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Swami's avatar

Morgan is expressing my thoughts on the matter as well (better than I could). I see us as entering a world of free and virtual, where economics no longer applies-- at least not in the same way.

Just about everything I do is free and/or virtual. Every year I do more free or near free (and it gets better) and spend less on physical things.

Two examples: twenty years ago my company built a teleconference room in every region. The cost was about a third of a million plus a hundred grand or so annually in upkeep and maintenance. This was to eliminate the costs of air travel. Today I have a better teleconference system included as a free app on every smart device in my house. I have millions of dollars in teleconferencing utility and it shows up as near zero in economics measures. It subtracted from GDP!

Second, I used to buy an album or two a month at $8 or $9 each in the late seventies. Today for $15 a month I get a virtual library in CD quality which includes over twenty million albums. Better quality, portable and more convenient. This would have cost millions to buy and store twenty years ago. Today, better for less.

Economists are simply missing what is going on right under their feet. Stagnation my ass.

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brendan_r's avatar

How fine-tuned are HHI indices?

For example, analysts consider Fabrinet an "electronics contract manufacturer", a massive industry 1,000 times larger than Fabrinet. But in fact they're an optical component manufacturer with 50% market share, sole supplier on most everything they do, win deals w/ out bids, etc.

Another: Mocon is superficially an Industrial Instrumentation firm. In fact, their instruments do one thing: measure the rate at which substances permeate materials, which is useful in food packaging. They must have more than 50% share of this space, if not 90%.

Defining market segments accurately is extremely difficult for industry insiders to do; they've got little incentive to publicize their findings; and as Peter Thiel points out, those w/ near monopoly power tend to exaggerate the scope of their market to fend off regulatory attention.

Wonder whether HHI's ability to carve the economy at its joints has deteriorated.

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