problem is that those monopoly procedures were established when time moved slowly. Back then, 20 years was barely enough time to get your product to and recognized in the market. These days, you can get there in a few years, or even less, which leaves nearly 20 more years to focus on killing all the competition.
Ultimately, we would have been better off if Google was pushed out into a free market after a few years. We benefitted from it having some head start, but it went on much too long.
I think you are close, but we need to stop these mega-mergers where the acquisition would give any company X% of the market. We also need to go after the anti-monopoly practices of the mega giants; like what Amazon did to Diapers.com. As we've seen through the pandemic and elsewhere, extreme consolidation is only good for shareholders and more rent-seeking. It is never good for workers or the market or competition. It has affected everything from food to energy to "news" to healthcare.
Scale's great, but it often comes with a societal cost. For every efficiency made, there's less agency and decent jobs to go round.
Seems unfair to make such decisions ad-hoc though, and string it out through years of court cases and m/billions of lawyer fees.
Why not establish rules of the market where once a company gets x% market share, the company 'wins', the CEO gets the ability to run for high office, the nation thanks shareholders and gives them a big payoff for supporting innovation, and those 1 run down the food chain get to spin off their own companies and go for gold.
Life and death is a part of everything sustainable in life. We should embrace these cycles and utilise them, not let old hat stagnation strangle and squeeze all what's good from life.