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Culture War Roundup for the week of September 2, 2024

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As western capitalism trends closer an closer to a command economy through mergers, acquisitions and consolidation you will have a harder and harder time arguing against communism.

About 5 companies make all beer. About 6 companies make all media. It's hard to really argue that single digit values of competition produce the level of innovation that a state run monopoly could never rather than simply producing collusion. It's hard to believe that internally the level of competence will not steadily trend towards that of the DMV.

Economies of scale at hyperscale will always produce single digit mega-firm competition. The advantages of this over government-and-single-firm planning are incalculable.

But that's not the point. The point is that new entrants at a smaller scale should be able to enter markets without government approval or interference of any kind. The law of compounding is real; the tiny two-guys-in-their-garage today turns into Apple in 30 short years. In the absence of that, we're all still using IBM mainframes to send dick picks.

To return to the brewery example from the post above (and my post below), we can see that dynamic at work there as well. While it's not true that the market has homogenized and the big consolidated firms aren't actually crowding out competition, it's also true that there would almost certainly be many, many more little breweries all over the place in the absence of government regulation. Would someone on my block turn their garage into a little storefront if they were allowed to just sell home-brewed bottles without requiring a whole raft of government licenses? Almost certainly yes. If someone wants to argue that the licensing and inspection regime is necessary to prevent bad things, that's fine, I can probably find points of agreement, but the tradeoff in tamping down startups has to be acknowledged.

If there's a problem that's stopping startups, it isn't "western capitalism" that's going so, unless this is just calling out that western capitalism tends to have substantial regulatory capture.

Why is it hard to argue? It's an empirical question and empirically these companies do work better than state run monopolies. You are also eliding all the foreign competition and small firms that could scale up if the big ones ever get bad enough.

G. K. Chesterton made a similar point a century ago.

If the common man in the past had a grave respect for property, it may conceivably have been because he sometimes had some of his own.

Right. That’s why Thatcher allowed people in social housing to buy their house cheaply. It worked for about 40 years, but created a housing bubble that I think has now undermined the effect.

  1. The question with consolidation is whether there are large barriers to entrance. If no, then consolidation allows some degree of economies of scale whilst preventing monopolistic pricing.

  2. We see that play out in the beer space. Small barriers to entrance means there are numerous craft brewery options and such beers are actually more expensive vis-à-vis the mass produced beer. You would expect if there truly was monopolistic pricing and consolidation prices to rise drastically but we don’t see that.

About 5 companies make all beer.

This is a pretty funny example of homogenization to use during an era when small, independently owned breweries exploded. I don't even live in a large city and there are a half dozen little brewery taprooms within walking distance and many more within biking distance.

This sounds like CCP-style state capitalism (which, for all its faults, is at least tremendously efficient) rather than communism either as historically practised or as envisioned by Marx and Engels.