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> To achieve what you're describing you should cap market capitalization.

That's not really it either. If you have a business which is generating high profits, it will have a high market cap. You can reduce it by transferring the corporation's liquid assets to shareholders, but if you've transferred the liquid assets and you're still above the limit, transferring non-liquid assets to shareholders is clearly the wrong direction.

What you really want is for separate businesses to be separate companies. Conglomerates are inefficient. Don't expand into new markets, just give the shareholders their money. The shareholders can invest it in the new markets if they want to.

The main impediment to this is the tax code, because if you give the shareholders the money it gets taxed -- twice -- but if you spend it internally or leave it inside the corporation in an offshore subsidiary, that doesn't happen.

Wikipedia gets to the same place via a different route. A non-profit doesn't have shareholders to pay dividends to, so instead of paying dividends being discouraged by the tax code, it just isn't possible, and you get the same results. The website generates more revenue than it actually needs to operate and the rest of the money has to go somewhere, so it goes somewhere inefficient as determined by internal politics.

> conglomerates are inefficient

It's interesting that you say that on a subthread discussing something Warren Buffet said. Berkshire Hathaway became an efficient conglomerate by acquiring and operating companies that eschewed the very principle we're discussing.

He has addressed that in the past. They are able to work around some of the problems by maintaining a hands off approach to their subsidiaries. There is also an important trust relationship that encourages the subsidiaries to give up "excess" profits to the parent.

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