The current claim is that the varied Big Tech companies are such monopolies that we are merely playthings for their profit. We need to change this – break them up, put bureaucrats in charge, have the public option, something – to remedy this situation.
There being a slight problem with this idea. That being that all monopolies get killed by technological change in the end. The only matter at issue being how long is that end in coming? A useful guide being that the more competition there is the sooner but that is only a guide.
Don Bouidreaux’s ex-colleague, Vernon Smith, makes this point:
Everything they say about Amazon was being said about IBM in the 1970s-80s. No one could dislodge them from the monopoly power of their operating system; all their clients were locked in. Then came Microsoft that beat ’em fair and square. In the 80s IBM barely survived bankruptcy.
Ask them to list the five top firms, every 10 years, starting in 1950. Their model cannot predict the turnover. Why? If the world has changed after a couple hundred years of the same, why?
Mark Perry gives us the empirical evidence here:
According to a 2012 report from Innosight (“Creative Destruction Whips Through Corporate America“) based on almost a century’s worth of market data, corporations in the S&P 500 Index in 1958 stayed in the index for an average of 61 years. By 1980, the average tenure in the S&P 500 had fallen to about 25 years, and in 2012 it was just 18 years. At the current churn rate, 75% of today’s S&P 500 companies will be replaced by 2027!
This is indeed that Schumpeterian creative destruction.
The thing that has to be proven by those crying monopoly is why is it different this time?
There are indeed things called natural monopolies. They exist and we do indeed treat them differently from other firms and organisations. Sometimes we do so by making them part of the state. Sometimes through regulation. Sometimes we just make them inefficient by making them bureaucracies. But that this, here, needs to be controlled does not tell us that that, there, needs also to be. We need the argument to be completed, that this must be controlled because…..
Thre’s an old Larry Niven story. A World Out Of Time. In which our hero mutters something about the oppressive state to which is is currently subject being able to last a long time because it is, effectively, a water empire. At which point the baddies fire him off into the centre of the glaxy for 3 million years as that’s long enough to protect that water empire.
The idea itself coming from certain analyses of archaic states. Egypt and China come to mind – they were indeed water empires. The state controlled the water without which all would die. So, the state controlled all by that means. Such water empires being subject to takeover from outside, but not to dismantling from inside. The rulers might change but the monopoly did not.
And yet such water empires did fall in the end. Technological change being the reason why too. Even the thing used as an example of long lasting system structures does fail in the end.
All monopolies die and they die as a result of that technological change. There is thus a reasonable argument to leave them be and promote whatever socioeconomic system promotes technological change. Given that that’s free market capitalism we seem to have a viable solution – leave things be and the monopolies will indeed be disrupted. At some point, the only question being how long?