Comment by bsder
18 hours ago
> That's not to say it's an easy problem to solve.
Incorrect. You simply decide that having less than 5 suppliers at any level is unacceptable and you bust companies up, repeatedly until you have those suppliers. That way when one goes bankrupt, you don't wind up with complete supply chain disintegration.
The solution is quite straightforward. However, it requires an electorate that has a couple of brain cells to rub together in order to understand the solution. And 30% of the US is willfully hostile to any real solutions while another 30% is happy to fiddle while everything burns.
> You simply decide that having less than 5 suppliers at any level is unacceptable and you bust companies up, repeatedly until you have those suppliers.
This is a very extreme solution, and eliminates many of the benefits from horizontal integration even when the benefits are passed onto customers. Consider:
- insurance companies
- banking
- utilities
It’s also hard to implement. What counts as a supplier? Is Google the sole supplier for search functionality? If 4 suppliers provide 1% of demand, and one supplies 96%, does that comply? If there’s only one company offering some new service (e.g. driverless cars), do they immediately get broken up?
> do they immediately get broken up?
Yes. Always. At all levels. I might provide a limit below which that doesn't happen (like $50 million in revenue), but as soon as you cross that limit, scrutiny should be automatic.
> This is a very extreme solution, and eliminates many of the benefits from horizontal integration even when the benefits are passed onto customers. Consider: - insurance companies - banking
There is no advantage to horizontal integration for consumers in those industries. If anything, the value is negative. The fact that people are quite a bit happier about credit unions than Chase says everything you need to know.
Sure, there are "efficiencies" to be gained by horizontal integration. What we have seen is that the horizontal integration is so strong that the industries are sclerotic in the face of crisis or change (see: toilet paper manufacturers in Covid who couldn't switch gears). It has become repeatedly clear that we need resilience and competition more than we need efficiency.
> utilities
Should be limited to natural monopolies and strongly controlled by the government. We have seen what happens when you create hybrid-type utilities that try to have some existence in the market (rather than being solidly government regulated) and the result is poor (see: PG&E).
> There is no advantage to horizontal integration for consumers in those industries. If anything, the value is negative. The fact that people are quite a bit happier about credit unions than Chase says everything you need to know.
IMO this claim is just too strong. I think you'd end up breaking up (or trying to) Lloyds of London, Spacex, Fedex, DHL, Boeing, Panasonic, ASML, Google, Apple, and many other very specialized companies. These businesses would be very expensive if they could only supply 1/5 of the market, to the point that many people would be totally priced out. The world can barely support 1 ASML, imagine if we had to pay for 5 of them. We'd be sent back to the 2000s, and that's _just_ computing.
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