"Enough" is a function of how much you have and how much you need. 25x annual spend is a common heuristic for the required net worth before you can safely retire. And the older you are, the less margin of safety you need. 4% of $1.3 million is $52k, which is enough to live quite comfortably in many places.
There is a big difference between Europeans in Europe and Europeans in the US - Europeans in the US readily point this out. The idea that Europeans are somehow genetically less suited to building tech companies is an obvious strawman. The reality is that Europeans in America are, like all immigrants, heavily self-selected.
The article also does not mention the huge difference in compensation for technology talent between the US and Europe. As long as that gap exists, top European talent will continue leaking across the Atlantic.
> the huge difference in compensation for technology talent
This isn't a single lever that can be pulled independently. You need highly fluid labor markets that force companies to pay competitive efficiency wages (i.e. fewer/weaker/no unions), competitive and innovative companies, lower regulation and government bureaucratic interference, ambitious and career focused labor force, etc. etc.
It's a chicken-and-egg problem that, at its root, stems from culture (IMHO).
If you as a shareholder receive a dividend of X% of the share price, you owe tax on it. But if the company buys back stock and as a result the share price increases by X%, you do not owe tax on that unrealized gain until you choose to sell your stock. That’s good for investors.
Qualified dividends are taxed at the same rate as long term capital gains, although the rules for what qualifies can be tricky (special one-time dividends in particular).
Very interesting. I had never seen that, but had seen this other essay which is clearly based on it, which supposes the complications that might arise if the FAA required pencils to certified for aviation use. I think it's a lot funnier than I, Pencil.
What about people who don’t want to live near train tracks? Or people who currently live on land that would be seized if train tracks were to be built? Not everyone wants to live in a city.
What about people who don’t want to live near train tracks? Or people who currently live on land that would be seized if train tracks were to be built? Not everyone wants to live in a city.
You see those gigantic parking lots and 4 way stroads? Many of the parking lots are empty for much of the day, and stroads are dangerous and inefficient.
For that matter, freeways and interstate highways are valuable resources we could repurpose for train tracks.
We have grossly inefficient transportation corridor that could easily be made more efficient.
Now, there will still be need to demolish homes and businesses for public benefit, but reducing traffic and making good use of land more efficiently means less homes will needed to be demolished.
The polled preferences of Americans look something like 60-40 in favor of single family homes. The actual land distribution in metropolitan areas looks more like 95-5.
To some degree, building more train tracks and allowing dense housing relieves pressure on the remaining areas.
Whoa! In my undergraduate computer science program at a top US public university, each course was graded to a curve that determined the number of grades in each range. If memory serves, 27% of the class received A or A-. I knew grade inflation at private schools was real, but am still surprised to see 70% of Yale kids getting As in CS. At that point, they might as well just assign pass / fail grades.
SCOTUS is unfortunately more powerful than Congress, at least because they're more capable of doing things.
Luckily they're more aligned with consumer welfare, which is good, as opposed to Khan's hippie "everything big must be bad" standard. This only supports small business owners and VCs, who are probably the most evil people in the US.
I don't think it's correct to paint Khan as following a "big is bad" standard. For instance, in [1] she explicitly says the opposite:
> Antimonopoly does not mean ‘big is bad.' The New Brandeisians—like Justice Brandeis—recognise that certain industries tend naturally towards monopoly. This is especially true of networks. In such cases, the answer is not to break these firms up, but to design a system of public regulation that prevents the executives who manage this monopoly from exploiting their power. A second goal is to ensure that executives face the right incentives to provide the best service possible to everyone who relies on the monopoly to sell or to buy a particular product or service. In the past Americans have used both direct government regulation, and various forms of antimonopoly law and policy, to achieve these ends.
I would believe what she said if she was doing this, but instead she's suing tech companies and asking them to break up in silly ways which is… not that.
> Part of her agenda is strengthening the merger review process. Merger review is intrinsically hard, because authorities essentially have to try and figure out what the effect will be if the merger is allowed or denied. There is no crystal ball for this, and there are rarely 'right' answers. Yet the merger regime has been very favourable to large firms over the past few decades, and there's a reasonable consensus in the antitrust community that it should be strengthened. A tighter merger process might make startup exits through acquisition less common, but it should also make it easier for startups to grow organically into large companies. In terms of creating a bottom-up and more pluralistic Silicon Valley, that seems like a win to me.
Serious question: what is the "antitrust community"?
Can you shed some light on the theory that making mergers more difficult would either a) make it easier for startups to grow organically or b) benefit society in general?
If the upside from working at or creating a startup is due to some combination of IPO or acquisition (this is of course a simplified model), and acquisitions are made more difficult, why do you assume that IPOs would become more likely or more lucrative? Once upside is removed from the startup ecosystem, how will potential employees and founders respond at the margin? I'm struggling to see an equilibrium here that involves more rather than less money and work poured into startups.
>> Serious question: what is the "antitrust community"?
Members:
- lawyers who work in the agencies on antitrust
- lawyers who work in competition practices of major law firms
- lawyers who work as competition counsel in-house at large firms
- legal scholars (in law schools) who write on these issues
- economists who work in the same agencies (FTC and DoJ)
- economists who work in the litigation consulting industry
- economists who work in academia on antitrust and competition issues (anyone in an economics department who lists “industrial organization” as a research field).
Plus our various groupies and hangers-on, who are numerous, because our parties are amazing…
Whatever "antitrust community" might be, if exists, almost by definition will be filled with people who are on balance biased towards more extreme enforcement of antitrust. Otherwise they would have no reason for being.
So not surprising at all that the "antitrust community" on average would be pro an FTC witchhunt whatever the basis may be on paper.
Do you consider yourself part of the "antitrust community?" Ok, if so, please let me know then, "doing it right," in your own opinion, entails doing more or less than is done now, in aggregate?
> Serious question: what is the "antitrust community"?
Not the poster, but I would assume it refers to the people who follow developments in antitrust law and the enforcement thereof (so antitrust lawyers, basically).
Well, and lawyers-turned-professor and/or treatise authors (who are typically professors). Often the experts turn towards academia if they're truly in it just to know everything about the field. So, Hovencamp, etc.
The "antitrust community" is people working in antitrust law/policy/academia who write, tweet, speak at conferences, etc. Two caveats are that a) this is my view based on personal observations, and b) that a consensus doesn't mean that everybody agrees. Undisputedly however, there is a lot of academic work these days which comes to the conclusion that merger review should be strengthened. For instance, see [1].
Khan's aim isn't necessarily to make mergers more difficult, or to prevent them per se. Rather, it's to make a more concerted effort to prevent mergers which on balance, appear not to be in the public interest. There are several reasons why a merger might be harmful.
First, some mergers are "killer acquisitions" whereby a large firm will acquire a "nascent" competitor and then discontinue its product (e.g. [2]). One danger here is that killer acquisitions nip start-up competition in the bud, such that new firms don't have a chance to grow and compete against incumbent firms. That's a problem because competition means that consumers, rather than incumbent firms, ultimately get to choose market outcomes. If there is no choice, then consumers can't choose. The ultimate failure mode here is some kind of command economy where monopoly firms get to make most of the decisions about how markets work and consumers get little say at all.
Second, mergers lead to market concentration because you're taking a market with n firms and moving to a market with n-1 firms. Market concentration isn't inherently bad, indeed, some markets are 'naturally' concentrated. That said unconcentrated markets are generally preferred to concentrated ones because concentrated markets can lead to things like tacit collusion (which has similar outcomes to a cartel) [3].
Third, if there is a real possibility for startups to grow organically and challenge large incumbent firms for the market, then theory goes that VC funding could be stimulated on the promise of a potentially huge return. For instance, a VC might be willing to fund a firm if there's a 5% chance that it will be the next Google, but not if there's a 10% chance that it gets acquired in a year or two.
You make a good point regarding acquisitions, IPOs and the personal incentives to work at a startup. I'm not assuming that IPO's would become more likely or lucrative; I don't have a view on that (except perhaps what I said in the previous paragraph). I guess if a firm was going to be successful, and a merger wasn't an option then it would eventually IPO instead, no? That might lead to delayed compensation, but it shouldn't affect the viability of a solid business. Fewer acquisitions might end up with some firms failing before IPO which would have otherwise been acquired. That's bad from the perspective of those at the firm, but isn't inherently bad from a social perspective. After all competition necessarily entails winners and losers. If all else fails, there is a 'failing firm defence' which would allow an acquisition if the only other option is the firm going out of business [4].
Finally, the lack of enforcement over the past few decades hasn't given regulators much opportunity to "learn" what is a good/bad merger. A more active merger review policy would entail regulators building up expertise and fine-tuning their approach. It's important to remember that merger control isn't necessarily adversarial. At its best, it's a positive-sum dialogue between firms who want to do business and regulators who are trying to provide public-minded oversight.
> I guess if a firm was going to be successful, and a merger wasn't an option then it would eventually IPO instead, no?
No, most businesses don't grow revenue fast enough to be IPO-worthy (or, as with WhatsApp and Instagram when they were acquired, don't make enough revenue to even be viable standalone businesses).
But even putting all that aside, what about the personal freedom argument?
If a founder wants to sell their company because they're tired of running it (this is a job that comes with immense personal sacrifice), or wants cash to take care of family, or sick parents, etc, should the government have the right to force them to keep it running?
The societal implications of the above feel absurd.
I think it's a false dichotomy to say that businesses either succeed by IPO/acquisition or fail. Can't a startup "just" be profitable within its niche, serve its customers well and make money while being privately held? It's not clear to me that we should live in a world where every middling startup is eventually acquired or has an IPO. Sure, some startups are destined for exponential growth and huge success, but not all. Likewise, if a business isn't profitable (and can't get funding to tide it over until it is profitable) then maybe it's not a good business. That's catastrophic for the firm, but on a social level, it essentially survival of the fittest.
With regards to personal freedom, we need to think more broadly than just founders. There's also the personal freedom of citizens to consider too; when powerful firms control large parts of the economy they essentially operate as private governments which can also impinge on people's personal freedom (see the below quote). Should a startup founder be allowed to sell a startup to monopolist/oligopolist if that contributes to more economic concentration? Maybe each individual merger isn't that harmful, but taken together their cumulative effect is. Besides, Khan isn't trying to block all mergers. She is focusing on mergers with already dominant firms; perhaps it's possible for the founder to sell a firm which isn't in a dominant position.
> ...power that controls the economy should be in the hands of elected representatives of the people, not in the hands of an industrial oligarchy. Industrial power should be decentralised. It should be scattered into many hands so that the fortunates of the people will not be dependent on the whim or caprice, the political prejudices, the emotional stability of a few self-appointed men. The fact that they are not vicious men but respectable and social minded is irrelevant. That is the philosophy and the command of the Sherman Act. It is founded on a theory of hostility to the concentration in private hands of power so great that only a government of the people should have it. [1]
How do you define ‘power’? Absent government regulation that can result in pathologies, a corporation only exists if customers are happy with its services. If Amazon makes me unhappy I’ll just take my money to alternatives.
No corporation forces me to do anything. They offer services and I’m free to buy or not from whomever.
Power is notoriously hard to define. In antitrust "market power" is usually defined as either the ability to set prices above marginal cost, or an ability to act free from competitive constraint (i.e. if the firm takes some action, it doesn't worry about other firms responding and taking away some of its business).
On the point of consumers switching away from bad firms, you say that
> a corporation only exists if customers are happy with its services
I'm not so sure. There are many firms that exist despite consumers being unhappy with the products/services provided. The notion that consumers can take their business elsewhere is shouldn't be taken for granted. There are many times where that's not possible; maybe alternative firms don't exist, or they're not convenient, or they have products you like (even) less. Maybe you're "locked in" to the existing firm even though it's starting to provide a worse service, through a contract or because of some path dependency. Thus, we can't take it for granted that firms and consumers have equal bargaining power and that consumers can simply stop purchasing at any time.
I’ve never seen alternative firms not exist unless, like I said earlier, government regulations exist to make it harder for new market entrants to pop up (see eg investment banking firms or local cable companies in some regions). In a free society there are always a set of people eager to take advantage of existing vendor weakness.
I commend your exceeding politeness but it seems like this position is based on feelings of consumer harm and missionary zeal rather than rigour (including a lack of true acknowledgement of second order effects of this regulation - all regulation has costs). Yet here I am as a consumer speaking for myself otherwise.
Maybe this why Lina keeps losing her cases.
WhatsApp can’t figure how to make money -> Facebook buys them and can afford to keep them free -> consumers continue using them instead of losing access to a wealth-generating service (the third world is full of small businesses that run on WhatsApp and Instagram).
Still not clear to me why preventing this from happening is good.
I agree with you that regulation has costs. I never intended to communicate that it didn't. Yet, at risk of stating the obvious, the fact that something has costs doesn't make it not worth doing if its benefits are greater than its costs. The question then returns to the crystal ball; will society be better off if we allow or deny the merger? I get a sense that you are of the opinion that free markets generally lead to good outcomes. Me too! Central planning of economies is generally to be avoided. Yet at the same time, I view large concentrations of corporate power as an endogenous source of unfreedom in otherwise free markets. Big companies, if we're not careful, become mini central planners in their own right.
Are you suggesting that the only reason competition might not exist is because of government regulation? If so, that's not correct. Being free to enter a market doesn't mean that it's viable to do so. Barriers to entry are common in all kinds of markets so it's not as though people can always start competing against a weak vendor. Exclusive contracts, the threat of predatory pricing, increasing returns to scale, high switching costs, network effects, IP monopoly, geographic isolation, etc can mean that it's simply infeasible to enter a market and start competing against an underperforming incumbent. Local cable companies are a good example. If you want to start a cable company, you either have to lease cable from an existing owner or lay your own cable. The former is infeasible if your competitor owns the cable, and the latter may be prohibitively expensive. All that to say... merger control is an important tool which can help prevent markets from becoming more concentrated when barriers to entry are high [1].
Regarding WhatsApp & Instagram, we don't know what the counterfactuals are if Facebook didn't acquire them. It's not a dichotomy where either WhatsApp was either acquired or would cease to exist. Indeed, there could be another world where Instagram (a startup monetised via ads) merged with WhatsApp (another startup without a monetisation plan) to challenge Facebook. Perhaps that additional competition would have led to all sorts of innovations that we haven't thought of yet. Of course I can't prove that, but again, we're back to the crystal ball again ;)
Finally, it's important to acknowledge that antitrust is political. That's because public power (the state) is used to discipline/reshape private power (privately held firms). Furthermore, it's asking a very political question: who gets to coordinate economic activity? [2] Many other areas of law are similarly political (e.g. taxation law, electoral law), so antitrust isn't special. Yet it does explain to some extent why there are strong disagreements. That's okay :)
I would like to see a list of costs of these regulations. Lina Khan never mentions it. Again there may be a fundamental lack of rigour that causes her to lose her cases so absolutely.
Yes, you point to another fundamental problem: central planning has a consistent record at making most of the populace poorer. It’s precisely because you don’t know the counterfactual that you should leave decisions to those with knowledge and skin in the game (ie market participants).
If Silicon Valley’s best VCs have a 30% success rate at picking winners, I don’t see how bureaucrats in Washington (whose salaries, modulo election season, aren’t even subject to consumer preferences given that they’re extracted by force from our taxes) feel so confident.
Finally, of course there is a fundamental axiom that is the root of the disagreement. I view government bureaucrats as our servants given we pay their salaries. I would rather consume services with private service providers as I please and involve the government to arbitrate disputes that come up.
PS The UK government did a nice job opening their cable market.
I don't know where you live, but my anecdata from being homeschooled starting ~20 years ago in the Bay Area contradicts this. I was part of a group of more than 50 homeschooled children of various ages. Our parents all had their own reasons for homeschooling us, but to my knowledge, none of them did it because they thought the public schools were too secular and teaching "sinful" science.
We were aware of families homeschooling for religious reasons, but not in the Bay Area.
Absolutely, all politics is local and the plural of anecdote isn’t data. I only homeschooled for a single year. I fully expect the communities to vary by region.
To be fair the topic of evolution only came up because the arborist made an off hand comment about how a particular tree had evolved from a tree that is native to warmer climates to survive in our area and it caused a bit of a stir with the parents. I think the park service got some sternly worded letters afterward.
