Comment by Retr0id
Comment by Retr0id a day ago
I wonder, is there any way to avoid this kind of market failure? Even a planned economy could succumb to hype - promises that improved societal efficiency are just around the corner.
Comment by Retr0id a day ago
I wonder, is there any way to avoid this kind of market failure? Even a planned economy could succumb to hype - promises that improved societal efficiency are just around the corner.
There is a way, and if anyone tells you we have to go full Hitler or Stalin to do it they are liars because last time we let inequality cook this hard FDR and the New Deal figured out how to thread the needle and proved it could be done.
Unfortunately, that doesn't seem to be the flavor of politics on tap at the moment.
Sam Altman cornering the DRAM market is a joke, of course, but if the punchline is that they were correct to invest this amount of resources in job destruction, it's going to get very serious very quickly and we have to start making better decisions in a hurry or this will get very, very ugly.
A tax on scale.
Yeah I know HN is going to hate me for saying that.
If a big company and a few small companies all have identical costs for producing a product, society is better served by having it produced by the few small companies than the one big company.
Once "better served" is quantified, you know the coefficient for taxation.
Make no mistake, this coefficient will be a political football, and will be fought over, just like the Fed prime interest rate. But it's a single scalar instead of a whole executive branch department and a hundred kilopages of regulations like we have in the antitrust-enforcement clusterfuck. Which makes it way harder to pull shenanighans.
> If a big company and a few small companies all have identical costs for producing a product, society is better served by having it produced by the few small companies than the one big company.
Why? That's exactly the circumstances where the mere potential for small companies to pop up is enough to police the big company's behavior. You get lower costs (due to economies of scale) and a very low chance of monopolization. so everyone's happy. In the case of this DRAM/flash price spike, the natural "small" actors are fabs slightly off the leading edge, that will be able to retool their production and supply these devices for a higher profit.
the mere potential for small companies to pop up is enough to police the big company's behavior.
If that were true, "you're in Amazon's kill zone" wouldn't be something VC's say to startups. And yet, they do say that.
>society is better served by having it produced by the few small companies than the one big company.
well, assuming the scale couldn't be used for the benefit of society and not to milk it dry. but yes probably the best that can have a reasonable chance at success, eventually, maybe.
> If a big company and a few small companies all have identical costs for producing a product, society is better served by having it produced by the few small companies than the one big company.
How so? Costs will be higher with multiple small products, resulting in higher costs for customers. That's the opposite of "society is served better".
We draw the line at monopolies, which makes sense.
By the time a company becomes a monopoly, it is immensely powerful - politically and monetarily - getting rid of it or splitting it up is near impossible. Monopoly laws are near impossible to apply as the corporation has sufficient money and influence to turn politicians into servile puppets.
Best to nip corpos before they gain more revenue than a nation state and become "too big to fail".
> > all have identical costs
> Costs will be higher
Read it again, please.
> Is there any way to avoid this kind of market failure?
There are potentially undesirable tradeoffs and a whole new game of cheats and corruption, but you could frustrate rapid, concentrated growth with things like an increasing tax on raised funds.
Right now, we basically let people and companies concentrate as much capital as they want, as rapidly as they want, with almost no friction, presumably because it helped us economically outcompete the adversary during the Cold War. Broadly, we're now afraid of having any kind of brake or dampener on investments and we are more afraid of inefficiency and corruption if the government were to intervene than we are of speculation or exploitation if it doesn't.
In democratically regulated capitalism, there are levers to pull that could slow down this kind of freight train before it were to get out of control, but the arguments against pulling them remain more thoroughly developed and more closely held than those in favor of them.