Blame "too big to fail" and negative interest rates.
When big banks had problems, the solution was to make even bigger banks and giving them free money in order to look good.
They take savers money with negative interest rates and give it free to big banks and companies like Google, Microsoft or Deutsche Bank.
Given that if you(as a person or small company) ask a bank for money you will have to pay 20% interest rates or so, this is a tremendous advantage for them.
Big companies have free money because they can ask for a loan and give back later less that what they took after inflation!!!
This means big companies could buy the competition instead of competing with them , like facebook with wassapp, with stock, being cheaper than having their overvalued stock go down with competition.
It also means big companies could buy their own stock in the market and pump up their value, making the stock acquisition cheaper and increasing board bonus(from stock owners) look reasonable.
Central banks and politicians are obliterating middle class and business owners. This is a terrible thing because History teach us this always happens before a (violent)revolution.
Capitalism without the corrective downward functions of capitalism creates scary unwieldy beasts. Moral hazards are very real yet the people who wished to avoid this in 2008-09 by letting them fail were called reckless (myself included) as austerity would have caused a ripple effect which hurts the incomes of regular people.
But instead of giving temporary safety nets to protect those regular people - while weathering the storm of a recession and rebuilding the system into something better, an evolution of sorts - the US gov went head and gave safety nets to the big corps and maintained the status quo of the last generation.
Which allowed the type of behaviour your talking about to flourish.
Basically the government and financial power players kicked the can down the road for the next generation to experience the effects of competitionless financial exploitation. The priority was (and is) valuing the financial industries short-term health over the organic growth of business, the flow of capital to things that create jobs (aka small/medium businesses which employ 90% of people), and long term wealth generation.
I personally don't find it surprisingly that it took 8 years for median incomes to rise again while the top tier upper class has been doing absolutely fine since the crash. This was by design of a liberal democratic administration.
Yet regular people are in no better position to deal with the next recession (particularly economically and to a lesser extent socially as US health care is slightly better but still embarrassingly bad) and the same people who caused the last one have likely been given better jobs, raises, and positions of power from which to influence on the next political administration.
This argument doesn't make any sense to me. Neither Google or Facebook or Apple have been using cheap loans to fuel growth. They have more cash flow from operations than they know what to do with, they don't need loans.
They also can't borrow at negative real interest rates. Only some governments can. And you can't blame the governments for low interest rates. At least in the medium term, interest rates are mostly set by the market, supply and demand for loans. There's not a lot of demand.
Gvien the forum we're on, it's worth pointing out that today's white collar laborers are capturing one or two orders of magnitude less of the value they're creating than the blue collar workers of 1990's detroit.
360 billion* divided by 1.2 million = 300000 "per employee". Typical salary to 40,000ish-100,00ish range for laborers/engineers. The disparity in those numbers isn't so bad at all.
Conversely, 1 trillion divided by 137000 = 7,299,270 "per employee". Typical salary of engineers in those firms is closer to 100,000 to 200,000, and that's just for the golden child software engineers. And without accounting for massive cost of living differences between 1990 Detroit and modern day SV.
Which wouldn't be so bad if there were some engineers earning close to or more than the "per employee" numbers, but I've never heard of anyone making even close to 7 figures as an engineer at a big firm...
That is a direct quote from the article. The article states $36B as well, not $360B.
"None of this helps the image of big business. Paying tax seems to be unavoidable for individuals but optional for firms. Rules are unbending for citizens, and up for negotiation when it comes to companies. Nor do profits translate into jobs as once they did. In 1990 the top three carmakers in Detroit had a market capitalisation of $36 billion and 1.2m employees. In 2014 the top three firms in Silicon Valley, with a market capitalisation of over $1 trillion, had only 137,000 employees."
On the one hand, we had a few decades of unprecedented sharing of prosperity. Those times have ended.
On the other hand, the unions have become their own sclerotic system of oppression. The greater pity, they do not see it that way.
Especially once all this “deregulation” has finished. Actually, it was not deregulation, but divestiture of public services to the plutocrats. Barely any regulations have been removed.
Now we have basic services supposedly available on a free market, but in practice there are so many requirements that it’s all crony capitalism. And one of the major powers fighting for its share of the bureaucracy and waste is the unions. That’s one reason why it costs so much and takes so long to do anything in an industry controlled by unions.
Unions are nice, but tricky to do right, and currently there are a lot of bad examples.
The private sector unionization rate is around 6.7% in the US so, despite whatever issues unions may have presented in the past, they are certainly not the primary cause of any of our current economic issues.
But the public sector unionization rate is more like 36%, and unions have an outsized economic impact. They aren’t the primary cause of our issues, but they have their share.
Whether it’s teacher unions that make sure teachers can’t get promoted for their quality, or construction unions that make sure housing can’t be built without protracted negotiations and significant expense, or transportation unions that make sure automated subways always have an operator, multiple operators in New York, or dockworker unions that oppose new technology on the (correct) assumption that they would lose jobs. Union opposition to technology was one reason why the Port of San Francisco no longer is a major shipping port; rather than some losing their jobs, everybody lost their jobs.
It’s nice if labor can partner with capital. In practice, it’s often more like a squabble for scarce resources. Sometimes you have to accept that a role is no longer necessary, but that idea doesn’t fit the union ideology.
You're making an ideological argument, not a factual argument.
How anyone can argue that working-class people have too much economic power today is just bizarre to me. The decrease in the share of the productivity gains to the working class and the rise in inequality tracks almost exactly with the decrease in unionization.
I do not claim that working-class people have too much power. I claim that unions, under the impression that they are working for the people, actually are their own form of oppression. The capitalists control the capital, the union bosses control the labor, and the worker is shut out. The ending of Animal Farm, illustrated.
There is an ideological component. I suspect that unions have a blind spot regarding just how important labor is. Of course there is no value to humans unless humans get their fair share of benefits out of the process. The problem comes when labor for labor’s sake becomes the goal.
Then unions tend to reject labor-saving technologies, which would work if they had a captive market. That might contribute to why unions still have such a large share of government and geographically constrained markets. But a lot of the time, the union temporarily improves the worker’s conditions, and then the capitalist moves the job overseas, or a competitor who is already overseas rises out of obscurity, or the citizens flee to the suburbs; and the next generation has a harder time finding an entry-level position to escape from poverty.
Unions also tend to discount intellectual contribution. In the United States, teachers are constantly under attack regarding their professionalism. Well, maybe we could treat them as professionals more easily if their unions allowed us to treat them as professionals. But no, they are labor, and a long-serving crank has more status than an inspirational young teacher. (Inspirational old teachers also have more status, but inspirational young teachers rarely stick around that long.)
I’m not in principle opposed to unions. I just think in notable cases they have been harmful.
Even as a contractor with an hourly rate. The assumption is the rate given is for 40 hours a week. I've had a number of hourly contracts where I was told either work the over time or find a new contract. The lack of care to employees is appalling at times.
I've been on contracts that are flat billed based upon 40 hours / week but no overtime is chargeable. The problems start when more than 40 hours / week is regularly expected to perform assigned tasks to standards of the contract and there's little control you have over the client putting barriers in place that make you less productive making the true hourly rate at least 25% lower.
I've only had two types of contracts. One is absolutely nothing to do, what I'm hired to do is not feasible and shelved. The second is so busy, so much overtime you can't breathe.
So many jobs now, over work and expect over 40 hours. With no additional compensation. A majority of my contracts are flat rate. I had one role that paid half of my rate for over time.
Not just tacit -- I used to work at a factory, where as an engineer I was exempt. But I was on 12 hour shifts, 3 on, 4 off, 4 on, 3 off. Except that if there's a meeting, you stay an extra hour or come in an hour early. Or if there's an incident, you stay until everything is cleaned up. And if there's a meeting on your off day? You come in anyway. You get paged in the middle of the day / night when you're supposed to be asleep? You call in, and if things are bad enough you come in. Nothing tacit about it. If you didn't do those things, you were getting fired.
You can't divide market capitalization by number of employees and compare that with "yearly" salary figure. A better comparison would be to divide revenue by number of employees.
You are going to have high market cap per employee in asset rich companies like oil producers and REITs. The value in those cases is primarily the mineral and real estate assets, not the employees, so tying salaries to it doesn't make a lot of sense.
Annual salaries come from our weird convention of defining years as groups of 365 days. A software engineer can earn $100k/year but also $1m/decade. Neither is comparable to a company being worth $xbillion because you're comparing stocks with flows.
When it comes to opinions or facts in sensitive subjects (such as anything related to taxation) - to be able to discuss freely you actually need a throwaway account.
A lot of people only down vote when they disagree to some content or questions and leave the questions and discussions somewhere else.
Funny cause amazon is closer to the 330K per employee mark. Wonder why their P/E is so high? Assuming it took all of walmart's sales it would only get 4 times bigger then now. how much profit can it extract?
Amazon appears to be able to ramp of profit at will via controlling expenditures and promotions. Review this years numbers vs the prior years. I think they wanted to show a investor what it looks like when they 'wanted' to turn a profit instead of plowing money back into everything imaginable.
If I'm wrong and they are still plowing money back into everything and are still throwing off numbers like this (compared to the past) ~ that's simply amazing.
even after thinking through that defense - a 191 P/E is above my understanding. I think their technology and software revenues are seen a hyper growth
It's possible. I did a research report on Amazon many years ago since I kept hearing people gripe about them not being profitable. They turned a large enough profit on that year that they could've wiped out all their debt in 1 to 2 years. They could then just keep pulling in profit. It was clear they were instead re-investing all their money back into the company's operations for growth and dominance. They also had this growing business selling computing resources that had taken over a new market with projected long-term potential. ;)
I'll bite. How about for every incremental $1 in ecommerce spending, Amazon gets about 50 cents? And (roughly speaking) many new startups start out and grow on AWS providing new revenue as well as valuable intelligence.
Online sales in the United States are expected to reach $523 billion in the next five years, up 56% from $335 billion in 2015, and mobile devices are expected to be a key driver in that growth, Forrester Research Inc. says.
"today's white collar laborers are capturing one or two orders of magnitude less of the value they're creating than the blue collar workers of 1990's detroit."
Which is why the problems associated are much more about the macro-economy than they are about silicon valley. The middle class is being gutted before our very eyes while the elite gobble up more and more of the "created value" through the power of technology.
It depends on the business. A lot of businesses create things that do take away from other people. Amazon destroyed the local bookstore, for one. In a sense, wealth is spread through redundancy and waste, and the more efficient people get the less wealth. My home town going from three regional retail chains to a single walmart led to the destruction of plenty of wealth through efficiency.
edit: it depends really too what we mean by wealth. If we define wealth as being employed, good lord wealth is zero sum. The amount of jobs the modern tech sector has created has been pitiful, with poorer compensation than many unskilled fields. If it means by possessing things, its a mixed blessing.Plenty of free or low cost content, though large staple goods like houses or cars are climbing up there.
Also, Martin Ford mentions something called the lights in the tunnel problem. Imagine a tunnel full of lights that represent the wealth of people. In the modern world, a handful of lights shine intensely bright, while increasingly more are dark, dim, or low-intensity. But the tunnel is dark, because a handful of lights can't generate enough light to make it illuminated. He used it in context of automation, but this is modern wealth creation, and eventually it will reach the point where the ones controlling the wealth have done so by dimming so many people that the tunnel goes dark.
Well, it is zero sum, but the actual limits are unimaginably vast. Though, there is a very high energy barrier to exploiting the resources of the entire universe. Let’s at least get to Mars, first.
There’s the matter of supply and demand. Nothing comes out of nowhere. When you create a thing, you demand some resources, and then the next person has to pay more for the same resource. Even for a creative output from yourself, you need food and shelter. (And what a controversy shelter has become, in the San Francisco Bay Area.) In the ideal case, the resources you consume enable you to create more wealth than you cost to the rest of society, and thus society benefits. (Not the now homeless person in San Francisco, though.)
Technology is sort of weird in that consumption actually decreases costs, in some situations. The semiconductor companies are paying exponentially increasing costs for state of the art fabs, and they need to keep the fabs selling at peak capacity to make a profit. Also, software is merely knowledge, with very low reproduction costs, so a small production of software can be consumed on a vast scale across the planet, and facilitate the production of more software, enriching people’s lives. This does not make it easy to reward the creators fairly.
Free market transactions are not zero-sum because each party feels they gain by making the trade (else they would not trade). Zero sum transactions are things like theft, any transaction with an unwilling party.
IMO, this problem is mostly a factor of the consolidation of finance.
The roll up of banking makes it impossible for smaller enterprises to get traditional capital. We moved away from the old, boom/bust distributed banking model towards a weird form of command economy with a cartel of mega-banks, which are really just proxies for the government.
People blame technology for the post-recession economy, but I think the billions/trillions of capital the flooded the market never made it into the economy. No wonder little is happening outside of businesses that work with a venture model.
Think about the reduction in what would be owner operated small businesses like shops and restaurants - go to almost any town (not city) in America and half or more of the commercial district is franchised or corporate chain stores.
Other owner operated businesses struggle even outside of retail too.
A friend of mine ran a 4th generation, profitable manufacturing business and ended up shutting down not because of costs or competition, but because it was increasingly difficult to get working capital when the regional financial institutions were rolled up.
Sarbanes-Oxley probably played a role as well. Successful startups now chase acquisition over IPO, which leads to the creation of huge empires (Apple, Google, Amazon, Microsoft) and few medium-sized players.
No, that's because the overvalued market caps wouldn't fly in an IPO. If Uber went public, they'd have to disclose real numbers, which probably indicate they're unprofitable. They're only worth $68 billion when the market doesn't have to pay out $68 billion.
It's today's very low interest rates that fuel "private equity", which is usually debt at some level.
* The share of GDP generated by America’s 100 biggest companies rose from about 33% in 1994 to 46% in 2013.
* The five largest banks account for 45% of banking assets, up from 25% in 2000.
* About 30% of global foreign direct investment (FDI) flows through tax havens; big companies routinely use “transfer pricing” to pretend that profits generated in one part of the world are in fact made in another.
This article did a good job of staying relatively neutral for such a controversial subject. It seems as though an oligopoly of multinational conglomerates will be the only choice for essential consumer products in a short 10/20 years. Without competition from smaller open-minded businesses, only innovation in rent seeking will take place. The companies that end up in control of the infrastructure and hardware will end up having more power than most of the world's governments. The cynic in me feels like we're in for some turbulent times.
It's not so strange that we get fewer "smaller open-minded business(es)" though, considering the increasing regulatory burden. Of course, they are maintainable - but they do consume a lot of resources to tick them all off.
Most of the regulations doesn't actually directly cost to comply with, but you'd need more staff or dedicate more time to things that are not your core business - that's money out of the pocket.
> But better the grind of multilateral negotiation than moves such as the European Commission’s recent attempt to impose retrospective taxes on Apple in Ireland.
Uh, isn't that "move" enforcement of the results of multilateral negotiation (the EU and its rules)? What exactly will or should happen when parties of these multilateral negotiations and agreements the column champions violate the rules? I'm guessing it'll resemble a "retrospective tax" so closely that it'd be hard to tell the two apart.
This isn't specific to Apple or Ireland (or even taxes) fwiw. Ordering the company to pay back the subsidy is a normal part of the remedy for subsidies found to violate EU anti-subsidy regulations. The intent is to make it ineffective for a country to pay out subsidies, because they will in the end not have the intended effect, as the company won't get to keep the money. If the remedy were a fine levied on the subsidizing state, but without required repayment, illegal subsidies would have their intended effect of actually subsidizing the target firm (they'd just become more expensive, because the fine would become part of the cost of the subsidy).
For example, when Real Madrid was found to have been unlawfully subsidized by a local Spanish government earlier this year (they were given €18.4m as compensation for a land transfer that fell through), they were ordered to repay the €18.4m [1].
Ireland is the one (accused to be) violating treaties it signed, with the goal of getting an advantage over other signatories, so it is not unlogical that it could be fined in some way for doing so.
In this context, multilateral means engaging at least a majority of the biggest economies on the planet. The EU solo-ing it is unilateral, just like the US solo-ing it would be unilateral, even if we described US law as agreed upon by 50 member states.
A libertarian explanation is that in the age of the Regulatory State, it's often more important to be the biggest lobbyist than to make the best product.
"In the Game of Crony Capitalism, you lobby or you die."
The problem with the libertarian explanation is that it contradicts the actual facts. The "age of the Regulatory" state started in the 1930's. It has been in decline for decades--with major sectors of the economy being deregulated in the 1980's and 1990's. In the 1950's and 1960's, regulatory agencies often had the power to directly exclude potential competition and set prices for goods. They have a fraction of those power today. Surely, that decrease in regulatory authority would be linked to a decrease in consolidation. But consolidation has increased during that time.
Moreover, there is a difference between a plausible theory and showing actual causation. How is lobbying helping Amazon and Wal-Mart to replace smaller retailers? Point to something concrete. Because it looks like the real explanation is the massive efficiency advantages those big firms possess.
Looking at other sectors of the economy: why are Apple and Samsung taking almost all of the profits in the smartphone industry? Are they better at lobbying the "Regulatory State" than HTC or Nokia?
Antitrust enforcement was greatly weakened by Reagan and has never been restored to its previous level, even during Democratic Administrations [0].
Superficially, that appears to be a decrease in regulatory activity. But it's one that obviously favors consolidation, and probably has the support of a lot of big-company lobbyists.
So the reality is more complex, I think, than either you or BurningFrog are suggesting.
The number of pages of regulations can increase even as the actual economic effect of regulation goes down. Air cargo deregulation is a good example: http://mercatus.org/publication/unleashing-innovation-deregu.... NLRB is another good example. I guarantee you it has more pages of regulations than it did in the 1940s--but nobody would argue it has as much power over the economy as it did back then.
Indeed, increased pages of regulations is as much evidence of decreased regulatory authority as the opposite. In the 1940s and 1950s, agencies regulated top-down pursuant to broad discretionary standards that could be summarized in a few pages. Today, agencies have to issue detailed regulations, justified by years of analysis and tens of thousands of pages of records, to change the lightbulbs.
Huh? The tax code isn't even close to 70,000 pages long. What specific document are you claiming to be 70,000 pages long? The Standard Federal Tax Reporter? That's not the tax code.
I see, you are correct. It's the explanatory material that has had to grow. While it's not a given, I would assume there there is a positive relationship between the code and the explainers.
I don't have time to put together a great convincing case, so I'll just say that this is very different from my view. Some high level regulations have been removed, sure, but meanwhile almost every corner of life now has regulations and regulators that have to be obeyed and asked for permission.
It would be nice to have some kind of objective measure(s) of the overall level of state regulation, rather than trade anecdotes/gut feels. Some economist has probably done that already.
I would guess your view derives from the fact that the parts of the regulatory state that have grown since the 1970's have more direct effects on individuals and small businesses: environmental, workplace safety, anti-discrimination, anti-money laundering. But there isn't much money in gaming those. The big-money sectors of the economy: telecommunications, transportation, manufacturing, and finance have been deregulated. And software has become a big-money sector of the economy and has remained almost completely unregulated.
I handle appeals in regulatory cases, so I have occasion to research historical regulatory treatment of different areas. It's really eye-opening to go read ICC, FCC, or FERC opinions from the 1940s and 1950s and compare them to ones from today. Agencies back then had vast powers: they could deny entry of a competitor into a market if they felt it would harm the revenues of incumbents. If you were an air carrier, you had to publish your prices, and if the agency did not like them it could impose prices on you. Those agencies are a shell of their former selves. Agencies used to have to power to structure industries top-down as they saw fit. Today, they might have thousands of pages more regulations covering various minutia, but nobody is going to build a "corporate colossus" lobbying to influence agency treatment of minutia.
I run a very small business metal fabrication facility in one of the most regulated and socialist of cities in the US, San Francisco.
We deal with hazardous chemicals, highly flammable gases and markedly unsafe working conditions.
Me and the rest of the people like me get an inspection once a year from the fire department to make sure minimum standards are kept (to ensure the safety of firefighters if they ever enter). tanks are tied up. flammables are kept in closed cabinets.
We pay the city around $100 a year in fees tied to volume of hazardous materials. Otherwise they leave us completely alone. We have to keep track of whether sales are retail or come with a resellers cert from the state.
When we have extra work, I bring in guys under the table. If I had real employees I would have to have additional insurance, and pay the city mandated minimum wage - which is a lot less than market value for a semi-skilled fabricator.
Its completely* anecdotal, but this boogeyman of massive regulatory burden doesn't seem to be universal. From my tiny little patch I'm free to fail or succeed without any state interference.
EDIT: if i pay someone more than $600, i have to file a 1099. sorry - all of this seems quite irrelevant, but personally i'm tired of having people claim that the small businessman is being repressed by excessive regulation and government tyranny. The small businessman is being repressed by the state of the market and the large businessman.
Somewhat related, but in my experience advising hundreds of small businesses over the past few years the worst (performing) are the ones that blame excessive regulation and government tyranny as a reason for their lack of progress.
It's rarely/never that from the independent perspective of the advisor to the company...
Not to turn this into a political discussion, but these same small business owners share a similar political leaning and are mostly parroting the canned narrative they hear on their respective talk channels...
I've had this argument with other people in the past and am willing to have it with you: the idea of a new and unprecedented amount of government "meddling" in the otherwise "free" market is a myth. The sea change of the 20th century lay entirely in bringing the machinery of government to bear in favor of people it had previously been used against, and against people it had previously been used in favor of.
And of course the people who previously were favored see this as new and invasive interference, because they had grown so used to being the favored parties that they simply took for granted that "free market" = "system rigged in my favor".
That line of explanation was never satisfying to me because it doesn't adequately address what happens when any company gets so large that they can apply a full range of non-regulated techniques to extract rents far above value provided?
Without government don't you get the the same place faster?
Isn't this a common libertarian fallacy - that government and private enterprise are 2 separate entities. Government is bad and should be restricted from interference and private enterprise should not be regulated and market forces will auto-converge to some nice maximum.
In reality there is really not that much difference between government and large enterprises. Funny enough that can also be reconciled with the libertarian dream, perhaps by simply viewing bits of the government as extensions or private enterprise. So FDA is a subsidiary of Monsanto, FCC of Verizon and so on.
So what is the fastest and easiest way to make a most profit - change regulatory environment, lobby, and so on.
This works for large companies and down to individuals as well. We just saw in latest DNC leaks, there is a price you pay and you get named ambassador in some picturesque European country.
> Government is bad and should be restricted from interference and private enterprise should not be regulated and market forces will auto-converge to some nice maximum.
That is not how I understand libertarianism. It is not that government is bad. But that government's role is to be the rule maker and referee. The government should not be playing the game.
Rather than "regulate" a large company, the government should make sure the rules don't hinder competitors. Ultimately, it is more competitors each trying something different that drives price down and quality up.
Conceiving of the government and private enterprise as separate entities really doesn't make sense. They both exist as a matter of energy and resource economy (in the sense of managing resources). They're adversarial and mutually beneficial, as is pretty much anything in any ecology.
Some seem ridiculous, and some don't. That said, I've seen some called ridiculous that I thought made sense. E.g. I've seen people call requiring nutritional data be available a ridiculous regulation. Maybe the ones I find ridiculous makes sense to some people out there.
Hm, I do like products with nutritional data. But isn't the non-regulatory solution here to just not buy products without nutritional data if so? I mean, I'd certainly contact my favorite brands and request that. If they won't hear me, then maybe there's a local alternative that could?
For some people, if nutritional value is out of sight, it is out of mind. I know that when I order at a restaurant, if the menu contains calorie content of meals it changes my ordering habits. But if you don't care about that segment of the population making an informed decision on what they eat, then yes, your recommendation is a solution.
No, they won't. It's more profitable for all of them to use cheaper and less healthy ingredients, and lie about what's actually in the food. Cost to consumers to figure out what's really in every package on our own would be overwhelming.
I have now and I fail to make a connection to the argument that I was making. Could you elaborate in which way you think it's applicable?
My argument was that the non-regulatory/voluntary solution would be for customers to demand from manufacturers/sellers to provide nutritional data, else they'd contact/buy from another manufacturer/seller.
> But isn't the non-regulatory solution here to just not buy products
> without nutritional data if so?
The point is the consumer does not have as much power as you think. Because consumers act as individuals and not as a group (prisoners dilemma etc.), consumers do not nearly have as much information as the seller, for a consumer the particular issues is one of millions he's supposed to take care of (save the rain forest by buying these but not these, be politically active here and here and here and again and again and again, inform yourself about these 1,000 products that you regularly buy, etc. etc. etc.).
So the race to the bottom and offering the lowest common denominator is what happens, not "competition ensures we get the best". Customer choice and competition between sellers are only two among many many more forces. It works in the simplistic model of how "capitalism" is supposed to work because - it's a model.
I unfortunately don't see how that changes anything I've said. My only contribution was to offer a supposedly non-regulatory solution could be, I have put no value in if it's a good or bad solution.
Given your feedback, I take it that you do not consider it to be a good solution - that is fine.
To discuss your feedback, I do agree that there can be and often are information shortages on both the buying and selling side, although we do seem to disagree on the influence individual and group choices (ie. power) can have or have, where I think they're more powerful and influential than what you might think. When it comes to group choices, there have been many successful purchasing associations and voluntary certification organizations through time.
It's not just regulation. The government actively subsidizes our largest industries - tech research via military spending, agribusiness via farm subsidies, oil firms via direct subsidies and global military intervention, and on and on.
It would be helpful if you would supply the Libertarian explanation for the Facebook, Google, Microsoft, and Amazon monopolies as products of the regulatory state and crony capitalism.
> It means making it easier for consumers to move their data from one company to another
I think this would be absolutely brilliant. The ability to readily move data from one service provider to another would provide a much-needed boost for competition in the digital space.
I don't know how common it is, but at least in Finland one can move their mortgage from one bank to another if they get a better deal elsewhere [1]. Or, one can move their mobile phone subscription and keep the old number. I find these kinds of service transfer entitlements essential for efficient competition.
[1] Or technically: one can always pay their Euribor bound mortgage off without extra cost, and take a new mortgage from another bank.
All data associated with my user account, perhaps with some kind of a schema if applicable. Other services could then implement data import features for this, or for just the part of the data that concerns the service they are providing.
Basically, it should be clear that all data connected to a person is irrevocably theirs. Any provider can build services for taking advantage of the data -- but it'd be the user's right to migrate it at their pleasure.
Standards happen so slowly. By the time people agreed on what should be in this, that agreement would be antiquated.
We need something like what happened with OpenID and Oauth. OpenID may be gone, but one company made a few bucks on it and OAuth is largely inspired by it. Someone needs to find a way to make a buck moving profile data around in a meaningful way then that becomes a de-facto standard that gets copied and used all over.
Then the government can regulate something that already exists rather than regulate something shitty into existence.
Yes, I didn't mean it would have to conform to a standard of any kind. You'd get the data; it would be up to you (or a service you choose to use) what to do with it.
Of course this wouldn't lead to any magical inter-operation of services, but that wouldn't be the point anyway.
> None of this helps the image of big business. Paying tax seems to be unavoidable for individuals but optional for firms
This kind of grinds me. There are tons of tax breaks for individuals: mortgage interest deduction, tax-free health care, etc. In fact, the exclusion of health care benefits from taxation costs the government more than all corporate tax avoidance schemes put together.
If business can deduct all the costs needed to maintain existence, then why shouldn't individuals? Health costs are required for existence, as is housing. Frankly, I think food and rent should also be deductible as an individual if a business can deduct the cost of catering and office rent.
There are a few tax breaks for individuals, but many more for companies. They're called "business expenses" :). I wish I could deduct everything I required as an individual (notably, there is no rent deduction for individuals).
Maybe it doesn't confuse others, but the removal of the word 'the' before "corporate colossus" (as it appears in the subtitle of the linked article) makes this title hard for me to parse.
Centralization is a big problem whether you have a mainly cooperative system like communism or a competitive one as in capitalism.
Decentralizing technologies can help us get systems that are distributed, diverse, and free to evolve but also capable of holistic measurement and operation.
Such as bitcoin, ethereum, NDN, swarm, Namecoin, 3d printing, etc.
Growth is globalized. Global companies get a disproportionate share of growth. Therefore giants will become increasingly large relative to non-global entities.
I'm not sure what the specific problems are. Which makes prescribing a fix impossible.
In my (uneducated) opinion, the specific problem is that the people, through their governments, lose control over these large, global entities that affect their daily lives.
When they get this big, there's no way to tax them and no way to punish them for wrongdoing - they could just move to a friendlier country, use loopholes, etc. Of course, thanks to various trade agreements, they will still have access to our markets...
And the consumer can't always go elsewhere - there may be no viable competition, or that competition gets bought by the larger company for what is essentially pocket change.
I know it's not an too popular opinion here on HackerNews and I'd say you're sort of right, but you got it in reverse. The problem is not that it's hard to control or tax companies, the problem is that it's not as easy for you or me to do the same.
You have to have significant resources to break free from local restraints, which is really unfortunate. It's also a lot of resources that gets spent, just so people or companies can do whatever they want with their own resources. In other words, it's possibly a loss of production - those resources could have gone elsewhere.
Please be gentle, I'm open for discussing these things.
but indeed that they are out of control: they can remove money from an arbitrary economy and not necessarily put it back (see apple that sitting in an incredible amount of cache) => (they dont need to hire people locally.. at least not as much) => they -at the moment are- making poor countries/people even poorer, rich ones even richer => they have more and more power in less and less hands
One specific problem is that global companies are currently able to engage in tax arbitrage where they get to shuffle their profits around the world to wherever the most favorable tax rate is. This leaves many of the countries that actually host these companies and provide services to them - like educated employees, transportation infrastructure, and a judicial system - without any tax revenue from the company.
The solution is simple. Stop taxing profits. Tax consumption. Defining "profit" is nigh impossible.
Starbucks is headquarted in the United States. Their research in Canada. Their beans from Columbia. European distribution is out of Germany. London finances new franchises. A location in France sells a latte for 4€.
How much of that 4€ is profit and how big of a slice does each country get? Because each country has a very fair claim to say that they deserve a slice of the profit pie.
It's impossible. There is no single answer. There is no moral system that precisely describe to which countries go which dollar.
It seems that every country that use them decide to apply them in addition to income taxes. And that means the VAT is never big enough, and there is no political climate to gradually replace one with the other.
In theory, a VAT, land taxes, and universal income should form the perfect taxation system together.
Actually removing profit tax and simply add VAT to the final consumer sale seems like a decent starting point for simplifying the system and prevent tax evasion.
When big banks had problems, the solution was to make even bigger banks and giving them free money in order to look good.
They take savers money with negative interest rates and give it free to big banks and companies like Google, Microsoft or Deutsche Bank.
Given that if you(as a person or small company) ask a bank for money you will have to pay 20% interest rates or so, this is a tremendous advantage for them.
Big companies have free money because they can ask for a loan and give back later less that what they took after inflation!!!
This means big companies could buy the competition instead of competing with them , like facebook with wassapp, with stock, being cheaper than having their overvalued stock go down with competition.
It also means big companies could buy their own stock in the market and pump up their value, making the stock acquisition cheaper and increasing board bonus(from stock owners) look reasonable.
Central banks and politicians are obliterating middle class and business owners. This is a terrible thing because History teach us this always happens before a (violent)revolution.