Why can't that be right?

I see the sentiment a lot, but it strikes me as reality denialism. People are willing to pay for one thing but not the other.

Exactly, it's "just" the market setting the price.

The issue is that these are near monopolies, so the market isn't efficient.

In other words, if those companies didn't have monopoly power, other businesses (or non-commercial entities) might be able to afford to hire some of these people as well, which might be beneficial overall for innovation.

That's the economic argument and it's pretty clean imo.

But as far as I'm concerned personally, I would really prefer to live in a world in which smart people work on human flourishing... rather than whatever that is.

I think that's exactly the point I was getting it. Who decides what efficient is, and what do they measure. You might care about vision algorithms, and I might care about hamburgers.

From the economics perspective, something being Monopoly doesn't mean it's inefficient.

Depending on the situation, they can be far more efficient then diverse companies, or much less

> From the economics perspective, something being Monopoly doesn't mean it's inefficient.

From an economics perspective, if there is a monopoly, there is no free market, so you can't rely on the market for efficiency. A monopoly can be efficient, but it can also be arbitrarily inefficient and still keep its position.

you are correct and I agree.

I was trying to make the point that monopoly isnt defined by inefficiency, either by the technical definition or the colloquial one.

Rality is complex, and few monopolies can be arbitrarily inefficient. I think this is where a lot of the public confusion about monopiles comes from.

If you have the only grocery store or gas station in town, it might seem like there is a monopoly. There is probably a wide leeway to raise prices or be inefficient, but not without limit or else someone would compete.

If Amazon, Google, or whomever 10X'd their prices, competitors would arise.

The market is shit at making long term risky bets that require a lot of R&D.

That's the reason why quantum computing and projects of this type would not exist if you didn't have behemoth companies with extra cash lying around.

The problem with your ideals is that every one has different ideas on what "human flourishing" looks like. One way or the other, if it is Government that is in charge of "human flourishing", then some group of people are going to benefit at the expense of another group of people, at the discretion of whoever currently has the most political clout.

Capital markets don't perfectly account for all positive and negative externalities in the world, not even close. For example think of a company that invents a miracle drug that only costs $1 to produce. The net benefit to humanity would be to open up production and sell it to everyone who needs it for a few bucks, but of course the company will do everything it can to maintain a monopoly and sell the drug for $X0000/dose, even if relatively few people can obtain it. Lawyers and lobbyists will get paid a lot of money to get the second outcome, even though they're producing negative value overall.

Im not saying they do. I am saying that claims of inefficiency or failure need to be compared to a possible and realistic counterfactual.

You might think it is is inefficient to have a miracle cure for cancer tied up on patent for 20 years, but what are you comparing it to.

> sell the drug for $X0000/dose, even if relatively few people can obtain it

A rational company would lower the price if that broadened the market and netted more profit by volume. Drugs aren't Veblen goods.

The impetus for jacking up drug prices is that the market is captive, and those who need the drug will obtain it. That and insurance/government is often the payor.

Right, but in some cases volume doesn’t make up for the price drop. Or the source materials are the bottleneck. Even if the societal benefit was greater.

If the drug is needed by 1 million people, selling it for $1 will net you $1 million (let's assume all the 1 million can afford $1). If they instead sell it for $1000 and only 2000 people who need it can afford it, they'll make $2 million, so it's much more economically efficient.

No, because once those people take the drug then cash flow disappears, because they're cured. It's ideal to stretch out the adoption of the drug as much as possible in that situation.

It's the same reason SAAS took off so much. If you sell the product and consumers are (relatively) happy, now what? They might come back and buy another version in 5-10 years, but how do you generate enough cash flow between now and then to stay afloat?

Thats not very true for drugs, especially a theoretical cure all.

The time value of money means you want to sell every dose as soon as possible. with a 10% annual return, $1,000 today is better than $2,600 in 10 years.

Additionally, each day that passes, someone else can come in and outperform you or undercut your price.

> That said, I do see an issue where some of the smartest people get sucked up by big tech. Instead of working on fundamental advances in image processing they end up working on beauty filters for Instagram. That can't be right.

Can't you say the same thing if you go back 80 years and talk about the smartest minds in the world instead of working on energy for the masses they're working on the atomic bomb?

Kind of... but the atomic bomb required progressing multiple fields substantially and resulted in some very important technological improvements that are genuinely good (the most stable non-carbon power generation).

What is the possible societal-positive outcome of another social media filter? Or improved ad targeting algorithm? Or more attention-grabbing social media feed?

> What is the possible societal-positive outcome of another social media filter? Or improved ad targeting algorithm? Or more attention-grabbing social media feed?

I could have asked the same thing about a weapon of mass destruction 80 years ago. I don't have an answer for how we can use those things in ways to better society. But I'm not convinced that there are _none_.

It was well known even to the general public in the 1940s that the mechanism behind the nuclear bomb could generate vast amounts of cheap energy. It was known by nuclear scientists in the late 1930s that massive amounts of energy were released upon nuclear decay, and that chain reactions were possible, but that harvesting the energy for power generation would take some time.

I don’t believe there is anyone in the general public or who is an expert in any of the aforementioned fields (which have been around for 1-3 decades) that truly believes they are net positives.

> It's hard to see how a smaller, more focused company would be able to justify that type of R&D.

Typically that's solved with R&D happening in academia or semi-public space.

How much this happens depends on the opportunities to do it in private companies, so entities like Google paying big salaries for R&D probably means we don't see what alternatives they would be if they stopped doing so.

> Typically that's solved with R&D happening in academia or semi-public space.

It was, but not any more. The crazy capital investments often come from private companies as well. And that's not a problem. They're spending their money rather than your money.

> They're spending their money rather than your money.

Ok, and from whom did their money come? They didn’t magic it into existence.

Google spending money that came from advertisers who got it from people buying their products isn’t much different than a research team spending public money, just with fewer middle men and a (generally) lower negative impact on society.

The money came from people selling (or trying to sell) products that other people want to buy for the price that includes the ads, as it's valuable. This is far better than the old school ad industry, which made advertising much more expensive and products more expensive.

$400 billion was spent on advertising alone in the US in 2023. In 1970, that number was $19 billion ($150 billion in 2023 dollars). Relative to GDP, that’s and 0.014% and 0.018% respectively. Depending on how you want to argue, there is either more spending on advertising (in dollars) than there was 50 years ago, or about the same (in relative GDP). Neither would account for products in the past being substantially more expensive than they are today.

That is ignoring the many moral arguments against targeted advertising, unnecessary consumerism, etc.

They could still spend the money in academia if they didn't the option to spend it themselves. When I was in college we had labs named after different companies, and those companies sponsored the research in those labs and had first dibs on commercialization.

so who are the academics raising 1b+ dollars to build and operate GPU farms to work on the frontiers of transformer models?

I'd raise you the same question on which private company is spawning its own LHC to research fundamental physics.

Firing particles at each other to disprove the next 500 variants of string theory is nowhere near as useful.

What a shortsighted comment

I don't think it would be the company that focused on those Moonshots. The founder types with $Billions get bored and start new things that try these instead.

Do you realize what the cost was to society to have a Bell Labs? Telephone service was expensive as hell and you couldn't even own your own telephone. There was no incentive for innovation in many areas like answering machines, cell phones etc