I mean, in the narrow sense he's of course right -- if you're a business owner or investor the logical thing to do is to aim to create a monopoly. Where I depart is the claim that this is also good for society as a whole.
I agree - didn't feel it was worth mentioning considering the original and the criticism I linked to :)
I like drawing parallels between economics and ecology... monopolies are farms, massive artificial monocultures that suppress natural competition and extract value for the profit of a few. They embody a cycle of growth and stagnation.
A healthy economy is more like a jungle, innumerable smaller competitors with diverse approaches to survival... an extremely resilient and constantly evolving ecosystem that leads to fascinating innovation.
>A healthy economy is more like a jungle, innumerable smaller competitors ... that leads to fascinating innovation.
I think you missed PT's point. The word "monopoly" has overshadowed his message. He wants people to pursue "blue ocean"[1] ideas to be innovative.
Instead of starting a company that makes another generic clone of aspirin, you pursue a drug that cures breast cancer. Or instead of building a business that broadcasts 150 characters (hey we offer you +10 more characters than Twitter), do something more innovative for society like building cheap flying cars.
I'd venture to guess that 99% actually agree with PT's underlying idea (innovation) but the distasteful word "monopoly" has completely drowned out the message. The term "blue ocean" is the same concept -- it just doesn't rile people up as much.
Does the typical investor really care if the idea is a cure for breast cancer or "driving all existing providers in some space out of business and then mopping up the market"?
Yes, investors care about the goals of the business. See the promises of Theranos' "40 tests and detect cancer from a single drop of blood". I can't think of a VC that has the investment thesis of "put money into businesses that has cutthroat competition and drive others out of business".
Theranos had promises of "blue ocean". No competition. This attracted investors like moths to a flame. (We now know they had no competitors because their technology was a fraud.) The investors would have been better off investing in a boring factory making generic aspirin ("red oceans of bloody competition").
Fyi... Peter Thiel thinks Uber is overvalued. He didn't like the way they compete.
Uber should be a case study that burning up billions in investor money (billions wasted on trying to underprice Didi in China) was a colossal mistake. How much of that bad strategy is blamed on Travis's vs investors is something we won't know until a tell-all book comes out.
I think you missed my point too... I'm not talking about Thiel. I addressed him and changed topics.
What you're describing is a jungle. Niches with dominant players that share in a diverse resilient economy. Bees and hummingbirds compete for the same resources but they are not copycats.
A monopoly is a farm, an established entity that's taken control of the local system to suppress disrupters.
That's the part I was replying to. When you say "I agree" with parent post that disagreed that "[monopoly] is also good for society as a whole."
>A monopoly is a farm,...
I wasn't replying to this alternative analogy. I think we both agree that PT wasn't using "monopoly" in this manner. His usage of "monopoly" was closer to your "jungle" ecosystem. My point was that you may actually not be disagreeing with PT.
They often are, because companies in highly competitive industries don’t have the excess profits to reinvest in research. Computing as we know it is largely the story of monopolies. Bell Labs bankrolled by the AT&T monopoly. Xerox PARC bankrolled by the Xerox copier monopoly. The Internet bankrolled by the ultimate monopoly (the military). The modern web bankrolled by the Google/Apple duopoly.
>companies in highly competitive industries don’t have the excess profits to reinvest in research.
On the flip side, monopolies often have little incentive to invest in improving their products/services, and find they can profit from making their products cheaper/worse.
Or outright killing research that threatens their main revenue drivers. Like, OK, we eventually got digital cameras, but Kodak didn't do anything with it for a long time because they wanted to keep selling film. With graver consequences, Exxon decided to suppress its own findings about climate change.
Another ongoing example: suppression of research into male birth control due to fears of cutting into profits from the cash cow that is female birth control.
Yet all of those monopolies either imploded, had their markets simply dry up, were out-innovated by smaller competitors, or investors just moved onto hotter fads.
The crashing and burning of a big monopoly may very well be a healthy event; but oh the damage they do before then...
Well it's not entirely clear that everything's great afterward either, since a lot of people are employed by any monopoly that crashes and burns and whole towns or regions can be devastated by that event.
Comparing one very effective and interesting skunkworks lab with the incredible explosion in choices and service in telecommunication, as well as drastically lower prices, that came when the monopoly was broken up?
I think you're demonstrating the anti-monopoly point handily.
The AT&T breakup destroyed the telecommunications industry. AT&T’s gold-plated POTS network was expensive, but for its time it was a technical marvel. Competitive industries don’t build stuff like that. There is a reason Apple and Samsung (huge, vertically integrated monopolies) produce the best phones.
Yes, monopolies do have the resources to invest in R&D. The problem is that they often lack the incentive because they have control of a market.
Government regulations that mandate some return (think telecommunications services for those in rural areas, pollution standards, etc.) can provide an incentive for monopolists/oligopolists to perform better according to some criteria. The problem is those mandates are not what we would always consider "innovative". By definition, they are often designed to incrementally improve on the status quo.
The game of politics has an important role. When there are oligopolies in many industries it is not unusual to see regulators getting jobs at the very companies they regulate. Think of the ties between the SEC and finance, CRTC in Canada and the communications sector, etc. Monopolists have a way of cementing their position in the economy and reducing the mandates that governments place on them.
I don't really think it is fair or reasonable to gloss over the tremendous role of government research by just calling the military "the ultimate monopoly."
I guess as long as they are regulated, monopolies can be beneficial to the society overall, in many ways intangibly. Bell Labs is a great example of something that kept on giving (Unix, C, etc).
I wonder what could make something like Comcast into a "good monopoly" though.
Another aspect is that commercial competition, while generally accepted as a system that in the end delivers superior results, seems woefully inefficient in terms of waste of resources, as opposed to something like academic competition, were people freely reuse competitors' previous work.
Kind of a hard argument to make when there are plenty of examples of contributions to computing that weren't bankrolled by monopolies. Just think about how much, especially in the early days, came out of academia alone. And I'm not sure where you get that the modern web has been bankrolled by Google and Apple when there are many, many other contributors.
IMO, innovation is usually fueled by competition. Where there's lots of competition, the need to innovate is the necessity for survival. I mean, how innovative was Microsoft in the 90's when they essentially had a monopoly on desktop computing? That's how we got stuck with IE 6 for so long...
> Just think about how much, especially in the early days, came out of academia alone.
Academic institutions are hugely monopolistic...
> Where there's lots of competition, the need to innovate is the necessity for survival.
That's the theory. In practice, competition drives bean-counting efficiency. See, e.g., Thinkpads before and after the Lenovo acquisition. Pretty much the only place you see innovation in that space is among companies that can carve out a niche based on brand or differentiating factors (Apple), or among companies that have a monopoly on a key piece of the supply chain (Intel, Microsoft).
Oh, heavens, no! Nobody associated with YCombinator (especially a demi-god like Thiel) is ever wrong about any topic involving our economic (or socioeconomic) system. Ever.
There may be an interesting discussion here somewhere, but as constructed your comment is less likely to produce such. Do you have specifics regarding Thiel’s position and how it compares with that of the article? As is, it appears you’re looking to provoke a reaction rather than promote a productive discussion.
My take is that he's basically saying capitalism doesn't work (edit: at least there's big problems within it) and if you want to get rich you should know how to play the system because just providing large amounts of social value isn't sufficient. I'm not sure that's his intended message though, since he often presents himself as a libertarian with the implicit message that capitalism and getting rich is a sign of providing social value.
Not sure why I'm being downvoted? OP throws out "Peter Thiel says monopolies are good," which is an appeal to authority and a post meant to cause controversy.
The OP wasn't necessarily agreeing with Thiel, just highlighting something of a counter-opinion. Your reply was a bit uncivil and didn't really add anything.
I remember reading his quote and I understood it to mean that a monopoly is good for the company that has it and a company should try to achieve a monopoly. I don't think he said that it's for the greater good.
This is brilliant. I recently wrote in to my senator about net neutrality. His reply was a breathtakingly convoluted justification of not regulating companies like Comcast because antitrust laws would take care of it. I've never felt so insulted.
Maybe he thinks more than one company is sufficient then? But that’s still just a civil difference of opinion! It’s not insulting to be disagreed with I’m afraid.
Except in the context he is speaking of, extremely few Americans have more than one company supplying them with Internet access. It is definitionally a monopoly, and to say existing anti-trust legislation is sufficient is saying the monopolies as they exist now are acceptable and nothing needs to be done.
It is a dismissive comment from the senator, he should feel insulted. It is like saying "help I'm bleeding" and the guy next to you saying "its not that bad, get over yourself".
I'm not so sure monopoly captures the root of the internet access problem. Yes, in many markets there is a single provider (e.g., Comcast). There are other providers (e.g., Verizon). But neither enters the other's markets.
I'm not suggesting their is a spoken conspiracy. But when neither side benefits from direct competition, what's the word for that?
It's insulting when people say something you both know is stupid but they act like they're just making a civil good-faith argument. Kind of like what you're doing.
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. Everything else is just a symptom of that problem.
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, annoyances, and inefficiencies. It's a drag on GDP and, especially, on quality of life.
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.
unfortunetly you would have to radically reform the entire political system and take a lot of powers away from states eg single sales tax, a single set of employment law.
Unfortunately the states are not turkeys voting for Christmas
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 face of something as abstract and high-falutin' as a kind of political root-cause analysis, and aside from that we have too many states-can't-possibly-do-anything-right-ever-evidence-be-damned-no-really-I-proved-it-from-first-principles-it's-just-like-math folks running around.
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.
The EU has a set of laws called State Aid, which disallows member states from subsidizing business to the detriment of their competitors (either other businesses or other states). Government can improve infrastructure, but cannot literally hand out cash to build a factory, or anything like that.
This exists even though EU nation states have far more individual power than US states.
In reality, these days member states will introduce laws for certain players that then anyone can use. It's not state aid then, but the result is the same.
For example, Belgium recently updated certain tax laws to reduce the amount of withholding tax payable by certain major foreign investors, to keep the AB Inbev holding company in Belgium instead of letting the shareholders move their holding entity to the UK.
> Government can improve infrastructure, but cannot literally hand out cash to build a factory, or anything like that.
Yes, because such "subsidies" would create competition for companies from more developed EU countries, the same countries that drive the acceptance of new EU members. Removing these obstacles crushed local industry, which is why less developed countries ended up with close to zero industrial production after joining the EU (thus starting the social, employment and competitiveness problems most smaller EU nations are facing).
Nevertheless, EU nations keep subsidizing "selected" businesses, especially for big foreign companies outsourcing their operations, using tax benefits.
> Removing these obstacles crushed local industry, which is why less developed countries ended up with close to zero industrial production after joining the EU (thus starting the social, employment and competitiveness problems most smaller EU nations are facing).
These sorts of talking points exist everywhere, in the West and in the East, state aid is one of the most attacked elements of the EU. Actually the talking point is near identical in the UK, that manufacturing has died because the government hasn't been able to step in (in effect, to prop up uncompetitive industries). Manufacturing has in fact plummeted in most developed countries, and it's easy for governments to pass the blame onto the EU.
Not really. The problem with most of the small-ish EU countries is that with the exception of Cyprus, Austria, Finland and Sweden, all the 13 countries that joined after GDR/BRD unification were former USSR or Yugoslavian countries + the GDR itself which was USSR allied. This means that their entire industry companys were either uncompetitive since decades (but kept artificially alive by the realo-socialist states) or got fleeced by local or foreign mafia (or, in the case of former GDR aka East Germany, by the Treuhand which has had its fair share of scandals) after the fall of the USSR.
In addition, there's a _massive_ wealth gap between the EU/EEA core (Germany, France, the Nordic states, Switzerland and UK), which bled all other EU nations dry of young people (they went off to study and stayed) and loads of working-age people (they went off to earn money to support their families at home, and stayed). The people "left behind" tend to be old-ish and politically conservative, which doesn't exactly help when everything around is changing at an unknown (for Soviet/Yugoslavia) pace... and what's left of young people today flees from the corruption and religious-conservative politicians.
What saddens me is that I have no idea if the situation can be fixed at all. Manufacturing or heavy industry isn't going to come back, no matter how hard Trump or his ideological "friends" try. It will stay in China or maybe migrate to Africa as soon as Chinese labor gets too expensive/the Chinese politics too restrictive. All that remains is agriculture (which is going to be more and more automated), tiny chunks of natural resources exploitation, and tourism. Maybe a bit of IT stuff, but people are highly skeptical of nearshoring/offshoring since the "big companies" (Accidenture, IBM, whatever) spoiled the well, and the local markets by far don't have as much demand...
Source: am half Croatian, half German (born and raised in Germany 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.
Just a minor clarification to your point. In "industry" towns like the Bay Area, Detroit, and Chicago - corporations are definitely the powerful non-state actors.
Outside of those though, their are many cities of considerable size where local developers hold the most sway. These local developers behave and are motivated by different things then the mega corps.
> 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.
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 monopolies are not good for consumers, but the average person is not a rational economist. I don't think Americans believe lobbying is bad. They want to be led by corporations and see lobbying as the legitimate means for them to lead.
> This thread is confusing State granted monopoly with Market granted monopoly. Economists usually talks about the former.
Can you really tease those apart in our mixed economy? Look at ISP monopolies, or the bizarre state of the "deregulated" electricity market and what remains of the long-distance telephone market. Or take pharma, where tremendous resources are needed to comply with regulation. Or the -- tremendous scare quotes required -- "marketplace" for health care. In a mixed economy, monopoly exists because of state and market.
In all your examples, state acts as gate-keeper and these are local/national industries. If you have a multi-national company that is monopoly, its very likely to be market granted monopoly.
> In a mixed economy, monopoly exists because of state and market.
No. We live in global economy. Most companies have to compete globally. You might get favours from few countries but not most. Note whether your home country gives you a boost or not, is irrelevent. The success in a foreign country without its govt's blessing, is the question.
I'm confused. The article was about the United States, which has an enormous regulatory apparatus. You're saying that's irrelevant to multi-national corporations that operate here?
No. If some MNC is a global monopoly then the industry is lightly/none regulated by most significant countries.
Though, USA is an exception, achived arguably due to history of low market intervention. I would not say that the MNC does not care but achieving global monopoly in heavely regulated industry is very hard. Case in point, in banking industry (the most regulated sector), there is no private (or even public) global monopoly.
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.
As an American who speaks to a lot of other Americans, this is definitely not the mentality that I'm seeing around me. Most people I know are becoming cynical about growing corporate control of our government and increasing income inequality. Pretty much everyone I know is worried about the monopolies.
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 catch up (yeah, it's just not fair, the tax rate that Snap is paying).
Now apply the exact same thing to the other tech giants (Apple, Microsoft, Google, Oracle, Intel, Cisco, etc). It's just as far-fetched with them as it is Facebook.
> 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.
Think of it this way: it's not that the larger companies are breaking the laws or simply not paying taxes that they owe - they're just being more innovative in how they approach those things. In a global economy, when there's pressure to pay lower wages by outsourcing labor, pay lower taxes by organizing some or all of the company abroad, or exploit loopholes in domestic laws for greater efficiency, that's just what you're going to do (given enough expertise and resources).
It's laughable to think a country could solve any of those things through stricter legislation; that will simply encourage those companies to move more of their operations to jurisdictions with more advantageous laws/taxes/labor/etc.
So how do you "level the playing field"? One way would be bringing those advantages to smaller companies through businesses that exploit those same loopholes / tax strategies, providing them as services to companies who otherwise couldn't afford doing it themselves (i.e., exploiting legal loopholes as-a-service, international tax strategies as-a-service, etc).
Or, you embrace the global economy, specialize in what your country can do most efficiently (hint: it's not manufacturing anymore in the US), and make it advantageous for companies to keep operating domestically. You lower taxes for everyone, so even the companies with few resources can enjoy the eased financial burden of taxes that normally only the big guys could avoid. In short, you compete globally rather than stick your head in the sand pretending that your country is somehow isolated from the rest of the world and you can fix everything through legislation.
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.
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.
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.
Frankly, it doesn't matter. Tax avoidance is as old as man himself. There will always be another way. Often set up and operating costs are a major driver for tax strategies, and for a company the size of Google, this doesn't matter.
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%.
So, the same people who are already heavily influenced by corporations are somehow going to wave a magic wand to limit the influence of those who are influencing them? Not sure I believe that will happen (at least, not as long as free speech is still a thing). I don't doubt that it could happen - at least in theory - but in my opinion, we're already too far down that rabbit hole.
The United States typically goes through cycles of corporate vs government control. This also mirrors the cycle of state vs federal control. Arthur Schlesinger Jr, who won two Pulitzer prizes, wrote extensively about this.
I know it’s hard to believe, but the next 15 years will see a dramatic rise of government power and higher corporate taxes. This will happen very suddenly with one party taking complete control of all the branches of government along with having a dominant ideology at their back. Doesn’t really matter if Republicans or Democrats are in control, we can see the progressives on the left like Sherrod Brown, and populists like Steve Bannon on the right (who has spoken highly of Senator Brown), advocating shockingly similar proposals.
Corporate taxes abroad were also often higher than the US rate at the time. Now they are much lower. If you sell X in, say, the UK -- as a company you often have the option: book the profit in the UK, or in the US.
There's not much laws can do to change that, that is just the way having the flexibility to structure your business in whatever way you prefer works.
If you were to reduce the US corporate tax rate to 10%, a lot more profit would be booked in the US again.
It's always a race to the bottom. Smaller countries (e.g. Ireland, Luxembourg, Malta, Cyprus) need a less broader tax base to cover their outgoings and thus will always be able to offer a low tax base. As a (larger) country, you can decide not to participate, but you'd be pricing yourself out of the market.
Imo, it's smarter to tax shareholders more, and corporations less. Corporations are generally productive and having the statutory seat of a multinational company in your country leads to an increase of tax revenue, because 1) people will have jobs, 2) those people will pay income tax, sales tax, will spend at (mainly local) businesses whose shareholders will be taxed, etc.
Dividend and capital gain taxes are generally also harder to avoid for the wealthy. At best you can defer them, so you'll always have to pay some tax if you want to spend $1-2-5m a year. Corporate taxes and income taxes are (very) easy to avoid.
I wonder how much it would cost to completely eliminate corporate taxes but increase dividend and capital gain taxes to say, 35-40%. Now, that said, I don't think this will ever happen. People in power love their tax breaks too much.
Capital gains are taxed at the same level as income tax, except when they are long-term investments, meaning longer than a year. The reason long-term investments are taxed at a lower rate is because you want to incentivize long-term investing as it increases stability.
Take that away and I have no incentive to invest in stability but have every reason to disrupt the market and take advantage of the swings. I'm not sure you want that.
As capital holders we will always have an incentive to invest. It's a way to let our money work for us, without having to put in time. Also don't forget companies wouldn't get taxed; the companies you hold would not have to pay corporate tax, so there would be more $$'s available to distribute to shareholders. You wouldn't actually be receiving less money after tax.
> The reason long-term investments are taxed at a lower rate is because you want to incentivize long-term investing as it increases stability.
Since most equities are held by tax exempt entities (whether that is domestic or abroad, e.g. pension funds or hedge funds in a tax haven), this argument doesn't make sense. The stock price of AAPL or YELP is not going to tank because an individual investors sells (barring perhaps the CEO).
The tax rate is lower generally to account for inflation. But not all countries have sliding capital gains tax rates. The UK has a 28% rate, most capital gains are exempt in Belgium and the Netherlands (but the latter has a small wealth tax), France just introduced a 30% rate, etc.
The "race to the bottom" is the reason why free markets are so prosperous. Each business independently works to reduce costs and competition forces companies to share those savings with consumers.
The best example of the "race to the bottom" stopping are monopolies (often gov't supported) like Comcast where they can sit fat and happy raking in a ton of profits and telling consumers to shove it.
But in this case, we're not talking about business. We're talking about the funding to pave our roads, run our schools, be able to fight fires, and all that other good stuff we need.
The gov't is well within their right to change the tax code as they see fit. And they do all the time. It's not like we're seeing tax receipts declining. They've done nothing but increase over the last 100 years.
That’s all true, however corporations exist at the behest of the government. They could make laws against that, against taking money outside. For an extreme example, South Korea had the death penalty for capital flight. Quite extreme, I’m not advocating it but it did work.
Furthermore most major corporations have had government involvement to attain their status, whether in the forum of subsidy, bailout or military procurement. Unfortunately most people aren’t aware of this “corporate welfare”.
Basically corporations which are unaccountable concentrations of public power, should not be allowed to dictate to the government, which is at least in theory accountable to the public. Unfortunately the trend has been in the opposite direction.
You're right, it would do nothing. The reduced tax base is just the result of increased tax competition, offering businesses a better alternative. I don't believe you can bring it back.
If you want to lower or eliminate corporate taxes (with a positive effect for people), you would need to increase dividend and capital gains taxes to compensate. You don't need to collect more corporate tax than is collected today, but if you can create more jobs, that's a net win.
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 by design for the benefit of the companies that control the jobs.
Comparing the corporate tax rate in 1952 to today is pointless. In 1952, the U.K. was a shell burned out from WWII. Today, it's a tax haven luring American companies to reincorporate there. You cannot fight this process with legislation--you'll just shoot yourself in the foot and drive companies out to other countries that will be happy to receive them. This isn't just a U.S. thing--even accounting for deductions and tax breaks, the U.S. has higher corporate tax rates than our competitor countries: http://www.npr.org/2017/08/07/541797699/fact-check-does-the-.... The "real" amount of taxes paid in the U.S. is about 18.6%, versus 8.5% for Canada, 11.2% for France, and 4.1% for South Korea.
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.
> Why then the phenomenon which the government has permitted of outsourcing US jobs?
The government doesn't "permit" outsourcing of U.S. jobs. Thanks to the technology created by folks here on HN, there is nothing the government can really do if IBM decides to fire a worker in New York and hire one in Bangalore. The only thing the government can really do is offer concessions and incentives to reduce the bleeding.
> 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.
The party that spent the most money just lost the most recent major election, so I'm not convinced money really matters much. In reality, we spend a minuscule amount on politics given the size of the country. About 0.0037% of GDP on Presidential elections, and 0.019% of GDP on lobbying. For context, we spend less on lobbying each year than we do on specialty coffee.
If money really bought elections, companies would spend a lot more of it trying to do so.
Well this election was different in two radical ways, two candidates who were not the first choice of corporate donors - Trump and of Bernie Sanders. It must not be forgotten that Trump is a billionaire who largely financed his own election. Bernie Sanders on public contribution. But this has been the exception rather than the rule.
This scholarly study found that “economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence.“
Hardly a surprising fact. Polls show most Americans believe the government is dominated by a small group of special interests who are looking out for themselves.
> If money really bought elections, companies would spend a lot more of it trying to do so.
Even the threat of money buys politicians. Case in point: the repeal of Obamacare is wildly unpopular with the US public, but the Koch brothers got a majority of the house of representatives to vote for it. How? Simple: they threatened that any GOP representative who voted against it, would face a primary opponent in their district next year with $millions in funding. They don't even have to spend the millions (although they do), because simply the threat of a well funded primary challenger is enough for them to buy votes.
It's a great tragedy that the supreme court has effectively taken our democracy away from us by ruling that money is speech, and protected by the first amendment.
Obviously, Republicans in Congress only care about what Republican voters want. And a significant majority of registered republicans want Obamacare to be repealed. So that’s a bad example of money driving politics.
Also, you’ve got it backwards about Citizens United. The Supreme Court didn’t rule that money is speech. Instead, detractors are trying to convince people that speech (the case was about a political movie) is actually money.
"Corporations have outsize influence on the government because they control jobs, which is the single thing Americans care about more than anything else."
They have influence on government because they pay politicians bribes that get them elected. Endless evidence to support that where companies or industries give money, politicians get elected, and politicians pass laws to give those companies benefits they want that aren't good for voters or even the voters money. The politicians get wealth and power in return. End of story.
The rest is narrative the politicians use to distract from that. Now, they do like bringing jobs and contracts into their districts to increase their votes. They operate on money, though. Recent example with ISP's:
> In 1952, the U.K. was a shell burned out from WWII. Today, it's a tax haven luring American companies to reincorporate there. You cannot fight this process with legislation--you'll just shoot yourself in the foot and drive companies out to other countries that will be happy to receive them.
And this is one of the many reasons I despise the UK currently (I'm British). The citizenry do not benefit from these arrangements. If anything people seem to becoming more aware of it and more pissed off about it.
I love how the UK likes to torpedo any EU attempt to overhaul and address these greedy little sweetheart deals as well.
Well, I think it's absurd to compare the post war (or the Korean war) tax rates to that of today. I think the effective corporate tax rates during the Reagan era would be more appropriate -- which then got whittled down again during the Clinton/Bush era.
But I agree with you that you can't ignore corporations' outsized influence on corporate taxes.
I highly doubt that is true. I mean, there are only 3 basic economics sectors, and you just stroke an entire one out of the question.
It is way more likely that the reality is more nuanced, and the US can not efficiently manufacture some things, while keeping the lead on some other things.
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).
From the Iron Law of Oligarchy page: "no sufficiently large and complex organization can function purely as a direct democracy"
I'm not sure this is proven yet. Certainly in the past, I'd have agreed, but with communication via the Internet making realtime decision-making between all members of a democracy possible, I think direct democracy is theoretically possible at least.
If not absolutely direct, then at least having the ability to instantly revoke a mandate from someone you have entrusted could go a low way to limiting the power of an oligarchy, as could entrusting different individuals and groups with a single person's vote, depending on the issue. For example, maybe I'd trust a particular economist to vote on my behalf for specific economic proposals, but I'd want Greenpeace to vote on my behalf for anything to do with, say, baby seal clubbing.
So long as the individuals can instantly take back the voting power they have entrusted to someone else, a reasonable semblance of direct democracy could work.
In practice, of course, it would be a hell of a mess to get everything functional, I just don't buy the notion that it's impossible in a world where everyone can communicate with everyone else essentially for free.
Essentially for free is not “for free”. For example, the best way many people have to communicate with their peers is Facebook. But A) their peers aren’t the ones seeding the discussions, and B) their communication is filtered for signals like “vitality”. More mundane, but important ideas, are a bit squashed on a platform like that.
Picking on Facebook because they’re the biggest, but Twitter appears to be worse on every axis, as it continues to evolve to favor clout.
I think direct democracy is theoretically possible at least.
But would it be desirable? I don't think so.
If not absolutely direct, then at least having the ability to instantly revoke a mandate from someone you have entrusted could go a low way to limiting the power of an oligarchy, as could entrusting different individuals and groups with a single person's vote, depending on the issue.
The later seems like a very good idea. The former not at all. If you trust someone with a mandate, just allow the time needed to develop a consistent plan. Worrying too much about short term is exactly the opposite of good administration.
> in the past, I'd have agreed, but with communication via the Internet making realtime decision-making between all members of a democracy possible, I think direct democracy is theoretically possible at least.
Our current issues have nothing to do with latency, they have to do with manipulation and propaganda. The internet has so far made that worse, not better. If every single Facebook trend, or 30 second clip from Fox and Friends had the potential to derail an international treaty, or modify healthcare on the fly, reality would be strictly more terrifying than it is now.
Show me web technology improving stability and deep thoughtfulness, and then we'll have something to talk about.
Any online poll serves as an example of this. On the funny side, sometimes you get a whale named "Mr. Splashy Pants" or a boat named "Boaty Mc. Boat Face". Other times, you suggest "Hitler Did Nothing Wrong" as a new flavor of Mountain Dew.
For a legislative vote where some actors have a lot to gain or lose from the outcome, I'd expect the manipulation to get even more egregious than people trolling polls for amusement.
I don't think people have come to grips with the nature of manipulation. We talk about letting everyone vote in realtime, but that doesn't solve the problem, because it's not looking holistically enough.
For example, Suppose on average 1% signup for the military in high school. Next suppose we add an intervention, we add a sign in the lunchroom for military recruiting (touching on all the right emotions). The average in these schools goes up to 3%! We say, these additional recruits CHOSE to join, but we know they wouldn't have had we not added the sign.
It's in this way that I say that realtime voting doesn't solve the problem, because it doesn't look holistically enough, namely at influence. It's not just at the ballot box, but in your daily life. The question then becomes, who can influence and how much?
> "I don't think people have come to grips with the nature of manipulation."
I agree that this is a big question. What are the divisions between manipulation, persuasion, coercion, influence, information, and education? Intent? Whether or not we agree with the position? I know that this can come off as flip, but it's not at all meant to.
In the case of the poster, what if there were two posters, an additional one for the local university. Average recruitment goes up 3%, and applications for the local university go up 3%. Does that change our perspective on what happened and the students' choices?
For me it underscores the point, we are under the influence of external forces (manipulated), for better or worse. We are also told, by some actors, that this isn't the case. These folks would have us believe, we are free to choose to enter the military or join college. But...
In this new scenario, students read the signs, the messages are brought to their attention, and of all the possible things they might do, the odds of choosing one of these two things increased some degree. In other words, the external forces in their environment have shaped their future state (choice).
I'd be curious to see a table of interventions, and the degree they pull out the entropy of what a person might do next. We might then make some categories, like you mentioned above.
When we appreciate the power of manipulation, for better or worse, perhaps we'll give it more serious consideration. This ought to undergird our thinking and decision making, whatever we may CHOOSE. ;)
To me the bothersome things are the expansion of the proportional impact of individual influencers and also the shrinking of the number of channels required to deliver influence effectively.
In the lunchroom example, so long as lots of other folks are putting posters on the wall, and presumably some kids don't look at the lunchroom posters, I don't have a problem with either the college or the military changing behavior that way. There were many alternatives, and the poster wasn't forced on anyone. The influence we're seeing now is expensive (much higher proportional impact if you can pay), and effectively guaranteed (everyone is tuned to the same channel or two).
I hope we don't have to analyze individual interventions, I'd much rather just break up the channels, or increase the diversity of the programming. Mostly because I'm not sure how to (and I'm not sure we should) answer your question.
Yes! In all organizations, money and power buy influence. The internet briefly changed this, but it has reasserted itself.
What do we expect the powerful to do with their influence then? Rules for rulers says they must use it to increase their power for any other decision reduces their evolutionary fitness and long term survival.
Therefore in the long run altruism is strongly selected against and we would expect to see less of it.
I also fell in love with the dream of the democratizing effect of the internet.
The problem is that speech isn't free (as in free beer). It's a commodity. The wealthier or more powerful get more of it. When people see messages frequently they tend to believe them [1]. It doesn't matter how direct your democracy is if people can be strongly influenced to vote as desired.
I used to believe that a sufficiently intelligent and enlightened being could lead a democracy. Rules for Rulers says this is impossible, because the altruistic entity would always lose to the practical power-optimizing one.
What you, CGP Grey and other people tend to not say is that this is not a deterministic outcome of democracy at all. Even the second link you posted has some exceptions in the article . The book that the video is based on (the Dictators handbook, great read) contains some ways out of it dilemma. It shows how and why democracy is more efficient at creating wealth for a bigger number of people, and so there is a strong market pressure towards a free society. These forces can be smothered (e.g. by making pessimistic youtube videos because those get viral views) or tapped into and strengthened (by offering counter points, becoming active in your local political sphere etc.) Culture shapes us and is shaped by us. This is not a game where fate is a player (oh, and as a side note for those that need it, it is also in your personal monetary interest to become involved in politics, even if you do not get corrupt. Knowledge and connections are power, even without corrupt behaviour)
I agree with what you said, except for the "greed on scales we've never seen before". I think it's pretty clear, if you look back at the last 5,000 years of history that we've clearly seen greed on the same scale (or greater) than what we are seeing right now. It seems to be endemic to the human condition.
The last time income concentration in the US looked like this was around 1900. That generated the union movement and interest in socialism and communism.
A lot of people forget that fascism had an overtly anti-capitalist attitude, espoused in propaganda and racial imagery (take a look at what a factory boss looked like in Nazi propaganda and you'll understand what I'm trying to say). And a program, too, that of subservience to the State. However, I'm not saying it wasn't capitalistic in effect, or anything like that.
Only that a system breakdown leads people to seek out extremes. In the late 19th and early 20th century there were ideologies in Europe and the U.S. that were available to cling on to, whether you were a union member, a soldier returned from a devastating war, or a deeply religious person, something was there to explain the order.
Today we have Facebook news (60%, is it, of Americans get their news primarily from there?). We have programmatic advertising, a feedback loop of information being sent to our attention and our behaviors being tracked and sending back datapoints for further optimized tracking... I'm not sure what this says about the state of ideology and the tremendous disunity in western society compared to 100 years ago, in the sense of people coming together under the banner of coherent ideas... But it'd make an interesting thesis paper.
The bigger problem is we're naive and/or completely unwilling to admit we have a corruption problem. US exceptionalism kinda dictates that corruption is a problem other (lesser) countries have. But certainly not here.
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.
Eh, it still applies. There's plenty of articles that have been posted here talking about how the real way to make money is SaaS, not on-prem. In that context, the provider is making more profit with no further innovation, in fact the only thing they've added is a limitation. To quote from your link:
Rent-seeking is an attempt to obtain economic rent (i.e., the portion of income paid to a factor of production in excess of what is needed to keep it employed in its current use) by manipulating the social or political environment in which economic activities occur, rather than by creating new wealth. Rent-seeking implies extraction of uncompensated value from others without making any contribution to productivity. The classic example of rent-seeking, according to Robert Shiller, is that of a feudal lord who installs a chain across a river that flows through his land and then hires a collector to charge passing boats a fee (or rent of the section of the river for a few minutes) to lower the chain. There is nothing productive about the chain or the collector. The lord has made no improvements to the river and is helping nobody in any way, directly or indirectly, except himself. All he is doing is finding a way to make money from something that used to be free.[5]
Now maybe, the program used to be $40 and not free but switching to $20 a month is definitely rent-seeking.
To universally label the move from on-prem, perpetual licensing to SaaS as pure rent-seeking is to misunderstand how different kinds of software products are purchased and used by different users.
As far as enterprise/business customers go, SaaS has been huge in reducing vendor lock-in and enabling customers to choose the best fit for their use case. SaaS has removed the huge costs of PoCs and initial adoption, meaning it's easier to evaluate vendors and switch when you're ready. You no longer have to buy the hardware to get the service up and running, or allocate as many employees to maintain the hardware and software. The explosion of vendors and competition in the SaaS space has forced more interoperability and customer-focused feature development than ever before.
SaaS has been great for pretty much all business customers. At this point, I don't think any but the largest companies, most specialized companies would rather build their own services at this point than try to purchase off the shelf when possible.
Damn I got a buzzword bingo on your second paragraph, holy crap man. Do you think a toll-road operator couldn't also describe all the benefits of a toll-road? Does that make it not rent-seeking? Look, we're on a (at least mildly) technical forum, we can be honest here - SaaS has been great for providers and sometimes great for customers. And I'm not talking about off-the-shelf vs built-in-house, I'm talking about billing method.
You can attack the presentation of the content, but do you think anyone wants to go back to the days of dealing with Oracle and SAP charging you for perpetual license and support, and then also needing consulting by the hour from them or a Deloitte/Accenture? Things really sucked in enterprise software in the 90s, and SaaS has made a lot of things so much better.
And I'm not talking about off-the-shelf vs built-in-house, I'm talking about billing method.
In many cases, the billing method has influenced the way the products work and how they're developed.
A political and economic system of Europe from the 9th to about the 15th century, based on the holding of all land in fief or fee and the resulting relation of lord to vassal and characterized by homage, legal and military service of tenants, and forfeiture.
Honestly, I searched for the definition expecting to disagree. I posted it when I realized parent was right, and figured I'm not the only person who hasn't studied feudalism in a while.
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.
Intellectual property in general is rent seeking. The fixed costs of producing IP are on the hands of creators, who often use third parties (or parent companies) that act as middle men who take fixed resources and extract infinite revenue from them through rent seeking on either licenses or subscriptions.
This is how all the stores selling IP make so much money, how all the streaming services are so profitable, etc all while not producing any original content themselves. And it applies to creators who direct sell themselves, because they aren't charging marginal costs on IP licenses - they are rent seeking their existing properties. Often to fund the creation of new ones, but I don't think many people argue the morality of rent seeking based on how the owner spends the rent. Any landlord can invest the rents they collect into new building construction, but that will still just lead to generating more rents.
American has an optimism problem. Or rather, optimism seems to be unequally distributed. Feels like we need some leadership to raise our eyes to all the opportunities out there, and how we can get to a better spot.
Firms like Microsoft led in the innovation in creating new barriers to entry. How could one compete with a browser provided at a zero price.
I think what happened to Microsoft is the perfect example of how to overcome a monopoly.
20 years ago, everyone thought that Microsoft’s monopoly was unassailable. Google barely existed, Facebook didn’t exist, Amazon was a bookseller and Apple was basically bankrupt.
20 years ago, Netflix had a few million DVD customers and AOL was the largest ISP.
this whole topic is because of political considerations and if you just look around you will see nearly all members coming from the same party parroting the same lines. throw in lots of google money which was the basis for a story recently bemoaning Amazon's influence and you can see its all for naught.
there is lot of movement by said members in Congress to invoke antitrust by drowning people in buzzwords and FUD. If anything the larger American based companies brought up as issues themselves face even greater competition from overseas. What we have to fear besides even more regulation on our own industries is having it turn into a trade war when overseas entities not burdened by the same restrictions start to compete.
But importantly, the government went after Microsoft for anti-trust and actually won even if they didn't break them up. It's impossible to really know the counter-factual of what would have happened if it wasn't sued for anti-trust. But, you can safely say it wouldn't have thrown a lifeline to Apple with the investment and it may have been much more aggressive in these emerging spaces. I still think it was still not fundamentally "ready" for the Internet and mobile but I do think that lawsuit made it much, much friendlier to newcomers.
But, you can safely say it wouldn't have thrown a lifeline to Apple with the investment and it may have been much more aggressive in these emerging spaces.
Microsoft "saving" Apple is apocryphal at best. The $250 million that MS invested wouldn't have made a difference when Apple lost a billion the same quarter and spent $100 million buying out PowerComputings Mac license.
Microsoft tried aggressively to get into mobile, search, and the music business. They failed at execution.
ISPs are monopolies in the purest form. Here in Orange County, California, you have no choice but go with Cox. And that's why an internet service, which costs less than $10 around the globe and is symmetrical and offers higher bandwidth, costs $100 here! Even worse when it comes to the business internet service! I had to find internet service for a church here in OC and the pricing starts at $200 for 10 Mbps!
Not that there's truly unlimited wired Internet in the US, but as far as I'm aware, most wireless Internet plans are limited, and throttled, so, those are not the same service to compare anyway. More than 10 years ago, some mesh wireless providers were offering some competition, but I don't think they exist anymore, so, Cox' only competition is the ridiculous AT&T DSL service.
I have AT&T Fiber - $70 a month all in no extra fees are taxes. Gigabit up and down theoretically. I can get 600Mbps/600Mbps on a bad day wired and 900 u/d on a good day. It's unlimited.
I'm not saying that wireless is a good alternative for everyone but I know a lot of people that could get away with the "unlimited" plans that carriers offer. In the future it could provide real competition.
The plans aren't throttled any more - as soon as you reach limit they automatically cut you down to 2G speeds, you are "deprioritize". Meaning that if you are in a heavily congested area, your speed will be lowered to give lighter users full access.
When we were between renting and buying we were in a place with horrible internet and we used our phones on t-mobile for everything - including streaming to an Apple TV. We used 70-150Gb per month mostly at night with no noticeable speed issues.
For technical reasons, I'm more accepting of wireless data limits than wireline. No matter how much a wireless carrier spends, they can't beat physics. There is a limit of how much data can be delivered over a certain spectrum (Shannon-Hartley theorem?)
America has a capitalism problem. What the article fails to address is that the root cause is really capitalism. Under capitalism wealth and power always concentrates, which in the case of businesses, that eventually means bad monopolies. Under a representative democracy that also means politics will always be corrupted because those with money and power will always be benefited by controlling politics, and they have the money and power to do so (who owns the news media? who can afford to buy off politicians, whether they start corrupt or not?). While the power of monopolies ebbs and flows as those without capital get angrier, the monopolies will always come back because that's what capitalism does.
Monopolies are not inherently bad. It's entirely possible to have a monopoly and have a great thing that everyone likes and is happy with and which keeps innovating. But under capitalism the primary incentive is the accumulation of capital which rarely lines up with creating something great long term.
I can think of at least one way to diminish companies power over legislatures. Pay representatives enough that they’re indifferent to corrupt forces. It’s not like there an expectation for representives to be broke.
At that point it seems you would have just promoted politicians in to the capital class without the middle-person, but again they now represent the capital class and all their non-politician capital class buddies at the cocktail parties, instead of representing those without much capital.
They’re already there. And in order to obtain and maintain that status they chose special interests over constituent needs. Lobbyists pay better than the people.
I don't think this solution really works. For some folks, nothing is ever enough. Then you also need to consider that it is less about money for some and more about friends and power. Maybe I don't do what corporations ask because they are going to pay my campaign. Maybe I do it because it makes me feel like a big man being the person they all come to for favors. Maybe I do it to gain acceptance into an aristocracy. I don't know how you can compete against that on a government salary, no matter how big.
Donald Trump is supposedly worth $3.5 billion. Do you think paying him more money would change the way he governs? I only use him as an example because he is the richest US politician, but there aren't too many poor ones at the federal level.
I guess I just don't see how you could ever pay a politician enough to be "indifferent to corrupt forces".
I’m dismissing Trump as an example as he’s a clear outlier.
How much do you figure you would have to pay Bill Gates to babysit? Unless you’re in his immediate circle that’s going to cost quite a lot of money. People react to incentives in relation to their current wealth. A chartered flight or sweatheart real estate deal will mean a lot less to someone making plenty for their job of representing the people. They’ll also be much more sensitive to scandals.
Yes, it fluctuates depending on numerous factors, including how unhappy those without capital get about the unequal distribution of capital. You see this when monopolies start getting broken up and some wealth gets passed back down. But inevitably the capital gets concentrated again because that's how capitalism works. And even when some of the wealth gets passed back down the people in power generally stay in power.
Capitalism on a smaller scale is broken. Once you have achieved a monopoly they become entrenched in the socio-political system.
On a global scale, where laws can't protect I.P. we will see innovation coming out from new sources. If America is happy to stagnate, we will see India and China leading the future.
Monopolies are a natural phenomenon in capitalism. I'm not sure why people glorify capitalism as much, given the fact that competition is impossibly hard in many areas, and that to reduce costs, and remove competitive pressure, companies tends to consolidate, i.e. reduce competition. Neither socialism nor capitalism makes sense today. We need a totally new system, but it's really hard to make a dent into the status quo, which is well-entrenched, and would resist any change!
This seems historically ignorant. Most systems of allocating power and resources have been tried at various times. The answer is likely at the end of a long, nuanced, and painful road of combining ideas from several of those systems: adjusting, revisiting, admitting failure, and correcting.
I would be skeptical of any "new system" that is not a result of reflection on historical economies.
No, I think your opinion is arrogant and ignorant. All existing systems are based on the technical limitations of the past time. In Australia, for example, there's a good start to integrate new ideas into the existing system - it's called Flux [0].
Edit: to clarify about Flux, it's still using an existing system, i.e. Democracy although it is implemented as Direct and Delegate Democracy within a Representative Democracy system, but, my point was, that such system could be used as a political virus to change the system from within without bloodshed, and then a totally new system can be put in place.
"Socialism" and "capitalism" are not switches you turn either on or off, they're a set of policies and practices you can apply to varying degrees and extremes.
The military is quite socialist as when you enlist you're given food, housing, equipment, medical care, and other things to perform your job, but it's also part of a large capitalist system where equipment and supplies are provisioned from a (theoretically) competitive marketplace.
What we need to do is find the right balance between dog-eat-dog individualism and insufferable collectivisim.
I disagree that the solution is a balanced one somewhere between the only two puristic and unrealistic options as in both money is key, and I disagree that it should be the centerpiece of our society as it's already proven to be a weak motivator and leads to very negative consequences.
There are good things in both orders, we need to learn from them, but something in the middle we already have in EU, and it's not working so well.
You are trying so hard to escape from a fundamental truth that echoes throughout history: government, money, economy, it's all about power. You can't sidestep the issue of power by throwing technology at it: you will just create an unbalanced, poorly thought out power dynamic (that uses technology!). Technology does not mean you get to throw out your history books. On the contrary, it means you probably need them more than ever.
The EU is not perfect, nor is the US, Canada, China, or anywhere else. We need to carefully analyze and experiment, not mash the reset button in the hope we get something better next time.
Everyone is in the middle because no country, no political state of any kind, has ever been, nor likely ever will be 100% capitalist or 100% socialist. Achieving such extremes is so impractical as to be impossible.
The difference between the EU and America is actually pretty slight on these two scales, but tiny shifts in policy can have a huge impact on society.
There's an interesting fat protocols article on block chain technology by usv. Unlike thin protocols like tcp/up where the value is captured by edge nodes, a fat protocol captures the bulk of the value and the edges are forced into commodity pricing.
I think it would be like everyone living in and contributing to the US as an idea. The block chain of the "US" has a good social security net, good public non-profit infrastructure, ample opportunity etc... Or theoretically would/should anyway. In reality it's too prone to corruption and manipulation.
If smart contracts get stable and consistent enough (and build up a correspondingly large body of contract law) we end up being able to create entities of faith, things to believe in and rely on but are also fragile in that they need faith to persist as well. "gods" if you will.
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[ 3.4 ms ] story [ 164 ms ] thread* Criticism: https://medium.com/@petersimsie/why-peter-thiel-is-dead-wron...
* Alternate interpretation of Thiel's intent: https://www.quora.com/Peter-Thiel-claims-that-competition-is...
I like drawing parallels between economics and ecology... monopolies are farms, massive artificial monocultures that suppress natural competition and extract value for the profit of a few. They embody a cycle of growth and stagnation.
A healthy economy is more like a jungle, innumerable smaller competitors with diverse approaches to survival... an extremely resilient and constantly evolving ecosystem that leads to fascinating innovation.
I think you missed PT's point. The word "monopoly" has overshadowed his message. He wants people to pursue "blue ocean"[1] ideas to be innovative.
Instead of starting a company that makes another generic clone of aspirin, you pursue a drug that cures breast cancer. Or instead of building a business that broadcasts 150 characters (hey we offer you +10 more characters than Twitter), do something more innovative for society like building cheap flying cars.
I'd venture to guess that 99% actually agree with PT's underlying idea (innovation) but the distasteful word "monopoly" has completely drowned out the message. The term "blue ocean" is the same concept -- it just doesn't rile people up as much.
[1] https://en.wikipedia.org/wiki/Blue_Ocean_Strategy
Theranos had promises of "blue ocean". No competition. This attracted investors like moths to a flame. (We now know they had no competitors because their technology was a fraud.) The investors would have been better off investing in a boring factory making generic aspirin ("red oceans of bloody competition").
Uber should be a case study that burning up billions in investor money (billions wasted on trying to underprice Didi in China) was a colossal mistake. How much of that bad strategy is blamed on Travis's vs investors is something we won't know until a tell-all book comes out.
What you're describing is a jungle. Niches with dominant players that share in a diverse resilient economy. Bees and hummingbirds compete for the same resources but they are not copycats.
A monopoly is a farm, an established entity that's taken control of the local system to suppress disrupters.
That's the part I was replying to. When you say "I agree" with parent post that disagreed that "[monopoly] is also good for society as a whole."
>A monopoly is a farm,...
I wasn't replying to this alternative analogy. I think we both agree that PT wasn't using "monopoly" in this manner. His usage of "monopoly" was closer to your "jungle" ecosystem. My point was that you may actually not be disagreeing with PT.
On the flip side, monopolies often have little incentive to invest in improving their products/services, and find they can profit from making their products cheaper/worse.
The crashing and burning of a big monopoly may very well be a healthy event; but oh the damage they do before then...
Comparing one very effective and interesting skunkworks lab with the incredible explosion in choices and service in telecommunication, as well as drastically lower prices, that came when the monopoly was broken up?
I think you're demonstrating the anti-monopoly point handily.
Government regulations that mandate some return (think telecommunications services for those in rural areas, pollution standards, etc.) can provide an incentive for monopolists/oligopolists to perform better according to some criteria. The problem is those mandates are not what we would always consider "innovative". By definition, they are often designed to incrementally improve on the status quo.
The game of politics has an important role. When there are oligopolies in many industries it is not unusual to see regulators getting jobs at the very companies they regulate. Think of the ties between the SEC and finance, CRTC in Canada and the communications sector, etc. Monopolists have a way of cementing their position in the economy and reducing the mandates that governments place on them.
I wonder what could make something like Comcast into a "good monopoly" though.
Another aspect is that commercial competition, while generally accepted as a system that in the end delivers superior results, seems woefully inefficient in terms of waste of resources, as opposed to something like academic competition, were people freely reuse competitors' previous work.
IMO, innovation is usually fueled by competition. Where there's lots of competition, the need to innovate is the necessity for survival. I mean, how innovative was Microsoft in the 90's when they essentially had a monopoly on desktop computing? That's how we got stuck with IE 6 for so long...
Academic institutions are hugely monopolistic...
> Where there's lots of competition, the need to innovate is the necessity for survival.
That's the theory. In practice, competition drives bean-counting efficiency. See, e.g., Thinkpads before and after the Lenovo acquisition. Pretty much the only place you see innovation in that space is among companies that can carve out a niche based on brand or differentiating factors (Apple), or among companies that have a monopoly on a key piece of the supply chain (Intel, Microsoft).
Grade: F (see me after class)
It is a dismissive comment from the senator, he should feel insulted. It is like saying "help I'm bleeding" and the guy next to you saying "its not that bad, get over yourself".
I'm not suggesting their is a spoken conspiracy. But when neither side benefits from direct competition, what's the word for that?
https://en.m.wikipedia.org/wiki/Trust_(business)
In the days of Rockefeller, these things were a little more formal. Nowadays companies know better than to put such silent agreements in writing.
We have a systemic corruption problem (manifested in lobbying) coupled with greed on scales we've never seen before. Everything else is just a symptom of that problem.
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?
Unfortunately the states are not turkeys voting for Christmas
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 face of something as abstract and high-falutin' as a kind of political root-cause analysis, and aside from that we have too many states-can't-possibly-do-anything-right-ever-evidence-be-damned-no-really-I-proved-it-from-first-principles-it's-just-like-math folks running around.
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.
This exists even though EU nation states have far more individual power than US states.
https://en.wikipedia.org/wiki/State_aid_(European_Union)
For example, Belgium recently updated certain tax laws to reduce the amount of withholding tax payable by certain major foreign investors, to keep the AB Inbev holding company in Belgium instead of letting the shareholders move their holding entity to the UK.
Yes, because such "subsidies" would create competition for companies from more developed EU countries, the same countries that drive the acceptance of new EU members. Removing these obstacles crushed local industry, which is why less developed countries ended up with close to zero industrial production after joining the EU (thus starting the social, employment and competitiveness problems most smaller EU nations are facing).
Nevertheless, EU nations keep subsidizing "selected" businesses, especially for big foreign companies outsourcing their operations, using tax benefits.
These sorts of talking points exist everywhere, in the West and in the East, state aid is one of the most attacked elements of the EU. Actually the talking point is near identical in the UK, that manufacturing has died because the government hasn't been able to step in (in effect, to prop up uncompetitive industries). Manufacturing has in fact plummeted in most developed countries, and it's easy for governments to pass the blame onto the EU.
Not really. The problem with most of the small-ish EU countries is that with the exception of Cyprus, Austria, Finland and Sweden, all the 13 countries that joined after GDR/BRD unification were former USSR or Yugoslavian countries + the GDR itself which was USSR allied. This means that their entire industry companys were either uncompetitive since decades (but kept artificially alive by the realo-socialist states) or got fleeced by local or foreign mafia (or, in the case of former GDR aka East Germany, by the Treuhand which has had its fair share of scandals) after the fall of the USSR.
In addition, there's a _massive_ wealth gap between the EU/EEA core (Germany, France, the Nordic states, Switzerland and UK), which bled all other EU nations dry of young people (they went off to study and stayed) and loads of working-age people (they went off to earn money to support their families at home, and stayed). The people "left behind" tend to be old-ish and politically conservative, which doesn't exactly help when everything around is changing at an unknown (for Soviet/Yugoslavia) pace... and what's left of young people today flees from the corruption and religious-conservative politicians.
What saddens me is that I have no idea if the situation can be fixed at all. Manufacturing or heavy industry isn't going to come back, no matter how hard Trump or his ideological "friends" try. It will stay in China or maybe migrate to Africa as soon as Chinese labor gets too expensive/the Chinese politics too restrictive. All that remains is agriculture (which is going to be more and more automated), tiny chunks of natural resources exploitation, and tourism. Maybe a bit of IT stuff, but people are highly skeptical of nearshoring/offshoring since the "big companies" (Accidenture, IBM, whatever) spoiled the well, and the local markets by far don't have as much demand...
Source: am half Croatian, half German (born and raised in Germany 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.
Outside of those though, their are many cities of considerable size where local developers hold the most sway. These local developers behave and are motivated by different things then the mega corps.
That sounds a little too extreme. Has vertical integration never occurred without the help of tax law?
It's much more complicated that what the OP laid out.
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.
Can you really tease those apart in our mixed economy? Look at ISP monopolies, or the bizarre state of the "deregulated" electricity market and what remains of the long-distance telephone market. Or take pharma, where tremendous resources are needed to comply with regulation. Or the -- tremendous scare quotes required -- "marketplace" for health care. In a mixed economy, monopoly exists because of state and market.
> In a mixed economy, monopoly exists because of state and market.
No. We live in global economy. Most companies have to compete globally. You might get favours from few countries but not most. Note whether your home country gives you a boost or not, is irrelevent. The success in a foreign country without its govt's blessing, is the question.
Though, USA is an exception, achived arguably due to history of low market intervention. I would not say that the MNC does not care but achieving global monopoly in heavely regulated industry is very hard. Case in point, in banking industry (the most regulated sector), there is no private (or even public) global monopoly.
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 catch up (yeah, it's just not fair, the tax rate that Snap is paying).
Now apply the exact same thing to the other tech giants (Apple, Microsoft, Google, Oracle, Intel, Cisco, etc). It's just as far-fetched with them as it is Facebook.
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.
It's laughable to think a country could solve any of those things through stricter legislation; that will simply encourage those companies to move more of their operations to jurisdictions with more advantageous laws/taxes/labor/etc.
So how do you "level the playing field"? One way would be bringing those advantages to smaller companies through businesses that exploit those same loopholes / tax strategies, providing them as services to companies who otherwise couldn't afford doing it themselves (i.e., exploiting legal loopholes as-a-service, international tax strategies as-a-service, etc).
Or, you embrace the global economy, specialize in what your country can do most efficiently (hint: it's not manufacturing anymore in the US), and make it advantageous for companies to keep operating domestically. You lower taxes for everyone, so even the companies with few resources can enjoy the eased financial burden of taxes that normally only the big guys could avoid. In short, you compete globally rather than stick your head in the sand pretending that your country is somehow isolated from the rest of the world and you can fix everything through legislation.
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.
The US leverage is limiting access to US markets for companies that do that.
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.
You have multinationals getting around a design flaw in the US tax system, by acquiring a foreign entity and going abroad.
Of course those companies will just search out another legal alternative to avoid paying taxes. And that is well within their rights.
In 1952 corporate tax in the US was 33% of total revenue. Today it’s less than 9%.
I’m also pessimistic but that doesn’t mean we should give up. There’s nothing about this that’s writ in stone.
I know it’s hard to believe, but the next 15 years will see a dramatic rise of government power and higher corporate taxes. This will happen very suddenly with one party taking complete control of all the branches of government along with having a dominant ideology at their back. Doesn’t really matter if Republicans or Democrats are in control, we can see the progressives on the left like Sherrod Brown, and populists like Steve Bannon on the right (who has spoken highly of Senator Brown), advocating shockingly similar proposals.
There's not much laws can do to change that, that is just the way having the flexibility to structure your business in whatever way you prefer works.
If you were to reduce the US corporate tax rate to 10%, a lot more profit would be booked in the US again.
Until other countries lower theirs, then it's just a race to the bottom, no?
Imo, it's smarter to tax shareholders more, and corporations less. Corporations are generally productive and having the statutory seat of a multinational company in your country leads to an increase of tax revenue, because 1) people will have jobs, 2) those people will pay income tax, sales tax, will spend at (mainly local) businesses whose shareholders will be taxed, etc.
Dividend and capital gain taxes are generally also harder to avoid for the wealthy. At best you can defer them, so you'll always have to pay some tax if you want to spend $1-2-5m a year. Corporate taxes and income taxes are (very) easy to avoid.
I wonder how much it would cost to completely eliminate corporate taxes but increase dividend and capital gain taxes to say, 35-40%. Now, that said, I don't think this will ever happen. People in power love their tax breaks too much.
Take that away and I have no incentive to invest in stability but have every reason to disrupt the market and take advantage of the swings. I'm not sure you want that.
> The reason long-term investments are taxed at a lower rate is because you want to incentivize long-term investing as it increases stability.
Since most equities are held by tax exempt entities (whether that is domestic or abroad, e.g. pension funds or hedge funds in a tax haven), this argument doesn't make sense. The stock price of AAPL or YELP is not going to tank because an individual investors sells (barring perhaps the CEO).
The tax rate is lower generally to account for inflation. But not all countries have sliding capital gains tax rates. The UK has a 28% rate, most capital gains are exempt in Belgium and the Netherlands (but the latter has a small wealth tax), France just introduced a 30% rate, etc.
The "race to the bottom" is the reason why free markets are so prosperous. Each business independently works to reduce costs and competition forces companies to share those savings with consumers.
The best example of the "race to the bottom" stopping are monopolies (often gov't supported) like Comcast where they can sit fat and happy raking in a ton of profits and telling consumers to shove it.
Have they increased in line with the larger national budgets required for basic public services?
Furthermore most major corporations have had government involvement to attain their status, whether in the forum of subsidy, bailout or military procurement. Unfortunately most people aren’t aware of this “corporate welfare”.
Basically corporations which are unaccountable concentrations of public power, should not be allowed to dictate to the government, which is at least in theory accountable to the public. Unfortunately the trend has been in the opposite direction.
Which would do what, exactly, for most people? Precisely nothing.
And they'd use loopholes to bring their tax burden down to 0 anyway.
If you want to lower or eliminate corporate taxes (with a positive effect for people), you would need to increase dividend and capital gains taxes to compensate. You don't need to collect more corporate tax than is collected today, but if you can create more jobs, that's a net win.
Comparing the corporate tax rate in 1952 to today is pointless. In 1952, the U.K. was a shell burned out from WWII. Today, it's a tax haven luring American companies to reincorporate there. You cannot fight this process with legislation--you'll just shoot yourself in the foot and drive companies out to other countries that will be happy to receive them. This isn't just a U.S. thing--even accounting for deductions and tax breaks, the U.S. has higher corporate tax rates than our competitor countries: http://www.npr.org/2017/08/07/541797699/fact-check-does-the-.... The "real" amount of taxes paid in the U.S. is about 18.6%, versus 8.5% for Canada, 11.2% for France, and 4.1% for South Korea.
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.
The government doesn't "permit" outsourcing of U.S. jobs. Thanks to the technology created by folks here on HN, there is nothing the government can really do if IBM decides to fire a worker in New York and hire one in Bangalore. The only thing the government can really do is offer concessions and incentives to reduce the bleeding.
> 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.
The party that spent the most money just lost the most recent major election, so I'm not convinced money really matters much. In reality, we spend a minuscule amount on politics given the size of the country. About 0.0037% of GDP on Presidential elections, and 0.019% of GDP on lobbying. For context, we spend less on lobbying each year than we do on specialty coffee.
If money really bought elections, companies would spend a lot more of it trying to do so.
This scholarly study found that “economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence.“
Hardly a surprising fact. Polls show most Americans believe the government is dominated by a small group of special interests who are looking out for themselves.
https://www.cambridge.org/core/journals/perspectives-on-poli...
Even the threat of money buys politicians. Case in point: the repeal of Obamacare is wildly unpopular with the US public, but the Koch brothers got a majority of the house of representatives to vote for it. How? Simple: they threatened that any GOP representative who voted against it, would face a primary opponent in their district next year with $millions in funding. They don't even have to spend the millions (although they do), because simply the threat of a well funded primary challenger is enough for them to buy votes.
It's a great tragedy that the supreme court has effectively taken our democracy away from us by ruling that money is speech, and protected by the first amendment.
Also, you’ve got it backwards about Citizens United. The Supreme Court didn’t rule that money is speech. Instead, detractors are trying to convince people that speech (the case was about a political movie) is actually money.
They have influence on government because they pay politicians bribes that get them elected. Endless evidence to support that where companies or industries give money, politicians get elected, and politicians pass laws to give those companies benefits they want that aren't good for voters or even the voters money. The politicians get wealth and power in return. End of story.
The rest is narrative the politicians use to distract from that. Now, they do like bringing jobs and contracts into their districts to increase their votes. They operate on money, though. Recent example with ISP's:
https://www.theverge.com/2017/3/29/15100620/congress-fcc-isp...
The oil companies make it even more obvious. They're making insane profits but still get tax subsidies from the politicians they paid off.
https://www.theguardian.com/environment/2015/may/12/us-taxpa...
And this is one of the many reasons I despise the UK currently (I'm British). The citizenry do not benefit from these arrangements. If anything people seem to becoming more aware of it and more pissed off about it.
I love how the UK likes to torpedo any EU attempt to overhaul and address these greedy little sweetheart deals as well.
But I agree with you that you can't ignore corporations' outsized influence on corporate taxes.
I highly doubt that is true. I mean, there are only 3 basic economics sectors, and you just stroke an entire one out of the question.
It is way more likely that the reality is more nuanced, and the US can not efficiently manufacture some things, while keeping the lead on some other things.
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
I'm not sure this is proven yet. Certainly in the past, I'd have agreed, but with communication via the Internet making realtime decision-making between all members of a democracy possible, I think direct democracy is theoretically possible at least.
If not absolutely direct, then at least having the ability to instantly revoke a mandate from someone you have entrusted could go a low way to limiting the power of an oligarchy, as could entrusting different individuals and groups with a single person's vote, depending on the issue. For example, maybe I'd trust a particular economist to vote on my behalf for specific economic proposals, but I'd want Greenpeace to vote on my behalf for anything to do with, say, baby seal clubbing.
So long as the individuals can instantly take back the voting power they have entrusted to someone else, a reasonable semblance of direct democracy could work.
In practice, of course, it would be a hell of a mess to get everything functional, I just don't buy the notion that it's impossible in a world where everyone can communicate with everyone else essentially for free.
Picking on Facebook because they’re the biggest, but Twitter appears to be worse on every axis, as it continues to evolve to favor clout.
But would it be desirable? I don't think so.
If not absolutely direct, then at least having the ability to instantly revoke a mandate from someone you have entrusted could go a low way to limiting the power of an oligarchy, as could entrusting different individuals and groups with a single person's vote, depending on the issue.
The later seems like a very good idea. The former not at all. If you trust someone with a mandate, just allow the time needed to develop a consistent plan. Worrying too much about short term is exactly the opposite of good administration.
Our current issues have nothing to do with latency, they have to do with manipulation and propaganda. The internet has so far made that worse, not better. If every single Facebook trend, or 30 second clip from Fox and Friends had the potential to derail an international treaty, or modify healthcare on the fly, reality would be strictly more terrifying than it is now.
Show me web technology improving stability and deep thoughtfulness, and then we'll have something to talk about.
For a legislative vote where some actors have a lot to gain or lose from the outcome, I'd expect the manipulation to get even more egregious than people trolling polls for amusement.
For example, Suppose on average 1% signup for the military in high school. Next suppose we add an intervention, we add a sign in the lunchroom for military recruiting (touching on all the right emotions). The average in these schools goes up to 3%! We say, these additional recruits CHOSE to join, but we know they wouldn't have had we not added the sign.
It's in this way that I say that realtime voting doesn't solve the problem, because it doesn't look holistically enough, namely at influence. It's not just at the ballot box, but in your daily life. The question then becomes, who can influence and how much?
I agree that this is a big question. What are the divisions between manipulation, persuasion, coercion, influence, information, and education? Intent? Whether or not we agree with the position? I know that this can come off as flip, but it's not at all meant to.
In the case of the poster, what if there were two posters, an additional one for the local university. Average recruitment goes up 3%, and applications for the local university go up 3%. Does that change our perspective on what happened and the students' choices?
In this new scenario, students read the signs, the messages are brought to their attention, and of all the possible things they might do, the odds of choosing one of these two things increased some degree. In other words, the external forces in their environment have shaped their future state (choice).
I'd be curious to see a table of interventions, and the degree they pull out the entropy of what a person might do next. We might then make some categories, like you mentioned above.
When we appreciate the power of manipulation, for better or worse, perhaps we'll give it more serious consideration. This ought to undergird our thinking and decision making, whatever we may CHOOSE. ;)
In the lunchroom example, so long as lots of other folks are putting posters on the wall, and presumably some kids don't look at the lunchroom posters, I don't have a problem with either the college or the military changing behavior that way. There were many alternatives, and the poster wasn't forced on anyone. The influence we're seeing now is expensive (much higher proportional impact if you can pay), and effectively guaranteed (everyone is tuned to the same channel or two).
I hope we don't have to analyze individual interventions, I'd much rather just break up the channels, or increase the diversity of the programming. Mostly because I'm not sure how to (and I'm not sure we should) answer your question.
Yes! In all organizations, money and power buy influence. The internet briefly changed this, but it has reasserted itself.
What do we expect the powerful to do with their influence then? Rules for rulers says they must use it to increase their power for any other decision reduces their evolutionary fitness and long term survival.
Therefore in the long run altruism is strongly selected against and we would expect to see less of it.
The problem is that speech isn't free (as in free beer). It's a commodity. The wealthier or more powerful get more of it. When people see messages frequently they tend to believe them [1]. It doesn't matter how direct your democracy is if people can be strongly influenced to vote as desired.
I used to believe that a sufficiently intelligent and enlightened being could lead a democracy. Rules for Rulers says this is impossible, because the altruistic entity would always lose to the practical power-optimizing one.
[1] https://www.psychologytoday.com/blog/the-new-resilience/2012...
(This time we got Trump. Oops.)
Only that a system breakdown leads people to seek out extremes. In the late 19th and early 20th century there were ideologies in Europe and the U.S. that were available to cling on to, whether you were a union member, a soldier returned from a devastating war, or a deeply religious person, something was there to explain the order.
Today we have Facebook news (60%, is it, of Americans get their news primarily from there?). We have programmatic advertising, a feedback loop of information being sent to our attention and our behaviors being tracked and sending back datapoints for further optimized tracking... I'm not sure what this says about the state of ideology and the tremendous disunity in western society compared to 100 years ago, in the sense of people coming together under the banner of coherent ideas... But it'd make an interesting thesis paper.
Those who cannot remember the past are condemned to repeat it.
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.
https://en.wikipedia.org/wiki/Rent-seeking
Rent-seeking is an attempt to obtain economic rent (i.e., the portion of income paid to a factor of production in excess of what is needed to keep it employed in its current use) by manipulating the social or political environment in which economic activities occur, rather than by creating new wealth. Rent-seeking implies extraction of uncompensated value from others without making any contribution to productivity. The classic example of rent-seeking, according to Robert Shiller, is that of a feudal lord who installs a chain across a river that flows through his land and then hires a collector to charge passing boats a fee (or rent of the section of the river for a few minutes) to lower the chain. There is nothing productive about the chain or the collector. The lord has made no improvements to the river and is helping nobody in any way, directly or indirectly, except himself. All he is doing is finding a way to make money from something that used to be free.[5]
Now maybe, the program used to be $40 and not free but switching to $20 a month is definitely rent-seeking.
As far as enterprise/business customers go, SaaS has been huge in reducing vendor lock-in and enabling customers to choose the best fit for their use case. SaaS has removed the huge costs of PoCs and initial adoption, meaning it's easier to evaluate vendors and switch when you're ready. You no longer have to buy the hardware to get the service up and running, or allocate as many employees to maintain the hardware and software. The explosion of vendors and competition in the SaaS space has forced more interoperability and customer-focused feature development than ever before.
SaaS has been great for pretty much all business customers. At this point, I don't think any but the largest companies, most specialized companies would rather build their own services at this point than try to purchase off the shelf when possible.
And I'm not talking about off-the-shelf vs built-in-house, I'm talking about billing method.
In many cases, the billing method has influenced the way the products work and how they're developed.
-Instead of buying a movie or a song, you stream it
-You don't own your data in the cloud
-You don't own the music you buy from Apple
-You can't even take the battery out of many newer model phones
n.
A political and economic system of Europe from the 9th to about the 15th century, based on the holding of all land in fief or fee and the resulting relation of lord to vassal and characterized by homage, legal and military service of tenants, and forfeiture.
Consider the inordinate attention (~homage) and data forfeiture which billions of people submit to those walled gardens (fiefs).
It seems symbolic that so many spend so much of their day with their heads bowed down towards their phone.
With software there is the added benefit of low-cost, highly scalable replication of the capital intensive product.
This is how all the stores selling IP make so much money, how all the streaming services are so profitable, etc all while not producing any original content themselves. And it applies to creators who direct sell themselves, because they aren't charging marginal costs on IP licenses - they are rent seeking their existing properties. Often to fund the creation of new ones, but I don't think many people argue the morality of rent seeking based on how the owner spends the rent. Any landlord can invest the rents they collect into new building construction, but that will still just lead to generating more rents.
Firms like Microsoft led in the innovation in creating new barriers to entry. How could one compete with a browser provided at a zero price.
I think what happened to Microsoft is the perfect example of how to overcome a monopoly.
20 years ago, everyone thought that Microsoft’s monopoly was unassailable. Google barely existed, Facebook didn’t exist, Amazon was a bookseller and Apple was basically bankrupt.
20 years ago, Netflix had a few million DVD customers and AOL was the largest ISP.
Who knows what will happen in the next 20 years?
there is lot of movement by said members in Congress to invoke antitrust by drowning people in buzzwords and FUD. If anything the larger American based companies brought up as issues themselves face even greater competition from overseas. What we have to fear besides even more regulation on our own industries is having it turn into a trade war when overseas entities not burdened by the same restrictions start to compete.
Microsoft "saving" Apple is apocryphal at best. The $250 million that MS invested wouldn't have made a difference when Apple lost a billion the same quarter and spent $100 million buying out PowerComputings Mac license.
Microsoft tried aggressively to get into mobile, search, and the music business. They failed at execution.
I'm not saying that wireless is a good alternative for everyone but I know a lot of people that could get away with the "unlimited" plans that carriers offer. In the future it could provide real competition.
The plans aren't throttled any more - as soon as you reach limit they automatically cut you down to 2G speeds, you are "deprioritize". Meaning that if you are in a heavily congested area, your speed will be lowered to give lighter users full access.
When we were between renting and buying we were in a place with horrible internet and we used our phones on t-mobile for everything - including streaming to an Apple TV. We used 70-150Gb per month mostly at night with no noticeable speed issues.
For technical reasons, I'm more accepting of wireless data limits than wireline. No matter how much a wireless carrier spends, they can't beat physics. There is a limit of how much data can be delivered over a certain spectrum (Shannon-Hartley theorem?)
Off topic, but I was amazed/interested, so: https://en.wikipedia.org/wiki/Netflix#Founding_and_establish...
"Netflix was founded on August 29, 1997 ... Netflix was launched on April 14, 1998, with only 30 employees and 925 DVDs available ..."
So you're technically wrong, but not far off. I thought Netflix was closer to 10 years old than 20.
Monopolies are not inherently bad. It's entirely possible to have a monopoly and have a great thing that everyone likes and is happy with and which keeps innovating. But under capitalism the primary incentive is the accumulation of capital which rarely lines up with creating something great long term.
I don't think this solution really works. For some folks, nothing is ever enough. Then you also need to consider that it is less about money for some and more about friends and power. Maybe I don't do what corporations ask because they are going to pay my campaign. Maybe I do it because it makes me feel like a big man being the person they all come to for favors. Maybe I do it to gain acceptance into an aristocracy. I don't know how you can compete against that on a government salary, no matter how big.
Donald Trump is supposedly worth $3.5 billion. Do you think paying him more money would change the way he governs? I only use him as an example because he is the richest US politician, but there aren't too many poor ones at the federal level.
I guess I just don't see how you could ever pay a politician enough to be "indifferent to corrupt forces".
How much do you figure you would have to pay Bill Gates to babysit? Unless you’re in his immediate circle that’s going to cost quite a lot of money. People react to incentives in relation to their current wealth. A chartered flight or sweatheart real estate deal will mean a lot less to someone making plenty for their job of representing the people. They’ll also be much more sensitive to scandals.
Not always. The share of wealth owned by the top 10% in the USA fell between 1932 and 1952, and again between 1962 and 1985 [1].
[1] http://gabriel-zucman.eu/files/SaezZucman2014.pdf#page56
On a global scale, where laws can't protect I.P. we will see innovation coming out from new sources. If America is happy to stagnate, we will see India and China leading the future.
This seems historically ignorant. Most systems of allocating power and resources have been tried at various times. The answer is likely at the end of a long, nuanced, and painful road of combining ideas from several of those systems: adjusting, revisiting, admitting failure, and correcting.
I would be skeptical of any "new system" that is not a result of reflection on historical economies.
Edit: to clarify about Flux, it's still using an existing system, i.e. Democracy although it is implemented as Direct and Delegate Democracy within a Representative Democracy system, but, my point was, that such system could be used as a political virus to change the system from within without bloodshed, and then a totally new system can be put in place.
[0]: https://voteflux.org/
The military is quite socialist as when you enlist you're given food, housing, equipment, medical care, and other things to perform your job, but it's also part of a large capitalist system where equipment and supplies are provisioned from a (theoretically) competitive marketplace.
What we need to do is find the right balance between dog-eat-dog individualism and insufferable collectivisim.
There are good things in both orders, we need to learn from them, but something in the middle we already have in EU, and it's not working so well.
The EU is not perfect, nor is the US, Canada, China, or anywhere else. We need to carefully analyze and experiment, not mash the reset button in the hope we get something better next time.
The difference between the EU and America is actually pretty slight on these two scales, but tiny shifts in policy can have a huge impact on society.
Edit: I'm saddened to find out that Jacque has recently passed away. I was planning to meet him in person as he was at an honorable age.
[0]: https://www.thevenusproject.com/
[1]: https://en.wikipedia.org/wiki/Jacque_Fresco
I think it would be like everyone living in and contributing to the US as an idea. The block chain of the "US" has a good social security net, good public non-profit infrastructure, ample opportunity etc... Or theoretically would/should anyway. In reality it's too prone to corruption and manipulation.
If smart contracts get stable and consistent enough (and build up a correspondingly large body of contract law) we end up being able to create entities of faith, things to believe in and rely on but are also fragile in that they need faith to persist as well. "gods" if you will.