Comment by Herring

1 day ago

Going by this list: https://en.wikipedia.org/wiki/Economic_moat

Those are all anti-competitive things. The article even links to "natural monopoly" and "barriers to entry".

It doesn't matter if they're used defensively or offensively, honestly or otherwise, the eventual distribution of power is what matters: a monopoly. At the end of the day you have very few vendors, with all the power to set prices at will, and get Buffet his massive return.

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Herring

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1659447091  1 day ago

None of those things is an active power grab though, which is what I was replying to.

a "natural monopoly" is "often the first supplier in a market" [0] How is being the first, thus more time to grow a market, anti-competitive in itself?

Or other things on that list (I am referring to Buffets moat, which is not entirely wikipedias moat):

    Network effect:    "value of a good or service grows" as it's used by existing and new customers
    Intangible assets: Brand Identity 
    Cost advantage:    Companies that can keep their prices low

How are those things themselves, which Buffet is talking about, not simply good business?

Doing shady, power grabby things to drain the moat of another business into your own moat is anti-competitive. That's not what Buffet talks about though. Which I highlighted and why Buffets moat is misplaced in your list.

A Trumpian "moat" would probably fit nicely, thou currently he's more concerned with draining others moats to flood the villages around them and then take the land that's left to build a personal use golf course

[0] https://en.wikipedia.org/wiki/Natural_monopoly

  • Herring  11 hours ago

    > Are economic moats anti-competitive, or just good business?

    > A "natural monopoly" is "often the first supplier in a market" [0] How is being the first, thus more time to grow a market, anti-competitive in itself?

    These are great questions, and you should ask your favorite frontier LLM. It's systems-level thinking, the ability to see the bigger picture, which takes a while to develop and a lot of reading.

    You're thinking: Great! I'm making the right decisions and winning and making money hand over fist. That's good business.

    I'm thinking: If your moat is super effective (shady or not doesn't matter), it limits competition (anti-competitive) => therefore eventually higher prices, lower quality, reduced innovation, potential for abuse, because there's less pressure to improve and more shareholder pressure for enshittification.

    If you identify with the monopoly you can't see that bigger picture. A healthy market has tons of options for customers to choose from and be served by. Again, talk to the frontier LLMs, they're pretty good at this level. Also fact check them, eg read or watch videos about antitrust enforcement under FDR, that was a crazy bit of drama.