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It's not a crime if we do it with an app (pluralistic.net)
872 points by keepit 14 days ago | hide | past | favorite | 609 comments



What a terrible article. The title and the first paragraph talk about how new business models are circumventing existing laws, which seems fair enough and actually quite an interesting subject.

Then, there is a switch to the most traditional of businesses with the most traditional business models. Who, the author argues, are engaging in price gauging. In the second paragraph he claims that apps cause this inflation ("so much of inflation can be attributed to a crime, done with an app"), then goes on to list a couple of traditional companies who are, he argues rising prices above inflation. And who he partially blames for inflation.

None of the examples he gives support the case he is trying to make in his title. Apparently being an "App" has absolutely zero to do with getting away with financial misdeeds.

None of the questions raised by the title are even investigated. And the core argument, that traditional companies are causing inflation, is never argued for. The last paragraph portraits a stunning lack of economic knowledge, as companies raising prices in line with inflation obviously would not lower prices after the source of the inflation is gone. The source of the inflation being gone does not cause inflation to reverse. And so the fair market price would not get lower, getting something so basic wrong seems ridiculous for someone leveling serious accusations at companies.


> Then, there is a switch to the most traditional of businesses with the most traditional business models. Who, the author argues, are engaging in price gauging. In the second paragraph he claims that apps cause this inflation

He is saying that the traditional businesses use an app that allows for a legal way of price gauging.

> The last paragraph portraits a stunning lack of economic knowledge, as companies raising prices in line with inflation obviously would not lower prices after the source of the inflation is gone.

The author claims, that these companies raise prices more than inflation based cost increases in production would allow for.


>The author claims, that these companies raise prices more than inflation based cost increases in production would allow for.

That's just supply and demand? People get mad that when there's an oil shortage, that oil companies raise prices above the cost of production, but they're happy to see oil companies' margin collapse when there's an oil glut.


What supply and demand? The supplies of these goods have had occasional disruptions but are largely unchanged. The demand has not changed in any material way. And yet the prices have increased, and those increases have far outstripped the increases in the cost of goods sold.

It’s worth noting that, in classical economic theory, the price in a competitive market is set by matching supply and demand, but the price in a monopolistic market is set higher such that the profit (“producer surplus”) is maximized, which harms the buyers (“consumer surplus”) even more than the amount by which the seller benefits. The net loss is called deadweight loss, and one can argue about whether and how government policy should be arranged to minimize deadweight loss.


> The supplies of these goods have had occasional disruptions but are largely unchanged.

Those "disruptions" you refer to create periods of "lack of supply" (i.e., less of the goods). That is what the "disruption" is, a temporary reduction in the "supply"

> The demand has not changed in any material way.

True, but, during the period of "temporary reduction in the supply" (i.e., the disruption) Econ 101's supply/demand curve will predict that the price will rise to make the "demand" during the period of limited supply equalize with the new supply level due to the disruption.

What often happens (and you see it most clearly with gasoline prices), is that the price reacts extremely quickly to the supply disruption by increasing fast (seemingly within hours). But then, when the "disruption" clears, and the supply amount returns to normal, the price tends to slowly drift downward (if it drifts downward at all).


Forget about oil for a second. Why is a large box of cereal $8 at the supermarket? It costs pennies to produce, maybe a dollar in landed cost. The small box costs almost the same landed and it's $5, which is also absurd. There is no supply shortage of corn and sugar, and no glut of demand for cereal.

I'm not stupid, I understand supply and demand. COVID was 4 years ago. Explain the $8 box of cereal.


> Why is a large box of cereal $8 at the supermarket? It costs pennies to produce, maybe a dollar in landed cost. The small box costs almost the same landed and it's $5, which is also absurd. There is no supply shortage of corn and sugar, and no glut of demand for cereal.

Most of the cost of the cereal isn't the cereal. First you're paying for the store. That's real estate costs -- currently excruciating. Property tax and insurance, based on the real estate prices. The store needs heat and light, that's oil and electricity. There are people who work at the store, has your state recently increased its minimum wage? Grocery stores that don't buy advertising have fewer customers and have to amortize these costs over fewer sales, so you either have higher costs per unit because they didn't buy advertising or higher total costs because they did, etc.

The next question you might ask is, why don't they get rid of the store? Ship the cereal to your door. But it's like 8 oz of cereal, you'd get killed on the shipping. To make it work you'd need your whole grocery order to be delivered in one trip.

That could actually be an interesting business model. Instead of "free shipping" encouraging you to buy one item at a time but then the shipping cost is really baked into the item price, have "flat rate shipping" where you pay e.g. $35/order for shipping with no item limit. Then if you're buying what would otherwise be $400 in groceries for $200 by cutting out the retail store, paying the $35 is totally worth it, and you could be adding items to your cart all month for a scheduled monthly delivery.

But is anybody offering that?


> First you're paying for the store. That's real estate costs -- currently excruciating. Property tax and insurance, based on the real estate prices. The store needs heat and light, that's oil and electricity. There are people who work at the store, has your state recently increased its minimum wage?

Same box of cereal costs the same in Southern California and South Carolina. South Carolina is cheaper in every way - electricity, rent, insurance, and labor. Same $8 premium cost for a commodity product that costs a dollar or so to land.

No one is competing for the customers' dollar, they are imposing a price scheme because there is extremely limited competition and distributors are being allowed to abuse their pricing power.


Cost of living index is 96.5 in South Carolina, 134.5 in California. It's higher in California but not by an order of magnitude. Somewhat unexpectedly, grocery costs are not just the same but actually higher in South Carolina:

https://worldpopulationreview.com/state-rankings/grocery-pri...

Could be California's higher population density allowing store costs to be spread across more units.

Also unexpected: The highest and lowest grocery prices in the continental US are Vermont and New Hampshire, respectively, and they're geographically right next to each other with nearly identical cost of living index but Vermont is paying 2.7x as much for groceries. But New Hampshire does also have 2.2x Vermont's population density.

In any event, price fixing doesn't seem like a strong explanation, because what are they doing, fixing prices in Vermont but not in New Hampshire?


What it costs to produce is irrelevant in an equilibrium price for supply and demand. I'm not sure you do understand.

Many people are buying the cereal for $8. Its that simple.

There is enough demand for it at $8 that the company is happy with the market clearing their supply at that price point.

If people were not buying the cereal at that price, they would lower it, or have gone out of business by now.

If someone could produce a substitute for far cheaper, and undercut, they would, and they do, but consumers are partial to name brands.

Cheerios are $5 at Walmart, People are buying them. Those people that think that $5 is too much can and do buy the $2 off-brand alternative.


> If someone could produce a substitute for far cheaper, and undercut, they would

Not when a cartel controls 97% of the market, distribution, placement, and is very keen on maintaining the status quo, as posited by the article.


At least in high population places like much of California, nobody controls distribution and placement to this degree. If you are not happy with Safeway - and there is no reason to be - you can buy some product categories at the other chains, at walmart or Costco, unpackaged at specialized grocery stores, at several kinds of ethnic grocery stores, even at eastern european grocery stores. And that's before getting to online, long distance, grocery delivery which is not even always out of the question on price. ALL of these are functional. We do have a lot of choice currently.

Thanks for quoting the textbook at me. Does that seem like a competitive market to you?

It shouldn't, because if it was, the cost would be pushed down near it's landed cost. That's a result of companies (both CPG producers and food market retailers) having concentrated market share in contravention of the law.


there is also competition for limited/expensive shelf space in the supermarket and only-so-much advertising media that must be shared with all other products

I'm old enough to remember that there used to be choices for different brands of various types of flakes: people use their dollars to exercise choices in the space of products to choose from, and they aren't any longer looking for a "dirt cheap corn flake shootout"

yes, there are also nonlinearities like minimum viable factory size, which leads to market concentration heading toward monopolization, but those factors are not specific to corn flakes nor driving that market.

did you know that Frosted Flakes are actually just stale corn flakes that are revived by spraying them with sugar? I used to work for a company modelling factory automation, and that was part of the model. So, if you don't sell sugar cereals, you're not as efficient.


Here's your competition. Literally $1.97 cereal that is a direct substitute for Cheerios: https://www.walmart.com/ip/Great-Value-Honey-Nut-O-s-Oat-Bre...

The competition is clearly Cheerios which sells for $4.93, which is still not $8 (I did find Cheerios priced above $8 at other stores, but only in family and giant size which are 50-75% larger): https://www.walmart.com/ip/Honey-Nut-Cheerios-Heart-Healthy-...

I'm not making up the numbers. Or the substitutes. Every grocery store I go to has name brand cereals, and then in the exact same aisle, off-brand alternatives that sell for far less.

So yeah it seems like a pretty competitive market to me if I can buy an alternative for 40% of the price of the name brand by reaching for a lower shelf. Is $5 a lot for a box of cereal? Maybe, that's up to you as the consumer. But, name brand cereal is also not a necessity, you can live a very happy life, eating healthy breakfasts without ever having touched a box of cereal.

Again, it seems like a pretty competitive market. Cereal is not a necessity, there are tons of other breakfast foods that substitute just fine, there are a variety of companies selling more or less substitable products through a variety of outlets, and there are no real regulatory barriers to entry. If I don't like one retailer, I can choose from dozens of others owned by different companies. If you think that there is a ton of margin being made, this is your opportunity to get rich selling cereal, or even just investing in General Mills (which has a profit margin of 12% on their goods, and has under-performed the stock market as a whole).

If you don't like the price of an $8 box of cereal, go buy the $5 one, or the $2 one, or don't buy any cereal at all and eat yogurt, or order from Amazon.com where you can get the best of all worlds by having name brand Cheerios brought to your door for $1.99: https://www.amazon.com/Honey-Cheerios-Gluten-Free-Cereal/dp/...


But why is all that cereal $8? Where's the competition driving prices back down?

This is a misunderstanding. There is no reason for SOME cereal to not be $8. Competition will not make ALL substitutable products go to the lowest price. The question is whether all cereal is there, or at least all plausibly substitutable cereal is there. And it's not. Someone else did the research, even if you want brand name Cheerios, there is still a lot of range in prices. Unfortunately many people are not THAT price driven, clearly.

Now, all these grocery store do have something in common. They are all in California (if we pick that state), so they all share the high cost of real estate, the high cost of custom formula gas, the high taxes, etc, etc, etc.

And the fire truck example, it correct, is much more of a problem. It's not hard to manufacture breakfast cereals (and clearly not THAT hard to distribute them) or to bring potatoes to restaurants! It's much harder to build reliable fire trucks.


I will emphasize: because people are paying that much for it. Willingly.

The competition is at Amazon, where I can buy a box of Cheerios, delivered, for $1.99. Or at Walmart where I can buy name brand cereal for $5, and Walmart equivalents for $1.97.


The company that makes the cereal is a low margin business. In fact most food that isnt high end is low margin. Somewhere they have a lot of costs to cover.

None of that answers the question of why a box of cereal that costs a dollar or so to deliver landed to a store costs me $8 to buy. Middle men are taking a huge chunk of the pie!

> costs a dollar or so to deliver landed to a store costs me $8 to buy.

Delivery optimization, logistics, and last mile operations are an unfathomably difficult problem(s) to solve, so much so that the entire world participates and there are still enormous gaps in efficiency, many that likely will never be solved due to physics.

I know you're plain wrong about it costing "a dollar" to deliver. Even if it did, you do not pay for just the operational cost, you pay for the convenience, expertise, reliability, or many other factors that comes with procuring a contract/agreement.


People have been delivering goods to stores for hundreds of years. How much expertise and convenience is required?

I don't really have the patience for ignorance being masqueraded as expertise.

If you have something to prove, then you're welcome to show the world how its done. Doubt me all you want, but you can't doubt the rest of the world.


For a while, that was the entire strength of Walmart (efficient distribution) and they did amazingly well with just that. For many years now, even they have not been able to achieve that. It's not so easy.

Their point is simply that your cost estimate is likely wrong.

> It costs pennies to produce, maybe a dollar in landed cost

Kellanova last had gross, operating, and net margins of ~35%, ~13%, and ~8%, respectively [1]. Likewise, Walmart achieved ~25%, ~4%, ~3% [2]. This isn't really compatible with "someone makes 700% of net profits on this box of cereal", unless you assume cereal is single-handedly subsidizing huge loss leaders for both its producer and retailers.

1. https://www.macrotrends.net/stocks/charts/K/kellanova/profit...

2. https://www.macrotrends.net/stocks/charts/WMT/walmart/profit...


A 13.5 oz box of Kellogg's frosted flakes is $11 at Walmarts. A BIGGER box of 16.5oz is $4.4 in Tesco in the UK, and store brand is $1.25. Salaries are higher on average in the US, but the minimum wage that will include many in the supply chain is higher in the UK. Yes, I would say that there is gouging going on. Besides, a company makes 0% profit if all of it goes to the executives' paychecks, doesn't it?

Gross margins don‘t include executive pay on the cost side

They include executive pay of all their suppliers :P

They’re colluding to fix prices. That is a cartel. It is facilitated by a middleman app. Still unethical, and should be illegal.

Right, but "companies raise prices more than inflation based cost increases in production would allow for" non-sequitur. There's plenty of ways that prices can raise faster than input costs, that doesn't imply price fixing.

> that doesn't imply price fixing

But Potatorac and Agri Stats do. They are price-fixing right out in the open.


same thing realpage was doing for renting.

It is 21st century version of a cartel.

Cartel via an app. It should be illegal. I was hoping feds going after RealPage would be a deterrent to that trend. But with the new admin, yeah thats over.


The author is doing some extra work to connect dots that might otherwise be better left connected by the readers.

The author’s entire thesis is that there isn’t a market for lots of goods because of oligopolies colluding. Supply and demand don’t work like the textbook says they will if there’s no market. He’s saying that almost all potatoes are sold by a couple firms, and those firms collude on price, effectively meaning (from a pricing perspective) that there is only one potato company. They therefore can charge whatever they want, up to the point of driving their customers out of business.

This is in contrast to a healthy market, in which producers compete by lowering prices to the point where the producer would go out of business.


> People get mad that when there's an oil shortage, that oil companies raise prices above the cost of production

It's a bit different when they all (i.e. cartel) agree to keep the same price even after the shock has passed, isn't it?


if there's clear evidence to this, it's illegal

According to the author, there is - through an app - and they even admit to it.

under what statute would this be illegal?

sherman act in usa

how many companies - lifetime - have actually been charged, convicted and significantly impacted by the sherman act?

Here is a page DOJ publishes on that (at least for fines). https://www.justice.gov/atr/sherman-act-violations-yielding-...

I also found this for criminal prosecutions under section 2 which is the section covering illegal monopolies. Pages 12 and 14 have some quick summary charts and tables.

https://www.americanbar.org/content/dam/aba/publications/ant...


Google, Facebook, Microsoft, Amazon are the ones in FANMAG off the top of my head.

Also keep in mind that the existence of the law guides decisions around compliance. There is ample evidence that all of the big decisions at FANMAG are viewed through compliance with anti-trust as a concern. Basically, a lot of big companies haven't been prosecuted because they have armies of lawyers working on where exactly that law kicks in, and how much they can step over the line without putting themselves at serious risk.

The existence of the law itself is a deterrence mechanism. It just seems like the justice department is hampered with a century old law in dealing with a modern world.

I personally think that we should be more zealous in enforcing, or better yet, pass better laws. Move the line way back, essentially.


Google, Meta, Microsoft, Amazon have really been hurting … :)

You can get this information from google. If you're trying to make a point, just make it!

The same one that makes price fixing illegal.

Go look up price fixing, and tell me why that statute wouldn't apply here, if you remain unconvinced.


The article is very clear in the mechanism: he posits companies are “blindly” colluding by using third party price information to inform their decisions on their own pricing. This isn’t “collusion” because they’re not the picking up the phone to each other to discuss price fixing. They’re allowing a third party to tell them what others are charging and “coincidentally” decide that they’d like to charge that, too.

If this fits the legal definition of a cartel and price fixing, I can’t say. I’m not a lawyer nor do I know what US law says on this matter. However, it’s fair to say there’s a bad smell to the whole affair.


No, the article says that the suppliers send data to a central service, which then tells them the optimal price, this service bases this price based on data sent by all other suppliers, and presumably gives all suppliers the same price.

True market clearing prices depend on easy entrance and exit of participants in the market. Apparently that isn't the case with potatoes, per the article.

Did we read the same article? There are repeated examples of cartels colluding to fix prices which aren't being prosecuted because they're using a third party (app) to coordinate the collusion rather than doing it in a board room.

This is what has repeatedly bothered me about Doctorow, he writes quite compellingly on the surface, but the arguments are often sketchy at best, and the pandering to/expression of outrage often dominates any attempts at clear analysis.

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It's you saying that. Notice how none of what you said appears in their comment. This is a strong indicator that you are arguing against yourself.

The fact that this is seemingly the top comment shows how entrenched HN’s typical user is in making money off the predatory practices articulated thoroughly in the article.


I noticed you mistook "gouging" for "gauging", which I agree, would change it to an obviously-wrong essay that failed to back up anything.

There's a lot of other stuff that is unclear (questions in the title? the article says inflation goes in reverse?), but that one thing neatly explains the vibe that might have driven the rest.


Perhaps if there was a tighter line pointing at corporations using 'apps'.

Traditional rental property corporations, were pre-existing, and also adopted the use of an 'app' that allowed them to raise prices over the inflation rate.

So, traditional corps, taking advantage of the new 'app-crime-for-free' model.

But really, where the logic broke down a little. Was all those 'crime-apps' are actually reducing prices for most part. So should help inflation not hurt it.


While some of the article’s leading point in apps doesn’t clearly connected to collusion to raise egg prices, it’s all valid. Tearing it all down is sore of you.

Blog posts are just random comments that would get torn apart, but elevated as worthy of discussion because its in an app.

This is all a result of a lack of active market regulation. The government needs to step in actively to keep a free market from collapsing into one of the natural end states. But the US has consistently been far too passive and accepts greedy companies far too readily.

If a single company can sell almost 100% of an essential good, they need to atomatically lose the power to set their prices and margins independently. Let them go through a cumbersome govenment approval process for price changes or something to cap margins. Price fixing cartels need to be busted more aggressively.


> If a single company can sell almost 100% of an essential good, they need to atomatically lose the power to set their prices and margins independently.

The fallacy is assuming that the government will make everything cheap for consumers.

In practice, government regulation of prices just changes the game. Look at any market with rent control: There are numerous meta-games around building or not building new supply, landlords are incentivized to not fix units because they know tenants don’t want to give up their rent control and move, and a new market emerges where people illegally sublet their rent controlled apartments because it becomes attractive to take advantage of the market demand that landlords aren’t allowed to capitalize on.

The other fallacy in all of this is thinking that companies control both supply and demand. For nearly all commodities, there is a price where consumers won’t pay for it. If rents get too high, people move to a different city. If gas gets too expensive they start carpooling and looking for WFH jobs. If eggs are too expensive they eat something else. These choices make people angry as hell, but there’s no denying that these choices exist. Companies can’t push past these limits and force people to buy at any price. They still have to discover that point on the supply and demand curve.


> If rents get too high, people move to a different city.

With what money? It takes three months rent up-front to move (first+last month rent and a deposit equal to one month rent) up front. People _need_ a place to live and will spend every last dollar to not be homeless.


The government won't make things cheaper. The point of the regulation would be to actively encumbered the monopolist company and either give strong incentives to split up or make room for nimble competitors.

What. Are you advocating for monopolies? Obviously there is a point where people stop buying essentials. The point of capitalism is to deliver goods as cheaply as possible. If toothpaste costs $60 I would still buy it because I need toothpaste. But that extra money now goes to someone who isn’t producing, they are mooching. It’s a welfare check to a billionaire. In a monopoly pricing is fixed at maximum profit, which could make goods 10x or 100x for things with relatively inelastic demand.

The government does not make things cheaper, competition does. The government’s role is to protect competition. Otherwise companies will collude not to compete.

"But the US has consistently been far too passive and accepts greedy companies far too readily."

All companies are greedy. That's the reason for existence. Your point that monopolies and oligopolies need to be crushed is very valid though. I wish more mergers were rejected in the first place.

Regulating prices is a recipe for disaster though.


Regulating prices is a recipe for disaster though

That's an assertion, not a statement of fact. Pricing in natural monopolies is a mature subject, and public utilities have been a thing for over 100 years. Also, pricing for medical procedures is regulated in Europe, and it works extremely well.


Yes, it's preferably over allowing a monopoly to set prices. However, wherever possible you should break up the monopoly or prevent it on the first place. Of course there are conditions where that's very hard and you mention some of them.

Setting prices where you could just have a functioning market has historically been well proven to lead to disaster. Look at any communist country. The GDR ended up allowing luxury stores that were not price bound and they were a huge hit for a reason.


The wait time for medical procedures is extremely long in places with price caps.

It does not work “extremely well” at all, it results in shortages and wait times exactly as you would expect from economics 101. I’m speaking from personal experience having been through it myself but feel free to look up how many Canadians go to the US every year and pay out of pocket for more evidence.


The wait time when you can't afford the physician is infinite. That's the market at work.

I feel that US companies are consistently more ruthless and cut-throat than companies in other countries I have visited. I see that as cultural rather than a pure economic issue.

> All companies are greedy. That's the reason for existence.

Black and white oversimplification that muddies the water.

You really can't think of two companies with incredibly different levels of "greed"?


Henry Ford tried not to be greedy all the time, then he was sued, and now all corporations are required to be greedy.

https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.


That's not really how that works. It's more along the lines of saying "we're doing this good thing because I want to and I have majority control so I don't have to care about the other shareholders" vs. saying "we're doing this good thing because it's good PR that may increase sales or help placate regulators" even though the thing you're doing is the exact same thing.

There are a lot of rules whose de facto consequence is to prohibit describing the true reason someone is doing something instead of actually prohibiting them from doing it.



One race-to-the-bottom phenomenon that (to me at least) appears to aggravate the impact of "corporate greed" is the social loop that goes as follows:

1. company decides to push the boundaries of the socially acceptable when it comes to cutting corners (e.g. screwing their customers, or employees, or environment, or debtors)

2. People don't like it, but rationalize this as being a natural consequence of incorporation and the profit motive. Hence while they grumble, there negative impacts to public perception don't actually cost the company as much as you might think

2b. Even if there's a boycott, there will be vocal minority that thinks it's all a bunch of whiny <target audience we're better than>. They'll actively harass or undermine said boycott or backlash, even if in a purely egotistical sense their interests are actually aligned with the boycotters

3. Social norm is reset; we all collectively expect even less from companies. That doesn't however mean the new norm is better or maintained, because as soon as there's some new major conflict between short-term profit and maintaining a decent reputation in public, we go back to step 1 from the new, lower baseline.

Stuff like increasing partisanship, and decreasing incentives for journalist (whether profession, citizen or influencer) to maintain their professional standing (as opposed to targeting clickbate) probably smears those gears nicely.

Many companies have historically clearly paid well over the odds to maintain their reputation, and done well doing so. It's just not true that nihilistic short term greed has always paid; obviously it didn't and still doesn't really. It profitable to do the little, but simultaneously also to do as many cheap things that materially affect public standing as possible.

By promoting the profit motive past a merely utilitarian means to an efficiency-optimizing end into a matter of national identity and point of distinction vs. in particular the USSR, we've shifted our culture beyond what's really rational. We (as a society) don't merely respect and understand the profit motive; we see it as a sign of merit - and significant enough merit that "winning" on that scale excuses a lot of other bad behavior.


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Surely he'll come through! And totally won't take Biden's work and claim it as his own, right?

> to keep a free market from collapsing into one of the natural end states

What is that natural end state? Natural monopolies are exceedingly rare, almost all monopolies are the result of government intervention.


I'm curious what you base that on. For instance, we've never really allowed literally cutthoat competition, nor things like fraud and we've generally not allowed misrepresentation. Governments intervene heavily and always have to set those kind of boundary conditions - but there are really lots of them. Economies of scale seem to be very, very common ever since the industrial revolution; and even more so in today's information-economy platform era.

I'm sure there are plenty of cases where significant competition is a natural end state, but how common those are in comparison? I'm curious.


The observation that the least regulated markets are typically the most competitive ones and that large companies rarely tend to maintain their lead over long periods of time. And at least one Nobel Prize-winning economist agrees with me: https://www.youtube.com/watch?v=tdLBzfFGFQU

While a humorous response by Milton and an interesting debating point, the argument he makes is pretty weak because it almost inevitably reduces to complete lawlessness, doesn't really define which government "granted" monopolies he's willing to give up, and ultimately relies on a fairly arbitrary definition of what government even is - and one that if you really let it go to the extreme not only obviously just doesn't work well for most people, it also does not avoid monopolies as is witnessed every day around the globe.

After all, the natural inclination of a powerful elite is to protect their interest. It's business 101 to want a moat, and tearing down one set of artifical legal protections that allows for a moat allows on the other hand for the far more extreme quite physically violent moat in the form of a putin-esque kleptocracy.

The argument merely sounds convincing because it's very selectively implying that certain monopolies are created by state power and might be weakened by free market principles without considering what a free market even is (generally a regulated one), nor addressing the fact that other monopolies will arise precisely because because the lack of regulation allows winner-take-all brute force strategies to work.

That doesn't mean Milton's ideas are without merit - but that there is a breaking point; dogmatically hoping for anarchy to avoid harmful centralization of power is problematic because of the dogma; not because it's never a valid approach.

But sure, if you're going to embrace Milton's (intentionally) vague proposition in the way it was likely intended - to provoke thought - then sure; there are state regulations that are in part to blame for some of today's near monopolies - the interaction between intellectual property, incorporation, and state-enforced contract law. As a matter of debate, sure, it'd be interesting to weaken all three and in particular their interactions. I just highly doubt that's very practical, nor would it be very easy to predict the outcome, especially once international power-plays start circumventing even the best of intentions.


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1) Government imposes regulatory barriers to entry, inhibiting new businesses from entering the market

2) Incumbents buy each other and raise prices

If you only had the second one then as soon as the incumbents tried to raise prices, new businesses would want a piece of it and enter the market, causing prices to fall until it was no longer profitable to enter the market.


Government non-intervention doesn't typically lead to monopolies. What monopoly are you referring to?

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The argument that you are making is that a single entity controlling the pricing of a good is bad. That's not a counter-argument, it's the same argument. It's bad when a government does it, it's bad when an oligopoly does it. More than one thing can be bad.

No, the argument I an countering is that since oligopoly is bad, government control would fix it. It has NEVER fixed it. Only more free market could.


My local power company is a monopoly with rates heavily regulated by the state. My electricity is cheap and reliable.

Newsflash: anything can be done badly. Cherry-picking the worst examples proves nothing.


Well let's see, the Russian market collapsed primarily because of sanctions. The Venezuelan market also collapsed primarily due to sanctions. And of course the Cuba market collapsed primarily due to sanctions.

It seems to me that the US and other nations locking these countries out of the global market has been a pretty major factor in their current economic situation. Do you disagree? I'd also posit that it might be the case that an autocratic takeover in each of these nations has negatively impacted them.


Redbaiting is SO 1950s

Redbaiting in 1950s turned out to be absolutely right thing to do, as latest unclassified documents showed. The problem is that now huge amount of us population live in the capitalism but preach socialism, even though there’s quite good choice of leftist countries where they can migrate to.

> The problem is that now huge amount of us population live in the capitalism but preach socialism, even though there’s quite good choice of leftist countries where they can migrate to.

You got me. https://thenib.com/mister-gotcha/


Also in some tribes in south America - checkmate!

If you can’t be intellectually curious why even be on HN?

Strawmanning like this may make you think you’re clever but it signals to the “average person” that your mind is made up.

I don’t read articles here because my mind is made up but because I like considering different points of view and data. Maybe start with that spirit next time?


I’m not sure you understand so I’ll go slow. If one US company owns all of one thing it’s bad. Mmmkay?

If the government owns all it is FAR worse. Intel used to be a monopoly in practice. Now it’s not. The manufacturer of CPUs in USSR though never ceased to be the one and only. Is it dumbed enough for you to understand?

[flagged]


Antitrust suits were filed against these four companies in November, alleging that they conspired to fix prices: https://archive.is/fp44d

That's pretty funny coming from someone attempting to manipulate people who have read the comments but not the linked article, or the original reporting that is linked to in said article.

You left out all four companies feeding data to PotatoTrac, all four companies announcing raising their prices by the same amount at exactly the same time, executives shifting which company they work for like it's a merry-go-round, the four companies communicating extensively between each other in a way not even remotely natural for competitors, the companies demanding suppliers not take on other customers, restaurant distributors forcibly bundling fries with other foods so that restaurants have to sell them, and so on.

Oh, and multiple anti-trust lawsuits: https://fortune.com/2024/11/22/potato-cartel-price-fixing-la...

Also left out that other mega-food companies have been caught doing the same thing...


Are you willfully misleading here or did you simply not, you know, do the thing you're supposed to do before commenting?

> The government needs to step in actively to keep a free market from collapsing into one of the natural end states.

Which is what, exactly? The US is per capita richer than almost all EU countries by a huge margin (with a few small exceptions mostly enabled by regulatory arbitrage targeting US money), so forgive me if I don't take your seething commentary about the US economic apparatus very seriously.


Any free, unregulated market will eliminate competitors until they create an oligopoly or even a single monopoly. It's an immediate consequence of the rules of the market.

Despite constant moaning about the US not engaging in monopoly-busting anymore, that doesn't actually seem to be a problem in practice.

In reality, comparative advantage and specialization dynamics do not uniformly equilibrate on monopoly markets.


The content of the article shows that it is still a problem. You think that landlords and food suppliers colluding to raise prices to just below the breaking point is not a problem?

It's not a "breaking point", it's the market rate. There's no landlord cartel; anyone can easily defect and lower their own prices.

The entire food production and provision supply chain has razor-thin margins. If you're hyperfocusing on that industry, it's a sign that your heuristics are pointing you at the wrong things.


Cartel price fixing is not "market rate" by any honest definition.

Outright monopolistic pricing is also "the market rate". Frankly, virtually any price somebody is willing to pay is almost by definition "the market rate". It's a meaningless defense for an artificially high price.

That's simply false. Name one unregulated market where this has occurred.


Standard Oil: Its monopoly was already crumbling before antitrust action. By 1911, market share had plunged from 90% to 64% as competitors like Gulf/Texaco emerged and new oil fields broke its grip.

Carnegie Steel: Government intervention. The federal government imposed steep tariffs on imported steel, shielding domestic producers like Carnegie from foreign competition. Without those tariffs, cheaper British/German steel would have kept Carnegie’s dominance in check.

Southern Pacific Railroad: Government intervention. The federal government gifted it, through the Pacific Railroad Acts, millions of acres and subsidized loans. This state-sponsored land monopoly let it block competitors from critical routes.


Google. Microsoft. Facebook. If it weren’t for antitrust, there’d be a lot fewer cell phone companies or airlines. I mean, it’s harder to name an industry where there hasn’t been consolidation. The only thing stopping it is the law. Consolidation was basically illegal until the 1980s. If you wanted to grow, you had to compete.

Wrong. Also, none of the companies you listed are monopolies.

Google was literally declared a monopoly by a court recently. Facebook and Apple both are oligopolies or monopolies in certain market segments. Apple has a monopoly on app store and on device payments. These things are bad enough that they’re being litigated.

> Inflation is one of the most politically salient factors of this decade

> Inflation has lots of causes, it's true.

https://fred.stlouisfed.org/series/M2SL

Algorithmic price fixing is certainly a not-insignificant part of the issue. But it's strange to see zero acknowledgement of the massive increase in money supply over the same time period. When doing causal analysis, we need to examine both the private sector and our government.

When you use M2 as denominator for egg prices, we're at the same place we were in early 2016: https://fred.stlouisfed.org/graph/?g=1DcVw


> But it's strange to see zero acknowledgement of the massive increase in money supply over the same time period.

Because when you look at inflation in the period of say ~2000 to ~2025 [1] it's really not very obvious that there's an increase in M2 from '08 onward.

Talking about M2 as a source of inflation is like shouting Red at a roulette wheel. Sure, sometimes the ball will land on Red but your shouting is a non-sequitur on the result.

[1]: https://fred.stlouisfed.org/series/CPALTT01USM657N


The CPI time series you provided is monthly % change. Here's M2 in those same units: https://fred.stlouisfed.org/graph/?g=1DcYJ

They look pretty similar to me. Chaotic in the short term, but averaging positive between 0-1%. In other words, slow but consistent exponential growth. I didn't say anything about a discontinuity in '08, I'm not sure what point you're trying to make with that.

Edit: here they are both plotted side by side in those units: https://fred.stlouisfed.org/graph/?g=1DcZr


Maybe you can see something in that noise, but I just plotted those and looked at their correlations, and it's garbage. Even looking at their sums, they have different slopes (over decades), all you can say is "number go up". The monthly correlation is junk, the yearly correlation of their sums is junk, the decade long optimally lagged correlation is junk (include 2008-2010 and it's worse). I had to look, because I wondered if there was some interesting coincidence, but there's not.

Now, if what you're trying to say is that the much larger (non M2) eurodollar currency correlates to long term global growth and inflation, yeah that's true. There is a trillion $ industry maintaining that called the banking system. But the idea that eggs, oil, lumber, or rent are well correlated is not even a funny joke. Gold and bitcoin are a bit different because they are so financialized, but I wouldn't go day trading them just based on Fed stats either.


Because true inflation isn’t CPI!

For money supply to be inflationary it has to increase demand or reduce supply for a given product.

It sounds neat but there’s little evidence of that occurring on more than a temporary basis during covid. But covid also caused supply shocks.

It seems that what happened is covid showed companies what they could get away with both because of decades of consolidation and because of new ways of colluding.


More dollars in circulation chasing the same supply of products = increased demand for those products, in dollar terms. I'm not looking specifically at the COVID spike (which, indeed, seems to be over from a monetary policy perspective), I'm looking at the longer term continuous exponential increase in money supply.

But those extra dollars aren’t with consumers. Otherwise, yes. That’s where the money supply causes inflation argument falls apart — at least for this case.

Maybe not at T=0, depending on how you look at money creation. But the "extra" dollars, wherever they originate, will eventually be spent, and will eventually diffuse out to every part of the economy. We're not printing trillions of dollars, locking them in a treasure chest, and burying them deep underground so that they may never move.

> https://fred.stlouisfed.org/series/M2SL

This graph is absolutely insane. As I am completely unfamiliar with what is represented, would you have some pointers on where to start to understand what it represents?

I'm particularly intrigued by the very sharp rise during the covid time, when the global economy was in taters.



It's not as insane as it looks. They changed the definition of M2 in 2020, which means we expect to see a jump right then

The definition of M1 expanded in ~April 2020: https://fredblog.stlouisfed.org/2021/05/savings-are-now-more...

And to the extent that the definition of M2 changed in 2020 (the FRED series description indicates it did), this was only in response to the expansion of M1, to ensure that it was not double-counted in or removed from M2.

Ah, thank you for the clarification.

Go to the settings of the graph and set the graph to logarithmic. Growth is linear.

An upward line on a log graph represents exponential, not linear, growth.

The rate of growth is linear. In fact, looking at the graph in logarithmic scale shows that the rate of growth of M2 is slowing.

Ohhh, missed that. Thanks!

ok, but does the increase in money supply explain the price collusion that businesses admit to doing? You're bringing up an issue that's not pertinent to companies criming.

> does the increase in money supply explain the price collusion that businesses admit to doing

Why would one cause of a phenomenon explain another cause?

The hypothesis "both wood and plastic burn" doesn't require wood to explain to existence of plastic.


I'm addressing the part of the article that uses inflation as a framing device. If inflation is the motivating issue, then we are turning a blind eye to the elephant in the room. I don't disagree with the criticisms of price collusion criming.

Increase in money supply only causes inflation if the money is spent on purchases of items with inflated prices (say, ferraris instead of basic food items).

When the basic food items become ferraris, people have no choice on that.


> Increase in money supply only causes inflation if the money is spent on purchases of items with inflated prices

The economy doesn’t work like that. You can’t inject money but only have it apply to specific sectors.

Everything is interconnected in the economy. If a lot of money comes into the market it will cause a lot of activity, changes in demand, new job openings that entice employees upward, increased wage demands for jobs, new hires requiring higher wages, rising costs to cover those wages, and the cycle goes on and on.

You can’t isolate the effects of inflation. At the scale of economies, inflation effects ripple through everything.

Also, eggs are a terrible indicator. Did everyone forget about the bird flu? It’s a supply problem.


Increased wages do not cause inflation. There are plenty of studies that show this.

It appears that the crux of the article is that a lot of price fixing is going on through the use of programs that suggest or encourage pricing among a few players, to the advantage of all the players and the disadvantage of the customer.

Crackdowns do take time in the US but there is hope. See e.g.:

https://www.justice.gov/opa/pr/justice-department-sues-realp...


The current administration, however, plans to let M&A run wild. Oligopolies don’t need an app for uncoordinated price fixing. The fact that there’s a cartel that controls 97% of the frozen potato market is wild. This will only get worse without breakups.


> cartel that controls 97% of the frozen potato market

This is a weird and emotionally loaded statement. Properly stated, the top four frozen potato producers have 97% of the market share.

That doesn't sound odd? In a mature market with very little technology innovation (potatoes) and very little geographic specificity (frozen), how many companies would you expect? How many laundry detergent companies are there? How many cereal companies are there?

How was this different in the past, except going back to before the interstate highway system?


It’s different because they are using data at scale to collectively decide on pricing via Potatotrac, ya know, the title of the article…?

The issue of having four players is that it makes the coordination problem of colluding relatively easier, but they are price fixing via giant data warehouse which is algorithmically suggesting how to price.

It’s like Real Pages for potatoes, or at least this is what the article claims and what is interesting.

In an era where you can have a computer churn through a trillion datapoints to arrive at an optimal price, is it even possible to have competitive pricing as was once conceived of? The elements of uncertainty and risk have been so thoroughly eliminated that inflation seems almost unstoppable as you have such a strong signal for what the market will bear.

It’s an interesting question for the nature of free markets but few seem to have caught on to this dynamic…


> This is a weird and emotionally loaded statement. Properly stated, the top four frozen potato producers have 97% of the market share.

Properly stated they colluded to fix prices. This is the definition of a cartel.


It doesn't matter how the cartel came to be, if it's a cartel fixing prices, it's illegal. You are doing a lot of water carrying for criminals here, ever consider how that makes you look?

In a healthy economy I would expect the government to prevent that level of concentration and ensure that every potato producer and every potato buyer had multiple local options for processing and distribution. Like you said, mature technology, very little innovation or geographic specificity - anyone with startup capital should be able to get in the business. Instead we let a handful of corporations define and regulate the market for their own benefit. How does that make any sense?

TBH I would think that frozen potatoes might have more competitors. It sounds like the kind of market that could have lots of players assuming that all it really comes down to is a warehouse by train or dock: It doesn't seem obvious that a 10 acre warehouse of frozen potatoes would have an obviously drastic cost advantage over another company with an 8 acre or 12 acre one.

Yet they don’t so clearly its not so easy. Who do you sell your potatos to? Mcdonalds? They probably have a contract already. Where do you even get your inputs, some farm that happens to not have a potato buyer lined up already? Where do you get your machinery for the process, from the toolmaker owned by the competitor perhaps that won’t sell you the state of the art?

Business concepts are easy. Actually doing business is hard no matter what it is. Especially when for one reason or another, 97% of the market is controlled by the potato cartel. Chances are you will find a Great Filter somewhere that ensures this cartels market share is maintained.


> Actually doing business is hard no matter what it is. Especially when for one reason or another, 97% of the market is controlled by the potato cartel.

Yes, it’s hard because you’re trying to fight a cartel. And furthermore, the cartels distribute their products to other cartels - grocery stores that have consolidated over the years into Walmart, Kroger and Publix. And if you don’t like it, you have to change the laws which are controlled and dominated by the cartels and their donations. Thanks to citizens United. The US economy is far from capitalism.


Seems odd to me for a country with 300+ million people in it.

when I hear a “farmer” complaining on the news about losing illegal immigrants and how they can’t afford to pay living wages to people working on their farms. News organizations make it sound like these farmers are individual small businesses when they are actually huge corporation themselves taking advantage of workers.


if top 4 independently controlled 97%, that wouldnt be bad. But rather, if they are colluding via an app, it is a caretl. pure and simple.

Those statements are not equivalent. “Cartel” and “top four producers” mean very different things. I don’t know if there is in fact a cartel, but you’re missing the point.

There is zero chance that this kind of Justice department actions will be continued in the current administration

Actually, there’s still a chance the current administration can do something about it. But there’s a zero chance the previous administration did anything about it.

Lina Khan did a ton of anti-trust but corporations seem to have realized Trump is transactional/pay to play. One can hope the strong antitrust continues but there’s little reason for optimism.

Unfortunately, pay to play is better than no pay to play. Recently, Trump had the audacity to ask for half of TikTok for the government to approve the deal. That sounds like a lot more than Lina Khan or Biden would’ve demanded.

By the way, I’m not condoning government ownership of corporations as the ideal solution, but I absolutely do not approve of huge corporate subsidies with no value in return for tax payers and handwaving small fine penalties for obvious monopoly behavior.


The previous administration didn’t do anything either. They, oh oops, studied for 3.5 years, and launched processes in the last 4 months of the 4 years. Oh my, I need to reelect them to see it happen!

The New Deal, which Bernie was resurrecting, was meant to break monopolies up, to promote completion and make price fixing impossible. the democrats voted against that as they are controlled by the big companies too. this is easy MAGA exists, and won.

Lina Khan led the most antitrust-focused DoJ in a century, which went after Apple, Google, Nvidia, Realpage, airlines, and dozens of other companies.

MAGA give zero fucks about antitrust, and antitrust or lack thereof has nothing to do with the creation of MAGA. That's such an absurd argument I have no idea how to even respond to it. The cornerstone of MAGA has always been nativism & reactionary politics.

I'm very, very tired of leftists shamelessly lying about anything and everything they can just to smear the Democrats.


What did Lena Kahn actually accomplish though? Maybe they had to pay some fines some traffic tickets essentially.

Many mergers were squashed. The M&A market shrank considerably. There’s only so much they can do as far as bringing and prosecuting cases in four years.

M&A market shrink because interest rates went up drastically while expectations of companies remained in the stratosphere in my opinion.

Lina Khan had little to do with it. What significant mergers were squashed that made a difference? What significant monopolies were busted?


Doubtful. Most deals aren’t financed with debt.

There are many but off the top of my head Kroger buying Safeway. Visa buying Plaid. Nvidia buying Arm. Didn't they block a cell phone merger? A mattress merger?


> These companies have been hiking prices for years, but really started to turn the screws during the post-covid inflationary period

The only one I found a time series for quickly is Lamb Weston: Their margins steadily went down after 2019, then surged quite substantially, and by the end of 2024 were more or less back at their 21/22 low points [1]

Additionally there's apparently a class action suit against the companies mentioned which was filed in November 2024 [2]

I don't know enough about this market to judge whether something shady happened, but it seems like both of those facts are relevant to this article.

1. https://www.macrotrends.net/stocks/charts/LW/lamb-weston/pro...

2. https://www.hbsslaw.com/cases/frozen-potato-products-antitru...


Margins aren’t an objective measurement. Margins are easy to manipulate through shell companies and other costs.

Just look at PBMs. They all supposedly have small margins. However, once you peel back the layers, you see rebates and kickbacks and all kinds of illegal schemes to hide the real income.


What is your hypothesis in this case? Something like "margins went down because of accounting shenanigans they only figured out a few years ago, surged so much because of price fixing that the accounting shenanigans were not good enough to cover it anymore, and then they figured out new accounting shenanigans to manipulate margins down to the previous low. And all of that in a way that overstated COGS or understated value of goods produced, because gross margins basically show the same pattern? I'm not in the potato business or an accountant, but curious to learn if you know more about this.

More like the shenanigans aren’t new and can move up and down. And there’s coordination between the segments in the chain. How is it that farmers are making less than ever before but the products are more expensive than ever before? Look at spot prices for food commodities like corn going back a decade or two. The price is flat. Why are prices of goods up? Why are companies now less efficient instead of more efficient? There are plenty of ways that middle men bloat costs. Profit margins are after expenses. Load up a company with debt. Sell all the real estate and pay rent. Bloat executive salaries. Play games with shell companies and other middlemen. It’s not rocket science.

> Josh Saltzman, owner of the DC sports bar Ivy and Coney. Ten years ago, Saltzman charged $3 for fries; now it's $6 – and Saltzman's margins have declined. Saltzman has a limited number of suppliers, and they all get their potatoes from Big Potato, and they bundle those potato orders with their other supplies, making it effectively impossible for Saltzman to buy his potatoes from anyone else.

I understand there will be a demand for French fries from consumers, but you don’t have to serve them. This is something I appreciate about Greek cuisine. There are so many wonderful foods spawned from input constraints. Sugar was a luxury in Greece during the 20th century while honey was more readily available, so you see many desserts sweetened with honey. The Lenten and nativity fast call for essentially a vegan diet, so there are numerous recipes that don’t require animal products and are cheap to make. Eggs and lemons were readily available, so they created avgolemono soup, which is a modest, yet delicious dish.

The overall American cuisine seems unwilling to adapt. The tricky bit is, that’s probably correct from a business standpoint. I’ve heard, “If we don’t sell hamburgers at airport restaurants, they’ll fail.” from a consultant in the airport terminal industry. It’s as if we’ve grown to expect seasonal fruit and vegetables year round as a mindset for our cuisine. Surely, there’s room to be more flexible with what we eat, which would allow business owners to serve food based on what’s readily available and cheaper for them to serve.

Now if absolutely every type of food is experiencing price gouging, that’s hard to get around. But I think there’s some middle ground, which requires serving different food items.


Does anybody know whats stopping ethical and slightly less greedy companies from outcompeting these conglomerates? Its a question I keep coming back to because if the market were efficient then competitors should be able to use that same data to undercut big potato (or big whatever). This never seems to happen.

I’m just guessing, but it likely requires scale in order to become profitable. Building up the necessary network, infrastructure and logistics, while getting up to speed on all the regulatory requirements, would require a lot of difficult work. VCs also wouldn’t fund something that merely becomes profitable, without a chance of making stupid amounts of money. The number of “founders” who would want to make this their carrier is constrained by that limited prospect as well, in addition to “selling potatoes” not being very sexy. And the price-fixing cartel would try to thwart you at every step.

That's called "barrier to entry" to a market (or "un-leveling the field of play"). Actually, that's what any significant corp use first to forbid any new competitor to compete (and that's the reason of the need of "disruption", meaning changing the field of play instead of trying to level it for all players).

Examples:

- laws and regulations provide great barrier for newcomers

- brand recognition (would you better by a know cigarette brand or unknown cheapest one?)

- technical and/or financial and/or IP investment, either because the INDUSTRIAL process need costly tools (so you need to be big from the start) or because you need some really specific know-how

- ...


Monopolies. They may not all have the 100% marketshare to convince regulators they legally constitute a monopoly, but in practice one can't compete on price with vertically-integrated conglomerates that already own the lion's share of the market, and have an existing relationship with all of your potential suppliers/logistics/retailers...

This is the answer. On paper, we have laws preventing monopolists from abusing their power. In reality, it's easy to disguise any predatory pricing or "special offers," running at or near a loss in your upstart competitor's market until they go out of business.

The only way you win is either major disruption (which is usually not possible), or having a bankroll comparable in size to the incumbent. But anyone with enough cash to enter the market is doing so for a return-on-investment, with just as much profit motive as the existing players.


That's not what monopoly means in practice, and in fact, depending on jurisdiction, there's not even a >50% rule in place.

Indeed,though it is a popular way that a lot of discussions around US regulation of monopolies seem to derail

>Does anybody know whats stopping ethical and slightly less greedy companies from outcompeting these conglomerates?

I like this question because it inspires the thought of an "incrementally more ethical firm". Ethics can be roughly characterized as constraints on behavior, therefore if two firms, all else equal, differ then the ethical one is naively at a natural disadvantage, having fewer degrees-of-freedom in any situation. The classic response is that cooperation between firms is itself a powerful advantage, and that ethical behavior ought to yield advantages to cooperation that outweigh the cost of behavioral restrictions.

I believe that the equation changes when ethical behavior itself is successfully attacked and associated with weakness. What happens to a bank if everyone believes it will fail? It fails. What happens when everyone believes that morality is weakness? Morality IS weakness. At that point the reputation and cooperation effects are erased, and only the loss of freedom remains. At that point the culture shifted from the "cooperate-cooperate" Nash equilibrium to the "defect-defect" one. (Religious belief tends to unequivocally favor "cooperate-cooperate" and can therefore both resist this transition and assist in the reverse transition, which adds to religion's social utility.)


Perhaps, given economies of scale, it's difficult for smaller more ethical companies to compete even with the price-fixed conglomerate product.

There are some more ethical companies, too. In N Out french fries are $2.30, certainly due to the fact that they own their supply chain and cut potatoes in house.


It's not like there's an open market you can actually just sell your frozen potato product on. The supply chain between producers and consumers is a web of vertical integration and deals between large oligopolistic companies.

If you can finangle a wedge of the market, they can just buy you, or apply local pricing pressure in lock-step based on their data broker recommendations.


By time a market is lopsided enough to incentivize startups to replace them, the established monopoly has built up a warchest of funds that is able to squash most any potential competition.

And even assuming companies don't resort to skeevy tactics to prevent competition, the companies that incentivize profit the most are going to have the most capital to expand and have the highest growth out of any potential competitors and fully saturate the market the fastest.


From what I can tell, market theory assumes it's easy to enter a market or that people with money to spend somehow want to use it to compete knowing that they're doomed to drive the industry back to "normal profit." Nobody investing money actually wants to throw money at something that will obviously drive a return to normal profit by competing, and do so within a few years after significant capital expense. They want to invest in something that will drive margin growth. Instead, the only reason people do it is to get a buyout offer from established businesses in the same market. Unless you're Mark Cuban.

Though the above is only true to a point - obviously if the margins get high enough or product deviates sufficiently existing businesses with related interests will step in: witness Costco's chicken business.

So maybe the question is less why isn't there more competition and more so why haven't restaurants vertically integrated their potato supply? The main theory I'd have is that price increases haven't negatively impacted their margins or revenues sufficiently yet.


Looking at expansion of local grocery "co-operative" in European country, well it might not have shareholders, but customers that bought in. And it is still expanding monster. Going to places where it really makes not much sense for entity that should offer shopping for local customers...

A very good question!

I'd add though that companies don't have to be "ethical and slightly less greedy" to compete on price. Competing on price is a natural way to gain market share. Nobody would say that Bezo expressed ethics and less greed when he said "Your margin is my opportunity"

Companies should charge the real equilibrium price of a product. It's an important signal to lower or increase supply. However, they should not create a coordinated scarcity or otherwise artificially force a higher price than the equilibrium price. This can only happen through (illegal!) cartels or too much market power (which the government is supposed to prevent).

As usual ee cannot ask for better people but need a system that makes the wrong people do the right thing.


> Does anybody know whats stopping ethical and slightly less greedy companies from outcompeting these conglomerates?

The customers who buy the product with the lowest price.

A very low price is much easier to achieve if you can make use of economics of scale.


My take: at scale, "more ethical" and "less greedy" are illusions. Corporation are not people, they are systems where, to succeed at large scale, being less greedy and more ethical is detrimental. Therefore, these good corporations are filtered out. Add to this the fact that each time, you need more and more initial investment to enter a market: you need to operate in larger scale with more and more technological investments. So, as the time passes, it is also harder to have ethical corporations operating in a market.

Because there is collusion in the supply chain as well. The grocery stores won’t place your product, the distributors won’t distribute it or will charge you more, the farmers will charge you more. This is why horizontal and vertical consolidation were made illegal a century ago. Anti-competitive behavior has to be policed at every level.

In some cases, the answer is "use some of that money you're raking in to bribe competitors not to compete". https://www.ftc.gov/news-events/topics/competition-enforceme...

An oligopol often has some kind of moat due to anti competitive behaviour. E.g. the potatoe argument from the article, where McCain makes it hard to buy potatoes from anybody but them as they are part of a packaged deal.

Discoverability. Theres no money in promoting free stuff, so compact free solutions never make it to your suggestions.

What do you mean "free stuff". This isn't about giving potatoes away for free but about reducing margins and competing on price. "Your margin is my opportunity" seems to work well in many cases

I think Mastodon vs Bluesky is an example. Mastodon, being OSS developed in someone's spare time (I think he makes a meager salary off grants and donations now) is barely marketed. Bluesky, being a multi-billionaire's pet project, had plenty of marketing. As a result, everyone who complained about the lack of free speech on X still ignored Mastodon, the actually-free-speech-host-your-own-server-how-you-want-it platform, for an entire year, instead preferring to wait for Bluesky, the billionaire-owned-and-operated exact-copy-of-early-Twitter where a different billionaire still controls your speech, to come out instead.

The answer is: nothing. The whole argument is predicated on a political conviction, not an economic reality.

This is naive and wrong. An example of this is Google Fiber and ironically Tesla. When Google Fiber came out, ISPs lobbied to sue Google and local governments to prevent Fiber from being available in their areas instead of competing. When Tesla tried to sell direct to consumer, dealerships sued to prevent it. Entrenched companies will always use the system to prevent competition. Regulatory capture is a term for a reason.

I doubt there are any regulatory or legal restrictions that prevent newcomers from selling frozen potatoes.

All of the FDA and USDA regulations and inspections.

...which even my local CSA seems to manage. Not saying there isn't a burden, but it's nothing like laying fiber or laws which specifically ban direct sales of automobiles.

If there was big money to be made undercutting Big Potato, someone would do it. Even my CSA grows potatoes.


The OP asked for examples of things that prevent ethical companies from outcompeting unethical ones and I provided a few. Hyper-focusing on potatoes doesn't invalidate that.

Your local CSA is also unlikely to be audited by the FDA unless they tried to go larger than your community.


Only argument I can think of is economics of scale. You need to have sufficient mass to enter the markets.

However even in this case customers, or Big Potato buyers, can simply ally and create a new supplier where they are shareholders.


Correct, which is why they agglomerated in the first place. Sectors where you see lots of agglomeration are ones where there are significant advantages to agglomeration.

And yeah, it’s hard to do once, but obviously it’s dramatically harder to do after someone has already done it.


Its interesting how the benefits seem to be dependent on market context. Go to the ralphs, its big potato no doubt. Go to the farmers market and people are there arguably to avoid big potato and big anything else for that matter.

You don’t think massive conglomerates have additional advantages they can deploy against competitors in order to retain their cartels?

Do you have some specific examples?

Oh sure: billions of dollars in cash? Hundreds of lawyers? Lobbyists on Capitol Hill? A buddy at USDA or EPA? Lower unit prices on just about every single thing they need to buy? Brand recognition? Strong negotiating positions in 100% of their deals?

Bundle web browser with your operating system.

Bundle operating system with CPU.

But, both lost in the end, despite abusing monopoly and government intervention did not really help.


No, abusing monopoly and government intervention didn't allow them to keep their monopoly forever. That is not the same as "did not help."

And in any case, no one is arguing conglomerated companies have no vulnerabilities or never lose.

I'm saying they have advantages, which is obviously true by the fact that conglomerated companies tend to dominate their sectors.


I will continue to shout this at clouds and hope something changes:

As tech industry practicioners, we are some of the only people in the country who have both the desire to affect positive change, AND the agency to do so. Don't work for these companies. If your company does business with these companies, criticize it and encourage your coworkers to do the same.


It's possible that the folks who find themselves working at Potatotrac are not genius leetcoders who can get a new FAANG job anytime they want. They're probably just ordinary people trying to make enough money to buy an occasional $10 potato for their family.

Airbnb or Uber, on the other hand...


It's also unlikely that the person working on the Russet Quality Calculator feature has any knowledge about the market shares of each customer and their boardroom deals.

[flagged]


I think you're satirically confusing (A) "you can't shift all responsibility into superiors" versus (B) "you're guilty for any kind of involvement even if you didn't know your actions were contributing to an evil thing."

While (A) factored prominently in the Neuremberg trials, it doesn't create (B).


I guess it's okay to have no morals in a tough situation, even if that is the very point in your life where you prove that you actually have morals.

ISTM this really wants legislative action more than FTC action. “Price fixing with an app” should not be something probably illegal due to complex Sherman Act arguments that result in it taking years for the government to do anything about it. It should be directly an unambiguously illegal, with strong penalties (3x damages?) for both the companies using the apps and for the companies making the apps. And enforcement should be fast: the government should be able to entirely shut down these apps via a preliminary injunction.

And yes, maybe there should also be penalties applied personally to the executives who break these rules. But that’s a can of worms and it might be unnecessary.


I think the key insight that the article misses is that when consumers interact with an app they have an excess of trust in "the app".

I run an ecommerce site. It's hard as a small retail operation to keep inventory in sync and model the complex network of supplier relationships for special-orders: we can get some products in a day, some things in a week, some in 6 months. Nonetheless customers assume that the computer is the word of God, and that if the website lets them order a product that product must be available immediately.

When you make an app to do something that is illegal, people for some reason assume it is legal (or at least less bad) to do in the app. The presence of a computer intermediary somehow cleanses the action of moral ambiguity. I think this is because most people don't understand how computers work, and they assume that "the computer is always right".

This goes as far back as Babbage:

On two occasions I have been asked, 'Pray, Mr. Babbage, if you put into the machine wrong figures, will the right answers come out?' I am not able rightly to apprehend the kind of confusion of ideas that could provoke such a question


The article isn't about consumer apps, though, it's about websites that all four companies in an industry use for "optimal pricing", which just launders collusion through a Python backend. I would considering giving the piece a reread.

I don't really see how doing collusion through a Python backend is separate from my point? They're doing an obviously illegal and immoral thing but wrapping it in a layer of technology which obfuscates and apparently legitimizes it. The consumer view is one aspect but the companies and regulators have the same perspective.

The food companies accused of gouging are mostly publicly traded corporations that publish their finances...if profit margins shot up we would be able to see it, but everyone who does the analysis finds margins are mostly steady, slightly down overall. Yet the bullshit claim persists.

Here are some better explanations: - the "breadbasket of the world" (Ukraine) is at war - wages are up in the agricultural sector (a good thing overall but it's not free) - egg shortage - years of government deficits have massively increased the money supply...(more money chasing the same economic output)


I can't say I buy this argument? I think for some of the cases (like Uber?) it might be correct, but are they sure there isn't another force at play in a lot of other cases?

I recall reading that with apartment rentals in NYC, the problem was (is?) apparently that there are literally contracts in place preventing landlords from deviating from the recommendation. That's the crux of the problem, not the app recommendation itself.

Are we sure the causes in these cases aren't analogously different? For example, the part about 97% of a market being controlled by one company sounds like a monopolization issue rather than anything to do with an app.


Did you read the article? The claim is that the app acts as a smokescreen to hide collusion. Or rather, it’s a new way to collude, and thus works as an obfuscation tactic. The app itself is immaterial: it’s using the technology as a way to dodge the law. In this case, w have laws against price fixing. Using an app for price fixing is a way for the price fixer to say, hey, it’s not me, it’s this other company that tells me pricing.

Ofc it’s the same outcome: price fixing.


> Did you read the article?

Seriously? I read the entire damn article before posting. That's why you see my comment had "the part about 97%" in it. It's referring to what was in the article. Was this really necessary?

> it’s using the technology as a way to dodge the law. In this case, we have laws against price fixing. Using an app for price fixing is a way for the price fixer to say, hey, it’s not me, it’s this other company that tells me pricing.

And I was telling you I don't buy this. Because if someone can make more money from defecting from the coordination strategy, they absolutely will. Unless, you know, 97% of the market is owned by one player. Or unless the parties can legally prevent each other from defecting. Or unless they can just blatantly collide illegally because law enforcement is lazy. Etc.

I gave you an actual example. The rental thing in NYC has a contractual price enforcement mechanism that is the real culprit. Why the heck do you think they include that provision if merely having an app was enough to fix prices and obfuscate it?


More like "not a crime if a cartel of corporations does it" - not so sure it has much to do with an "app".

Useful analysis of consolidation and resulting price increases due to "inflation", even if the title could use re-wording.

Interesting that -- especially in an election cycle -- the government is blamed for "inflation", whereas a large contributing factor -- and the main one in this case -- are companies which control a market segment leveraging opportunities (COVID supply chain breakdowns, etc.) to increase their profits at the expense of the Average Joe.

We recently had to do a shower remodel. The salesperson told us that the price was 50% higher now than it was pre-pandemic. Prices shot up during the pandemic due to the known supply chain issues, but never went back down even after those supply chain issues are resolved.

Another good example of this are road bikes (I'm a cyclist): You could get a nice carbon bike for $2500 before the pandemic. Now it's $5000 for essentially the same thing. This is not explained by supply chain issues or an increase in the money supply.


To an extent costs did rise. All sorts of materials are costlier. Rent is higher. Labor is paid more. Pre pandemic was what 6-7 years ago at this point, thats a long time for prices to stay flat. If companies like trek were making appreciable more profit margin today than 7 years ago, it should be apparent in their quarterly reports no?

Not expecting prices to be flat.

But the cost of raw materials did not rise 50% to 100%, neither did wages. Residential rents jumped, but commercial rents -- which is what would affect cost of business -- did not.

So there's not really any way to explain this other than companies along the chain realizing that the prices are sticking (meaning customers are still buying) so there's no reason to go back. But the reason that the customers are still buying is because in many cases, as the article brings out, there is serious consolidation of the market which means that there's not enough competition to push prices back down.

> If companies like trek were making appreciable more profit margin today than 7 years ago, it should be apparent in their quarterly reports no?

Trek is private so we can't know. But in the original article the author cites examples of companies with a monopolistic position increasing profits. Also, it may not be the consumer-facing company -- Trek -- that is taking the bulk of those profits, but a supplier with a hold on the market (i.e., Shimano-SRAM duopoly) that is.


Feels more and more like we're entering a post-"disruption" era.


No, we’re just learning that disruption is usually terrible. The word is proving to mean what it actually means.

> These companies have been hiking prices for years, but really started to turn the screws during the post-covid inflationary period. One of Schwenk's sources is Josh Saltzman, owner of the DC sports bar Ivy and Coney. Ten years ago, Saltzman charged $3 for fries; now it's $6 – and Saltzman's margins have declined. Saltzman has a limited number of suppliers, and they all get their potatoes from Big Potato, and they bundle those potato orders with their other supplies, making it effectively impossible for Saltzman to buy his potatoes from anyone else.

I've had the same opinion for a while now. Something has malfunctioned with the market economy if jacking up prices does not bring in competition that can do it for less.


The central message of this article is that huge companies are bad because they make large profits.

But there are many countries were companies cannot grow huge because the underlying economy is small and not part of a large trading block. (Georgia, where I'm currently living, is a good example).

People are worse off in these countries: Wages are lower in dollar terms. Locally produced products are of poorer quality and cost more.

So, although huge companies make big profits, their economies of scale do benefit their customers and staff.


I was recently looking into my family history, and doing some research on my great grandfather's rural grocery store in 1930's Kansas. I found an old newspaper ad from the time where the four local stores were excited to offer a weekly sales program where each one would put a product on sale every week, and the other three would agree not to compete on that product. "Huh, that's an interesting gimmick... wait, wait, WHAT? How was that legal?"

Lately I have been trying to propagate type ideas:

(1) corporations are not people. They are groups of people acting in concert under the direction of a small number of, or even one, person. They get legal immunities that individuals and unincorporated companies don’t. It is bat shit crazy to legally treat them as people for the purpose of “rights”. They don’t have morals (literally corporations are amoral entities). They concentrate power. We should be limiting them; not doling out rights to them.

(2) the best way to limit corporate power is to make it undesirable to centralize too much corporate power. I think that corporations should have a tax rate base on power - eg increasing based on revenue and number of employees and market share. The rates should increase with increases in any of these numbers. If done correctly, it would eliminate the need for antitrust and much oversight as it naturally deters centralization. Lots of details like shell corporations controlling other corporations, etc, but do-able.


I agree with you, but not your solution in 2. Market share is shaky data to quantify at best, and you'd just incentivice software companies over manufacturing companies for tax purposes (Since software has lower employee count, and hardware software are going to extribly linked going forward)

There needs to be a way to reverse IPO companies as spin outs much easier, with some kind of government incentive to do so. It would unlock alot of value instead of causing it to be withheld.

Some examples of this would be google splitting out search, youtube, and AI products, with the datacenters and IP staying under alphabet.


Interesting that if people took their health more seriously, the food companies mentioned here would struggle to survive regardless of pricing power. Total addressable market would plummet. I suppose one way to accept the status quo is that these companies are self levying a vice tax.

Well, it used to be a crime to offer a communication service without government explicit approval.

But an app like Skype made it possible for people to communicate for free. Was it bad? Do we need government to define what kind of business people can conduct?


If 80% of goods in my shopping cart experienced price increases above the current inflation rate, wouldn't these higher prices contribute to a new, higher inflation rate?

After all, inflation is measured by tracking changes in consumer prices.


> Heritage Foundation economics that insists that monopolies are "efficient"

That’s not correct. The Heritage Foundation does not state that monopolies are efficient, their stance on antitrust laws and monopolies emphasizes *consumer welfare and economic efficiency* over simply protecting smaller businesses or achieving other social goals

https://www.heritage.org/government-regulation/report/antitr...


>Cal-Maine Foods, owns practically every brand of eggs in the case: Farmhouse Eggs, Sunups, Sunny Meadow, Egg-Land’s Best and Land O’ Lakes.

I wonder what else is inaccurate in this article...

"As of my last knowledge update in October 2023, Cal-Maine Foods is one of the largest producers and marketers of shell eggs in the United States. The company has a significant market share in the egg industry, often reported to be around 20% or more of the U.S. market."


What I find terrifying with the system is that it's not enough to earn a living. You have to get rich. There will be no stopping until the complete market domination and then the line needs to continue going up significantly somehow. Dominate, then exploit.

Take Netflix's incessant price gouging. Or all the examples in this article. It's always funny seeing telco operators complaining about regulation and pleading that they'll self regulate and be good citizens.


https://www.pave.com/benchmarking This feels like a similar way to control salaries.

Why are there not local competitors to checks notes cook, bag and freeze potatoes at a 10x markup?

Might it be an overly large regulatory burden on starting said competitor?


No, it's because it's not profitable to do so, and the big players will kill your business. This is also tangentially mentioned in the article... You think you can compete with PotatoCo, which makes billions of dollars, has massive scale, owns several Senators, and which every last potato farm in America is already using? And you want to blame the food regulations that keep people from getting sick and dying?

But sure, just go "start a frozen potato company". Why didn't anyone else think of that until Hacker News?


> owns several Senators

This is the regulations I'm talking about.

> just go "start a frozen potato company"

No thanks, I bet the regulatory burden is absurd


Don’t react to the Airbnb and Uber: read the article to the end. The core argument is tech empowers oligopolies which in turn drives inflation.

There are other damning facts too:

> private equity companies have rolled up all the fire truck companies, hiking the price of trucks, creating backlogs and bottlenecks for parts and service, and starving the nation's municipalities (including Los Angeles)

Capitalism is dead. Long live capitalism.


> Don’t react to the Airbnb and Uber: read the article to the end.

Agreed, but it is IMO a flaw in the author's work that they chose to lead with Airbnb and Uber. You see this very often with criticisms of the tech industry, and while it is understandable (they're the 2nd and 3rd most visible examples of what the author is describing; I'd put crypto 1st, though), I think it just hurts the point and certainly the appeal of such articles. Frankly, if we ignore the real issues they cause, how many people in the real world actually care about Airbnb and Uber dodging regulations? The public-opinion tide miiight have turned against Airbnb by now, but I'd wager that for most people, Uber/Lyft are still fine, and an overwhelming improvement compared to the taxis we had before. (I don't even use them more than a handful of times a year, but that's way more than taxis.) Even for Airbnbs, I suspect most people think nothing of them; a small chunk see, like, those funky, slightly-cheaper, hipstery accommodations they might have stayed in once or twice; and a vanishingly small percentage actually care about property shortages or regulatory issues.

I realize I've detracted from the main point, and I apologize, but it is something people will have to deal with if they want to make this point (tech industry regulation) to the wider public. Using Airbnb and Uber as the headline examples of "tech dodging regulations" is an awful idea when most people are ambivalent, if not outright happy, that the regulations were dodged in those cases. We will need something a bit more salient.


Crony capitalists are trying to see how far they can push before the people push back. So far people seem to be content to lie down and complain on forums managed by crony capitalists (for example the site you are on right now).

>The core argument is tech empowers oligopolies which in turn drives inflation.

No it isn't. How is potato farming "tech"?


PotatoTrac is an analytics service. Not a farm.

Read the article! The point is that there is a app that facilitates potato price fixing

For capitalism to work well, you need a strong state to create free and fair markets and punish bad actors.

All these genre of articles are of the same vein.

- corporations are inherently evil. They are akin to criminals.

Every single time the author has never run a business that is equivalent at the scale of the business being criticized.

And they attribute to malice that can be explained with systematic incentives or complex interactions between various complex components in a dynamic world.

Its not the same as committing a crime.


What happened to BoingBoing - I was surprised when I read the author was Cory Doctorow.

Doctorow left BoingBoing in 2020 if Wikipedia is to be believed (though that roughly tracks with my memory).

He's been doing his own thing on Pluralistic ever since.


I particularly enjoyed the "Optimized for Netscape Navigator." banner

If it's a crime, it's obviously still also a crime if it's an app, just look at Ross Ulbricht or SBF.

Is it really fair to compare "PotatoTrac" with Uber and AirBnB?


> Is it really fair to compare "PotatoTrac" with Uber and AirBnB?

If they both break laws but seemingly get away with it, so they have that in common, why not compare them? What makes PotatoTrac or any of the other incomparable?


It'll be interesting to see how many people focus on debating legality instead of centering the harm being done, particularly to those living in poverty.

What is and isnt a crime is defined by who owns the press and power of the land

In any modern Democracy, it would be illegal to kick families out of their home and then rent the home out to wealthy westerners, yet that is literally what AirBNB allows, see Amnesty International take:

https://www.amnesty.org/en/latest/press-release/2020/12/airb...


> It's not wage theft if we do it with an app.

Which one is this? (Taxi = Uber, Hotel room = Airbnb, Unregistered security = various crypto?)


I think Uber too, and many competitors. They fundamentally employ people but don’t pay minimum wage.

Ah thanks, for some reason the description had made me think there was some dodgy HR/payroll startup rather than the gig economy generally.

Walgreens and Storenet

What proportion of the ultimate financial beneficiaries of these apps are old money white supremacists?

Airbnb leaves more people homeless while enabling the rich more convenience.

Uber (as in ”übermensch”) makes the most desperate people compete for pittances, use their income at the gas station and the auto parts store while enabling the rich more convenience.

Doordash does the same.

Robinhood et al take from the poor and give to the rich.

Potatotrac at least screws everyone over somewhat equally. Where are the riots over this?


Rioting has its place, but I think we're at a point where that's become somewhat performative & police are now militarized with Trump holding a good bit of the slack on their leash.

Find the underground railroads. Build communities of care. We need to get better at caring for each other & collaboration. The other side has apps for that. Where are the developers making apps for the revolution?



I’ve noticed “let us price it for you” appearing in ever more apps and services. Seatgeek most recently.

Profits are higher when cooperating than competing.

Cooperation is easier than ever now, and happens transnationally and locally.

Sellers generally have more sunk investments than buyers, and hence more market power.

Regulators gain more by cooperating as well, and industries embrace regulation that reduces competition especially new entrants.

It’s easy to explain but hard to address.


re uber and taxis: I don't use uber, but I just had occasion to price a ride to the airport (Dulles) from home (Bethesda MD) for Lyft and a taxi, and the taxi was a lot cheaper. We got there just fine.

The article referenced in there about Lamb Weston and MvCain foods and goes into a lot of detail about how prices get determined in this market.

The “behave themselves” comment was certainly juicy, but the entire multi thousand word article is about how these companies are in an intense competition in a low margin industry. Here’s an example:

> Former VP of International at Lamb Weston Well, McCain came in at a better incentives than Lamb Weston, and Lamb Weston maybe felt complacent and said, no, we're going to keep this account, and they lost it. That was a blow to their ego. They lost the Wendy's business. They lost the majority of their Wendy's sales to Cavendish Farms, which was 200 million pounds plus. So they've lost some major accounts. Tegus Client Because they refused to concede on the price mostly? Former VP of International at Lamb Weston That's correct. They could have kept the business if they conceded on the price. But there's a cost to conceding on the price as well. I mean there's a cost, but there's also cost to not to concede. I'm not sure when they're going to get the Aramark's business back or if they ever get it back. They've got to pay us to get Aramark's business again. They're going to have to do exactly what McCain did, try to maintain it. Tegus Client Right now, this sounds more like a good competitive market. So how does this tie back to just Lamb being silent on the price increase and McCain like leading again? Former VP of International at Lamb Weston Well, they felt that they're not going to give McCain Foods the price increase. The price increase never happened. Even though it did get announced, it never did happen. So this is one of those battles that may be short-lived, but it could be long-lived. It could be a couple of years because McCain, a privately held company, they're not subject to the stock market or the analysts asking them difficult questions, even though most of them don't ask difficult questions to Lamb Weston. So they're independent. They can do what they want to do. The 2 major shareholders are the second generation, Scott and Mark McCain. Their EBITDA exceeds $1 billion a year, not bad for 2 young men that inherited the business. So they're not really in any hurry to concede to Lamb Weston or to say, okay, I'm just going to forget this. It could be tit for tat down the road, could be. Or they may just say, let's not go there, let's just try to raise the price. If Lamb tries to raise their price in September, you asked the reason why would they raise prices if they had a cost reduction on potatoes, they're going to raise prices because inefficiencies in the plant, COVID costs, they're going to mention that. They're going to talk about ingredients, oil consumption, cardboard up and all. So their COGS have increased even though potato prices would have been reduced.

https://app.tegus.co/guest/document/view/67Hf3DiMGQ944SkfpRh...


They’re describing capitalism. The end state of capitalism is a single entity co trolling everything. We might not let the end state happen, we might stop at duopolies as described in the article but it’s not much better. It’s not a system benefitting regular people only the wealthy capital owning class.

Surely there must be a way to counteract this with an app...

Thank god we don't have such nasty monopolies in IT.

I think you meant its not a crime if you can afford it.

Funny, whenever any leftists stay in power for a while we see such kind of situation, but somehow it only gets noticed AFTER they are no longer in power.

Do you see it as a bit of a wrinkle in your theory that the author has five citations to his own work about price fixing published during the Biden administration?

This is ridiculous. This situation has persisted under all parties, globally.

You think it's left vs right but actually the entire system has been co-opted by this neo-oligarchy.


And I think the excitement of how many crimes it won't be if you commit them via AI is one of the main economic fuels of our current tech bubble.

When did HN start supporting and sharing Communist ideas like that government regulation solves things? Government regulation almost always protects incumbents, hurts innovation, raises prices for everyone, and creates corruption.

It really does suck that US companies have belatedly figured out that demand is elastic and jacked up the prices. Where I live that happened long ago.

The thing is that he doesn't present any alternative. I know he's some variant of a communist, so does he suggest government control for everything? As if that solved anything? I guess what you find on empty market shelves is cheaper.

Truly a question - what's your solution? What's a solution? People have been arguing that everything is getting worse since forever. I've yet to see people organize and stop buying Pepsi or Coke. Should the government do it for them? Do you propose AI will solve the Socialist Calculation Problem? You're probably against AI as well...


Pepsi and Coke issue has been solved as there are multiple cola brands with store label or no label. You can buy cheaper cola and you do not need to buy Coke/Pepsi.

The direct fix is not that hard. I’m pretty sure the laws are already there, they just need to be used. Block mergers that create companies with massive market share. Break up monopolies. Severely punish price fixing.

The real question is, why doesn’t this happen? And answering that gets you to the real, difficult problem: the government doesn’t want to do these things because the government chiefly operates to serve the rich and powerful. Solving that is quite difficult indeed.


I think the classic suggestion is to breakup monopolies and block large mergers. We don't need to have people stop buying Pepsi or Coke, we need the company that sells Coke to not own a giant swath of the entire drink market.

Although specifically here, I think we need new regulations broadly banning the type of data broker price fixing that is discussed in this article.


You shouldn't have to propose a solution to complain about a problem.

The title should be about monopolies, because while I was curious to read arguments on why Uber and Airbnb should be illegal, instead I got an article about cartels in some of the most traditional industries.

Feeling disappointed.


But ... the iNVIsiblE HAnD of thE FREe MaRKEt

Thank god for those apps. Screw regulators.

There is nothing wrong with raising prices.

I haven't been this intrigued since I found out my 'hot sister' was adopted. Just saying ¯\_(ツ)_/¯

Pepsi and microwave popcorn are food? Couldn’t get past that despite the valid point the author was attempting to make.

This article is a total bullshit.

The inflation after covid was caused ONLY for printing money with the covid excuse.

All Those "cartels" existed long before covid, and why they didn't raise the prices before?

If you rise the price, you open a space to other companies to sell at lower prices.

But if you print money and not grow the production of good and services, the money will worth less, making everything more pricey.


Is this about CBP1?

what a dog shit article. The claim that "apps" enable financial misconduct is unsupported, and the title's questions are left unaddressed. The central argument—that traditional companies are driving inflation—is never substantiated. The final paragraph reveals a fundamental misunderstanding of economics, suggesting that prices should fall once inflationary pressures ease, which is incorrect.

This severe lack of economic insight undermines the rest of the article's credibility for me. and at 500k upvotes, I'm really starting to question even bothering with this community anymore. Bot votes?


yeah and it's not copyright infringement if we steal and redistribute the content using an "AI"

https://flaminghydra.com/sam-altman-and-aaron-swartz-saw-the...


Unchecked capitalism is harmful. It seems like the Trump administration will exacerbate the issue. Biden had an opportunity to address it, but he failed to act. In the end, we’re left being governed by crooks.

I think it comes down to how one defines capitalism. Markets are an excellent default for pricing things and thereby allocating resources and effort. Markets are also almost impossible to really get rid of: if one attempts to completely eliminate market activity you usually end up with a “black” market.

But markets experience market failures: this might be in the form of monopoly or monopsony pricing power, it might be in the form of lobbyism or other institutionalized corruption, it might be in the form of outright lawbreaking or other even more direct coercion.

Capitalism-like systems only serve the populations that live in them when they are honestly and competently referred: they only work when market failures are addressed with vigor.

We’ve sailed so far past this type of state that the government is now actively aiding and abetting cartels and oligarchs in their efforts to induce market failures.

That ends with some kind of internal or external war, hence the bunkers and islands and spaceships and shit.


The app crime angle for uber/airbnb is a now familiar topic that gets heated and still draws a variety of different kinds of opinions. Landlord price cabals enabled by apps have started to get press.. this surprises almost no one and makes everyone angry.

Price fixing, consolidation, and greedflation in food sources though does not seem to get much press. I think the revelation would be extremely surprising, scary, and absolutely infuriating to most people.

What is really striking here is how the tired old “vote with your wallet!” advice won’t even work for potatoes anymore. And yet the staunch defenders of business-as-usual capitalism still insist nothing has changed, that we only need to “use our agency!” to effectively fight against whatever kinds of abusive corporate bullshit is getting normalized this week. That’s not just a tired rhetorical trick to win points in an argument or to blame the victim, it’s becoming very transparently absurd.


More like "It's not a crime if a corporation does it." The US treats corporations with kid gloves. They get away with so much, and in those rare cases where a regulatory body does anything, it's often just a strongly worded letter, a warning, a threat to one day send a strongly worded letter, or, in really rare, extreme cases, a company official gets called in to say a few words in front of Congress. Nobody goes to jail, fines get whittled down to nothing in appeal after appeal, and the government usually finally just accepts a pinky-swear to never be bad again.

Contrast that to how individuals get the hammer put down on them by the justice system if they so much as fart in the wrong room. The lesson from the last 50 years should be: If you want to commit a crime and get away with it, do it as a corporation.


Exactly - theres a lot of stuff that if an individual/small business owner did, they'd be personally onerously fined or jailed.. but corporations get a pass. Corporations also have a lot of money to pay good lobbyists & lawyers such that laws are pretty forgiving, loopholes are found & exploited, and finally they are vigorously defended if the government ever does try to crack down.

Ubers behavior during its growth phase, and even now is a good example of this. The latest letter of the law vs spirit of the law thing Uber did was circumvent the NYC law to try and ensure Uber drivers get a fair minimum wage.

To avoid having to pay any difference to make up the hourly wage to drivers, Uber runs an algorithm which kicks drivers out of the app randomly if demand gets too low, without warning or indication of when they can get back in. It can be minutes or hours. So the drivers remain on the road, driving/idling, waiting to get back into the app. The "work" is still getting done, but it doesn't count against Uber.

Imagine a small restaurant doing similar, deciding at random slow times instead of sending staff home for the day, they assign them no tables and mark them as off-the-clock. When demand picks up again, they get assigned some tables and resume making money.

The whole independent contractor on-demand app market is an automated exploitation engine.


>To avoid having to pay any difference to make up the hourly wage to drivers, Uber runs an algorithm which kicks drivers out of the app randomly if demand gets too low, without warning or indication of when they can get back in. It can be minutes or hours. So the drivers remain on the road, driving/idling, waiting to get back into the app. The "work" is still getting done, but it doesn't count against Uber.

I get legislators want uber drivers to earn a living wage, but expecting uber to continue allowing unlimited amount of drivers to be "online", when they have to pay for them is absurd.

>Imagine a small restaurant doing similar, deciding at random slow times instead of sending staff home for the day, they assign them no tables and mark them as off-the-clock. When demand picks up again, they get assigned some tables and resume making money.

You're trying to imply small businesses don't do this but this happens all the time. It's not even limited to minimum wage laws. After the ACA was passed, everyone started avoiding hiring people for more than 32 hours if they could, to skirt the "you have to provide healthcare to all full time employees" requirement.


If Uber has let so many drivers on the app such that they cannot earn a minimum wage, they should stop aggressively enrolling new drivers. They could have also kicked people out for full days, rest of shift, or given an indicator of when they may try again. Something that leaves it more clear they are off and don't linger around to try and get back in.

Restaurants/retail will reduce staffing due to demand, but they don't leave people hanging by an on-call thread the way this automated Uber model did. Tends to be more like cutting shifts off early or calling people not to come in. It is not this automated app-driven robo labor optimization. People aren't being told to go outside and maybe they'll get called back in 5 minutes, 1 hour, or 1 day.

Agreed a lot of businesses moved people to 32 hour weeks to avoid ACA, which is a different issue.. how's all the on-demand faux contractor workforces healthcare though?


>If Uber has let so many drivers on the app such that they cannot earn a minimum wage, they should stop aggressively enrolling new drivers.

Most of those drivers were presumably enrolled before that legislation was passed/came into force. Blaming uber for having those drivers seems like a stretch.

> They could have also kicked people out for full days, rest of shift, or given an indicator of when they may try again. Something that leaves it more clear they are off and don't linger around to try and get back in.

Is this a real concern? This seems like something that sucks for the first few days and then everyone realizes what's the new normal and adapts accordingly. I don't doubt uber could have done better here, but characterizing poor UI as "circumvent the NYC law to try and ensure Uber drivers get a fair minimum wage" is a stretch. It's also unclear how uber benefits from drivers being frustrated at the UI.

>Restaurants/retail will reduce staffing due to demand, but they don't leave people hanging by an on-call thread the way this automated Uber model did.

Uber driver are not "on call". They can sign off at any time. Sure, they might need the money, but in that respect I don't see how that's any different than 0 hour contracts that some restaurants have.

>Agreed a lot of businesses moved people to 32 hour weeks to avoid ACA, which is a different issue.. how's all the on-demand faux contractor workforces healthcare though?

The point isn't that being an uber driver is a dream job, it's that contrary to your rhetoric of "Imagine a small restaurant doing similar", small restaurants indeed will do something similar, if given the chance.


> I don't doubt uber could have done better here, but characterizing poor UI as "circumvent the NYC law to try and ensure Uber drivers get a fair minimum wage" is a stretch.

Honestly, that's _exactly_ what it looks like to me. Law makes it so that they have to pay drivers that are available to drive but aren't actively involved in a fair... so they change the system so that, if they don't have fairs for you you're not considered available to drive. Everything about that reeks of trying to circumvent the law.

Now, I don't know that there _is_ a better solution that works with their business model; but the answer to that isn't "cheat", it's "your business model it's sustainable".


The actual problem is that it's a stupid law.

You effectively have two options. Option one, Uber signs up as many drivers as they have customers during off-peak hours and then if you want to drive only during peak hours to take advantage of surge pricing you can't and if you want a ride then there won't be enough drivers, because they won't sign up any more if they'd have to pay someone for 8 hours to have them only drive for one. Option two, there are that many full-time drivers and then they sign up some additional part-time drivers to satisfy peak demand, but the part-time drivers are part-time and they're not getting paid during off-peak hours.

Which one do you want? Notice that there is no one better off under the first option; the people who don't want to work part-time still have the option not to under the second option, the first just prevents them from doing it even if they want to.


Option 3 - You hire enough people to cover general demand, have surge prices to lower demand when there's not enough drivers, and charge prices for normal/lower demand that allows you to make sure everyone you have on duty makes at least minimum wage.

And if you _can't_ find a solution that allows you to pay everyone minimum wage, then you don't get to do business. I can think of plenty of businesses I could set up that would make me money and allow me to pay the people that work for me below minimum wage. But, see, we don't allow that; and we created a minimum wage law to make it very clear that we don't allow that.

Not every business model is viable given the rules society has setup (to protext society as a whole)


> Option 3 - You hire enough people to cover general demand, have surge prices to lower demand when there's not enough drivers, and charge prices for normal/lower demand that allows you to make sure everyone you have on duty makes at least minimum wage.

This is just a rehash of Option 1. The point of surge pricing is to get more drivers to drive during peak times. If you're instead using that money to pay other people to be idle then the average driver makes less money because part of what would have been their compensation is now going to pay someone else to sit around idle, and they lose the ability to make a higher hourly rate by working only during peak demand. Which in turn reduces the number of drivers available during surge pricing and there goes your funding source for hiring more drivers, so you're back to laying off lots of drivers who would otherwise have part-time work, but now also reducing the median driver's hourly rate.

> Not every business model is viable given the rules society has setup (to protext society as a whole)

Minimum wage laws in general have never protected anyone. If there is another job available to you that pays more than minimum wage and is otherwise on equally favorable terms, you would have taken that one regardless of whether a lower paying job is available. If the lower paying job is better, e.g. because it pays slightly less but you also have lower costs in terms of commuting distance or greater flexibility in hours etc., taking away that option "for your own protection" is patronizing BS.

This is why minimum wages are set at the level that only ~1% of people make minimum wage, because it minimizes the damage done by the law while still allowing opportunistic politicians to claim they've done something. Actually doing something is creating opportunities for people that have better conditions or pay higher wages so that it doesn't matter if someone is offering low wages because people aren't desperate to accept them for lack of alternatives.

Notice also that taking away alternatives can do more than just force you to take a worse one. It can make the worse alternative worse. Suppose there is a job with low pay but it's across the street from where you live, and another one with an hour commute each way, costing you $40 and two hours/day. You take the first one unless the second one pays significantly better, at least several dollars/hour more to compensate you for the gas and the time. Unless the first one is banned and goes away because it was $1/hour below the "minimum". Then not only are you stuck with the second one, they can lower their pay to the minimum when they would otherwise have had to pay more to compensate for the commute because you no longer have an alternative.

Price controls are bad.


> Minimum wage laws in general have never protected anyone. If there is another job available to you that pays more than minimum wage and is otherwise on equally favorable terms, you would have taken that one regardless of whether a lower paying job is available.

That "if" there is doing a lot of work. I think you underestimate how many people out there are in a situation where it's the job they have or the street. Not everyone has the option to just go pick another job, and the people that don't is heavily skewed towards the people with the worst jobs.


> That "if" there is doing a lot of work. I think you underestimate how many people out there are in a situation where it's the job they have or the street.

That's making the opposite case from the one you want. You take away the lower paying job when it was the only one available and now they're on the street because there is no alternative.

"Fortunately", in more cases than not the "if" was the actual. This is geometry: If there is one viable employer within 50 miles of where you live then statistically there are four within 100 miles, 9 within 150 miles and 16 within 200 miles, because area is pi r^2. So if you take away the first job there is a large chance that there is a second one with a much worse commute. But the commute is going to more than eliminate any value from getting paid slightly more, which is why they didn't take that job to begin with.


Option three: They get enough drivers to cover most of the peak, and end up paying for some idle time otherwise. Just like almost every company with permanent staff.

Alternatively option two with an explicit, upfront decisions who is actually part-time, so there are no surprises and the rules are known.


> Option three: They get enough drivers to cover most of the peak, and end up paying for some idle time otherwise. Just like almost every company with permanent staff.

That only works when the difference in demand between peak and off-peak is small relative to the cost of idle workers. In this case it isn't.

> Alternatively option two with an explicit, upfront decisions who is actually part-time, so there are no surprises and the rules are known.

Then you'll be objecting that the majority of people are classified as part-time because there will be a lot of people who get 40 hours some weeks and zero other weeks due to changes in seasonal demand etc.

Also, the result of that would be that in the slower weeks, one person gets 40 hours and one person gets 10 instead of each person getting 25 hours, and that's obviously not to the advantage of the person whose hours you're cutting. Which in turn implies that the person getting 40 will be signing up for some fresh hell like "you get 40 hours but we choose when they are" and then they're both getting screwed by the change.


> one person gets 40 hours and one person gets 10 instead of each person getting 25 hours

If these are the upfront conditions, why is that an issue?

But the main issue you're getting closer and closer to is: uber's model doesn't seem to be profitable if they have to pay and employ with reasonable conditions. They don't have to be profitable though. We really can let them fail. The reasonable cities can then provide standard overprovisioned public transport.


> If these are the upfront conditions, why is that an issue?

Because they might have both preferred 25 hours with flexibility to a forced choice between 40 inflexible hours or 10 flexible ones.

> uber's model doesn't seem to be profitable if they have to pay and employ with reasonable conditions.

Uber is an app. Their primary cost is paying drivers. They're not going to fail because you imposed this inflexibility on them. What's going to happen is they're going to have fewer drivers and provide less service. But "have fewer drivers" is those people losing their jobs, which isn't really helping them out.


> But "have fewer drivers" is those people losing their jobs, which isn't really helping them out.

Laws that regulate how people can be treated by employers have always been a balance between _some_ people having it worse (ex, their jobs not being available) so that the _vast_ majority of people have it better.

The same things is true of things like safety regulations. It costs more to be safe, and you have to charge more or hire less if you're going to have them. But overall, society is better for them (even though some people no longer have jobs).


> Laws that regulate how people can be treated by employers have always been a balance between _some_ people having it worse (ex, their jobs not being available) so that the _vast_ majority of people have it better.

Not all of them. For example, a law that requires companies that agree to pay workers for services rendered to actually pay them has no obvious mechanism to destroy jobs and may even create jobs as people become willing to do work when they otherwise wouldn't have trusted the employer to pay them with no enforcement mechanism.

The types of rules you're talking about are typically lobbied for by specific groups to gain advantage for themselves at the expense not of the employer but of their competition for employment, i.e. other workers. For example, the passage of minimum wage laws came about during the Jim Crow era because what white workers wanted from discrimination was to prevent black workers from "taking their jobs" but what the discrimination was actually causing was for the black workers to accept lower pay and then receive the jobs anyway. The law was motivated by the desire to prohibit the latter and thereby cause the black workers to lose their jobs because then the discrimination would manifest in the hiring decision rather than the wages.

This is the same category of thing which is happening with Uber, except that the groups aren't black people and white people, they're part-time Uber drivers and full-time ones. The full-time ones want the part-time ones out of the market, so they keep lobbying for laws to make casual acceptance of fares more burdensome.

> The same things is true of things like safety regulations. It costs more to be safe, and you have to charge more or hire less if you're going to have them. But overall, society is better for them (even though some people no longer have jobs).

The premise of safety regulations is that people are busy and don't have time to read through statistical studies to determine if a more expensive product is worth the cost because it's sufficiently safer, so the government should do the evaluation and then require the ones that are worth the cost.

The problem is the government doesn't require the ones that are worth the cost, they require that ones whose manufacturers or other interest groups have the best lobbyists even when they're not worth the cost, and then net-negative rules accumulate over time. Soon you have a thicket of rules where the vast majority aren't worth the cost, and a tiny minority that are but are mostly things the market would have demanded even without the mandate. This is a big reason why, for example, it's so expensive to build housing in the US and high rents are causing homelessness, preventing family formation and transferring wealth from working people to landlords.

Notice also the scam here: New "safety standards" are passed but they don't apply to existing buildings, so people continue living in the existing buildings (which by this logic are unsafe) because now newer buildings have been made prohibitively expensive. This benefits landlords, not safety, but attempts to remove the rules are met with claims of impacting safety.


> both preferred 25 hours with flexibility

That's not an option though. The option uber gives is "maybe 25, maybe not, you'll find out on the day".

That's still "how do we keep uber in business". There are alternatives like good quality overprovisioned public transport which can take most of those customers. It can also deal with peak situations like events.

It's a sunk cost fallacy to think of uber as some kind of last resort employer that can ignore the rules.


> That's not an option though. The option uber gives is "maybe 25, maybe not, you'll find out on the day".

It's 25 when it's 25. Which you can still have a preference for when the alternative is 10, or the alternative is "40 hours but your hours are 9PM to 1AM and then 5AM to 9AM".

> That's still "how do we keep uber in business".

Uber is still in business when they require you to work split shifts in the wee hours. We're trying to save drivers and riders from the consequences of foolish rules.

> There are alternatives like good quality overprovisioned public transport which can take most of those customers.

Overprovisioned public transport is just Uber with lower efficiency. You have a municipal bus with zero or one passengers instead of a smaller private car with one passenger or avoid the trip because you know before you start that no one is going there.

> It can also deal with peak situations like events.

Ten thousand people exit the stadium at the same time and each want to go to a different destination, thousands of which are single family homes in the suburbs.

> It's a sunk cost fallacy to think of uber as some kind of last resort employer that can ignore the rules.

The assumption is that Uber is bad, but Uber is better than taxi medallion cartels or private cars that then have to be parked in the city instead of picking up a different fare going in the opposite direction.


> Uber is better than taxi medallion cartels

Uber is _different_ than the taxi system. Not all taxi systems are "taxi medallion cartels", even in cities with taxi medallions. And, when it started, Uber was worse than the taxis in a lot of cities in many ways. It's gotten better since then, but pretty much exclusively to try to prevent the cities from throwing them out on their asses.


If Uber wasn't better than taxis from the start then why would people use or drive for Uber instead of taxis?

>Honestly, that's _exactly_ what it looks like to me. Law makes it so that they have to pay drivers that are available to drive but aren't actively involved in a fair... so they change the system so that, if they don't have fairs for you you're not considered available to drive. Everything about that reeks of trying to circumvent the law.

How is this any different than minimum wage laws which are ostensibly enacted to increase worker's salaries, but businesses respond by hiring people for fewer hours? I agree that uber is thwarting legislators' attempt to improve the earnings of uber drivers, but this was the outcome everyone has foresaw, including the legislators. Characterizing it as some cunning chicanery on uber's part is absurd.


> How is this any different than minimum wage laws which are ostensibly enacted to increase worker's salaries, but businesses respond by hiring people for fewer hours?

Nobody is hiring more people to counter the laws "to increase worker's salaries", they're hiring fewer workers to counter the laws that require certain benefits (health insurance) for full time workers. That's a totally different issue.


> Blaming uber for having those drivers seems like a stretch.

It seems perfectly predictable that a loophole you actively exploit will be closed off. Don't build your business model around loopholes, or be prepared to face the consequences.


> If Uber has let so many drivers on the app such that they cannot earn a minimum wage, they should stop aggressively enrolling new drivers.

Why? All Uber cares about are the fees it collects, which are dependent on the total number of miles and total number of rides. It has no reason to care if its drivers make minimum wage or not, unless it can be shown that if they cannot, Uber will not have enough drivers. Fortunately for Uber, there is no evidence that this is the case.


> It has no reason to care if its drivers make minimum wage or not

Is the question "are we breaking any laws" not a reason to care?


Given the legal record w.r.t Uber, I think its fairly clear that it is not.

> If Uber has let so many drivers on the app such that they cannot earn a minimum wage, they should stop aggressively enrolling new drivers.

The number of drivers needed at any given time is completely variable. It's obviously a larger number during peak travel periods.

Suppose number of drivers needed off-peak is 100 and the number needed at the peak is 500 and they have 300 drivers. They need to sign up another 200 drivers to satisfy the peak demand, but they already have 200 more than they can use off-peak. What would you have them do? They effectively need a large proportion of the drivers to be working part time specifically during peak hours.

Moreover, there are many people willing to do that. They're not sitting in their cars idling, they're at home doing chores or other contract work and they only get in their car if the app tells them they can get paid. This is not a problem for the people who are satisfied with it, and why are the people who are unsatisfied with it even doing it? If you don't like driving for Uber, don't do it.


> The number of drivers needed at any given time is completely variable. It's obviously a larger number during peak travel periods.

That's variable based upon time of day, not completely variable. It is not a new problem either. Take public transit: drivers may hate split shifts, yet they are given well defined shifts that they are paid for.

On top of that, a company that operates through an app ought to have the ability to develop software to relatively reliably predict demand.

> Moreover, there are many people willing to do that.

Willing, or desperate? For example: relatively few people want to be on-call replacement workers. They either do it because they need the money or they do it because they are hoping to get their foot in the door. Those who do it willingly are typically doing so for extra cash and because they don't have any other obligations (e.g. retirees in some fields). Now imagine that an entire company is based upon the concept of replacement workers. That puts Uber closer to the exploitive end of the spectrum than the opportunity end.


> That's variable based upon time of day, not completely variable.

It's completely variable. If there is a major sporting event in your city, the demand is going to be much different than it is at the same time of day when there isn't a major sporting event. Demand is affected by weather, public transit disruptions, current events etc. It's not just time of day.

> Take public transit: drivers may hate split shifts, yet they are given well defined shifts that they are paid for.

Public transit has internal buffers that absorb demand. You have a bus which seats 40 but typically has 7 passengers. If there is a demand spike, this time you have 35 passengers, but this is still less than 40 so you don't need any more drivers. If that happens with Uber, they suddenly need five times as many drivers.

> On top of that, a company that operates through an app ought to have the ability to develop software to relatively reliably predict demand.

They could certainly predict part of the demand, but then what? You don't know ahead of time what time of day it's going to rain and cause a ton of people who usually ride a bike to want a ride. There is still a high amount of unpredictable variability in the demand.

> Willing, or desperate? For example: relatively few people want to be on-call replacement workers. They either do it because they need the money or they do it because they are hoping to get their foot in the door.

Let's consider these people then. Their options are to have no job and likely run into serious financial difficulties, take the on-call job to cover some bills while they look for a better job, or take some even worse job than the on-call job, but that might not be worse in a way that has been legislated against, e.g. because it's two hours away and there is no law against having a four hour round trip commute.

The only reason they'd take the on-call job is if their other options are worse. But if their other options are worse then taking away the on-call job option isn't helping them. To actually help them you need to give them some options that are better, in which case you still don't have to prohibit the on-call job because then they'd just choose the better alternative once it's available.

> Those who do it willingly are typically doing so for extra cash and because they don't have any other obligations (e.g. retirees in some fields).

Then why shouldn't those people be able to do it, and get the extra cash?

> Now imagine that an entire company is based upon the concept of replacement workers.

Suppose Uber was part of Costco but otherwise operated in an identical way. Is that supposed to make any difference?


> The number of drivers needed at any given time is completely variable. It's obviously a larger number during peak travel periods.

That's Uber's business problem to solve, though, not ours.

Sucks to be them. The solution isn't "well, let's make it easier for Uber and screw over their not-employees".

The government, the people, are not obligated to ensure profitability is possible for every corporations every idea.


> That's Uber's business problem to solve, though, not ours.

The solution is going to be dictated by economics, not magic. There is no option where they convert all of the part-time drivers to full-time without any increase in the demand for rides.

What they're trying to do is avoid cutting off the part-time drivers entirely. But stop trying to force them to do that, it doesn't actually help people.


Let's not pretend that they want to have all the benefits of having those part-time drivers without any of the responsibilities.

I don't expect them all to be converted to FTEs. But this unavailability BS is just that, BS.

"You are unable to log in because we have enough drivers to meet anticipated demand." Simple. Not log in, and then do a job or two then "oops, you've been randomly selected to be unable to earn money for the next hour".


Suppose you're a part-time driver. You're at home, going about your other business but are willing to take a fare whenever there is one. They're not at all sure they'll have enough fares for you to do an 8-hour shift, but they know there's one for you right now. They should deny you because they can't guarantee there will be more an hour from now? How does that help you?

Particularly after operating at a loss for a decade by overpaying drivers and undercharging riders, such that they get a monopoly, squeeze out local competition, and change consumer habits to rely on ridehailing.

Now that they won and are making money, boo hoo the government is being tough on us.


I mean this is just a private corporation that replaced an older private corporation (a taxi company) who in turn was trying to solve the core issue with car dependent infrastructure, which is: what does one do if one doesn't have a car?

Because if you're just at home, car centered infrastructure while expensive, inefficient, and dangerous, does function. But then, if you leave home on a business trip or a vacation... the problems become quite apparent quite quickly.

And you're completely correct here diagnosing the problem:

> Suppose number of drivers needed off-peak is 100 and the number needed at the peak is 500 and they have 300 drivers. They need to sign up another 200 drivers to satisfy the peak demand, but they already have 200 more than they can use off-peak. What would you have them do? They effectively need a large proportion of the drivers to be working part time specifically during peak hours.

Where I disagree is that there's a car-based answer to this, because restricting ourselves to working within the bounds of the car has caused the damn problem: because you need X number of cars with X number of drivers available to move Y number of people at Z time of day, and all three of these are going to change with availability in unpredictable ways. Whereas just... good mass transit could move all of those people, with less fuel, FAR less vehicles, and while those journeys would all probably take a bit longer even in ideal conditions, they would be safer, our air would be cleaner, and you wouldn't even need a taxi company or an app that pays people slave wages to take you places.


The transit problem is largely a housing problem because mass transit needs a threshold amount of population density to function and that level is below what you get when the majority of the land area is zoned exclusively for single-family homes. But that's not something you can solve overnight -- it takes time to build stuff like that -- so people are still going to have to decide what to do today.

Moreover, even if you build more multi-family housing and mass transit, you're still not changing the nature of the issue, only the scale. There will never be 100% mass transit use because there will always be higher and lower population density areas and some proportion of people living in the latter. Then the people who live outside the reach of mass transit may want to come inside it from time to time, and you'll still have car service for that, and still have peak and off peak, and still have to answer the same questions even if there are only a third as many people doing it.


For sure, but we still have a massive proportion of what could be served by Mass Transit in the States all dedicated to cars, which is why gridlock is basically the American commuting experience in one word. I just spent a week in a major city visiting my employer's office for some face time with everyone, and every morning was started by spending about 20 minutes stuck in traffic, even though my hotel was only a short drive from HQ.

More than three quarters of Americans live in suburban or rural areas. If you tried to run an hourly bus down a suburban street in the middle of the day, it would have one passenger. You can't run bus service at the density of the suburbs, with single passengers it's just a slower, more expensive and less efficient Uber.

Then you get traffic congestion in the city because those people come into the city in their cars. But you can't just add mass transit where the traffic is because those people still need to traverse the part of their path where it isn't.


> expecting uber to continue allowing unlimited amount of drivers to be "online", when they have to pay for them is absurd.

I don't recall anyone demanding that. Maybe things have changed since then, but back when I worked in restaurants if things were slow I'd be sent home and know when I was expected to be back be that the next day or in time for the dinner rush. I wasn't randomly clocked off for 15-30 minutes, and expected to hang around, then suddenly told I'm back on. In fact we'd call that wage theft, (which is very common in the US). But suddenly for Uber such a thing is acceptable.


>I don't recall anyone demanding that.

That's seemingly what OP was demanding, given the displeasure he was expressing at uber for the practice.

>but back when I worked in restaurants if things were slow I'd be sent home and know when I was expected to be back be that the next day or in time for the dinner rush. I wasn't randomly clocked off for 15-30 minutes, and expected to hang around, then suddenly told I'm back on. In fact we'd call that wage theft, (which is very common in the US). But suddenly for Uber such a thing is acceptable.

It's the difference between employment vs working as a contractor. Cab drivers, who also work as independent contractors. No fare, no pay.

>The tight margins of the hack trade can leave cabbies feeling frustrated. “Sometimes, I don’t like it, because I have the potential to lose money,” said M. D. Islam, a cabby from Queens who has been driving for six months. He often earns less than $100 a day, he said; if his cab breaks down, or he can’t find passengers, he may end up in the red.

https://www.nytimes.com/2012/05/23/nyregion/new-york-taxi-dr...


> It's the difference between employment vs working as a contractor.

That's absolutely NOT the difference between employment and contracting. The general expectation from the IRS is that if you are setting someone's hours (and Uber is, the driver chooses to be available, but within that availability window, Uber can arbitrarily define them as unavailable), then they are an employee.

Contractors don't just hang around your job site because you tell them you don't have work for them now but "stick around 5 minutes or 2 hours, we might have some then".


Agreed. These tech companies are all squeezing the definition of contractor for their benefit.

Amazon similarly abuses on-demand contractors and we see this for example in the little popup trailer parks in their distribution center parking lots during holiday crush...

I get it, as a consumer these are nice services to have - but it doesn't mean we have to be OK with these labor conditions. Further, from a self interested point of view, its a slippery slope to Amazon & the rest figuring out how to do the same to their SWEs over time.


>the driver chooses to be available, but within that availability window, Uber can arbitrarily define them as unavailable

This is basically the result of new york's legislation. In jurisdictions without such legislation, uber doesn't cap the amount of drivers that can be online. Moreover "availability" in this context is entirely arbitrary. The amount of fares available is still the same. The only difference is that uber caps the amount of people that can be online because new york puts them on the hook if anyone is "available" but doesn't make minimum wage. This was never the case for regular cabbies, but for whatever reason decided to apply this to ride hailing apps only.

>Contractors don't just hang around your job site because you tell them you don't have work for them now but "stick around 5 minutes or 2 hours, we might have some then".

Right, because the labor required to build a house isn't spiky like the demand for drivers.


> That's seemingly what OP was demanding, given the displeasure he was expressing at uber for the practice.

From the OP

> Uber runs an algorithm which kicks drivers out of the app randomly if demand gets too low, without warning or indication of when they can get back in. It can be minutes or hours.

I think the OP makes it very clear that the issue is the lack of communication especially around when they can work next, not that Uber isn't willing to maintain a surge staff during minimal demand.


>I think the OP makes it very clear that the issue is the lack of communication especially around when they can work next

"When they can work next" is entirely dependent on supply and demand. Also, it seems like he was more upset about drivers having to wait around while not getting paid, than having to periodically check the app. From the OP:

>To avoid having to pay any difference to make up the hourly wage to drivers, Uber runs an algorithm which kicks drivers out of the app randomly if demand gets too low, without warning or indication of when they can get back in. It can be minutes or hours. So the drivers remain on the road, driving/idling, waiting to get back into the app. The "work" is still getting done, but it doesn't count against Uber.

In a later comment he also lamented about how uber was "leave [drivers] hanging by an on-call thread". I doubt that if uber added push notifications for slots becoming available, that OP would be even slightly placated. The issue is that there's more willing drivers than active "slots" available, since such slots uber have to pay for. As a result, there's still going to be people waiting around for a chance to make money, while being unpaid. Adding push notifications only means people don't have to check their phones every 5-10 minutes for a slot, but they're still forced to wait around unpaid.


> "When they can work next" is entirely dependent on supply and demand.

Are you really going to try to make the case that a company the size of Uber finds the demand in NEW YORK, of all places, unpredictable? That speaks more to incompetence on Uber's part than any unrealistic expectations elsewhere. Especially since restaurants have managed to operate in far more unpredictable conditions for all of human history.

> Also, it seems like he was more upset about drivers having to wait around while not getting paid.

Right, yeah. If they said hey, we don't need you for the next four hours, drivers don't have to wait around. If they say it'll be 15 minutes, drivers know to wait around. Instead, they conveniently tell them nothing, effectively keeping them on-call. A bit of communication fixes that.


Exactly it’s automated employee abuse

A lot of jurisdictions require 4 hr minimum pay when called in to work.

I wonder, would cabs be more competitive of Uber's alternative business model, if Uber had to be fairer?

If so, then isn't Uber a sham? And shouldn't market forces see them go?

Airbnb used to be cheap... at the start. Then people added insurance, people had to get permits, and so on, just as Hotels, and other do. Now it's not so cheap any more.

One of the biggest disruptions is "don't pay your fair share". Or "pay people dirt wages".

Companies carve out a new business model, and aren't taxed or forced to pay as incumbents are.

Are people against people making a fair wage? Well guess what, you have to pay more for an Uber. And maybe Uber doesn't work as a business model unless it's too expensive.

Too bad! Uber has to work in the same ecosystem as everyone else... or it's a farce.


>A lot of jurisdictions require 4 hr minimum pay when called in to work.

>I wonder, would cabs be more competitive of Uber's alternative business model, if Uber had to be fairer?

None of which applies to cabs, who are also independent contractors. For instance

>The tight margins of the hack trade can leave cabbies feeling frustrated. “Sometimes, I don’t like it, because I have the potential to lose money,” said M. D. Islam, a cabby from Queens who has been driving for six months. He often earns less than $100 a day, he said; if his cab breaks down, or he can’t find passengers, he may end up in the red.

https://www.nytimes.com/2012/05/23/nyregion/new-york-taxi-dr...


Re: ABNB People book on this platform thinking it’s vetted somehow.

Well in an area I vacation there was a fatal fire at a weekly rental home with unlicensed electrical work, no working smoke detectors and no license to rent the unit (requires a town inspection). Of course the renters had used an app platform that gives them the illusion that these are somehow legal vetted and safe.

Instead you can end up in a rental with safety standards well below developing world standards.


> I get legislators want uber drivers to earn a living wage, but expecting uber to continue allowing unlimited amount of drivers to be "online", when they have to pay for them is absurd.

Uber gets to choose how many drivers to schedule at a given time. Expecting it to be unable to correctly-ish choose this number, when it's 50% of the work every other company has to do, is what's absurd.


> expecting uber to continue allowing unlimited amount of drivers to be "online", when they have to pay for them is absurd.

The market they operate is of their own making, there is no "free market" argument to be made here. What's absurd is the mischaracterization of what their constructed market can provide to its participants, particularly when people are apparently randomly banned from participating it as they please.


Further, from a markets point of view, by managing their market with micro-lockouts of drivers out during projected quiet periods, they are essentially setting a price floor such that riders are paying more than they otherwise might have.

Stock markets for example generally have circuit breakers and limit up/down rules that will put in pauses for a stock if there is too much volatility. However they do not institute asymmetric throttling by say restricting half of sellers from selling but allowing buyers orders through.


>Imagine a small restaurant doing similar //

These are 'zero hour' contracts a popular tool in the UK for businesses you screw over poor employees.

There is some utility for workers too - some people need to be able to say 'I'm not coming in today', or 'I'm leaving right now', often due to carer responsibilities though. The power lies with the business and the workers bad circumstances are often being exploited.


That's not the same though, in zero hour contracts you get told how many hours you being asked to work and you can decide to come in or not. You're not called into the restaurant to cook 2 burgers and the told we don't have customers right now so you're off work and the 20min when the next customer comes in you have to work again. Completely different scenario.

That's not like the scenario with Uber either though. Nobody is telling the drivers they have to work again.

It’s a classical example of how power bends all the rules.

I remember being unhireable. Piece work stuff like Uber where you didn't need a resume felt like the only possible way to make money.

This. The entire point of corporations is to shield individuals from penalties, but they don’t work. Business failure in good faith, where the shielding makes sense, is not really protected because bank loans require personal liability and because it’s impossible these days to recover from a damaged reputation unless you come from a family rich enough to hire its own PR firm. On the other hand, when it comes to letting rich people get away with absolutely unambiguous criminality, corporations work very well.

The corporate veil should provide enough protection from random and unforeseeable failures to encourage entrepreneurship, but not enough that it shields wrongdoers from consequences. Currently it shields nearly everyone from everything in nearly all cases from run-of-the-mill business failure all the way up to straight-up fraud.

It doesn’t shield small business owners in practice, though. Bank loans tend to require personal liability, and there are ways to pierce the corporate veil when the company is provably one person. So individuals get only a small amount of protection in practice. Even if you fail in good faith, there’s a good chance that your life and reputation are ruined.

On the other hand, large companies are basically private armies in which the presumably passive shareholders are so distant from the actions taken on their benefit that people almost never go to jail unless they are deliberately thrown to the wolves by shareholders or superiors.


>Currently it shields nearly everyone from everything in nearly all cases from run-of-the-mill business failure all the way up to straight-up fraud.

Tell that to Bill Hwang or Sam Bankman-Fried.


Bill Hwang and SBF committed the cardinal sin of business: losing other rich people's money. They both ran out of friends very quickly. Elizabeth Holmes was the same.

Came here to say the same.

Had they been scamming small investors, even for the same total dollar value, they might have actually gotten way with it.

Not only did they lose other rich peoples money, they lost money for people that were richer than them. Important distinction ..


ding ding ding

The problem is that only 0.01% of the people who need to be held accountable are. The number isn’t zero, clearly, but how many of the people who caused the 2008 disaster ended up in prison? My point exactly.

I also think it’s clear that SBF was jailed for his effects on the rich rather than on average people. Worse than fleecing billionaires, he made them look bad. Clearly he’s a scumbag who deserves prison time, but people worse than him are free.


>but how many of the people who caused the 2008 disaster ended up in prison? My point exactly.

>I also think it’s clear that SBF was jailed for his effects on the rich rather than on average people. Worse than fleecing billionaires, he made them look bad.

"The rich" was upset enough at SBF losing $32 billion to throw the book at him, but are totally fine with the GFC causing $2 trillion in damage to the global economy?


I get the feeling this was the plan from begining.

Sure, the plan (of LLCs) was always to limit liability but initially _who_ could incorporate wasn't literally everybody.

Like the founding fathers ran their business as themselves. There isn't some Monticello LLC that Thomas Jefferson was CEO of so if TJ did something bad then he's personally liable for it. This is what's changed and is the problem, people get LLCs in situations they really don't deserve them in.


What are you talking about?

While the lack of accountability for corporations is crazy, I’m a firm believer in the Cube observation: there is no master plan.

There is one master plan tho: might is right. It gets pushed back, but it seeps through every contention wall we have put up so far.

A flaw in human nature, but not a plan. There was no board meeting where people came up with it and set out a roadmap and had milestones and KPIs.

It’s an emergent property and it sucks, but there’s no conspiracy.


The owning class everywhere has always gotten together trying to figure out how to keep things the way they are.

Then what is coordinated lobbying

Countries with might is right systems don't have corporate ownership, they have personal fiefdoms.

IIRC the modern corporation as a legal entity was created in response to the high capital and high risk requirements embodied in early western shipping ventures. The first stock exchange ("bourse") for this was actually French(?) (hazy here, possibly Belgian or Dutch, and probably roots in Hanseatic League financing if not beyond). FWIW there's a whole subset of the antiques world which deals in share notes - promissory notes issued to people funding capital intensive ventures like new railway lines, often beautifully decorated and serial numbered for nominal security against forgery.

AFAIK the follow-on concern of manipulation of the modern legal environment as a tool for unencumbered multinational greed really began with entities like the East India Company being empowered by pontificating rulers back home granting because-I-said-so immunity for arbitrary actions outside their borders, thus establishing the ground work for industrial scale opium trading, piracy, slavery, and banana republics. We're in a period of relative reckoning now where the cash-piles thus accrued are facing some popular scrutiny, but there'll never be recompense. As we've reached the ends of the earth and new wealth to seize has become scarce, we've turned to speculation and beyond earth to mars, the metaverse, and media in general. Stock markets are largely society's greed temples and in some cases designed for money laundering (eg. Singapore stock market for the Burmese junta). Even small companies on the public markets are worth orders of magnitude more than you can earn in a lifetime, leading to an intellectual drain toward speculative systemic value extraction instead of productive ventures.

IMHO a naive hope of crypto was a reckoning, instead we received the opposite: increased speculation, libertarian multinational economics and now abject political profiteering. No action on critical issues like climate. Less international trust and diplomatic potential than we've had since WWII - truly, we are lost. But it's less a conspiracy than a back-scratching piggy trough of reverent greed-inertia, in which all pigs are created equal but a cabal of investment bankers are more equal than others. Meanwhile everyone else slave for their locally dangled currency carrot, backed primarily by golden handcuffs of mortgages, an inertia of ignorance, a charade of democratic process, increasing global population dependence on multinational trade to meet quality of life expectations, and conveniently captured choke points like identity (The End of the Nation State: The Rise of Regional Economies), food (Stuffed and Starved: The Hidden Battle for the World Food System), regulation (Preventing Regulatory Capture: Special Interest Influence and How to Limit It), international logistics (The Outlaw Ocean, International Shipping Cartels), energy (Energy Revolutions: Profiteering versus Democracy), education (Privatizing the Public University), media (Selective Control: The Political Economy of Censorship) and weaponized finance (Confessions of an Economic Hit Man, Mortgaged Democracy).

It is perhaps not overly hyperbolic to state that the challenge of our era is to determine a mode of capturing the power of emergent technology to undo this situation, and nothing less than the fate of the planet rests on doing so.


> It is perhaps not overly hyperbolic to state that the challenge of our era is to determine a mode of capturing the power of emergent technology to undo this situation, and nothing less than the fate of the planet rests on doing so.

Eugenics that select for altruism, empathy and cooporation and against greed and egotism. It's absurd to keep this subject taboo as we're staring down the apocalypse. Rather everyone goes down with the ship than consider something drastic that might go against what I was taught as a kid


Haha :) I think evolution shows centralist solutions don't end well. GATTACA comes to mind. It'd be nice if we all did something positive and chillaxed a bit instead of fervently lining our piggy-troughs to the detriment of all other piggies, non-piggies and future piggies. So practically, that means, like - don't marry an investment banker, a politician, or a sociopath corporate ladderite.

The current solution has been leading to the worst possible end.

Corporations are owned by people. Profit is distributed back to the society thru dividends. The largest shareholder category is pension funds, not billionaires. So effectively boomers are robbing younger generations.

Most profits are distributed by capital (like share price) increases rather than dividends.

Stock dividends and stock price appreciation are two sides of the same coin. Both are "money returns to investors in the business".

All that differs between them is the tax treatment each gets come tax time.


> All that differs between them is the tax treatment each gets come tax time.

And that if you hold a stock for say 10 years and somehow sell during a recession you could make ~0$ on that stock if it only did buybacks. While with a dividend you'd have come out ahead.

Conceptually they have very different incentives as well. With buybacks you want a company to have high volatility as well as to make short term decisions so that you can buy a dip, ask for say lay-offs, and sell as it goes up. With dividends you want the company to make longer term strategic decisions so that their revenue goes up and you get a larger dividend.


> And that if you hold a stock for say 10 years and somehow sell during a recession you could make ~0$ on that stock if it only did buybacks. While with a dividend you'd have come out ahead.

A stock with buybacks should be compared to a stock with dividend reinvestment.

If you do something other than reinvest dividends, you should sell some shares every year.


Share buybacks and dividends exist and are used in the approx same ratio, so it's probably incorrect to say most profits. Also buybacks do not change the pool of dividend receivers.

Data from 2023, by Aswath Damodaran, says that 40.87% of companies are doing buybacks and that buybacks are 64.28% of all cash returned [1][2]. US is leading in this segment here wrt to rest of the countries.

[1] https://aswathdamodaran.blogspot.com/2023/03/data-update-7-f...

[2] https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg...


What kind of evidence would you need to see to no longer view corporations in this light?

Blaming all your problems on old people isn't any more attractive than blaming them on Jews/women/queers/etc.

You're reading this on a device made in an underpaid Asian sweatshop, wearing clothes that are the same. Old people with pension funds are no more or less complicit in the brutality of the system than you are. Try blaming the people who are causing this situation on purpose, not the millions who are just trying to navigate it as best they can.


I hate that ever since I was a teen in the 80's I've been encouraged by government policy to put my retirement into pension funds which invest in the stock market, thus justifying all manner of immoral and unethical business practices in the name of protecting pensioner savings.

I am complicit in a rigged system with no escape.


It's possible to save pension by investing without pension funds. However the trick is that most pension funds are underfunded and run like a Ponzi, thus constantly need larger and larger group of young people to fund them. If and when this system collapses is going to hurt the government and that's why the encounrage to keep the Ponzi going.

The whole concept of "retirement" where old people are allowed to relax and be supported by young people, compared to the old days when people just worked until they died, requires enough surplus productivity from young people to look after old people as well as themselves.

If the population pyramid inverts and there are too few young people, the whole concept of "retirement" becomes unsustainable, unless AI advances enough to make up the lost productivity.

Pensions are just a way of formalizing the obligation to old people, but they are not themselves the root source of the problem.


Setting aside that 'too few young people' is by definition when there's a problem, thus making it a tautology, there's a lot we can do by changing our views of what retirement means.

Retirement should not mean a life of air travel and cruises, achieved by pension savings.

Retirement should not mean continuing to live in your 2,500 sq. ft. ranch house in the suburbs with only car access.

John Maynard Keynes famously predicted we would be working 15 hours a week due because of increasing productivity. Where did all that productivity go?

If it's because we believed we needed ('deserved') more, then change those beliefs. If it's because of the concentration of wealth into the 0.01% then AI productivity improvements won't fix things.

The AI-mongers sell the false and unsustainable promise that AI will magically solve things so people don't need to change their habits.

Yet we can achieve a lot of savings by building more compact areas to live which don't require a car, and by building mass transit with the needs of the elderly in mind (no steps, low-frequency lines which run through neighborhoods, for those with limited mobility, etc.)

We can save money and get better health outcomes with a tried-and-true single-payer health care system done in every other developed country (eg, "Medicare For All".)

That can all be done now.

Yet we aren't. Because it's easier, and more profitable to those with money, to ignore the festering problem, with the fig leaf of 'AI' or some other future technology, and let someone else deal with it,


Also in many cases we must accept the fact that people die. And some times keeping them alive is too costly or take too much labour. I admit it is horrible realisation, but I think inevitable one.

Sure. And also long recognized by the 'tried-and-true single-payer health care system's I referred to.

The US system has worse overall health outcomes, so it's like we aren't really trying.


You would have been dependant upon the market either way. Even if it was a public pension model via taxation guess where the funds would come from? The market. All matters of trade-offs would affect the viability.

Not equally dependent.

Like, with the US privatized medical system and its parasitical medical insurance system, we can see how medical costs are higher and overall health outcomes lower than in countries with single-payer/national health care.

And if I happen to choose a health insurer which decides my cancer treatment is inappropriate, I'm either bankrupt or dead.

Yes, I'm still dependent on healthcare, but one is better aligned to my health.

Similarly, the personal pension system requires staff and/or custom software to handle customer relations, and the individual funds have marketing budget to convince people to join. This disappears with a nationalized system where it can all be part of the same social security system, and benefit from the economy of scale.

Furthermore, companies justify all sorts of unethical practices because they point to all the (abstract) pensioners who will lose their retirement, which relies on those pensioners not being able to say 'no, don't do it in my name.'

While something like the Government Pension Fund of Norway can select funds and influence the corporate governance in a way which is aligned with national goals.

Yes, there are all sort of ethical funds I could invest in. The paradox of choice and my complete lack of expertise means I must hire that expertise, like when I got advice when I set up my account.

Furthermore, if I happen to select green energy stocks, but they go down the toilet after the invention of Mr. Fusion, I'm currently screwed. While a public pension has the mandate of supporting everyone.

Yes, I'm still dependent on stock investemtns, but one is better aligned to my retirement.

Lastly, the government can raise money from taxes. The government can pay for more nurses and doctors, and training hospitals. The government can pay for high-quality retirement housing. The government can do a lot of things that a private pension plan cannot do.


>Contrast that to how individuals get the hammer put down on them by the justice system if they so much as fart in the wrong room. The lesson from the last 50 years should be: If you want to commit a crime and get away with it, do it as a corporation.

That's because most crimes "individuals" do are straightforwardly illegal and easy to prosecute, whereas the "crime if a corporation does it" are not. It's not any different than say, simple property crimes (eg. stealing or vandalism) vs white collar crimes, both of which can be perpetrated by individuals but the latter are far harder to prosecute. Stealing a candy bar is an open and shut case, especially with surveillance footage. A long firm fraud[1] is far harder to prosecute. If you buy a truckload of candy bars on credit, fail to repay the vendor, and declare bankruptcy, prosecutors are going to have a hard time prosecuting the case. Having bad business acumen isn't a crime, so on the surface nothing illegal has happened. To prove wrongdoing they must prove that you intentionally acquired goods on credit without intending to pay it back, which is far harder.

[1] https://en.wikipedia.org/wiki/Long_firm_fraud


> That's because most crimes "individuals" do are straightforwardly illegal and easy to prosecute, whereas the "crime if a corporation does it" are not

Maybe that’s something that should be adjusted by a legislative body.

Crimes are only “easy” or “difficult” to prosecute because of the laws as they’re written.


>Crimes are only “easy” or “difficult” to prosecute because of the laws as they’re written.

Yes and no. Yes in the sense that you can make crimes very easy to prosecute, no in the sense that doing so usually makes unobjectionable or even good behavior illegal in the process. Take insider trading for example. It would be very easy to simply make selling the stock of a company you work for, or are in any other way party to, outright illegal. But this would be bad for a lot of reasons; it would make it harder for businesses to compensate employees, it would encourage employees of successful companies to leave early taking important business knowledge with them, etc. Some behavior is simply harder to make illegal because it's harder to identify by its nature, which subsequently makes it harder to enforce laws against it.


> Yes in the sense that you can make crimes very easy to prosecute, no in the sense that doing so usually makes unobjectionable or even good behavior illegal in the process

I’m no legal expert, ofc, but I’d bet that a good enough legislature could strike a balance that society can be okay with.

Whatever we have now isn’t that.


You could just say employees get a blackout period each year where they can’t buy or sell company stock.

Sure, there are always compromises that can be made and my point wasn't about insider trading specifically, it was that there are tradeoffs to consider. But let's take your example, how long is the blackout period and how long is the open period? I would contend that there is almost no open period short enough that a motivated insider couldn't trade on their non-public knowledge if they were "lucky" enough to have it during the open period, so you're kind of back at square one where you still need the SEC and DoJ to investigate and borderline cases will slip through the cracks. And for everyone else, they've lost some liquidity in case of personal emergency, etc. Again, this isn't to argue against blackout periods specifically, they might be good policy, just pointing out that law and law enforcement is not always easy.

That's basically what SEC Form 144 is.

DoJ Put hundreds of J6 fools behind bars because they aren't monied and influential enough to drag out the process. Meanwhile, Georgia has a mountain of criminal evidence from four years ago and they haven't gotten anywhere but for a few guilty pleas from the low level stooges.

I had a similar view during the GFC.

Clearly crimes were committed, and clearly layers and layers of management were in on the joke, but only the few little fish at the bottom who were dumb enough to ever put things into writing with a paper trail went to jail.

A lot of the alleged rogue traders were far less rogue than their employers would like you to believe, similar with the LIBOR fixing scandal, etc.

J6 is very similar because there will never be a paper trail of the Orange man sending written orders to storm the Capitol. Everything is a wink and a nod.

The guy at the top never actually says the thing, the next rung down maybe says it but only 1-1 in-person in a secure environment, a few levels down maybe a phone call & hopes not to be tapped, a few more layers down you start to get to the idiots who send a text/email.

Akin to the Mafia.


> The guy at the top never actually says the thing,

Georgia literally has a recording of a criminal threatening to retaliate against a public official if they don't rig the election.


To be fair that was the one instance they have him dead to rights, true.

It is a bit unexpected I suppose for a normally friendly party to be recording your phone call. He did work in a less regulated environment than banking so recorded phone call probably caught him by surprise. No one was that dumb at banks (most calls are recorded and there’s often even a beep to remind you the line is recorded).


Most crimes done by individuals are intentional. That is most often not the case with corporations. Intentionality is an important requirement in most crimes.

That doest mean that there isn't plenty of room for more centralized civil protections against negligence and recklessness.


That's a big assertion to make without any evidence. There's a lot of individual crime which is not intentional (e.g. driving related) and there is a lot of corporate crime where someone clearly made a decision. In particular corporations employ lawyers so they have people qualified to decide if a crime is likely being committed.

Interestingly, driving infractions are mostly noncriminal.

Corporations are giant responsibility diffusion machines and more often than not they stumble into illegal activity rather than internally commit to it. Hence, they are not acting intentionally. Also relevant is my assertion that this bumbling illegal behavior also needs better enforcement - it's just civil in nature and not criminal.


I guess if our goal were to stop this sort of corporate behavior, we would remove the requirement of a crime being intentional for corporations.

> we would remove the requirement of a crime being intentional for corporations

You still have the problem of punishing diffuse guilt. The correct answer is fines. Massive fines, potentially to the point of bankruptcy. We don't like to do that, however, because corporations have many stakeholders who may not deserve punishment, e.g. employees.


No, that's not why "we" don't like to do that, as there's countless way around that problem. They don't like to do that because it hurts the main stakeholders: those holding the reigns, the 0.1%.

There's countless ways around the issue of "average" employees being punished. E.g. hard caps on top employee compensation for X years. Bans on dividends.

Forced stock dilution, now that's a solid one. Create extra shares equivalent to 20% of market cap, given to the government who sells them on the open market.

I'm sure there's holes in these but plenty of smarter people than me who can easily make them watertight.


> countless ways around the issue of "average" employees being punished. E.g. hard caps on top employee compensation for X years. Bans on dividends

How do either of these help an employee of a company that was just poofed?

> there's holes in these but plenty of smarter people than me who can easily make them watertight

No. There aren't. Both the caps you proposed--capping dividends and salary--have known workarounds. Stock buybacks exist because they're more tax efficient than dividends. Health insurance is tied to employment because in WWII the U.S. government capped wages.

There is really one solution to corporate malfeasance: criminaly prosecuting where you have evidence of individual criminality and massive fines in every other case. We bankrupted our automakers without hurting their jobs. That's actually less intrusive than trying to fuck with their capital structure by e.g. banning dividends, which just incentivises leverage.


I agree the correct answer is fines, but I disagree that the government should concern itself with whether or not the company decides to take it out on employees who don't deserve it. It's up to the company to decide how it should be run. As long as the government disincentivizes the actions by making the fines high enough, that is good enough.

> I disagree that the government should concern itself with whether or not the company decides to take it out on employees who don't deserve it

Those employees disagree with you and they vote. Every district has large employers whose employees would, as a voting bloc, flip a primary or even general election.


I honestly don't believe this is the case. I think Americans would largely support increased fines for corporate malfeasance. I think it much more likely that the large fines aren't assessed because those in the position to be fined also as a rule have more influence over the system itself. Though the result is the same in the end I guess.

> Americans would largely support increased fines for corporate malfeasance

Americans do. But every time it comes up, the discussion gets derailed with these ancilliary ideas. Just look at this thread. Fines are old and boring.

> the large fines aren't assessed because those in the position to be fined also as a rule have more influence over the system

There is also the practical matter of the power to levy large fines being, itself, immensely powerful. You don't want to create a fine czar only to lose control of them in a term or two.


> You still have the problem of punishing diffuse guilt.

Corporations are hierarchical.

> however, because corporations have many stakeholders who may not deserve punishment, e.g. employees.

Hiding behind the employees. The ones with the least stake in the company. That’s a classic.

They might have their two weeks notice. What else? “There might be no other jobs around?”

Class collaboration is a lie.


> They might have their two weeks notice. What else? “There might be no other jobs around?”

"Let them eat cake" isn't a winning pitch when it's your job on the line.


You are trying to turn “the corporations are committing crimes” into “the peasants are starving”. I know that this is board of diverse backgrounds, but you have to be very out of touch for that hilarious reversal to be convincing.

> You are trying to turn “the corporations are committing crimes” into “the peasants are starving”

No, I'm pointing out the real limitations on the types of punishments that folks--typically on the left, with good intentions but breathlessly naively--like to propose. Ignoring the board doesn't make you a smarter player.

I'm then pointing out the option that works within those limitations to exact tremendous justice. The option that when it comes up, anyone in its crosshairs will immediately start pointing to hare-brained schemes like a "corporate death penalty" to get out of. Massive. Fines.

(For those who prefer jail time to fines, do you really thing Bytedance's CZ would trade his 6 months in jail for the tens of billions he's personally walked away with?)


I have been thinking. Maybe corporate fines should work like civil forfeiture. You do not attack the corporation, you attack the shares. You fine individual shares. And fines could be larger than value of the share. Next time it is sold the sale price goes toward the fine. And so does any dividend paid.

> You do not attack the corporation, you attack the shares. You fine individual shares. And fines could be larger than value of the share.

You're again reinventing corporate fines in a way that makes them problematic. You've not only dissolved limited liability, which makes investing in equities a rich man's game, you're proposing going after tens if not hundres of millions of Americans if a single Fortune 500 breaks a law. That's mechanically impossible.

> Next time it is sold the sale price goes toward the fine. And so does any dividend paid.

Poor people pay the fine. Rich borrow against their shares.

None of these problems exist with massive fines. None of them add anything, procedurraly or punitively, over massive fines. The idea that shareholders are going to do legal scrutiny when many professional investors barely read public filings is laughable. Re-inventing fines is rolling your own legal system when we have centuries of good law to rely on deriving from corporations suing each other.


That or sharply raise the severity of lesser offenses if the perpetrator benefits financially from negligence with potential penalties including (a) corporate death penalty (revocation of charter) (b) nationalization.

Isn't that already the case? For instance Wells Fargo was fined $185M for fraudulently opening accounts customers didn't want[1]. Wells fargo (ie. management) weren't scheming to fraudulently open accounts. They only set aggressive sales goals, and that caused some employees to go rogue and commit fraud themselves.

[1] https://en.wikipedia.org/wiki/Wells_Fargo_cross-selling_scan...


I'm skeptical that the intentions of the Wells Fargo executives were pure and white as the driven snow.

The incentives align to encourage executives to commit crimes in service of short-term gains — even in the extreme case of Wells Fargo, Carrie Tolstedt and John Stumpf have both avoided prison time and ended up money ahead to the tune of tens of millions of dollars, even after clawbacks and fines.

Not only shouldn't intent matter, we should assume the worst. Whether assuming the worst is a workable enforcement regime, I don't know — but it most accurately models a reality where the most rational behavior for executives is indifference to the law.


How do you know that lacked intent? It just sounds like cover for intent

The point isn't that wells fargo management didn't scheme to intentionally defraud customers, it's that the government was able to punish wells fargo for defrauding customers without having to prove they intentionally schemed to do so.

I'll disagree with the point that corporate crimes aren't intentional, they most certainly can be. There are plenty of examples of companies deciding that it's more profitable to "do crime" and just pay the fine if caught. Danske Bank famously have a post in their budget to pay fines for breaking banking laws.

The problem is to prove that something is done intentional, on a "corporate level", whatever that means in the given case. Imagine having a law where breaking it would mean that the business have to shutdown. A competitor could pay off someone inside the company to break the law deliberately to have the legal system remove competition.


This is a bullshit argument that people in charge of these companies make. How do you know the "thief" that stole merchandise from a store wasn't going to come back to pay for it in an hour? You don't... you just assume the worst, which should be the case for corporations.

It's not a bullshit argument, it is a battle tested argument with a long history.

Is it roughly the same long history as the long history of corporations getting away with crimes that individuals could not?

Yknow maybe the modern day requires rethinking of some regulations regarding corporations.


> That's because most crimes "individuals" do are straightforwardly illegal and easy to prosecute, whereas the "crime if a corporation does it" are not. I

Yes, but why are individual crimes easy to prosecute and corporate crimes not. These are not things that just popped into being like a thunderstorm. They are a part of an economic and social system that makes things in such way.


The GP did not mean "individual crimes". The meaning was: "most crimes that an individual will commit turn out to be easy to prosecute".

I.e., shoplifter steals candy bar, surveillance camera has clear view of the shoplifters face, and of the theft, and security camera in parking lot gets license plate of car they drive away in. Easy conviction for prosecutor, as there little question of who committed nor of what crime was committed.

Contrast that with the GP's example "business type" crime. To prove the "business" committed a crime, they have to find a way to prove the business, when buying the truckload of candy bars, at the time of the purchase, intentionally never intended to pay back the loan taken out to buy the truckload. Proving intent (i.e., effectively "mind-reading") is way more difficult than proving a crime happened in the "shoplifter" example above. There's no security camera footage recording the "intent" of the business when it purchased the truckload of candy bars.


That does not refute their main point:

> They are a part of an economic and social system that makes things in such way.

It’s difficult to prove intent but we make that necessary to prove when it doesn’t have to be. It could be that negligence is enough for it to be a crime.


Negligence has the same problem as intent.

The difficulty with corporations is that demonstrating anything about their behavior at all (negligence, intent, ignorance, malice, stupidity...) requires doing so for a corporate body, in the sense of that word that refers to a thing visibly composed of many other distinct things.

What does a corporation want? What does that question even mean? Was a corporation negligent? Does that refer to its officers? Its employees? Specific employees? A written plan?

It's not that hard to come up with a definition of what you mean by a corporation for the purposes of defining a specific type of behavior. For example, you may regard negligence as being a property of the board, exhibited by the decisions the board makes. However, any given definition likely misses cases where a reasonable person would still tend to feel that "the corporation was negligent".

This doesn't come from the for-profit aspects of a corporation, or its existence as part of a capitalist economy. It comes from the aggregate nature of a corporation, and talking about any sort of intent-ful behavior in the context of an aggregate is challenging.


For lots of problems the boring answer is: because there is no easy solution. For me as a software developer, I can imagine a lawyer asking "but why are there so many bugs in applications?".

Would we be able to have a world in which there are almost no bugs? Yes, definitely. Would that be a better world?... I tend to say no. Because we trade more bugs for faster development. Because not all bugs are critical. Because some requirements are not completely consistent. And other reasons.

I imagine it's the same with the law. That is not to say there are no improvements to be made, but unless multiple people with lots of experience in the field come and say "this would be better with no side effects" I would be cautious.


> They are a part of an economic and social system that makes things in such way

If you're trying to imply such crimes are hard to prosecute because The Powers That Be™ deliberately made it that, how does that explain the difficulty in prosecuting long firm fraud (and other white collar crimes)? You can argue that price fixing being hard to prosecute helps "corporate America" or whatever, but basically everyone is united against long firm fraud. Yet, it's hard to prosecute. Why is that?


The thing to look for would be the way that making long firm fraud easy to prosecute would lead to companies being accountable for things they don’t want to be accountable for.

Like what? Moreover, what does this hold for public policy? Should we bring back debtor's prisons? That would be the obvious solution to long firm fraud.

I’m not an expert, but the way you wrote your comment seemed to be discounting this possibility for no discernible reason

Debtor's prisons were widely considered to be cruel, which is why they were abolished basically everywhere in the developed world.

Ok? I’m not arguing about debtors prisons? I’m not sure why you’ve focused on it

>I’m not arguing about debtors prisons? I’m not sure why you’ve focused on it

Because that's seemingly what you were asking about? If not clarify what you originally meant rather than beating around the bush then being surprised when people aren't focusing on the things you want.

>>>Like what? Moreover, what does this hold for public policy? Should we bring back debtor's prisons? That would be the obvious solution to long firm fraud.

>>I’m not an expert, but the way you wrote your comment seemed to be discounting this possibility for no discernible reason

>Debtor's prisons were widely considered to be cruel, which is why they were abolished basically everywhere in the developed world.


My point is just this: it seems like there are a million reasons that all of the following could be true:

* policy is majorly influenced, to the point of near dictatorship, by shareholder profits

* thus, crimes perpetuated in the name of these profits are vague, hard to define, hard to prosecute

* some white collar crime, that shareholders despise, remains difficult to prosecute despite being aligned with the interests of this dominating power


At least a portion of this question from personal opinion goes towards how "united" the general "everyone" is against fraud.

The idea is similar to Tragedy of the Commons issues. The collective community, or aggregate view is "fraud bad", yet the individual, provided opportunity and anonymity, acts in the their own self interest, especially where punishment is viewed as difficult or low plausibility.

Similar issues occur with the general concept of honesty, and views of social honesty. Surveyed, personal belief is that most respondents would state that other humans should reply honestly, with accurate information. However, many, in personal action and isolated opportunities are quite willing to embellish, neglect to correct a mistake, or outright lie.

Neglecting to correct a mistake is one of the most difficult, and shows up quite frequently in markets. With the markets often congratulating recipients for taking advantage of fools who priced something "wrong." Lots of various rationalizations that then get used. "Its their own fault", "they won't notice the difference", "I'm just more clever", "we deserve it because of our status", ect... Usually, seems more frequent the further away, the less personal, and the more abstract the lie or theft. Much like the article title. Office Space did this joke a long time ago.

  Peter: Ah no, you don't understand. It's very complicated. It's, uh, it's aggregate, so I'm talking about fractions of a penny here. And over time they add up to a lot.
  Joanna: Oh okay. So you're gonna be making a lot of money, right?
  Peter: Yeah.
  Joanna: Right. It's not yours?
  Peter: Well it becomes ours.
  Joanna: How is that not stealing?
Mileage may vary on the comparison, yet I found similarities with a lot of entertainment media, that eventually made me pull away. Personal belief is most respondents are opposed to their own suffering and torture, yet quite happy to read / watch media that often amounts to systematic character torture. Laugh happily eating popcorn while miserable people on screen suffer, yet would not want to be transposed into the same situations. It's ok, its abstract, and not especially personal. It's just entertainment.

That's true, which is why we should be heavily focused on keeping corporations small, discrete and weak enough to drown in a bathtub when they act up.

That's like saying "you can tell this is an Aspen by the way it is". The idea is that we should have control over those laws dude. We didn't just spawn in a video game and are forced to deal with it. "Cause that's what Dad says" isn't how it's supposed to be.

>The idea is that we should have control over those laws dude

Okay, what should we do to tackle long firm fraud?


Make the leadership (partly) liable again and create incentives against such happenings.

Overturn citizens united and/or fully treat businesses like a person (jail, death).

>Overturn citizens united

Who are all the people lobbying to keep long firm fraud hard to prosecute?

>and fully treat businesses like a person (jail, death).

Getting stuff on credit and then defaulting on the debt isn't illegal for natural persons either.


I have to believe you are a bot.

> That's because most crimes "individuals" do are straightforwardly illegal and easy to prosecute, whereas the "crime if a corporation does it" are not.

That's part of the point and problem because it is by design. Rich people and corporations like treating their problems as so complex as to be completely intractable. "How do you tax me when I don't have income?!" "How can I be responsible for a system of decisions?!" Etc. Rich people and corporations want nothing but upsides, and they have designed the system to work this way.

A great example of this is Steve Cohen, who got away with insider trading for years. https://www.youtube.com/watch?v=1szayJV505M. You're telling me that a small business owner whose direct reports repeatedly commit and are convicted of fraud would just be able to walk away? Yea, right. In Cohen's case, he just walked away and bought a sports team.


Sure - then don't let them get big enough that they start to affect public at large. Name and shame the company, not the individuals. Let the public and market decide if such a company lives or dies. Right now, we are letting them get big enough that they are turning back and are eating us.

The era of trump will accelerate this further. Not that Obama Biden were saviors, Trump and co are putting fuel on the fire

We need to start seizing IP into the public domain and sending shareholders to jail when their companies misbehave. I'm on the hook if my dog bites somebody, it should be no different if the role of my dog is played by a company.

Monetary risk is not a real enough risk.


While I’m sympathetic to the sentiment, I don’t see how “sending shareholders to jail” could possibly work, given how many people own shares. It’s like your dog would be collectively owned by a million people. Maybe you mean the board?

There is no room for million people in any jail system on the planet.

What should happen is to send the share price to zero or give to the government.

This was e.g. done with 2008 financial crisis for Fannie Mae and it had been paying dividends to the US citizens since then.

However there exists discussion whether this was a good thing in the end.


FYI, the US prison population is 1.2 million.

Obviously that's not the same as havingva million of currently empty capacity, but still.


Some of the largest shareholders include pension plans and every day peoples retirement accounts

Yes, I got voted to oblivion for stating this

https://news.ycombinator.com/item?id=42831013


To continue the analogy, if a dog is aggressive and hurts people it gets put down, why not put down the corporation?

Because the ripple effects are much larger. Lay off a few thousand people in most cities and you’re sinking all sorts of businesses that had nothing to do with the crime.

Putting down a corporation doesn't necessarily mean ending a productive operation. Employee or government takeover are options too.

Right, just transfer ownership to the employees and let them decide which leaders to keep around.

So it’s good for employees when the company does something criminal? That seems like misaligned incentives. If you and I can engineer a crime, we can seize all of the stock from shareholders?

I don’t think these solutions are well thought through.


I do think judicial dissolution is underused, but it should require a rather high bar of malfeasance. Significant penality for executives or the board seems like a more sensible first step in general.

I figure the sentence would be something like:

> 5 years of jail time distributed across the top 20 shareholders proportional to their stake

Ideally a judge wouldn't hand out such a sentence if it involved punishing people who didn't have a controlling stake, but I don't think we should rule such things out. I can be held criminally liable for negligence when my dog does something that I wasn't even around for or aware of, there's no reason that shareholders couldn't also. If you don't have enough control to prevent your property from committing crimes, you should probably change that.

I don't know enough about where corporate structure norms stop and where the law starts to know if "the board" is something that is always going to be available for prosecution, which is why in general I mean the shareholders.


A charitable reading of that would be shareholders who have enough sway to push corporate action. Boards, really.

But the board is just an elected representative of the shareholders. They don't necessarily own anything and they don't have day-to-day insights over the company, which is where the details of crimes lurk. They might not even have any direct financial interest in the company, and instead they're employed by an institution to represent their interests.

"Shareholder" are not people who own a stock in robin hood.

It's large players with board positions who reap the benefits and turn a blind eye to blatant corruption.


> "Shareholder" are not people who own a stock in robin hood.

If you own even a fraction of a share of a business (say IBM), you are, by definition, a "shareholder" in that business. It does not matter if it is via the RobinHood app., or a JP Morgan Chase Premier Brokerage Account.


Yeah, this place is starting to sound like reddit. Unhinged SJW everywhere.

It's not about justice, it's about designing incentives to prevent future bad behavior.

If you have neither control nor information that is sufficient for betting that the investment won't harm people, don't invest.


I own stocks in several companies, as most people on here probably do. There's nothing wrong about what they're saying, I'm a shareholder. If one of the companies I've invested in commits genocide I don't think it would be unfair for me to be punished in some way beyond the monetary loss of my investment.

Though I agree that monetary punishments to the company are much more effective than jail for some random shareholders. They just need to be large enough.


The people on the board are rarely the largest shareholder. In the case of both Google and Facebook, the board doesn’t really have too much control at all since the founders hold the majority of voting power.

That would be like you sending the whole family to jail if one of them commits a crime. They are separate legal entities.

No, it would be like sending one or more family members to jail because of what their dog did. If the family can't agree on who is responsible for the dog's behavior on their own, it's not crazy to distribute the sentence to more than one family member.

Dog isn’t a legal entity.

Corporations can't be jailed, so if the sentence would otherwise be jail time, neither are they in any way that matters.

So should every one who owns stock in a company - including mutual funds go to jail?

Maybe? It should at least be debatable, not taboo, to consider. One's investment into a criminal enterprise could arguably be contributing to or encouraging that crime. Having this nearly-impenetrable corporate veil that shields decision-makers, footsoldiers, and funders (both institutional and retail investors) from consequences of their actions seems like the extreme end of a spectrum that should be explored. But when you even bring up that it's a spectrum, people clutch their pearls and trot out the "think of those poor retiree passive investors" line that shuts down thought and prevents even considering change.

> It should at least be debatable, not taboo, to consider

It's not taboo, it's stupid and unworkable. You're proposing sending half of America to jail if any Fortune 500 commits a crime. That's a get-out-of-jail-free card, not meaningful deterrence.

Massive. Fines. Everyone keeps trying to be creative about penalising corporations without levying massive fines. Just levy the fines. You don't need to lay anyone off, you're just wiping the shareholders (and management) of their wealth and transferring ownership to creditors.

The "corporate death penalty" was the greatest invention of the corporate lobbyist. It successfully derails conversations about massive fines, which are workable and scary, into ones about charter revocations and whatnot, which is not.


Agreed that massive fines (or, in my view preferably, massive stock dilutions) are better. However

> You're proposing sending half of America to jail if any Fortune 500 commits a crime. That's a get-out-of-jail-free card, not meaningful deterrence.

This is a poor argument.

If the law would be as such and be upheld, everyone would start making damm sure the companies they invest in are trying their hardest to adhere to the law. It would also work as a strong counterbalance to megacorps. Both which would be incredibly positive developments.

It's similar to rules in football. "Well if you start carding players for getting angry at the ref then half the team will get a yellow card every game!". Yes, the very first game this might happen. The second and third it sure won't.


> If the law would be as such and be upheld, everyone would start making damm sure the companies they invest in are trying their hardest to adhere to the law

So everyone in the US is going to do due diligence on all 500 companies in the S&P 500?

Also you act as if the majority of Americans care about the law or ethics? You do remember the election we just had don’t you? The support that the majority has for 1500 criminals who just got pardoned?


No, just Fidelity and Vanguard (and S&P themselves) have to do due diligence for this sort of thing. In reality though, if $100 billion fines were on the table for companies like uber, that diligence would be priced into the stock and it would be far more effective.

> just Fidelity and Vanguard (and S&P themselves) have to do due diligence

You're proposing bankrupting millions of Americans' retirements because Uber didn't follow local taxi rules?

> if $100 billion fines were on the table for companies like uber, that diligence would be priced into the stock and it would be far more effective

Yes. Again, we're re-inventing massive fines.


I don't think that scratches the itch. The point is to hold people personally responsible for what their money is doing. Mutual funds should be risky business because they obfuscate important details from the person who's making the decision--that's not a recipe for markets that work well.

> If the law would be as such and be upheld

It wouldn't be upheld. It couldn't be upheld. The first time somebody were stupid enough to try to uphold it, it would prompt a popular firestorm that would undo its effects. (I'm not even approaching the numerical impposibility of attempting to enforce something like that.)


The way I've been imagining it, the jailtime would be allocated among the top 5 or 10 shareholders according to their stake.

The thing you are suggesting is jailing every adult American with a 401k when a corporation misbehaves.

You say that shouldn't be taboo, it should be debatable. Alright, I'm listening, tell me how that wouldbsolve more problems than it would create.


Nobody said every shareholder would go to jail, just that it should be more common that some of them do.

But supposing that you did propagate it to every shareholder... I think that creating an incentive to divest in companies that are likely to commit crimes, and to avoid financial instruments where you can't be sure just what it is your money is up to, would create a much healthier investment environment. There would be more homework done before deciding which companies ought to get the boost. As it is, there are no market forces working to prevent cases where investors are enabling activity that are harmful to the rest of us.

Those mutual and index funds where the investor is disconnected from whatever harms their money is doing are a hazard to us all. Investing should mean understanding what you're investing in. The whole system needs more types of risk, it's currently like a car with no steering wheel.


> Nobody said every shareholder would go to jail

You didn't, but the person I replied to did.

Two comments up was:

> So should every one who owns stock in a company - including mutual funds go to jail?

And the person I replied to says maybe so, let's consider it.

56% of US civilian workers have a IRA/401k or other work retirement plan. I say no, let's not consider jailing a majority of the country's working population.


So you propose putting 40% of the population of the US who have money invested in the S&P 500 in jail?

I’m not proposing that at all. False dichotomy. Is it possible that there is a reasonable middle ground somewhere between “shield everyone involved in corporate wrongdoing” and “send every investor to jail?”

Your words were

> One's investment into a criminal enterprise could arguably be contributing to or encouraging that crime

Every shareholder is an “investor”. Well not really, when you buy a stock unless you buy at IPO or secondary offering, you are buying an ownership share from another holder.

So if you really want to go after “investors” you would have to find all of the investors who invested before the company went public and the ones who bought at IPO.

We also have to go after any bank who lent the company money since they were also “involved in the criminal enterprise”.

In the case of Amazon, you would definitely have to go after Bezo’s ex-wife since she is a major shareholder.


You're reading the post of the OP uncharitably (which is against the rules) and are deliberately misinterpreting their words into ridiculous extremes.

Please unlearn that.


How would you read it “charitably”? Be’s repeatedly said that all investors should be criminally on the hook for crimes committed by the companies they invest in.

yea sure let’s make taking risks even harder

we as a society are better off when people take risks


That's only true when they're risks associated with outcomes that people generally find favorable.

If the corresponding reward is that I pull off a successful crime, then we as a society are worse off for having funded the risk.


Contrast that to how individuals get the hammer put down on them by the justice system if they so much as fart in the wrong room.

The thing is though - in America people are corporations except of course no one will teach you that. Open an single-person LLC and boom - you are now corporation. Have a rental, move it under LLC, own a car, LLC… now you are corporation (with limited to no liability) :)


You have to be very careful with this, especially as a single person corporation.

https://en.wikipedia.org/wiki/Piercing_the_corporate_veil

Moreover most of the difficulty in prosecuting corporate crimes comes from the fact that responsibility is spread across multiple people, that it's hard to prove anyone did anything wrong. Obviously that won't work with a single person corporation.


That’s not quite true. It’s just the first step. Your business then has to observe and perform all the required customs and ceremonies (board meetings, etc.) in order to be respected by the law. Otherwise a court can “pierce the corporate veil” and find individuals liable for their actions.

I am speaking from personal experience… all those customs and ceremonies are formalities you pay a company few bucks a month to handle for you…

What companies do this for you? I wasn't able to find any in a few minutes of research. I found several that operate as a registered agent, but that's just one piece of the puzzle.

My favorite example is PG&E: convicted for 84 counts of involuntary manslaughter after the Camp Fire, the punishment was… a $3.4 million fine, because you can’t incarcerate a corporation.

https://www.abc10.com/article/news/local/wildfire/pges-mansl...


This has actually been partly why when people ask me about my business I tell them it sometimes feels more like a statement about incorporating yourself.

Minus the crime part to be clear. I actually try to hold myself to a high ethical standard.


If you go down the list, every single reason written or not that illegal taxicabs for example are illegal doesn't apply to ride sharing platforms this is why you see such a major propagandist push from taxi companies about Uber drivers being rapists, serial killers, mass shooters etc while taxi drivers are angles.

The laws exist for a reason and it's not to protect the wages class of people who drive taxis. Since ride-sharing doesn't break the letter nor the spirit there is very little desire to change laws to make it illegal.

An individual choosing to break the law on the other hand, well, we've already seen what happens, things get bad fairly quickly as opposed to the decade plus of relatively spotless service from Uber and similar companies. There is even a statistically significant gap in DUIs compared to certain cities that banned ride-sharing companies, though I haven't seen a proper meta-analysis yet.


This is only gonna get worse, we just had the CEOs of massive corporations actively campaigning for the current president.

This also happens in the EU, tho.

there are some exceptions, when US jails EU CEO https://www.theverge.com/2017/12/6/16743308/volkswagen-olive...

Make company leadership (partly) liable again and create incentives against such happenings.

I’d say “it’s not a crime if ur rich” or “it’s not a crime if ur powerful” is more fitting.

This will get worse soon with the oligarchs in power.

And by the way, this is preaching to the choir. Nothing will change if we keep echoing the same things to ourselves.


Luigi Inc.

i find this comment strange. limited liability is by design

The "design" is sensitive to which liabilities are limited for whom.

Shielding marginal or non-voting investors from disproportionate responsibility for things essentially out of their control transfers risk from them, and makes it easier to move money to useful places. That's great!

Shielding key decision-makers and large-stake owners from responsibility for actions performed at their behest is not so much. And in fact, the pure "design" of limited liability has means for "piercing the veil" and keeping these individuals responsible and for wholly disolving corporate charters.

It just turns out that once commercial enterprise grows big enough, or is steered by influential enough leadership, capturing regulation and enforcement to serve their own interests, they can undermine those safeguards and assert a kind of wholesale corporate immortality and immunity that completely undermines the "design" -- a bug in the implementation of that design, if you would.


Limited liability means the shareholders are shielded. It’s not supposed to mean the company itself is shielded.

Yes, limiting the liability of criminals from prosecution is the design. That's what's wrong with it, and why we must stop it.

'Corporations have neither bodies to be punished or souls to be condemned. Hence they do as they please.'

-Edward, Lord Thurlow.


Tangentially, my other favorite on such things:

> There has grown up in the minds of certain groups in this country the notion that because a man or corporation has made a profit out of the public for a number of years, the government and the courts are charged with the duty of guaranteeing such profit in the future, even in the face of changing circumstances and contrary to the public interest. This strange doctrine is not supported by statute or common law. Neither individuals nor corporations have any right to come into court and ask that the clock of history be stopped, or turned back.

-- Robert Heinlein, Life-Line


Please cite example of farting in the wrong courtroom.

Either that, or your post is hyperbolic.


Yes. Yes it is. Congrats you cracked the code.

And yet, if someone replies “that’s exaggerated” they’ll be told they’re wrong.

Have your cake and eat it too


hacker news discovers literary devices

This is the way our world works.

If you steal a potato, you will be arrested immediately and the case will be resolved in a few weeks or months.

If you illegally fix the price of potatoes and steal billions from the market, you will be allowed to operate for years in the open while a lengthy civil procedure eventually may ask you to give 1 or 2% of what you stole back in fines.

Don't blame the potato theives or potato cartels, blame the politicians that built the system to work this way.


They hang the man and flog the woman

That steal the goose from off the common,

But let the greater villain loose

That steals the common from the goose.

The law demands that we atone

When we take things we do not own

But leaves the lords and ladies fine

Who take things that are yours and mine.

The poor and wretched don’t escape

If they conspire the law to break;

This must be so but they endure

Those who conspire to make the law.

The law locks up the man or woman

Who steals the goose from off the common’

And geese will still a common lack

Till they go and steal it back.

English nursery rhyme, circa 1700.


So the silly Haitian goose drama in Ohio was really a message to all the plebs?

Meanwhile, citizens are being stopped and harassed for their papers because they don't look right.


> Don't blame the potato theives or potato cartels, blame the politicians that built the system to work this way.

Blame both.


Well, mainly blame the potato cartels and the politicians. The potato theives are the only ones the deterence system is nominally working to prevent.

Oh, and don't forget the voters, who mostly don't care, thus enabling the cartels that extract value from them to grow unchecked.

I'm not sure that the voters don't care -- it's mostly that they don't know. Because they are being constantly flooded with messaging that screams in other directions: "it's the immigrants!!" "it's trans people!" "it's those f*ing libs!!" "it's those MAGA idiots!!" etc. etc.

And because these things are complicated, it's hard to boil them down to a few words that stick with voters, and attempts to do so come off as "West/East Coast Elitism". This is why populism is great for large monopolistic corporations so long as it can be channeled away from them (which they spend a great deal of money on).


The potato cartel has convinced a lot of voters that what's good for the cartel is good for everyone...

Yes. I see this kind of "if your lock is easy to pick and your house is robbed, it's not the burglar's fault" argument a lot -- it's the lock-maker's fault! It's your fault for not doing enough research on locks! Or more commonly on HN, it's the fault of too much regulation somehow? -- and, it's like, okay, all of those factors may be worth considering, but the burglar still made a conscious decision to rob you. The burglary is not some inevitable consequence of systemic failure. If somebody leaves their laptop on a bar top for a few minutes to go to the bathroom and you steal it, "hey, they left it there" is not some kind of magic get out of jail free card for you. You chose to steal it.

And, yep: if four companies that control 97% of their market conspire to fix prices together, they are making a conscious decision to do so. There may be systemic failures which make it easier for them to do that than there should be, but they're still choosing to do it knowing that it's wrong. I'd go so far as to say that they're actually counting on people pointing the finger anywhere but at them. It's not us, it's just inflation! It's not us, it's the Biden administration! It's not us, it's something something something Covid! Yeah, okay, but at the end of the day, you're consciously choosing to price gouge.

Doctorow's point is, I think, that companies are deflecting from this by saying "it's not us, it's the apps, man! They're telling us what the optimal prices are, and we're just following their command!" But that's still, at the end of the day, price-fixing. It's _outsourced_ price-fixing, but it's still price-fixing.


A real world example: wage theft in the US is bigger than all other forms of theft combined. How often do you hear about it? We hear endlessly about shoplifting rings and lax enforcement by lefty prosecutors. When was the last time you saw coverage of workers not being paid what they’re owed? When was the last time somebody went to jail for not paying their workers what they’re owed?

I routinely see coverage of workers not being paid what they’re owed.

People do sometimes go to jail for not paying workers what they’re owed (https://kfoxtv.com/amp/news/local/el-paso-contractor-jailed-...), but this article illustrates pretty clearly why you don’t hear more about it. Advocacy orgs aren’t going to brag about some random contractor or McDonalds supervisor going to jail, and the corporate fat cats they could brag about rarely commit wage theft themselves.


We need to redefine what it means to commit this sort of crime. The modern corporation is an expert in dodging responsibility. Upper management will make it very clear that everyone is expected to follow the law at all times. Then they’ll set up incentives, requirements, and quotas that more or less require breaking the law to meet. When the inevitable occurs, they’ll wring their hand and say, we don’t condone that behavior.

The management chain needs to be held more responsible for actions at the bottom. That doesn’t mean we put them in jail for every misdeed by some front-line worker, but they shouldn’t be allowed to turn a blind eye to systematic lawbreaking.


Wage theft, like any other kind of theft, is a self-incentivizing crime. I agree people shouldn't be allowed to turn a blind eye to systematic lawbreaking, but no system of incentives can erase the fundamental accounting identity that a business unit will have more money if they pay workers less than promised.

It’s easy to to erase that identity. You make the expected value of the punishment (cost multiplied by probability of getting caught) higher than the expected value of the crime.

This should be easier to deal with than most crimes. The problem with individual crimes is that criminals are generally bad at thinking through the consequences. No matter how terrible the punishment is, you’re still going to have murders, because the typical murderer isn’t weighing the cost/benefit tradeoff.

Companies are much better at this, especially big ones. Make wage theft unprofitable and it will drop dramatically.


You don't talk bad about the advertisers.

That's not actually true. Wage theft is maybe third: https://truthnotoutrage.com/2023/12/05/retail-theft-dwarfs-w...

By all indicia, shoplifting is a much bigger problem. I know this myth and wage theft in general are really popular on social media. I think its lacking of representation in traditional media and prosecution is a mix of how much more clear-cut shoplifting is and just the victims report it more.


All of the sources and math in there seem extremely cherry picked to make the point that they want.

They provide theft data from the FBI, that is then contradicted directly by a non-scientific survey performed by a lobbying group of their members, for political purposes. It also fails to differentiate between shoplifting and outright robbery (the difference in my mind being the use of deception vs the use of violence).

They then choose the latter as a representation of fact with no caveats.

I have no idea whether wage theft is more or less than shoplifting. Anecdotally, I am among numerous people who have had 5 figure sums stolen through wage theft, yet none of these people have shoplifted anywhere near that amount.


Thanks. I suppose the “more than all others combined” would be “except shoplifting,” which is a big “except.”

I still maintain that wage theft is covered and enforced far less than it should be given the scale, precisely because of who the victims and perpetrators are. Your link lays it out nicely: “ While wage theft is a horrible crime against workers, retail theft also directly causes higher costs for consumers and arguably hurts workers even more than wage theft does.” Don’t worry about what we’re stealing from you, peons, the real problem is what you’re stealing from us.


Wage theft always starts with labor law compliance. They didn't take the required break on their shift...better adjust the hours to be compliant. Now it's normalized and rationalized. Each employee has to make a stink to address the theft and are dismissed without a second thought. I used to work blue collar service industry and saw this happen in nearly every company where I worked. There is no union or personal agency. The individual worker is discarded at the first sign of legal friction.

I worked a job where every person worked 63 hours a week standard at $7.50 an hour. We would have a lunch break where one person would go fetch lunch and bring it back each day. We would all meet in the break room and scarf down our food in a few minutes and get back on the floor. We literally clocked this on time cards. We might take up to fifteen minutes to eat but accounting would adjust it to 30 minutes every time. No consultation, warnings or notices of any kind. The timecard was gone at the end of each week so you had no record of your actual punches.


This source is garbage. There are only two articles on the site, I see typos in both of them so it has likely not been checked by anybody, and it uses sources like the NRF that have famously been discovered to play fast and loose with these numbers. Do not believe it.

The numbers of retail theft are from the National Retail Federation based on a survey, so by no means a reliable independent source.

The politicians didn't build this. The cartel owners did, so they are absolutely blame worthy. But politicians sit back and do nothing about it, due to regulatory capture.

News flash: either the head of Potato Cartel inc was tapped to run the US Potato Thief Catching Commission, or the head of the US Potato Thief Catching Commission retired from public life and took a position as head of Potato Cartel inc

Well I would argue political donations that politicians gladly accept leads to them sitting back and doing nothing.

> Don't blame the potato theives or potato cartels, blame the politicians that built the system to work this way.

The potato cartels are controlling the politicians. They are directly to blame.

Get rid of the super-rich and we will get politicians that work for the public instead of the super-rich.


> blame the politicians that built the system to work this way.

Politicians are only doing what the potato cartel is telling them to, because if they weren't they'd be replaced by big-potato-friendly politicians. You can't blame a single actor. What's to blame is the system itself. As long as what's driving it is capital, whomever and whatever makes it grow most will be rewarded, under the risk of being replaced. There's only one metric that counts in this game, and it's no surprise that everything arranges around its optimization.

World is controlled by big potato.



The potato thieves and the politicians are the same team.

>while a lengthy civil procedure eventually may ask you to give 1 or 2% of what you stole back in fines.

Examples? Usually when this argument is trotted out, there's two factors not mentioned: the amount "stolen" is the amount transacted (ie. total potato sold, rather than the additional profit made), or that the government's case is shaky and the settlement reflected that.


Big banks role in 2008 financial crisis. Facebook fines from FTC regarding user privacy.

But your point shows the asymmetry in the system. Most thieves don't get to argue costs of goods stolen vs. sticker price of goods stolen and then get to reach a cushy settlement because the government is scared of losing a protracted battle.


> "[...] but what should we do when the highborn and wealthy take to crime? Indeed, if a poor man will spend a year in prison for stealing out of hunger, how high would the gallows need to be to hang the rich man who breaks the law out of greed?"

-- Snuff by Terry Pratchett


> Don't blame the potato theives or potato cartels, blame the politicians that built the system to work this way.

The corporations and politicians are not independent though. The corporations lobby to get a rigged system they want.


Politicians don’t exist in a vacuum. People are to blame too. So are business owners.

I virtually guarantee you will not be arrested immediately.

You can not have a lawful and fruitful society if the inhabitants of that society don't want it.

There is no law that you can pass to make the billionaire asshole not be an asshole. You can make him not a billionaire, but the inhabitants of the American society will not allow that.

That is a population problem. Not a political one.


Blame can be shared. They lobbied to have and keep the systems. The concept or argument that someone accomplished this in this way on accident or without understanding the ethical repercussions is laughable.

Don't blame anymore because blame is an act of supremacy.

Responsibility says it's shared to varying degrees through various classes of equivalence among all.

The thieves are trying to eat or feed people in the context of oppression that capitalism is. Capitalism is a system of oppression that requires poverty to work, so is an economic system of oppression. "Crimes" committed in the context of oppression are required when "noncrimes" are insufficient for meeting needs.

Cartels operate without regard for human life and support the context of oppression. Totally different level of responsibility.

Politicians create the system based on choices made due to support from the cartels. They're in some classes of equivalence with the politicians because they're interacting in a way that promotes the context of oppression.

They're all operating within the context of oppression that is individualism.


Hypothesizing for the moment that all of that is true and accurate, what do you propose the solution is?

Rampant open air community building for learning how to care for one another. Underground railroads for moving people to safety. Learning armed self defense.

We're literally in a country that is setup to become a prison & the fences may already be built and just not fully turned on yet.


Wearing these down downvotes as a badge of honor. Appistocracy gotta keep the truth down

> If you steal a potato, you will be arrested immediately and the case will be resolved in a few weeks or months

Have you been to San Francisco?

We don't prosecute petty crime in America. If you want a proper example, compare it to wage theft (including by small businesses).


> We don't prosecute petty crime in America.

Yes we do; at rates that horrify the rest of the world. It's very expensive. You can find a lot of detail here: [0].

> Most people in the U.S. criminal legal system are not accused of serious crimes; more often, they are charged with misdemeanors or non-criminal violations. Yet even low-level offenses, like technical violations of probation and parole, can lead to incarceration and other serious consequences. Rather than investing in community-driven safety initiatives, cities and counties are still pouring vast amounts of public resources into the processing and punishment of these minor offenses.

0 - https://www.prisonpolicy.org/reports/pie2024.html


> Most people in the U.S. criminal legal system are not accused of serious crimes; more often, they are charged with misdemeanors or non-criminal violations

I've probably committed misdemeanors; I don't think I've committed a felony. If misdemeanors are committed at a higher rate than felonies, and felonies are prosecuted at a higher frequency than misdemeanors, most prosecutions will be misdemeanors and most uncaught crime would have been charged as a misdemeanor.

> low-level offenses, like technical violations of probation and parole

It's difficult to call probation or parole violations "low-level offenses" without knowing the underlying offense.


> most prosecutions will be misdemeanors

So... We do prosecute petty crime? Ok then.

And since America has far more prisoners than basically any other country... We're prosecuting a lot of them.

> It's difficult to call probation or parole violations "low-level offenses" without knowing the underlying offense.

Feel free to read through the link instead of just the quoted section. There's no shortage of statistics and source data in the Methodology link.


Let's be honest hear. If you go to store and steal sack of potato. I doubt either the store or police will even attempt to track you anymore... Retail theft is just left to happen.

I doubt that. "Loss prevention" divisions in larger corporations might allow for some amount of unpunished theft, but once that number gets high enough, they'll implement measures to control it. Sometimes, that takes the form of locking down shelves, but I imagine some take a more reactive approach.

Additionally, the amount of video and audio (and other data) recorded is increasing, not decreasing. As tracking technology gets more sophisticated, systems of identification, location, and retaliation will also get more sophisticated. Even automated.

I don't think it'll be too long before we'll have "arrest-a-thief" as-a-service.


> I don't think it'll be too long before we'll have "arrest-a-thief" as-a-service.

I believe that's called '911'...


You can't solve capacity or 'caring' problems at 911 by just paying more, or threatening to buy services elsewhere. So there's good reason to think it's not what corporations want.

I've seen some pretty gnarly fights between grocery store security and shoplifters. Back when I worked in one I had to take our security guard to the hospital to have a bite wound treated.

There are more of them nowadays, with guns pr