What [Richard] Florida now sees is the double edge of the advice he gave and that so many followed.
A bigger, denser city, in general, increases the rate of innovation, increases the rate of startups, increases the rate of productivity; at the same time, the bigger, the denser, the more knowledge intensive, increases the rate of inequality, increases the rate of economic segregation, makes housing less affordable. So it’s a two-sided monster.
The underpinning tenet of chasing exponential growth is that anything less than “all of it” is never enough. … But it’s not the only paradigm available for rent.
Source: Enough – Signal v. Noise
Once you realize that the prevailing narrative of entrepreneurship is a paradigm, and not an immutable natural law, you open your eyes to alternatives. One of which is that of enough.
Big enough. Ambitious enough. Profitable enough.
But how much, exactly, is enough? Well, obviously that depends. What’s easier than trying to pin down a goal a priori is to accept when you’re past it.
The longest lived businesses in the world aren’t the ones that were biggest in their day. Many of them are family firms, or small to mid-sized enterprises content with steady evolvement of their niche. Content with enough.
Bigger isn’t automatically better, and may well simply be more brittle. Bigger risks, bigger dangers, harder falls from grace.
Taking profits every year, along the way, insulates owners from ending up as the last, biggest fool to buy a stake before the valuation stops growing.
Ultimately, what defines enough is up to you. The paradigm shift is to decide that there is such a point, and that the point is below “all of it”.
The freshman House representative Ro Khanna wants to see a broad rethinking of how the government evaluates mergers like Amazon-Whole Foods.
the FTC and DOJ need to consider all of these factors and make a holistic determination: Is a merger on balance helping wages, jobs, investment for innovation, and prices? Or is it, on balance, not?
And the problem of the current antitrust legislation is that it’s just a litmus test on prices and doesn’t consider all these other equally important factors. And that’s really the philosophical debate between Brandeis and the consensus all the way from Theodore Roosevelt versus the shift to free-market absolutism that Robert Bork enabled.
The key to understanding Amazon’s purchase of Whole Foods is to understand that Amazon didn’t buy a retailer: the company bought a customer.
like AWS, the key to profitability is having a first-and-best customer able to utilize the massive investment necessary to build the service out in the first place
Source: Why I Dissented – Neel Kashkari – Medium (President of the Federal Reserve Bank of Minneapolis)
In summary, I dissented because the key data I look at to assess how close we are to meeting our dual mandate goals haven’t changed much at all since our prior meeting. We are still coming up short on our inflation target, and the job market continues to strengthen, suggesting that slack remains. Once the data do support a tightening of monetary policy, I would prefer the next policy move by the FOMC [Federal Open Market Committee] to be publishing a detailed plan that explains how and when we will begin to normalize our balance sheet. Once we put that plan in place, and we see the market reaction to it, we can return to using the federal funds rate to remove monetary accommodation when the data call for it.
Monetary policy is currently somewhat accommodative. There don’t appear to be urgent financial stability risks at the moment. There is great uncertainty about the fiscal outlook. The global environment seems to have a fairly typical level of risk. From a risk management perspective, we have stronger tools to deal with high inflation than low inflation. Looking at all this together led me to vote against a rate increase.
I know—for over 20 years, I helped craft some extremely generous executive-compensation packages.
Source: How Companies Actually Decide What to Pay CEOs – The Atlantic, by Steven Clifford, author of The CEO Pay Machine: How It Trashes America and How to Stop It
In 2014, 500 of the highest-paid senior executives at U.S. companies made nearly 1,000 times as much money as the average American worker, after taking into account salary, bonuses, and stock-based compensation. … Through the 1970s—when the ratio of CEOs’ pay to that of the average worker was much lower, at somewhere between 20:1 and 30:1—the lodestar was “internal equity,” or how an executive’s pay compared with that of other employees in the company. A nascent industry, executive-compensation consulting, changed this. Consultants recommended switching to “external equity,” meaning compensation would be based on what other CEOs were paid.
every board I have ever sat on or researched benchmarked itself at the 50th, 75th, or 90th percentile, therefore targeting CEO pay at similarly exalted levels. Benchmarking below the 50th percentile says, We are a lousy company and don’t even aspire to be better. So in this sense all CEOs are above average: To be benchmarked at or above the 50th percentile, they need not do anything other than report to a board that considers its own company exceptional.
Around the world, a generational divide is worsening.
Source: The Old Are Eating the Young – Bloomberg, by Satyajit Das
Central to the issue is that the rapid rise in living standards and prosperity of the past 50 years has been largely based on rising debt levels, ignoring the costs of environmental damage and misallocation of scarce resources.
A 2010 study from the International Monetary Fund found that in the U.S. the lifetime tax burden was positive (tax paid was less than benefits received) for all age cohorts above 18 years, with the largest benefit accruing to those over age 50. But the figure for future generations is negative (benefits received will be less than taxes paid), meaning they’ll have to meet the obligations of their elders.
In economic organization, we must distinguish between enforcing rules and making rules. Laws are rules enforced by state bureaucracy and made by a legislature. The SWIFT Protocol is a set of rules enforced by SWIFTNet (a centralized computational system) and made, ultimately, by SWIFT’s Board of Directors. The Bitcoin Protocol is a set of rules enforced by the Bitcoin Network (a distributed network of computers) made by — whom exactly? Who makes the rules matters at least as much as who enforces them. Blockchain technology may provide for completely impartial rule-enforcement, but that is of little comfort if the rules themselves are changed. This rule-making is what we refer to as governance.
Using Bitcoin as an example, the initial versions of the protocol (ie. the rules) were written by the pseudonymous Satoshi Nakamoto, and later versions are released by a core development team. The development team is not autocratic: a complex set of social and technical entanglements means that other people are also influential in how Bitcoin’s rules are set; in particular, so-called mining pools, headed by a handful of individuals, are very influential. The point here is not to attempt to pick apart Bitcoin’s political order; the point is that Bitcoin has not in any sense eliminated human politics; humans are still very much in charge of setting the rules that the network enforces.
blockchain technologies cannot escape the problem of governance. Whether they recognize it or not, they face the same governance issues as conventional third-party enforcers. You can use technologies to potentially enhance the processes of governance (eg. transparency, online deliberation, e-voting), but you can’t engineer away governance as such. All this leads me to wonder how revolutionary blockchain technologies really are. If you still rely on a Board of Directors or similar body to make it work, how much has economic organization really changed?
And this leads me to my final point, a provocation: once you address the problem of governance, you no longer need blockchain; you can just as well use conventional technology that assumes a trusted central party to enforce the rules, because you’re already trusting somebody (or some organization/process) to make the rules.
If we can align the incentives of the players involved, we can build infrastructure that is actually necessary and while doing it quicker and at lower prices than we do now.
One of Goldhill’s key devices is to place the language and values of the health care industry on a metaphorical island. He constantly talks about life “on the island” and “on the mainland.” For example, on the island, nobody ever talks about prices, they only talk about costs. This is not a subtle nuance. …
Does it really matter to you how much it costs the grocery store to provide that twelve pack of your favorite beverage? Of course not. It’s only matters to you — someone living on the mainland — what the price is to you. Price is how you determine your preferences among competing items. Profit is how the market receives feedback on those preferences. High prices invite substitution. High profits invite competitors. This is all basic and obvious to us on the mainland.
Which is why, on the healthcare island, the conversation is about costs. … Just like on Healthcare Island, on Infrastructure Island we have our own way of talking about things. And we never talk about prices, only about costs.
RE: The U.S. Has Forgotten How to Do Infrastructure – Bloomberg, by Noah Smith
That suggests that U.S. costs are high due to general inefficiency — inefficient project management, an inefficient government contracting process, and inefficient regulation. It suggests that construction, like health care or asset management or education, is an area where Americans have simply ponied up more and more cash over the years while ignoring the fact that they were getting less and less for their money.
The European Commission’s antitrust case against Google is likely to be the first of many against aggregators, because the end game of Aggregation Theory is monopoly.
To briefly recap, Aggregation Theory is about how business works in a world with zero distribution costs and zero transaction costs; consumers are attracted to an aggregator through the delivery of a superior experience, which attracts modular suppliers, which improves the experience and thus attracts more consumers, and thus more suppliers in the aforementioned virtuous cycle. It is a phenomenon seen across industries … The first key antitrust implication of Aggregation Theory is that, thanks to these virtuous cycles, the big get bigger; indeed, all things being equal the equilibrium state in a market covered by Aggregation Theory is monopoly: one aggregator that has captured all of the consumers and all of the suppliers. … One more implication of aggregation-based monopolies is that once competitors die the aggregators become monopsonies — i.e. the only buyer for modularized suppliers. And this, by extension, turns the virtuous cycle on its head: instead of more consumers leading to more suppliers, a dominant hold over suppliers means that consumers can never leave, rendering a superior user experience less important than a monopoly that looks an awful lot like the ones our antitrust laws were designed to eliminate.
interoperability and API disclosure — could be solutions when it comes to defusing the market power of aggregators
the broader point underlying Aggregation Theory holds: the (metaphorical) rules have changed, and it’s fair to believe that at some point the laws may have to as well. It won’t be easy, though, and the possibility of unintended consequences will be strong, particularly given the self-corrective resiliency tech has shown to date that provides a compelling argument for leaving well enough alone.