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America has a monopoly problem

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Re: America has a monopoly problem

#91

Post by curiousgeorgio »

Clubber wrote: post #74
curiousgeorgio wrote: post #63

Earlier quoted context omitted.

Except this game isn't governed by just one body. It's a global economy, so even if your own country "strips your medals", you just move to the country that won't do that.

>you just move to the country that won't do that. The US leverage is limiting access to US markets for companies that do that.

Well, the problem is "companies that do that" is a matter of legal interpretation, and companies will find loopholes in that definition as well. If you get too restrictive, that can also have some pretty serious political consequences, so there's not as much leverage as one might think.

Re: America has a monopoly problem

#92

Post by Synaesthesia »

rayiner wrote: post #82
Synaesthesia wrote: post #64

Earlier quoted context omitted.

You’re not mentioning the outsize influence that corporations have on government which leads to them permitting these loopholes. It can be fixed by legislation. In 1952 corporate tax in the US was 33% of total revenue. Today it’s less than 9%.

Corporations have outsize influence on the government because they control jobs, which is the single thing Americans care about more than anything else. The Fortune 500 directly employ 17% of the U.S. workforce, and indirectly employ many more ( e.g. employees of parts companies that sell to Ford/GM, contractors who install fiber for AT&T). The tax provisions companies take advantage of aren't "loopholes," they exist…

I don’t think so. Why then the phenomenon which the government has permitted of outsourcing US jobs? Have the tax cuts created more jobs? Was there a condition attached that they need to employ more people?

It’s quite simple, with financial power comes political power. Elections cost a lot of money these days and if you look at the donor list of both parties it’s dominated by large corporations.

Edit: a more useful metric will be the percentage of total revenue paid by corporations. As can be seen the tax rate is misleading.

Re: America has a monopoly problem

#93

Post by jack9 »

adventured wrote: post #47
whistlerbrk wrote: post #14

America has a corruption problem. The ability for companies to vertically integrate and essentially make smaller businesses non-competitive can only occur when you don't have to pay the taxes your smaller competitors have to pay and don't have to obey the same laws your competitors have to obey. We have a systemic corruption problem (manifested in lobbying) coupled with greed on scales we've never seen before. Everyt…

Google, Facebook, Microsoft and Apple would be extraordinarily profitable even if they were paying 26% corporate income tax rates. Your entire premise collapses right there. Facebook will generate near $20 billion in earnings before tax for fiscal 2017. You're positing that if they pay $6 billion in taxes, instead of $4 billion, then their monopoly will unwind or somehow their competitors will finally be able to catc…

> Google, Facebook, Microsoft and Apple would be extraordinarily profitable even if they were paying 26% corporate income tax rates. Your entire premise collapses right there.

You are flat wrong. The integration has already occurred. The corruption is currently ingrained. Being able to source from your own penny factories in another country put many of the behemoths into their market dominant position or solidified them. Facebook is an odd duck which leveraged capital wisely. Amazon had decades of massive loses (revenue-wise) until, roughly, AWS took off. The capital markets favor bigger players at almost every turn and smaller successful companies are consumed and destroyed at a shocking rate after they rise above a starting locality. Microsoft used to afford that kind of market attrition, but now it's been largely Yahoo, Google, Alibaba, etc.

Re: America has a monopoly problem

#94

Post by falcolas »

curiousgeorgio wrote: post #63
autokad wrote: post #60

Earlier quoted context omitted.

so if if someone takes performance enhancing drugs that has not yet been discovered isn't cheating, they are being innovative. treat it like the olympics. if an athlete that takes a performance enhancing drug that has yet to be prohibited, they still loose their medals and cannot compete.

Except this game isn't governed by just one body. It's a global economy, so even if your own country "strips your medals", you just move to the country that won't do that.

And face the possibility of being banned from doing business with that one body, or the country that body governs.

As bad as China is to foreign companies, they're still bashing away at the doors to be let in. Imagine any of GAFA being blocked from doing business in the US.

Re: America has a monopoly problem

#95

Post by zanny »

ashark wrote: post #48
dforrestwilson wrote: post #41

Earlier quoted context omitted.

Yup. Amazon receiving 238 bids of localities falling over themselves to handover tax credits and other goodies is the example I've been thinking about recently. https://www.reuters.com/article/us-amazon-com-headquarters/a... How to fix it though?

> How to fix it though? Don't think we can. We're more likely to fix one of our other big, fundamental problems—the two party system + gerrymandering, for which proportional representation or any of several other schemes would be a good fix—than we are that, and I'd say the odds of our fixing that this century are maybe 50/50. We have no stomach (or mind...) for questioning such foundational premises of our system in…

The abundance of persons of the latter mentioned mindset are an intentional product of the power structure, though. Ignorance and indoctrination combined create an army you can oppress and use to keep the oppressed fighting amongst themselves. You just blame your oppressions on the "other".

I don't think you can save that many people when there are so many of them. It becomes cultural. Their identities are defined by their conviction. In earlier times, that would be the point where you leave the society and go somewhere else, but there is really no where left to go on Earth - every country has their own flavor of brooding fundamentalists supporting some faction of the government through propagandized anti-intellectualism.

Re: America has a monopoly problem

#96

Post by abandonliberty »

whistlerbrk wrote: post #14

America has a corruption problem. The ability for companies to vertically integrate and essentially make smaller businesses non-competitive can only occur when you don't have to pay the taxes your smaller competitors have to pay and don't have to obey the same laws your competitors have to obey. We have a systemic corruption problem (manifested in lobbying) coupled with greed on scales we've never seen before. Everyt…

What you have is natural selection. Systemic corruption is itself a deterministic outcome/symptom when corruption is an adaptive trait. Unfortunately many undesirable behaviors are adaptive: the risk-adjusted rate of return is positive. 'Bad actors' have much more to gain from engaging in them than watchdogs have in stopping it.

You will always lose the fight against corruption in the long run because as the war goes on you get weaker and they get stronger.

This is a fundamental issue with organizational design (and democracy).

Highly recommended further reading/viewing:

Rules for rulers is very helpful at understanding this: https://www.youtube.com/watch?v=rStL7niR7gs

Iron law of Oligarchy (the deterministic outcome of democracy) https://en.wikipedia.org/wiki/Iron_law_of_oligarchy

Re: America has a monopoly problem

#97

Post by L_Rahman »

athenot wrote: post #55

> We have become a rent-seeking society It just dawned on me while reading the article that this accurately describes the shift from licensed software to SaaS that has been happening in the past decade.

SaaS is essentially an acknowledgement that the most profitable and extractive business model in modern capitalism is to build a capital intensive product and rent it out.

With software there is the added benefit of low-cost, highly scalable replication of the capital intensive product.

Re: America has a monopoly problem

#98

Post by zanny »

oconnor663 wrote: post #39
whistlerbrk wrote: post #14

America has a corruption problem. The ability for companies to vertically integrate and essentially make smaller businesses non-competitive can only occur when you don't have to pay the taxes your smaller competitors have to pay and don't have to obey the same laws your competitors have to obey. We have a systemic corruption problem (manifested in lobbying) coupled with greed on scales we've never seen before. Everyt…

> The ability for companies to vertically integrate and essentially make smaller businesses non-competitive can only occur when you don't have to pay the taxes your smaller competitors have to pay and don't have to obey the same laws your competitors have to obey. That sounds a little too extreme. Has vertical integration never occurred without the help of tax law?

Generally if your economy is healthy the general case should be that no part of a supply chain can ever get rich enough to outright buy another piece. If any one part was making too generous a profit that could build that kind of war chest, low barriers to entry and competition would quickly propagate alternatives that took less profit.

This is, however, why you cannot just have a strict free market. Some industries emerge - and will emerge - that are naturally hard to enter and compete in. But at the same time, you need to have the lightest touch necessary, because the same regulatory apparatus can (and does in spades today) be abused to prevent competition by industry incumbents. But again, it is hard to accumulate the capital or scale to control government unless you have one of those non-competitive revenue streams.

The important historic realization is that we have failed to police businesses that had such extreme margins, probably because at the time those invested in such businesses felt it was just the success of the American market instead of being a wound in society that would grow infected.

Re: America has a monopoly problem

#99

Post by Maarten88 »

dforrestwilson wrote: post #41
ashark wrote: post #27

Earlier quoted context omitted.

Our preference for (relatively) high levels of local control (and the resulting tiered cake of tax jurisdictions and regulatory domains) makes our system incredibly vulnerable to race-to-the-bottom behavior when confronted with powerful non-state actors (corporations). Our fear of a hypothetical (though, to be clear, in other times and places realized) evil state leaves us with a host of real, everyday stresses, anno…

Yup. Amazon receiving 238 bids of localities falling over themselves to handover tax credits and other goodies is the example I've been thinking about recently. https://www.reuters.com/article/us-amazon-com-headquarters/a... How to fix it though?

> How to fix it though?

If tax agencies would just stop accepting any "transfer pricing" BS from multinational corporations, and simply divide their total net profit (wherever) by the share of the national market and base corporate tax on that, I think that would be a start.

Localities competing for business is i.m.o. much less problematic: it's a one-time write-off, there is legislation, and it has to be "sold" to tax-payers.

Re: America has a monopoly problem

#100

Post by zanny »

wav-part wrote: post #53
sandworm101 wrote: post #42

Earlier quoted context omitted.

I think it goes a step deeper. Imho the issue starts with the fundamental distrust of government. Lacking the ability to see government as a valid leader, Americans turn to corporations and billionaires. They really do believe that Apple and Dow chemical can do a better job leading the country than any elected politician. They are not worried about the monopolies. They should be, any economist would agree that monopo…

This thread is confusing State granted monopoly with Market granted monopoly. Economists usually talks about the former.

There are extremely few natural market monopolies, and almost all of those that exist are the kind that provide the strongest argument for collectivization of that industry - because the vast majority of such monopolies fall under the broad umbrella of infrastructure.
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