[brc]

Except that it is nothing like communism.

Communism is defined by a complete lack of freedom to change the status quo. In turn, the lack of freedom to change the status quo means that development and progress is dramatically slowed, slowing down improvements in quality of life - as people themselves would prefer.

Consolidation only persists where it is either an effective way to deliver value (Walmart) or regulatory capture has occured (eg taxi licences, car dealerships). Todays consolidated behemoth is tomorrows has-been company - as long as the laws allow them to fall apart when they can no longer innovate and compete.

Inequality of income to me seems as though an economy is functioning well at the creating-value part. A lack of inequality (too much equality) is a danger sign that the creation of wealth and progress has been halted, most likely due to lack of freedom for individuals to pursue their own interests.

It's a misunderstanding to think that competition requires many players to be effective. In many cases, you only need two players and threat of entry to any others for competition to be successful at optimal use of resources. You only need two fighters and some contenders for a world champ boxing match to make them the best available at the time. And a fair referree.

I'll be the first to admit that the last part is the most difficult to achieve, but it's no reason to abandon the concept of the game.

[nhaehnle]

Communism is defined by a complete lack of freedom to change the status quo.

I agree that the comparison to communism is silly, but not for this reason. Ultimately, communism is about how the economy is structured, one important feature being that there is no private ownership of capital (though other forms of private property are okay). In other words, a world of capitalist consolidation/monopolies is indeed nothing like communism.

There could (and should) still be freedom to change the status quo in a communist economic system though.

Edit to add:

Consolidation only persists where it is either an effective way to deliver value (Walmart)

Putting Walmart in parenthesis here is a bit dishonest. Almost every kind of business benefits from consolidation, because of economies of scale. You might just as well have put Burger King, KFC, or any other chain of anything into parenthesis.

Same is true in the high-tech industry, by the way. Just look at the big players in the web, but also count the number of remaining chip foundries on the planet.

In all those cases, power is concentrated into few hands, which we know to be problematic from history.

[audunw]

"Communism is defined by a complete lack of freedom to change the status quo."

Communism is as diverse as capitalism, and this is neither the text-book definition, nor the real-world definition.

Is the definition of capitalism a complete lack of freedom to change the status quo because that was the case under Pinochet?

The text-book definition is the common ownership of the means of production. Is China still communist? The definition still applies somewhat in that they still have a lot of state owned businesses, and the banks which borrows capital to private business are state-owned. It can be argued. Does China have a complete lack of freedom to change the status quo? Only from a naive western perspective. There is only one party, but China's way is, if you want to change the state you join the party or work for the government (membership is not necessary to hold a government position). In other words, they consider it democracy through participation. A single person certainly has the ability to change the status quo, basically in the same way as in the west. Who really thinks voting actually matters much any more?

I don't condone China's way. I think the lack of acceptance for political dissent is disgusting. But that's besides the point. Point is, we can't fool ourselves into thinking China is like a dictatorship. They have other processes, but still achieves a decent meritocracy.

I'm beginning to think that democracy is a failure at the federal/union level. Look at the US and the EU. How functional is the democracy at that level these days? Maybe having so many people vote for a single/a few position makes democracy ineffective? I think these observations is why China is not jumping on the democracy bandwagon at the top level (they have implemented local elections).

[brc]

I wasn't trying to define communism - if I was doing that I would say it was the public ownership of the means of production - or something along those lines.

A better way of putting it would be 'all countries who have turned to communism have a lack of freedom to change the status quo'. It's not the definition of communism - or even one of it's stated goals - but the lack of ability for individuals to benefit from their efforts creates a situation where the status quo is difficult to change.

Your example of China illustrates this perfectly - all the while that mao-ist communism held sway, China went nowhere - or backwards - in terms of changing. The current weak-communism allows people to retain the rewards of their benefits - and so the dynamism of china has increased greatly.

I'm not talking at the single voter level - I'm more talking at the Bill Gates/Steve Jobs/Elon Musk level. You need strong individual change agents to move the whole game forwards, and in a publicly-owned, incentive destroying regime, these individuals never flourish. That is what entrenches the status quo, and that is why communism is characterized by a lack of status quo. There certainly is no argument that communism causes stagnation, the results are quite shocking even if you remove the tendency for brutal dictators to leverage themselves into the position of power and murder their opponents.

I agree that democracy at the federal level is very flawed, particularly in the EU, but also in the US, where Federal departments and laws overrule too many local and state laws. The success of Federalism lies in the reuiqrements of individual regions to compete in terms of opportunity and the ability of like-minded people to gather and control their destiny. Texas and Oregon should be allowed to evolve in different directions, as should Sweden and Greece. Forcing harmonious regultions and taxation on them makes both areas feel aggrieved. The benefits from Federalism are really about applicability of similar laws, common defense and completely free trade within the borders. The drawbacks are losing your voice by vote dilution. The balance has to be at the point where a federal government is limited as to the extent it can override state laws.

[rtpg]

>Consolidation only persists where it is either an effective way to deliver value (Walmart) or regulatory capture has occured (eg taxi licences, car dealerships). Todays consolidated behemoth is tomorrows has-been company - as long as the laws allow them to fall apart when they can no longer innovate and compete.

That doesn't hold up to reality, as proven by what has happen ed with banks, hospitals, and health insurance over the past 30 years (regulations make entry a bit more capital-intense, but if you have enough willpower and minimum capital you can start a bank).

>It's a misunderstanding to think that competition requires many players to be effective.

It's part of a definition of a free market : atomicity of actors. In a free market, no single actor can influence price.

>I'll be the first to admit that the last part is the most difficult to achieve, but it's no reason to abandon the concept of the game.

The concept of the game involves an infinite amount of really tiny boxers, not two world champions. All the math around free markets bringing prosperity is based around this fact (among a couple other prerequisites). You can't just abandon it.

Anti-trust and anti-monopoly laws are basically the most pro-free-market laws we can make.

[brazzy]

> Communism is defined by a complete lack of freedom to change the status quo.

Um, no. No, it's not. At all.

[leaveyou]

It's quite funny how little people know about communism, why it appeared, how it developed and what influence it had over capitalism & why it collapsed although less than 25 years passed since its collapse.

[leaveyou]

@collyw The original communism (the one "by the working class for the working class") is blue, cold and not coming back soon..

[collyw]

I find it quite amusing how people talk about communism failing, AFTER we bailed out the banks.

[nmrm]

> Consolidation only persists where it is either an effective way to deliver value (Walmart) or regulatory capture has occured (eg taxi licences, car dealerships).

Value for whom?

The problem is that "effective way to deliver value" is measured in terms of corporate profit (value to shareholders), not in terms of the actual thing being produced. So firms can produce less value to the economy at-large (fewer flights, worse beer, etc.), at greater cost to the consumer/supply chain, and still increase value.

The entire article is indicting this setup, where companies screw over their customers and suppliers in order to produce value for a few already very wealthy individuals who hold large stakes in the corporation.

This is how low-competitive environments work. Period. And it's not commie nonsense (unless Goldman Sachs are part of a massive commie conspiracy). From the article:

Goldman Sachs in February published a research memo advising investors to seek out “oligopolistic market structure[s]” in which “a smaller set of relevant peers faces lower competitive intensity, greater stickiness and pricing power with customers due to reduced choice, scale cost benefits including stronger leverage over suppliers, and higher barriers to new entrants all at once.”

> In many cases, you only need two players and threat of entry to any others for competition to be successful at optimal use of resources.

First of all, there's not much of a threat to entry when one or two companies own the entire market and there's a huge cost to entry. Have you seen many airline start-ups in the past half century or so?

Furthermore, it's possible to price like a monopoly when you only have one or two major competitors and everyone is part of a gentleman's agreement. Implicit, of course, but these aren't pricing cartels in the same sense that PACs don't coordinate with political campaigns.

The boxing match analogy is inherently flawed because these companies can still win big without wiping out all their competition. There is no gold medal when everyone's happy splitting the enormous pot of gold.

In fact, most seem to desire a situation where they have one "friendly" competitor so that they get all the perks of monopolistic position via an implicit gentleman's agreement on pricing, while still having the luxury of pointing across the street whenever regulators come around.

[fennecfoxen]

Value for who? PLEASE! Get real! Wal-Mart delivers value for shareholders because they attract customers because they're cheaper and more efficient.

But I suppose some people rather vilify its customers, under the delusion that tens of millions of America's poorest could magically lift themselves out of poverty by spending more money on manufacturing and transportation costs and on people working at cash registers. Bah.

(And the grocery market in general is anything but low-competition.)

[nmrm]

> Value for who?

Well they sure as hell aren't passing it on to their employees; meanwhile, their stock is doing quite well...

> Wal-Mart delivers value for shareholders because they attract customers because they're cheaper and more efficient.

> (And the grocery market in general is anything but low-competition.)

Okay, so you've double turned yourself. Walmart faces lots of competition from local chains, which prevents it from screwing consumers on prices. Competition is good.

I'd argue they compensate by leveraging their market position to place pressure on their increasingly de facto vertical supply chain and by poorly compensating their employees.

> by spending more money on manufacturing and transportation costs and on people working at cash registers.

Of course, this ignores that many of those poor are the ones in the factories, warehouses, trucks and behind the cash registers.

[fennecfoxen]

> Okay, so you've double turned yourself... Competition is good.

What? This isn't a double-turn at all. I'm not defending uncompetitive environments and monopolistic exploitation, I'm asserting Wal-Mart as example uncompetitive environment is, in the general case, nuts.

> Of course, this ignores that many of those poor are the ones in the factories, warehouses, trucks and behind the cash registers.

Not ignoring that fact, NOTWITHSTANDING THAT FACT. No one is better off if one person working minimum wage pay extra money to have another person working minimum wage drive a truck further (and burn more fuel for that matter). Recognize a simple truism: no group gets better off by engaging in waste. (You could make a case that someone-else making substantially more than minimum wage paying extra for that would increase overall well being by paying more for these services, because of diminishing marginal utility of that richer person's wealth, but making groceries cost more is a freakishly regressive sort of way to attempt to redistribute wealth... and wealthy people aren't shopping at Wal-Mart anyway, they're all at Target or Whole Foods...)

[nmrm]

> I'm not defending uncompetitive environments and monopolistic exploitation

Okay. Well that's what the article is attacking. So I guess I don't understand your point w.r.t. the thesis of the original article. Do you agree with the article but disagree that Wal-Mart is an example? Or what? Could you clarify?

> I'm asserting Wal-Mart as example uncompetitive environment is, in the general case, nuts.

To repeat myself, there's more than one way for companies to behave anti-competitively.

Wal-mart cannot afford to screw consumers, so they find other ways to leverage their status as a mega-corp -- squeezing local government via tifs (this corn field/park/10 year old walmart is "blighted", so give us 15 year tax break to build a new one), paying poorly compared to other players in the market, abusing or undercutting supply chain partners, etc..

> but making groceries cost more is a freakishly regressive sort of way to attempt to redistribute wealth

Well, we could one-up Wal-Mart and make all the groceries completely free by enslaving all those involved in food production. So this is clearly an over-simplification.

It's also a false choice. Wal-Mart could instead decrease its profits and play nicer with everyone (like many of its local chain competitors do, arguably because they don't have the huge legal/PR/marketing team and cash reserves which can buy F-U leverage against local governments and labor groups -- this coercive power that comes with being so big is at the heart of the article's thesis).

Also, the price difference vs. wage difference between Walmart and its competitors also puts the lie to this claim -- even an extra 1.00+ an hour way more than offsets an extra .10 cents on the dollar for groceries.

[tomp]

> Wal-Mart delivers value for shareholders because they attract customers because they're cheaper and more efficient.

That doesn't really follow; it could also be, for example, that Wal-Mart delivers value for shareholders because they drove out all the competition and attract customers because they are the only place to shop at.

I'm not saying that's necessarily true for Walmart, but it's obviously true for US internet providers, to give just one example.

[brc]

>Have you seen many airline start-ups in the past half century or so?

Yes, several.

Virgin Atlantic, Virgin Australia and Virgin America were all startup airlines that have gone on to have success despite being in highly regulated businesses. Virgin Australia was started in 2000 with $4 million and two planes and now has a market cap of $1.5 billion. It entered an oligopoly market with two airlines and cracked it wide open.

Even companies with gentlemans agreements are susceptible to entry by new competitors - even if it requires large amounts of cash - there are plenty of people with large pools of cash looking for opportunities. It happens so often that I am genuinely shocked that people think it doesn't.