Comment by mangeletti | Hacker News Reader

Comment by mangeletti | Hacker News Reader

This is a rare situation / age we're in, because we haven't seen these levels of income inequality in a long time.

To the degree to which I would apply labels to myself, I'm a capitalist, and I'm a libertarian. I don't trust our corrupt political system anymore, and I certainly don't think the government has the ability to help society as much as it hurts it, at least most of the time. Because of this, I think that any extra taxation that the government levies will commensurately damage our society.

That said, I can't help but think that our entire economy has been swept out from under our feet by the financial sector. It's not tech companies and supposedly "rich" tech founders that capture our economy. It's VCs. A VC can give a company that would otherwise be insolvent the capital it needs to capture an entire market, and then raise the prices. We see it time and time again.

We're trained to believe that, without VC, the tech industry would somehow be stifled. This is simply untrue. Without VC, a lot of our "side" projects that create true innovation would have a chance at success. The reason many of them don't is because they're up against the same thing from a VC-backed competitor. Except, the VC-backed version is cheaper (or free), is backed by an unsustainable, large team of skilled developers, and doesn't care that it's hemorrhaging money, because once it creates a monopoly it will pay dividends for life to the very few who own it.

What you wrote is exactly what I've been thinking about over the past year. Especially the part about VCs - That's my life's story.

I would upvote this with all my karma if I could. Very well said.

I'm very much on the other side of the political spectrum, but I would have a lot more appreciation for libertarianism if someone could come up with a credible, practical solution for making monopolies (or monopolistic behaviour) rare or impossible. With the proviso that it acknowledges the reality that monopolies form even in the absence of government influence.

With the proviso that it acknowledges the reality that monopolies form even in the absence of government influence.

If I remember back to my anarchist philosophy, that is ceding too much ground. Patents, access to cheap capital, "artificial" interest rates etc... are all government influence that large companies can take advantage of to become monopolistic. Without those the argument goes, that firms would never get so big because competition would sprout up immediately to cut into their market dominance.

If you look at Standard Oil or Bell System, the case studies for all monopolies, they all hinged on some government grated protection. In Bell's case it was initially a patent and then subsequently "legally sanctioned regulated monopoly." In the case of Standard Oil they utilized Trusts, which were legally recognized forms of distributing ownership to stay within the law.

So unfettered capitalism might not lead to long and enduring monopolies, but it would be much nastier and competition much more fierce because the systems on which business is built today would have to go away in total - to include regulated banking, infrastructure standards etc...

The question should instead be: Is the world in which there is no regulation one that you would actually want to live in? I would argue no.

edit: Note that I don't agree with this view, it is however the argument that is made.

> Without those the argument goes, that firms would never get so big because competition would sprout up immediately to cut into their market dominance.

That's how the argument goes, but this is neither a proof nor an observation--just a piece of economic theory, and there are others going against it.

Yes well, I don't think anyone would argue that success breeds competition. Just look at the "hoverboard" market, or any product for that matter, for proof of that.

This does not mean the competition will always, necessarily be strong enough to prevent the formation of a monopoly.

If there is a competitor then there is no Monopoly. It's not just a semantic exercise.

Note that anti-trust actions, like what happened with MSFT, typically are executed long before a monopoly is established.

In an unregulated market, just because you want to compete doesn't mean you'll succeed. Without the regulatory framework to protect upstarts, a monopolist can just allocate X% of its budget to the task of "killing competitors" (maybe even literally) and they will be much more effective at it than in the world where laws limit their options.

While government regulations provide a fertile ground for growing a monopoly, I do not believe they're a necessary condition. A for-profit business will seek the most effective ways to reach its goals. It happens that in our world, those often involve abusing the regulatory framework. But if you remove that framework, it won't make companies magically stop trying to monopolize markets. They'll simply grab the next most effective way to do it. Maybe some will band together, now that there is noone saying that they can't. Maybe some will start cutting more corners on the product, or ignore even more of what used to be environmental laws. Or maybe the few remaining competitors will enter a literal fight, involving guns and bombs and tanks.

And now that your monopolies have guns and tanks and can openly play dirty, good luck for the small upstarts trying to take them down. They won't be able to.

--

Anyway, I'm pretty sure that if all governments were to suddenly disappear tonight, by tomorrow morning many corporations would be already on their way to forming some new quasi-governments. I believe high-level executives are aware that a) social order is good for business, and b) having a working framework for establishing and enforcing contracts is vital to their operations.

And now that your monopolies have guns and tanks and can openly play dirty, good luck for the small upstarts trying to take them down.

Well exactly. That was my point. In the absence of regulation, there might not be monopolies but it would be a Mad Max style business environment.

I think that "Mad Max style business environment" will actually evolve back to the rule of law. That's how our present world came to be, after all. We moved from warlords to cities, then to regions, nation states and finally to international unions and trans-national government organizations. We moved, because at each step, grouping together and establishing some shared rules was good for people and good for business.

Indeed it would.

The Greek philosopher Polybius referred to this cycle between anarchy and totalitarian state as the anakyklosis

[1]https://en.wikipedia.org/wiki/Anacyclosis

This is actually... a) very insightful, and b) something I don't recall ever encountering before. Thanks a lot for the reference!

(Increasingly, I'm starting to feel that a lot of things I figure out for myself - often while writing HN comments - is something that's been widely known for thousands of years. I guess I need to sit down and read some of those classic works.)

I'm glad I followed TemPORal's post to the "parent". I also have not heard of this.

This particular bit startled me for the reflection I see in current day politics:

>During ochlocracy, according to Polybius, the people of the state will become corrupted, and will develop a sense of entitlement and will be conditioned to accept the pandering of demagogues.

I think that, regardless of which side of the political spectrum most of us are on, we all want things to work better than they do. The problem is that taking the steps to make things work better reduces the opportunities for graft and corruption on the part of people who are in positions of power within our government.

Soon or later, with the "appification" of economy, an anti-monopoly law must appear (maybe with the form of basic income?). On the long run, doesn't seem sustainable for society to have "monopoly creators" ruling under some form of oligarchy.

It sounds like you're a libertarian somewhat "by default", as you say you don't trust the political system anymore. But, to be fair, shouldn't you compare "mediocre/bad government" vs "mediocre/bad libertarianism"? Both could be as bad, so that would not be a decisive reason to prefer one vs the other. Or the latter might even be worse than the former.

Reply on news.ycombinator.com