They could do one better and cheaper - start their own coin, make Amazon accept that (and no other coins) and it'd probable dwarf bitcoin in market cap.
Perhaps Bill Gates truly has developed compassion for the less fortunate, however moving his money into the foundation is a very convenient tax strategy, and I suspect he enjoys the challenges and influence he has, and less so the warm fuzzies from helping people.
(I anticipate this comment will not go over well, as it seems I must just not see the truth that Bill Gates is a perfectly benevolent being who has ascended from human qualities)
Bill Gates was a ruthless business man, but through the influence of his wife/father/Warren Buffet or some combination,
he's soften a bit and seems to have decided to give a lot away and convince others to do so as well.
There's lots of weirdness in society about having the wealthiest having influence starting to approach government program status, but here we are. (perhaps they're trying to blunt the income inequality complaints, but maybe they really have come around to caring...)
It's actually the other way around: Buffett followed Gates' lead on large-scale philanthropy, designating the Gates Foundation as the benefit of his largesse. Yes, each man had long-standing intentions for philanthropy, but it really reached fruition together.
What does Bill Gates care about optimizing tax? He is old, isn't planning on giving his money to his children and he has so much money he wouldn't even be able to spend it if he wanted to. It makes no sense. Im pretty sure he does care about his legacy on the other hand.
isn't planning on giving his money to his children
1. none of "giving pledge" signees pledged 100% – they do pledge most of it, although inheriting "almost nothing" of billions is still pretty comfy.
2. the biggest cushion the heirs of Giving Pledgers will inherit is something money can't buy: influence. After all the Gates foundation is a family trust and as such will be run by the trustee's heirs, when their parents die [1]
I anticipate this comment will not go over well, as it seems I must just not see the truth that Bill Gates is a perfectly benevolent being who has ascended from human qualities
He’s not benevolent or lead a perfectly good life. But he decided to spend his billions on trying to improve the world and you all are still hung up on the anti trust things he did at Microsoft. Or think he’s doing it to “gain power and influence” or as a tax dodge.
You don’t have to forgive him. But stop coming up with weird conspiracy theories about why he’s spending his money and let go of the unscrupulous business decisions.
stop coming up with weird conspiracy theories about why he’s spending his money
Well firstly, no I don't have to do any of that. And secondly, it's not a theory about a conspiracy. It's more of a speculation. Finally, I highly doubt his benevolence, that's my whole point as I said in my original post - he probably enjoys the influence a lot more than he enjoys helping people.
I think there’s a common misunderstanding about how tax write-offs work. If you donate x dollars, and your marginal tax rate is t, you end up losing x - xt dollars. That means you have less money than if you didn’t donate, even after accounting for the write-off. Arguments that somebody only donated money for the tax write-off usually don’t make sense.
Possibles exceptions to this include hard-to-value assets like art, where someone could potentially exaggerate the value by at least 1/t to defraud the tax authorities, but this doesn’t seem relevant to donating publicly-traded Microsoft stock. Bill Gates would be richer if he didn’t make these donations.
The US and the world really need an organized approach to pandemics and it needs to be free of political influence. Said work is going to require a lot of academic and government support. If Gates can bootstrap that, that would be a good legacy.
I think he's probably bored at this point. Whats there really left to do at Amazon? AWS and the website are eating the world. He's 57. Why not at this point go play with his rockets and spend time inside that WaPo newsroom that he loves.
Americans adopt that narrative voluntarily when it comes to entrepreneurs, he doesn't need to interfere with the Wapo newsroom for that. (and to my knowledge hasn't).
WaPo has publicized quite a few articles critical of Jeff Bezos and Amazon, even after WaPo was acquired. So this is something that seems to be just another baseless "jeff bad" take.
The questions shouldn't focus on what he lets get printed - we still live in an age where journalism seems to have minimal consequences no matter the quality - but what happens if e.g. the WaPo Guild takes action in solidarity with an Amazon union.
There is a difference between "does not have editorial oversight" - which I believe - and "has no say in what can be published" - which is trivially false since as owner he could do anything from hire only sports reporters to shut the whole thing down if he wanted.
>but what happens if e.g. the WaPo Guild takes action in solidarity with an Amazon union?
Luckily, we don't need to wonder, because WaPo has actually posted that kind of an article just yesterday, and it was extremely critical of Amazon's anti-unionization efforts [0]. The article's headline is "Amazon’s anti-union blitz stalks Alabama warehouse workers everywhere, even the bathroom". Even the headline itself wasn't sugarcoated or softened in the slightest.
This is not an especially a sympathetic article to either side, but I'm talking about things beyond the core remit of a newsroom. If Amazon workers strike, what happens if the WaPo Guild refuses to cross the picket line by accepting Amazon deliveries, using AWS, or run articles alongside Amazon ads?
I think having one in Musk is enough (though Musk is married now). Don’t need planet of the billionaire bachelors in the midst of their midlife crises.
As chairman and being involved in the WaPo newsroom and possibly K street would actually help Amazon. But you'd probably have to enjoy politics and does Bezos? Bezos built Amazon so is he OK with it being chopped up if it comes to that or not?
Hopefully the latter. We've got an excess of billionaires trying to mould society with their vast sums of wealth.
Blue Origin would be a great use of his time. Massive long-term benefit to humanity, few implications on global governance or the lives of most individuals.
Or his own private charter city, so people have to consent to live in his world.
Or he could blow it all on yachts, hookers and blow.
I don't understand why space rockets and lunar lander is important except if they help us clean our planet. It's a long bet on a long time horizon. But maybe it's a good way to spend government money.
I think the CEO as influencer is on the wane and with antitrust and regulatory reform coming we will be looking more for politicians who can unite and provide social leadership. Trump took a lot of oxygen out of the room and now is a good time for up and comers like Buttieg and AOC.
As Exec Chair I will stay engaged in important Amazon initiatives but also have the time and energy I need to focus on the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post, and my other passions. I’ve never had more energy, and this isn’t about retiring. I’m super passionate about the impact I think these organizations can have.
I just posted a reference to his purchase of 0.4 billion dollar boat.
He is retiring. Amazon is outcome of purchase of many many companies just like Microsoft.
Gates is retired and Microsoft is still buying companies even hotels; anything and everything has been bought with the cash acquired from US's money printing machine.
I doubt he's going to pull some big expenditure - with a net worth of 182BN USD there isn't really an item available that would be "a big expenditure".
" Amazon is also announcing today that Jeff Bezos will transition to the role of Executive Chair in the third quarter of 2021 and Andy Jassy will become Chief Executive Officer at that time.
“Amazon is what it is because of invention. We do crazy things together and then make them normal. We pioneered customer reviews, 1-Click, personalized recommendations, Prime’s insanely-fast shipping, Just Walk Out shopping, the Climate Pledge, Kindle, Alexa, marketplace, infrastructure cloud computing, Career Choice, and much more,” said Jeff Bezos, Amazon founder and CEO. “If you do it right, a few years after a surprising invention, the new thing has become normal. People yawn. That yawn is the greatest compliment an inventor can receive. When you look at our financial results, what you’re actually seeing are the long-run cumulative results of invention. Right now I see Amazon at its most inventive ever, making it an optimal time for this transition.” "
Pretty sure that was meant to mean "customer reviews" the amazon product. See also in the list: "marketplace" which I don't think they expect anyone to believe they invented either.
Could you point me to another merchant who offered customer-readable customer reviews before Amazon? I'm not saying there isn't one, just that when we were implementing them, I was unaware of any precedents ...
My memory is there were some stores that had "customer reviews" before Amazon, but they were all screened by the company before being published. So every product would only have 5 star reviews.
When Amazon came out with real reviews, it seemed crazy to many at the time -- like why would you want to share bad things about your products on your own website? I thought it was awesome.
OK, so now this hinges on the idea that such stores had an online e-commerce-y presence before amzn. Again, I'm not ruling it out, but I don't remember us having any real models for this.
Amazon's customer review system was created as a barrier to entry for competitors, as much as anything else.
It's definitely not absurd, even if they only deserve a share of the credit.
There's nothing absurd about the way Amazon and Apple defined cloud computing and smartphones. They deserve as much credit as anyone for the services / products we know today as cloud computing and smartphones. The version of the smartphone that took off in sales, took over the culture and has become a human staple globally, was entirely defined by Apple's iPhone. No other company did that, it was Apple, period. To not recognize them as the prime mover of smartphones would be absurd.
I'm certainly no expert on what makes a phone a smartphone, but it seems like Blackberries with their email and small web functionality really kicked off the movement of phones being able to do more than calls and texts.
I'd argue everyone who has heard of Ford is most likely familiar with Mercedes, whereas the number of people familiar with Amazon will likely be many orders of magnitude larger than the people who know who invented cloud computing. Not quite an apt comparison, imho.
without Andy (and AWS), I'd posit that Jeff would just be another regular old billionaire who'd own a sports team, but otherwise folks would not know much about.
I kind of agree. But without AWS, Amazon could never have become the Amazon that we know today. AWS brings in the vast majority of the profits (sometimes >100%) for Amazon, despite being a modest proportion of revenue (~10%).
This is what generates the funding necessary for Amazon to do the crazy things that make Amazon amazing. Amazon - AWS = digital Walmart. Big and profitable, but not Amazon.
While regular consumers may not know what AWS is, Amazon's core business was able to sustain losses for 10+ years only because of profits coming from there.
Interestingly, if you go international, Amazon is either not present at all or a niche player as an online store in many countries. But in terms of cloud infrastructure they've become the universal global default / premium service. It is fascinating to me that they have beaten players like Microsoft, IBM, Oracle etc. to this status. I actually have to mount a business case in my organisation NOT to use AWS even though all the desktops and half the servers are pure Microsoft stack.
Ask outside tech bubble and 9/10 never even heard of AWS,even though half of the things they use run on it. The retail front-end is the PR, while AWS is a magic money tree.
I mostly agree but I also think AWS is probably more in the public consciousness than most people would think (in the US anyway). They have TV advertisement slots with NFL for crying out loud. That said, most people probably don't actually know what it is, just that they've heard of it.
As "cloud" and "AI" become more and more accepted generic terms for technology to the public and I think AWS may even over take the PR position.
Fair point,I was commenting from European point of view,where tech companies are often invisible,apart from maybe Google or Apple with their ads plastered all over the place.I reckon an average American is more likely to tell what Oracle or AWS is just purely because of the amount of ads they've been exposed to, compared to an average European
In the current environment, E-commerce is a less interesting space for startup founders vs. cloud SW.
This led parent commenter to assume the cloud is more important than E-commerce.
This is a fallacy, of course, since E-commerce is probably the largest / most important market on the internet, it just doesn't FEEL that way b/c Amazon has an unprecedented control over nearly the entire thing.
AWS has 40 billion in revenue, 12 billion in profit and is growing 30% YoY. It's got great profit margins, huge lock in, and is a natural monopoly. Not sure how much it would be worth on the open market, but wouldn't surprise me that it's 50%+ of Amazon's market cap.
This may seem like a silly question, but what is the point of the cloud if people don't buy goods / services over the Internet?
If ecommerce remained flat for the rest of time, do you really think the cloud would grow?
I don't really see the cloud as attached to retail. But yes, if online retail remained flat, the cloud would still grow. Because most software will be built using the cloud, for the cloud, for the foreseeable future (I'd stake confidently 50 years, probably at least 100, perhaps forever).
“Retail” is just the part of commerce that’s somewhat moved online today. “E-commerce” is any type of commerce moving online.
I really struggle to think of reasons as to why people will pay for software if it doesn’t ultimately lead to commerce.
EDIT: For context, BABA used it e-commerce lead in China to become the largest gateway for utility bill-pay. Very much not retail, but still e-commerce. The internet is a tool run by humans to serve humans, & if humans aren’t transacting using the internet, everything else about the internet is inherently less valuable.
I'd say AWS + first-party products and services (Prime Video, Echo, Kindle, Grocery delivery). I can definitely see their pure retail business take more and more of a back seat as time goes on.
Could even see it breaking up at some point. Retail, Consumer Tech, and AWS. There's no real tie between AWS and the rest of Amazon at this point. In fact, it might be a liability as competitors of Amazon retail & Consumer tech don't want to use AWS.
I could see it breaking up at some point, when our antitrust regulators wake up to the monopoly that Amazon has become and splits the company into multiple parts.
I think the main reason AWS will breakaway will be that it'll just be so different from the rest of Amazon.
I think (for better of worse) the cloud providers - A/G/M + maybe a newcomer yet to be announced - will come to dominate computing in a way most people do not foresee.
Yes, right now they dominate the hardware provision and that will accelerate. But through that, their services will dominate software engineering, and eventually they will dominate not just IDEs and devtools (hence GitHub purchase and VS Code for MS) but they will define programming languages and even what constitutes programming.
Amazon just settled with the FTC for stealing Flex drivers’ tips. Likely that’s just the tip of the iceberg in their screwing over the people who make their products move.
Wow. I still remember when Amazon started as an online bookstore selling books and people kind of laughed at the idea, and the time Amazon kept losing money and refused to post an earning and people got mad. Amazing long game.
Interestingly, it seemed at the time that books were just about the least exciting things being sold on the Internet, and the shipping costs looked fatal to the business. You could buy just about anything, and everybody was going out of business trying to compete on big ticket items like electronics and movies and games and beanie babies. Not much competition on books online (anybody remember the “Duwamish book store demo” from Microsoft?). It seems to me that he looked way out and thought about how things would be done 20 years hence, regardless of what made sense at the time, and chose to start on the piece of that future with the weakest competition.
Shipping books was/is one of the cheapest things to ship, as they need minimal packaging, and the USPS offers a special media mail rate. This allowed him to work out all the logistics behind the scenes, and then make incremental improvements to handle other products.
There was competition. Bookstacks.com had been in business with a telnet-only interface for more than a year before Amazon.
As noted by others, the shipping cost-to-item-average-cost ratio is precisely why Jeff chose books to start with. But yes, he also looked way out (even if he couldn't see as clearly as some people seem to think he could).
My understanding was that it was also about the long tail. With millions of titles in print, and a minimum selection of thousands to make a decent bookstore, you can't print a decent catalog and mail it. Before Amazon, the biggest mail-order books business was the Book-of-the-Month Club. Perfect case for an online catalog.
When I was working in Tokyo in the 90's, English technical books were somewhat hard to come by and fairly expensive so co-workers would often pool together to do bulk purchases. There was one book site that I don't remember the name of now that almost always beat Amazon when it came to purchase price plus shipping at least in the beginning so we would always comparison shop. Maybe not sexy but online bookstores were certainly something of a lifeline in our case and I would often look forward to the arrival of a book order like a kid waiting for Christmas.
I think AWS ended up subsidizing the rest of the company. Amazon stumbled backwards into a highly profitable business that allowed them to continue playing the long game to create a monopoly in distribution.
As Exec Chair I will stay engaged in important Amazon initiatives but also have the time and energy I need to focus on the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post, and my other passions. I’ve never had more energy, and this isn’t about retiring. I’m super passionate about the impact I think these organizations can have.
Don't know why you're being downvoted, those interviews were vile. They were just probing for self-incriminating answers and when they didn't moved on.
The CEO role comes with a lot of mundane responsibility (and potential liability) that I’m surprised he held onto for so long. I would expect a guy like Jeff to want to get on another rocket ship (unsure if literal or figurative).
It is as mundane as they want it to be. It mostly comes off that way because the majority of CEOs are the MBA types. If you look at Steve Jobs, Elon Musk etc., their day to day involvement could hardly be called mundane.
And pay. With the discussion in other threads about whether corporations should be able to compete with nations, is Amazon's wealth-distribution better or worse than various nations?
> Today, we employ 1.3 million talented, dedicated people
All those creating the value. Many of them having poor working conditions and living off social welfare programs. One guy at the top skimming everything. Is he really worth all those billions? Could he survive on a little less and share with those doing the work? Or is his contribution really more than all those million combined..?
Although I know what you mean, in Amazon's case the people making the "value" are paid very well. Its blunt but true, Amazon prints money from AWS not selling lightbulbs.
Similarly, the idea that if you put 1.3 Million warehouse staff in a big room Amazon will come out the other side is really really stupid.
It was public knowledge that Bezos stopped running Amazon day-to-day a while ago. It was headed by the two execs under him (Andy Jassy for AWS and Jeff Wilke for retail). Jassy even had the CEO (of AWS) title. With Wilke announcing his retirement a few months ago, Jassy was the clear frontrunner to take over from Bezos. In hindsight I guess Wilke retired because Jassy was picked over him. The timing of the announcement is unexpected, but nothing else.
Yes, a bit of shakeup at the top. Jassy now CEO, Dave Clark stepping into Jeff Wilke's role as head of retail. I assume Charlie Bell will step up as head of AWS.
Listening to cbell rip someone apart in the weekly ops meeting while watching the #wtf peanut gallery whilst sipping my coffee are probably my fondest memories of working at AWS
It's funny how differently people respond to that type of stuff.
I grew up playing pretty competitive sports. Being ripped apart in front of my peers was a once a week occurrence for me for most of my life. I had no interest in doing it to anyone else, but it didn't seem like a big deal, and didn't bother me much.
My first job was at a company where it happened a lot. I didn't realize how toxic it was until I started talking with co-workers who were having panic attacks from it.
Yep. Not sports here, but military. I will take a dressing down, public or otherwise, over office politics and some of the corporate shenanigans that I have encountered in my private sector career. Give it to me straight, let me know how bad I fucked up, and what we can do to fix it, or walk me out the door.
That said, I also understand that this doesn't work for alot of people.
Same for me. My high school and college hockey coaches could really let you have it. They never pulled you aside and did it in private either. My college coach had episodes that would make even Bobby Knight look like a pussycat. He once had a roll-on-the-floor grappling fight with a teammate in the locker room between periods. (Coach had a big tactical advantage: he wasn't wearing skates) When I ended up working on a trading desk the impromptu performance review broadsides -- in front of everyone -- felt very familiar.
It's actually a rare opportunity that someone smart can "rip me apart" for the right reason. Candid truth does not hurt. It stimulates growth. In contrast, the worst place is where everyone is nice, but does not tell you what you have done wrong.
Candid truths can be shared in blameless postmortems and a hundred other ways. An executive shouting at someone in a large meeting is an ego trip, nothing more.
Blameless is often pointless because sometimes something about the person is the problem. If the project failed because Bob ran it and Bob is too risk averse, then you can't fix it without talking about Bob. Bob either needs to figure out how to be less risk averse (hard and time consuming journey) or Bob shouldn't run projects that require risk taking.
Doesn't mean Bob is bad or gets fired, but he is part of the picture.
The whole blameless thing is so weak - if there's something about you that caused the failure, don't you want to know?
If your root cause analysis leads to a preventative fix that amounts to “humans should not make mistake X” you haven’t done anything to prevent recurrence.
The key mental shift (for me anyway) is that if a system can be brought to its knees by a single person, then the system is very likely flawed. You need to design a better system when the flaw in the system is the people. What that often looks like is changing/instituting processes such that quantitative measure (metrics, checklists, etc) governs decisions (thereby removing much, but importantly not all, of the human element), or you design processes in such a way that one person is not in charge of making the decision (the "two person rule", CRs, leadership approval). There are of course other tools but these two are pretty common in my experience.
> if a system can be brought to its knees by a single person, then the system is very likely flawed.
That just means that the person who designed the system deserves the blame.
I'm only half-joking here. You can't just rely on the "system" – someone needs to be responsible, either for the decision or for creating the system that makes the decision.
Having a system/process is not about removing accountability, it's about reducing discretion/cognitive load where it's been identified as risky. In fact, having a system/process in place to point to and say "this individual did not follow the steps/process/rules" makes an unbiased conversation about their performance much more possible.
Yes and this works when you're doing something for the 10th time. It totally doesn't work when you're doing something innovative and risky, which I assume is the kinds of conversations we're talking about here (this subthread is contextual to a senior amazon exec, he's probably not PMing someone forgetting to change the backup tapes)
As someone who has been on these calls multiple times, I think "rip someone apart" was an attempt to portray the bluntness with which feedback was provided but (as other commenters have mentioned) not to import any ad hominem attack characteristics to the feedback. Although admittedly the language used was contrary to that. While Amazon certainly has its flaws and has plenty of room to grow in the hospitable work environment category, cbell's feedback on weekly calls is not one of those areas imo.
I listen to the calls weekly. No one shouts. No one degraded others. Cbell's power is that he doesn't have an ego in these calls.
The blameless postmortems are reviewed in these meetings, and the findings challenged, to ensure they really got to the root cause and lessons are learned.
I once almost got to present my post mortem, but it wasn't high enough priority that week. I wish it had been. It would have been ripped apart, but I would have gotten the feedback from the smartest people in the company on how to make my system better.
Thing is, cbell doesn't make it personal (in any of the calls I've seen). It's about raising the bar. He demands quality, and he gets it. His weekly ops meetings have been imitated by other orgs, terribly, because they don't understand the point. They think ripping into people is the goal.
I've got a project this year that I'm told is on his radar. I'm not terrified. I'm excited, because it means I have to deliver the best I am capable of and I'll get help to do it.
Like you, I don't think those meetings were particularly brutal but merely kept plain and honest, and more importantly, were of great learning value besides being a fantastic demonstration of leadership by cbell.
> His weekly ops meetings have been imitated by other orgs, terribly, because they don't understand the point
couldn't agree more. Almost every day of the week now with AWS, org, service, and team level ops meetings, and most of them miss the forest for the trees
That does tell us something about the corporate structure though - whilst a lot of people think AWS would be better off being spun out, there's no way you hire the head of AWS as CEO of Amazon if you think that's the direction forward.
My mental image is that people want to spin off AWS for society’s benefits because Amazon grew too big and abuses the integration. Amazon squarely resisting this idea seems uncontroversal.
People argue companies like Walmart don't want to pay their rival Amazon for cloud hosting, but the truth is if AWS is the best cloud provider, it makes business sense to go with them
They do, as far as I know Microsoft has a pretty good hold on retail. Some go with GCP but Google is less “enterprisy” for their taste in a lot of ways.
At the scale Walmart operates - 25th largest GDP in the world if considered as a nation[1], supporting over 2.2 Million employees[2], in over 27 countries[3] - it's simply more cost effective to do your tech in-house.
Amazon is huge... but Walmart is truly massive... over double Amazon's size in just about every metric. They clearly have the resources to handle things on their own.
It's a matter of corporate strategy... Amazon is like a combination of different entities, one of which is AWS, and AWS arguably does cloud better than anyone else
Walmart doesn't have the same capabilities. Being larger doesn't mean they can do it.
Been part of some of those conversations, some companies are wary of hosting with Amazon not due to paying their competitor but due to the amount of power they are putting on a direct competitor hands.
Was in the industry for a stint, and the issue was not only about money going to Amazon. There was a serious fear for their usage data to be used as a window into their business (if not fear of more illegal and unethical access to their data)
The case of Amazon using internal market place data to guide their own product strategy has already been made over and over, so the precedent exists.
Has the government filed an antitrust suit against Amazon? It could take half a decade to go from filing to a (potential) final appeal at the Supreme Court.
In a way that's the case with every company. Each part is more valuable on it's own, unless it's more valuable together with another part. :P
btw, it looks like you have some sort of shadowban. I don't see any terrible comments among your last 20 or so, so you might want to ask @dang if he can look into your case.
Their fast growing ad network can be seen as a conflict worth splitting out.
Probably similar or maybe even clearer than Google since more people understand a store selling their own products than Google owning every single step (with huge non transparent and evidently according to TX colluded margins) in the ad transaction, in addition to all the user data, and their own products.
Nah, its just that you'll have to change your perspective of customer support. Any questions will be answered in 5 days by pointing to the FAQ and each response will take an additional 5 days. If fact, you'll probably find the answer yourself before support helps you. Finally, the feedback mechanism will be so generic as to be useless.
Unless you want to pay 10% of your order for expedited service. Then those days drop from 5 to 3.
AWS support is pretty great in my experience. That’s with a paid plan, but I consider it great even for a paid plan. Typically instant chat with someone who can usually fix it is a game changer.
I think it’s a little unreasonable to expect free support for such a technical product to be as good as that for the retail site.
Crazy, he's one of those guys that you think will just be at the top forever. Hopefully the transition for Amazon is as (seemingly) seamless as the Steve Jobs/Tim Cook transition was for Apple.
Retiring at 57 is pretty risky. Hopefully his savings hold out. He's looking at 30 more years of life. Personally I would be too cautious to leave this early.
Yeah, he's just one health crisis from complete bankruptcy. What if he goes to the hospital complaining of a headache and they charge him $182 billion for an aspirin?
Assuming he lives past 100, and gets zero interest/return on his ~200 billion net worth, he’ll need to somehow keep his spending below about a thousand dollars a minute to survive.
> Hopefully the transition for Amazon is as (seemingly) seamless as the Steve Jobs/Tim Cook transition was for Apple.
I like Apple, but there is quite a seam with the Jobs/Cook transition. That seam is the overly minimalistic industrial design patterns witnessed in the butterfly keyboard, vanishing ports, trashcan Mac, etc. They seem to finally be coming around on this.
Exactly. It seems that while Jobs was able to balance/direct Ive in a constructive way, Cook was not. So at least from the outside Ive started to have an outsized impact on the final product, to the detriment of the product’s final quality. It took Ive’s departure for things for things to go back to normal.
>I’m excited to announce that this Q3 I’ll transition to Executive Chair of the Amazon Board and Andy Jassy will become CEO. In the Exec Chair role, I intend to focus my energies and attention on new products and early initiatives. Andy is well known inside the company and has been at Amazon almost as long as I have. He will be an outstanding leader, and he has my full confidence.
This reads to me as Jeff Bezos doesn't want the boring job of running AWS and Amazon anymore. He want something new,
>As Exec Chair I will stay engaged in important Amazon initiatives but also have the time and energy I need to focus on the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post, and my other passions.
There are plenty of Growth left in Amazon and AWS. But that is not as exiting as Blue Origin or Funding other initiative via Day 1 Fund.
I still remember when Amazon was only selling Books. People laughed, Media Laughed, and I guess most of us laughed.
The retort to your bonus question is that the government doesn't get to "spend" its GDP. Although the counter-retort is to bring up government revenue instead, where Amazon instead slots in between Mexico and the Netherlands.
Let's start with the premise that "representative government is the union of the people" and "profit motive is not always the best incentive for action in society", and go from there.
I dispute that premise. I'd hardly call America "unified" at the present moment; we are in such a state of disunity that many are refusing to accept election results. Pervasive as Amazon, Google, et al. may be, they are still much easier to escape than the United States government.
Corporations are not legally obligated to put profit ahead of everything else. That's a bad myth that refuses to die. There is absolutely no substance to that claim.
There is no legal obligation to maximize shareholder value.
I don't know of anyone claiming it's a legal obligation. It's a natural obligation, and it's worse.
The shareholders want profit maximised, and with that end, decide upon the board of directors, who decide upon the CEO. If the CEO does not maximise profits, the CEO will not remain the CEO. Therefore, the CEOs of (publicly-traded) companies are obliged to maximise profits – those who do not feel such an obligation are not CEOs.
Hmm. I could argue that technically there're sometimes contracts with investors, but that's not about public trading; they probably just didn't understand where the obligation comes from.
It's odd to claim companies are obligated to maximize profit in a thread about Amazon, whose retail operation isn't profitable and basically exists because Bezos hypnotized investors into giving him free money forever.
Sure sure, you know what I meant.. Legally in the sense that for _most_ companies, if they don't prioritize profits, they can potentially face shareholder lawsuits, or management gets ousted and replaced by the board, etc..
There's nothing new about the US not being united. The Democrats dispute every election they lose, just as they did in 2016. There is nothing new about it. The US has rarely been united throughout its history in fact. It's borderline a fluke that it has survived this long as one nation.
And if you think it's bad now, it's going to get dramatically worse yet. The largest groups that make up the US today, that dominate its politics and culture, have absolutely nothing in common with eachother and will grow further apart as the years pass. The rancor will get much worse. The populism will get worse. The end result is obvious and unavoidable (and I'm not talking about civil war, that's a redneck fantasy; it's tyranny, oppression, endless strife, and ever worsening dysfunction as the Feds try to contain the unspooling and get ever more paranoid).
> Pervasive as Amazon, Google, et al. may be, they are still much easier to escape than the United States government.
Like it or not, there's always going to be some powerful entity who you cannot escape because it rules the land. The only question is what shape you want that entity to have. Accountability matters, and so democracy is generally a good place to start.
What about starting with the premise that "a successful corporation offers goods or services people want for less cost than competitors" whereas a successful government organization "exhausts their budget every fiscal quarter and successfully demands more". Which is doing more good for the people? I've worked for both and know which I'd choose.
Because someone will soon realise that "a successful corporation offers goods or services people want for less cost than competitors" is a great reason to introduce slave labour to increase efficiency. Gig economy without employment rights and stopping unions is just a step towards that.
Also "exhausts their budget every fiscal quarter and successfully demands more" applies just as much to corporate projects. And given we gov agencies rarely can solve the whole problem, why expect them not to exhaust their budget?
A successful corporation performs its mission smartly and reliably.
This may or may not include specified behaviors, tasks, growth, marketing, sales, profits, goods, services, employees, competitors, etc.
Even corporations without any shareholders are common, found in the non-profit sector, but you do need corporate officers regardless.
Would it be better if there were a couple non-profit corporations with one or two million employees each the size of Amazon or Wal-Mart, to go along with what we have now?
If you think profit motive, rather than ethics and benefit to society, should control prisons, the provisioning of healthcare, or the education of citizens, there is no middle for us to meet on.
The right-wing (libertarian?) belief here is usually that doing things for the benefit of society doesn't actually benefit society, because irony always wins.
I don't know if this is true, but you'll only talk past each other if you don't acknowledge it.
Neither have to be that big. If something's going to be so big and pervasive into people's lives though, then I'd rather be able to have a democratic say in a government than the Shinra Electric Power Company.
Governments aren't defined by a market cap, but rather by the services they provide to their citizens.
Consider that a private company's only goal is to enrich its shareholders, and they have no responsibility to the people or places around them. They are only accountable to their shareholders and the government.
A governments responsibility is solely to its citizens who also control it by vote.
The bigger your biggest companies are, the more powerful your government must become to keep them in line - to ensure they don't break the rules. If you want a small government that is able to retain order and fairness, you must also limit the size of the companies within its purview.
That's a pretty narrow definition of a government. I hardly think that's been the case for most of history and I don't think that's actually the case in the majority of nations to date, even at the surface.
Consider that politicians' only goal is to get re-elected. While the rare exception may exist, that's also true of companies. While governments are accountable in theory, that rarely holds true in practice. I don't think that a "bigger" government, id est one with more regulatory oversight, would help; rather, use the existing court system to enforce what we have. If we lack political will to enforce the existing measures, adding more will not help. A government need not be "big" to have effective court systems and pass some rules on what certain companies can and cannot do.
Monopoly rules only exist and matter because of the government. It's pretty obvious that even with them, there's a real pressure for consolidation (and that's efficiency of scale).
The natural state of a company is a monopoly. Once you are a monopoly, you don't need to worry about getting "re-elected" any more than a despot does.
The free society exists only in the space between these two clashing titans.
Sure regulatory capture can entrench interests, but there's no reason to believe that in the absence of regulation one big company wouldn't aggregate every major market and just destroy all competition.
Governments are defined by the populace and land they have sovereign authority over, not the services they provide. That's not terribly different from a corporation being defined by its assets and employees
Warmer... but not quite. Governments are defined by a monopoly on force. Whoever distinguishes "murder" from "homicide" is the government, and that government's territory stretches as far as those definitions are in effect.
"If you want a small government that is able to retain order and fairness, you must also limit the size of the companies within its purview. "
Why does the government needs to be big (in size?).
It just needs to be strong enough and really connected to its people it represents. Then also a very small country (with a small government) can set up and enforce clear rules on multinational companies, doing buisness within that country.
The rules just need to be simple. If they are complicated, it just means, those with the best lawers will win and they are usually working for the corporations.
I suspect that's in large part due to their interconnectedness with the European Union. Neither are Schengen countries, or Eurozone countries, but they both participate in the Single Market - and Norway is a full participant in the EEA. [1,2]
Roughly speaking they coordinate on all major rules and policies and practices with the entire rest of the EU and therefore are effectively part of the EU for regulatory and trade purposes.
The UK on the other hand, obviously just wrapped up its Seppuku process of leaving the EU, and we're already seeing the relative increase in their being taken advantage of by corporate interests due to their much weaker position.
Switzerland and Norway take advantage of the power of the EU to push back on corporate interests, and the UK is getting kicked around as its negotiating power just went down by a factor of 10.
A corporation that didn't take its customers demands into account would be quite likely to fail. There are many governments that continue to exist by enriching and providing for a small segment of society, and uses force to suppress the demands of the rest of society. A corporation generally doesn't shoot dissatisfied customers.
Even in relatively liberal democracies, governments are clearly more beholden to forces other than citizens and their vote. There's a reason why US governments did little to respond to massive BLM protests this summer, as government viewed its responsibility as more aligned to police unions than citizens.
> A corporation that didn't take its customers demands into account would be quite likely to fail.
Without a government to enforce monopoly rules, it'll just aggregate all its competition into one big blob, and you won't have any choice. Efficiencies of scale mean there's a natural pressure towards consolidation. The terminal state is always one blob that owns everything.
Once they do, they can smash any new upstarts, by undercutting prices, or by just buying them too.
> A corporation generally doesn't shoot dissatisfied customers.
Sure does shoot dissatisfied union leaders though [1] and enslave children to farm cocoa [2], and take down a democratically elected government kickstarting a 36 year long civil war [3]. Also substantially all of the trans-atlantic slave trade [4, 5].
These things were all allowed to happen because the governments in those respective jurisdictions weren't (and in the case of child slave labor, aren't) strong enough to stop them.
The idea that "a corporation generally doesn't shoot dissatisfied [people]" is a privileged western position to take based on the current system working pretty well. In places that have weak government, your statement simply does not hold.
> Without a government to enforce monopoly rules, it'll just aggregate all its competition into one big blob, and you won't have any choice.
Thats not really true. There are tons of industries out there that are highly competitive, and are not aggravating into a monopoly, and those industries are highly competitive without much action from the government.
Sure, there are some industries that have huge network effects, such as telecom, that have a tendency towards monopolies.
But such industries are not the rule. There are instead many industries where monopolies are not forming, competition is working on its own, without the government doing much to enforce that competition.
Like almost every single major market where people spend a large percentage of their money on?
Are restaurants a monopoly? Obviously not.
Cars? There are lots of options for cars
grocery stores? There are certain some big players, but the 10 corner stores, target, safeway, and whole foods within 5 blocks of where I live show that it is not a monopoly. MAYBE you could argue geographic monopoly for grocery stores, in certain limited exceptions in a few small towns, but that is not the vast majority of people.
Housing? There are 10s (or Hundreds?) of millions of people own their own home, or rent it to others. Clearly That is pretty competitive
Lets now pick some random things that I see within eyesight of me.
What about refrigerators? There are multiple refrigerator companies.
Furniture? Probably a lot of companies make furniture.
What about shoes? Clothing? There are lots of clothing companies.
And before someone says it, yes I am sure that every example that I gave has some big players in the market.
But my main point is that I simply do not consider the existence of some big players in a market, to be anywhere even close to the same thing as a monopoly or similarly non-competitive market. There is a huge gap between those two things.
The only major exception to all of these examples, is some of the new tech companies that have significant network effects in winner take all markets. Sure, maybe there is an argument that Google is getting to the point where it almost has a monopoly on ads.
But, just looking around my room, and looking at the main things that I buy in my life, which is food, shelter, transportion, and clothing, it seems pretty clear that most of these things have lots of competition, even if there are some big players in these markets.
That is unless someone is going to make a silly argument that the only markets that could be considered "competitive" are ones in which there are 10 thousands small businesses of equal size or something.
I mean, all of these exist in regulated markets that have antitrust regulations. Mergers simply would not be approved. This is a function of the system working as designed.
The trend however is clear.
It's extra clear in a market like air travel. Just two decades ago the US domestic airline market was actually competitive until...
1. 2001 saw TWA fold into AA.
2. 2005 saw America West fold into US.
3. 2008 saw ATA fold into SouthWest.
4. 2008 saw Northwest fold into Delta.
4. 2009 saw Midwest fold into Frontier.
5. 2010 saw United fold into Continental to form "United".
6. 2010 saw AirTran fold into SouthWest.
7. 2013 saw US Airways (and by extension America West and TWA) fold into AA.
8. 2016 saw Virgin America fold into Alaska.
When the government is asleep at the wheel, consolidation happens. The only reason the Big 4 aren't the Big 3 is because of regulators.
Out of your identified markets, the trend towards consolidation is very clear - except where no meaningful economy of scale efficiencies can be realized (such as real estate, or taxis).
Cars, for instance, consolidated to such an extent that only 14 car companies control 54 brands [1]. Again the only reason there isn't more consolidation is because of regulators.
Fridges are another great example. The market has seen huge quantities of consolidation, and likely the only reason it has hasn't progressed further at this time is because of regulators. [2]
You're mistaking the system working for it not being there at all.
Sure, that is a market with large amounts of geographic network effects. I already said that markets with large network effects could have competition problems.
IE, with air travel, on any given route between two cities, there might only be 1 or two airlines servicing it. So yes, thats a problem.
Most things that people spend their money on do not have much network effects, so my original point stands.
> to such an extent that only 14 car companies control 54 brands
So not a winner take all market then? Got it. I already said that it would be ridiculous to claim that a market would need to have 10,000 companies of equal size, in order to be considered "competitive".
So yes, I consider the car market to be fairly competitive, and not one where you only have "no choice".
> Fridges are another great example.
You just posted a link that shows that there are a bunch of competitors, and that it is not a winner take all market.
So I stand by my point that neither cars nor fridges are in any way similar to something like internet service, where someone might only have 1 or 2 choices, or something like the Google ads business, where Google has a huge amount of power in the market that is no way comparable to the fairly competitive car market.
I posit these markets only have many players because regulation prevents their consolidation.
Cars went from 54 to 14 establishing clear directionality and benefit. It's not going from 14 to 1 only because of laws against further consolidation in the space. Regulators would simply deny their request to consolidate further. Stopping at 14 isn't some magical constant or some natural end state.
My point is that the natural direction in each of these markets is consolidation, then at a point it hits a dead stop. Why is consolidation only useful up to a certain threshold? It's not. Regulation steps in and keeps it competitive.
> only because of laws against further consolidation in the space
No, because these markets don't have some huge geographic network effect.
The markets are pretty different than something like home internet service.
The traditional example being that of water pipes, where there is zero benefit to laying the pipes twice to a house.
You should be able to see how a situation where laying the pipes twice to a house is pretty different than a situation where there absolutely could be benefits to another car company being created, to manufacture new cars.
> Regulation steps
I am not sure how you can claim with with a straight face, that anti-trust laws/regulation is being strongly enforced these days, and that this is the reason why most industries are not turning into monopolies.
Anti-trust law isn't really enforced even in obvious cases where it should be enforced these days , and yet I see a world where there is lots of new companies entering markets, and lots of competition, in most markets, despite regulators failing to enforce regulation in the exceptional and rare cases where it should be doing so.
It is quite clear that regulation is not stepping in, even in the obvious cases. So no, I do not believe that the non-existent enforcement of regulation is doing anything. Instead, we are living in a world that has lots of competition, despite the fact that the regulators aren't doing anything even in the blatant and exceptional cases where it should, such as in telecom/internet/app stores/ect.
> I am not sure how you can claim with with a straight face, that anti-trust laws/regulation is being strongly enforced these days, and that this is the reason why most industries are not turning into monopolies.
As I said, my analysis applies to companies that have demonstrated economies of scale.
Mergers are rejected all the time, and further, you can't discount the mergers that weren't requested in the first place because of the regulators.
I would say in the US mergers tend to skate through, but in if that company operates in other jurisdictions they need approval from all global regulators, and the EU has no such objections to saying no.
You haven't posited a theory at all for why consolidation is good up to 14 players in the automotive space but 13 is just a bridge too far. It's not. There's external pressure. Competition is bad for companies because it reduces margin. Consolidation removes competition and improves margins. That's just fact. Companies don't care about capitalism, competition or free markets. They care about making more money.
I really would not consider the current situation to be one where regulators are doing strong enforcement of anti-trust law.
Regulators are really not doing much regulating right now, on the anti-trust and anti-competition front, and regulators not doing much regulating in these new markets where they definitely should be.
I am not sure how you could possibly look at the current state of some of these rare expectations of monopoly behaving companies, and claim that regulators are doing their job.
> I would say in the US mergers tend to skate through
Well then this concession is good enough to support my point.
> You haven't posited a theory at all for why consolidation
Well I don't need to. All I have to do is point to the existence of lots of markets that are competitive, and point out that regulators that aren't regulating. The reason doesn't matter as long as I point to the clearly true fact that regulators aren't doing much regulating in some of these markets.
But, one possible theory is that consolidation also reduce competition, and can cause companies to stagnate, and can reduce innovation in that market. You would have to argue that no startups ever could succeed in the face of "scale" (something that is clearly not true. Startups suceed all the time), if you are going to argue that scale is such an overwhelming advantage that inevitably causes every single company in that market to join together.
Also, different companies run differently, and this can give them advantages in some things, and disadvantages in others, allowing them to overcome scale problems, due to the advantage/disadvantage of merely being different. Heterogeneity in companies allows them to target niches and stay in the market.
I’m sorry you’ve made a very uncompelling case for me. You fail to address the directionality inherent in all my data preferring to instead point at the current state as though it’s terminal and natural. I just don’t see it that way. Thanks for your perspective however!
My point was that once you reached a certain scale the US regulatory environment is less relevant than the strictest regulatory environment in which you do or hope to do business. It’s not sufficient for Ford and GM to merge with only the US gouvernements blessing as they do business in Europe and the EU would never permit it. They’d need sign off from the EU, US, CA, AU, CN, etc.
Source showing how weak EU anti-trust enforcement is
After doing more research, is clear that the EU is doing much less enforcement against merges than even I previously thought, and I am now going to claim that the EU regulators aren't doing much enforcement either.
Really I am quite surprised at how little the EU is doing, and should have looked that up much earlier, instead of taking your initial claim at face value.
Furthermore, I can only find a single example, in the history of EU anti-trust law, of the EU blocking a US merger. And that was in 2001 regarding a GE acquisition.
If there is only a single example, in the history of EU anti-trust law, of the EU blocking a EU merger, a whole 20 years ago, then it is pretty clear that the EU is not doing much enforcement against US mergers.
So my point stands. You concede that the US is not doing much enforcement of anti-trust law. And the fact that the EU has only ever been successful in doing so a single time, 20 years ago, means that the EU is pretty irrelevant to this conversation as well.
> Really I am quite surprised at how little the EU is doing, and should have looked that up much earlier, instead of taking your initial claim at face value.
Again, the number of blocked vs approved isn't particularly relevant. What matters is also the number that weren't tabled in the first place, and obviously, the number of things that didn't happen is a particularly challenging set to count. Companies aren't fond of public failure, and so they'll try and suss out whether regulators would be amenable to a merger before making it public.
6,000 vs 30 is a meaningless metric, because 6,000 small companies merging into 3,000 small/midsize companies isn't relevant to this discussion as it doesn't do much to alter the competitive landscape. 30 mega-caps merging into 15 giga-caps is what I'm talking about.
I'm not saying companies should never merge, that's fine, it's in their competitive interest to do so. Mergers are good for companies because they reduce competition and improve margins.
Again, what you haven't explained is why a small company merging into a small company is advantageous, a mid size into a midsize is advantageous, but a giant into a giant just wouldn't ever work. Of course it would work, the same dynamic continues to exist. Regulators are why.
T-Mobile just acquired Sprint, right? So we know there's certainly an advantage on the business front to consolidate these businesses. So why doesn't AT&T buy T-Mobile to form AT&T&T? Well, they tried in the early 2010s and the DOJ filed suit is why. [1] Further AT&T had to pay a huge amount of cash to T-Mo when it all unwound.
Even if you think that, the metric of only a single american merger ever being prevented, and it happening 20 years ago, is still pretty relevant.
If the regulators in Europe have only blocked a single merger in America, ever, then European regulators are simply not relevant to the conversation, and you have already conceded that American regulators aren't doing much.
You cannot handwave away the true fact that the EU has only stopped a single American merger, one time, 20 years ago. And that this is pretty good evidence that European regulators are not doing much to prevent American mergers.
> T-Mobile just acquired Sprint
Huh. And I guess European regulators didn't do anything about that, did they? In the clear and obvious cases of geographic network effects in the industry of Telecom, which I have already stated is one of the few exceptions where regulation is definitely needed (Telecom, has huge geographic network effects. It is the same problem as internet, or electricity, or water pipes, and I have already said that network effects are the one major area that consolidation will definitely happen), we see that European regulators didn't stop such a clear an obvious thing that should have been stopped.
> 6,000 small companies merging
Well, in one of the cases of large telecoms companies, such as t-mobile/sprint we see that it wasn't blocked!
> so they'll try and suss out whether regulators would be amenable to a merger before making it public.
Well they didn't stop the clear and obvious example that you just brought up regarindg T-Mobile/sprint. Looks like European regulators are doing much of anything.
So no, European regulators are not doing much of anything at all, to prevent American companies from merging, using an example that you brought up.
> Well, they tried in the early 2010s and the DOJ filed suit is why
As I said, before, businesses that have huge geographic network effects are one of the few exceptions where there is a huge advantage to consolidation. But even IN these clear and extremely obvious cases, only sometimes will regulators take action. But sometimes they won't either.
The fact that nobody blocked the t-mobile/sprint situation is clear evidence that regulators aren't doing much to stop mergers, even in the rare and obvious cases where they should step in.
All I'm saying is that mergers that are stopped aren't publicly reported for the most part. They do their due diligence, and if they don't think it'll go through they don't file. The only public failures are the ones where the companies failed to do their diligence on regulations in advance and wind up with egg on their faces.
But apparently the EU isn't actually stopping much of anything, as evidenced by the fact that the T-mobile sprint merger that you brought up went through, which is a clear an obvious thing that they should have stopped but did not.
If they failed to stop such an obvious case, then is strong evidence that they aren't doing anything.
But whatever. Going to move on from this thread because it is clear that you know that this example is a clear cut example of how the EU isn't doing much to regulate anything, which is why you completely ignored it.
The complete dodge on that shows that you understand how much it disproves your point, and shows that the EU isn't doing much, which is why you completely ignored it.
So that dodge is good enough evidence for me, to show me that you understand this.
Again you don’t know if that it’s the regulations stopping it or not because the existence of regulation may well dissuade them from filing in the first place. If they never filed them you’re not counting them yeah? To be clear I’m not saying you’re wrong, I’m saying that we have insufficient data to say conclusively.
All we know is there is clear pressure in industry to consolidate, that at some point they stop, and that regulations to preclude further consolidation exist.
As a practical matter, without government to to enforce contracts and protect IP, most of the monopolies we've seen over the last ~120 years or so would never have existed. There would not have been much to MSFT if software piracy were a nonissue at the corporate level.
Without rules I think you'd see a lot more violence. They'll get their way domestically, in the same way large enterprise has leveraged violence the world over to get their way.
Someone has to have a monopoly on violence or you're going to have a bad time.
> A corporation that didn't take its customers demands into account would be quite likely to fail.
Meeting customer demands is only one way to compete. A better facebook is going to still have a hell of a time not being out-competed by facebook. Likewise with amazon sometimes throwing its weight around to take a loss to undercut competitors until they starve.
"A governments responsibility is solely to its citizens who also control it by vote"
And most Western governments are now abdicating this responsibility in the name of political ideals and the stated notion that non-citizens have the right to demand a place in the nation of their choosing.
> And most Western governments are now abdicating this responsibility in the name of political ideals and the stated notion that non-citizens have the right to demand a place in the nation of their choosing.
Nobody is doing that. However, I'd suggest that even if they were, it wouldn't invalidate anything I'm saying.
Non-citizens are permitted to immigrate under various circumstances, defined under naturalization law. Sometimes that's on the basis of being refugees. Sometimes its on the basis of skills and needs. Sometimes its granted in the face of exigent circumstances.
In the case of the DREAMers, it's based on the notion that if you're brought into the country as a toddler, then you didn't intentionally commit a crime and the fair thing to do is to let you remain - in no small part due to the huge role these folks play in the economy. The parents who committed those crimes are not granted any sort of amensty.
I don't think the "responsibility" part is all that important. There are many points about it that can be argued, but I think the more important part is means.
Private companies' only effective means to do anything are to produce a product that people freely choose to buy and attract people to work for them (absent a few rare exceptions).
Governments have effectively unlimited means to compel people. They can spy on anyone, fine them, throw them in jail, kill them, all for as much and as long as they feel like.
That's not what national total wealth refers to. It refers to the wealth of all citizens.
> National net wealth, also known as national net worth, is the total sum of the value of a nation's assets minus its liabilities. It refers to the total value of net wealth possessed by the citizens of a nation at a set point in time.
Given that multi-national corporations exist, it seems obvious that companies will have greater wealth than nations.
> Given that multi-national corporations exist, it seems obvious that companies will have greater wealth than nations.
That doesn't follow because every non-totalitarian country has multiple corporations operating in it, in most countries a much larger number than the maximum number of countries a corporation could possibly operate in.
> Bonus question: Why should governments be allowed to get that big?
I would argue that most of our current problems are happening because our governments are small, ineffective, and corrupt. I would prefer big, effective, smart, and transparent governments that can take decisive action any day of the week. I'd go so far as to abolish state governments entirely and split their powers between counties and the federal government; they were made for a time when our communications were limited by the speeds of our fastest horses.
I mean, that's not what I said at all, and then I see you're breaking out the old 'taxation is theft' sawhorse.
Personally I'm a 'taxation makes civilization possible' man myself, and I find that the 'taxation is theft' people rarely make meaningful contributions to society.
They were made for a time when we were not so poorly educated that we trusted leadership to people so far away, with so little in common with ourselves and our way of lives.
I tell you what, though. You design an effective, smart and transparent government and I'll never say a word about how big you would like it to be.
> They were made for a time when we were not so poorly educated that we trusted leadership to people so far away,
How do we define 'far away'? I can have a face to face conversation with someone at the opposite end of the country with near-zero effort.
> with so little in common with ourselves and our way of lives.
I strongly disagree with this. Partisan politics try to paint people from different regions of the US as being wildly different, and I flatly reject this notion. I've lived in urban, rural, and in areas separated by thousands of miles. Americans are far more alike than different. There are the same (minor) cultural differences within the average state as between states on opposite ends of the country.
> I tell you what, though. You design an effective, smart and transparent government and I'll never say a word about how big you would like it to be.
I don't have all the answers, but I would start by outlawing the bribery of public officials via campaign donations, and I'd put the legislative process in version control.
If the US hadn't dropped the ball on enforcing existing antitrust laws in the 80s and 90s, we wouldn't have to ask. Perhaps many more regular people would own productive enterprises, and wouldn't be looking to government to address inequality.
Now that both corporations and government are so big and intrusive that they're somewhere between a nuisance and prohibitive toward small-scale enterprise, we should at least think about ways to sic them on each other.
The obvious argument is the adage that "If a company's only goal is to grow at any cost it is not a company. It's a cancer."
Secondary item is that a company of this scale has the ends and means to ward off any competitor and eventually set the wages for an industry. Companies scaling to this size is evidence that the taxation system is too lax and allows money to be funneled out of the loop.
Think of it like a pool pump that has sprung a leak. It keeps sucking in but not pupping out into the pool, Amazon is amassing this money by NOT spending it on the economy. Eventually your pool will be stuck at the lowest line of the pump inlet.
Because we get more than we had before. As costs go down, the risk of innovation goes down, we're able to be more responsive, able to do new things. People are able to have more variety to meet their individual needs and preferences.
In short we get more or work less and the overall quality of life for everyone increases.
> Amazon is amassing this money by NOT spending it on the economy.
Quite incorrect on this point, Amazon has pretty small cash reserves compared to peer tech companies. Even then, if Amazon were merely putting that money in the bank, where is it going? It's getting loaned out to other companies and consumers, who are spending it, investing it, etc via fractional reserve banking.
It's very hard for a corporation to get large without explicit or implicit government support. Truly competitive markets do not allow monopolies to develop in the long-term.
An existential crisis for humanity is absolutely NOT the kind of climate that would cause humans to stop valuing a nation, a people, a culture, or their ancestry. I would argue that it is only the benign environment that most humans have enjoyed for the last 60 years or so that has caused these values to mean less than they always have.
It's only voluntary if they don't get too large. See: company stores. Or basically any megacorp in cyberpunk genre.
Also it can appear voluntary... "Sure you can pay 2x the cost for your insurance or you can get insurance, food, accommodation conveniently provided by Amazon who is also your employer for a good discount"
"Concealment at scale is the secret to Amazon’s success. Customers enjoy a seamless one-stop shop experience from the comfort of their homes. Out of sight is a ruthless game of regulatory arbitrage, as Amazon installs itself in low-tax jurisdictions and exploits legal loopholes around the world. Even further away from the customer lies Amazon’s environmental impact, scorching frontline communities in the global south while executives in Seattle roll out their latest greenwashed PR campaign."
To be fair, Amazon has probably the worst corporate reputation among public-facing companies, up with Walmart when it comes to labor issues. So I find it hard to believe that anyone is being convinced that Amazon is a net positive here.
And at a certain point it's consumerism that's driving all of this. I don't know if it's fair to blame Amazon for this any more than it is to blame McDonalds for obesity. We live in a society where people are free to make their own choices, and as long as these "hidden costs" aren't well regulated, a lot of people will take a cheeseburger at the cost of a few extra pounds, and some 2-day shipped plastic junk at the expense of some poor over-worked employee's vacation.
Meanwhile, these consumers are putting additional strain on the healthcare system, and encouraging companies like Amazon to get away with all of its labor abuses.
I think my phrasing was poor. I meant specifically about labor issues, not the general impact on society/the world. Everyone in the country jokes about how Amazon employees have to run, skip bathroom breaks, etc. to meet warehouse quotas. Whether this is entirely true anymore, I don't know, but that's the reputation.
The crux of the argument really focuses on that "for profit" bit, and that's really a conundrum in corporate governance. The problem isn't at all "corporations", which are just assemblies of humans for a common purpose, but is the specific, legally-arguable requirement that their ultimate purpose is maximizing profit. The contrasting idea is the "public benefit corporation", where you're (presumably? IANAL) legally obligated to funnel your profits back into doing the job of the business better).
From a legal/ideological standpoint, this might be a powerful soft-pivot that would solve a lot of problems.
There's a famous line from Walt Disney, during Disney's golden age, where he said "we don't make movies so we can make money - we make money, so we can make movies". That really hits at the heart of it.
The interesting thing is that, to a large degree, most of the meaningful corporations that improve the world - despite nominally being for-profit companies, generally tend to operate halfways into public-benefit territory. Partly because the benefit provided by them is essentially what the owners are "buying for themselves". To put it in perspective - if you're an extravagantly wealthy patron who wants to - themselves - have animated films to watch, you can't just hire some off-the-shelf people to do it, because they don't exist unless an industry to train them, exists. There's not really a "more narrowly selfish" way to do it - you're best served by building some outfit like Disney to build a brain trust of people to produce what you want.
Similarly with Amazon; sure, an extravagantly wealthy individual could probably accomplish the shipping part of it with personal couriers, but the information-gathering part of it where all the products-available-to-buy are laid in front of you as choices would be nearly impossible to match. Like, you could try to match it with some awful, personal, potemkin setup. But by the time you put in all of that effort ... I mean, you're basically already building what could be a business that could serve others, so you may as well.
Until you consider that everyone is born into a quasi-feudal arrangement where they owe fealty and taxes to a country culture and government they didn't choose, and the only choices of leader are limited to those willing to climb the greasy pole of politics - typically self-selecting sociopaths.
This is unfortunate, but it's also an invariant of human behaviour. The alternative is to get leaders through inheritance, which isn't any better.
So the best thing to do is to try to nudge the system in a direction where the worst tendencies are mitigated: build institutions in which non-sociopaths can thrive politically, and allow a reasonable path for outsiders to join the political process.
The US in particular is very bad at both. First past the post election systems don't provide a path for outsiders to join, which makes them seem stable until they suddenly become very volatile. And the fact that all elections in the US are personalized favours sociopathy over competence in politicians (compare the US system to one where you vote for a party instead of a person; in the former, people who are competent but lack charisma can still rise in the ranks of a party and get to power, while in the latter everything devolves to low-quality popularity contests).
Arguably, this could be the UK to some degree, given that if you have a TV, you're expected to pay for a "TV license", the funds of which go entirely to the state run broadcaster.
It's not mandatory to get a TV license, but they will harass you and strongly imply you're a fraud if you don't get one. You can fill in a declaration stating that you don't need one to make the harassment go away for a year. I refused to do so out of principle and eventually I got a letter saying they "opened an investigation" in to me, but I never heard more about it. shrug.
Actually, (if I guessed your country right) since 2019 it is replaced by a "general public service fee", which is a tax that is earmarked for public service uses.
You might not like where your taxes go, but at least you can vote for that to change. In a company you have no such freedom unless you have the financial ability to buy stock.
Certainly not the U.K, many people don’t pay for a license fee, there’s no law saying you have to. Everyone pays elevated prices for itv even though we don’t watch it though as the funding comes from tesco, sainsburys, etc increasing prices to pay for it.
a lot of European counties pay for state tv from a tax on things like electricity, but saying “it’s illegal not to pay tax” is an odd statement.
It's not like corporations really have a better track record. Quite a few of the colonisation efforts were done by corporations or under private management (not "nations"). Corporations hid and obscured facts about asbestos, smoking, climate change, etc. for decades. Various corporations are not exactly well known for their excellent treatment of people in various less well-off regions (Shell in Nigeria, Dole in South-Africa, etc.), abuse of monopoly positions has a long history, and when corporations really screw things up it's up to the nations to provide some sort of relief (1930s, 2008, housing crisis in various countries).
"Illegal not to subscribe to the state TV channel" seem like small fries.
The capitalist colonization of North America, complete with genocide and chattel slavery, deserves at least honorable mention. Also the East India Company, and the Irish famines orchestrated by British landowners, and many more.
Just because the companies doing the murder are more numerous and regularly go out of business, doesn’t mean that capitalism’s hands are free of blood.
> In my country it is illegal not to subscribe to the state TV channel.
This is, frankly, a very silly thing to get hung up on.
First of all, I assume you mean you have to make some payment that goes to that channel, not that you're forced to watch it.
Second, this means you're essentially passing a presumably small tax that is earmarked for that channel.
In other words, it's not any different from all the other taxes: paying them is part of life in society, and you're never going to agree with all their uses.
I bet there are far bigger items in your government's budget that you disagree with.
> The British East India company was a corporation when it took over large parts of India.
Corporations are chartered by governments and reflect the chartering government’s values (which may be laissez-faire, but in the case of the British East India Company—and it's state-granted monopoly, violations of which were punishable by indefinite term of imprisonment—were decidedly not.)
I would say in terms of anti-monopoly, that there is some natural cutoff that companies are forced to split. For instance, AWS and Amazon can easily be two separate companies as the missions and revenue streams of each are vastly different.
It has 1.3 million employees and employs a great deal more through its distribution partnerships, sellers using Amazon storefront and so on. The amount of folks who rely on Amazon for their living is probably comparable to some of those countries you listed.
I don't get the comparison here tbh. The valuation of of AMZN is based on assets + future time-discounted dividends. While, those wealth figures for Saudi Arabia are just assets. After all Saudi Aramco, which is mostly state owned, is worth about 1T.
It's equivalent to a lot of different sentences. Any given market has a maximum size, so if you want to limit the size of a corporations' market share, you are absolutely limiting "what services they provide and to how many people". Or are you totally for monopolies?
First, Amazon isn’t even worth as much as the oil under Saudi Arabia, second, why is it better that murderer Mohammed Bin Salman controls that much wealth than Jeff Bezos?
What's the value of 1 million shares of Amazon stock? If every single share of Amazon stock went on the market today, would it be worth share price * number of units? Hell no.
> Corporations should never be allowed to get this large.
Make your case instead of dropping your groupthink everywhere. Why? And: What is the maximum size a corporation should be allowed to grow? Who gives that permission now?
Would also want to know, once you decide the maximum size of a corporation, exactly what happens to it once it exceeds that size, and who determines that it has infact exceeded it, and carries out whatever the plan is for what happens at that time.
In the US, Congress decides the rules, the FTC and the Department of Justice decide when they believe a corporation is too large, and the court system decides if they're right. The corporation can then be stopped from acquiring other businesses, stopped from executing certain business practices, or broken up into smaller companies. Generally a judge ensures that the plan is carried out.
Because money is power, corporations are not democratic, and putting so much power in the hands of one person or a handful of people is dangerous to society. I would also refer you to the entire history of US antitrust law, which will be hard for anyone to summarize in a comment. The whole field of competition law is a question of how to balance the rights of those running a business with the rights of those affected by the business. Often those rights conflict, and there is no way for the law to be "neutral", it has to take a position on how to strike the right balance.
I don't have an answer for how to determine when a corporation is too large, it's a very difficult question that I am not qualified to answer. As for who determines that, I think a democratic government should decide. I disagree with how the current US government makes these decisions, but I still think it is the right organization for the job.
Not really possible to give you a citation, it's an opinion, or a philosophy. If you have a different idea of an ideal society, we're not going to cite our way to an agreement.
If you're going to dictate an opinion over an entire social structure, then it better be proven to work. My idea of an ideal society has already been proven to work in the past (look at the Islamic Golden Age). However, many of those in power today won't allow it to happen since it is against their interests.
I'm sorry, I don't understand what you mean by "proven to work". Give me any society in the history of the world, and I'll give you a moral framework that makes that society ideal. There is no right answer, there is no reference society we can use as a baseline.
Do you want me to cite some philosophers that try to justify the value of democracy?
> However, many of those in power today won't allow it to happen since it is against their interests.
Is this bad? Can you prove it? The idea that the few shouldn't rule over the many without their consent is a political opinion.
The modern West thinks that their version of democracy is the only way to success or prosperity, conveniently ignoring what it took them to get there. I read an interesting article that was making the argument that it's because the modern West is already prosperous that they have the luxury to run their nations under their version of democracy, not that democracy caused them to become that way.
The end goal is to have a functioning, stable, and just society. Unless we're willing to stick to rules that are proven to work, we're going to keep fumbling and wondering why things are the way they are. I bring up the Islamic Golden Age because Islam places a set of rules which dictate things like government and finance, basically red lines that should not be broken. However, everything within those lines are up to society to decide as it sees fit based on the times.
I don't want to say that Islam is "democractic" because that would give the wrong impression that it is fully in line with the West's current practices. It isn't. However, it has a concept known as "Shura", a form of consultation if you will, that allows society to determine how things are run within the boundaries I mentioned, even including the ruler (but not in the free for all manner how elections are run in the West). It's more nuanced, and it's been proven to work.
You can cite philosophers, and I can also cite philosophers that oppose democracy (again in the Western sense). It won't get anywhere, it's all hypothetical. What I did do is show you a system that has been historically proven to work. Today's system is a fumbling mess and we keep crying about it.
I guess I'm stuck on the phrase "just society". Your position, which is perfectly reasonable, is that a stable society that achieves economic, scientific, and cultural prosperity is a good society. Some people value having an equal voice in their government above all of those things. It is not just posturing, it is a genuine belief sincerely held by many people. They would consider the Islamic Golden Age to be an unjust society. Other people sincerely believe that the current system in America is working, by their metrics. They don't want anything to change. Some people would rather die than live in a society where they can't practice their religion, some people think any religion is incompatible with a just society, some people think society can't be considered just until everyone follows their religion. Since there is no such thing as objective justice, there is no way to "prove" that any of these positions work. They work if you think they work.
> Some people value having an equal voice in their government above all of those things.
You're going to have to elaborate more, because Islam definitely allows people to have their voices heard. Furthermore, it not only allows people of different faiths to live on its lands, their rights are heavily protected by the law:
I was just responding to your statement that Islam isn't exactly democratic in the modern sense, and there are some "boundaries". Presumably that means there are some issues where an average citizen doesn't get a vote? I am not making a value judgement, I am just trying to explain how it is possible for someone to believe differently than you.
> If this isn't the manifestation of justice, I don't know what is.
Now imagine somebody saying that exact sentence in response to, for example, a man being stripped of his possessions because his caste is not allowed to own property. Clearly that kind of law is not reconcilable with your idea of a good society, and yet you both consider these contradictory things to be perfect justice. Does that illustrate my point?
Or: the next verse says that certain taxes should only be leveled on non-Muslims. I don't care whether or not you agree with this, the point is that both views are possible. It's impossible to prove that religious discrimination is just or unjust. It's an opinion! A society could survive perfectly well with or without that rule. Different value systems will come to different conclusions about whether that rule is a good idea.
> Now imagine somebody saying that exact sentence in response to, for example, a man being stripped of his possessions because his caste is not allowed to own property.
Is this in reference to an Islamic position? If so please provide a source.
Not it isn't, it was an example intended to be completely contradictory to the Islamic position, to illustrate how two people can both believe their completely irreconcilable systems are the pinnacle of justice.
> Presumably that means there are some issues where an average citizen doesn't get a vote?
Look up Shura laws on how these things work. Topics are delegated to experts in their respective fields who have the obligation to act out of interest of the society, a form of "meritocracy" if you will. This doesn't mean that average citizens cannot be consulted.
> for example, a man being stripped of his possessions because his caste is not allowed to own property. Does that illustrate my point?
No it doesn't, because Islam does not prohibit non-Muslims from owning properties. You have not shown what issues you have with the Islamic system so far other than conjecture.
> the next verse says that certain taxes should only be leveled on non-Muslims
Because non-Muslims are not required to pay Zakat, Muslims are already "taxed".
I feel that the discussion went on a tangent. The fact of the matter is that it is perfectly not only possible to build a society without the dangerous practice of interest, but it is in the benefit of the entire society to do so (except a relative few who stand to benefit extremely from interest and other similar practices). We've known about it for a long time now.
I agree this is a tangent. The point that I am failing to make is that even if you and I agree that the Islamic Golden Age was the perfect society, we cannot "prove" that, and many people believe it was a terrible society by definition, because they have very different value systems than us.
Democracy is the worst form of government, except for all the others. I'm a firm believer in continuing to innovate and improve governance. I don't think it's just an abstract philosophical argument. These things can be modeled with game theory (cite: The Dictator's Handbook).
There are opinions and philosophies about evolution, vaccines, and lots of other things, but at the end of the day, those can be resolved through rational discourse.
I'd like my government to look out for my interests. I'd like it to be competent and not corrupt. There are lots of ideas for how to get there, and I'm really not comfortable with the imperialism of democracy.
China had good ideas with civil service exams, which select for competence. Aristotle and Confucius had good ideas around moral philosophy of rulers. Marx had some nice ideas too. They didn't play out as well in practice as capitalist democracy, but that doesn't mean we should toss up our hands, give up, and quit trying. Especially now that we have tools for corrupting democracy like never before, and conversely, ways to model governance like never before.
A discussion about vaccines can be resolved through rational discourse only if everyone agrees that diseases are bad for you. If I think disease is good, you can't convince me that vaccines are good for society, even if we agree on their effects.
That's a contrived example, but this kind of disagreement is very common in discussions about government and society. If you believe that individual choice is important and all humans are born with equal rights, and I believe that individual choice is unimportant and some humans are born superior to others, we are never going to agree on an ideal form of government. We can have full agreement on the facts and full disagreement on what we consider to be a "good" outcome.
You mentioned game theory, but you can't design one model that will satisfy one person who wants to maximize outputs for all players, one person who wants to weight players in different castes differently, and one person who wants to set a hard cap on all players because too much material comfort leads us away from God.
The solution is to look at systems that have been proven to work. I brought up the Islamic Golden Age in this thread. It doesn't have the nonsense of putting a hard cap on anyone's wealth. It actually encourages people to work and gather wealth morally, and spend it correctly. The best of both worlds so to speak.
... and it comes with a built in wealth tax (zakat), which is just about the best economic idea EVER. And it prevents loans with interest. And there are versions which embody economic free trade (the whole debate about political borderds). And...
... it's almost as if Mohammed was an economist who foresaw all the economic problems of the 21st century, and built protections around them.
(1) Right now, virtually everyone agrees that individual choice is important and all humans are born with equal rights
(2) If they don't, it's often possible to come up with solutions which work for everyone. The problem is when people jump to solutions ("democracy") rather than problem-statements and first principles.
The early US is a good examples of -- actually quite exactly -- your contrived example. The South had slavery. The North didn't. There was an overarching federal government which dealt with military and foreign diplomacy. It worked for a bit over a half-century until it didn't, mostly for reasons unrelated to why it worked as long as it did (the expansion of northern culture west upset the design, as it had an upper hand in congress).
My claim is that there are systems of government which do a better job of protecting individual choice and equal rights than capitalist democracy. My claim is that if you articulated your value system completely (probably not on a web forum but over an hour-long coffee), we could probably design a better one around your values, which also did better for most people's values. My claim is also that if you've signed an NDA, you probably don't have all that much individual liberty.
Money is a form of power, it is not equivalent to power.
Amazon is valued at $1.6T and this is a calculation that directly correlates to how much individual shares of Amazon. Shares can be sold for money, but this decreases the share of power the shareholder has by the exact amount of shares they sold to the buyer, which increases their shares and power over the company. The act of buying and selling shares affects the stock price which can increase or decrease the market valuation of Amazon.
If Amazon were a lone behemoth sitting on top of the stock market and second place wasn’t even close, I think you would have a stronger case.
Checking literally thirty seconds ago, Amazon isn’t sitting up there all by its lonesome, it is the bronze medal with Apple and Microsoft sitting above it, Apple up above the $2T barrier, and Google lagging pretty closely behind at 1.3T.
Now these market valuations will be a bit different tomorrow, or next week, or next month, but none of this is literal money in the bank. Money in the bank comes from the products and services these companies sell.
They are also both cooperators and competitors with each other and companies like Facebook ($761B), Walmart ($395B I think it was) and Adobe ($232B).
The power they can leverage from these assets is immense, but it is in competition with other motivated actors who are throwing more actual cash around.
If we do nothing, it is likely there will be more trillion dollar companies this decade than the ones we are discussing now, some of those will be in different market sectors altogether, and some of those will be competitors, and some of those will be semi-competitors.
Companies with far less cash than this already lobby for their interests in places like the Capitol, and the amount of money they’re using to successfully (and unsuccessfully) lobby is measured in the low millions, not the billions, and certainly not the trillions.
So what exactly is the problem that reducing the size of these companies valuation and theoretical power supposed to solve? How does this benefit society? Is society being harmed by Amazon at $1.7T or Apple at $2.2B? Is the problem their size or their practices?
Break this down. It’s easy to say “no company should be this size”, it’s a lot harder to say why, and I am not convinced yet. There’s plenty of people in the PRC with billions, and that hasn’t stopped the PRC from soliciting them for “voluntary” contributions, so maybe lots of money < lots of guns and a big Army in the overall economy of power.
I'm not trying to convince you, I just wanted to answer your question. I don't think it's possible to convince you in the space of one comment, and if it is, I'm not the one to do it. This is a centuries-old argument with absolutely no expert consensus that seems to get more difficult the more you study the issue.
If you want an easy to read modern political argument you can read Break Em' Up by Zephyr Teachout. If you want a more academic approach I would look up the syllabus of an antitrust course and read some court cases, but different syllabi will probably give you wildly different conclusions. Supreme Court cases from a couple decades apart will give you different conclusions. As I said earlier, there is no right answer, it's about balancing inherently conflicting rights and deciding where to draw the line.
> I'm not trying to convince you, I just wanted to answer your question.
Sure it is, if there is a good convincing case, you can in the space of a single comment at least get me to seriously question and re-evaluate my priors, check out your book recommendations, and I would do the rest from there whether I ended up agreeing or disagreeing in the end.
Let’s start with what is the impetus for action? Inaction is easy, it’s the default, but if my Representative (presently Pelosi) or US Senators or their eventual opponents and/or replacements trotted that line about how a company shouldn’t be able to get this big, out without an attempt at a good explanation as why we should cap the size of a corporation’s growth, I would throw them from the average politician column into the crazy column. Not just because they are taking that position, reasonable people can disagree, but because they would be seeking power on that position and they would be seeking an expansion of Federal power and action with that position without justification, without a limiting principle, frankly it looks arbitrary and capricious like an imaginary line that exists only in their mind that no company’s market valuation must ever cross without consequence.
The political will to power that led to the anti-trust legislation, prosecution and conviction wasn’t that the defendants were merely too big for their britches; it was their abuse of a market dominant position that it was argued harmed the public. Even today reasonable people can disagree on whether this was a justifiable course of action on the part of the government, but I am not here to re-litigate historical events.
Is the present position of Amazon and its close peers and the other >$100B companies as measured by their market valuations, not market share, not cash and other assets, but present market valuations, equivalent or like to the situations in the past where the government was willing and able to successfully pull the trigger of the antitrust gun? To reiterate, what is the impetus that we must act given the facts that we have about these contemporary corporations with such immensely high valuations?
2. National "competition" that convinced hundreds of city and state governments to offer billions of dollars in subsidies that most economists agree are harmful to the places that offer them. You can blame this on incompetent governments if you want, but the incentive must have been pretty strong if so many of them fell for it. Maybe too strong?
3. Amazon controls its market and is also a participant, so it can promote its own products above competitors'. It can give its own stuff a bump in the search results, or give it a nice looking "Amazon's Choice" badge, or advertise it next to competition, whatever. Even the potential of abusing this power is a problem.
5. Amazon has enormous market share of online retail, but sees third party sellers as competition and often works against them. Many sellers simply do not have a realistic alternative, even if they don't like Amazon's terms. This is a news article with a lot of allegations that you may not immediately believe, but I think it can at least be considered an impetus for investigation: https://www.washingtonpost.com/technology/2019/10/01/amazon-...
6. Amazon Alexa has a nearly 70% market share in the US, an absurdly high number. Alexa is not a standalone product, it is deeply integrated into the Amazon ecosystem and is used to promote other business lines.
#1: I did some sleuthing, Diapers.com, originally 1800Diapers, LLC and later Quidsi, Inc. after they had expanded into other lines of business started in 2005, and you can read a PR statement from the time here: https://www.digitalcommerce360.com/2005/06/08/1800diapers-co...
From the PR statement, you can see their growth hack:
> 1800Diapers also recently added a large selection of very popular diaper bags, also at low prices with free shipping. The Company actually guarantees the prices for its diaper bags are the cheapest on the Internet or it refunds the difference.
The best unit price on that page is $0.16 for 8 to 15 lb babies, which after about 16 years of inflation, comes out to $0.21 today. Pampers Baby Dry. The exact same diapers are, at the time of this writing, have a unit price of $0.21 on Amazon. Getting a link from the Amazon app on my iPad where I’m typing this is amazingly unobvious, so here’s the item model # to search: 037000862215 <—————— posted this comment and I see my iPad thinks this is a phone number. I advise readers not to click on it should the option present itself.
The company, Quidsi, Inc. was eventually purchased by Amazon for $545M in 2010. It is not apparent that diaper buyers were harmed by this transaction. The price beats Walmart’s at least, yet Walmart continues to sell diapers, and you can find competitive prices at Costco, though you cannot find the same model. At worst, diapers are slightly more expensive today, and at best, this whole line of argument is a wash. Yes, Amazon took aggressive steps against a competitor, but was it an abuse of their market power? Mind this is when Amazon was far from the size they are today by any objective measure, and ultimately the shareholders of that competitor made out well for themselves. 1800Diapers was also measuring their prices against their competitors on the front page, March 2005, with an estimated 6% sales tax rate baked into the price of their competitors, and very prominently advertised the lack of sales tax. Amazon was their only major competitor for which such a tactic would not work so 1800Diapers price matched.
#2: The people I most hold responsible for cronyism are the government officials which participated and bent over backwards so that Amazon could try to get a discount on some New York and Northern Virginia real estate. Not to absolve Amazon, they hold responsibility for initiating it, but cronyism falls squarely on the soldiers of the officials willing to sellout their own tax base, and is arguably an abuse of their power.
#3: Correct. As does Safeway, Whole Foods prior (and after) to the Amazon acquisition, Lucky’s, Albertson’s (which owns Safeway, they might own Lucky’s too) and Costco. Amazon is a website you buy stuff, and some of that stuff is Amazon products, and some of that stuff is Amazon white-label products. There are other means of buying and selling on the internet, and we are starting to see the infrastructure for that develop now.
15 years ago Walmart was the 800 pound gorilla destroying retail. 30 years before that, Sears was untouchable. Clearly it is possible to have a competitive retail landscape even in the face of an enormously dominant competitor. The small businesses that can’t make it on Amazon are in a tough business, in 10 years many of
them won’t be around, but other products and service providers will.
#4: There has been a lot of FUD around private arbitration; I have yet to see solid investig...
I think we just have different value systems. For me, even the potential of abusing these powers is enough to break up Amazon, and I see very little reason to hold back. It's like trying to prevent a country from developing nuclear weapons, even though they have a great government and there's no evidence they would ever abuse them.
Basically, Amazon's "right to grow" or whatever is not important at all to me, and I don't see what harm is done by breaking them up. I guess a few executives and large shareholders might lose some money, but everybody keeps their jobs, their products will continue, it just feels as obvious to me as your position feels to you. Corporations don't have rights and are not innocent until proven guilty, there's no need to convict them of a crime. It's like city planning: if the community would be better served by removing a highway and putting in some dedicated bus lanes, you just take a vote and then do it, you don't have to wait until there's a 20 car pileup on the highway to take action.
You are confusing a whole lot of concepts here, and at times it seems you are arguing against yourself(?).
First you argue against great concentrations of capital also being great concentrations of power, in this "yes, but no" sentence:
>Money is a form of power, it is not equivalent to power.
This sentence seems to mean absolutely nothing. "not equivalent to power" is some sort of vague semantic argument about what power "is", that is not interesting to the discussion.
Wealth _is_ power in the sense that you can use money to affect change in the world. Wealth is the simplest and most flexible form of power, because it can be directed at anyone or any organization, and transformed into other forms of power. And it even grows by itself!
You then talk about the market cap of Amazon. Why?
The market cap, while also representing a sum of money, is not really relevant to the discussion.
You even seem to realize this yourself, but you do not really explain the reason for bringing it up.
Are you trying to say that competition exists and therefore everything is good?
That would be fine if it weren't for the fact that the companies you mentioned do not compete in the same markets.
They share some markets, e.g. AWS vs GCP, but you offer no evidence that this market is healthy.
Competition is key if you want a healthy market, as is aligning corporate goals with societal ones. You could even argue that competition for customer business is the main mechanism for achieving alignment.
If you allow any one business to get too much power, competition will weaken.
Excessive power can come in the form of excessive capital concentration. It can also come in the form of other bargaining chips that come with excessive capital concentration, such as: control over resources used by direct competitors in a market, e.g. the marketplace itself; the ability to create jobs, politicians love jobs; the ability to invade a new market by subsidizing a new department with capital from elsewhere in the organization; or even an information asymmetry created by a huge data collection operation.
Amazon exhibits all these forms of power and more.
Some of the other companies you mentioned exhibit these as well.
It would be in the interest of society to break up monopolies and other concentrations of power that are actively impeding competition in the way that Amazon is.
These ideas aren't new, developed nations typically create institutions to maintain healthy competition.
In the US, the federal trade comission and the DOJ are tasked with keeping competition healthy by enforcing antitrust law.
They used to be a lot more active than they are now, e.g. when they broke up Bell. I wonder what has made them slip...
Power takes differing and subtle forms: political, electoral, military, obligation, legal, sexual and official (as in the power practiced by an office holder). Monetary power is precisely one type of power, it is powerful, but is not power’s only form. Everyone has a price, except when they don’t. Is a billion dollars enough to make up for the loss of your son? What about a trillion? Only if the value you placed in him could only be measured in money.
> You then talk about the market cap of Amazon. Why? The market cap, while also representing a sum of money, is not really relevant to the discussion. You even seem to realize this yourself, but you do not really explain the reason for bringing it up.
You’ve lost the thread. Let me help:
============
>>> I still remember when Amazon was only selling Books. People laughed, Media Laughed, and I guess most of us laughed.
>>>Amazon is now a ~$1.6 Trillion Dollar Company.
What an era.
>> For comparison, using national total wealth, that makes Amazon worth more than Saudia Arabia, Denmark, Portugal, or New Zealand.
>> It's $280.5 billion in revenue in 2019 put it above the GDP of Romania, Peru, Ukraine, etc.
>> Corporations should never be allowed to get this large.
> Make your case instead of dropping your groupthink everywhere. Why? And: What is the maximum size a corporation should be allowed to grow? Who gives that permission now?
===================
> Amazon exhibits all these forms of power and more. Some of the other companies you mentioned exhibit these as well. It would be in the interest of society to break up monopolies and other concentrations of power that are actively impeding competition in the way that Amazon is.
Sure, they exhibit power, they use their power, but is it actually too much power? We can use any measure you like that isn’t market cap, now that we’ve re-established the thread and where that came in. Pick your measurements, and demonstrate how they show that Amazon is too powerful, not merely powerful.
> These ideas aren't new, developed nations typically create institutions to maintain healthy competition.
As a general rule, although not a hard rule, I don’t have nice things to say about the laws of other nations. Your task is much easier leaving them out of it.
I think the problem is that it's not obvious why getting super big is bad. Anti-trust is a law around abuse of customers by cornering a market. But what if they haven't abused customers? What if they treat customers really well and otherwise provide a lot of value? Why stop them from becoming that big?
(It is a big company, but I also appreciate being able to order on-demand compute, or getting like a hundred million things in under a day delivered to my door)
I guess it's similar to arguing against a benevolent dictatorship. And I don't mean that to be snide, I think if I met someone living under a truly benevolent dictator I would have a very hard time explaining to them why I think it's a bad and dangerous form of government.
For one, if you don't like something, you don't get to air your displeasure, find common ground with others who feel the same and then band together to do something about it, say, vote out the people who are the reason for it. Benevolent dictatorships tend to bare their teeth once the spotlight of scrutiny hits them.
Imagine a $2T company. One day CEO decides that his company should stand for only Republican values, donate them handsomely, buy newspapers for them, start TV channels for them, only offer employment to republican leaning persons, introduce new laws through lobby... All of these is in fact legal. When a company becomes too big, a single person can control its resources towards hurting political system, general public good, tilt opinions and so on. You are then relying on this one person to knowingly or unknowingly not make a bad move. Most often, they will.
EU anti-trust takes harm to competing business into account, but American anti-trust is totally focused on consumer harm, and specifically harm from higher prices.
So unsurprisingly, American tech monopolies are usually middleman-monopolies that offer low (often free) prices while squeezing businesses on the other side. Facebook/Google sells the user as the product, while Amazon is GREAT for low prices, but not so great, and sometimes ruinous for the sellers.
Well, one way to think about it is to consider what the effect of the growth might be. What good is a corporation doing getting that large? Who benefits from the amassing of so much wealth? Are they acting for the benefit of many people, or are they more like a black hole -- mindlessly absorbing money and growing over time?
Certainly if a corporation can grow to get so large, it's hard to argue against it. It becomes a bit like a force of nature in that sense. But there are possibly repercussions to that, just as there would be repercussions if a black hole were to suddenly appear in our solar system.
I like that Jeff has the funds to dump into important projects like Blue Origin, and General Fusion, etc. Projects that have zero chance to be profitable at a small scale, but significant benefits to humanity once things start working.
Elon is probabally the prime example of a crazy billionaire who dumps his wealth into wildly unprofitable ventures to get things done for the betterment of humanity.
Of course most billionaires end up like Larry Ellison, whose only drive seems to be increasing the size of his boat collection. He has every right to be doing his own thing, but it would be nice if there was a way to incentivize incredibly risky projects with a potential for significant public good.
while there are exceptions, most companies sell products and therefore mostly grow by selling products. That is, they grow because people think there is value to the product and fork over there hard earned money.
As such, it's pretty clear that Amazon is providing tremendous value to society.
> I do not believe that in the four administrations which have taken place, there has been a single instance of departure from good faith towards other nations. we may sometimes have mistaken our rights, or made an erroneous estimate of the actions of others, but no voluntary wrong can be imputed to us. in this respect England exhibits the most remarkable phaenomenon in the universe in the contrast between the profligacy of it’s government and the probity of it’s citizens. and accordingly it is now exhibiting an example of the truth of the maxim that virtue & interest are inseparable. it ends, as might have been expected, in the ruin of it’s people. but this ruin will fall heaviest, as it ought to fall, on that hereditary aristocracy which has for generations been preparing the catastrophe. I hope we shall take warning from the example and crush in it’s birth the aristocracy of our monied corporations which dare already to challenge our government to a trial of strength, and to bid defiance to the laws of their country.
--Thomas Jefferson, 1812 [1]
When private power eclipses democratic power, you cease to have a democracy. You have a dominant aristocracy/oligopoly, which is not functionally different for 99% of the populace than a monarchy. Extremely large corporations are filled to the brim with powerful but incompetent people who got there through connections and political warfare instead of merit.
A corporation should be allowed to grow until the point where they own enough of the government to make their own rules and avoid paying taxes like the rest of us. As soon as they do that, they should be split across state lines so there is more democratic control over their behavior, and they are small enough to audit and tax accordingly.
Jefferson spent his public life defending the sanctity of private life and actively fighting against expanding the size, capacity and capabilities of the Federal government beyond what he saw as virtuous.
The United States is without a King nor aristocrats who hold seats in a House of Lords by their birth; it is without a House of Lords!
What you advocate is anti-Jeffersonian in both its intent and nature, and therefore you are without just cause citing Jefferson.
So if you wish to break with Jefferson and make your own advocation, do so without citing the dead when you clearly have no business doing so, and put your own thoughts and words behind that arrow.
That’s not obvious. They don’t have diplomatic immunity, issue passports or visas, have the power to pass laws, do not have the power to detain, arrest, prosecute, convict, imprison or kill, and they have no military power.
In what way are they like dictatorships by engaging in commercial activities and being worth a large sum of money based on what their shares are bought and sold at?
All people only have 24 hours a day even if they're rich. It's easy to combat them if you care more than they do; all these huge tech companies have surprisingly little political power and constantly lose local battles to activist groups and retired homeowners.
Bezos can hire people to do things for him, but clearly this has limits, he isn't sending hitmen after Amazon critics even if he could pay them $1 billion Amazon shares each.
Yeah - the man is 57, and at this point does NOT have to work anymore...probably for the rest of his life.
Looks like he still intends to run his philanthropies, Blue Origin, and the Post, but after the type of run he has had, he's probably taking some more free time while he's healthy.
I try not to fall into the "cult of personality" trap, but Amazon is where it is _because_ of Bezos, and it'll be fascinating to watch how the transition plays out with the Jassy era.
Bezos's net worth was $12 billion after Amazon's IPO in 1997. Him and a dozen generations after him would be set for life on that much wealth. Whatever the reason for stepping away might be, it's definitely not money.
As a company Amazon is definitely too big to fail at this point. Its fate will probably be like Google's after Page/Brin/Schmidt stepped away. In the worst case it will start to fade away in another decade or two.
In my opinion there is hardly a justification or a _need_ for an individual to own billions. But I think we haven’t found a good way to redistribute money, apart from billionaires self-pledging to give their wealth away.
I think you pass the point of not having to work somewhere prior to 130B net worth.
I'm worried about what happens to Amazon with Bezos gone. A good outcome would be something like Apple and Tim Cook. A bad one would be Microsoft and Ballmer, it will take a while to see which type this ends up being.
Don't know, but I like Gates better since he stepped down as MS CEO and brought positive change to more unfortunate people's lives. Maybe Bezos would do similar things?
I don't like the press release, it keeps repeating Amazon every sentence. It's a tiring read, much Like Andy Warhol's repeating patterns. That alone pretty much says a lot about the current Jeff Bezos.
You raise a great point. I did not like Gates the CEO but I deeply respect gates the Philanthropist. We can only hope Bezos turns out the same. I wonder how one could change the world with 130B dollars.
> probably for the rest of his life.
At a net worth of $1 billion and assuming he lives to 100 that is $23 million dollars a year to spend, which reasonably, he could only spend around $5-10 Million if he tried.
He is worth what, $150 Billion? By the fall he probably will be.
He could find a group of 10,000 people of the same age, spit the money evenly and each person would have $340k per year, a large enough sum to reasonably travel all year long around the world for each person never working agin.
When you get issued stock options at a company, you immediately become liable for taxes on them, since they are treated as income. This is true even if there is no public market for the shares at that time (something that caused headaches for many early dotcom stock option grantees).
It's is an obvious precedent for taxing somebody who has "received" wealth via the route that Bezos has done.
And disincentivize people from working? That's not a sustainable economic system. For a properly sustainable system, consider how Islam solved this problem over 1400 years ago. Zakat is the only form of "tax" if you will that is mandated. Interest and other predatory practices are prohibited (e.g. shorting). Once the fundamentals are correct, everything else naturally falls into place. It has been reported that during the rule of Umar II, there were no poor people left in Iraq to accept Zakat (charity) since everyone paid their share. It would be nice to see that happen again, but the modern financial system won't let it happen.
One might argue that having $1B of assets (certainly liquid assets) is a fairly major disincentive to working.
High marginal tax rates on super-high levels of income and/or wealth doesn't discourage working. It just makes doing something to add another chunk to your income/wealth require something other than financial renumeration. There's plenty of evidence that humans do their best work when they have intrinsic and not extrinsic motivation.
Bezos is a case in point. I believe him to have an almost absurdly high level of intrinsic motivation (I worked with him for 15 months). He might like the wealth he has, but the things he will continue to do with his life, just like Amazon itself, get done for reasons beyond money.
> High marginal tax rates on super-high levels of income and/or wealth doesn't discourage working.
Do we have precedence for this? From what I'm aware, even when the US had high marginal tax rates which some dems seem to be calling to bring back, no one ever paid those rates because there are always ways for the very rich to reduce their income on paper, while still increasing their wealth.
I do agree with you that it takes a very special kind of person to have the wealth of Elon or Bezos and still continue to want to work, it's obviously more than money at that point. But those people are outliers. I know I wouldn't be motivated to spend more effort if it meant a proportional decrease in the total amount of money I would end up pocketing due to increased taxes.
Worse than disincentivizing people from working, it disincentivizes people from risking money on growth (building companies, doing startups, angel investing).
Interest isn’t predatory, it encourages growth and investment in building businesses. Look at the enormous wealth created by capitalism. Economic growth helps the most people the fastest, this model works.
That doesn’t mean there shouldn’t be protections on the lower bound and human rights, there should be. It also doesn’t mean there shouldn’t be environmental protections or regulations to effectively coordinate and prevent tragedy of the commons style failures. We should also prevent wealth being able to leverage political power (which isn’t easy).
It is by the very fact that the lender is owed money in the contract by doing basically nothing. Proper investment balances the risk between parties, so that one party does not have an inherent advantage over the other. This is part of running a moral and just society.
> Look at the enormous wealth created by capitalism
Red herring. The system is fundamentally unstable, by the very fact that people are on the lookout for the next economic crash because it's built into the system. When that happens, people with money are able to acquire even more assets, increasing the divide.
I'm all for people making money, as long as they do it the moral way. Interest is immoral and predatory.
The lender is paid for the service of lending money out (which incurs risk). You want to incentivize this behavior.
Without interest, it would be harder for people to get loans. Lots of financial services wouldn’t exist (or would demand some other form of payment). This would keep people who aren’t already rich unable to access capital.
People react to incentives, good incentives lead to beneficial behavior. Interest is extremely net positive, both for lenders and for borrowers (and society). Everyone wins.
Crashes aren’t really built into the system or a fault of capitalism, they happen because problems are hard to predict and the environment changes. The wealth created isn’t only for the rich: https://press.stripe.com/#stubborn-attachments everyone benefits from economic growth.
I think Islamic law (or really any religious framework) has very little of value to say on the topic of morality or running a productive society.
> The lender is paid for the service of lending money out (which incurs risk). You want to incentivize this behavior.
Not all forms of payment are ethical or moral (e.g. prostitution). This is an exploitative practice, and should definitely not be incentivized as we've seen time and time again the destructive effect it has on society and the economic system.
> This would keep people who aren’t already rich unable to access capital.
This is why Islam has Zakat laws to ensure the poor are lifted out of poverty. We keep seeing the dems trying to solve the problem by increasing taxation, but to no avail. Islam solved the problem over 1400 years ago.
> I think Islamic law (or really any religious framework) has very little of value to say on the topic of morality or running a productive society.
Morality does not exist without religion. Secondly, Islam has proven to have run one of the most successful societies of all time, and definitely the most moral since Islam came. We still benefit of the discoveries made during the Islamic Golden Age.
> "This is why Islam has Zakat laws to ensure the poor are lifted out of poverty."
Charity isn't as good as letting people get access to capital that they can leverage for themselves.
We're not going to agree on this so can probably leave it here.
I will say I think morality exists in spite of religion.
It's not hard to pick out examples where Islam fails on the morality issue, see: women's rights and the recent Charlie Hebdo murders, both driven by ideology.
As I originally pointed out, interest is prohibited in Islam, Judaism, and Christianity (at least) for a good reason. It's not ethical nor moral, in fact, it's destructive and parasitic.
> Charity isn't as good as letting people get access to capital that they can leverage for themselves.
It lifts people out of poverty to get them on their feet. There are many funds that provide people with access to capital (e.g. accelerators). Capital is not limited to interest bearing loans. The simplest example is pitching an idea to investors who in return own a portion of a potential company. If it works out, both parties benefit, otherwise, both parties equally took on the risk.
> women's rights
Those are cherry picked by anti-Islamic rhetoric drivers who have shown their ignorance and lies time and time again, and whose arguments fall apart the moment they're critically discussed. It's really meaningless talk that gets thrown around.
> and the recent Charlie Hebdo murders,
Easy refutation: you're going to have to show that Islam itself condones or required such murders to take place.
You just state it’s destructive for ideological reasons because of religious law, that’s not a good argument and it ignores contrary evidence. Why is taking a percentage of someone’s company better? If anything that’s more exploitive.
You’re the one cherry picking here and rationalizing anything that doesn’t fit into a narrative you’ve already decided is true. There won’t be any ability for us to agree, because you can’t update based on new evidence.
You can pretend Charlie Hebdo and any other negative action that’s clearly driven by ideologically motivated Islam is not “true Islam”, but then you’re just creating some special reference class that ignores the bad stuff.
I’m not trying to get into a fight. It’s rare for religious people to break free from their religion, but it’s possible. I succeeded when I was young and seeing counter arguments is part of it.
Yep, the one that guarantees women the rights to inheritance, not to mention that many other texts in Islam that order men to be lean and kind to women and not to exploit them (compare to what we see in the West today where women are sold as a commodity).
> but then you’re just creating some special reference class that ignores the bad stuff.
I'm not, because for any action that someone who ascribes to the religion does, we're able to go back to the texts and decide whether or not that was truly Islamic. There is no cherry picking or filtering. It's quite simple really. This isn't a "no true Scottsman" fallacy, it's going back to the Law books (Quran, Hadith, etc.) and checking whether what was done was legal or not.
> You mentioned accelerators - usually they operate by investing for a percentage of the company.
Yes. The trade off is that if the company fails, the accelerator loses the money they put into it, and the founder loses the time and effort. It's proper risk sharing. Now compare to a loan, where the founder not only owes the loan, but also the interest on top.
> you fear rebellion
The Arabic word is "nushooz". Look up what it means. Also, look up what "beating" means.
If someone defaults on their loan the bank gets nothing. If someone takes a loan and builds a successful business, the bank only gets the small agreed to percent return.
What you consider 'proper' is arbitrary and entirely determined by religious law.
> "Also, look up what "beating" means."
I know what beating means, this kind of denial of obviously bad stuff is one reason among many of why I find religion so distasteful. That entire section is written about how women are supposed to be obedient to men, the entire context is sexist.
With religion you start with an answer and make up reasons to get to your pre-determined answer. Outside of religion you start with evidence and struggle towards the truth.
> If someone defaults on their loan the bank gets nothing
Not before the bank coming after the assets of said person to try to grab as much as it can, destroying them in the process. Secondly, usurious money lending is obviously a very lucrative business by the fact that banks make billions in revenue. However, it is also extremely destructive purely by the fact that there exists trillions of dollars of debt (mortgages, auto, student, etc.), not to mention that the government itself is in debt and has to print money, devaluing the hard work of its citizens who worked and saved money, only to have it be worth less. Yet we cry because "the rich get richer", I wonder why?
We've already seen the effects on governments time and time again, most recently Greece and Lebanon. There is really no other way but to admit that it is a dangerous and predatory practice that benefits a relative few at the top of the economic ladder, at the expense of everyone else.
> this kind of denial
It's not denial because it is explicitly mentioned in Hadiths. We say things outright, and don't dance around the issue. Just one example: https://en.wikipedia.org/wiki/Farewell_Sermon
> You too have right over them, and that they should not allow anyone to sit on your bed whom you do not like. But if they do that, you can chastise them but not severely
You can see how it refers to infidelity.
Both the husband and wife have rights from each other, and for each other. "Sexism" is quite meaningless in this context. We're not leftists/feminists/latest fad of the day, and we're proud of it. Each sex has their rights and duties, and claiming "sexism" shows weakness in argument. You can read about many important women in Islamic history who rightfully left their mark.
> With religion you start with an answer and make up reasons to get to your pre-determined answer.
Depends on the religion. It's a blatant fallacy to group all religions together, very unintellectual to say the least.
Umar II is the one Umayyad caliph whose tomb wasn't sacked by the Abbasids when they took power. Would you care to enlighten us as to how this system went so wrong (Hint: it was Arab Muslims accumulating property and wealth over non-Arab Muslims, let alone non-Muslims)
The question is how to determine the value of non liquid assets in order to implement a maximum wealth tax.
Suppose I own land or a private company or a collection of copyrights that become very valuable. Who and how determines when it crosses the $1B threshold, and how am I brought under said threshold. What if the asset is not easily divisible?
These are legitimate questions. In some ways they have analogs that have already been "solved" (perhaps not satisfactorily). Who and how determines the property tax you owe on a building or land? But I agree that these are not trivial to answer in satisfactory ways. Societies frequently have to come up with imperfect answers.
I know we can’t expect perfect solutions, but arbitrary blanket statement such as capping wealth at $1B make no sense to me.
Wealth (or money) is a proxy for power, and if the goal is to limit one’s power, I don’t see the purpose of an arbitrary dollar amount maximum that is extremely hard and probably litigious enforce to enforce.
It would be better to suggest capping the number of companies’ boards one can sit on, or limit the number of non broad market index fund investments one can have, or some other solution that directly attacks the problem of concentration of power.
In the 1990s, I knew dozens of people who faced major financial problems because they immediately owed taxes on options they had just exercised, on shares that were not tradable. These were just regular developers (or in some cases, shipping crew), and they didn't have $50-500k sitting around to cover taxes like that.
Maybe the rules have been changed since then? I do know that by the early 2000's there were financial services companies offering wierd loans to help cover the taxes (obviously using the stocks as collateral).
This is the difference between RSUs, NSOs, and ISOs. ISOs don't make you pay taxes until you exercise it (a qualifying event), which means you actually took this piece of paper and converted it into tangible value. I'm not sure how they could have exercised it and not had it turn into cash (perhaps their company got acquired and they got options of another non-IPO'd company?).
Let's put it like this. The year after I exercised my one and only set of amzn stock options, I owed US$43k in taxes based on their nominal value. The stock was not publically traded at the time, and I had to find savings to cover the tax bill. I retained the piece of paper and started selling later that year after the IPO. At least one other early hire at amzn owed a lot more than this.
Yeah - options are taxed on exercise, not on grant (that’s the dispute with your original comment).
Also, you’re taxed on the spread at exercise between the strike price and the fair market value at the time of exercise.
If you’re able to exercise when the shares are granted (which early employees can often do by early exercising unvested shares) then there is no spread and there is no tax (at time of exercise, you still pay tax when you eventually sell the shares). Doing this and filing an 83b election with the IRS is important for people joining a startup where they hold lots of equity that’s valued near zero.
It’s even a little more complicated than that if you get ISOs since you can exercise some of them tax free until you hit AMT (but AMT has not increased over time so this is less useful than it used to be). NSOs don’t have this ability.
RSUs are different and you do get taxed on grant and some are withheld to cover (FB started this and they’re colloquially called FB-style RSUs). This is a relatively recent invention that started because private companies with high valuations had options with strikes too expensive for normal employees to exercise prior to the mandatory ten year expiration. Also old employees who held the option contracts wouldn’t be able to pay the exercise tax on the spread you mention and would hit the 10yr expiration (at which point they need to make a loan shark deal or risk floating a lot of cash). This used to not be an issue because companies didn't stay private this long. With RSUs employees don’t have to worry about any of this, but they lose more on grant to income tax than they could by exercising and holding options optimally.
RSUs aren’t strictly better though because if you can exercise options you can hold the stock for 1yr and get long term cap gains which is 15% up to 400k and 20% after. This is a lot more potential upside than just getting hit with income tax. Though in CA you still get hit with a large percentage state income tax on it anyway. (13% after 1M I think).
All of the above commentary is unrelated to a wealth tax (or capping net worth) which I think is dumb policy.
This grew into a kind of long comment, but if you’re dealing with equity it’s worth learning this stuff for yourself since leveraging equity effectively is probably the best way to actually get wealth in a timeframe shorter than a lifetime of index funds investing.
"they immediately owed taxes on options they had just exercised"
On exercise yes, but not on issue. I think you're mixing up people buying their options (exercise) with issuance of the options.
No taxes are owed at grant or vest on options, whether NSO or ISO.
Upon exercise (buying - regardless of whether there's a sale) of NSO a tax is owed on the spread between the FMV (usually the 409a valuation, if pre-ipo) and the strike price at grant. This can be considerable and I'm sure is the tax event you're thinking of.
Savvy employees with a cooperative employer often exercise at grant time -- before the options vest -- writing a check almost immediately after hire. This is an early exercise. If this takes place before the value changes (before the board updates the 409a valuation) then there is a taxable event but the spread is $0. The employee then follows up with an 83(b) election to notify the IRS that they wished to be taxed now, rather than later at vest, which ensures that income tax on the spread is never paid. It all becomes regular capital gains.
Depends on the country/jurisdiction. In some places it is upon issue, in some places it is upon exercise or a mix thereof.
Sadly over here in Belgium a non trivial tax (18%, but it varies according to some parameters such as runlenght) is due upon issue, turning stock options into a potential substantial risk.
Why would you give that money to worse allocators of capital? He's generated 1.3 million jobs. How many jobs would you sacrifice in order to limit Bezos to whatever wealth cap you think is appropriate? By definition you will sacrifice them, so the question is at what cost is it too much and how much money is too much money? Also who decides that, is it you?
How are you measuring "efficient allocation of capital"?
Amazon has been very successful at squeezing "efficiency" out of their employees, where "efficiency" is defined largely as abusive conditions and poor wages. While they may be a large employer in raw numbers, vast numbers of their employees depend on public assistance. UPS, USPS, and FedEx seem to pay consistently higher wages. And on top of that, like most "supermassive" companies, they are very "efficient" at dodging taxes.
Yes, this is "efficiency" in the financial sense, but it is by no means net positive at the societal level.
I imagine he's pretty burnt out of running the day to day. Time for something new after 2 decades. Love or hate Amazon it has been a force on the planet.
Absolutely. I could see him shifting more in the Gates or Musk kinda life, funding more fun projects or philanthropies. Not gonna lie running Amazon after 20 decades probably isn't as fun as running an aerospace company or other pet projects. He probably has lots of ideas he wouldn't mind throwing money at and investing in.
Another thing I find interesting is that Amazon's main business is so common that there's a single word for it: retail. They're just yet another middleman between distributors and consumers. Not long ago, a lot of the business world thought Walmart was the indisputable retail king. Amazon proved there's still room for growth in retail.
Will this simple thing called retail produce yet more trillion dollar companies, or is it running out of gas? Will there be an Amazon killer? History suggests yes.
Sure, you can pump money into building fighter jets and aircraft carriers, but those don't last long, nor are they helpful for economy in the long term.
In the long term, the only backbone of the economy is making and selling things to people that they want, a.k.a retail.
Some companies are moving towards selling directly to consumers, especially if they have a brand to protect. Nike is pulling back from retail a bit and focusing on their own website and app to promote and sell their products.
The flip side is Amazon has empowered a lot of smaller manufacturers to get nearly direct access to consumers. Especially Chinese firms but even some small American companies have benefitted from the huge base of customers Amazon gives them access too.
To me he looks like retiring. Working on new projects while someone else is CEO hasn't worked out well. Ask Bill Gates, Steve Jobs (when Scully became CEO) and Larry Page. Bezos had been buying massive houses and spending a lot more time there. He had been seen with his girlfriend a lot more these days. Before his affair, he barely had time for anything other than Amazon. I think he is done with all ambitions more or less.
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[ 3.1 ms ] story [ 362 ms ] threadEither one is a win for humanity.
(I anticipate this comment will not go over well, as it seems I must just not see the truth that Bill Gates is a perfectly benevolent being who has ascended from human qualities)
https://givingpledge.org/About.aspx
There's lots of weirdness in society about having the wealthiest having influence starting to approach government program status, but here we are. (perhaps they're trying to blunt the income inequality complaints, but maybe they really have come around to caring...)
1. none of "giving pledge" signees pledged 100% – they do pledge most of it, although inheriting "almost nothing" of billions is still pretty comfy.
2. the biggest cushion the heirs of Giving Pledgers will inherit is something money can't buy: influence. After all the Gates foundation is a family trust and as such will be run by the trustee's heirs, when their parents die [1]
[1] https://www.theguardian.com/society/commentisfree/2017/jul/2...
He’s not benevolent or lead a perfectly good life. But he decided to spend his billions on trying to improve the world and you all are still hung up on the anti trust things he did at Microsoft. Or think he’s doing it to “gain power and influence” or as a tax dodge.
You don’t have to forgive him. But stop coming up with weird conspiracy theories about why he’s spending his money and let go of the unscrupulous business decisions.
Well firstly, no I don't have to do any of that. And secondly, it's not a theory about a conspiracy. It's more of a speculation. Finally, I highly doubt his benevolence, that's my whole point as I said in my original post - he probably enjoys the influence a lot more than he enjoys helping people.
Possibles exceptions to this include hard-to-value assets like art, where someone could potentially exaggerate the value by at least 1/t to defraud the tax authorities, but this doesn’t seem relevant to donating publicly-traded Microsoft stock. Bill Gates would be richer if he didn’t make these donations.
Investing in journalism is actually a very good thing.
Bezos has no say in what can and can't be published.
Luckily, we don't need to wonder, because WaPo has actually posted that kind of an article just yesterday, and it was extremely critical of Amazon's anti-unionization efforts [0]. The article's headline is "Amazon’s anti-union blitz stalks Alabama warehouse workers everywhere, even the bathroom". Even the headline itself wasn't sugarcoated or softened in the slightest.
0. https://www.washingtonpost.com/technology/2021/02/02/amazon-...
We're about to witness one of the most glorious midlife crises in history.
Blue Origin would be a great use of his time. Massive long-term benefit to humanity, few implications on global governance or the lives of most individuals.
Or his own private charter city, so people have to consent to live in his world.
Or he could blow it all on yachts, hookers and blow.
https://www.nytimes.com/2021/01/30/style/mackenzie-scott-pri...
[0]https://www.nytimes.com/2020/12/20/business/mackenzie-scott-...
- Day 1 Fund
- Bezos Earth Fund
- Blue Origin
- The Washington Post
So a combination of philanthropy, crazy cutting-edge tech, and media. He'll still be pretty busy haha
As Exec Chair I will stay engaged in important Amazon initiatives but also have the time and energy I need to focus on the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post, and my other passions. I’ve never had more energy, and this isn’t about retiring. I’m super passionate about the impact I think these organizations can have.
That said, I think it can use his focus more than anything else (and he is investing 1B/year in it)
After hours traders seem to like this move.
He is retiring. Amazon is outcome of purchase of many many companies just like Microsoft.
Gates is retired and Microsoft is still buying companies even hotels; anything and everything has been bought with the cash acquired from US's money printing machine.
“Amazon is what it is because of invention. We do crazy things together and then make them normal. We pioneered customer reviews, 1-Click, personalized recommendations, Prime’s insanely-fast shipping, Just Walk Out shopping, the Climate Pledge, Kindle, Alexa, marketplace, infrastructure cloud computing, Career Choice, and much more,” said Jeff Bezos, Amazon founder and CEO. “If you do it right, a few years after a surprising invention, the new thing has become normal. People yawn. That yawn is the greatest compliment an inventor can receive. When you look at our financial results, what you’re actually seeing are the long-run cumulative results of invention. Right now I see Amazon at its most inventive ever, making it an optimal time for this transition.” "
Here's the quote.
When Amazon came out with real reviews, it seemed crazy to many at the time -- like why would you want to share bad things about your products on your own website? I thought it was awesome.
Amazon's customer review system was created as a barrier to entry for competitors, as much as anything else.
Perhaps I'm remembering my/people's reaction to first seeing reviews on Amazon.
Which is to say there’s a sense in which you’re right and a sense in which this is an absurd statement..
I believe Grid5000 did it before Amazon [1].
It opened in 2005 and allowed users to automatically book hardware (with OAR [2]) and install their own images (with Kadeploy) on dedicated hardware.
[1]: https://www.grid5000.fr/w/History [2]: https://www.grid5000.fr/w/Getting_Started#Reserving_resource...
There's nothing absurd about the way Amazon and Apple defined cloud computing and smartphones. They deserve as much credit as anyone for the services / products we know today as cloud computing and smartphones. The version of the smartphone that took off in sales, took over the culture and has become a human staple globally, was entirely defined by Apple's iPhone. No other company did that, it was Apple, period. To not recognize them as the prime mover of smartphones would be absurd.
Absolutely. You’ll note that the OP’s word choice was invented - defined would indeed be appropriate and not at all absurd.
Perhaps, but you didn't get them right (nobody did so far).
> 1-Click
Reminds me of the guy who invented "half-click" buying, i.e. you buy on the mousedown event.
Most people have no idea what AWS is, but know what Amazon the consumer business is.
AWS is only well known among tech circles.
This is what generates the funding necessary for Amazon to do the crazy things that make Amazon amazing. Amazon - AWS = digital Walmart. Big and profitable, but not Amazon.
Actually no. Most people I know even not in Tech, know Amazon has this 'cloud' business. Whether they know it is called AWS or not, is different.
As "cloud" and "AI" become more and more accepted generic terms for technology to the public and I think AWS may even over take the PR position.
In the current environment, E-commerce is a less interesting space for startup founders vs. cloud SW. This led parent commenter to assume the cloud is more important than E-commerce.
This is a fallacy, of course, since E-commerce is probably the largest / most important market on the internet, it just doesn't FEEL that way b/c Amazon has an unprecedented control over nearly the entire thing.
Cloud has barely begun.
If ecommerce remained flat for the rest of time, do you really think the cloud would grow?
“Retail” is just the part of commerce that’s somewhat moved online today. “E-commerce” is any type of commerce moving online.
I really struggle to think of reasons as to why people will pay for software if it doesn’t ultimately lead to commerce.
EDIT: For context, BABA used it e-commerce lead in China to become the largest gateway for utility bill-pay. Very much not retail, but still e-commerce. The internet is a tool run by humans to serve humans, & if humans aren’t transacting using the internet, everything else about the internet is inherently less valuable.
I think (for better of worse) the cloud providers - A/G/M + maybe a newcomer yet to be announced - will come to dominate computing in a way most people do not foresee.
Yes, right now they dominate the hardware provision and that will accelerate. But through that, their services will dominate software engineering, and eventually they will dominate not just IDEs and devtools (hence GitHub purchase and VS Code for MS) but they will define programming languages and even what constitutes programming.
It's amazing what he's been able to do. Good for him.
As noted by others, the shipping cost-to-item-average-cost ratio is precisely why Jeff chose books to start with. But yes, he also looked way out (even if he couldn't see as clearly as some people seem to think he could).
Though i imagine a lot of reasons justified books.
[1]: https://www.youtube.com/watch?v=rWRbTnE1PEM
For instance, being paraded in front of Congress committees so each member can get a little sound bite shitting on him.
Truly, we didn't deserve Bezos. Maybe he's realized that.
AWS head will take over as new CEO.
All those creating the value. Many of them having poor working conditions and living off social welfare programs. One guy at the top skimming everything. Is he really worth all those billions? Could he survive on a little less and share with those doing the work? Or is his contribution really more than all those million combined..?
Similarly, the idea that if you put 1.3 Million warehouse staff in a big room Amazon will come out the other side is really really stupid.
I grew up playing pretty competitive sports. Being ripped apart in front of my peers was a once a week occurrence for me for most of my life. I had no interest in doing it to anyone else, but it didn't seem like a big deal, and didn't bother me much.
My first job was at a company where it happened a lot. I didn't realize how toxic it was until I started talking with co-workers who were having panic attacks from it.
That said, I also understand that this doesn't work for alot of people.
Doesn't mean Bob is bad or gets fired, but he is part of the picture.
The whole blameless thing is so weak - if there's something about you that caused the failure, don't you want to know?
That just means that the person who designed the system deserves the blame.
I'm only half-joking here. You can't just rely on the "system" – someone needs to be responsible, either for the decision or for creating the system that makes the decision.
The blameless postmortems are reviewed in these meetings, and the findings challenged, to ensure they really got to the root cause and lessons are learned.
I once almost got to present my post mortem, but it wasn't high enough priority that week. I wish it had been. It would have been ripped apart, but I would have gotten the feedback from the smartest people in the company on how to make my system better.
I've got a project this year that I'm told is on his radar. I'm not terrified. I'm excited, because it means I have to deliver the best I am capable of and I'll get help to do it.
couldn't agree more. Almost every day of the week now with AWS, org, service, and team level ops meetings, and most of them miss the forest for the trees
Also, IRC is still alive.
Amazon is huge... but Walmart is truly massive... over double Amazon's size in just about every metric. They clearly have the resources to handle things on their own.
[1] https://poseidon01.ssrn.com/delivery.php?ID=0340721260780250...
[2] https://corporate.walmart.com/newsroom/company-facts#:~:text....
[3] https://corporate.walmart.com/askwalmart/in-which-countries-....
(6000 employees in 2018, per wikipedia)
Walmart doesn't have the same capabilities. Being larger doesn't mean they can do it.
The case of Amazon using internal market place data to guide their own product strategy has already been made over and over, so the precedent exists.
That is assuming the companies would all be as successful being spun out.
btw, it looks like you have some sort of shadowban. I don't see any terrible comments among your last 20 or so, so you might want to ask @dang if he can look into your case.
Probably similar or maybe even clearer than Google since more people understand a store selling their own products than Google owning every single step (with huge non transparent and evidently according to TX colluded margins) in the ad transaction, in addition to all the user data, and their own products.
Unless you want to pay 10% of your order for expedited service. Then those days drop from 5 to 3.
/s
I think it’s a little unreasonable to expect free support for such a technical product to be as good as that for the retail site.
Edit: risking -> risky; fixed life sentence
Assuming he lives past 100, and gets zero interest/return on his ~200 billion net worth, he’ll need to somehow keep his spending below about a thousand dollars a minute to survive.
Sounds like real poverty to me...
I like Apple, but there is quite a seam with the Jobs/Cook transition. That seam is the overly minimalistic industrial design patterns witnessed in the butterfly keyboard, vanishing ports, trashcan Mac, etc. They seem to finally be coming around on this.
IMHO Apple are stepping back from the form over function precipice and are being more pragmatic, to the benefit of customers.
>Fellow Amazonians:
>I’m excited to announce that this Q3 I’ll transition to Executive Chair of the Amazon Board and Andy Jassy will become CEO. In the Exec Chair role, I intend to focus my energies and attention on new products and early initiatives. Andy is well known inside the company and has been at Amazon almost as long as I have. He will be an outstanding leader, and he has my full confidence.
This reads to me as Jeff Bezos doesn't want the boring job of running AWS and Amazon anymore. He want something new,
>As Exec Chair I will stay engaged in important Amazon initiatives but also have the time and energy I need to focus on the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post, and my other passions.
There are plenty of Growth left in Amazon and AWS. But that is not as exiting as Blue Origin or Funding other initiative via Day 1 Fund.
I still remember when Amazon was only selling Books. People laughed, Media Laughed, and I guess most of us laughed.
Amazon is now a ~$1.6 Trillion Dollar Company.
What an era.
It's $280.5 billion in revenue in 2019 put it above the GDP of Romania, Peru, Ukraine, etc.
Corporations should never be allowed to get this large.
Why?
Bonus question: Why should governments be allowed to get that big?
Good government is hard, but it's certainly better than a corporation that is legally obligated to put profit ahead of anything else.
There is no legal obligation to maximize shareholder value.
The shareholders want profit maximised, and with that end, decide upon the board of directors, who decide upon the CEO. If the CEO does not maximise profits, the CEO will not remain the CEO. Therefore, the CEOs of (publicly-traded) companies are obliged to maximise profits – those who do not feel such an obligation are not CEOs.
I do believe that there are people who claim that companies have that legal obligation, which is what you said you’d not observed.
And if you think it's bad now, it's going to get dramatically worse yet. The largest groups that make up the US today, that dominate its politics and culture, have absolutely nothing in common with eachother and will grow further apart as the years pass. The rancor will get much worse. The populism will get worse. The end result is obvious and unavoidable (and I'm not talking about civil war, that's a redneck fantasy; it's tyranny, oppression, endless strife, and ever worsening dysfunction as the Feds try to contain the unspooling and get ever more paranoid).
Like it or not, there's always going to be some powerful entity who you cannot escape because it rules the land. The only question is what shape you want that entity to have. Accountability matters, and so democracy is generally a good place to start.
Also "exhausts their budget every fiscal quarter and successfully demands more" applies just as much to corporate projects. And given we gov agencies rarely can solve the whole problem, why expect them not to exhaust their budget?
This may or may not include specified behaviors, tasks, growth, marketing, sales, profits, goods, services, employees, competitors, etc.
Even corporations without any shareholders are common, found in the non-profit sector, but you do need corporate officers regardless.
Would it be better if there were a couple non-profit corporations with one or two million employees each the size of Amazon or Wal-Mart, to go along with what we have now?
I don't know if this is true, but you'll only talk past each other if you don't acknowledge it.
Governments aren't defined by a market cap, but rather by the services they provide to their citizens.
Consider that a private company's only goal is to enrich its shareholders, and they have no responsibility to the people or places around them. They are only accountable to their shareholders and the government.
A governments responsibility is solely to its citizens who also control it by vote.
The bigger your biggest companies are, the more powerful your government must become to keep them in line - to ensure they don't break the rules. If you want a small government that is able to retain order and fairness, you must also limit the size of the companies within its purview.
The natural state of a company is a monopoly. Once you are a monopoly, you don't need to worry about getting "re-elected" any more than a despot does.
The free society exists only in the space between these two clashing titans.
Corporate monopolies usually only persist due to two reasons: regulatory barriers or technological stagnation. Both are solvable.
Why does the government needs to be big (in size?).
It just needs to be strong enough and really connected to its people it represents. Then also a very small country (with a small government) can set up and enforce clear rules on multinational companies, doing buisness within that country.
The rules just need to be simple. If they are complicated, it just means, those with the best lawers will win and they are usually working for the corporations.
With numbers come also internal struggles, that weaken the whole system.
Look at switzerland or norway for example. They are small in numbers, but don't get really screwed by big corporations either.
Roughly speaking they coordinate on all major rules and policies and practices with the entire rest of the EU and therefore are effectively part of the EU for regulatory and trade purposes.
The UK on the other hand, obviously just wrapped up its Seppuku process of leaving the EU, and we're already seeing the relative increase in their being taken advantage of by corporate interests due to their much weaker position.
Switzerland and Norway take advantage of the power of the EU to push back on corporate interests, and the UK is getting kicked around as its negotiating power just went down by a factor of 10.
[1] https://ec.europa.eu/trade/policy/countries-and-regions/coun...
[2] https://ec.europa.eu/trade/policy/countries-and-regions/coun...
Even in relatively liberal democracies, governments are clearly more beholden to forces other than citizens and their vote. There's a reason why US governments did little to respond to massive BLM protests this summer, as government viewed its responsibility as more aligned to police unions than citizens.
Without a government to enforce monopoly rules, it'll just aggregate all its competition into one big blob, and you won't have any choice. Efficiencies of scale mean there's a natural pressure towards consolidation. The terminal state is always one blob that owns everything.
Once they do, they can smash any new upstarts, by undercutting prices, or by just buying them too.
> A corporation generally doesn't shoot dissatisfied customers.
Sure does shoot dissatisfied union leaders though [1] and enslave children to farm cocoa [2], and take down a democratically elected government kickstarting a 36 year long civil war [3]. Also substantially all of the trans-atlantic slave trade [4, 5].
These things were all allowed to happen because the governments in those respective jurisdictions weren't (and in the case of child slave labor, aren't) strong enough to stop them.
The idea that "a corporation generally doesn't shoot dissatisfied [people]" is a privileged western position to take based on the current system working pretty well. In places that have weak government, your statement simply does not hold.
[1] https://prospect.org/features/coca-cola-killings
[2] https://www.washingtonpost.com/graphics/2019/business/hershe...
[3] https://www.umbc.edu/che/tahlessons/pdf/historylabs/Guatemal...
[4] https://www.britannica.com/topic/East-India-Company
[5] https://dutchreview.com/culture/history/voc-dutch-east-india...
Thats not really true. There are tons of industries out there that are highly competitive, and are not aggravating into a monopoly, and those industries are highly competitive without much action from the government.
Sure, there are some industries that have huge network effects, such as telecom, that have a tendency towards monopolies.
But such industries are not the rule. There are instead many industries where monopolies are not forming, competition is working on its own, without the government doing much to enforce that competition.
Are restaurants a monopoly? Obviously not.
Cars? There are lots of options for cars
grocery stores? There are certain some big players, but the 10 corner stores, target, safeway, and whole foods within 5 blocks of where I live show that it is not a monopoly. MAYBE you could argue geographic monopoly for grocery stores, in certain limited exceptions in a few small towns, but that is not the vast majority of people.
Housing? There are 10s (or Hundreds?) of millions of people own their own home, or rent it to others. Clearly That is pretty competitive
Lets now pick some random things that I see within eyesight of me.
What about refrigerators? There are multiple refrigerator companies.
Furniture? Probably a lot of companies make furniture.
What about shoes? Clothing? There are lots of clothing companies.
And before someone says it, yes I am sure that every example that I gave has some big players in the market.
But my main point is that I simply do not consider the existence of some big players in a market, to be anywhere even close to the same thing as a monopoly or similarly non-competitive market. There is a huge gap between those two things.
The only major exception to all of these examples, is some of the new tech companies that have significant network effects in winner take all markets. Sure, maybe there is an argument that Google is getting to the point where it almost has a monopoly on ads.
But, just looking around my room, and looking at the main things that I buy in my life, which is food, shelter, transportion, and clothing, it seems pretty clear that most of these things have lots of competition, even if there are some big players in these markets.
That is unless someone is going to make a silly argument that the only markets that could be considered "competitive" are ones in which there are 10 thousands small businesses of equal size or something.
The trend however is clear.
It's extra clear in a market like air travel. Just two decades ago the US domestic airline market was actually competitive until...
1. 2001 saw TWA fold into AA.
2. 2005 saw America West fold into US.
3. 2008 saw ATA fold into SouthWest.
4. 2008 saw Northwest fold into Delta.
4. 2009 saw Midwest fold into Frontier.
5. 2010 saw United fold into Continental to form "United".
6. 2010 saw AirTran fold into SouthWest.
7. 2013 saw US Airways (and by extension America West and TWA) fold into AA.
8. 2016 saw Virgin America fold into Alaska.
When the government is asleep at the wheel, consolidation happens. The only reason the Big 4 aren't the Big 3 is because of regulators.
Out of your identified markets, the trend towards consolidation is very clear - except where no meaningful economy of scale efficiencies can be realized (such as real estate, or taxis).
Cars, for instance, consolidated to such an extent that only 14 car companies control 54 brands [1]. Again the only reason there isn't more consolidation is because of regulators.
Fridges are another great example. The market has seen huge quantities of consolidation, and likely the only reason it has hasn't progressed further at this time is because of regulators. [2]
You're mistaking the system working for it not being there at all.
[1] https://www.visualcapitalist.com/14-companies-control-entire...
[2] http://www.appliance411.com/purchase/make.shtml
Sure, that is a market with large amounts of geographic network effects. I already said that markets with large network effects could have competition problems.
IE, with air travel, on any given route between two cities, there might only be 1 or two airlines servicing it. So yes, thats a problem.
Most things that people spend their money on do not have much network effects, so my original point stands.
> to such an extent that only 14 car companies control 54 brands
So not a winner take all market then? Got it. I already said that it would be ridiculous to claim that a market would need to have 10,000 companies of equal size, in order to be considered "competitive".
So yes, I consider the car market to be fairly competitive, and not one where you only have "no choice".
> Fridges are another great example.
You just posted a link that shows that there are a bunch of competitors, and that it is not a winner take all market.
So I stand by my point that neither cars nor fridges are in any way similar to something like internet service, where someone might only have 1 or 2 choices, or something like the Google ads business, where Google has a huge amount of power in the market that is no way comparable to the fairly competitive car market.
Cars went from 54 to 14 establishing clear directionality and benefit. It's not going from 14 to 1 only because of laws against further consolidation in the space. Regulators would simply deny their request to consolidate further. Stopping at 14 isn't some magical constant or some natural end state.
My point is that the natural direction in each of these markets is consolidation, then at a point it hits a dead stop. Why is consolidation only useful up to a certain threshold? It's not. Regulation steps in and keeps it competitive.
No, because these markets don't have some huge geographic network effect.
The markets are pretty different than something like home internet service.
The traditional example being that of water pipes, where there is zero benefit to laying the pipes twice to a house.
You should be able to see how a situation where laying the pipes twice to a house is pretty different than a situation where there absolutely could be benefits to another car company being created, to manufacture new cars.
> Regulation steps
I am not sure how you can claim with with a straight face, that anti-trust laws/regulation is being strongly enforced these days, and that this is the reason why most industries are not turning into monopolies.
Anti-trust law isn't really enforced even in obvious cases where it should be enforced these days , and yet I see a world where there is lots of new companies entering markets, and lots of competition, in most markets, despite regulators failing to enforce regulation in the exceptional and rare cases where it should be doing so.
It is quite clear that regulation is not stepping in, even in the obvious cases. So no, I do not believe that the non-existent enforcement of regulation is doing anything. Instead, we are living in a world that has lots of competition, despite the fact that the regulators aren't doing anything even in the blatant and exceptional cases where it should, such as in telecom/internet/app stores/ect.
As I said, my analysis applies to companies that have demonstrated economies of scale.
Mergers are rejected all the time, and further, you can't discount the mergers that weren't requested in the first place because of the regulators.
I would say in the US mergers tend to skate through, but in if that company operates in other jurisdictions they need approval from all global regulators, and the EU has no such objections to saying no.
You haven't posited a theory at all for why consolidation is good up to 14 players in the automotive space but 13 is just a bridge too far. It's not. There's external pressure. Competition is bad for companies because it reduces margin. Consolidation removes competition and improves margins. That's just fact. Companies don't care about capitalism, competition or free markets. They care about making more money.
I really would not consider the current situation to be one where regulators are doing strong enforcement of anti-trust law.
Regulators are really not doing much regulating right now, on the anti-trust and anti-competition front, and regulators not doing much regulating in these new markets where they definitely should be.
I am not sure how you could possibly look at the current state of some of these rare expectations of monopoly behaving companies, and claim that regulators are doing their job.
> I would say in the US mergers tend to skate through
Well then this concession is good enough to support my point.
> You haven't posited a theory at all for why consolidation
Well I don't need to. All I have to do is point to the existence of lots of markets that are competitive, and point out that regulators that aren't regulating. The reason doesn't matter as long as I point to the clearly true fact that regulators aren't doing much regulating in some of these markets.
But, one possible theory is that consolidation also reduce competition, and can cause companies to stagnate, and can reduce innovation in that market. You would have to argue that no startups ever could succeed in the face of "scale" (something that is clearly not true. Startups suceed all the time), if you are going to argue that scale is such an overwhelming advantage that inevitably causes every single company in that market to join together.
Also, different companies run differently, and this can give them advantages in some things, and disadvantages in others, allowing them to overcome scale problems, due to the advantage/disadvantage of merely being different. Heterogeneity in companies allows them to target niches and stay in the market.
So that already establishes the point.
I would really recommend that you become more informed on the issue of EU anti-trust enforcement. I just did a bunch of research myself.
Here is a source from quoting the EU president himself.
https://www.reuters.com/article/us-eu-competition-juncker/ju...
"Juncker said the Commission had only ever blocked 30 mergers and approved more than 6,000."
https://www.jonesday.com/en/insights/2020/06/eu-court-raises...
Source showing how weak EU anti-trust enforcement is
After doing more research, is clear that the EU is doing much less enforcement against merges than even I previously thought, and I am now going to claim that the EU regulators aren't doing much enforcement either.
Really I am quite surprised at how little the EU is doing, and should have looked that up much earlier, instead of taking your initial claim at face value.
Furthermore, I can only find a single example, in the history of EU anti-trust law, of the EU blocking a US merger. And that was in 2001 regarding a GE acquisition.
If there is only a single example, in the history of EU anti-trust law, of the EU blocking a EU merger, a whole 20 years ago, then it is pretty clear that the EU is not doing much enforcement against US mergers.
So my point stands. You concede that the US is not doing much enforcement of anti-trust law. And the fact that the EU has only ever been successful in doing so a single time, 20 years ago, means that the EU is pretty irrelevant to this conversation as well.
Again, the number of blocked vs approved isn't particularly relevant. What matters is also the number that weren't tabled in the first place, and obviously, the number of things that didn't happen is a particularly challenging set to count. Companies aren't fond of public failure, and so they'll try and suss out whether regulators would be amenable to a merger before making it public.
6,000 vs 30 is a meaningless metric, because 6,000 small companies merging into 3,000 small/midsize companies isn't relevant to this discussion as it doesn't do much to alter the competitive landscape. 30 mega-caps merging into 15 giga-caps is what I'm talking about.
I'm not saying companies should never merge, that's fine, it's in their competitive interest to do so. Mergers are good for companies because they reduce competition and improve margins.
Again, what you haven't explained is why a small company merging into a small company is advantageous, a mid size into a midsize is advantageous, but a giant into a giant just wouldn't ever work. Of course it would work, the same dynamic continues to exist. Regulators are why.
T-Mobile just acquired Sprint, right? So we know there's certainly an advantage on the business front to consolidate these businesses. So why doesn't AT&T buy T-Mobile to form AT&T&T? Well, they tried in the early 2010s and the DOJ filed suit is why. [1] Further AT&T had to pay a huge amount of cash to T-Mo when it all unwound.
[1] https://som.yale.edu/sites/default/files/ATT%20-%20T-Mobile%...
Even if you think that, the metric of only a single american merger ever being prevented, and it happening 20 years ago, is still pretty relevant.
If the regulators in Europe have only blocked a single merger in America, ever, then European regulators are simply not relevant to the conversation, and you have already conceded that American regulators aren't doing much.
You cannot handwave away the true fact that the EU has only stopped a single American merger, one time, 20 years ago. And that this is pretty good evidence that European regulators are not doing much to prevent American mergers.
> T-Mobile just acquired Sprint
Huh. And I guess European regulators didn't do anything about that, did they? In the clear and obvious cases of geographic network effects in the industry of Telecom, which I have already stated is one of the few exceptions where regulation is definitely needed (Telecom, has huge geographic network effects. It is the same problem as internet, or electricity, or water pipes, and I have already said that network effects are the one major area that consolidation will definitely happen), we see that European regulators didn't stop such a clear an obvious thing that should have been stopped.
> 6,000 small companies merging
Well, in one of the cases of large telecoms companies, such as t-mobile/sprint we see that it wasn't blocked!
> so they'll try and suss out whether regulators would be amenable to a merger before making it public.
Well they didn't stop the clear and obvious example that you just brought up regarindg T-Mobile/sprint. Looks like European regulators are doing much of anything.
So no, European regulators are not doing much of anything at all, to prevent American companies from merging, using an example that you brought up.
> Well, they tried in the early 2010s and the DOJ filed suit is why
As I said, before, businesses that have huge geographic network effects are one of the few exceptions where there is a huge advantage to consolidation. But even IN these clear and extremely obvious cases, only sometimes will regulators take action. But sometimes they won't either.
The fact that nobody blocked the t-mobile/sprint situation is clear evidence that regulators aren't doing much to stop mergers, even in the rare and obvious cases where they should step in.
If they failed to stop such an obvious case, then is strong evidence that they aren't doing anything.
But whatever. Going to move on from this thread because it is clear that you know that this example is a clear cut example of how the EU isn't doing much to regulate anything, which is why you completely ignored it.
The complete dodge on that shows that you understand how much it disproves your point, and shows that the EU isn't doing much, which is why you completely ignored it.
So that dodge is good enough evidence for me, to show me that you understand this.
All we know is there is clear pressure in industry to consolidate, that at some point they stop, and that regulations to preclude further consolidation exist.
Someone has to have a monopoly on violence or you're going to have a bad time.
Meeting customer demands is only one way to compete. A better facebook is going to still have a hell of a time not being out-competed by facebook. Likewise with amazon sometimes throwing its weight around to take a loss to undercut competitors until they starve.
And most Western governments are now abdicating this responsibility in the name of political ideals and the stated notion that non-citizens have the right to demand a place in the nation of their choosing.
Nobody is doing that. However, I'd suggest that even if they were, it wouldn't invalidate anything I'm saying.
Non-citizens are permitted to immigrate under various circumstances, defined under naturalization law. Sometimes that's on the basis of being refugees. Sometimes its on the basis of skills and needs. Sometimes its granted in the face of exigent circumstances.
In the case of the DREAMers, it's based on the notion that if you're brought into the country as a toddler, then you didn't intentionally commit a crime and the fair thing to do is to let you remain - in no small part due to the huge role these folks play in the economy. The parents who committed those crimes are not granted any sort of amensty.
Private companies' only effective means to do anything are to produce a product that people freely choose to buy and attract people to work for them (absent a few rare exceptions).
Governments have effectively unlimited means to compel people. They can spy on anyone, fine them, throw them in jail, kill them, all for as much and as long as they feel like.
> National net wealth, also known as national net worth, is the total sum of the value of a nation's assets minus its liabilities. It refers to the total value of net wealth possessed by the citizens of a nation at a set point in time.
Given that multi-national corporations exist, it seems obvious that companies will have greater wealth than nations.
That doesn't follow because every non-totalitarian country has multiple corporations operating in it, in most countries a much larger number than the maximum number of countries a corporation could possibly operate in.
I would argue that most of our current problems are happening because our governments are small, ineffective, and corrupt. I would prefer big, effective, smart, and transparent governments that can take decisive action any day of the week. I'd go so far as to abolish state governments entirely and split their powers between counties and the federal government; they were made for a time when our communications were limited by the speeds of our fastest horses.
Personally I'm a 'taxation makes civilization possible' man myself, and I find that the 'taxation is theft' people rarely make meaningful contributions to society.
I tell you what, though. You design an effective, smart and transparent government and I'll never say a word about how big you would like it to be.
How do we define 'far away'? I can have a face to face conversation with someone at the opposite end of the country with near-zero effort.
> with so little in common with ourselves and our way of lives.
I strongly disagree with this. Partisan politics try to paint people from different regions of the US as being wildly different, and I flatly reject this notion. I've lived in urban, rural, and in areas separated by thousands of miles. Americans are far more alike than different. There are the same (minor) cultural differences within the average state as between states on opposite ends of the country.
> I tell you what, though. You design an effective, smart and transparent government and I'll never say a word about how big you would like it to be.
I don't have all the answers, but I would start by outlawing the bribery of public officials via campaign donations, and I'd put the legislative process in version control.
Corporations exist to enrich shareholders and nothing more.
Now that both corporations and government are so big and intrusive that they're somewhere between a nuisance and prohibitive toward small-scale enterprise, we should at least think about ways to sic them on each other.
Ok, I'll bite. Why? It's not like there's some natural law against it, so you need to provide an argument for why you think they shouldn't.
Think of it like a pool pump that has sprung a leak. It keeps sucking in but not pupping out into the pool, Amazon is amassing this money by NOT spending it on the economy. Eventually your pool will be stuck at the lowest line of the pump inlet.
In short we get more or work less and the overall quality of life for everyone increases.
Quite incorrect on this point, Amazon has pretty small cash reserves compared to peer tech companies. Even then, if Amazon were merely putting that money in the bank, where is it going? It's getting loaned out to other companies and consumers, who are spending it, investing it, etc via fractional reserve banking.
as the sibling comment notes, amazon is not amassing money. rather, amazon has amassed value.
you might want to familiarize yourself with what a corporate valuation is, and means.
> Corporations should never be allowed to get this large.
Or maybe we should convince a larger swath of humanity to unite behind an idea larger than "nationhood" or "my country".
It will always be a matter of "us vs them" it's just a matter of who is "us" or "them"
Also it can appear voluntary... "Sure you can pay 2x the cost for your insurance or you can get insurance, food, accommodation conveniently provided by Amazon who is also your employer for a good discount"
Not saying Amazon IS a monopoly. But a "nation corporation" would effectively be company scrip on a much larger scale I suspect
"Concealment at scale is the secret to Amazon’s success. Customers enjoy a seamless one-stop shop experience from the comfort of their homes. Out of sight is a ruthless game of regulatory arbitrage, as Amazon installs itself in low-tax jurisdictions and exploits legal loopholes around the world. Even further away from the customer lies Amazon’s environmental impact, scorching frontline communities in the global south while executives in Seattle roll out their latest greenwashed PR campaign."
https://www.theguardian.com/commentisfree/2020/dec/01/amazon...
And at a certain point it's consumerism that's driving all of this. I don't know if it's fair to blame Amazon for this any more than it is to blame McDonalds for obesity. We live in a society where people are free to make their own choices, and as long as these "hidden costs" aren't well regulated, a lot of people will take a cheeseburger at the cost of a few extra pounds, and some 2-day shipped plastic junk at the expense of some poor over-worked employee's vacation.
Meanwhile, these consumers are putting additional strain on the healthcare system, and encouraging companies like Amazon to get away with all of its labor abuses.
The US healthcare system, oil, gas and coal companies, weapons manufacturers, factory farms, fast fashion sellers, soft drink and dessert companies?
I mean, Amazon and MS are in ESG investing indexes, so they must be doing okay. Those indexes won't even allow nuclear power in.
From a legal/ideological standpoint, this might be a powerful soft-pivot that would solve a lot of problems.
There's a famous line from Walt Disney, during Disney's golden age, where he said "we don't make movies so we can make money - we make money, so we can make movies". That really hits at the heart of it.
The interesting thing is that, to a large degree, most of the meaningful corporations that improve the world - despite nominally being for-profit companies, generally tend to operate halfways into public-benefit territory. Partly because the benefit provided by them is essentially what the owners are "buying for themselves". To put it in perspective - if you're an extravagantly wealthy patron who wants to - themselves - have animated films to watch, you can't just hire some off-the-shelf people to do it, because they don't exist unless an industry to train them, exists. There's not really a "more narrowly selfish" way to do it - you're best served by building some outfit like Disney to build a brain trust of people to produce what you want.
Similarly with Amazon; sure, an extravagantly wealthy individual could probably accomplish the shipping part of it with personal couriers, but the information-gathering part of it where all the products-available-to-buy are laid in front of you as choices would be nearly impossible to match. Like, you could try to match it with some awful, personal, potemkin setup. But by the time you put in all of that effort ... I mean, you're basically already building what could be a business that could serve others, so you may as well.
So the best thing to do is to try to nudge the system in a direction where the worst tendencies are mitigated: build institutions in which non-sociopaths can thrive politically, and allow a reasonable path for outsiders to join the political process.
The US in particular is very bad at both. First past the post election systems don't provide a path for outsiders to join, which makes them seem stable until they suddenly become very volatile. And the fact that all elections in the US are personalized favours sociopathy over competence in politicians (compare the US system to one where you vote for a party instead of a person; in the former, people who are competent but lack charisma can still rise in the ranks of a party and get to power, while in the latter everything devolves to low-quality popularity contests).
I refuse to believe that is the only alternative.
In my country it is illegal not to subscribe to the state TV channel. The same cannot be said about Amazon Prime.
Just curious: 1) What country 2) Do you have to pay?
2) Yes
You might not like where your taxes go, but at least you can vote for that to change. In a company you have no such freedom unless you have the financial ability to buy stock.
a lot of European counties pay for state tv from a tax on things like electricity, but saying “it’s illegal not to pay tax” is an odd statement.
"Illegal not to subscribe to the state TV channel" seem like small fries.
The governments of Russia, Germany and China killed over a hundred million of their own people last century, no corporation comes anything near that.
[1] https://en.wikipedia.org/wiki/IG_Farben#Zyklon_B
Just because the companies doing the murder are more numerous and regularly go out of business, doesn’t mean that capitalism’s hands are free of blood.
This is, frankly, a very silly thing to get hung up on.
First of all, I assume you mean you have to make some payment that goes to that channel, not that you're forced to watch it.
Second, this means you're essentially passing a presumably small tax that is earmarked for that channel.
In other words, it's not any different from all the other taxes: paying them is part of life in society, and you're never going to agree with all their uses.
I bet there are far bigger items in your government's budget that you disagree with.
The British East India company was a corporation when it took over large parts of India.
Corporations are chartered by governments and reflect the chartering government’s values (which may be laissez-faire, but in the case of the British East India Company—and it's state-granted monopoly, violations of which were punishable by indefinite term of imprisonment—were decidedly not.)
You know, I’m saying things without substantiating them. No offense, but anti-Corp is cool these days. Virtue signaling without thinking on one’s own.
Countries either. Why did we allow it?
What's the value of 1 million shares of Amazon stock? If every single share of Amazon stock went on the market today, would it be worth share price * number of units? Hell no.
Make your case instead of dropping your groupthink everywhere. Why? And: What is the maximum size a corporation should be allowed to grow? Who gives that permission now?
I don't have an answer for how to determine when a corporation is too large, it's a very difficult question that I am not qualified to answer. As for who determines that, I think a democratic government should decide. I disagree with how the current US government makes these decisions, but I still think it is the right organization for the job.
Citation needed. Democracy is not a sufficient nor even necessary requirement for prosperity or "good" in general.
Do you want me to cite some philosophers that try to justify the value of democracy?
> However, many of those in power today won't allow it to happen since it is against their interests.
Is this bad? Can you prove it? The idea that the few shouldn't rule over the many without their consent is a political opinion.
The end goal is to have a functioning, stable, and just society. Unless we're willing to stick to rules that are proven to work, we're going to keep fumbling and wondering why things are the way they are. I bring up the Islamic Golden Age because Islam places a set of rules which dictate things like government and finance, basically red lines that should not be broken. However, everything within those lines are up to society to decide as it sees fit based on the times.
I don't want to say that Islam is "democractic" because that would give the wrong impression that it is fully in line with the West's current practices. It isn't. However, it has a concept known as "Shura", a form of consultation if you will, that allows society to determine how things are run within the boundaries I mentioned, even including the ruler (but not in the free for all manner how elections are run in the West). It's more nuanced, and it's been proven to work.
You can cite philosophers, and I can also cite philosophers that oppose democracy (again in the Western sense). It won't get anywhere, it's all hypothetical. What I did do is show you a system that has been historically proven to work. Today's system is a fumbling mess and we keep crying about it.
You're going to have to elaborate more, because Islam definitely allows people to have their voices heard. Furthermore, it not only allows people of different faiths to live on its lands, their rights are heavily protected by the law:
http://qaalarasulallah.com/hadithView.php?ID=23053
Note that the word "contracting man" here refers to a non-Muslim.
If this isn't the manifestation of justice, I don't know what is.
> If this isn't the manifestation of justice, I don't know what is.
Now imagine somebody saying that exact sentence in response to, for example, a man being stripped of his possessions because his caste is not allowed to own property. Clearly that kind of law is not reconcilable with your idea of a good society, and yet you both consider these contradictory things to be perfect justice. Does that illustrate my point?
Or: the next verse says that certain taxes should only be leveled on non-Muslims. I don't care whether or not you agree with this, the point is that both views are possible. It's impossible to prove that religious discrimination is just or unjust. It's an opinion! A society could survive perfectly well with or without that rule. Different value systems will come to different conclusions about whether that rule is a good idea.
> Now imagine somebody saying that exact sentence in response to, for example, a man being stripped of his possessions because his caste is not allowed to own property.
Is this in reference to an Islamic position? If so please provide a source.
Look up Shura laws on how these things work. Topics are delegated to experts in their respective fields who have the obligation to act out of interest of the society, a form of "meritocracy" if you will. This doesn't mean that average citizens cannot be consulted.
> for example, a man being stripped of his possessions because his caste is not allowed to own property. Does that illustrate my point?
No it doesn't, because Islam does not prohibit non-Muslims from owning properties. You have not shown what issues you have with the Islamic system so far other than conjecture.
> the next verse says that certain taxes should only be leveled on non-Muslims
Because non-Muslims are not required to pay Zakat, Muslims are already "taxed".
I feel that the discussion went on a tangent. The fact of the matter is that it is perfectly not only possible to build a society without the dangerous practice of interest, but it is in the benefit of the entire society to do so (except a relative few who stand to benefit extremely from interest and other similar practices). We've known about it for a long time now.
Democracy is the worst form of government, except for all the others. I'm a firm believer in continuing to innovate and improve governance. I don't think it's just an abstract philosophical argument. These things can be modeled with game theory (cite: The Dictator's Handbook).
There are opinions and philosophies about evolution, vaccines, and lots of other things, but at the end of the day, those can be resolved through rational discourse.
I'd like my government to look out for my interests. I'd like it to be competent and not corrupt. There are lots of ideas for how to get there, and I'm really not comfortable with the imperialism of democracy.
China had good ideas with civil service exams, which select for competence. Aristotle and Confucius had good ideas around moral philosophy of rulers. Marx had some nice ideas too. They didn't play out as well in practice as capitalist democracy, but that doesn't mean we should toss up our hands, give up, and quit trying. Especially now that we have tools for corrupting democracy like never before, and conversely, ways to model governance like never before.
That's a contrived example, but this kind of disagreement is very common in discussions about government and society. If you believe that individual choice is important and all humans are born with equal rights, and I believe that individual choice is unimportant and some humans are born superior to others, we are never going to agree on an ideal form of government. We can have full agreement on the facts and full disagreement on what we consider to be a "good" outcome.
You mentioned game theory, but you can't design one model that will satisfy one person who wants to maximize outputs for all players, one person who wants to weight players in different castes differently, and one person who wants to set a hard cap on all players because too much material comfort leads us away from God.
... it's almost as if Mohammed was an economist who foresaw all the economic problems of the 21st century, and built protections around them.
Peace be upon him. It's simply more evidence of his prophethood :)
(1) Right now, virtually everyone agrees that individual choice is important and all humans are born with equal rights
(2) If they don't, it's often possible to come up with solutions which work for everyone. The problem is when people jump to solutions ("democracy") rather than problem-statements and first principles.
The early US is a good examples of -- actually quite exactly -- your contrived example. The South had slavery. The North didn't. There was an overarching federal government which dealt with military and foreign diplomacy. It worked for a bit over a half-century until it didn't, mostly for reasons unrelated to why it worked as long as it did (the expansion of northern culture west upset the design, as it had an upper hand in congress).
My claim is that there are systems of government which do a better job of protecting individual choice and equal rights than capitalist democracy. My claim is that if you articulated your value system completely (probably not on a web forum but over an hour-long coffee), we could probably design a better one around your values, which also did better for most people's values. My claim is also that if you've signed an NDA, you probably don't have all that much individual liberty.
Money is a form of power, it is not equivalent to power.
Amazon is valued at $1.6T and this is a calculation that directly correlates to how much individual shares of Amazon. Shares can be sold for money, but this decreases the share of power the shareholder has by the exact amount of shares they sold to the buyer, which increases their shares and power over the company. The act of buying and selling shares affects the stock price which can increase or decrease the market valuation of Amazon.
If Amazon were a lone behemoth sitting on top of the stock market and second place wasn’t even close, I think you would have a stronger case.
Checking literally thirty seconds ago, Amazon isn’t sitting up there all by its lonesome, it is the bronze medal with Apple and Microsoft sitting above it, Apple up above the $2T barrier, and Google lagging pretty closely behind at 1.3T.
Now these market valuations will be a bit different tomorrow, or next week, or next month, but none of this is literal money in the bank. Money in the bank comes from the products and services these companies sell.
They are also both cooperators and competitors with each other and companies like Facebook ($761B), Walmart ($395B I think it was) and Adobe ($232B).
The power they can leverage from these assets is immense, but it is in competition with other motivated actors who are throwing more actual cash around.
If we do nothing, it is likely there will be more trillion dollar companies this decade than the ones we are discussing now, some of those will be in different market sectors altogether, and some of those will be competitors, and some of those will be semi-competitors.
Companies with far less cash than this already lobby for their interests in places like the Capitol, and the amount of money they’re using to successfully (and unsuccessfully) lobby is measured in the low millions, not the billions, and certainly not the trillions.
So what exactly is the problem that reducing the size of these companies valuation and theoretical power supposed to solve? How does this benefit society? Is society being harmed by Amazon at $1.7T or Apple at $2.2B? Is the problem their size or their practices?
Break this down. It’s easy to say “no company should be this size”, it’s a lot harder to say why, and I am not convinced yet. There’s plenty of people in the PRC with billions, and that hasn’t stopped the PRC from soliciting them for “voluntary” contributions, so maybe lots of money < lots of guns and a big Army in the overall economy of power.
If you want an easy to read modern political argument you can read Break Em' Up by Zephyr Teachout. If you want a more academic approach I would look up the syllabus of an antitrust course and read some court cases, but different syllabi will probably give you wildly different conclusions. Supreme Court cases from a couple decades apart will give you different conclusions. As I said earlier, there is no right answer, it's about balancing inherently conflicting rights and deciding where to draw the line.
Sure it is, if there is a good convincing case, you can in the space of a single comment at least get me to seriously question and re-evaluate my priors, check out your book recommendations, and I would do the rest from there whether I ended up agreeing or disagreeing in the end.
Let’s start with what is the impetus for action? Inaction is easy, it’s the default, but if my Representative (presently Pelosi) or US Senators or their eventual opponents and/or replacements trotted that line about how a company shouldn’t be able to get this big, out without an attempt at a good explanation as why we should cap the size of a corporation’s growth, I would throw them from the average politician column into the crazy column. Not just because they are taking that position, reasonable people can disagree, but because they would be seeking power on that position and they would be seeking an expansion of Federal power and action with that position without justification, without a limiting principle, frankly it looks arbitrary and capricious like an imaginary line that exists only in their mind that no company’s market valuation must ever cross without consequence.
The political will to power that led to the anti-trust legislation, prosecution and conviction wasn’t that the defendants were merely too big for their britches; it was their abuse of a market dominant position that it was argued harmed the public. Even today reasonable people can disagree on whether this was a justifiable course of action on the part of the government, but I am not here to re-litigate historical events.
Is the present position of Amazon and its close peers and the other >$100B companies as measured by their market valuations, not market share, not cash and other assets, but present market valuations, equivalent or like to the situations in the past where the government was willing and able to successfully pull the trigger of the antitrust gun? To reiterate, what is the impetus that we must act given the facts that we have about these contemporary corporations with such immensely high valuations?
1. Documented examples of Amazon knowingly using predatory pricing to put a competitor out of business, most famously with Diapers.com. Amazon saw them as a "#1 short term competitor", lowered their prices and took a loss so Diapers.com couldn't compete, and then raised prices again once they were able to acquire their competitor. https://twitter.com/HouseJudiciary/status/128855628101652070..., https://www.bloomberg.com/news/articles/2020-07-29/amazon-em..., https://www.ftc.gov/tips-advice/competition-guidance/guide-a..., https://academic.oup.com/antitrust/article-abstract/7/2/203/...
2. National "competition" that convinced hundreds of city and state governments to offer billions of dollars in subsidies that most economists agree are harmful to the places that offer them. You can blame this on incompetent governments if you want, but the incentive must have been pretty strong if so many of them fell for it. Maybe too strong?
3. Amazon controls its market and is also a participant, so it can promote its own products above competitors'. It can give its own stuff a bump in the search results, or give it a nice looking "Amazon's Choice" badge, or advertise it next to competition, whatever. Even the potential of abusing this power is a problem.
4. If Amazon were to ever abuse its position to harm a seller or employee, they cannot be sued: https://prospect.org/labor/biggest-abuser-forced-arbitration...
5. Amazon has enormous market share of online retail, but sees third party sellers as competition and often works against them. Many sellers simply do not have a realistic alternative, even if they don't like Amazon's terms. This is a news article with a lot of allegations that you may not immediately believe, but I think it can at least be considered an impetus for investigation: https://www.washingtonpost.com/technology/2019/10/01/amazon-...
6. Amazon Alexa has a nearly 70% market share in the US, an absurdly high number. Alexa is not a standalone product, it is deeply integrated into the Amazon ecosystem and is used to promote other business lines.
You can also search for Amazon in here for some better researched claims: https://judiciary.house.gov/uploadedfiles/competition_in_dig...
From the PR statement, you can see their growth hack:
> 1800Diapers also recently added a large selection of very popular diaper bags, also at low prices with free shipping. The Company actually guarantees the prices for its diaper bags are the cheapest on the Internet or it refunds the difference.
Price matching, which is not illegal.
So let’s take a look at the website from 2005:
https://web.archive.org/web/20050301022607/http://www.1800di...
The best unit price on that page is $0.16 for 8 to 15 lb babies, which after about 16 years of inflation, comes out to $0.21 today. Pampers Baby Dry. The exact same diapers are, at the time of this writing, have a unit price of $0.21 on Amazon. Getting a link from the Amazon app on my iPad where I’m typing this is amazingly unobvious, so here’s the item model # to search: 037000862215 <—————— posted this comment and I see my iPad thinks this is a phone number. I advise readers not to click on it should the option present itself.
The company, Quidsi, Inc. was eventually purchased by Amazon for $545M in 2010. It is not apparent that diaper buyers were harmed by this transaction. The price beats Walmart’s at least, yet Walmart continues to sell diapers, and you can find competitive prices at Costco, though you cannot find the same model. At worst, diapers are slightly more expensive today, and at best, this whole line of argument is a wash. Yes, Amazon took aggressive steps against a competitor, but was it an abuse of their market power? Mind this is when Amazon was far from the size they are today by any objective measure, and ultimately the shareholders of that competitor made out well for themselves. 1800Diapers was also measuring their prices against their competitors on the front page, March 2005, with an estimated 6% sales tax rate baked into the price of their competitors, and very prominently advertised the lack of sales tax. Amazon was their only major competitor for which such a tactic would not work so 1800Diapers price matched.
#2: The people I most hold responsible for cronyism are the government officials which participated and bent over backwards so that Amazon could try to get a discount on some New York and Northern Virginia real estate. Not to absolve Amazon, they hold responsibility for initiating it, but cronyism falls squarely on the soldiers of the officials willing to sellout their own tax base, and is arguably an abuse of their power.
#3: Correct. As does Safeway, Whole Foods prior (and after) to the Amazon acquisition, Lucky’s, Albertson’s (which owns Safeway, they might own Lucky’s too) and Costco. Amazon is a website you buy stuff, and some of that stuff is Amazon products, and some of that stuff is Amazon white-label products. There are other means of buying and selling on the internet, and we are starting to see the infrastructure for that develop now.
15 years ago Walmart was the 800 pound gorilla destroying retail. 30 years before that, Sears was untouchable. Clearly it is possible to have a competitive retail landscape even in the face of an enormously dominant competitor. The small businesses that can’t make it on Amazon are in a tough business, in 10 years many of them won’t be around, but other products and service providers will.
#4: There has been a lot of FUD around private arbitration; I have yet to see solid investig...
Basically, Amazon's "right to grow" or whatever is not important at all to me, and I don't see what harm is done by breaking them up. I guess a few executives and large shareholders might lose some money, but everybody keeps their jobs, their products will continue, it just feels as obvious to me as your position feels to you. Corporations don't have rights and are not innocent until proven guilty, there's no need to convict them of a crime. It's like city planning: if the community would be better served by removing a highway and putting in some dedicated bus lanes, you just take a vote and then do it, you don't have to wait until there's a 20 car pileup on the highway to take action.
First you argue against great concentrations of capital also being great concentrations of power, in this "yes, but no" sentence:
>Money is a form of power, it is not equivalent to power.
This sentence seems to mean absolutely nothing. "not equivalent to power" is some sort of vague semantic argument about what power "is", that is not interesting to the discussion.
Wealth _is_ power in the sense that you can use money to affect change in the world. Wealth is the simplest and most flexible form of power, because it can be directed at anyone or any organization, and transformed into other forms of power. And it even grows by itself!
You then talk about the market cap of Amazon. Why? The market cap, while also representing a sum of money, is not really relevant to the discussion. You even seem to realize this yourself, but you do not really explain the reason for bringing it up.
Are you trying to say that competition exists and therefore everything is good?
That would be fine if it weren't for the fact that the companies you mentioned do not compete in the same markets. They share some markets, e.g. AWS vs GCP, but you offer no evidence that this market is healthy.
Competition is key if you want a healthy market, as is aligning corporate goals with societal ones. You could even argue that competition for customer business is the main mechanism for achieving alignment.
If you allow any one business to get too much power, competition will weaken. Excessive power can come in the form of excessive capital concentration. It can also come in the form of other bargaining chips that come with excessive capital concentration, such as: control over resources used by direct competitors in a market, e.g. the marketplace itself; the ability to create jobs, politicians love jobs; the ability to invade a new market by subsidizing a new department with capital from elsewhere in the organization; or even an information asymmetry created by a huge data collection operation.
Amazon exhibits all these forms of power and more. Some of the other companies you mentioned exhibit these as well. It would be in the interest of society to break up monopolies and other concentrations of power that are actively impeding competition in the way that Amazon is.
These ideas aren't new, developed nations typically create institutions to maintain healthy competition. In the US, the federal trade comission and the DOJ are tasked with keeping competition healthy by enforcing antitrust law. They used to be a lot more active than they are now, e.g. when they broke up Bell. I wonder what has made them slip...
> You then talk about the market cap of Amazon. Why? The market cap, while also representing a sum of money, is not really relevant to the discussion. You even seem to realize this yourself, but you do not really explain the reason for bringing it up.
You’ve lost the thread. Let me help:
============
>>> I still remember when Amazon was only selling Books. People laughed, Media Laughed, and I guess most of us laughed.
>>>Amazon is now a ~$1.6 Trillion Dollar Company. What an era.
>> For comparison, using national total wealth, that makes Amazon worth more than Saudia Arabia, Denmark, Portugal, or New Zealand.
>> It's $280.5 billion in revenue in 2019 put it above the GDP of Romania, Peru, Ukraine, etc.
>> Corporations should never be allowed to get this large.
> Make your case instead of dropping your groupthink everywhere. Why? And: What is the maximum size a corporation should be allowed to grow? Who gives that permission now?
===================
> Amazon exhibits all these forms of power and more. Some of the other companies you mentioned exhibit these as well. It would be in the interest of society to break up monopolies and other concentrations of power that are actively impeding competition in the way that Amazon is.
Sure, they exhibit power, they use their power, but is it actually too much power? We can use any measure you like that isn’t market cap, now that we’ve re-established the thread and where that came in. Pick your measurements, and demonstrate how they show that Amazon is too powerful, not merely powerful.
> These ideas aren't new, developed nations typically create institutions to maintain healthy competition.
As a general rule, although not a hard rule, I don’t have nice things to say about the laws of other nations. Your task is much easier leaving them out of it.
(It is a big company, but I also appreciate being able to order on-demand compute, or getting like a hundred million things in under a day delivered to my door)
The consumer welfare principle post-dates anti-trust.
So unsurprisingly, American tech monopolies are usually middleman-monopolies that offer low (often free) prices while squeezing businesses on the other side. Facebook/Google sells the user as the product, while Amazon is GREAT for low prices, but not so great, and sometimes ruinous for the sellers.
Certainly if a corporation can grow to get so large, it's hard to argue against it. It becomes a bit like a force of nature in that sense. But there are possibly repercussions to that, just as there would be repercussions if a black hole were to suddenly appear in our solar system.
Elon is probabally the prime example of a crazy billionaire who dumps his wealth into wildly unprofitable ventures to get things done for the betterment of humanity.
Of course most billionaires end up like Larry Ellison, whose only drive seems to be increasing the size of his boat collection. He has every right to be doing his own thing, but it would be nice if there was a way to incentivize incredibly risky projects with a potential for significant public good.
As such, it's pretty clear that Amazon is providing tremendous value to society.
--Thomas Jefferson, 1812 [1]
When private power eclipses democratic power, you cease to have a democracy. You have a dominant aristocracy/oligopoly, which is not functionally different for 99% of the populace than a monarchy. Extremely large corporations are filled to the brim with powerful but incompetent people who got there through connections and political warfare instead of merit.
A corporation should be allowed to grow until the point where they own enough of the government to make their own rules and avoid paying taxes like the rest of us. As soon as they do that, they should be split across state lines so there is more democratic control over their behavior, and they are small enough to audit and tax accordingly.
[1] https://founders.archives.gov/documents/Jefferson/03-10-02-0...
The United States is without a King nor aristocrats who hold seats in a House of Lords by their birth; it is without a House of Lords!
What you advocate is anti-Jeffersonian in both its intent and nature, and therefore you are without just cause citing Jefferson.
So if you wish to break with Jefferson and make your own advocation, do so without citing the dead when you clearly have no business doing so, and put your own thoughts and words behind that arrow.
In what way are they like dictatorships by engaging in commercial activities and being worth a large sum of money based on what their shares are bought and sold at?
Bezos can hire people to do things for him, but clearly this has limits, he isn't sending hitmen after Amazon critics even if he could pay them $1 billion Amazon shares each.
This is partly why I left Google.
Looks like he still intends to run his philanthropies, Blue Origin, and the Post, but after the type of run he has had, he's probably taking some more free time while he's healthy.
I try not to fall into the "cult of personality" trap, but Amazon is where it is _because_ of Bezos, and it'll be fascinating to watch how the transition plays out with the Jassy era.
Ya think?
Assuming he has managed to figure out how to live forever ... at some point this wealth would get depleted.
that was already true a long time ago, you don't need to be one of the wealthiest people on the planet before you don't have to work anymore.
https://www.news.com.au/technology/innovation/this-jeff-bezo...
As a company Amazon is definitely too big to fail at this point. Its fate will probably be like Google's after Page/Brin/Schmidt stepped away. In the worst case it will start to fade away in another decade or two.
In my opinion there is hardly a justification or a _need_ for an individual to own billions. But I think we haven’t found a good way to redistribute money, apart from billionaires self-pledging to give their wealth away.
I'm worried about what happens to Amazon with Bezos gone. A good outcome would be something like Apple and Tim Cook. A bad one would be Microsoft and Ballmer, it will take a while to see which type this ends up being.
Either way losing Bezos as CEO is a bummer.
I don't like the press release, it keeps repeating Amazon every sentence. It's a tiring read, much Like Andy Warhol's repeating patterns. That alone pretty much says a lot about the current Jeff Bezos.
He is worth what, $150 Billion? By the fall he probably will be.
He could find a group of 10,000 people of the same age, spit the money evenly and each person would have $340k per year, a large enough sum to reasonably travel all year long around the world for each person never working agin.
Nobody should ever have a $1B worth.
How does this work? Forced sale of assets? Who determines the market price of the assets, if they’re not highly liquid?
It's is an obvious precedent for taxing somebody who has "received" wealth via the route that Bezos has done.
High marginal tax rates on super-high levels of income and/or wealth doesn't discourage working. It just makes doing something to add another chunk to your income/wealth require something other than financial renumeration. There's plenty of evidence that humans do their best work when they have intrinsic and not extrinsic motivation.
Bezos is a case in point. I believe him to have an almost absurdly high level of intrinsic motivation (I worked with him for 15 months). He might like the wealth he has, but the things he will continue to do with his life, just like Amazon itself, get done for reasons beyond money.
> High marginal tax rates on super-high levels of income and/or wealth doesn't discourage working.
Do we have precedence for this? From what I'm aware, even when the US had high marginal tax rates which some dems seem to be calling to bring back, no one ever paid those rates because there are always ways for the very rich to reduce their income on paper, while still increasing their wealth.
I do agree with you that it takes a very special kind of person to have the wealth of Elon or Bezos and still continue to want to work, it's obviously more than money at that point. But those people are outliers. I know I wouldn't be motivated to spend more effort if it meant a proportional decrease in the total amount of money I would end up pocketing due to increased taxes.
Interest isn’t predatory, it encourages growth and investment in building businesses. Look at the enormous wealth created by capitalism. Economic growth helps the most people the fastest, this model works.
That doesn’t mean there shouldn’t be protections on the lower bound and human rights, there should be. It also doesn’t mean there shouldn’t be environmental protections or regulations to effectively coordinate and prevent tragedy of the commons style failures. We should also prevent wealth being able to leverage political power (which isn’t easy).
It is by the very fact that the lender is owed money in the contract by doing basically nothing. Proper investment balances the risk between parties, so that one party does not have an inherent advantage over the other. This is part of running a moral and just society.
> Look at the enormous wealth created by capitalism
Red herring. The system is fundamentally unstable, by the very fact that people are on the lookout for the next economic crash because it's built into the system. When that happens, people with money are able to acquire even more assets, increasing the divide.
I'm all for people making money, as long as they do it the moral way. Interest is immoral and predatory.
Without interest, it would be harder for people to get loans. Lots of financial services wouldn’t exist (or would demand some other form of payment). This would keep people who aren’t already rich unable to access capital.
People react to incentives, good incentives lead to beneficial behavior. Interest is extremely net positive, both for lenders and for borrowers (and society). Everyone wins.
Crashes aren’t really built into the system or a fault of capitalism, they happen because problems are hard to predict and the environment changes. The wealth created isn’t only for the rich: https://press.stripe.com/#stubborn-attachments everyone benefits from economic growth.
I think Islamic law (or really any religious framework) has very little of value to say on the topic of morality or running a productive society.
Not all forms of payment are ethical or moral (e.g. prostitution). This is an exploitative practice, and should definitely not be incentivized as we've seen time and time again the destructive effect it has on society and the economic system.
> This would keep people who aren’t already rich unable to access capital.
This is why Islam has Zakat laws to ensure the poor are lifted out of poverty. We keep seeing the dems trying to solve the problem by increasing taxation, but to no avail. Islam solved the problem over 1400 years ago.
> I think Islamic law (or really any religious framework) has very little of value to say on the topic of morality or running a productive society.
Morality does not exist without religion. Secondly, Islam has proven to have run one of the most successful societies of all time, and definitely the most moral since Islam came. We still benefit of the discoveries made during the Islamic Golden Age.
Ok sure, but interest is fine.
> "This is why Islam has Zakat laws to ensure the poor are lifted out of poverty."
Charity isn't as good as letting people get access to capital that they can leverage for themselves.
We're not going to agree on this so can probably leave it here.
I will say I think morality exists in spite of religion.
It's not hard to pick out examples where Islam fails on the morality issue, see: women's rights and the recent Charlie Hebdo murders, both driven by ideology.
This is off-topic flame war material though.
As I originally pointed out, interest is prohibited in Islam, Judaism, and Christianity (at least) for a good reason. It's not ethical nor moral, in fact, it's destructive and parasitic.
> Charity isn't as good as letting people get access to capital that they can leverage for themselves.
It lifts people out of poverty to get them on their feet. There are many funds that provide people with access to capital (e.g. accelerators). Capital is not limited to interest bearing loans. The simplest example is pitching an idea to investors who in return own a portion of a potential company. If it works out, both parties benefit, otherwise, both parties equally took on the risk.
> women's rights
Those are cherry picked by anti-Islamic rhetoric drivers who have shown their ignorance and lies time and time again, and whose arguments fall apart the moment they're critically discussed. It's really meaningless talk that gets thrown around.
> and the recent Charlie Hebdo murders,
Easy refutation: you're going to have to show that Islam itself condones or required such murders to take place.
On women’s rights: https://en.wikipedia.org/wiki/An-Nisa,_34
You’re the one cherry picking here and rationalizing anything that doesn’t fit into a narrative you’ve already decided is true. There won’t be any ability for us to agree, because you can’t update based on new evidence.
https://www.lesswrong.com/posts/CqyJzDZWvGhhFJ7dY/belief-in-...
You can pretend Charlie Hebdo and any other negative action that’s clearly driven by ideologically motivated Islam is not “true Islam”, but then you’re just creating some special reference class that ignores the bad stuff.
I’m not trying to get into a fight. It’s rare for religious people to break free from their religion, but it’s possible. I succeeded when I was young and seeing counter arguments is part of it.
Where did I ever claim that? Islam doesn't dictate that at all.
> https://en.wikipedia.org/wiki/An-Nisa,_34
Yep, the one that guarantees women the rights to inheritance, not to mention that many other texts in Islam that order men to be lean and kind to women and not to exploit them (compare to what we see in the West today where women are sold as a commodity).
> but then you’re just creating some special reference class that ignores the bad stuff.
I'm not, because for any action that someone who ascribes to the religion does, we're able to go back to the texts and decide whether or not that was truly Islamic. There is no cherry picking or filtering. It's quite simple really. This isn't a "no true Scottsman" fallacy, it's going back to the Law books (Quran, Hadith, etc.) and checking whether what was done was legal or not.
> “ Yep, the one that guarantees women the rights to inheritance”
From the link: “As for women of whom you fear rebellion, convince them, and leave them apart in beds, and beat them.”
> “It's quite simple really. This isn't a "no true Scottsman" fallacy, it's going back to the Law books”
See the quote from the “law book” above.
Yes. The trade off is that if the company fails, the accelerator loses the money they put into it, and the founder loses the time and effort. It's proper risk sharing. Now compare to a loan, where the founder not only owes the loan, but also the interest on top.
> you fear rebellion
The Arabic word is "nushooz". Look up what it means. Also, look up what "beating" means.
If someone defaults on their loan the bank gets nothing. If someone takes a loan and builds a successful business, the bank only gets the small agreed to percent return.
What you consider 'proper' is arbitrary and entirely determined by religious law.
> "Also, look up what "beating" means."
I know what beating means, this kind of denial of obviously bad stuff is one reason among many of why I find religion so distasteful. That entire section is written about how women are supposed to be obedient to men, the entire context is sexist.
See: https://www.lesswrong.com/posts/34XxbRFe54FycoCDw/the-bottom...
With religion you start with an answer and make up reasons to get to your pre-determined answer. Outside of religion you start with evidence and struggle towards the truth.
Not before the bank coming after the assets of said person to try to grab as much as it can, destroying them in the process. Secondly, usurious money lending is obviously a very lucrative business by the fact that banks make billions in revenue. However, it is also extremely destructive purely by the fact that there exists trillions of dollars of debt (mortgages, auto, student, etc.), not to mention that the government itself is in debt and has to print money, devaluing the hard work of its citizens who worked and saved money, only to have it be worth less. Yet we cry because "the rich get richer", I wonder why?
We've already seen the effects on governments time and time again, most recently Greece and Lebanon. There is really no other way but to admit that it is a dangerous and predatory practice that benefits a relative few at the top of the economic ladder, at the expense of everyone else.
> this kind of denial
It's not denial because it is explicitly mentioned in Hadiths. We say things outright, and don't dance around the issue. Just one example: https://en.wikipedia.org/wiki/Farewell_Sermon
> You too have right over them, and that they should not allow anyone to sit on your bed whom you do not like. But if they do that, you can chastise them but not severely
You can see how it refers to infidelity.
Both the husband and wife have rights from each other, and for each other. "Sexism" is quite meaningless in this context. We're not leftists/feminists/latest fad of the day, and we're proud of it. Each sex has their rights and duties, and claiming "sexism" shows weakness in argument. You can read about many important women in Islamic history who rightfully left their mark.
> With religion you start with an answer and make up reasons to get to your pre-determined answer.
Depends on the religion. It's a blatant fallacy to group all religions together, very unintellectual to say the least.
I enjoy reading your discourses in support of Islaamic economics. Do you have a blog, email or social media account?
Wa salaam.
Thank you brother. Please feel free to reach out to me at zmadaniia@gmail.com
Suppose I own land or a private company or a collection of copyrights that become very valuable. Who and how determines when it crosses the $1B threshold, and how am I brought under said threshold. What if the asset is not easily divisible?
Wealth (or money) is a proxy for power, and if the goal is to limit one’s power, I don’t see the purpose of an arbitrary dollar amount maximum that is extremely hard and probably litigious enforce to enforce.
It would be better to suggest capping the number of companies’ boards one can sit on, or limit the number of non broad market index fund investments one can have, or some other solution that directly attacks the problem of concentration of power.
This is false, right? It's only taxable on exercise. That or I know 1,000s of people at major companies that owe back taxes.
Maybe the rules have been changed since then? I do know that by the early 2000's there were financial services companies offering wierd loans to help cover the taxes (obviously using the stocks as collateral).
Also, you’re taxed on the spread at exercise between the strike price and the fair market value at the time of exercise.
If you’re able to exercise when the shares are granted (which early employees can often do by early exercising unvested shares) then there is no spread and there is no tax (at time of exercise, you still pay tax when you eventually sell the shares). Doing this and filing an 83b election with the IRS is important for people joining a startup where they hold lots of equity that’s valued near zero.
It’s even a little more complicated than that if you get ISOs since you can exercise some of them tax free until you hit AMT (but AMT has not increased over time so this is less useful than it used to be). NSOs don’t have this ability.
RSUs are different and you do get taxed on grant and some are withheld to cover (FB started this and they’re colloquially called FB-style RSUs). This is a relatively recent invention that started because private companies with high valuations had options with strikes too expensive for normal employees to exercise prior to the mandatory ten year expiration. Also old employees who held the option contracts wouldn’t be able to pay the exercise tax on the spread you mention and would hit the 10yr expiration (at which point they need to make a loan shark deal or risk floating a lot of cash). This used to not be an issue because companies didn't stay private this long. With RSUs employees don’t have to worry about any of this, but they lose more on grant to income tax than they could by exercising and holding options optimally.
RSUs aren’t strictly better though because if you can exercise options you can hold the stock for 1yr and get long term cap gains which is 15% up to 400k and 20% after. This is a lot more potential upside than just getting hit with income tax. Though in CA you still get hit with a large percentage state income tax on it anyway. (13% after 1M I think).
All of the above commentary is unrelated to a wealth tax (or capping net worth) which I think is dumb policy.
This grew into a kind of long comment, but if you’re dealing with equity it’s worth learning this stuff for yourself since leveraging equity effectively is probably the best way to actually get wealth in a timeframe shorter than a lifetime of index funds investing.
On exercise yes, but not on issue. I think you're mixing up people buying their options (exercise) with issuance of the options.
No taxes are owed at grant or vest on options, whether NSO or ISO.
Upon exercise (buying - regardless of whether there's a sale) of NSO a tax is owed on the spread between the FMV (usually the 409a valuation, if pre-ipo) and the strike price at grant. This can be considerable and I'm sure is the tax event you're thinking of.
Savvy employees with a cooperative employer often exercise at grant time -- before the options vest -- writing a check almost immediately after hire. This is an early exercise. If this takes place before the value changes (before the board updates the 409a valuation) then there is a taxable event but the spread is $0. The employee then follows up with an 83(b) election to notify the IRS that they wished to be taxed now, rather than later at vest, which ensures that income tax on the spread is never paid. It all becomes regular capital gains.
IANAL nor an accountant and this is not financial advice.
Sadly over here in Belgium a non trivial tax (18%, but it varies according to some parameters such as runlenght) is due upon issue, turning stock options into a potential substantial risk.
Amazon has been very successful at squeezing "efficiency" out of their employees, where "efficiency" is defined largely as abusive conditions and poor wages. While they may be a large employer in raw numbers, vast numbers of their employees depend on public assistance. UPS, USPS, and FedEx seem to pay consistently higher wages. And on top of that, like most "supermassive" companies, they are very "efficient" at dodging taxes.
Yes, this is "efficiency" in the financial sense, but it is by no means net positive at the societal level.
https://www.seattletimes.com/business/amazon/amazons-turnove...
https://www.ttnews.com/articles/amazon-thrives-fedex-deliver...
Will this simple thing called retail produce yet more trillion dollar companies, or is it running out of gas? Will there be an Amazon killer? History suggests yes.
Sure, you can pump money into building fighter jets and aircraft carriers, but those don't last long, nor are they helpful for economy in the long term.
In the long term, the only backbone of the economy is making and selling things to people that they want, a.k.a retail.
The flip side is Amazon has empowered a lot of smaller manufacturers to get nearly direct access to consumers. Especially Chinese firms but even some small American companies have benefitted from the huge base of customers Amazon gives them access too.
Did we? I just remember thinking oh neat and buying a bunch of books.