Imagine merging three public firms, by making each firm into a division of a single new firm with one new boss. In principle, this new boss has the option to keep these firms running exactly as before. The prior CEOs could become division heads, with complete freedom to run their divisions as before, and paid the same, such as via options on new assets that track the new profits of each division. Under this arrangement, the profits of the new firm could arguably be the same of the profits of the old firms, minus a little bit for the salary of the new boss.
In the book Golden Gates (https://www.amazon.com/Gold..., the author argues that YIMBYism has a greater chance of passing when actors from outside the locality are allowed to vote by using federal law to supersede local prohibitive ordinances to build more affordable housing units.
Govt monopolies are accountable to people through voting. Corporate monopolies are often disallowed by anti-trust rules since they lead to price fixing hurting consumers. That's one reason there aren't large companies since anti-trust laws don't allow for it.
Isn't the solution to this apparent knowledge gap that we're simply too early for this? (I've just read the grabby aliens page, so maybe that concept is burnt into my short term memory and cognition :)
But just as in history empires overextended then fell apart because there was no technology to hold them together, it seems that firms before wouldn't have gained much even if they merged. (Eg. they would have run up to antitrust issues, etc.)
Bell got big, because it was a communications company, but people felt that they were doing a bit too much of that profit maximization so it got broken up. (Not that it solved the people's problem...)
Also, it seems that without technology to help blindly merging firms just doesn't help that much.
Plus there's probably an inverse relationship between firm/investor expansiveness (merger hungriness) and firm lifespan, as too aggressive firms tend to blow up as technology/society/culture changes. (And we only see the big successful exceptions/outliers.)
All in all, probably the current state is not the "ideal" asymptotic state for profit maximizing, but firms are not really that spherical profit maximizers. (Or if they/some are, society seems to eventually nudge them toward some edge.)
The problem is that the claims are too vague to be falsifiable. When he says "firms do not do this," what magnitude is the expectation? You could look at today's state of affairs and say, "Look at all the firms that are merging!" And you could just as well say, "Look at all the firms that don't merge!" It's simply not a meaningful enough claim to have surprise about.
When he imagines a hypothetical agency "in charge of food for the whole nation," we're told it can behave in any fashion at all from one extreme to the other. That's not a coherent object to make any sort of argument about.
#1 - His followup statement, "firms with more than 250 employees employed 55% of the private US work force in 2020", can only be true if there are MANY fewer large firms (at least at the 250 person cutoff). So, most of these firms do not choose to merge.
#2 - You're probably right to be skeptical here.
#3/4 - You think it's not obvious that giving the FDA the power to nationalize food and agriculture would cause the government to intervene in food and agriculture more? It's is almost a tautology. A government agency that is allowed to regulate and control more will, on average, regulate and control more. The only way to do that is by doing the things Hanson stated.
This might be the sloppiest take I've ever seen on this topic.
• "In fact firms do not do this." — In fact firms merge all the time.
• "The typical scale of most firms seems far smaller than can be explained by these effects." — No reason is given. Italics do not constitute an argument.
• "It seems obvious to me that by now such a food agency would have intervened in food production, processing, and distribution far more extensively that has been the actual case in our actual history." — Not at all obvious, and again no evidence or even any argument is given.
• "The amazing thing is that all this would happen even with high quality oversight and accountability by agencies to politicians, and politicians to voters." — The amazing thing is that the author thinks he can state this prediction without basis of any sort.
There are good reasons to beware centralization, but this piece is simply lazy. This gets an F. Show your work.
If speculators believe that overall outcomes are better if some decisions are made by separate processes, including futarchy processes, then they can approve bills that authorize such separate processes.
They could also do that if the firms were seperate. The reason to do them more if them firms are merged are because someone the firms have become more interdependent.
I'm of course presuming that firm size is chosen in a roughly profit maximizing way; if they expected much larger profits from being larger firms, they would merge to achieve that.
Maybe this fact has implications for futarchy? If centralization causes overintervention then multiple decision markets with separate objectives might outperform a single futarchy with a global objective. Not to mention sometimes global objectives are hard to measure (e.g. hard to measure objective happiness when someone eats an apple, easier to measure what you're willing to give up for the apple)
The bigger an organisation gets, the more energy it devotes to internal politics. Those three division heads are mostly scheming how they can get the top job, rather than running their divisions.
I don't see how the last sentence of paragraph three supports your major point. Just because large firms *only* employ 55% of the private work force doesn't connect with losing or gaining profit. If anything, they have fewer employees that they have to pay and can hold on to more of their revenue.
Can we quantify the risks of centralization in general or of company mergers/company growth in particular? What dynamics cause companies to be most effective at the size they have on average? I can think of some factors:* limits to economies of scale (you mentioned standardized products vs. individual tastes)* missing markets - you can only merge with companies you know about and can evaluate and trust* cost of merger or other restructuring* regulatory limitations - what is the inner dynamic of anti-trust law and could its effect be realized more effectively with different means?* inner dynamics of companies - deep hierarchies come with a lot of problems (Moloch - https://www.lesswrong.com/t... ) * personal interests of the actors (you mentioned the CEOs)
It looks like Amazon has found some interesting solutions to this. One seems to be to create sub companies and services that compete in the market like AWS and FbA.
Exactly...but isn't that the kind of rule that would allow one to treat the merged firm as very much like three seperate firms. The fact those forms do compete less means they don't do nothing. So maybe I'm confused by your suggestion. Is it that you can't come up with any set of rules to allow some benefits to be achieved while not losing the advantages of Independence (this seems to achieve that) or simply the narrow point that one doesn't always want lots of top down direction.
The later point is clearly true but I'm not sure it's something there is much doubt about.
In the book Golden Gates (https://www.amazon.com/Gold..., the author argues that YIMBYism has a greater chance of passing when actors from outside the locality are allowed to vote by using federal law to supersede local prohibitive ordinances to build more affordable housing units.
Govt monopolies are accountable to people through voting. Corporate monopolies are often disallowed by anti-trust rules since they lead to price fixing hurting consumers. That's one reason there aren't large companies since anti-trust laws don't allow for it.
Isn't the solution to this apparent knowledge gap that we're simply too early for this? (I've just read the grabby aliens page, so maybe that concept is burnt into my short term memory and cognition :)
But just as in history empires overextended then fell apart because there was no technology to hold them together, it seems that firms before wouldn't have gained much even if they merged. (Eg. they would have run up to antitrust issues, etc.)
Bell got big, because it was a communications company, but people felt that they were doing a bit too much of that profit maximization so it got broken up. (Not that it solved the people's problem...)
Also, it seems that without technology to help blindly merging firms just doesn't help that much.
Plus there's probably an inverse relationship between firm/investor expansiveness (merger hungriness) and firm lifespan, as too aggressive firms tend to blow up as technology/society/culture changes. (And we only see the big successful exceptions/outliers.)
All in all, probably the current state is not the "ideal" asymptotic state for profit maximizing, but firms are not really that spherical profit maximizers. (Or if they/some are, society seems to eventually nudge them toward some edge.)
The problem is that the claims are too vague to be falsifiable. When he says "firms do not do this," what magnitude is the expectation? You could look at today's state of affairs and say, "Look at all the firms that are merging!" And you could just as well say, "Look at all the firms that don't merge!" It's simply not a meaningful enough claim to have surprise about.
When he imagines a hypothetical agency "in charge of food for the whole nation," we're told it can behave in any fashion at all from one extreme to the other. That's not a coherent object to make any sort of argument about.
https://www.reddit.com/r/co...
#1 - His followup statement, "firms with more than 250 employees employed 55% of the private US work force in 2020", can only be true if there are MANY fewer large firms (at least at the 250 person cutoff). So, most of these firms do not choose to merge.
#2 - You're probably right to be skeptical here.
#3/4 - You think it's not obvious that giving the FDA the power to nationalize food and agriculture would cause the government to intervene in food and agriculture more? It's is almost a tautology. A government agency that is allowed to regulate and control more will, on average, regulate and control more. The only way to do that is by doing the things Hanson stated.
This might be the sloppiest take I've ever seen on this topic.
• "In fact firms do not do this." — In fact firms merge all the time.
• "The typical scale of most firms seems far smaller than can be explained by these effects." — No reason is given. Italics do not constitute an argument.
• "It seems obvious to me that by now such a food agency would have intervened in food production, processing, and distribution far more extensively that has been the actual case in our actual history." — Not at all obvious, and again no evidence or even any argument is given.
• "The amazing thing is that all this would happen even with high quality oversight and accountability by agencies to politicians, and politicians to voters." — The amazing thing is that the author thinks he can state this prediction without basis of any sort.
There are good reasons to beware centralization, but this piece is simply lazy. This gets an F. Show your work.
If speculators believe that overall outcomes are better if some decisions are made by separate processes, including futarchy processes, then they can approve bills that authorize such separate processes.
They could also do that if the firms were seperate. The reason to do them more if them firms are merged are because someone the firms have become more interdependent.
I'm of course presuming that firm size is chosen in a roughly profit maximizing way; if they expected much larger profits from being larger firms, they would merge to achieve that.
Maybe this fact has implications for futarchy? If centralization causes overintervention then multiple decision markets with separate objectives might outperform a single futarchy with a global objective. Not to mention sometimes global objectives are hard to measure (e.g. hard to measure objective happiness when someone eats an apple, easier to measure what you're willing to give up for the apple)
The bigger an organisation gets, the more energy it devotes to internal politics. Those three division heads are mostly scheming how they can get the top job, rather than running their divisions.
I live with corporate monopolies already and I don't like that.
I don't see how the last sentence of paragraph three supports your major point. Just because large firms *only* employ 55% of the private work force doesn't connect with losing or gaining profit. If anything, they have fewer employees that they have to pay and can hold on to more of their revenue.
What does the last sentence (before the Added) refer to? Green New Deal? Build Back Better? DSA?
Can we quantify the risks of centralization in general or of company mergers/company growth in particular? What dynamics cause companies to be most effective at the size they have on average? I can think of some factors:* limits to economies of scale (you mentioned standardized products vs. individual tastes)* missing markets - you can only merge with companies you know about and can evaluate and trust* cost of merger or other restructuring* regulatory limitations - what is the inner dynamic of anti-trust law and could its effect be realized more effectively with different means?* inner dynamics of companies - deep hierarchies come with a lot of problems (Moloch - https://www.lesswrong.com/t... ) * personal interests of the actors (you mentioned the CEOs)
It looks like Amazon has found some interesting solutions to this. One seems to be to create sub companies and services that compete in the market like AWS and FbA.
Exactly...but isn't that the kind of rule that would allow one to treat the merged firm as very much like three seperate firms. The fact those forms do compete less means they don't do nothing. So maybe I'm confused by your suggestion. Is it that you can't come up with any set of rules to allow some benefits to be achieved while not losing the advantages of Independence (this seems to achieve that) or simply the narrow point that one doesn't always want lots of top down direction.
The later point is clearly true but I'm not sure it's something there is much doubt about.