One interesting way to reduce maze levels and monopoly power would be to make it harder for industries to consolidate to fewer players.
One possible policy would be to tax buying stakes in limited-liability companies by limited-liability companies. 20% might work.
Hedge funds that play a valuable economical role can do that under corporate structures that don’t include limited liability. This would likely reduce the likelihood that individual hedge funds are “too big to fail”. The owners of those hedge funds would then have more skin in the game.
Why target change rather than level? Taxing organizations by total size or by levels of management might be closer to what you’re seeking. Or, more radically, doing away with limited liability for corporations—make officers (and shareholders!) liable for corporate actions.
These choices do, of course, also limit the willingness to take risks and overall decrease civilizational capability. Whether you consider that to be additional valuable slack or a significant reduction in overall welfare is a modeling choice :)
I’m not targeting chance in size. If a company invests in valuable technology and increases in size as a result, it wouldn’t face taxes in this proposal. I’m targeting the activity of buying stocks by limited liability corporations.
I think stocks should generally be held by private individuals or institutions that are not limited liability corporations.
I want companies to take risks by investing in technology and not take risks by buying up stocks of companies. If I look at a company like Pfizer I would want them to reinvest their profits into new research technology instead of buying back their own shares or buying up other companies.
Mergers make markets less competitive and can be done by CEO’s for reasons that are in the interest of the CEO but neither their company nor society as a whole. A 20% tax would reduce the mergers to those where a really strong case for synergy can be made.
Hmm. I model “targetting the merger” as worring about the path, where “targetting the resulting structure” would be preferable, whether it occurs by growth, acquisition, or initial setup.
I see “Mergers make markets less competitive” as biasing toward the status quo, and privileging the same result created by non-merger mechanisms. I’m curious whether I’m wrong on this, and you see the merger path to that structure as the main problem, or whether I’m misunderstanding the reasons for your proposal.
If you have a market where you have a large company with a lot of market power but that company is run relatively badly in a world without mergers that large company will lose. With mergers, it can be possible for the badly run company to just buy off potential competitors.
I want people who are able to effectively make investments in technology to be in control of large amounts of capital instead of people who are clever about company politics and merging being in control of that much control.
We need companies like Intel who can build a 20 billion dollar microchip factory and for that reason having laws that directly forbid large companies would create a lot of damage.
One interesting way to reduce maze levels and monopoly power would be to make it harder for industries to consolidate to fewer players.
One possible policy would be to tax buying stakes in limited-liability companies by limited-liability companies. 20% might work.
Hedge funds that play a valuable economical role can do that under corporate structures that don’t include limited liability. This would likely reduce the likelihood that individual hedge funds are “too big to fail”. The owners of those hedge funds would then have more skin in the game.
Why target change rather than level? Taxing organizations by total size or by levels of management might be closer to what you’re seeking. Or, more radically, doing away with limited liability for corporations—make officers (and shareholders!) liable for corporate actions.
These choices do, of course, also limit the willingness to take risks and overall decrease civilizational capability. Whether you consider that to be additional valuable slack or a significant reduction in overall welfare is a modeling choice :)
I’m not targeting chance in size. If a company invests in valuable technology and increases in size as a result, it wouldn’t face taxes in this proposal. I’m targeting the activity of buying stocks by limited liability corporations.
I think stocks should generally be held by private individuals or institutions that are not limited liability corporations.
I want companies to take risks by investing in technology and not take risks by buying up stocks of companies. If I look at a company like Pfizer I would want them to reinvest their profits into new research technology instead of buying back their own shares or buying up other companies.
Mergers make markets less competitive and can be done by CEO’s for reasons that are in the interest of the CEO but neither their company nor society as a whole. A 20% tax would reduce the mergers to those where a really strong case for synergy can be made.
Hmm. I model “targetting the merger” as worring about the path, where “targetting the resulting structure” would be preferable, whether it occurs by growth, acquisition, or initial setup.
I see “Mergers make markets less competitive” as biasing toward the status quo, and privileging the same result created by non-merger mechanisms. I’m curious whether I’m wrong on this, and you see the merger path to that structure as the main problem, or whether I’m misunderstanding the reasons for your proposal.
If you have a market where you have a large company with a lot of market power but that company is run relatively badly in a world without mergers that large company will lose. With mergers, it can be possible for the badly run company to just buy off potential competitors.
I want people who are able to effectively make investments in technology to be in control of large amounts of capital instead of people who are clever about company politics and merging being in control of that much control.
We need companies like Intel who can build a 20 billion dollar microchip factory and for that reason having laws that directly forbid large companies would create a lot of damage.