Comment by squeedles
3 days ago
Thanks for that. We seem to have lost sight of the importance of "commercial biodiversity" in the past 40 or more years of continuous M&A concentration.
Happily, I saw a little discussion of it in 2008 when the advocates of letting the auto companies fail were pushed back by statistics showing how many second and third tier suppliers would be destroyed. But the fourth tier, the shenzhen / radio alley-type stuff is still ignored. Very similar to how most companies want to simply hire skills and assume that they will magically appear when in years past, companies took an active hand in creating them by having a career development path in-house.
Perhaps the AI bubble will be viewed in the future as the last gasp of companies that depleted the soil that they grew in and now struggle to survive without anyone that knows how to do the work anymore. Maybe LLMs will be all that remains, our Moai.
It's a shame the same logic wasn't applied in maintaining a healthy root-level auto company ecosystem. Having a single megacorp at the top inevitably makes it too big to fail. On the other hand, if there are dozens of smaller car companies, the failure of any one of them is insignificant to the wider ecosystem.
A company that knows it is too big to fail will inevitably lead to mismanagement. After all, why bother saving for a rainy day when you can count on corporate welfare handouts? Why bother reducing your risks when you can always rely on a bailout? You can never lose, so the obvious thing to do is to bet as big as possible in an attempt to create as much short-term "shareholder value" as possible.
I can't think of a way to have dozens of smaller car companies, all competitive and all viable long term without ongoing and adaptive regulation.
With Chevron doctrine dead and Congress struggling to pass a budget, I can't see how it is possible to have any meaningful regulation in the US in the short to mid term.
Even the mainland China model of pitting province and local governments against each other to foster competition might not work in the long term (it is still early days). We already see specialization in provinces which to me indicates that there is a defacto province government who wins auto manufacturers in the long run.
There's plenty of "commercial biodiversity" left on Canal Street. And it's pretty gross.