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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

#211
Four.

That's the magic number. There have to be four competitors of significant size before prices go down. There are both EU and US studies substantiating this. It's been seen in cellular phone networks, ISPs, drugstores, and banks. Drop below the threshold of four, and the magic happens. Prices go up, margins go up, and consumers lose.

Four should be the basis of antitrust policy. Less than four, and there are two options - break up, or become a regulated public utility.

Two or three isn't enough. Collusion happens. Explicitly or implicitly, price competition doesn't happen with only two or three players. Four seems to be enough that cartels usually break up on their own. Somebody won't play ball.

Four.

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

#212

Earlier quoted context omitted.

There are two Americas, the one that HN folks inhabit and the underclass. The former is doing great. The latter has grown and shifted. I grew up in a rural community that was in the process of unraveling from a prosperous farming and light industrial area to a rural slum. There are zero operational farms in that area today. The one I worked for as a teen was in continuous operation since the Dutch colonial period. Th…

Since 2016, real (inflation-adjusted) wages have risen quickly for people in the bottom quartile, while for upper-income workers they've been stagnant. Obviously, most people on HN are still better off than manual laborers, but the gap has narrowed substantially (a big reversal from 1995-2015) and that's a good thing. https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_pr...

>real (inflation-adjusted) wages

lol.

The whole point of this discussion is that our metrics are not properly measuring things. The reported inflation number is a joke. See: anything in life that matters like - a house - a car - an education - health care - raising a kid - basically any life-milestone

but TVs and electronic toys have never been cheaper so it's all okay! Hedonic adjustment!

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

#213
post #198
post #173

Earlier quoted context omitted.

But polls show that around of population are flat out wrong on certain objective measures, like GDP, the S&P 500 index, and the unemployment rate[1]. If they can't get basic factual questions right, why should we put much stock in their "intuitive feel of the economy"? [1] https://www.theguardian.com/us-news/article/2024/may/22/poll...

That's exactly the point - there's some sort of disconnect and people just want to say "they're wrong" instead of trying to figure out why people feel that way.

[deleted]

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

#214

Earlier quoted context omitted.

The utility sector has a 10% profit margin. Hardly an example of a monopoly abusing its position. If utilities were nationalized the maximum possible gain is 10% and the potential loss is the unlimited capacity of the government to waste resources.

Not true the maximum losses a private utility can generate for the public are unlimited because the losses always get nationalized. The 10% margin is after C suite grift so it’s likely more than 10% you can save. Plus if you are on the hook for losses might as well take the 10%

It will be paid out of tax money either way. To save me money the government would have to either:

1. run the operation at least 90% as cost effectively

2. be less likely to make major costly mistakes

From my experience with government the probability of 1 is 0% and the probability of 2 is minimal. At least when PG&E caused those wildfires, their execs were fired and had to pay $100 million of their own personal money in damages. This doesn't happen when government employees screw up. They don't even lose their jobs.

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

#215
post #207
post #173

Earlier quoted context omitted.

But polls show that around of population are flat out wrong on certain objective measures, like GDP, the S&P 500 index, and the unemployment rate[1]. If they can't get basic factual questions right, why should we put much stock in their "intuitive feel of the economy"? [1] https://www.theguardian.com/us-news/article/2024/may/22/poll...

Guys this isn’t that complicated. Basically every commercial interaction you have these days involves someone trying to cheat you, with basically no way to find recourse to human understanding or help. It’s every day, every time you interact with a corporation as a consumer. It fucking sucks profoundly and people are completely exhausted by it. Have you really not noticed?

But the questions isn't "how do you feel about the economy", it's "do you think the s&p 500 went up or down". Even if you think the stockmarket is fake and disconnected from what actually happens on main st, you should still be able to correctly answer whether it went up or not. Failing to do so shows that either you have no grasp on how the S&P 500 is actually doing, can't hold opposing concepts it your head (ie. the "real economy" is doing shit but the S&P 500 is doing great), or can't follow basic instructions. Neither makes me confident in other things you're saying, like how how good the economy is.

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

#216
post #112

Earlier quoted context omitted.

This seems to be rooted in a generalized problem which I'll hastily call the conscious abuse of polite understanding, or abuse of economic consensus. Another possible rubric for this, a bit more sensationalized, would be "destructive precision". A simple example would be the hollowing-out of conventional terms everyone believes they hold the same settled definition of, such as "a flight." Instead of transacting accor…

So, a pricing exploit based on arbitrage between the rigorous description (and enforcement) of payment for a service in one direction, and the comparatively un-policed description of the service delivered, in the other? Perhaps the lawyering class wants everyone to either suffer under their miserable penchant for overweening semantic nitpicking, or suffer it along with them.

A description versus price equation, where there's a lot of variables on one side and only one on the other, does seem to be the model.

I guess I would add that it may only be a Salient as it is with respect to certain things like flights, because there are a couple of outstanding counter examples like cell phones and and automobiles which seem to exhibit the exact opposite trend.

A deeper analysis might reveal that there is a cycle at at work here, wherein the initial novelty of a prodict or service which is destined to become a commodity, means there is not yet a strong set of expectations about what the service or product is "supposed" to provide. distinction in the market has to come from adding context to that essentially commodity utility.

But later on some consumers begin to recognize that some of the additional context may not be strictly necessary or offer a value to them and would prefer compartmentalization of the core product as distinct from its value-added variants.

When flights were a comparative novelty, or at least a novelty in different market segments at different times, distinction between products was through different levels and configurations of service or features rather than price.

This may still be the phase of the product cycle that cell phones (setting aside the fairly stable tiers of product within that category) are in. It's harder to make as direct across the comparison with cars as they are older than both air travel and mobile phones, and because of all the regulation that enforces standardization of non-optional features related to safety.

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

#217
post #180

Earlier quoted context omitted.

This is basically a variation on tragedy of the commons. The solution is right there in front of everyone and "simply" requires everyone to do it coordinately. I've told this solution to numerous people, just log onto your bank website and click "dispute" and thats it you are done. Nope, they either don't believe me or are afraid of doing it because "banks". They continue to just allow crappy businesses to effectivel…

Disputing with banks isn't particularly reliable. These larger companies have a script now for responding for one, and the other thing that happens is they'll kill your account and permanently ban you. Neither of those accomplishes the goal of being able to purchase the product or service without being ripped off .

> the other thing that happens is they'll kill your account and permanently ban you

This practice really should be illegal. “I don’t want to do business with you because I screwed up, you correctly called me on it, and I had to refund you.” PERMABAN.

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

#218
post #198
post #173

Earlier quoted context omitted.

But polls show that around of population are flat out wrong on certain objective measures, like GDP, the S&P 500 index, and the unemployment rate[1]. If they can't get basic factual questions right, why should we put much stock in their "intuitive feel of the economy"? [1] https://www.theguardian.com/us-news/article/2024/may/22/poll...

That's exactly the point - there's some sort of disconnect and people just want to say "they're wrong" instead of trying to figure out why people feel that way.

>people just want to say "they're wrong" instead of trying to figure out why people feel that way.

Why are these two things positioned as opposing/contradictory? Why can't those people be wrong but we still try to figure out why they think that way?

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

#219
The termites thing is kind of amusing. But isnt much of whats described in the article properly known as “rent seeking”?

A monopoly might be the ultimate form of rent seeking. But for example a company that buys other companies/products in bulk to trap customers, but never improves or maintains those products and increases prices, is not only engaged in rent seeking but probably committing fraud. But expectation fraud is not a crime.

I think theres a tipping point in economics that once rent seeking becomes a certain percentage of the economy, its pretty much over.

Its economic corruption partnered with govt corruption.

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

#220
post #22

>Today, Verisign is the single most profitable company in the stock market, a great example of an economic termite This is just blatantly false. VeriSign is in fact the 1215th most profitable company in the stock market [1]. By operating margin, it's 155th [2]. I find it hard to give an article much credit when I can't even get past the introduction without having to comb through citationless false/misleading stateme…

Verisign has a profit of around $1B with around 1k employees.

Ingersoll Rand has around 18k employees. SBI holdings has around 19k. Beiersdorf has around 21k.

I don't know what the author was thinking or why it was phrased that way, but Verisign seems vastly more profitable per employee than others on the list. Also, I have no idea why they even need ~1k employees.

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