[roenxi]

> The free market fundamentally doesn't have a good response to this problem, excess capital is taken out of these companies during good times and then they run to governments seeking bailouts during bad times but governments don't know how to mandate good corporate governance.

Sounds like the free market hasn't been tried, a key plank of the free market on the supply side is that incompetent managers have to go bankrupt and lose their capital or otherwise get squeezed out. If the government is going to bail people out then obviously the companies will take adopt a ridiculously risky management strategy because they get the upside and dodge the downside, so they just have to maximise the potential upside at any cost. No surprise if after getting a bailout people do exactly what they did that led to the bailout until they need another bailout. Why change?

The trick to "mandating" of good corporate governance is not to bail them out. Then at least the corporations will be governed in a way that they aren't likely to go bankrupt. Maybe even make things people want and sell them at a profit.

> here's a few industries where structurally, companies can only exit the market but it's almost impossible for a new company to enter. Airframes, jet engines, CPU manufacturing, lithography etc.

Is there actual evidence for this, or are the companies involved just doing a good enough job that the market doesn't see a need for new entrants? Because it actually seems a bit implausible that these technologies could just disappear or even become less available under a free market. What we actually see is the likes of NVidia or ASML, where other players can't catch up because the market leader is just pushing the cutting edge forward too quickly (spare a thought for Intel, who was the unbeatable colossus once).

[bluegatty]

The free market works fine - the problem is at that scale, we can only afford a few key players, they're strategic so they end up having subsidies other considerations.

Put differently: if the population of the earth were 50 Billion people instead of 8 Billion - then we'd have markets with enough competition to allow free market dynamics.

In that context, then we'd have 'Space companies' being subsidized.

We'd have a hotel on the Moon and we'd easily be on Mars already.

Those aircraft are on the 'edge of our resource capabilities' - huge companies at the top of the pyramid.

If we had a massively bigger economic pyramid, they would be more like car companies.

[hakfoo]

I'm not sure if a bigger population would really justify more jet manufacturers.

Outside of general aviation (hobbyists/business jets), the potential buyers for jet aircraft are going to trend towards natural oligopoly.

Military craft, there's basically one buyer per country, at most a handful of different decision makers behind the same basic chequebook.

Civilian craft, does the number of airlines scale with population? There are a finite number of viable routes, airport slots, and market segments, so would it actually support a hundred new airlines, or would we just end up with a Big Southwest buying 1,000 737s instead of 100?

Even if you had more airlines, would they want to diversify their fleets? Running the same few types of planes, especially if they're the same types of planes as their competitors, unlocks efficiencies. How much would it cost a random American or European airline to retrain their pilots to fly the Comac C919, and how much would they spend extra on adaptations (stocking new spares, retraining maintenance staff, retooling processes for different floorplans)? I also suspect there's a very strong CYA/risk aversion mindset that would make it very hard to sell a new player into the market.

Regional flag carriers have political excuses to support a buy-local policy at some cost, but that still only justifies a handful of manufacturers per economic hegemon.

[js8]

So you think U.S. would be better at airplane manufacturing had Boeing gone bankrupt at some point in the past?

It's a pretty strong claim and I would like to see some theoretical justification, other than belief in the magical free market.

In my country, IIRC, we let Aero Vodochody to crash and be bought by Boeing. We are not better at making airplanes, honestly probably the worst than at any other point in history.

[roenxi]

Well, no I think something subtly different. I think if you look at the quality of life in Czechia before and after Aero Vodochody went bankrupt it probably rose, all else equal. And the quality of the corporate governance would have been better than in an alternative. It'd be interesting to check the price and quality of the aircraft that were available for use; those two things probably moved in a helpful direction. That last move isn't guaranteed by basic economics, but it seems quite likely in this case.