I bought your book and like your articles as you point to many interesting monopoly issues. But I have to point out that not all problems in the world are caused by monopolies. I’m a supply chain consultant and have worked with shipping lines. They are, even taking alliances into account, not monopolies. On contrary. The oversupply of their capacity and competition is so heavy that for most years they barely make money. One example of this which I learned while trying to sell them the software. As of now no container shipping line is using so-called revenue optimization software like all airlines and hotels do because In their market where supply is structurally higher than demand it doesn’t work. (While airlines and hotels can overbook seats/rooms). So larger vessels are a genuine reflection of creating economies of scale. Yes this causes risks and overall I agree current supply chains are efficient but not resilient. But in this case not because of monopolies.
How does a company dis-aggregate supply chains without increasing cost/price to the end market (consumers)? Does localized production and tariffs lead to inflationary trends? As for Intel, their US-based manufacturing is self-serving. It protects their IP from being stolen.....FYI, one specific monopoly in semi is ASML.
I find parallels with the financial system of 2008: the 'cushion' (in this case, capital in reserve) had been pared back to the minimum. This maximized returns on equity when times were good but left no buffer for when something systemic occurred (2008 - coordinated housing crash; 2020/21 - COVID disrupting supply chains).
I think your three remedies are all sensible although I do find myself wondering if they, by themselves, will be sufficient? Ultimately you need supply chains with slack in them. In power, that means paying for reserve capacity, for example. For some end markets, it might be up to governments to decree that something is strategic enough to have sufficient back-up capacity that's worth paying for (drugs, PPE, food, energy stockpiles etc.)
There are all sorts of companies out there hawking some combination of services / software designed to enhance efficiency. I've been looking at software jobs and I've come across a lot of things which are extremely nebulous in what they actually do, but in broad strokes, it's all about moving more faster.
Obviously there's not money to be made in promising inefficiencies! But Large Object Stuck In Important Canal tells me that at the same time hyperefficiency is being endlessly pursued, so too does there need to be incentivization for resiliency, redundancy, etc. And I don't exactly see VC getting behind resiliency.
Where are the people who understand this? What work are they doing? How do they get supported when their work is antithetical to the pace and direction of business overall?
Thank you - your brief discussion with Matt and Katie on "Useful idiots" was truly outstanding !!
“The question, though, isn't whether Alex Jones should have a platform. The question is, should YouTube have recommended Alex Jones 15 billion times through its algorithms so that YouTube could make money selling ads?”
As for health care monopolies -- the health care insurance industry represents an authentic American mafia. And -- it is very unlikely that Biden administration will break-up HiTech monopolies -- about half of population already knows about DNC's and CIA/FBI security complex scam -- their scam of the century; the Russia-gate hoax that was initiated by Obama/Biden administration.
The entire DNC lying team is back in power -- Pelosi, Schumer, Biden, Schiff, Nadler, Maxine Waters, Jamie Ruskin, etc. - with Obama and Hillary in background - promoting their proteges and co-conspirators a la Kamala Harris (Hillary's protégé), Neera Tanden, Melissa Hodgman (wife of the Comey’s infamous Peter Strzok), Pete Buttigieg, etc, etc.
The urgent question is perhaps: Who will be the first Democrat Congressman or Senator to publicly confirm the Russia-gate conspiracy - the huge now 5-year scam from the start? HiTech monopolies and MSM would have difficulty to silence the break in the dam plus -- the farce with Biden actually ruling and governing the country is rapidly coming to its end.
There is absolutely no "unity and healing" until the Russia-gate huge hoax is unmasked and the lying team knows that very well. Trump was certainly a disaster on multiple dimensions -- not pardoning Julian Assange was not only one of his many crimes but also an illustration of his sheer stupidity. Trump also installed evangelical fundamentalist Robert Redfield to run critical organization CDC (Center for Disease Control and Prevention) as its director in 2018 (he immediately increased his salary to almost $0.5M) who than decided to develop an American, hence "superior test kit" (despite that Chinese scientists in a record short time provided full virus genome and Germans and others developed a test kit adopted by WHO).
The new “superior and our” test kits failed and much delayed the ultra-important testing/tracing
– resulting that in the entire February only 256 people were tested?!? – the crime of a century. Redfield was on a board of the largest evangelical anti-gay organization while for a decade unsuccessfully developing AIDS vaccine (and fabricating results)….
Overall both parties are equally bad -- really two oligarch wings of same War party focused on controlling world's oil resources and aggressive non-compromising hostility to "godless" socialist countries who among other teach in schools evolution "hypothesis".. ;-))
Always remember Obama's statement: “Venezuela is fundamental threat to USA” -- declared Obama formally initiating regime change. What he meant is “Socialism is a threat to capitalism”… hence imperial War-party endless wars -- against Bolivia, Nicaragua, Venezuela, Syria, Cuba, Libya, China…..
Right now the US is engaged in two cold wars -- making the war industry ultra-happy. Any accounting for the Russia-gate hoax would likely create a sea of change. The US military terrorism could began to be "defunded" and monopolies might be finally broken -- the coming climate change catastrophe might accelerate and take care of that also.
I agree with your analysis of the monopoly aspect of big ships, but you've neglected to mentioned that the efficiency gains are not only financial. Big ships are more fuel efficient per ton-mile, which is a big plus in the age of climate warming.
Thanks! Here's another disaster-in-waiting: global phosphorus supply, critical to global food supply, and by extension our survival.
In commercial agriculture (which is another mechanism in dire need of reform at every level), phosphate rock, along with a nitrogen source, is fertilizer. No phosphorus, no food. Western Sahara and Morocco have by far the largest reserves with U.S., India, and China's known domestic supply all used up within a generation at current use rates.
While not an artificial monopoly situation (although if I recall correctly Morroco's 1975 invasion/occupation of Western Sahara was motivated by the cash cow of phosphate rock) it's a supply chain project that we have time to mitigate if solutions are implemented soon.
Love the piece. I read the links. Everyone--including Matt--is still skirting the elephant in the living room no one feels they have permission to talk about: values. It's good if Intel and others choose to increase resiliency; however, it's not sufficient to change the culture. The change the culture, you have to talk about your values, your own deepest, innermost values and truly human values. Then positive system change accelerates.
This article is spot on. No doubt, this very simple logistical nightmare has called much needed attention to our fragile and unsustainable global supply chain and the importance of more localized, regional- based distribution networks.
"By far the single biggest openly discriminatory posture in America is excluding non-college educated Americans from most elite jobs."
I wish you and everyone else who says this would mention how blatantly illegal it is (Griggs v. Duke Power).
I also wish people would mention how much it harms the US and the world. A person not getting a job they would otherwise do well at has knock-on effects; we all lose the productivity of their labor. So much talent goes to waste in the US today.
"Third, we should rapidly restructure the way that firms finance themselves, so that they have less debt." - it would be good if you could expand on this or reference anyone working on the policy recommendations. With monopoly, there are existing enforcement mechanisms that are under utilized. With corporate financing and governance issues, I assume there aren't...? If we return to previous models where companies actually kept reserves, they'd just be targets for looting again. Also there is the issue of replacing equity with debt in stock buybacks, leveraged buyouts etc. Curious what has been proposed as possible fixes / alternatives.
If anyone has a burning interest in the subject - Odd Lots did a pretty good podcast in January on the shipping industry and touched on some of these issues ('Why The Cost of Shipping Goods From China Is Suddenly Soring').
I bought your book and like your articles as you point to many interesting monopoly issues. But I have to point out that not all problems in the world are caused by monopolies. I’m a supply chain consultant and have worked with shipping lines. They are, even taking alliances into account, not monopolies. On contrary. The oversupply of their capacity and competition is so heavy that for most years they barely make money. One example of this which I learned while trying to sell them the software. As of now no container shipping line is using so-called revenue optimization software like all airlines and hotels do because In their market where supply is structurally higher than demand it doesn’t work. (While airlines and hotels can overbook seats/rooms). So larger vessels are a genuine reflection of creating economies of scale. Yes this causes risks and overall I agree current supply chains are efficient but not resilient. But in this case not because of monopolies.
Matt you should take a look at what's happening with physical silver shortages. There have been a string of robberies in Nebraska where the thieves target RVs and steal the catalytic converters out of them for the raw metal. https://www.1011now.com/content/news/LPD-Nearly-100-catalytic-converters-stolen-from-cars--RVs-in-last-five-months-570693171.html
Silver is incredibly important for electronics and several other sectors.
How does a company dis-aggregate supply chains without increasing cost/price to the end market (consumers)? Does localized production and tariffs lead to inflationary trends? As for Intel, their US-based manufacturing is self-serving. It protects their IP from being stolen.....FYI, one specific monopoly in semi is ASML.
An interesting article, as ever.
I find parallels with the financial system of 2008: the 'cushion' (in this case, capital in reserve) had been pared back to the minimum. This maximized returns on equity when times were good but left no buffer for when something systemic occurred (2008 - coordinated housing crash; 2020/21 - COVID disrupting supply chains).
I think your three remedies are all sensible although I do find myself wondering if they, by themselves, will be sufficient? Ultimately you need supply chains with slack in them. In power, that means paying for reserve capacity, for example. For some end markets, it might be up to governments to decree that something is strategic enough to have sufficient back-up capacity that's worth paying for (drugs, PPE, food, energy stockpiles etc.)
There are all sorts of companies out there hawking some combination of services / software designed to enhance efficiency. I've been looking at software jobs and I've come across a lot of things which are extremely nebulous in what they actually do, but in broad strokes, it's all about moving more faster.
Obviously there's not money to be made in promising inefficiencies! But Large Object Stuck In Important Canal tells me that at the same time hyperefficiency is being endlessly pursued, so too does there need to be incentivization for resiliency, redundancy, etc. And I don't exactly see VC getting behind resiliency.
Where are the people who understand this? What work are they doing? How do they get supported when their work is antithetical to the pace and direction of business overall?
Thank you - your brief discussion with Matt and Katie on "Useful idiots" was truly outstanding !!
“The question, though, isn't whether Alex Jones should have a platform. The question is, should YouTube have recommended Alex Jones 15 billion times through its algorithms so that YouTube could make money selling ads?”
As for health care monopolies -- the health care insurance industry represents an authentic American mafia. And -- it is very unlikely that Biden administration will break-up HiTech monopolies -- about half of population already knows about DNC's and CIA/FBI security complex scam -- their scam of the century; the Russia-gate hoax that was initiated by Obama/Biden administration.
The entire DNC lying team is back in power -- Pelosi, Schumer, Biden, Schiff, Nadler, Maxine Waters, Jamie Ruskin, etc. - with Obama and Hillary in background - promoting their proteges and co-conspirators a la Kamala Harris (Hillary's protégé), Neera Tanden, Melissa Hodgman (wife of the Comey’s infamous Peter Strzok), Pete Buttigieg, etc, etc.
The urgent question is perhaps: Who will be the first Democrat Congressman or Senator to publicly confirm the Russia-gate conspiracy - the huge now 5-year scam from the start? HiTech monopolies and MSM would have difficulty to silence the break in the dam plus -- the farce with Biden actually ruling and governing the country is rapidly coming to its end.
There is absolutely no "unity and healing" until the Russia-gate huge hoax is unmasked and the lying team knows that very well. Trump was certainly a disaster on multiple dimensions -- not pardoning Julian Assange was not only one of his many crimes but also an illustration of his sheer stupidity. Trump also installed evangelical fundamentalist Robert Redfield to run critical organization CDC (Center for Disease Control and Prevention) as its director in 2018 (he immediately increased his salary to almost $0.5M) who than decided to develop an American, hence "superior test kit" (despite that Chinese scientists in a record short time provided full virus genome and Germans and others developed a test kit adopted by WHO).
The new “superior and our” test kits failed and much delayed the ultra-important testing/tracing
– resulting that in the entire February only 256 people were tested?!? – the crime of a century. Redfield was on a board of the largest evangelical anti-gay organization while for a decade unsuccessfully developing AIDS vaccine (and fabricating results)….
Overall both parties are equally bad -- really two oligarch wings of same War party focused on controlling world's oil resources and aggressive non-compromising hostility to "godless" socialist countries who among other teach in schools evolution "hypothesis".. ;-))
Always remember Obama's statement: “Venezuela is fundamental threat to USA” -- declared Obama formally initiating regime change. What he meant is “Socialism is a threat to capitalism”… hence imperial War-party endless wars -- against Bolivia, Nicaragua, Venezuela, Syria, Cuba, Libya, China…..
Right now the US is engaged in two cold wars -- making the war industry ultra-happy. Any accounting for the Russia-gate hoax would likely create a sea of change. The US military terrorism could began to be "defunded" and monopolies might be finally broken -- the coming climate change catastrophe might accelerate and take care of that also.
I agree with your analysis of the monopoly aspect of big ships, but you've neglected to mentioned that the efficiency gains are not only financial. Big ships are more fuel efficient per ton-mile, which is a big plus in the age of climate warming.
Thanks! Here's another disaster-in-waiting: global phosphorus supply, critical to global food supply, and by extension our survival.
In commercial agriculture (which is another mechanism in dire need of reform at every level), phosphate rock, along with a nitrogen source, is fertilizer. No phosphorus, no food. Western Sahara and Morocco have by far the largest reserves with U.S., India, and China's known domestic supply all used up within a generation at current use rates.
While not an artificial monopoly situation (although if I recall correctly Morroco's 1975 invasion/occupation of Western Sahara was motivated by the cash cow of phosphate rock) it's a supply chain project that we have time to mitigate if solutions are implemented soon.
Democracy Now! did a great piece on Western Sahara (they got busted as press while there and it got a bit hairy): https://www.democracynow.org/2018/8/31/four_days_in_occupied_western_sahara
There are articles about it here and there but it's hard to get people motivated to think about and act on a crisis that hasn't ocurred yet. Here's one from the Guardian: https://www.theguardian.com/environment/2019/sep/06/phosphate-fertiliser-crisis-threatens-world-food-supply
We owe Matt a debt of gratitude as the firms he reports on are dangerous.
Heavy corporate taxes in the USA will cause these companies to yet again flee to cheaper labor.
Why does it feel like we will soon re-visit 1979?
Love the piece. I read the links. Everyone--including Matt--is still skirting the elephant in the living room no one feels they have permission to talk about: values. It's good if Intel and others choose to increase resiliency; however, it's not sufficient to change the culture. The change the culture, you have to talk about your values, your own deepest, innermost values and truly human values. Then positive system change accelerates.
This article is spot on. No doubt, this very simple logistical nightmare has called much needed attention to our fragile and unsustainable global supply chain and the importance of more localized, regional- based distribution networks.
"By far the single biggest openly discriminatory posture in America is excluding non-college educated Americans from most elite jobs."
I wish you and everyone else who says this would mention how blatantly illegal it is (Griggs v. Duke Power).
I also wish people would mention how much it harms the US and the world. A person not getting a job they would otherwise do well at has knock-on effects; we all lose the productivity of their labor. So much talent goes to waste in the US today.
"Third, we should rapidly restructure the way that firms finance themselves, so that they have less debt." - it would be good if you could expand on this or reference anyone working on the policy recommendations. With monopoly, there are existing enforcement mechanisms that are under utilized. With corporate financing and governance issues, I assume there aren't...? If we return to previous models where companies actually kept reserves, they'd just be targets for looting again. Also there is the issue of replacing equity with debt in stock buybacks, leveraged buyouts etc. Curious what has been proposed as possible fixes / alternatives.
If anyone has a burning interest in the subject - Odd Lots did a pretty good podcast in January on the shipping industry and touched on some of these issues ('Why The Cost of Shipping Goods From China Is Suddenly Soring').
I wonder if the real problem here is canal monopolies. Have the Suez canal operators ever been incentivized to widen or deepen their canal?