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Its an inevitable state of any market system (especially if regulated). Eventually it will become more profitable to use the gains of capital to buy protection from regulators, instead of investing in ever smaller business improvements. Using money to defeat competition is ultimately inefficient and generates lower returns for investment. Unless regulators are totally insulated from the market, they will have a stake in selecting winners and will eventually construct moats that others can't cross, as that provides the highest returns to capital, and the greatest rewards to regulators. Monopoly is the most market-efficient vehicle to deliver returns to capital, and the most natural state of the market; one player using advantages and gains eventually destroys all opponents. Smaller players can never gain a foothold due to the incumbents being so efficient and far ahead, and it makes more sense to merge with the front-runner, allies, or be destroyed (hence the competitor pool keeps shrinking). These are features of the system that naturally emerge without counterveiling forces. For example, AI companies will shortly find its cheaper to just get the government to constrain their competition. The alternative is many companies spending trillions to eek out profits, a poor state to be in. Regulators want money and power, so its in their interest to create this protected state, as the "free and open market" isn't buying elections or vacation homes. And of course, any unprotected competitors left behind will die, consolidate, or sell to the victors; so we will eventually have a "winner takes all" system where one or two big players dominate. Any startups will either be quickly destroyed as people ask "why use a worse product", or will sell to the monopoly when they realize they can't afford to spend $1T training models and building data centers, and complying with all the regulations. My point is that protectionism (in any form) isn't something to bring down over time to encourage competition -- the system can't naturally function that way, as it would require each player to go against their own interests. Instead, protectionism is a natural ever-increasing good that will be cultivated for the controlling capital and regulators in the system. We only see the "free market" operations during a time before market / regulator capture, as that's the time when there aren't yet dominant players who can guarantee power and money to the regulators, and there isn't enough consolidation of capital to immediately destroy all competition, but its an unstable market state. |