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An Economy of Overfed Middlemen

mattstoller.substack.com

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Re: An Economy of Overfed Middlemen

#31

Post by anigbrowl »

AnimalMuppet wrote: post #6
eli_gottlieb wrote: post #5

Earlier quoted context omitted.

If a monopolist is efficient, then nationalization is efficient. Break them up or seize them.

That does not follow. "The monopolist can do this efficiently" != "the government can do this efficiently". In particular, the monopolist has given evidence of knowing how to run that operation well. The government has given no such evidence. I'm not a fan of monopolies, but your position is flawed.

The monopolist isn't a person per se, unless you imagine Jeff Bezos micromanaged every aspect of Amazon.

'Run well' like 'efficiently' is up for debate. Amazon is efficient because of its distribution model and allegedly because it exploits its workers to some degree. Many labor practices would be incompatible with standards of government employment, for the good reason that government should uphold the very labor standards it extols to the market. So if Amazon's retail distribution were nationalized, either it would run less efficiently or we'd have to admit that it's profitability depends on practices many consider unsavory or unethical.

But let's take ethics out of the equation and suppose you have a highly efficient operation run entirely by robots, which is also a monopoly. In a competitive environment margins should fall within the range of normal profits, but if it's a monopoly then the owner can continue to extract economic rents and you're essentially back to landlordism. In that case there isn't a good argument against nationalization or jacking the marginal tax rate sky high.

Re: An Economy of Overfed Middlemen

#32

Post by AtlasBarfed »

Almost all markets are now monopoly, duopoly, or cartel. Has been for a while.

It's gigantic detriment to innovation, unemployment, wage suppression, prices.

The end state of unregulated real world free markets is monopoly, because of the ability to establish market barriers, extract subsidies, state-level actor manipulation, dumping.

Antitrust is dead in the US. Cartel economics is part of the oligarchical political control and the formalized power base of the rich.

And economists and economics were puppeted on TV, think tanks, parroting the free market religion to enable this.

And as part of this, we couldn't do anything (and still can't) about global warming. This will possibly doom us as a civilization.

Re: An Economy of Overfed Middlemen

#33

Post by zeruch »

danaris wrote: post #19
sylvain_kerkour wrote: post #9

Earlier quoted context omitted.

The passivity against monopolies has more to do with international competition and the fear of losing world domination.

Does it? Or does it have more to do with the massive industry capture of politics? Not to mention the right-wing ideology of, effectively, if you can make money doing it, and hide the negative effects from the public at least a little, you're a Real American Hero.

"Massive industry" is the applicable term. The scale of both the capture, and the middle man loss to a more parochial/regional model is terrifying to 'captains of industry' and their political minions.

Re: An Economy of Overfed Middlemen

#34

Post by Veen »

jollyllama wrote: post #18
rahimnathwani wrote: post #15

Middlemen (e.g. wholesalers and retailers) serve a valuable function. Imagine each consumer having to maintain relationships with hundreds of factory owners and tens of farmers.

>Imagine each consumer having to maintain relationships with ... tens of farmers Farmers' markets are great.

But a marketplace is a classic example of a middle man. They facilitate sales between one group (the farmers) and another group (the buyers). The alternative is every buyer visiting every farm they want to make a purchase from. Farmers markets are a useful example of why middlemen often have a valuable role.

Re: An Economy of Overfed Middlemen

#35

Post by AnimalMuppet »

carschno wrote: post #11
AnimalMuppet wrote: post #6

Earlier quoted context omitted.

That does not follow. "The monopolist can do this efficiently" != "the government can do this efficiently". In particular, the monopolist has given evidence of knowing how to run that operation well. The government has given no such evidence. I'm not a fan of monopolies, but your position is flawed.

How do you come to conclude that Organisation A (monopolist) will magically be less good than Organisation A (owned by the state)? If the same organisation is profitable while but state-owned, it could also be an indicator that it's just not operating in a legit way. Note: I think you've also been confusing government and state, but I assume that was not intentionally.

> Note: I think you've also been confusing government and state, but I assume that was not intentionally.

Not intentionally, no. Given that the context was nationalization, what in your view is the difference between government and state?

Re: An Economy of Overfed Middlemen

#36

Post by jollyllama »

jasode wrote: post #30
jollyllama wrote: post #18

Earlier quoted context omitted.

>Imagine each consumer having to maintain relationships with ... tens of farmers Farmers' markets are great.

>Farmers' markets are great. Fyi if you didn't already know... the farmers' markets are themselves a type of middlemen. (At least every one I've shopped at in the USA.) The farmers' market rents out the booth spaces to vendors (farmers). It's a real-world "platform" to bring together buyers and sellers. The farmers' cost to rent the space is embedded into the prices the consumers pay. A true individual relationship w…

That's true. The farmers' market also acts as a advertising for that kind of direct relationship. Most of the vendors have cards with links or phone numbers where you can arrange that kind of thing, or even deliveries. I'd say the difference is the farmers' market allows for that, whereas at a grocery store I'm usually buying products labelled states away, if they even are from a farmer you could ever buy direct from at all.

Re: An Economy of Overfed Middlemen

#37

Post by jollyllama »

Veen wrote: post #34
jollyllama wrote: post #18

Earlier quoted context omitted.

>Imagine each consumer having to maintain relationships with ... tens of farmers Farmers' markets are great.

But a marketplace is a classic example of a middle man. They facilitate sales between one group (the farmers) and another group (the buyers). The alternative is every buyer visiting every farm they want to make a purchase from. Farmers markets are a useful example of why middlemen often have a valuable role.

I never said they weren't. The takeaway would be middlemen can add different value. In this case the middleman is adding value by opening the door to direct relationships. So it's a gateway. In the case of a supermarket, they're adding something like distribution or logistics.

Re: An Economy of Overfed Middlemen

#38

Post by uoaei »

Veen wrote: post #34
jollyllama wrote: post #18

Earlier quoted context omitted.

>Imagine each consumer having to maintain relationships with ... tens of farmers Farmers' markets are great.

But a marketplace is a classic example of a middle man. They facilitate sales between one group (the farmers) and another group (the buyers). The alternative is every buyer visiting every farm they want to make a purchase from. Farmers markets are a useful example of why middlemen often have a valuable role.

Your comment is phrased as if you disagree with a conclusion which I don't believe was posed in the GP.

Re: An Economy of Overfed Middlemen

#39

Post by pydry »

vsareto wrote: post #25
Centigonal wrote: post #7

Everyone from Sam Altman to Peter Thiel has been talking about this for years. Capitalists are very straightforward about this - if you want to capture value, find a way to plant your flag in some emerging market and get a monopoly on one or more parts of the value chain. Marketplace operators are especially attractive to investors, because the financials are really pretty - the marketplace provider doesn't own signi…

They do some organizing of information via their apps, which has a tangible user experience (plus the apps themselves are definitely a thing they built). Building a good marketplace is also no small feat. In concept, they are all useful abstractions over the worst case scenario: individuals only finding and talking with other individuals to get goods or services. In practice, there are definitely abuses which come do…

>Building a good marketplace is also no small feat.

Nope, but it's lavishly overcompensated and starved of competition for the markets who manage to get the network effect going.

There is no really effective regulation to ameliorate this effect either.

Wouldnt need much though. If, say, e.g. airbnb simply werent able to enforce parts of their ToS around scraping/contacting users then it would make the market vastly less dysfunctional.

Re: An Economy of Overfed Middlemen

#40

Post by jmeister »

danaris wrote: post #19
sylvain_kerkour wrote: post #9

Earlier quoted context omitted.

The passivity against monopolies has more to do with international competition and the fear of losing world domination.

Does it? Or does it have more to do with the massive industry capture of politics? Not to mention the right-wing ideology of, effectively, if you can make money doing it, and hide the negative effects from the public at least a little, you're a Real American Hero.

There are many progressives who've come around to favouring mega businesses over "mom-and-pop" for: higher wages, stabler jobs, easier enforcement of regulations..

For example: Matt Yglesias

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