Why does Wall Street still think that everything will consolidate? Probably because for the last forty years, it always has. Is that dynamic finally changing?
Consolidation is the natural extension of late stage hyper-capitalism, where only shareholder value is maximised, i.e profits, by minimizing actual work done and maximising economic rent seeking. One can only gain the power to increase prices, and seek higher economic rents, if one becomes a monopoly or has monopoly power.
It should be clear to everyone by now. Wall Street, loves nothing more than a monopoly. There are no competitive constraints to reduce prices, increase worker wages and cause market disruption. Just consistent, and controllable gains to shareholders as long as the industry grows.
It's not even capitalism, as we know capital markets encourage competition, cause prices to go down and force firms to remain competitive. It's a perverse alternative and is a clear admittance by companies that they have no merit to provide the market, no meaningful product, service, innovation or efficiency.
Want to create a new product as your main product has stopped growing? Buy a leading company in a tangential market, vertical integration. Want to increase marketshare of your main product? Buy your competitor, horizontal merger.
Anti-trust is really at the heart of nearly all socioeconomic problems in America, and is the only cure to the cancer that is this perverse capitalism and yet anti-trust has been completely gutted for the last 20, maybe even 40 years, intentionally so by Wall Street and hyper capitalists.
The window of opportunity is closing, let this perverse capitalism fester for a few more decades and you will have irreversible monopolies/oligopolies in nearly every distinct market. It cannot be reiterated how the world has dodged a bullet by having Biden elected and spear front anti-trust by electing Lina Khan and John Kanter.
We're at a time where the youth are more anti-capitalism than perhaps ever before. If the FTC/DOJ can harness this and gain wide populous support, it could be the catalyst for generations to come.
Really well put. As a strong Bernie supporter i believed for a long time that policy like Medicare for All and Free college would and higher min wage would fix many of our ills.
But through economists like Krugman and Stiglitz and writes like Stoller and Christopher Leonard i have come to see that until we break up these monopolies NONE of the economic change needed to restore capitalism and democracy can occur.
I think we have to push this narrative as wide as possible.
“The thesis for all of them,” is that there is going to be consolidation, ‘one day we’re going to stop competing with eight different studios for a project, we’ll be competing with three and we’ll be able to spend more rationally.’ They all believe that to be the case.”
Am I wrong or isn't this the essence of a command economy?
"In Supermarket News, industry pundits believe that the Kroger-Albertsons deal heralds a “'new grocery landscape.'"
Joseph Stalin said something similar to his apparatchiks deployed to seize Ukrainian Kulak's grain or kill them if they resisted—leading to the holodomor and 5 million dead.
Wall Street thinks that consolidation is natural because that's how finance gets paid, and that's how executives and bankers get rich.
Of course that's complete nonsense, that's not how the real economy operates at all. Real people used to get rich by creating good products and doing good business.
If the FTC ever puts enough fear in these companies, they'll realize there is money to be made in breakups as the individual companies perform better than the monopoly dinosaurs.
As someone who was trained as a scientist, not an economist, can someone please give me the bullet of what happens when the game of big fish eat smaller fish ends and there is only one fish left. I can't imagine that it's anything good....
From my amateurs perspective...if you are counting on consolidation for growth, what happens when there is no more consolidation to be had? It sounds like a dystopian scenario out of hell...
You may not be an economist but your analogy is spot on.
History has shown that mergers generate profits by squeezing wages, not innovating. This history goes back to the Robber Barron’s in the late 19th century
Yes! Thank you for that! The Robber Barrons of the 19th century. I was raised on that. My father was a conservative Republican, but more in the traditional sense (not totally off-the-walls crazy). The ONLY thing we both agreed on was the dangerous rise of monopoly power. He was a capitalist on steroids with one big caveat: monopoly power must never be allowed to gain a strong foothold or it would stifle innovation and destroy the benefits of capitalism. He used to cite the Robber Baron era policy and events.
He died in 2010, but felt that we were well on our way over the cliff back then. He also felt the door to reform was closing. He blamed both political parties for their relationships with big business. Admittedly, I didn't see how the Democrats were so much to blame back then. By 2012, I had to admit he was right. It was both parties.
Most people still don't see it. So many of my friends think all we have to do is elect Democrats. That may have been true 20 years ago, but not now. If we could vote our way out of this, it would have happened by now.
Your father was spot on. The Democrats are every bit as guilty as the Republicans for the growing power of Monopolies in the US. Bill Clinton and Obama were massively important in giving monopolies the power they have today.
I am not going to give up hope nor should anyone. The US voter has twice elected leaders and Law Makers that fought monopolies and crushed them.
No other policy can really get through to improve the economic lives of Americans until the Monopolies are crushed. They hurt innovation, productivity growth, wealth distribution and justice. Stay in the fight to bring them down.. I will be until the day i die. It is a good cause.. your father was right!!
Wow...this is causing ideological whip lash— "The Pentagon has been complaining about consolidation for years now. But Aerojet executives seem to want to get out of the business of making stuff, and hand that problem over to someone else."
Reminds of the reporting on Congress members dependend on militiary-industrial complex cash flow to their districts forcing M1A2 Abrams tanks on the Pentagon which stedfastly said it didn't want them or need them. What has played out on the battlefield in Ukraine proves the Pentagon analysis of its needs to be accurate.
Consolidation is the natural extension of late stage hyper-capitalism, where only shareholder value is maximised, i.e profits, by minimizing actual work done and maximising economic rent seeking. One can only gain the power to increase prices, and seek higher economic rents, if one becomes a monopoly or has monopoly power.
It should be clear to everyone by now. Wall Street, loves nothing more than a monopoly. There are no competitive constraints to reduce prices, increase worker wages and cause market disruption. Just consistent, and controllable gains to shareholders as long as the industry grows.
It's not even capitalism, as we know capital markets encourage competition, cause prices to go down and force firms to remain competitive. It's a perverse alternative and is a clear admittance by companies that they have no merit to provide the market, no meaningful product, service, innovation or efficiency.
Want to create a new product as your main product has stopped growing? Buy a leading company in a tangential market, vertical integration. Want to increase marketshare of your main product? Buy your competitor, horizontal merger.
Anti-trust is really at the heart of nearly all socioeconomic problems in America, and is the only cure to the cancer that is this perverse capitalism and yet anti-trust has been completely gutted for the last 20, maybe even 40 years, intentionally so by Wall Street and hyper capitalists.
The window of opportunity is closing, let this perverse capitalism fester for a few more decades and you will have irreversible monopolies/oligopolies in nearly every distinct market. It cannot be reiterated how the world has dodged a bullet by having Biden elected and spear front anti-trust by electing Lina Khan and John Kanter.
We're at a time where the youth are more anti-capitalism than perhaps ever before. If the FTC/DOJ can harness this and gain wide populous support, it could be the catalyst for generations to come.
Runner
Really well put. As a strong Bernie supporter i believed for a long time that policy like Medicare for All and Free college would and higher min wage would fix many of our ills.
But through economists like Krugman and Stiglitz and writes like Stoller and Christopher Leonard i have come to see that until we break up these monopolies NONE of the economic change needed to restore capitalism and democracy can occur.
I think we have to push this narrative as wide as possible.
Beyond thinking that consolidation is natural and inevitable, it seems like the vibe is like there's a fundamental property right to engage in M&A.
what do you call a captialist economy whose shot callers are creating a command economy no different from that of the CCP or former USSR?
“The thesis for all of them,” is that there is going to be consolidation, ‘one day we’re going to stop competing with eight different studios for a project, we’ll be competing with three and we’ll be able to spend more rationally.’ They all believe that to be the case.”
Am I wrong or isn't this the essence of a command economy?
Competition not consolidation creates innovation. Consolidation creates rents
Matt Stoller's writing is revelatory and puts in stark relief the failure of Corporate Media's news coverage.
"In Supermarket News, industry pundits believe that the Kroger-Albertsons deal heralds a “'new grocery landscape.'"
Joseph Stalin said something similar to his apparatchiks deployed to seize Ukrainian Kulak's grain or kill them if they resisted—leading to the holodomor and 5 million dead.
Wall Street thinks that consolidation is natural because that's how finance gets paid, and that's how executives and bankers get rich.
Of course that's complete nonsense, that's not how the real economy operates at all. Real people used to get rich by creating good products and doing good business.
If the FTC ever puts enough fear in these companies, they'll realize there is money to be made in breakups as the individual companies perform better than the monopoly dinosaurs.
As someone who was trained as a scientist, not an economist, can someone please give me the bullet of what happens when the game of big fish eat smaller fish ends and there is only one fish left. I can't imagine that it's anything good....
From my amateurs perspective...if you are counting on consolidation for growth, what happens when there is no more consolidation to be had? It sounds like a dystopian scenario out of hell...
RG
You may not be an economist but your analogy is spot on.
History has shown that mergers generate profits by squeezing wages, not innovating. This history goes back to the Robber Barron’s in the late 19th century
Yes! Thank you for that! The Robber Barrons of the 19th century. I was raised on that. My father was a conservative Republican, but more in the traditional sense (not totally off-the-walls crazy). The ONLY thing we both agreed on was the dangerous rise of monopoly power. He was a capitalist on steroids with one big caveat: monopoly power must never be allowed to gain a strong foothold or it would stifle innovation and destroy the benefits of capitalism. He used to cite the Robber Baron era policy and events.
He died in 2010, but felt that we were well on our way over the cliff back then. He also felt the door to reform was closing. He blamed both political parties for their relationships with big business. Admittedly, I didn't see how the Democrats were so much to blame back then. By 2012, I had to admit he was right. It was both parties.
Most people still don't see it. So many of my friends think all we have to do is elect Democrats. That may have been true 20 years ago, but not now. If we could vote our way out of this, it would have happened by now.
RG
Your father was spot on. The Democrats are every bit as guilty as the Republicans for the growing power of Monopolies in the US. Bill Clinton and Obama were massively important in giving monopolies the power they have today.
I am not going to give up hope nor should anyone. The US voter has twice elected leaders and Law Makers that fought monopolies and crushed them.
No other policy can really get through to improve the economic lives of Americans until the Monopolies are crushed. They hurt innovation, productivity growth, wealth distribution and justice. Stay in the fight to bring them down.. I will be until the day i die. It is a good cause.. your father was right!!
Wow...this is causing ideological whip lash— "The Pentagon has been complaining about consolidation for years now. But Aerojet executives seem to want to get out of the business of making stuff, and hand that problem over to someone else."
Reminds of the reporting on Congress members dependend on militiary-industrial complex cash flow to their districts forcing M1A2 Abrams tanks on the Pentagon which stedfastly said it didn't want them or need them. What has played out on the battlefield in Ukraine proves the Pentagon analysis of its needs to be accurate.
https://www.seattletimes.com/business/wa-supreme-court-oks-albertsons-merger-4-billion-dividend/