[Balladeer]

> Markets prevent monopolies and cartels.

A lot of the optimism seems to rely on this statement and...I'm not convinced? But I also admit I'm not well informed on the topic. Does anyone have suggested reading on 'market discipline', as they're calling it?

I mean, the first person on their "Patron Saints of Techno-Optimism" is Jeff Bezos, who is actively dealing with an antitrust lawsuit from the FTC regarding Amazon's frequent and regular push toward monopoly power.

[jaybrendansmith]

I really want to love this manifesto. This is my one sticking point. Regulatory capture, monopolies, and cartels are the fatal flaw in this techno-optimism, and they break everything. Let's say I subscribe to this wonderful story Marc tells. Please tell me the purpose of government if it is not to destroy cartels and monopolies. They are every bit as bad as the government, which is a type of monopoly itself.

[scyzoryk_xyz]

Isn't that them speaking from multiple sides of the mouth? It's a manifesto by... venture capitalists. They have a very specific and diverse audience that they want to read this.

I mean, there is not going to be any low-interest capital flowing in to fuel all these techno-optimist ideals if the start-ups can't later be acquired by the existing monopolies.

[nickpp]

Point me to a resistant monopoly or cartel and I will show you a government granted/supported one. Free markets are naturally resistant through free competition (startups!) and, you know, laws.

[TheDong]

> Point me to a resistant monopoly or cartel and I will show you a government granted/supported one.

Microsoft famously made deals with laptop vendors to prevent Dell, HP, and so on from selling computers with any operating system other than Windows: https://en.wikipedia.org/wiki/Bundling_of_Microsoft_Windows

Similarly, Intel stifled AMD by providing financial incentives to vendors who offered no AMD-based products: https://en.wikipedia.org/wiki/Advanced_Micro_Devices,_Inc._v....

Were those government supported monopolistic behaviors? Does the "free market" mean that a competitor could have simply made one company that produced an entire laptop, OS, and CPU from scratch to provide the consumer a cheaper choice?

Why would the "free market" lead to vibrant competition, rather than monopolistic hoarding of power?

[nickpp]

Government's action did had zero effect against Microsoft. Slap on the wrist. Their monopoly was naturally made irrelevant by the market moving onto the next tech frontier: mobile & cloud.

The free market lead to that. Countless startups trying everything under the sun made sure incumbents like Apple or Google had to innovate, acquire and evolve to avoid Microsoft's fate. In a free market there is always a chance a new startup will spring up and upend the order. Tons of VC money are continuously trying exactly that.

[kalleboo]

The only reason that mobile went the way it did was because Microsoft was so afraid of government Antitrust action that they let Apple survive

[nickpp]

Apple survived thanks to Steve Jobs and Steve Jobs alone. He could've built his vision in any company or startup though, when he took over Apple was a few weeks away from bankruptcy.

[lmm]

> Free markets are naturally resistant through free competition

That's circular logic. Free markets are defined as those in which competition happens. Unregulated markets often tend towards cartelization and monopoly.

> and, you know, laws.

Which need to be enforced by governments.

> Point me to a resistant monopoly or cartel and I will show you a government granted/supported one.

The whole robber baron era is a counterexample - the likes of Standard Oil getting broken up by the goverment. Market competition is powerful but it only works when the government is actively enforcing a competitive market, which there is sadly little enthusiasm for lately.

[nickpp]

Nobody said anything about not having governments. Rule of Law is required for societies to even exist.

Read some more on the robber baron era - you'll find out Standard Oil was already losing to competition before government action. For another great example how the free market broke a cartel, read up on how Dow Chemical fought the German bromine cartel:

https://en.wikipedia.org/wiki/Herbert_Henry_Dow#Breaking_a_m...

No government intervention necessary.

[lmm]

> Nobody said anything about not having governments.

That's very clearly where you're going with this though.

> Point me to a resistant monopoly or cartel and I will show you a government granted/supported one.

[nickpp]

Please don't put words in my mouth. Government's role in a free market economy is quite essential: upholding rule of law (specifically contract law) and taxing externalities. Overreach is the problem though (like regulating the charging port on my damn phone).

[winphone1974]

Any capital intensive project can become a resistant monopoly for the first mover, who then manipulates pricing to prevent competition.

[nickpp]

> who then manipulates pricing to prevent competition

How exactly? Reducing profits defeats the purpose of becoming a monopoly, while any sliver of profit is the startup's opportunity.

To create a monopoly you need to restrict competition some other way, like through governmental regulation.

[spiralx]

> Reducing profits defeats the purpose of becoming a monopoly, while any sliver of profit is the startup's opportunity.

Only if you ignore the concept of loss leaders, or the very act of competing in the market itself by undercutting competitors' prices. Companies are very happy to receive less money in the short term in exchange for guaranteed recurring revenue in the long term, it's only rational after all, and applies as much to a yearly subscription being cheaper than 12 individual monthly subscriptions as it does to established companies accepting reduced revenue in the short term to guarantee their share of the market in the long term.

This is all pretty obvious from a basic understanding of how companies work TBH.

[nickpp]

Loss leaders, price dumping and price wars are as old as the world and free markets are perfectly capable to deal with them. Here's how how Dow Chemical fought the German bromine cartel's price dumping at the beginning of the last century:

https://en.wikipedia.org/wiki/Herbert_Henry_Dow#Breaking_a_m...

No government intervention necessary.

[james4k]

And how do you think a government reinforcing a monopoly comes to be?

[nickpp]

Countless ways. From sheer governmental incompetence like when regulating the competition out of markets. To simply not understanding second order effects when “helping markets” with patents and humongous copyright terms. To not understanding supply and demand when pressed to fulfill voter promises like when attempting to control and fix prices. To being captive to interest groups that end up controlling a huge chunk of economy like in heath care.

But most of all through sheer, pure corruption. Because why else would someone become a politician - a relatively low paid position - if not to be in a position to transform all that power and influence into money, for the highest bidder?

[james4k]

And who are the highest bidders?

[scubbo]

Corporations, in America, where the travesty known as Citizens United exists.

(I'm not claiming that other countries don't have money in politics; but America is the one where it is most clearly enshrined with an actual name to the philosophy)

[nickpp]

Incumbents, of course. The ones holding the largest interest in preserving the status-quo and freezing competition. Professional organizations needing power to preserve the barrier of entry. Huge, trans-national Unions.

But other power brokers as well. Other politicians with more money. Their own stock holdings. Foreign powers. Well moneyed interest groups. Ideological organizations siphoning old money.

Occasionally even the scrappy start-up trying to game the system. These usually fail, see SBF - but they are not saints either.

There is no shortage in interests vying to corrupt politicians. Somehow they never mind and always succumb.

[LindeBuzoGray]

Right. Land and air telecommunications are almost totally controlled by Verizon and AT&T. They are also some of the largest cable companies, although Comcast is a competitor. Although Comcast owns NBCUniversal, and we can start getting into the media monopoly.

We can go through business by business and see the rise of monopolies and oligopolies. Universal owns half of the US music market - Universal, Sony and Warner own over 80% of the US music market. Accounting is done by the Big Four, advertising by its own Big Four.

Just down the line - consolidation, oligopoly, monopoly. That is what markets produce. Standard Oil reversed its breakup into ExxonMobil, as did the Baby Bells into Verizon and AT&T. Even the government intervention into the monopolies gets reversed.

[lotsofpulp]

What organization has a media monopoly? You have access to the internet, with which you can access media from individuals all the way up to multiple large corporations.

On the national level, there are multiple sources of news (NYT/News Corp/Disney/Comcast/Paramount/WaPo/LATimes/etc). There are lots of sources of professionally and amateur produced entertainment. Apple/Amazon/Comcast/Disney/Sony/WarnerBrosDiscovery/Paramount/etc.

If anything, the monopoly exists on wired broadband to peoples homes, which is usually only available from one seller.

[flerovium]

Ownership:

NYT - billionaire Sulzberger family

WaPo - Jeff Bezos

LA Times - billionaire Patrick Soon-Shiong

Disney/Comcast/Paramount represent the consolidation of an industry that used to be hundreds of independent newsrooms into a dozen or so corporations. The murdoch family's New Corp is regularly analyzed as a political force on par with individual elected leaders, if not more so.

Entertainment: Apple/Amazon/Comcast/Disney/Sony/WarnerBrosDiscovery/Paramount

The problem is that the industry has consolidated into a number of players you can count on one hand.

[vsareto]

Market discipline acts as a challenge, and humans figure out ways around challenges to maximize some reward (money). Market discipline is only enforced by humans and they have weaknesses.

This manifesto wants to pretend that the rules enforce themselves by some natural property of the system akin to physics or biology, and not from humans.

The manifesto is completely flawed on markets because what requires people to be discriminatory buyers is scarcity, which is opposite of what this manifesto is suggesting we work towards. It has no plans on how to handle technological abundance's (not post-scarcity) affect on market behavior:

>We believe markets are the way to generate societal wealth for everything else we want to pay for

[jeffreyrogers]

> I mean, the first person on their "Patron Saints of Techno-Optimism" is Jeff Bezos

No, it's an anonymous Twitter account, you read the name wrong, "Beff Jezos" (sic), not "Jeff Bezos".

Also if you look at the purest form of markets, which is probably high frequency trading, there are no monopolies and no cartels. It's an intensely competitive industry with relatively small profits given their transaction volume.

[throwaway38475]

I don't think that's correct. Access to the fiber links or colocation in a facility is not only ridiculously expensive you have to know the right people (the cartel) to get it done.

I can't just offer a crazy amount of money and get access, the other major players have to let me play.

[jeffreyrogers]

You actually can just offer a (not very large) amount of money and get access. The fees aren't even that large and they are public see [1] for example. The startup costs for an HFT would be comparable to a restaurant buildout, it's really not a capital intensive business.

[1]: https://www.nyse.com/publicdocs/Wireless_Connectivity_Fees_a...

[PaulDavisThe1st]

If that's "the purest form" of something, give me the dirty version any day.

An utterly useless human activity, that does nothing for actual humanity but simply serves as a wealth redistribution technique shared among a tiny number of highly-self-interested individuals ... it might be "pure" but it's not "pure" in any way.

[stevenhuang]

You don't understand market making and it's not ok to pretend you do.

[TheLegace]

I don't know if you have been on the other side of what market makers do, but its not exactly a day at the beach. Once you gain enough insight to see whats going on the charts you just see it as a graveyard of traders positions, stop losses and their capital. This happens every minute the market is open at every timeframe.

Have you ever wonder why the markets appear so irrational? Great economic data and the worse drop in months or vice versa. These are the expectations, emotions and psychology of the masses that are liquidated by market makers. Have you also just had a gut instinct to buy or sell and market moves completely opposite beyond your psychological limit. Only for it to start moving into profit once you have closed at a huge loss. This is all market makers do all day.

In principle there is nothing immoral here. Participants are all taking risks voluntarily, no one is forcing you risk trading the stock market. But in practice market makers take positions at the stop losses 90% of market participants giving them significantly overwhelming supply of assets at the best prices, while everyone else sees consistent intractable losses.

This is a Darwinian environment where only the biggest, fiercest and most aggressive players will win by killing weaker, smaller and less knowledgeable players. The only way for a small fish to win is to understand the rules the market makers play by. Their strengths, desires, weaknesses, limitations and once you do you realize that this was someone's capital, but it's also capital not going to the market makers.

[PaulDavisThe1st]

I think you intended to reply to me (GP), not the parent.

You're ignoring my objection to this stuff, which has nothing to do with immorality and everything to do with with the waste and misdirection of resources. Why do people participate in this stuff? Because someone might get rich. From my POV, that's a waste and misdirection of resources. People getting rich is not the right motivation for pareto or utilitarian optimal allocations.

[RandomLensman]

People are entitled to do things that are not an optimal resource allocation. Social systems that block that tend be very nasty.

[stevenhuang]

Capitalism and people getting rich is for better or worse exactly the stabilizing factor that has lead to the success of the modern world we take for granted. Capitalism is the worst except for all the others.

I empathize that it appears the case it's not an optimal allocation, but to say you know it's a misallocation leans overly simplistic.

What you see as misdirection of resources is the product of competitive market forces that drive innovation and efficiency. And the market often finds value in ways not immediately apparent.

Is less efficient resource arbitration (futures, forex) worth the trade-off? Producers can make their own market and set their own prices. But do that in an information vacuum and there will be increased deadweight loss in the form of higher bid-ask spreads, increasing costs, reducing economic activity.

There are more benefits in the form of reducing volatility and increasing liquidity.

It is not at all as obvious as you make it that society would be better off had HFTs and similarly received sorts of "financialization" not exist.

[skulk]

Instead of reaching for this horribly irritating snark (I'm sure GP understands market making enough to understand why HFT exists), why not be charitable and consider the opportunity cost of the smartest people spending their mental energy to create a slightly more efficient market? Is this really a responsible use of this resource?

[stevenhuang]

Consider a similar irritation when seeing those with a superficial grasp of a complex topic oversimplify and make unwarranted conclusions.

And it's precisely the GPs unwavering certainty that HFTs are net negative that accurately informs they do not understand the full implications of what HFTs offer.

Because when you're aware of the full picture, it is not at all obvious society will be better off without it.

https://news.ycombinator.com/item?id=37912662

[gen220]

HFT is a dance in the shadows of the most highly-regulated practices in history (securities exchanges), I don't think it's a good example of "pure" markets being immune to monopolies.

Each of those regulations is a tombstone for the monopolies and cartels that came before, and there will absolutely be more tombstones to come. The history of the stock market is rife with corruption, stock manipulation, and short-thrifting the general public. The great fortunes of the 20th century were made on the backs of practices that are all kinds of illegal today, and with good reason.

[hemloc_io]

Sigh, sad b/c I actually know this, but just a small correction.

That's an anonymous Twitter/X account @BasedBeffJezos not the actual head Jeff himself.

Founder(?) of the e/acc philosophy

[laidoffamazon]

This is worse than the actual Jeff Bezos, who constructed a trillion dollar company that underpins the internet, and is instead just an alt-right NRx troll on the internet.

[Balladeer]

Hah! Thanks for the correction / info; I do appreciate it.

[shadowgovt]

Yeah. If anything, monopolies and cartels spring into being within a free market. Over and over and over again.

They're so dangerous to free markets because they hack the core freedoms into a positive feedback loop. Collusion beats naked competition; it's why our ancestors evolved to form societies instead of eating each other.

[gojomo]

Read more closely: Jeff Bezos isn't mentioned. A pseudonymous X account known for gonzo tech/AI optimism, @BasedBeffJezos, is.

[noqc]

Even absent contracts (which exist to enable collusion) the iterated prisoner's dilemma and its generalizations seem to be solvable by tacit agreement (in the two party case, by tit for tat).

The only people who maintain that markets have the perfect competition property are those who define markets this way. Their existence is left as an exercise.

[nradov]

Free markets allow for and even encourage monopolies and cartels in the short term because those drive up profit margins. But over a longer time scale most are eventually destroyed by missing a disruptive innovation.