[programmingpol]

As a Republican elected official in a southeastern state, I have a front-row seat to what this article points at.

The road construction industry used to be a great opportunity for small business people to create for themselves a substantial income. These days, all the companies in our area are owned by conglomerates, backed by billion dollar financial institutions. If you were to risk a million or two or an asphalt plant, they will undercut your prices till you go bankrupt, then inflate their prices once again. The two companies in our area will bid on all of our projects, but it's clear they are in cahoots when it comes to their pricing.

By our estimates, the taxpayers are overpaying by at least 15% - 20%. In my mind, this robs others of opportunity and transfers wealth from tax-paying citizens to billion dollar companies.

No one points this out because the road builders give a lot to politicians. Go against them, and they'll spend enough to have the public label you a RINO which, in this neck of the woods, can get you booted from office.

I've wished for some time that someone could create a modular asphalt plant that can be packed up on trucks and taken to wherever the job site is. I think companies like this could help regulate prices and make a lot of money.

[fny]

Your problem is that big business has conflated free-market capitalism with the right to monopoly and convinced your constituency that anti-trust regulation is destructive to a free market when, in truth, oligopoly leads to corruption of the free-market and a farce of capitalism.

You need to work on educating your citizenship gradually until they understand the conditions wherein capitalism actually works. That way they might see why breaking up big busines and preventing M&A is often the Right Thing™️ and conservative to do.

[ethbro]

Pretty sure parent is aware what "their problem" is, seeing as they have a front seat to it. ;)

And "educating the citizenry" as a feasible tactic in local races is an exercise in futility. For the cost of an educational campaign, his or her opponent (or their supporters) could run attack advertising that would certainly lose parent the election.

Aggregating like businesses and pushing for change higher up the political food chain is more effective, albeit not without its own risks.

[dredmorbius]

Conflated, or used the shibboleth of "free-market capitalism" as a cover for monopoly mercantilistic rent-extraction.

Having put a fairly considerable amount of study into the history of economic thought, back to Greek and Roman times (see Backhouse's The Ordinary Business of Life for a comprehensive, if dry, overview of mainstream economic thought), and with a strong focus on Smith to present, this problem is a pervasive one.

The irony is that it's practiced quite ardently by many of the loudest "defenders" of free-market systems. (Not always -- there are straight-up monopolists who have given up all pretense. Most, though, preach and act inconsistently.)

[programmingpol]

Well said. I could not agree with this more.

[dnautics]

How do you keep the big companies from making the contract awards process too difficult for entrant players. I've seeb see this, for example, in [TLA] contracting where in practice some players hire full time staff at 100k+ to even get all the forms correct.

And then if the contracting award process is too easy, how do you fix the problem of keeping fraudsters out and the contractors accountable?

[hippich]

So problem, as I understand, is that it requires significant amount of capital to get going for independent company, and they might go under if big company cut them. And the big companies undercut independent ones so later they could raise price.

So I had this question - what if state would commit to 10-20 years worth of contracts with some kind of locked in rate (adjusted for inflation or something), not just one off contract? This way independent company would have more motivation to do major capital investment, and big companies will not be able to undercut small players on one off job, only to get all next ones for 20% more..

Hopefully this makes sense.

[programmingpol]

I've floated this idea around but what I found out was that it's against our state's laws to have such open contracts. Changing the state law would be difficult (road builders have a big voice in state government). We also, by law, have to accept the lowest bid that meets specs, even if that means higher prices in the long run. Championing accepting higher bids would be difficult come election time. The attack ads would read, "Politician A wants to give his buddies a sweet-heart deal at the expense of the taxpayer."

It's a very difficult problem.

[intended]

Remember that all such plans have been tried in our lifetimes alone.

Someone can easily run a campaign against such a system By saying it’s anti competition, or drives complacency.

In a meta sense you are almost always fighting against the current local equilibrium.

You will always need someone to inspect and call out BS behavior.

This means good policing and investigating and reporting.

[gcb0]

some places have laws were one govt contact can't be more expensive than the previous similar job. if there are no bidders, the posting should remain open for a long time (12months here).

doesn't solve everything, but the intent of those laws is to make that harder.

[naveen99]

maybe one day an even bigger company such as Amazon will eat the asphalt companies lunch then. Their margin is someone bigger's opportunity. Or maybe 15-20% profit is just reasonable and competitive with other industries.

[lovich]

So is the logical end goal of this system to have a single company that makes all economic decisions as they use their excess capital to take over other industries?? That sound's like the end goal is not going to be functionally different from communism other than that the theoretical super company's goal will be to make its shareholders rich and communism government as least pretended like they wanted to help all their citizens

[KGIII]

15-20% over the proper amount, above and beyond their normal profit. That's not all that unusual in that space. I worked in a field closely tied to the industry. I'm amazed it functions as well as it does.

[programmingpol]

That estimate is based on the fact that since the last true independent company in our area was bought out by the big guys, prices for all subsequent jobs rose 15% - 20%. I'm all for business making as much profit as possible. I'm not against profit, I'm against predatory pricing that limits competition.

[KGIII]

Oh, I understand. I didn't help this problem. I sold my traffic modeling company to a larger group. It's a lucrative industry, even without gouging.