Too Many Companies Drain Value from the Economy
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On the other hand, it's bewildering to think that every area of life has been subject to so much regulatory capture (in dozens of jurisdictions nonetheless) that the year 2000 formed a tipping point of corporate profits in the US. Half of the years have been under administrations more friendly to mergers, so the vertical consolidations in the style of CVS-Aetna or Cigna-Express Scripts could have gone on to become a tool for deep-pocket entrants to enter heavily-regulated markets. Instead, horizontal consolidation mergers like GlaxoSmithKline and Pfizer-Wyeth dominated. Don't forget AOL-Time Warner, Comcast buying AT&T Broadband, or the saga where SBC bought Ameritech and then the remnants of the original AT&T, renamed itself to AT&T, and then bought BellSouth too. Or any number of big bank mergers. Or oil companies.
So, it seems instead of entering new markets during a time of favorable regulatory environment, companies chose to buy out competitors instead, lay off a bunch of newly-redundant staff, and pocket the profit. Hmm.
It appears that anti-trust, which was rare to begin with, may now have been politicized.
For example, it's hard to understand why favoritism is shown to ISPs yet effort is put into breaking up large software companies. Especially in light of the difference in campaign contributions in 2018.
To be clear, I'm don't disagree with the Obama Justice Department's blocking of the Sprint/T-Mobile merger. Such a merger would certainly have reduced the competition in wireless markets, and would probably have led to higher prices and poorer service. But it's hard to characterize the decision to pursue telecom companies (while ignoring big tech) or the reverse (pursuing big tech while ignoring telecoms) as anything but political.
Wasn't it the ATT/T-Mobile merger? Which is a bit different from T-Mobile/Sprint in various aspects.
"Political" means that companies can avoid AT action by buying off politicians with campaign contributions, lobbying, and other forms of plutocratic and anti-democratic influence.
The political question is who gets targeted for action, who doesn't, and why.
You say favorable regulatory environment, but favorable to who? If you have a bunch of regulations that make it hard to start a new ISP and compete with the incumbents, but also get rid of the ones that prevent them from buying each other, it's hard to call that "deregulation" rather than regulatory capture.
Can you point to a non-hypothetical example of the former?
Build-out requirements that prevent small ISPs from forming to serve only a specific neighborhood.
Second, that is a poor example of regulations that "make it hard to start a new ISP and compete with the incumbents." Presumably, that's talking about upstart private competition. What you're saying is the opposite. Government entities or government-sanctioned monopolies (like the local power or water utility) don't in any sense "compete" with the private sector. They displace it. If you're a startup ISP, you can't hope to compete with say the local electric utility, which can make large capital investments in network service and recover from captive electricity rate payers.
As an aside, the idea of government entities "competing" is a weird new brand of rhetoric (you also see it with the "public option"). I'm not sure where it comes from, but it makes no sense. If you're a New Deal liberal and believe government would do something better than the private sector, then own that. Don't pretend like private companies can meaningfully compete with an entity that doesn't have to turn a profit to stay in business.
Second, in this case I remember reading of private monopolies arguing against municipalities threatening to roll out their own networks, exasperated by the poor service provided by the private sector.
Over here, I enjoy the “Fruits of Socialism” (while they last) where private service providers have to co-own the infra and complain about regulators keeping a relatively open eye on them ;)
What other options are there? Letting the market "solve it" is not an option because the incentives are not aligned and market actors are not rational.
In addition, it is worth understanding that it is not sufficient for most market actors to be rational. Because even if you have a single irrational actor, game theory takes over and everyone starts acting irrationally in an effort to not get crushed.
Labelling that kind of behaviour as rational is a neat rhetorical trick. But by any objective standard of ethics - or even realistic expectations of medium-to-long-term survivability - it doesn't meet any of the standards required for rational action, any more than any other hoarding behaviour does.
And there's the post-financial view that the real benchmark for rationality isn't competitive acquisition but maximisation of personal and collective opportunity - which is something that markets consistently fail at. (Although again the stock rhetoric claims otherwise - typically with selective interpretation of the available evidence.)
They just keep failing.
What do you have in mind?
Regulations on taxis were sold as a public safety measure but the regulators became captured by the industry.
Uber and Lyft sidestepped the regulations and prices went down, service improved dramatically, and there was no reduction in safety. (In fact, it’s likely drunk driving has gone down and improved public safety.)
In this instance, private industry is currently a better regulator than the regulators were.
Technically neither of those is a failure of regulation, those are side effects of regulation.
Uber and Lyft removed transparency of costs beyond knowing the cost of your trip for instance which isn't a benefit.
In fact I can't think of much that is related to regulation that they do better beyond being good enough for now by most metrics that people care about. Of course if that changes in the future nothing can be done.
I am fine with Uber and Lyft existing and I do agree that taxis had in some places made themselves into a nuisance but I don't know that those companies did a better job as much as they just ignored all those problems and assumed they weren't important.
Please, the taxi companies have been decimated world wide. Its absolutely clear that people are way happier working and consuming Lyft/Uber services.
That's the only cost that matters isn't it? And the cost that taxis wouldn't provide a quote for until service was rendered.
Furthermore: Is there a general principle here that can be applied across a range of situations as a better alternative to government regulations?
First, it shows that corporate profits fluctuate between 5-10% of GDP since 1947? The article paints that as "less for everyone else"--but it seems like a lot for everyone else.
Second, it cites a study, but then immediately admits it "should be taken with a grain of salt" because it refers to a hypothetical model without necessarily connecting it to the actual economy or ruling out alternative explanations. But then it proceeds to take the assumption that corporations are "extracting economic rents" as a given.
It cites the decline in labor share of income: https://www.kansascityfed.org/~/media/images/publications/re.... It tries to link that to rent extraction, but the timing is peculiar: https://www.mckinsey.com/featured-insights/employment-and-gr....
Given the narrative of rent extraction, you'd expect the declines in labor share of income to have happened during the long period of deregulation, reduced antitrust enforcement, etc., starting in the 1970s. But labor share of income was 65% in 1950, and 63% in 2000. It's 57% today, and the vast majority of the decline happened in the last two decades.
Most of the decline is the result of a handful of sectors: https://www.mckinsey.com/featured-insights/employment-and-gr.... Half of them are ones where technology has turned workers into commodities, like retail, or where technology enables massive productivity without much labor, like internet or software.
> But in most industries, economists Germán Gutiérrez and Thomas Philippon believe, this process has broken down. In a new paper, they attempted to measure how much new business entry responded to the market opportunity available in an industry. Gutiérrez and Philippon used a measure called Tobin’s Q, which represents the ratio of a company’s market value to the book value of the company's assets. When Q is high, it should mean that new competitors have an opportunity to come in and take some of the profits in that industry, thus reducing existing companies’ price premium and bringing Q down. Indeed, the authors found that this was common up until the late 1990s. But after 2000 -- right around the same time that profits started to rise to unprecedented levels -- the relationship broke down. High Q levels no longer seem to attract new market entrants.
It's the ratio of market value to book value. Hasn't book value become less reliable in the age of software? They mention 2000 as the somewhat mysterious starting point of unprecedented profit levels. Doesn't seem so mysterious if 2000 was when companies starting adopting technology more intensively.
Untrue if you're entering say the car repair, grocery stores, heavy machinery, food production, etc etc.
So many days business are branded and everything that isn't has had it's margins shrunk to zero. You can't drop in replacements for FAANG or Microsoft or a whole lot of consumer products because they aren't and can't be commodities as they have set themselves up as walled gardens.
Good for business, investors, and valued employees. Bad for consumers.
Lack of interoperability or replacibility is the monopoly of the 21st century and when we get past it we'll be in the beginnings of a post scarcity economy.
Closed Data - controlled by monopolies, and generated by the enclosure and privatisation of user activity - is far more of an issue than Closed Source ever was.
How much of that is due to robots doing more work? Modern solutions like mostly automated server farms, factories and warehouses generates quite a lot of value. Who enjoys the fruits of robot labor? The people who owns the robots. Robots are not means of production, they don't make people more efficient, they just replaces people.
Example: we replace all cashiers at McDonalds with robots, does that make every other worker more productive? No. The people who own those robots reaps the profits. Can't the workers strike to get better wages now that there is more profits to go around? No, we happen to have a lot of newly unemployed cashiers who would gladly take your job from you!
The point of this article is to complicate that very narrative by identifying how increased regulations actually serve the interests of concentrated wealth.
Norway as many other Nordic countries have high taxation levels and many government employees, but this is primarily because education and health care and a lot of child care is run by the government. It does not imply a larger bureaucracy.
However this does not stop us from having efficient and simple government. We have much simpler tax code than the US e.g. Despite health care being public, our health care bureaucracy, regulations and rules are much simpler.
You actually need some regulations to stop complex regulations from creeping in. E.g. we have strict rules regarding political advertisement and campaign contributions which means money is not an important thing in Norwegian politics. Consequently politicians are not bought and we have much less of this business initiated regulations and red tape that the US has.
Yet we have stronger regulations with respect to workers rights, unions, environment etc. But that does not mean it is more complex.
Having a "bigger government" does not necessarily mean a more complex one. In fact it often reduces complexity by setting more common standards.
Honest question: given what you know about politics in Norway, do you personally believe Norway’s complexity reduction through agreement on common standards can scale to a country the size of the US?
Could 60 Norways mutually agree on common standards?
Maybe they’ve figured out something we in the US haven’t.
This is not true if Norway is anything like Germany. A few years ago the German government commissioned a study on the public's influence on policy.[0] It concluded decisively that political decision making aligned the closest with the wants of the wealthiest while there was even a negative trend with regards to the poorest in that policies favored by a majority of them were especially unlikely to be enacted. Europe isn't as insane as the US in that regard but that's not a high standard.
[0]: https://www.bmas.de/SharedDocs/Downloads/DE/PDF-Publikatione...
There's zero chance of this being true, even despite strict campaign contribution regulations. Arguably, it makes buying politicans more effective because corrupt people can easily skirt the rules "i.e. getting groups of people to donate on your behalf", etc.
Of course corrupt people will always try to skirt the rules and rig the game in their favour, so the harder you can make it the better. And strict campaign contribution rules are definitely better than not having them there, but to suggest that no Norwegian poltiicans are bought is absurd to the point of naivete.
"They also found that lobbying expenditures in that industry are correlated with increased regulation, higher profits and lower entry. Unsurprisingly, they found that lobbying and regulation tended to keep out smaller companies to the benefit of larger ones."
Regulatory bodies need to take into consideration size, age, and frequency of violation by the regulated in terms of exacting punishment on new entrants.
For instance; BigFin fintech company gets caught violating Anti-Money Laundering regulations. Big fine.
SmallFin fintech gets caught: slap on the wrist, thou shalt make a remediation plan, and here are the milestones you have to meet.
SmallFin continues doing business, but is on the regulators radar.
SmallFin caught again? Fine.
Now. Let's say SmallFin dissolves, but the key players move and incorporate as YetAnotherSmallFin (different Corp, mostly same people). Get caught? Regulators should look at the people who have been dinged before, and should know better, and regulation should be less forgiving based on that.
The fact is, a great deal gets hidden under "the Corporate Veil" that probably shouldn't be so easily divested from by those looking to abuse the system.
A regulator should by and large be a constructive guiding hand; not just ssmern as something to be worked around in the process of finding new and interesting ways to do shady things.
The catch here is you need to be able to attract high quality people to run the regulator, and I really have no solution for that.
Little company Uber flaunt the law until it becomes big company Uber that can afford its own lobbiests.
I think Uber is interesting in that they actually did offer a superior technological solution to a social problem (driver and rider safety and trust), which is usually doesn't work since social problems are messy. I think this is why their "ask for forgiveness, not permission" strategy paid off in most markets - the people wanted them to win.
"Excessive" and "less" are not synonyms for "bad" and "good".
This isn't about quantity, it's about quality.
One of the big problems is that regulations are immortal. They get passed and never repealed. This causes two problems. First, they don't go away even if they're bad. Second, they accumulate. That's especially problematic for bad regulations, but it's even a problem for good regulations. If you have a boat with five tons of idle carrying capacity and you decree that it carry four tons of the king's freight, all is well and there is a net benefit produced. But if you decree that it carry eight tons of the king's freight, it sinks.
So if you want to add new rules, you need to find some old ones to take back out. And you should be uniquely careful what you add to begin with, because every one has an opportunity cost, and even bad rules are sticky.
https://en.wikipedia.org/wiki/Sunset_provision
Though yes, that is a legitimate issue.
Other forms of legislative garbage collection carry high costs and side effects.
Some people think that can be fixed, get money out of politics and then good regulation can exist in the long run. Others do not think that's possible, so it's better to remove the power from government altogether, because over time it will always be bought.
Saying that if something is bad, you should try to make it good is just restating the problem.
My goal was to highlight an exceedingly tired and bogus argument.
To us from school (B), the school (A) thoughts are hopelessly naive, but it's impossible to convince anyone of our wisdom who hasn't found it on their own, and it just comes across as infuriating "you'll understand when you're older" condescension.
And so life goes on :)
The solution is to change/improve the system that is creating the regulations. There will almost definitely be new regulations involved in doing this.
I don't see how a system that creates excessive regulation can be expected to constructively par down that regulation without significant changes to that system.
2. I have to think that a lot more money and effort is expended trying to influence regulations than what shows up in the formal lobbying accounting.
One thing companies do is make sure to have major employment centers in as many states and congressional districts as possible, in order to get a good base of votes in any matters that may come up. This must cost a fair amount, but would never show up in the lobbying budget. Just as an example.
What stats you got for ROI on aerospace R&D vs. lobbying?
Mancur Olsen, The Logic of Collective Action. Seminal economics text.
https://en.wikipedia.org/wiki/The_Logic_of_Collective_Action
https://www.worldcat.org/title/logic-of-collective-action-pu...
Also, companies don’t need to be direct competitors to have adverse interests. For example, Google lobbied heavily on copyright issues because it wants to commoditize a downstream product input to its own services. That places Google at odds with media companies, even though the companies don’t compete directly.
In defence, Beoing and other MIC firms are generally better served by fighting for a larger pie, than over their share of it. The fight is over defence vs. nondefence (mostly social services) spending. See for example; https://www.sourcewatch.org/index.php/Boeing
And I'd asked what your data are. Got any, or do you prefer asking to answering questions?
You're the one supporting the assertion that "the value add of $1 dollar of lobbying/capture efforts goes farther than $1 in R&D or whatever after a certain point." It seems like that's the assertion that requires supporting data. My point simply is that, in the absence of data, we can look at what we would naturally expect to happen if your premise were true--prices would get bid up. The fact that lobbying prices aren't getting bid up suggests your premise is false.
You can add further layers of speculation to explain that unexpected result, but now you're really going out on a limb. I think a simpler explanation is that your premise is simply false. Lobbying has low expected ROI--that's why companies spend so little on it. (In particular, I suspect that lobbying just isn't very effective, so the expected value of a very favorable law or policy, weighted by the incremental increase in probability of that coming to pass through lobbying, is low.) That hypothesis explains the data, without resorting to additional handwaving.
it may be that the required amount of lobbying money necessary for a larger corp is in relative terms tiny but in absolute terms somewhat large (e.g. $15mil gets you 80% of the way there, whereas $150mil only 85%; but a smaller corp can't chalk up the $15mil required for pareto or whatever distribution)
So we rely on lobbyists now to explain to our legislators when the "system of tubes" metaphor for the Internet breaks down. Hopefully we can get multiple competing groups in the door to prevent the advice from being too one sided but at the same time everyone presenting has an agenda. Which probably costs the taxpayer more than hiring experts would but that cost isn't obvious the way a line-item on the budget would be.
And as bad as the current system is having legislation just based on what representatives know would probably be worse.
You just showed how simple it is to switch the incentives. I'll add that taxpayers pay for the campaigns instead of corporations. Whoever wins at each level of elections gets a larger amount to campaign with. If contributions are allowed outside that, it's only individuals with a cap. It's a felony to violate these rules. Work from there.
The real problem with society is that we try to build static structures (laws) in an attempt to foil dynamic adversaries (humans). This simply does not work.
Corporations do not elect representatives. Lobbying companies do not elect representatives.
Seems clear which needs to be got rid of.
Also, in the United States, you do not need shareholders to form a corporation. You are already a corporation in and of yourself. If you want to fund your activities via your own money, you do not technically even need any corporate body to conduct in business. Business is an individual right.
Seems less reasonable to petition as a full time role, and get everyone's representative on board with unduly supporting a particular company or cause, or get undue weight because can throw $10m at the issue. That's not really representing the people any more, even if it is understandable how it happens.
Citizens banding together in a cause? Already happens, and no doubt representatives who receive 500 letters or emails that could be copies of each other are treated as less weighty than 500 individuals writing individual emails on the same cause.
Hence trying to limit opportunity for professional and full time lobbyists, the permanent presence near to government constantly trying to influence, create and ruin policy. Sure, the CEO is probably only ever going to sign rather than write, and their money will always bring extra influence. I'd hope to find a balance that keeps it transparent but minimises gaming the system with money.
As is, lobbying is bending most governments around the world badly out of shape, and seems to have got far out of hand. Of course getting a better system, whatever it may be, through the current system is another matter entirely... :)
The other is not.
I'm still dumbfounded by the idea that corporations should enjoy any kind of right or privilege, let alone that kind of special treatment they enjoy nowadays.
The objection is that "it's too hard to define legally". Nonsense. Courts distinguish between natural and artificial legal personality all the time. Corporations are a legislative creature. People aren't.
Perhaps, but probably not. The ease of corporate veil piercing is inversely proportional to the number of involved parties.
> An incorporated association? Legally distinct and visible to a court.
which means that it is easier to sue as an entity.
> The objection is that "it's too hard to define legally". Nonsense.
I never made that argument. Stop with the strawmanning. I said that there is no way to limit the ability of companies to petition the government without simultaneously limiting the ability of individuals to do so as well. The previous regulations we had were easily bypassed.
What you said was:
> Okay, so if citizens decide to band together to petition their representatives, that isn't allowed?
Implying that these were inseparable. They are not. That enforcement is difficult and imperfect is different from whether it is possible or desirable.
Sure! So, I'll start a software company, let's call it Maxisoft. Then, I'll start a non-profit, "the Maxisoft benefactor's mutual benefit corporation" (A non-profit producing body) who just happens to share officers with Maxisoft (after all, since we're all in business together, it makes sense that we're all friends, right).
> limits on the type and amount of spending
Why? Don't individuauls have an unlimited right to spend as much as they want seeking redress of grievances? Board members could just vote officers a higher salary and then the officers can simply use the corporation's assets (now their own via the magic of payroll) to do the same lobbying, and certainly, you cannot be against the right of an individual (in this case an officer of the corporation) from asking his/her representative for change?
> they're required to publish sources and destination of income
I fail to see how this isn't a massive breach of an individual's right to privacy, but either way, for the most part, donations to a political campaign are public.
Ultimately, IMO, your regulations fall flat, because they all get in the way of an individual right to seek redress. In every case, there is a straightforwards way around the regulation, and there is no way to stop what you are trying to stop without stripping some people of their individual right to petition their government. Thus, we ought to reject all the regulation as an unnecessary overreach.
I agree that no restriction will be perfect; however, I think that it's likely that restrictions could be crafted that are better than what we have now. For example, maybe something like:
- A non-profit can spend as much as they want on politics as long as the money comes from individuals.
- There is a restriction on how much an individual can give to any given non-profit. Or perhaps there would be restrictions on what percent of the PACs spending comes from any one person. It is illegal for non-profits to collaborate to bypass these rules (in the similar way to how it is illegal for corporations to collaborate to fix prices).
That being said, what's your solution if you are opposed to campaign finance regulations?
I mean, I agree, but money is going to buy influence whether you believe in some sense of noble politics or not. Without severely and arbitrary restricting even more rights it's impossible to get around this. Those with more money can make friends with influencers, buy advertising space, produce media, etc, at far greater rates. Even without direct lobbying, they're going to be more influential
> There is a restriction on how much an individual can give to any given non-profit. Or perhaps there would be restrictions on what percent of the PACs spending comes from any one person. It is illegal for non-profits to collaborate to bypass these rules (in the similar way to how it is illegal for corporations to collaborate to fix prices).
No there isn't. There's just taxes on contributions if you give more.
> - A non-profit can spend as much as they want on politics as long as the money comes from individuals.
I already gave a few ways around this legislation above.
So for instance, a corporation could still have their executives donate to PACs and they could create dozens of PACs in order to be able to donate more overall. However, there is a limit to how many executives and PACs they can juggle so it at least doesn't scale the way the current abuses do.
Nah, someone will just offer a service to those executives to manage their PAC contributions. But, I mean, job creation is great, so I guess that makes sense.
It’s a real problem, so let’s work on some solutions. Mercenary sock puppets should be limited, no?
If lobbying was actually limited to citizens or small groups of citizens the negative impact could be reduced. Many other countries aren't impacted by regulatory capture as bad as the US.
Don't corporations also answer to customers? Customers will stop buying from a corporation if prices are too high or service is too poor.
The people who really need protection are the third parties who can get stuck with externalities from activities they had nothing to do with.
enthusiast building company around that new thing: hey wait that doesn't make sense, this is supposed to be for everyone
that enthusiast is now lobbying. is there a specific other situation you were hoping to clamp down on that doesn't rope in the enthusiast?
Get rid of congressional elections, move to a method of selecting representatives that selects a representative sample of the population such as a lottery among registered voters.
"solving the problem is half the problem"
Lobbying and legal bribery are far more prevalent in the US than in Europe.
Let's say I'm Boeing and I pay a lobbying firm 15M USD - what happens next? Where does the money go?
The team of in-house and outside lobbyists do a number of things including monitoring legislation, writing internal position papers laying out the company’s arguments for and against legislation, briefing execs on changing rules, organizing visits from execs, and participating in strategy sessions with trade associations.
Most importantly they try to exert influence. The most direct way is through meeting with congressional staff and regulators. These meetings are fairly easy to come by — anyone can call a Congressional office and request a meeting on an issue(and more citizens should!), but in most instances you will get shunted to a low level staffer who politely listens to your plea and takes notes. But, in the case of Big Business, that $3 million you spend in consultants brings with it some very deep rolodexes. They can get meetings with Chiefs of Staff, Chief Counsels, and sometimes directly with members of Congress so you can go to a Senate office and have a deep discussion about a specific piece of legislation. You can articulate how the legislation will impact your business, the economy at large, or the Senator’s constituents. You can propose new legislative language. Your team of lawyers can show the underpaid, overworked staffer all the loopholes he’s unknowingly introducing. You can propose a “carve out” to protect some special group (e.g. “Companies that spend $X in R&D should be exempt from provision Y”).
There are many other ways in which lobbyists try to get the ear of Congress, but the above encapsulates a significant portion of the spend you see in lobbying disclosure reports.
> They can get meetings with Chiefs of Staff, Chief Counsels, and sometimes directly with members of Congress so you can go to a Senate office
But how? Is it simply that the lobbyists make plain who they are representing and the government people involved know a lot of tax dollars are potentially at stake, or is it something more skullduggerous?
$15M is a lot of money, so Boeing obviously feels it's worth it; maybe I'm being too cynical, but I just can't see how unless there is something underhand afoot.
https://statescoop.com/nationwide-lobbying-push-for-contract...
Lobbying is very similar to legal work, and often is done by lawyers. Highly trained professionals take often very complicated domain issues and distill them into terms politicians and their staff can understand. (Typically, the politician, as a matter of ideology, already supports the position the company is espousing. The purpose of the lobbying then is to arm the politician with data and legal arguments to support that position and counter the data and arguments offered by the opposition.) Producing a single document can cost tens if not hundreds of thousands of dollars.
You might pay them $1M to do research on a particular policy that is beneficial/detrimental to your business. That same firm will then put together a polish presentation or proposed language for legislation and get it in front of politicians where it makes a difference.
It's certainly not "Google hired this firm for $1M and they have $900K in donations to a politicians election fund". That's illegal.
A good example (that another poster mentioned) are organizations like the ACLU. They raise money and use it to lobby the government to get pro-ACLU laws written.
They may also start a PR campaign for your case.
At best, lobbying is bribery with a facade of conversation. At worst it's extortion. The corruption is baked in either way.
> They found that the higher the volume of new regulation in an industry -- measured by analyzing the text of the Code of Federal Regulation -- the less new entry is driven by high Q.
Where Q "represents the ratio of a company’s market value to the book value of the company's assets."
Many industries become more capital intensive as they grow, and higher capital thresholds for effective market entry make market entry harder. Additionally, as industries grow, the scale of their externalities grows, requiring regulation.
The aggregation of capital in public capital markets supports this (Value of equities up, # of market participants down).
The fact that the legislature has been gridlocked for years also doesn't support the hypothesis that regulatory action is the causal root of the lack of competition in the 2000s.
None of that stuff is actually strongly correlated. Whether an industry's capital costs increase disproportionately with scale has little to do with whether that industry has significant externalities requiring more regulation as it grows. You can find major examples of every combination of those things.
Moreover, if the increased capital costs are a result of increased regulatory compliance costs, that's not actually disproving the original point either.
> The aggregation of capital in public capital markets supports this (Value of equities up, # of market participants down).
That would be expected regardless because the lower amount of competition would be expected to result in higher profits and higher valuations regardless of the cause.
> The fact that the legislature has been gridlocked for years also doesn't support the hypothesis that regulatory action is the causal root of the lack of competition in the 2000s
Whatever gridlock existed hasn't stopped them adding some 40,000 plus new pages to the CFR in that time.
California has been legislating significantly without issue during all of the federal gridlock.
You're seeing this happen before your very eyes with companies like Google and Facebook. Their lobbying expenditures have exploded as a response to increased treats of regulation.
Interestingly each new rule (e.g., a new road traffic regulation) only acts as yet another avenue to collect money.
I suppose lobbying is a legalised form of bribe so the passage you quoted makes perfect sense.
Equally nuts is the special interest group that Upcodes is battling. They draft regulations and then _charge_ the public to access the regulations that they’ve lobbied lawmakers to adopt claiming some sort of IP right over the law.
https://www.opensecrets.org/news/2019/06/virginia-thomas-ext...
In the US, two political parties control nearly all activity down to the county and city level. If you are in politics already you pretty much have to have permission to seek higher offices. If you are not you have to get past both parties even the one you wish to be part of. There is a reason why at the Congressional level reelection is almost a sure thing with most people losing their seat from retirement!
So lets look at the national level, where CU and CFR bells are rung the most. Incumbent politicians have unlimited access to the media and to a point even use of the postal service. That is one hell of an advantage to an outsider to surmount. Then thrown in all the PACs they have friends and family in, all of which are protected by wonderfully named laws to protect the integrity of elections but really do only two things, protect incumbents and provide a legal means to make their friends and families rich.
So lets drop back to CU and the 1A. The 1A says nothing about whose speech rights may not be infringed, it says speech may not be infringed. The CU ruling made it clear that it wasn't some fictional body having freedom of speech, it was the right of the people in any organizational form they choose will always have the right to free speech wherever they go.
That is why you must resist all attempts to reform campaign financing. The established parties already have it all wrapped up and are merely feeding you nice market tested lies to prevent anyone from breaking their duopoly.
Open the door to silencing one voluntary grouping of the public from entering politics by any means and you allow for any future grouping which is a threat to the established parties to be blocked as well.
Why should people be okay with unlimited expenditures by corporations and special interest groups?
Having your government's influence be heavily skewed towards companies or even any non inclusive group of individuals seems like a huge problem. I understand that there is a balance to be struck but the current one seems way off to me.
> Then thrown in all the PACs they have friends and family in, all of which are protected by wonderfully named laws to protect the integrity of elections but really do only two things, protect incumbents and provide a legal means to make their friends and families rich.
Isn't the ability of PACs to hand out so much money a consequence of Citizens United?
This isn't a very good example because the health insurance market is dysfunctional for reasons independent of this and Medicare is the government, so "negotiating prices" really just means dictating prices.
We already see this with Medicare in areas other than prescription drugs, where Medicare will set payouts below cost. Then many providers won't accept it (harming patients by reducing choice) and others, not wanting to turn away sick patients, will see them at a loss but then have to recover the money by charging more to patients with private insurance or paying out of pocket (harming them and reducing access to care due to higher prices).
> The latter is a regulation that does nothing to deter new companies from entering the pharmaceutical industry
Even if all it did was exactly what you expect it to (cause lower prescription drug prices), low margins are exactly what will deter new companies from entering a market. They can't recover their startup costs (which incumbents paid years ago), so they don't bother. With price controls that lower amount of competition may not raise prices, but you would certainly expect it to impact the amount of new R&D happening.
http://voices.washingtonpost.com/ezra-klein/2009/07/does_med...
The way health insurance should ideally work for non-emergency care is that the insurance pays the amount charged by the lowest cost provider, but the patient can choose any provider they like and pay the difference themselves.
Then if one provider has bigger rooms or is less of a commute or has better ratings on some ratings service, the patient is the one deciding whether or not the benefit is worth the additional cost, instead of some functionary who is neither the patient nor the recipient of the bill.
None of that happens in the current healthcare market where we pay over double all other modern nations, nor does it happen in the many other nations that effectively control medical costs via setting a schedule of prices for drugs and medical procedures.
The check on cost in this case would be the patient, because outside of any other reason to choose one provider over the other, they would choose the least expensive one and save money. Which gives every provider the incentive to either be the least expensive one or provide tangibly more benefit to justify a higher price.
Yes, for it to work it would have to be combined with some functioning price transparency, but so let's do that then.
And the last isn't actually required. If patients can discern no meaningful difference between providers then they'll just choose the least expensive one, leading to price competition as intended. Though you can imagine that repeat patients will still have good knowledge of how big the patient rooms are, how soft the beds are, how much time they find themselves spending in the waiting room, how far the office is from their house, etc.
> None of that happens in the current healthcare market where we pay over double all other modern nations, nor does it happen in the many other nations that effectively control medical costs via setting a schedule of prices for drugs and medical procedures.
Nobody thinks the current US healthcare market is cost efficient. The existing regulatory environment is bad and promotes a lack of competition. But why is the only solution price controls, instead of fixing the bad rules that impair competition?
The limitation in patent durations would disallow corporations milking old inventions and would incentivise them to keep innovating. It would also allow more competition, because the formulas end up in the public domain quicker, enabling actual market efficiency through improving production processes and so on. Parallels could be drawn to the entertainment and software sectors.
Stimulating the lowest market price would counteract predatory tenfold price hikes by allowing competitors to produce a generic variant at reasonable prices and outcompeting the bad behaviour.
The current regulatory framework incentivises big conglomarates to be anti-consumer because that's where the money lies. At the end of the day, we're talking about people's health.
The problem with Medicare is that they don’t pay for ineffective treatment. This makes it slightly more difficult for medical networks to charge for higher margin procedures.
I think the data on what hospitals, insurance companies, and drug companies call the "cost" shows it's over-inflated BS. If they're lying and price-gouging, then whoever is charging them should demand payouts below their "costs" if they can't force them to do a reasonable profit above actual costs. Quick article off the top of Google with examples of the "costs" at hospitals:
https://www.foxbusiness.com/features/outrageous-e-r-hospital...
It's certainly the case that some of the underlying costs are higher than they ought to be. The problem is you can't fix that by lowering payouts across the board -- if certain medical devices are too expensive because of a lack of competition, the hospital can't lower the price the other company charges (or they'd have done it regardless). Nor can they reduce regulatory compliance costs when they still have to comply with the same regulations. So they have to cut something else instead. Which isn't what you want when the something else was a cost effective method of improving patient outcomes.
There isn't a "make it cost less" button that can magically lower prices across the board. Some things already have reasonable margins. To reduce costs without killing people you have to specifically target the waste (and its causes, which in many cases are high compliance costs, barriers to entry and a lack of competition).
At each emergence, new enterprises are born and start an arc of relevance. Amplitudes and periods vary greatly, but companies like Sears & Roebuck have their days of high growth, maximum employment, then stagnation and decline as successor WalMart transpires through its cycle and takes the reins for a while.
These companies pay varying amount of taxes, but can't get away from paying wages. Consider how many families are supported by MacDonald's or Bank of America. They contribute to society by employing people and enabling them to pay income taxes much more than their employers pay through corporate tax payments.
Society gets into trouble when a pair of declining and ascending firms create a discontinuity for employees. If an employee of WalMart loses their position because WalMart has lost market share to Amazon, that employee is not likely able to move their employment to Amazon. Distribution centers are not in the same places as WalMart retail stores, and, the skills they need are not the same. Both are selling the same items to the same customers, but due to the different business models, the employees of one do not map onto the needs of the other and you have a discontinuity.
On the one hand, Amazon is more efficient than WalMart and delivers more goods dollars for the same wage dollar (revenue per employee). So fewer workers are needed and there will be workers left unemployed or underemployed during the transition. On the other hand, Amazon should, over all, be therefore able to charge lower prices, benefiting all consumers.
My point is that getting to the bottom of the question about how much and what type of value an enterprise delivers to society is a deeply complex question. Bloomberg's opinion seems superficial.
I can't let this point go undebated.
The taxes paid by workers cannot be counted as the corporation's contribution to society, because this tax would've been paid regardless of the employer - it is a contribution from the worker to society.
A corp that does not pay enough corp taxes is a corp that doesn't contribute. Providing employment is not a form of contribution, since the employment makes profit. Unless the corp employs people at a loss (in which case, it can be called a contribution - provided they do not reclaim tax credits to offset the cost).
This only makes sense if you're assuming the total number jobs, salaries, or GDP can't change. If you decrease the number and/or size of businesses, income tax collected will absolutely go down. That's what happens in a recession.
Whether you consider income tax to be a worker's contribution or their employer's contribution is a meaningless distinction. Any policy that attacks either side (causing fewer or lower paid workers, or fewer or worse paying employers) will reduce the amount of income tax collected.
[1] https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-v... [2] https://en.wikipedia.org/wiki/Water_board_(Netherlands)#Hist...
The goal of the people who own these companies is to make money with it, or carry out whatever other purpose it has.
The goal of the government in providing a legal framework which allows these companies to exist as legal entities is to benefit society in some way.
If the latter isn’t working out then maybe it needs to be adjusted.
The economic notion of "value" -- the quantity the economy optimizes -- is weighted according to wealth. "Value creation," as referred to in economic circles, is not about doing what people want, it's about doing what wealth-weighted people want. That really is the crux of it.
You can gauge its progress by looking at the wealth distribution. In a flat distribution, the economic notion of value coincides very closely with the colloquial notion of value. In a heavily skewed distribution, it doesn't correspond at all. Masses of starving poor people are of no concern to a system that assigns them 0 weight. Feeding them produces no value. In stark contrast, those with great weight can command the economy to devote great energy to highly counterproductive tasks such as consolidating and perpetuating their own power. This is an intrinsic problem of skewed distributions -- and the reason why "who's goals" is exactly the right question to ask.
Of course, you can't hammer the wealth distribution completely flat without eliminating the economy's ability to incentivize, because being on the advantaged side of an uneven distribution is the reward. You have to strike a balance. That shouldn't be controversial, but on account of the great energies mentioned above, it is.
By confusing the two notions of value, one can make the argument that you just did, and with that one subtle alteration the tendency of the system to run away is hidden. Note that the system you described could be obtained from the system I described by pressing a "reset" button and hammering the wealth distribution flat between each transaction. I'm sure that wasn't your intent, but it's a dramatic demonstration of how attaching the word "value" to the economic concept of wealth-weighted-value hides the problem from view.
The economic notion is basically saying a mass of poor people have no value to anybody else if they're not able to do anything anybody else wants or each other want enough to pay for.
But it is, I think, fair to note that corporations are not responsible for making sure the rules under which they function work for everyone. That particular failure belongs to government, or in the alternative, all of us for allowing such a shitty government.
Because corporations as they exist are completely fictional, you bet your ass we can take those completely made up protections away from them once they stop being a net benefit to society.
If that were done, corporations would do an absolute shit job of returning value to shareholders.
Unfortunately, reality is a bit more complex than that.
However, economists have made big progress coming to grips with that complexity, and many proponents of small government and laissez-faire are actually acolytes of what James Kwack calls "Economism" [2], an adherence to Economics 101 that's simultaneously dogmatic, hugely selective, and pro business & anti regulation.
"Real" economists (including the frequently maligned "The Economist" magazine) are quite in favour of sensible regulation, government intervention, and progressive policies, more so than corporate lackeys and the Republican caricature of conservatism.
Lastly, that shareholder value maximisation should be the only goal of companies is a sensible result, yes, but only for a specific and narrow theoretical question (the principal-agent problem, embedded in a neoclassical framework). What the actual goal of actual corporations in the real world should be is up to us (subject to real world constraints, obviously).
When you see one without the other it indicates that the system is not functioning properly.
What we are seeing is this may not always be the case.
I think the less pro-capitalist portion of America is mostly aligned with viewing companies as being driven by profit, with varying amounts of support - judging, indifferent, endorsing - for their pursuit of profit depending on where that individual falls on the spectrum. The economic and political situation is getting pretty dire IMO.
Free market without any regulations will work as long as people are simply decent. But we are human, poor man wanna be rich, rich man wanna be king etc. So some regulations are needed. But not so many of the lobbied ones, as the corporate interests should not be the primary concern of the government. IMHO etc.
> No, it is an economics term describing a type of market.
It's both; it's an economics term describing an idealized abstraction which does not (and arguably cannot) exist in the real world, and a propaganda term applied to real markets which, without exception, diverge radically from the idealized abstraction.
"Regulation" is another term that's been abused to the point of meaninglessness, for that matter. It's largely just a synonym for "thing I don't like" now.
[EDIT] it's a bit like "right", which is mostly a term of propaganda, too. Declaring something's a right is propaganda. Declaring something's definitely not a right is propaganda. It may be useful in that role, but it's not especially useful in deciding policy. And yes I'm familiar with from-first-principles attempts to distinguish "natural" rights from everything else. I've even read the Second Treatise. It's all just-so stories, not some law of reality.
> Does the market a business exists in give you the freedom to not be burgled
Yes, to an extent, freedom of property guarantees that anyone who burgles you will be punished
> Does it give you the freedom to not have to pay for healthcare for your employees
Yes. In a free market, there is no employee. Employees are simply one-man/woman businesses that you exchange money for in exchange for labor or time or a task (in the case of salaried employees). There is no reason why someone paying a business should have to explicitly pay for that business's healthcare. The employed business, even if a single person, should charge enough to pay for their health insurance.
> Does it provide some level of free training to those employees?
No. Nowhere in a negative right to life, liberty, or property is there a promise of free education.
> If you're a fisherman and there's another fisherman does the market ensure that other fisherman won't exhaust the ecosystem?
No, the ecosystem exists independent of the market (it preceded it), and there is again no right to ecosystem partitioning in the right to life, liberty, and property.
To reinforce the point a bit - if, for instance, over fishing is unpunished, regulated or otherwise incorporated into costs then failing to over fish will result in a competitive disadvantage that the market will punish. In this case acting in a way that ensures a long term benefit to society is being actively punished by society's rules - and the system is illogical.
To simply exist, free markets require a ton of government-backed regulations, the most obvious one being the right to private property.
There's this dichotomy between the Good free markets and the Bad big government. They're actually two sides of the same coin : they need each other to exist.
Radical advocates of free markets (and anarchists) always seem to forget the violent nature of humans.
Actually, that's pretty much the only one.
Radical advocates of free markets are often libertarian, and they rarely forget the violent nature of humans, which is why libertarians explicitly call for the existence of a government, limited in scope to defending a few enumerated rights, such as private property.
What’s this “ton of government-backed regulations” you’re referring to?
> Radical advocates of free markets... always seem to forget the violent nature of humans.
What kind of “radical” are you talking about here? Anarchists?
In theory the perfectly competitive market is most effective at maximising net utility for all participants. But in general, very few markets are close to that end of the spectrum. Most fall somewhere in the other categories.
"Unregulated" would be preferable, I think.
Free market: A market that is free from government interference, prices rising and falling in accordance with supply and demand.
https://www.oxfordreference.com/view/10.1093/oi/authority.20...
> Does the market a business exists in give you the freedom to not be burgled?
Yes, it gives you that freedom.
> Does it give you the freedom to not have to pay for healthcare for your employees?
Yes, it gives you that freedom.
> Does it provide some level of free training to those employees?
Are horses brown? Depends on the horse. Does that mean “horse” is a “terrible term”? No.
> If you're a fisherman and there's another fisherman does the market ensure that other fisherman won't exhaust the ecosystem?
No, because the lack of property rights in that situation creates a tragedy of the commons.
(Dismissing for now the qyuestion of what goods and services can be effectively delivered via markets, and in what circumstances.)
Even within a so-called free market, numerous market failures may exist: externalities, imperfect or asymmetric information, monopoly/monopsony, coercion, power imbalances, fraud and misrepresentation, rent-seeking and rents, public goods, principle-agent problems, capital concentration, systemic risk, capture and corruption, Gresham's Law dynamics, unpriced ecological inputs, and numerous parties unable to participate in wholly market-based transactions, among them.
Establishing a minimum wage, or employer of last resort, addresses a well-known conflict in the tendencies of the prices of wages and rents -- see Smith and Ricardo.
What you're describing is neither free market nor even remotely viable.
This is not correct. A free market is a market that is free from government interference. Such rules or requirements can constitute government interference. Ergo, they can fail to yield a free market.
To see the absurdity of the claim that "uniform or standard rules or requirements" always yield a free market, consider the "uniform rule" given by the price floor I described above.
> Even within a so-called free market, numerous market failures may exist
This is irrelevant to a discussion about whether the term "free market" is meaningful. It's moving the goalposts.
> coercion, fraud and misrepresentation, capital concentration, systemic risk, capture and corruption, numerous parties unable to participate in wholly market-based transactions (?)
These are not "market failures", and many of the failures you described are really the same (Gresham's Law and information asymmetry). That aside, one must take into account whether the alternatives are worse: in other words, government failure. For example, on your point about "rent-seeking and rents":
Alexander Hamilton of the World Bank Institute argued in 2013 that rent extraction positively correlates with government size even in stable democracies with high income, robust rule of law mechanisms, transparency, and media freedom. [1]
> What you're describing
What am I describing?
[1] Small Is Beautiful, at Least in High-Income Democracies: The Distribution of Policy-Making Responsibility, Electoral Accountability, and Incentives for Rent Extraction. Alexander Hamilton. http://documents.worldbank.org/curated/en/195551468332410332...
Not proprietary semiconductors from a single vendor, only maybe decades-old commodity parts that are drop-in substitutable, either due to numerous implementations of the same signaling, or outright licensing of the original IP to many vendors.
The entry barrier to competing with a silicon vendor that has a complex, well established proprietary product stack is extremely difficult.
(Which is not to say it constitutes economic rent.)
Silicon vendors don't want to offer lower prices; they want to produce something differentiated from the rest, and then charge as much as they can get away with.
(BTW, good luck offering lower prices and higher wages at the same time. That is only possible if it can be made up for in volume.)
The comparison to the S&P500 is confusing. Why would GDP be linked to the S&P500? GDP is a static measure of what the economy is producing, where the S&P500 is a measure of expected future profits. You wouldn't expect them to track the same.
Assume you're referring to the second graph. That graph starts in July 2009, which is just the very-rightmost section of the first graph, which starts all the way back in ~1947. And while corp profits as a percentage of GDP hasn't changed much since 2009, this percentage is much higher than post-war average right up until the Great Recession.
Regarding S&P not tracking to the GDP, while yes you would except them not to line up 1-1, long term equity valuations can't grow faster than GDP without some other fundamental economic change,e.g. a permanent reduction in the risk-free rate (and rates over the past ~30 years are significantly lower - remains to be seen how permanent this ends up being). For more info google Buffett ratio.
Free and uncompetitive: social networks
Free and competitive: breakfast cereal
Unfree and competitive: stock markets
Unfree and uncompetitive: comcast, san francisco landlords, NFL
In such a low stakes weird economy, it's really hard to compete because nobody needs anything. For your corporate desk worker, keeping the existing deal is inertia while changing it is work and career risk. So rather than effort ~ dMoney, effort ~ d^2Money. That's alread explanes so much even before saying deals are corrupt steak dinner affairs or whatever.
The right is correct in saying that the things people really need, housing food and healthcare, are super regulated. But the left right in that land use and especially ealthcare are totally unsuited for a free market anyways. (Though LVT is more powerful and magical than any healthcare rule.)
When there is a recession, many companies are wiped out and/or acquired, thereby reducing the overall tax numbers.
Honestly, all these articles bemoaning current state of the market tell me that we might be nearing a high.
I wonder if the same premise still applies with employee-owned companies? or does that turn the article's premise upside down?
I am 100% on board with the idea that large companies have captured key agencies. You don't need a scientific study to note the antics of Ajit Pai or the hostile takeover of the CPFB by a guy that just showed up and just sat in an office there until people started doing what he said. However, the idea that somehow cutting regulations will cause monopolies to be less monopolistic is laughable.
Look at Uber, the poster child for dysregulation. They openly and actively thwart any kind of rule of law that would constrain them, and they can fund their operations at shocking losses in the mere hope that they can corner the market permanently. Look at the arms manufacturers that openly lament that there isn't enough of a left wing ruckus to scare people into buying more guns. Look at the right wing rebellion in Oregon over a nothing cap-and-trade bill that called for armed militia to protect the interests of oil.
When you have money, the fewer constraints you have, the more you can do. It's the golden rule.
What do either of these examples have to do with monopolies?
I did understand that the title means "A great number of companies drain value from the economy", rather than "Having too many companies drains value from the economy".
Did anyone understand the message the article wanted to communicate aside from the title? What was it? Is it a valid message based on the sources it linked?
The phenomenon:
"in recent years, stock valuations have increased faster than either profits or the economy itself"
The explanation:
"They found that redistribution from workers to shareholders accounted for 54% of increased stock wealth. Falling interest rates, rising investor appetites for risk and economic growth comprised the remaining 46%."
Additional information/context:
"But their finding is consistent with evidence by economists Loukas Karabarbounis and Brent Neiman showing that labor’s share of income has declined all over the world. It’s also consistent with work by economist Simcha Barkai, who found that business profits have increased much faster than the value of the capital they own."
The previous theory:
"But this leaves the question of how shareholders have managed to extract increasing rent from the economy. In a healthy economy, competition should get rid of rents, because new companies will enter the market and vie for a slice of that pie, offering lower prices and higher wages until the rents mostly disappear."
Evidence that previous theory is wrong:
"But Gutiérrez and Philippon estimate that increasing returns to scale aren’t correlated with the breakdown of the relationship between Q and new business entry, casting doubt on this explanation. Instead, the authors point the finger at increasing regulation. They found that the higher the volume of new regulation in an industry -- measured by analyzing the text of the Code of Federal Regulation -- the less new entry is driven by high Q. "
To summarize, stock valuations have increased. Several studies support the idea this is due to an increase in the proportion of profits going towards shareholders instead of laborers. Previously people might have thought that in a free market new competition would appear which prevents this from happening but other studies suggest this isn't happening because of increasing regulation, possibly due to increased lobbying.
The fair value of a company is the net present value of future profits. To calculate NPV, you take some profit in the future, and discount it to the present by dividing it with the discount rate (usually inflation or risk-free rate), and repeat. Due to FED’s quantitative easing, the discount rate has been historically low for the past decade!
What, for example, is the NPV of a tulip bulb? Or a share in the South Sea Company?
economic downturns are looked at like they are just numbers on a chart, but they have real visceral and sociological results for millions of people and can be felt for a generation or more
So, they managed to blame capitalism and the free market for the effects of lack of free market and the will of politicians and the public to accept regulation that causes less free market? What the hell!!!! This is the kind of culture that makes it possible for estabilished companies to lobby for increasing regulations. If there were a "free market at all cost" approach, maybe even punishment for those who attack the free market with lobbying, there would not be this kind of problem. There would be other problems, of course, but not this one. Of course, they had to blame even the lack of free market on the free market. Come on!
So it’s possible that big companies are increasing their market power by
using lobbying to capture politicians and regulators. If this is true, it’s
very bad news for free markets and capitalism. It would validate the claims
of Senator Bernie Sanders, the socialist presidential candidate who has
blamed corporate interests for the woes of American workers.
It would validate the claims of Senator Bernie Sanders,
the socialist presidential candidate who has blamed
corporate interests for the woes of American workers
I'm not sure how that author makes the segue from regulation being a problem to more government control being the answer.
I could use my native Norway as an example, where corporation has not taken an increasing share of the economy and workers are better compensated.
We have been run for many years by Bernie style guys. However we tend to have much simpler regulation than the US, which has been run mostly pro business/capitalism types of people.
Size of government and regulation complexity is NOT the same thing. The amount a country taxes its citizens and the complexity of the tax code e.g. is not remotely related. But conservative rhetoric implies that it is. In Norway we have considerably higher taxes than the US, but our tax code is far simpler.
Likewise our health care system is mostly government controlled, but US health care system while mostly private is encased in far more complicated regulations. Our health care rules and regulations are far simpler. The bureaucracy surrounding US health care is mind boggling.
Although this is hard to impress on an American, a more powerful government often means LESS and SIMPLER regulations not more complexity. A more powerful government less influenced by special interests can simplify things by creating common standards for things.
We have a lot of that in Norway, where the US has lots of incompatible standards, because government is weak or heavily influence by business interests. E.g. there is a standard for electronic prescriptions, so I can get a prescription with any doctor and that will automatically be available in any pharmacy regardless of the company operating that pharmacy.
It isn't hard to explain why things are this way. US politicians can easily be bought, and companies pay them to create complicated regulations which benefit them by keeping competition out.
Why do you think the most complicated bureaucracies exist in developing countries? It is because government is so corrupt. Corruption drives complexity. If you want simpler rules you need cleaner government. Then you need to get money out of politics. Bernie Sanders is the guy to do that.
What prevents government from being influenced by business in Norway? What keeps it “strong”?
Conservatives and libertarians have said this for decades, but they don't exist in his world, so he treats it as a brand new independent discovery?
A market where companies engage in regulatory capture is not a free market. The word you're looking for is "corporatism", Noah Smith.
How?
So when you don’t have a free market?
The status quo is a bastardization of capitalism.
So no, most Americans do not have a 401k and seeing as that would be one of the easiest / most common ways to access the stock market, therefore have no shareholdings.
And people also get social security at 65.
But thats not true, retirement funds own only around the 37% (according to [1]), considering thats millons of americans, the pie is clearly awfully cut.
[1] https://www.businessinsider.com/who-actually-owns-the-stock-...
Over 54% of Americans own stock. https://news.gallup.com/poll/211052/stock-ownership-down-amo...
Putting aside the labour value of theory (it has some minor problems, like being wrong), you'll note that Marx was talking mostly about actual factors of production. Labour is one of these, the other traditionally-named factors are land and capital (ie, factories, machines etc).
But most of the increase in the wealth of the wealthiest of the past 20 years has occurred almost entirely in the sharemarket, in which prices have run far ahead of net profits. Shares aren't, in themselves, factors of production. It might be argued that the extraction of surplus value is represented by the share price, except that the share price is set by shareholders or would-be shareholders trading with each other.
It's hard to see the link as clearly as it existed back when "capitalist" meant "a man who owns the factory".
You have causality backwards.
> What about the Great Depression?
Marx didn't predict it. He predicted a very different phenomenon based on the long rate returns to capital leading to periodic crises, which would end in a revolution and after that he gets a little bit vague.
The Great Depression was an asset bubble that burst with no fiscal or monetary mechanisms available to cushion its effects. It was the most spectacular in a long line of crises exactly like it.
> Marx spent most of Das Kapital differentiating market value and essential value and so it is with shares.
Marx made the same error you're making; which is believing that there is a "true" or "essential" value for anything. His economics was based on the economics of the time, which had not yet solved the diamond-water paradox with the subjective theory of value.
Marx was trying to make steel from clay. He was a brilliant and original thinker, but his theories didn't pan out. The crises he predicted do not follow the form he described, the revolutions which succeeded were not in the countries he predicted, the inexorable laws of history turned out to be very exorable after all.
His main contribution since the late 19th century has been as an anchor to progressive economic thinking.
Is this really what we've sunk to? Is this really what everyone thinks? Are we so jaded by the failures of our economic system we can't even tell when it's falling apart?
Surely, even the most staunch supporter of the free market can admit that at a bare minimum, capitalism in this country is in desperate need of better anti-trust regulation to stop monopolies from crushing all competition. Surely we can admit that simply making a bunch of tech startups with weird website URLs is not going to fix the economy by themselves, and might even be making the problem worse.
Of course, given that we can't even agree that global warming is a problem as the arctic permafrost melts, I'm not particularly hopeful.
Except literally nobody will do that, except the caricatures in the fantasy of your own mind.
Not taking the position, but free market supporters typically point to regulations as the main reason why monopolies exist.
Contrast the treatment of monopoly in Marshall's Principles (the leading text from the 1880s through the 1940s) -- a full chapter, plus numerous other mentions -- with, say, Hazlitt's One Lesson, where it escapes mention entirely, save a note at the end. Hazlitt's book is corporate propaganda.
https://archive.org/details/in.ernet.dli.2015.217841/page/n5...
https://archive.org/details/in.ernet.dli.2015.217841/page/n9...
https://fee.org/resources/economics-in-one-lesson/ 9full text in one page)
Yes, I do agree. For example, we should stop threatening media platforms like Facebook and Google with regulations that would put any competitor out of business, either because the regulations are so onerous or because the regulations are so unimaginative that they accidentally rule out perfectly viable, and better, business models.
Perhaps we could enact a law that prevented regulation of most markets.