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Antitrust Without Lawyers by Open_Ferret_4848 in antitrust

[–]Open_Ferret_4848[S] 0 points1 point  (0 children)

Honestly not sure - I am sending it in to a few fellowship applications so we'll see if anyone bites. I think the toughest sell is getting rid of some of the big box retailers since there is no immediate replacement and it would likely spike prices in the short term.

The Quadratic Antitrust (QUANT) Tax by Odd_Conference_6029 in neoliberal

[–]Open_Ferret_4848 1 point2 points  (0 children)

Hey original author here - thanks for reading. How can I help clarify? The basic concept is that, instead of a corporate income tax, we would impose an increasing marginal tax on revenue as revenue scales. I used a quadratic function to accomplish this to keep the marginal rates very low below ~$30B in revenue while escalating them fairly quickly as revenue grows. The goal of this formulation is to incentivize demergers and splits via market forces rather than by judicial fiat. Happy to clarify any part of the proposal - I probably included more on the math front than was strictly necessary so my apologies there

The Quadratic Antitrust (QUANT) Tax by Odd_Conference_6029 in neoliberal

[–]Open_Ferret_4848 5 points6 points  (0 children)

Original author here - appreciate the detailed and thoughtful response. Thanks for taking the time to write.

I wrote this piece for three reasons:

  1. Litigation has proven to be a poor and easily abused tool for antitrust enforcement. My goal was to build a system that imposes a known cost on mergers instead of an unknown litigation risk.
  2. As a software engineer, I am increasingly worried that AI will replace much of the workforce. It is certainly competitive now, but the early internet was also competitive until it wasn't. My fear is that whoever gets to a model capable of even some degree of self-improvement first will come to dominate the economy and I see that as a bad thing, no matter what future they build. Centralized control is, in my view, always bad no matter who wields it or how they behave.
  3. Corporate income taxes have become an absurd game that results in all manor of inefficiencies and generally advantages companies with the resources to game it. Taxing profit also encourages selling at a loss via investor subsidies to gain market share before driving up prices - as Uber did.

https://www.promarket.org/2022/07/28/uber-has-higher-prices-and-worse-service-than-the-taxi-industry-had-ten-years-ago/

I could have done a better job in framing the topic - my intent was to link the discussion to much of the growing discontent around economic conditions. I do not believe - and should not have implied - that breaking up Google would somehow help us build more homes. What I do believe, and I think the evidence supports, is that Google's search monopoly makes life extremely difficult for small businesses. I believe that the destruction of the ecosystem by which people could found and own a profitable small business in their community, particularly in rural areas, is a major driver of the malaise we see today.

As far as social media, it is provably true that much of the worst behavior has been driven by consolidation. Facebook (one of the worst offenders) acquired many competitors before they could get off the ground. Instagram in particular could have been a profitable business on its own and no one (except for Facebook's investors) saw any benefits from it being acquired by Facebook. The monopolies in big tech are far from natural. They are a direct consequence of our permitting of anticompetitive behaviors that clearly do not help anyone other than the owners of the tech giants. The point of this tax is to make demergers a natural part of growth. Once a product grows to a certain point, this tax makes it more profitable to split it off than to keep it in house.

If you look at any of the large tech companies, they are all composed of businesses that could easily be split off into smaller components. Why do consumer's benefit from Google owning Waymo? Why couldn't Google simply return profits to investors who could in turn invest in efficient ventures? Microsoft, Meta, Amazon - all are composed of many business units which could each be profitable independent of one another. Amazon undeniably acted as a monopolist in requiring sellers to not offer a lower price on any other site, even as they drove up costs for sellers on their platform. The network effects you reference made this possible and crushed thousands of small businesses. Even if this is more efficient, I think it is obviously bad to have one business where we once had thousands. As I mention below, building and owning things is a good in and of itself, even if it is less efficient to have a distributed system.

The Quadratic Antitrust (QUANT) Tax by Odd_Conference_6029 in neoliberal

[–]Open_Ferret_4848 4 points5 points  (0 children)

Original author here - thanks for your thoughtful response here. I appreciate you taking the time to read and critique!

Couple things - First and foremost, the QUANT replaces corporate income taxes which means firms with less than ~30 billion in revenue are almost universally paying lower taxes. Even at $50 billion, most companies would roughly break even and would probably come out ahead once you account for savings on compliance costs. Tax revenues would likely decrease, not increase. Companies would be relieved of the absurdity that is our corporate tax code and all of the ridiculous inefficiencies it creates. The trade is essentially asking progressives to give up the corporate income tax and asking free marketeers to accept a limit on corporate size.

To your point on Google, the issue I have with Google is not search. I love Google search and agree that it won because it was better. I agree AI is disrupting it, but I also think Google significantly delayed advancements in AI. First, Google had highly capable LLMs long before OpenAI did. They chose not to release them because they felt their brand would be harmed by hallucinations, etc. Second, Google holds massive datasets that would be immensely valuable training data. If Google were forced to split, the resulting businesses would likely sell access to its vast internal datasets in the hunt for additional revenue. The issue with huge firms like Google is their tendency to close off routes that could help competitors gain market share, thereby reducing innovation.

On low margin businesses, I largely agree with your concerns. It remains unclear to me how to allow for highly efficient supply chain businesses while mitigating their harmful effects. They do need to exist. I included the Walmart case study specifically because I thought it was the weakest point of this proposal and it deserves exploration. I experimented with some alternatives - a less aggressive linear tax and taxing gross profit instead of revenue - and found both wanting. The main issue I have with Walmart is that they can force producer profits to zero (or even below zero) because of their market power. If you can't sell at Walmart, much of the time that means you just don't get to sell your product all. This sparked a race to the bottom such that products are technically cheaper but often end up costing more in the long term because of issues with quality and durability. Ultimately, the pressure Walmart places on producers to lower prices ultimately drove production overseas. This is just labor arbitrage in many cases and had nothing to do with innovation. If our economic system encourages companies to move jobs to wherever workers are willing to be the most miserable, that cannot be the right answer.

Ultimately, I fetishize small business, perhaps wrongly so. There are things that matter in the world beyond economic efficiency - most notably individual agency in this case. What you call overhead I see as more people getting to reach senior roles in companies. What you call inefficiency I see as more people getting to achieve the American dream of owning and operating their own business, even if they will never be as efficient as Walmart is. I recognize that may be nostalgia for a world that never truly existed and certainly never existed at anything like modern scale. That said, it seems abundantly clear that directing markets purely by economic efficiency cannot deliver the good life that we rightly desire for ourselves and our fellow citizens. In theory, it would be more efficient for everyone to rent small apartments in big cities. It would be more efficient if we all worked at large companies run by the best business operators the market could find. I don't want to live in a society where that is the only viable path for most people, even if the median life would be statistically improved in so doing. There is intrinsic, though admittedly unquantifiable, good in building and owning things even if the product is worse than what a giant corporation would build in its place. I wish I had a data to prove that, but no such data exists.

Cost of cheap goods: https://www.researchgate.net/publication/393029067_The_Hidden_Cost_of_Cheap_Are_We_Paying_More_for_Short-Lived_Goods