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Economic Termites: Monopolies not noticeable enough for most of us

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Re: Economic Termites: Monopolies not noticeable enough for most of us

#411

Post by AnimalMuppet »

CPLX wrote: post #352
AnimalMuppet wrote: post #321

Earlier quoted context omitted.

Could you now address the objection? If that's the case, who's buying all the output?

Those to whom the returns on capital are accruing. Again none of this stuff is super groundbreaking. Shantytown hills overlooking mansions surrounded by high walls and barbed wire is kind of a global norm. As America edges closer it only feels unfamiliar to those of us that have become accustomed to something different.

I don't believe it.

Take cars specifically. The US makes 11 million new cars a month. If regular people can't afford them, are billionaires really buying up all those cars? How many new cars does a billionaire need? Where are they parking them all?

I can believe your explanation with money. I can even believe it with houses, with rich people buying up houses as an investment. But I can't believe it with cars. Regular people are buying new cars, and regular people think they can't afford new cars. How do we make sense of that?

Re: Economic Termites: Monopolies not noticeable enough for most of us

#412

Post by neilwilson »

WalterBright wrote: post #342
neilwilson wrote: post #304

Earlier quoted context omitted.

It’s not quite that simple. If I give you a new £20 note and you put it in a drawer then that won’t cause prices to go up. It’s not money supply that’s the issue, it’s money flow vs capacity to produce. There isn’t a fixed amount of stuff and there certainly isn’t a fixed speed at which money can change hands.

> If I give you a new £20 note and you put it in a drawer then that won’t cause prices to go up. Withdrawing money from circulation (or lighting your cigars with it) cause a reduction in the money supply, meaning each remaining dollar is worth more, which is deflation.

People withdraw money from circulation all the time. It's called 'saving'. That's what a 'deficit' is - people saving rather than spending. That's what money in a bank account is. It's what a government bond holding is.

That isn't reducing the money supply - burnt notes remain on the books of the note issuer and are included in the calculation. It reduces the overall velocity of money, not the amount of money.

That's because the velocity is variable. Not just in aggregate but in individual areas.

Dollars change hands at variable speed. That's why turnover is measured in dollars per month, not dollars.

Mixing up dollars per month and dollars is like mixing up miles per hour and miles.

Re: Economic Termites: Monopolies not noticeable enough for most of us

#414

Post by yareal »

randomdata wrote: post #370
wholinator2 wrote: post #109

Earlier quoted context omitted.

That's very good for you, you should count yourself lucky. But i think we should trust people when they tell us how they feel. Do you live paycheck to paycheck? Are you aware that a majority oh Americans (55-69%) do, defined as struggling to save or invest anything past the monthly expenses? I'm a late 20s man who made it into tech, I'm doing great! My friend who got into tech might kind of hate their corporate job l…

> Are you aware that a majority oh Americans (55-69%) do, defined as struggling to save or invest anything past the monthly expenses? How can that be? Only ~30-35% of Americans rent a home, which means that ~65-70% of Americans either own a home or are freeloading (e.g. living with parents). Only ~3% of homes are considered to be underwater, which means virtually all those who own a home have been able to save over a…

Being underwater on a mortgage and not being able to save aren't the same.

A mortgage that is underwater means the value of the home is less than the loan balance. That can happen for any number of reasons.

It doesn't mean anything about your ability to save money. If you make $5k a month and spend $5k on expenses, you can make all your mortgage payments (whether or not that mortgage is underwater) but still not save.

When outlets report savings of Americans they don't typically mean just in savings accounts.

Re: Economic Termites: Monopolies not noticeable enough for most of us

#415

Post by randomdata »

yareal wrote: post #414
randomdata wrote: post #370

Earlier quoted context omitted.

> Are you aware that a majority oh Americans (55-69%) do, defined as struggling to save or invest anything past the monthly expenses? How can that be? Only ~30-35% of Americans rent a home, which means that ~65-70% of Americans either own a home or are freeloading (e.g. living with parents). Only ~3% of homes are considered to be underwater, which means virtually all those who own a home have been able to save over a…

Being underwater on a mortgage and not being able to save aren't the same. A mortgage that is underwater means the value of the home is less than the loan balance. That can happen for any number of reasons. It doesn't mean anything about your ability to save money. If you make $5k a month and spend $5k on expenses, you can make all your mortgage payments (whether or not that mortgage is underwater) but still not save…

> A mortgage that is underwater means the value of the home is less than the loan balance.

Indeed. Which means that when a home is not underwater, the owner has savings (or is breaking even, of course, but that is as equally unlikely and is for all intents and purposes considered to be the same as underwater).

> If you make $5k a month and spend $5k on expenses, you can make all your mortgage payments (whether or not that mortgage is underwater) but still not save.

Interest-only loans account for only 1-2% of mortgages. Outside of that small group, and the small group underwater (which very well may be the same group), if you are paying a mortgage, a portion of that is a portion you are saving. Mathematically, that has to be true. There is no way around it.

> When outlets report savings of Americans they don't typically mean just in savings accounts.

So, then, again the numbers don't add up unless we're counting children. Why would you count babies in those not able to save? Is a newborn not making enough money to be able to save a problem or somehow notable?

Re: Economic Termites: Monopolies not noticeable enough for most of us

#416

Post by HWR_14 »

roenxi wrote: post #339
HWR_14 wrote: post #324

Earlier quoted context omitted.

I'm not sure of many, if any, monopolies where regulatory constraints are the cause. Especially compared to causes like network effects. Do you have a modern example? I can think of a couple of examples where regulations exist to manage other constraints on competition, like the FCC regulating the spectrum. But not where the regulations cause the number of major competitors to decrease dramatically.

One example I like is Internet Explorer. IE had a "monopoly" back in the early 2000s and made up something like 90% of the browser market. Then Firefox came along and broke the market open, then Google and Apple rolled in like bulldozers [0] and we got to a healthy 4-player market. Everywhere except for South Korea. You can still read articles on it to this day [1]. Regulations had an unfortunate interaction that mad…

IE didn't lose in the market when Firefox came along. IE lost when the government fined Microsoft billions of dollars and forced it to relinquish it's monopoly position.

Meanwhile the current market is Chrome, reskinned Chrome and Safari. Hardly a healthy marketplace.

Re: Economic Termites: Monopolies not noticeable enough for most of us

#417

Post by jmalicki »

creer wrote: post #392
jmalicki wrote: post #374

Earlier quoted context omitted.

Natural monopolies due to high capital costs are businesses like TSMC and ASML - you're not going to get a "small new entrant" with 4nm lithography for making high-end microchips.

TSMC, ASML are as extreme as it gets. You might as well ignore them completely in this thread.

There are local versions - a veterinary emergency hospital with veterinary oncologists and cardiologists in a smaller city without other metros for hundreds of miles, for example.

Re: Economic Termites: Monopolies not noticeable enough for most of us

#418

Post by ryandrake »

Spooky23 wrote: post #346
ryandrake wrote: post #189

Earlier quoted context omitted.

> That’s an example of why the nihilism of MAGA is so appealing. The world is collapsing around many people. And this is what I don't get about current US politics. MAGA = Republicans. The Republican party is the party of generational wealth transfer. The Republican party is the party of elite businessmen lording over the working class. The Republican party is the party of all the economic forces that are unraveling…

MAGA or “conservatives” is different than republicans. MAGA is a populist movement of nihilists being used by those money people. Problem is none of their problems are being addressed. Jesus, guns, and persecution of various straw men will run out of steam, and the angry populist energy will transition to real unrest.

> MAGA or “conservatives” is different than republicans.

This thread is dead at this point but I just wanted to point out that you can't really separate them anymore. They have nominated a MAGA candidate for the top office in the country, three times in a row. The vast majority of their electorate will vote for the MAGA candidate. The party -is- MAGA for all practical discussion.

Re: Economic Termites: Monopolies not noticeable enough for most of us

#419

Post by yareal »

randomdata wrote: post #415
yareal wrote: post #414

Earlier quoted context omitted.

Being underwater on a mortgage and not being able to save aren't the same. A mortgage that is underwater means the value of the home is less than the loan balance. That can happen for any number of reasons. It doesn't mean anything about your ability to save money. If you make $5k a month and spend $5k on expenses, you can make all your mortgage payments (whether or not that mortgage is underwater) but still not save…

> A mortgage that is underwater means the value of the home is less than the loan balance. Indeed. Which means that when a home is not underwater, the owner has savings (or is breaking even, of course, but that is as equally unlikely and is for all intents and purposes considered to be the same as underwater). > If you make $5k a month and spend $5k on expenses, you can make all your mortgage payments (whether or not…

> Which means that when a home is not underwater, the owner has savings (or breaking even, of course, but that is as equally unlikely and is for all intents and purposes considered to be the same as underwater).

What? It doesn't mean this at all. You can have savings and still be underwater. If you have a 3.5% for your mortgage, but the market crashes after you bought at the peak, you can be underwater because your house lost value. And it would be foolish to pay down the loan rather than get a better rate for your savings.

Underwater mortgages are totally orthogonal concepts to savings.

> if you are paying a mortgage, a portion of that is a portion you are saving

I think I see your confusion. Yes, money saved into a home is an asset that you are building over time. However it's a non liquid asset, it's difficult to turn back into cash for, e.g., a surprise medical bill.

Repayment of a loan meets the strict mathematical definition of "savings" however it is typically excluded (as are, e.g., investments). For instance, the U.S. calculation of GDP does not consider repayment to be saving.

Savings are typically held in checking accounts, savings accounts, CDs, and money market accounts. Some people take a portion of their savings and invest them in higher risk items like stocks and bonds, but those are investments.

It's important to decouple the concepts of net worth (or even just worth) from the concept of "savings" because you can be taking actions that increase net worth (e.g. paying a mortgage) that don't increase one's savings. (Though, eventually, if you sell the home you could put any proceeds into savings.)

Re: Economic Termites: Monopolies not noticeable enough for most of us

#420

Post by pydry »

JumpCrisscross wrote: post #233
pydry wrote: post #97

Earlier quoted context omitted.

Most of the assumptions made in economic models conceal sources of profit. They dont appear to be there to simplify complexity because they simulate situations that have never and will never be approximated (never been perfect competition or information, never will be). It's unlike, say, physics in this respect.

> Most of the assumptions made in economic models conceal sources of profit This is wildly inaccurate. A huge amount of economics is focussed on profit. For obvious reasons. > never been perfect competition or information, never will be Frictionless surfaces are mostly a fiction, too. That doesn’t mean calculating the expected outcome in a frictionless condition is useless. If the deviance is more than you’d expect f…

>This is wildly inaccurate. A huge amount of economics is focussed on profit. For obvious reasons.

As an example there are countless studies looking at the relationship between the minimum wage and employment and off the top of my head I can think of maybe 2 off the top of my head that measure the relationship between the minimum wage and profit.

For obvious reasons. The same reasons.

It's not a great way to get ahead in your scientific profession to point out things which make the people with the money and the power uncomfortable - Galileo discovered that one.

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