
Declining worker power vs. rising monopoly power: explaining recent macro trends - hhs
https://voxeu.org/article/declining-worker-power-versus-rising-monopoly-power
======
jakozaur
In almost all USA industries, there is increasing amount of consolidation. The
top 4 companies' in almost any industry has a larger share of the total
market: [https://www.economist.com/briefing/2016/03/26/too-much-
of-a-...](https://www.economist.com/briefing/2016/03/26/too-much-of-a-good-
thing)

Some consolidation is natural, but a huge part is caused by mergers and
acquisitions (M&A) fulled by Private Equity. The M&A benefits the shareholders
of participating companies at the expense of consumers, employees, and other
companies.

~~~
dcolkitt
Monopolization almost certainly is occurring. The left usually cites weak
antitrust enforcement. The right usually cites regulatory barriers that make
it expensive to compete without economies of scale. I actually think both
sides are at least partially correct.

However what almost everyone overlooks is the demographic transition. The US,
along with every other developed economy, is significantly older today than it
was 40 years ago. And the fact of the matter is that an older work force
almost certainly leads to an economy with larger, older firms.

Most entrepreneurial activity is disproportionately carried out by younger
people. Young workers are much more likely to work for small, young, growing
firms. That makes sense because they have longer horizons and can take more
risks. Older workers, who have higher fixed expenses and are closer to
retirement, prefer the stability of a stable, large company with low employee
turnover.

Macroeconomists who have attempted to quantify this impact, generally find
that the average firm age in an economy linearly increases with the average
worker's age.[1] Since older firms, tend to be larger, slower growing, and
less competitive, it's not wonder we've seen an increase in monopolization.

[1] [https://www.nber.org/papers/w25382](https://www.nber.org/papers/w25382)

~~~
WalterBright
> Since older firms, tend to be larger, slower growing, and less competitive,
> it's not wonder we've seen an increase in monopolization.

This is self-contradictory.

~~~
tmh79
how is this contradictory?

Firms that are monopolistic are less competitive, larger, and slower growing.
Reducing monopolistic tendencies increases capital growth, competition, and
reduces average firm size. This is well understood economics.

Monopolies arent' some hypercompetitive ultra capitalist battlespace, they're
fat and happy, and the most impactful teams they employ are lobbyists and
policy folks in DC. Look at like, comcast and what they did with the FCC.

~~~
AQuantized
Those attributes stem from them being a monopoly, they don't create it in the
first place. He's questioning the implication that being less competitive and
slower growing would allow you to obtain more of a monopoly.

~~~
jagged-chisel
The large, lumbering not-yet-a-monopoly has no method to increasing market
share other than buying smaller competitors; thus leading to monopolization.

------
alexose
I find it very disappointing that the most reliably lucrative career arc for a
programmer nowadays is to get hired by a tech giant and stay there as long as
possible. And the second most is probably to go to work for a company that
could get gobbled up by a tech giant.

I've made a career out of small startups, and I wouldn't trade it for a thing.
On the other hand, if I'd gone to work for Amazon straight out of college, I'd
probably have a boat by now.

~~~
wpietri
And what kills me about this is it almost seems like the big tech companies
are just grabbing up engineers to no purpose. When I hear stories about what
people are actually doing at larger companies, it often seems somewhere
between miniscule and just plain empty. And it's not like a lot of the people
telling these stories don't understand that. But they're happy enough wasting
a third of their day at that salary.

~~~
danjac
Thankfully we have modern Agile/Scrum with all its process and meetings to
soak up that time and give us the feeling of business.

~~~
wpietri
I appreciate you putting "modern" in there. We tried so hard to make it people
over process. Getting things done over internal BS. Alas, that's not how it
ended up for most people.

------
lanevorockz
Trying to break the conditioning here but government should always tax in a
way that it incentive WORK. The way things are Wealth is no longer being
produced, so those who have it will be on top because income will never be
enough to prop you up.

Therefore we should want a Growth market so that more wealth is produced and
risk averse people will still be rich but more people will become as rich as
them.

To resolve Inequality we can't just have the mindset of punish the rich for
creating wealth. We need to grease up our economy so that everyone else can be
rich as well.

Different mindset but this problem is super hard to solve and I don't think
anyone has a decent solution for it.

~~~
deegles
Why should everyone have to work? We are 100% capable of creating a society
where everyone's basic needs are met with the automation and technology we
have today. The idea that a person is only worth something if they work needs
to be deeply reexamined.

~~~
kebman
Because if you cannot offer anything of value, someone else will offer that
value on your behalf, making you an extraneous cost which anyone in their
right mind would want to remove. And then you are but a slave to whomever you
are useful to, meaning whoever controls you, and whoever has the power, and
who grants you the means to get those basic needs. If someone is giving you
bread for free, you can be sure it's because they don't want you to rebell.
But then that is also your only value to them, which is a very dangerous
proposal, because it means you're expendable, and that the guy giving you that
bread might not want to continue such a fruitless endavour. That is why an
economy _must_ rely on the basis of voluntarily offering something of value.
Because the alternative is literal enslavement.

~~~
deegles
> If someone is giving you bread for free, you can be sure it's because they
> don't want you to rebell.

There's no other reason you could think of to feed a hungry person?

> That is why an economy must rely on the basis of voluntarily offering
> something of value. Because the alternative is literal enslavement.

You don't see the irony in saying that a person _must_ volunteer their value
or be enslaved?

~~~
kebman
> There's no other reason you could think of to feed a hungry person?

Free individuals might give something out of benevolence. But a state
institution is not a free individual. It can only represent the collective,
and you cannot ensure that all individuals in such a collective would agree to
such an exchange, or feel benevolent about it. As such, there is no such thing
as a benevolent state. Instead, you can employ game theory on such entities,
to the extent of making them look completely self-serving and even
psychopatic, as proven by Nash.

This is why it is so important to curtail the development of big and
monolithic bureaucratic organisations, and instead use such principles as
those given by Montesquieu, to make natural powers compete for authority.

> You don't see the irony in saying that a person must volunteer their value
> or be enslaved?

Do you think the person giving you bread should be forced to give you that
bread? Nay, it would be far better if there was some kind of mutual exchange.
There is none to be had, when the exchange is merely giving out a resource for
"free." Except we know that it's not for free, but in return for your good
behaviour. Then the exchange isn't free, but depending on an exchange anyway,
except you have little to no say in it. Then the one in power of that resource
in turn also have absolute power over you. So there should be a way for you to
gain that power for yourself, or in the least make sure the one giving you
bread does not have monopoly in doing so, because it will inevitably devolve
into abuse of power.

~~~
someguyorother
This seems to be a kind of mixing of two concepts. First, that "a state that
is big enough to give you anything, is big enough to take it all away". And
second, that being provided resources "for free" is a forced exchange because
you don't have a say.

If the state was a dictatorship, then the point might apply. However,
democratic states (to lesser or greater degrees) contain some measure of
feedback; and that weakens both of the prongs.

Plainly speaking, a democratic state provides its people bread for free
because that's what the people want. The state can't take it all away since it
is responsible to the people, and the exchange isn't a one-sided forced deal
because the people in the state's jurisdiction have collective power on the
state itself.

If that power is the power of the ballot, then the mutual exchange could be
seen through an adversarial lens to be "good behavior in return for free
bread". But the consequence doesn't hold, as the state doesn't have absolute
power over its people. The exchange is mutual because if either party reneges,
so does the other party.

But the stronger that feedback is, the less the adversarial model works.
Consider a community small enough to support a direct democracy along
consensus lines. If the tech existed, such a community could create an
automated bakery and then hand all of that bread to its members. Here the
members govern themselves; there is no external power that arises out of the
state and then unilaterally controls the people.

A larger state may be different, but that difference is a matter of degree.
"The one in power of that resource" only has "absolute power over you" if you
are not part of it.

~~~
kebman
This is not a concept, but an observation. What you're talking about already
exists. It's the capitalist cooperative, where people voluntarily come
together to pool capital in order to build some company that produces things
or services that are of benefit to the collective owners and/or their
customers.

However, while the price of membership in such a unit decreases with every new
participant, the ownership is also diminished with each new owner, until
effective control over the unit or process becomes very difficult. This will
inevitably lead to frustration and feelings of powerlessness as needed change
is slowed more and more.

As the saying goes, more votes, does not necessarily mean more democracy. It
simply means that it becomes harder to get anything done. Meanwhile,
bureacracies grow and rule uninterrupted under such conditions, since a vote
every fourth year, and the meddling of one or two representatives, can only
ever make small and incremental changes, instead of giving the organization
the far-reaching and overarching reorganization that it actually needs in
order to become fair and effective again; a thing that is usually contested
and opposed by those making up the bureacracy of that organization in the
first place.

~~~
someguyorother
Right, so the point that it is a matter of degree stands, and the point that
you are not powerless in a state where you are part of the government also
stands.

Given those points, it is not impossible to imagine a future state deciding to
use some of its resources to constructing an automated production system. Its
legitimacy is backed up in two ways: once, by the consent of the governed
through the democratic process, and the other, by the positive externalities
it grants to the people in common.

If the people of such a future state decides to create a common automation
infrastructure, then they may also reach the conclusion that not everybody
needs to work. The conclusion you reached in your initial post,

>Because if you cannot offer anything of value, someone else will offer that
value on your behalf, making you an extraneous cost which anyone in their
right mind would want to remove.

no longer holds, because even in the most selfish system, any bureaucrat who
takes the time to "remove" you will have to face the consequences. And
therefore, there can exist a state that does not demand everybody work.

To some extent, that already exists today. Welfare states protect (or are
intended to protect) people who can't work. The people in a welfare state do
not want to leave those who can't work to starvation, and so the state
doesn't, either.

I do, of course, agree that states as they exist today are imperfect,
sometimes grossly so. But I disagree that there is a necessary implication
that everybody has to work. As long as the people have a say, and as long as
the people do not only value labor, the state cannot simply rid itself of its
unproductive constituents. If anyone "in their right mind" would remove people
that are "extraneous costs", then the people are collectively insane - and
they are coherently and strongly insane enough to check those who are not.

~~~
kebman
> Right, so the point that it is a matter of degree stands, and the point that
> you are not powerless in a state where you are part of the government also
> stands.

Not really. The more people who get to vote, the less individual control you
get yourself over the outcome, and so the more powerless you become. More
votes do not equate more democracy, only less individual power to influence
your own future or leadership through the ballot, especially if your choices
are limited. Unless you take a more direct action, and go into politics
yourself, that is. But who has the time for that?

This is why people are rioting in the streets now, instead of patiently
waiting until the voting booths open. It's because deciding between two
candidates wouldn't resolve the matter in any meaningful way. Especially since
there are no real candidates to vote for, that would make anything but token
change for you. Nevermind an independent candidate, who just wouldn't gain any
traction at all, or at least not under the American system.

Call me cynical, but representative democracy only works because it gives
people the _illusion_ that they have an individual say in politics, but they
really don't. However the illusion keeps them blissfull enough to not want to
rise up. If it actually mattered, I'm sure there wouldn't be a discussion on
whether the Brexit vote should be respected (many wanted to disregard it
entirely), or even that my own country of Norway perhaps shouldn't pursue
relations with the EU, since a majority voted against membership. Yet here we
are, with a de-facto membership of the EU through the EEA. Voting against it
really worked. Yay... /sarcasm. So I can full well understand why some people
think rioting is a better choice. I don't condone it, and I think there are
better ways to protest, but I still understand it.

> even in the most selfish system, any bureaucrat who takes the time to
> "remove" you will have to face the consequences. And therefore, there can
> exist a state that does not demand everybody work.

Depends on the system in place. And it would be at the eternal scorn of those
who have to work, but still pays the full cost of all those who don't. Because
UBI isn't "free." And let's face it, such a machine wouldn't be "free" either,
although it stands to reason that if it was made really big, then it would
certainly be cost saving enough as to preclude all competition from all those
who don't have the means to build such a machine themselves. As such, it would
be clearly monopolistic.

In essence, it would be unfair to all those who would otherwise compete by
baking bread of their own, because it would make bread-baking entirely
unprofitable for everyone, just like slavery made low-end work unprofitable
both in Rome and in pre-civil war USA. People somehow forget to mention that
the war wasn't just about emancipation, but also because slavery gave slave
owners such an unfair advantage that it put a lot of people out of honest
work. Thus there would be something in it for every baker to throw a wrench
into such a monopolistic machine.

If the only way to build such a machine, is to build it big, then it stands to
reason that only big players can build it. So what makes you think they'd do
it out of pure benevolence, without anything to gain from it? Surely, giving
elites peace from the "rabble" might be a good enough reason? In fact, large
swathes of the people would become complacent and dependent on the machine. So
anyone who could gain control over it, would also stand to gain untold power
for themselves and their group.

I think a fair few people would aspire to such power, and some might even be
willing to murder for it. If you were somehow able to defend that coup, either
diplomatically or by force, you would in effect gain dictatorial power over
anyone it served. And nevermind democracy. You now have the power to decide
what people vote, or no bread for you! And so, even if it was made with good
intentions and for benevolent reasons, the machine may well come under the
control of evil. Worst of all, if evil ever got control over it, many would
come to their aid, simply to make sure they would continue to come first in
the bread-line.

Now consider a crisis sweeping the world, say, destroying crops around the
world; the guys who are getting stuff for free, would be the first to be cut
out of the service of that machine. Only those who worked and saved would
afford bread in such a time, as everyone would be made to pay. Except those
who relied solely on the machine would starve, because they wouldn't have
anything saved up to pay for bread. And so you'd have new upheavals.

The only way to alleviate such an extreme amount of power, would be to make
sure there is competition for it, so that several machines were made to
compete with each other to offer the best bread. And for that to be possible,
you need people who also add value by working in various ways.

But without any incentives to do so, one might revert to letting the state do
it. And then it would be in the interest of the state to keep that power to
themselves, and prohibit anyone else from having it. Good luck saving it from
the psychos and sociopaths that usually want to climb to those heights.

> If the people of such a future state decides to create a common automation
> infrastructure, then they may also reach the conclusion that not everybody
> needs to work.

If they provide no value, then they are also worthless and expendable. If
their worth is only potential, then don't be surprised if they're treated like
cattle by those owning or controlling that infrastructure.

> To some extent, that already exists today. Welfare states protect (or are
> intended to protect) people who can't work. The people in a welfare state do
> not want to leave those who can't work to starvation, and so the state
> doesn't, either.

Except it's an inherently unsustainable system unless most people in that
country also contributes to it. We're now in a situation where more and more
countries cannot afford the welfare states they once created. And _now_ while
the coffers are empty, and the jobs are drying up, people want UBI? Who's
gonna pay for it? The only reason rich people would pay for it, is to insure
safety for themselves. So in essence, they would pay for security against the
masses. It's the same reason the patricians of Rome did it. Well, Ok, whatever
you say, it did work for a time... For that reason. So that's at least
_something,_ I guess. But whatever that was, it wasn't freedom.

There is already solutions that lets people stop working, however: Income
based on interest, dividends and rising asset values. This is when the value
you add back to society has become intrinsic to the property that you own. But
most people have neither the means nor the knowhow for how to get there.
Perhaps this is what schools should focus on in the near future, then?

~~~
Avicebron
>If they provide no value, then they are also worthless and expendable.

This doesn't have to be the case, only the most nihilistic and privileged view
of the world can produce such statements. People are not valuable because of
their ability to produce capital, reducing things to these terms is a
deficiency in both mental models and morality.

------
benjaminjosephw
I came across this very relevant article earlier today: "Computers Don't Kill
Jobs, People Do: Technology and Power in the Workplace"[0] It was written in
1996 but many of the observations affirm these trend:

> Technology undoubtedly contributes to productivity, which should, of course,
> make more available to all. But buried (not too deeply) in the very
> innovations that increase productive capacity of the workforce are factors
> that serve to deny the workforce the bargaining power to gain their share of
> the output.

It argues that the people who drive innovation and technological advancement
in the workplace tend to do so for the benefit of a small minority (i.e. the
owners/buyers rather than the worker/users) which itself contributes to an
increasing inequality of power.

[0] -
[https://www.jstor.org/stable/1047971](https://www.jstor.org/stable/1047971)

------
kebman
To me it's pretty easy to understand. It's far easier for state organs to
control large corporations, than many small and independent businesses.
Meanwhile, it's far easier for coroporations with means to lobby for
legislation that makes it difficult for smaller, i.e. competing, businesses to
thrive. They can do this, because they can afford the armies of lawyers and
lobbyists needed to uphold and exploit all those rules. Just add revolving
doors. It's particularly conspicuous that this is going on to such a degree in
the USA. In effect, it means the USA is increasingly ending up with a new kind
of aristocracy not dissimilar from the royal rule they once rebelled against.

~~~
Dumblydorr
I'd argue it's simpler for governments to foster a free and competitive market
than try to work against massive vertically integrated companies with tons of
lobbyists and power.

Are you suggesting the US has any control over the tech giants? It's clearly
not the case, most politicians talk the talk, but they take massive donations
in private events and then craft legislation to favor big tech. What we need
is more companies, more competition, government needs to bust up the big
players and disallow M&A.

~~~
nickff
Bureaucracies don't like working with a bunch of small companies; they want to
work with a few large companies with specialized departments that make it easy
to get what they want. The rules and regulations are all written for large
corporations with inside counsel and compliance departments, not small
independent companies.

source: I work at a small company, and have dealt with such bureaucrats

------
scottlocklin
No sane person should ever listen to Larry Summers again. This weasel looted
America; even looted Russia with his pals at Harvard -anything he has to say
that isn't a groveling apology for his life of treachery and destruction isn't
worth listening to.

~~~
nickff
I'm not sure that Larry Summers would call the people at Harvard his 'pals';
my understanding is that Summers was forced out of his position there.

~~~
scottlocklin
Andrei Shleifer was definitely his pal, definitely helped loot Russia, is
STILL at Harvard, despite their settling a lawsuit over insider trading
related to his activities, and Summers was not forced out from his position
there for any malfeasance. He was forced out for saying things. Which shows
you where Harvard is at; commit crimes, loot multiple countries? No problemo;
just don't say things which trigger people.

------
brenden2
I think this plays into the current social unrest as well. People have been
trying to separate the looters and protestors, but they seem to completely
ignore the extreme inequality that exists throughout the US, especially in
this period of high unemployment.

People at the bottom have it bad, very bad. Being ignorant of that problem is
just going to make it worse. Lashing out at fancy retailers in fancy
neighbourhoods makes a lot of sense as a way of sending a message to rich
people, whether you like it or not.

~~~
metalliqaz
I know a few rich people. They basically want Trump to just shoot all the
protesters. I don't see any message being received.

~~~
Miner49er
Well, history shows us where that kind of disdain for the poor will eventually
lead. It isn't gonna be good for the rich.

~~~
Ididntdothis
The problem is that change can take decades or centuries and the end result
may not be better or even worse.

~~~
ergothus
I forget where I saw it, but I appreciate a comment that says: When faced with
extreme inequality, you can redistribute wealth through taxation or you can
redistribute poverty through revolution.

~~~
Super_Jambo
"by legislation redistributing wealth or by revolution distributing poverty"
\- Will Durant

~~~
Ididntdothis
Traditionally the ruling class has voted against the first and hoped the
second wouldn’t happen in their own lifetime.

------
dclowd9901
This paper still dances around the real issue.

Why has worker power decreased? Yes, we can say that capital owners
capitalised on the fact that workers were willing to give up more. But why
were they? Unions can explain some of it, but why did Unions go away? Why is
it, when two workers sit in two rooms with two managers, one of them is
willing to take less than the other?

Consumer credit is why. Because of consumer credit, the person who is able to
and willing to overextend their financial position "wins", which is an awful
race to the bottom.

The essential purpose of work is to provide a lifestyle. If you cannot achieve
the lifestyle you want with your job, you will demand more money. Why work at
all if you're just scraping by, and not able to enjoy any of life?

But, wait, here's a credit card. Now you can have that lifestyle you want, and
you don't really _need_ to demand more from your employer. Or maybe you do,
but you know the next guy has one too, and you know that he'll take less
because he can, and maybe he's less financially intelligent than you are. So
you feel like you have less bargaining power at the table.

Would unions help with this? Maybe. But lifestyle is what drives us at our
core. If greed is a core component of demand, then we need to make it so that
we can't quench greed with false financial mechanisms.

~~~
shoo
Is there any research that supports this claim that access to consumer credit
is primarily responsible for decreasing worker power?

------
RcouF1uZ4gsC
The big issue is supply and demand. With increasing automation and global
supply chains, there is a huge amount of labor available relative to the need.

In the past, a union strike at a plant would see a generous long-term contract
and benefits for the workers. Now, it is likely for the plant to be moved or
workers replaced with automation.

~~~
rmrfstar
Larry Summers is simply not credible. This is an "oh fuck things are about to
get out of hand, let's try to insert ourselves into the debate so we don't get
locked out" paper.

Here is Larry Summers from his 1998 speech "The Challenges of Success".

" The world looks very different than it did at the beginning of this decade,
a time when America was said to be in decline. It is now clear that America
will grow faster in this decade than Japan and Europe. Their four-decade-long
story of convergence has ended and America is pulling further ahead. Why this
success? A large share of the credit must go to the two forces that this
conference brings together: technology and finance.

The twin forces of intonation technology and modern competitive finance are
moving us toward a post-industrial age. And if you think about what this new
economy means - _whether it is AIG in insurance, McDonald 's in fast-food,
Walmart in retailing, Microsoft in software, Harvard University in education,
CNN in television news - the leading enterprises are American._ "

Edit:

I tried deleting this, because it is an ad-hominem, which feels good but adds
nothing.

It is just endlessly frustrating that one of the principle architects of the
current status-quo demands so much attention.

Summers helped structure post-Soviet Russia, viciously attacked Brooksley Born
when she sought to regulate the swaps market, among many many other serious
lapses in judgement.

And yet, when he and his students come up with another insane policy proposal
we have to take it seriously and challenge it on the merits.

It feels a lot like the allied strategy during WW2 of saturating enemy air
defenses.

[1] [https://mattstoller.substack.com/p/how-bill-clinton-and-
amer...](https://mattstoller.substack.com/p/how-bill-clinton-and-american-
financiers)

~~~
twic
I'm not hugely surprised that the OCR of the scan of the transcript of the
speech says "intonation technology", but i'm mildly amused that both Stoller
and you copy-and-pasted it without question.

------
thayne
I'm suprised there isn't any mention of the relation between monopoly power
and declining worker power. I'm not an economist, but it seems like if a
company gets a monopoly on an industry, it most likely also has a monopsony on
workers in that industry, thus reducing the negotiating power of those
workers, since they can't go work for another company if their employer treats
them badly. At least, not without having to be re-trained to work in a
different industry.

------
viburnum
It’s sad to see elite American economists fumbling around with productivity
and employment issues that Swedish economists like Wigforss, Karleby, Sandler,
and the Myrdahls had worked out in the 1930s and 1940s.

~~~
afterburner
It's a feature not a bug. Things that were figured out in the 30's (such as
Keynes) were _actively fought against_ by people who didn't like the policy
those economic conclusions led to. Mainly because those policies interfered
with their plans to gobble everything up.

Entire erroneous economic theories were concocted to wage their war.

------
specialist
+1 Comparing wages to corporate profitability, valuations. Drives me nuts when
these aspects are treated as completely unrelated.

I'm still deeply ambivalent about redistribution, cashectomies, etc. But it'd
a lot easier to remain neutral if there was (a lot) more profit sharing.

Also, I have a hunch that gross inequity is related to the "missing
productivity". I'm hoping someone is researching this.

~~~
zozbot234
AIUI, profits do not really explain inequality. It's a _wages_ dynamic, where
the premium that's paid for highly-skilled work tends to grow over time.
Separately, wages in highly-regulated sectors (such as law and healthcare)
also show significant growth, even though skill requirements haven't changed
all that much in these occupations.

~~~
specialist
I still have zero intuition about cost disease.
[https://en.wikipedia.org/wiki/Baumol%27s_cost_disease](https://en.wikipedia.org/wiki/Baumol%27s_cost_disease)
The only notion that makes any sense to me (so far) is Graeber's bullshit jobs
thesis.

Being a life long patient, my observation is that healthcare workers have
become A LOT more skillful, knowledgeable, educated. The natural trend towards
ever greater specialization and all that.

I know nothing about lawyers, so can't comment.

~~~
Super_Jambo
Have you read Phishing for Phools? The basic idea is that companies innovate
in deception as well as efficiency.

This is another way to explain bullshit jobs, obviously someone working to con
their customers for their bosses will feel their job is bullshit.

To me this explains most of what is going on. Markets are evolutionary
environments for profit making companies. Companies must innovate in
production efficiency and product quality. But they must also stay competitive
in corrupting regulators, fooling customers and short changing workers.

------
uoaei
This is co-authored by Larry Summers, whose main ideological bent is that
economic activity is good only as long as it serves US interests and can be
directed by the US. He is on record as saying that African countries are
_under_ polluted.

This is not to disavow any of the conclusions in the document, but only to
provide a framing and context for the kinds of problems he is capable of
identifying and the kinds of solutions he is comfortable proposing.

------
lazulicurio
Although the economy is a complex system and it's dangerous to try to over-
simplify, my personal opinion is that there are two main and intertwined
causes:

1) the cost to participate in the US court system.

2) the abuse of copyright, patent, trademark, and contract[1] law to divorce
workers from their experience and treat employee knowledge as company
property.

The time and money involved in both pursuing and defending court cases favors
larger entities with armies of lawyers and large war chests. Intellectual
"property" cases take especially vast amounts of resources because of the
fuzziness involved. Meanwhile, treating workers as fungible producers of ideas
that can be bought and sold both reduces the bargaining power of individual
workers while empowering companies that can amass large portfolios of patents,
etc. to use in litigation.

Not sure about reforms for the court system, but patent and copyright reform,
combined with restrictions on unfair employment contracts, would go a long way
to improving the situation.

[1] NDAs, NCAs, etc.

------
PatrolX
Monopolies and centralization drive fear.

Fear controls populations, and protects power.

We need to start taking decentralization far more seriously than we have been.

[https://twitter.com/asculthorpe/status/1268265854648700930](https://twitter.com/asculthorpe/status/1268265854648700930)

------
amaajemyfren
TIL: NAIRU. Non-Accelerating Inflation Rate of Unemployment refers to a
theoretical level of unemployment below which inflation would be expected to
rise. It was first introduced as NIRU (non-inflationary rate of unemployment)
by Franco Modigliani and Lucas Papademos in 1975, as an improvement over the
"natural rate of unemployment" concept which was proposed earlier by Milton
Friedman.

In the United States, estimates of NAIRU typically range between 5 and 6%.

Monetary policy conducted under the assumption of a NAIRU typically involves
allowing just enough unemployment in the economy to prevent inflation rising
above a given target figure. Prices are allowed to increase gradually and some
unemployment is tolerated.

[https://en.wikipedia.org/wiki/NAIRU](https://en.wikipedia.org/wiki/NAIRU)

~~~
kgin
It’s a fascinating thing to realize that policymakers consider zero
unemployment to be too low. The economy is built on the idea that some people
at the bottom will be desperate enough to keep minimum wages low.

~~~
ls612
Zero unemployment would be bad because it would imply there’s no churn of
people leaving one job for another. Back last year when unemployment was 3.5%
most of that is people choosing to leave a job to find a new one.

~~~
sudosysgen
It is not necessary to be unemployed for an extended amount of time in order
to change jobs.

~~~
ls612
But on average a few percent of people will be unemployed at the moment the
survey week is conducted. And that is what the unemployment rate is measuring.

~~~
sudosysgen
Let's look at this mathematically. If the average person changes jobs every
four to five years, and spends two-three weeks unemployed doing so, as they
already have a plan for their next job, you would expect a job-related
unemployement rate of around 1% due to job changes.

~~~
ls612
In practice it makes up around 2%. The remainder in good times is people who
were just fired, a few layoffs (since even in booms businesses can fail) and a
few people entering the workforce.

~~~
sudosysgen
Sure. That is less than half of the normal unemployement rate.

------
Merrill
But why did worker power decline?

I think that a major factor is the increasing number of roles occupied by
workers. Workers were easier to organize when large numbers performed similar
job functions in large manufacturing industries. Now manufacturing that
requires a large number of one type of worker has been offshored. The residual
manufacturing is either highly automated, or it is producing a large array of
higher-tech products requiring a wider variety of skill sets.

The new service economy also requires a vast number of different roles fitting
into partially automated business processes. As the degree of automation
shifts, roles change rapidly. This makes it difficult to engage in union
bargaining to arrive at contracts that define wages and benefits for specific
jobs.

~~~
viburnum
Nope, it was a political battle that labor lost.

------
zwaps
One thought: US centric.

~~~
lotsofpulp
Economies of scale from computing power and reduced demand for labor due to
automation is not US specific.

~~~
harpratap
> But the decline in the labour share has been much more pronounced in the US
> than in other industrialised economies which are arguably similarly exposed
> to globalisation and technological change

From the linked article

~~~
lotsofpulp
The US happens to have a huge population speaking the same language and
dealing with roughly the same regulations, so the economies of scale are even
better. But, as the article says, labor everywhere faces the same risks.

------
simonebrunozzi
The problem is not just consolidation, which is certainly happening.

The real problem is that certain industries (e.g. airlines) supposedly compete
on prices and service, but large chunks of their stocks are owned by the same
investors. It doesn't take a smart brain to imagine what happens behind the
scenes...

------
jorblumesea
Could it be that Larry Summers, proponent of deregulation and globalization,
could have contributed to the destruction of the American worker? Ironically,
no mention of those policies here.

~~~
rmrfstar
There's also his 1998 attack on Brooksley Born and her proposal to regulate
swaps. This proposal would have likely avoided or mitigated the 2008 crisis
[1,2].

If I made an error that big, it would take some huge new insight for my
research to be taken seriously again.

[1]
[https://www.nytimes.com/2008/10/09/business/economy/09greens...](https://www.nytimes.com/2008/10/09/business/economy/09greenspan.html?pagewanted=print)

[2]
[https://en.wikipedia.org/wiki/Brooksley_Born](https://en.wikipedia.org/wiki/Brooksley_Born)

------
joycian
Does anybody here know of a good modern book about land value tax or Georgist
economics in general? Any (constructive) opinions would also be welcome.

~~~
bwestergard
"Radical Markets" by Weyl and Posner (2018) is a very accessible summary of
what you might call "neo-Georgist" thinking.

George's essential political idea was that society is not a struggle between
labor (workers) and capital (entrepreneurs, investors, landowners, etc), but
between rentiers - paradigmatically landlowners, but in neo-Georgist thought
all "owners" \- and the "productive" classes (labor and entrepreneurial
capital). For George, the general interest can always be identified with
capital accumulation. Rentiers stand in the way of capital accumulation, and
thus in the way of the general interest.

Many software developers feel the line between entrepreneurial capital and
highly remunerated wage work is quite blurry because, for at least two
decades, they have seen a significant amount of upward and downward mobility.
Who doesn't know someone who started a "lifestyle business", retired early, or
cashed out some stock options and played the VC game a bit? Combine this with
the obvious dysfunctionality of the Bay Area housing market, VC excess, etc.
and Georgism seems entirely natural.

The difficult questions for the neo-Georgists include: Can capital
accumulation really be identified with welfare? Given how stagnant labor
productivity enhancing technological development has been for two decades, can
we really assume institutional changes will boost it? If they can't, doesn't
this make the normative questions all the more difficult?

------
suyash
I fail to see this in High Tech Companies, let's take FANG for example, by
various measure we can call these monopolies, now if you look at their
worker's earning, they earn by far the highest in the industry for same type
of job. So that seems to have failed the premise of this argument "Declining
worker power vs. rising monopoly power:"

~~~
rjkennedy98
In a bubble, yes. But if you compare them to the top paying jobs of prior
generations (say finance jobs of 20 years ago) they are actually pretty paltry
wages in comparison. Plus, 250K in San Francisco where the average home is
over a million dollars is not really that great.

------
JohnnyHerz
this statement by the authors is silly on it's face...

They claim that the US has seen a falling labor share due to the following ---
"the decline in worker power – as private sector unionization and union power
fell, the real value of the minimum wage declined, shareholder activism
increased, and ‘ruthless’ management tactics became widespread"

The authors are either locked up in their academic high tower and out of touch
or they are writing to serve a political agenda.

Unions served a valuable purpose when management was truly "ruthless", however
nothing in current work culture remotely approaches "ruthless" anymore.

Unions are effective at increasing pay in return for less production. it's sad
but true. There are few unions left that actually have anything resembling an
ethic of hard work when compared to non-union norms. These remnants of hard
working union types are only found in the blue collar "gloves and sweat"
industries.

That point aside, America has lost it's blue collar labor force because we
have developed a technocratic, first world, entitlement culture that considers
physical labor as an untenable acquaintance.

Meanwhile, the rest of the world has to fight and struggle to survive and hard
work is a fact of life and a measure of worth. Consequently, Americas blue
collar workforce is simply out worked by the rest of the world and if not for
the immigrant work force, that bring the drive and desire to work hard with
them, American labor would be in an even worse predicament.

Pricing power for the workforce does exist in America and examples abound.
However, it is these unionized parts of the economy that have contributed to
the downward trend in labor share by offering less production in return for
extorted compensation increases.

American born workforce has lost the cultural sponsorship of physical labor
and each generation laments the laziness of the next. This is the underlying
reason that America's share of world labor has declined.

Academics are laughingly stupid sometimes.

------
nahuel0x
The law of increasing concentration of capital is probably the most successful
prediction made by Karl Marx until now. Just another sample:

"Since the 1950s, food retailing in the UK has undergone a massive shift from
high streets, covered markets and district centres full of small independent
specialist food shops; grocers, greengrocers, bakers and butchers, to the
domination of food retailing by the "big four" supermarket chains; Tesco,
Asda, Sainsbury's and Morrisons. In 1960 small independent retailers had a 60%
share of the food retail market, supermarkets about 20%. Now the small
independents share is reduced to 6%, while the multiples' share has increased
to 88%.7"

------
joantune
This related video pops to mind TL;DR buybacks and CEOs bonuses based on share
value, create an incentive not to invest in the worker force
[https://youtu.be/ylLTMYt24lA](https://youtu.be/ylLTMYt24lA)

------
yogthos
Marx literally wrote about this in Das Kapital over a 100 years ago laying out
the mechanisms of capitalist consolidation:

The splitting-up of the total social capital into many individual capitals or
the repulsion of its fractions from one another, is counteracted by their
attraction. This last does not mean that simple concentration of the means of
production and of the command over labour, which is identical with
accumulation. It is concentration of capitals already formed, destruction of
their individual independence, expropriation of capitalist by capitalist,
transformation of many small into few large capitals. This process differs
from the former in this, that it only presupposes a change in the distribution
of capital already on hand, and functioning; its field of action is therefore
not limited by the absolute growth of social wealth, by the absolute limits of
accumulation. Capital grows in one place to a huge mass in a single hand,
because it has in another place been lost by many. This is the centralization
proper, as distinct from accumulation and concentration.

The laws of this centralization of capitals, or of the attraction of capital
by capital, cannot be developed here. A brief hint at a few facts must
suffice. The battle of competition is fought by cheapening of commodities. The
cheapness of commodities depends, coeteris pribus, on the productiveness of
labour, and this again on the scale of production. Therefore, the larger
capitals beat the smaller. It will further be remembered that, with the
development of the capitalist mode of production, there is an increase in the
minimum amount of individual capital necessary to carry on a business under
its normal conditions. The smaller capitals, therefore, crowd into spheres of
production which Modern Industry has only sporadically or incompletely got
hold of. Here competition rages in direct proportion to the number, and the
inverse proportion to the magnitudes, of the antagonistic capitals. It always
ends in the ruin of many small capitalists, whose capitals partly pass into
the hand of their conquerors, partly vanish. Apart from this, with capitalist
production an altogether new force comes into play - the credit system.

In its beginnings, the credit system sneaks in as a modest helper of
accumulation and draws by invisible threads the money resources scattered all
over the surface of society into the hands of individual or associated
capitalists. But soon it becomes a new and formidable weapon in the
competitive struggle, and finally it transforms itself into an immense social
mechanism for centralization of capitals.

~~~
julienfr112
Well, Marx predicted that :
[https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit...](https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to_fall)
. The exact opposite of what we are looking at.

~~~
sudosysgen
Except that the rate of profit has fallen and is falling, with small
fluctuations year over year.

It is possible for monopoly and industry power to crush worker power, while
the rate of profit increases. In fact, this is exactly what he predicted.

The mechanism for this to happen is simply accumulation of capital.

Another reality is that the profits of many industries such as the financial
industries are not predicted to fall according to Marx, only that of
commodity-producing industries. An absolutely huge part of modern profits is
not profits according to the definition used at the time, and not realizable
or even intangible. If you look at the rate of profit in commodity-producing
industries, you will find that it is exceedingly thin in a great many cases,
and that often profit is only realized via financial instruments (for example,
the sale of new cars).

------
amaajemyfren
I am not an economist. Compared with the hard sciences (physics, biology,
chemistry, mathematics) economics is still quite new and I suspect there would
be more people seeing these trends and offer other models trying to explain
them.

From a libertarian acquaintance the root cause is clear. Going off the Gold
standard[1] in the US. I am not completely convinced.

[1] [https://wtfhappenedin1971.com/](https://wtfhappenedin1971.com/)

