Re:Fixing ‘too-big-to-fail’
by fluidcruft on Monday February 04, 2013 @03:21PM
(#5166825)
If there is demand of $10 billion for buying a service/product, it can be satisfied by 10x$1 billion companies or 1x$10 billion company. Shouldn't increased competition keep prices down? (and if not why not do the obvious and fast-forward to the inevitable single-employer economy?)
"Competition" doesn't just keep prices down magically. Competition keeps prices down when firms compete to increase market share at the price of unit margin.
But the point is, you're weakening that. You're making market share less valuable, and unit margin more valuable. So you'll tip the scale more in the direction of high-margin, low-market-share organizations.
And with more enterprises floating around, stockbrokers would definitely have more to do, and I thought the idea was to get rid of them.
Gosh, this forcing fiscal motivators on people sure causes some tricky unintended consequences.
But high unit margins are terrible. First of all, they mean higher consumer prices, which are bad in and of themselves. But also, that unit margin either becomes corporate profit (in which case it makes richer the stockholders of the company, who will, ceteris paribus, be wealthier on average than the consumers paying that cost), or it gets eaten up by the management of the company (in which case it makes richer the executives of the company, who will, ceteris paribus, be wealthier on average than the consumers paying the cost).
It is crazy to suggest that we should pursue a policy that increases consumer prices and redistributes that wealth to the wealthy.