Comment by automatic6131
Comment by automatic6131 a day ago
We need better antitrust and anti-monopoly enforcement. Break up the biggest companies, and then they'll have to actually participate in markets.
Comment by automatic6131 a day ago
We need better antitrust and anti-monopoly enforcement. Break up the biggest companies, and then they'll have to actually participate in markets.
Sorry, how did she stand in the way of IPOs? She was against the larger players providing easy off-ramps to smaller players but I don’t recall anything about IPOs. Indeed, Figma’s IPO is precisely because she undid the pending Adobe / Figma merger if I recall correctly.
Khan was largely ineffectual. The current administration, if it can be blamed on SV at all, is more likely to be the result of Harris's insanely ill-timed proposal to tax unrealized capital gains just as election season was kicking into high gear.
IMO Khan was by far the best we've had in at least 2 decades. Her FCC even got a judge to rule to break up Google! The biggest downside Khan had was being attached to a 1 term president. There's just not that many court cases against trillion dollar companies you can take from investigation to winning the appeal on in 4 years
All true, and I'm not making a value statement about whether her influence was good or bad. However, Khan only threatened the oligarchs' companies, while Harris point-blank threatened their fortunes.
Don't pick a fight with people who buy ink by the barrel and bandwidth by the exabyte-second. Or at least, don't do it a month before an election.
The oligarchs hated Kahn with the intensity of a thousand burning suns. If you listened to All In all they were doing is ranting about her and Gary Gensler.
That being said, Kamala's refusal to run on Kahn's record definitely helped cost her the election. She thought she could play footsie with Wall Street and SV by backchanneling that she would fire Kahn, so she felt like she couldn't say anything good about Kahn without upsetting the oligarchs, but what she was doing was really popular.
She was largely ineffectual because she was cock-blocked by the ruling classes. I lean libertarian-capitalist and still I think this. Although it's not a settled debate in the classic liberal or libertarian traditions, there are plenty of arguments in them against the excessive concentration of power.
I think a better solution is exponential tax on a company size. I.e. once a company starts to earn above, say, 1 billion, it will be taxed by income by ever increasing amount. Or put it another way, use taxes to break the power law and winner takes effect all into a Gaussian distribution of company sizes.
> I think a better solution is exponential tax on a company size. I.e. once a company starts to earn above, say, 1 billion, it will be taxed by income by ever increasing amount.
This is in the right spirit but you want two things to be different about it.
The first is that the threshold for a given industry doesn't make sense as a dollar amount, it makes sense as a market share percentage. Having more than 15% market share should be a thing companies don't want, regardless of whether it's a $100 trillion industry or a $100 million one.
And the second is that taxes create a perverse incentive for the government. You absolutely do not want the government to have even more of a financial incentive to sustain and create more of the companies of that size. What you want is to have fewer of them.
So, what you want is a rule that if a company has more than 15% market share, the entire general public is allowed to sue them into bankruptcy for the offense of market consolidation. Which also removes the problem where they buy off the government prosecutors, because if they commit the offense then anybody can sue them.
> And the second is that taxes create a perverse incentive for the government. You absolutely do not want the government to have even more of a financial incentive to sustain and create more of the companies of that size. What you want is to have fewer of them.
That's not really a convincing argument. The government is the body for setting up the economic rules, it is not bound by it. The government doesn't have revenue or profit. Money is created by the government, it doesn't have a value yet. The direct financing of actions through taxes is not done for the government, but a way for the government to project the costs of the governmental action into the economy. Sure, there are a lot of idiots now-a-days, that think a state should work like a business and make profits, but they are misled.
> The government is the body for setting up the economic rules, it is not bound by it.
When a new law is proposed, the Congressional Budget Office prepares a report on the impact it will have on the budget.
Now suppose a new law is proposed that will remove an existing unfair advantage of large companies over small ones, causing more small companies to form and take market share from incumbent larger ones. If large companies pay a 50% tax rate and small companies pay a 10% tax rate, the CBO analysis will show tax revenue going down. Then in order to make up the shortfall at a given level of deficit spending, the government would have to raise taxes or reduce spending, both of which are unpopular, so instead the bill gets tabled and the huge companies retain their unfair advantage. That's the perverse incentive we don't want to see.
> Money is created by the government, it doesn't have a value yet.
If the government can create an unlimited amount of money with no drawbacks, why don't they just send everyone a check for a trillion dollars? If they can't then whatever they want to spend in excess of what they can get away with printing or borrowing has to come from tax revenues, and then what happens when you set up an incentive structure where the government gets more money to spend the bigger they allow companies to get?
> anybody can sue them.
who bears the costs of this suit?
And who determines what makes for a good market share size to be the threshold?
And by having such a rule, an industry that would have higher efficiency to when consolidated would not be able to (but you wouldn't know). It's a bad set of policy imho.
A better way would be for gov't to increase competition by adding supply, or demand, whichever one is the bottleneck to competition. If a company, such as AWS, is getting a lot of marketshare, but their profit margins is still high, then the gov't should incentivize competition by funding or giving loans to businesses that want to compete with AWS.
However, if AWS's profit margins, even at high market share, remains very low (e.g., amazon's commerce side), then there's no need for the gov't to "step in" at all, as there would be no incentive for any competitor to try enter the market due to low margins.
> who bears the costs of this suit?
The goal is to not have it happen, because the company is going to see that they're only slightly below the threshold and voluntarily split themselves into smaller pieces and buy themselves a safety margin because if they don't everybody knows the lawsuits are going to vaporize them once they exceed the threshold.
> And who determines what makes for a good market share size to be the threshold?
Anything in the vicinity of 5%-15% would be fine.
> And by having such a rule, an industry that would have higher efficiency to when consolidated would not be able to (but you wouldn't know).
This is extremely rare and the circumstances where it happens aren't a mystery. It's when entering the market has extremely high fixed costs but then the unit cost of usage is negligible, e.g. it costs a huge amount of money to install water and sewer but then the incremental cost of someone washing their hands is insignificant.
For those things you either have the government do them, or if it's a private company then it's a regulated utility which is completely banned from anything that even vaguely resembles vertical integration as the price of being allowed to have more than the threshold amount of market share.
> A better way would be for gov't to increase competition by adding supply, or demand, whichever one is the bottleneck to competition.
The problem is generally caused by the incumbents capturing the government and then enacting rules that inhibit rather than increase competition. That's why you need anyone to be able to initiate the lawsuit, so they can't capture the government department which is supposed to be thwarting them because then it's the entire public.
This would permanently increase DRAM prices. Memory fabricators either earn billions of dollars in income each year or they can't keep going. There are no little Mom and Pop businesses that can do photolithography on leading process nodes.
Nonsense, it would force vertical de-integration.
Chip fabs used to be like book publishers; you don't have to own a printing press to be an author. Carver Mead even described his vision of the industry that way.
Nowadays you have to get your cell libraries and a large chunk of your toolchain from the fab. Of course it's laundered through cadence+synopsys, but it's still coming from the fab. You have to buy your masks from the fab (heck they aren't even allowed to leave the fab so do you really own them?). And on and on.
For the record I don't agree with the "exponential" part, but otherwise this is an underappreciated and powerful technique.
In another comment you proposed a sane version of the parent proposal. I wouldn't have commented if fpoling had originally floated that scheme. I was mainly objecting to drastically increasing taxes "once a company starts to earn above, say, 1 billion" without regard for the minimum viable scale of different businesses.
> Chip fabs used to be like book publishers;
I can still make a book like that in my basement. People do this as a hobby now. You can still build chips like that in your garage. People do this as a hobby now.
These things DO NOT SCALE... you cant have 10,000 people running printing presses in their basement to crank out the NYT every day. A modern chip fab has more in common with the printer for the NYT than it does with what you can crank out in your garage.
Let's look at TSMC's plant in AZ. They went and asked intel "hey where are you sourcing your sulfuric acid from. When they looked at the American vendors TSMC asked intel "how are you working with this". Intels response was that it was the best they could get.
It was not.
TSMC now imports sulfuric acid from Taiwan, because it needs to be outrageously pure. Intel is doing the same.
Every single part, component, step and setup in the chain is like that. There is so much arcane knowledge that loss of workers represents a serious set back. There are people in the production chain, with PHD's, who are literally training their successors because thats sort of the only option.
Do you know who has been trying the approach you are proposing? China. It has not worked.
https://www.youtube.com/asianometry probably the best rough and ready education you can get on the industry.
Is that revenue, or profit? If revenue, it'll slam certain kinds of high-volume low-profit businesses, and if it's profit then the company will just arrange to have big compensation "expenses" for executives.
The latter would have to be backstopped by taxes on individual income.
The sane version of this proposal omits the "exponential" part, applies to profits (net income), and makes the tax rate industry-specific (just like Washington State's revenue tax).
Set limits so the top cant earn more than x times the lowest paid in the company then.
Ah yes, the same tax mentality that is working great for EU innovation.
This was Lina Khan's big thing, and I'd argue that our current administration is largely a result of Silicon Valkey no longer being able to get exits in the form or mergers and IPOs.
Perhaps a better approach to anti-monopoly and anti-trust is possible, but I'm not sure anybody knows what that is. Khan was very well regarded and I don't know anybody who's better at it.
Another approach would be a wealth and income taxation strategy to ensure sigmoid income for the population. You can always make more, but with diminishing returns to self, and greater returns to the rest of society.