Consolidations of every field have hurt. In the few small things that I do have any passing familiarity with, consolidations was the one big noticeable trend, from aviation to comic book distribution. It's extremely odd how so much consolidation has occurred as a natural trend. It's the nature of business, I understand, but still...

Corporate welfare-ism is at least decried as much as personal welfare by the old school republican commentators, to their credit, but yes, it does amount to us being the greatest Socialist nation [for the right people].

The People...
How do we reverse the trend? Spread out all loads, all opportunities, all benefits, all responsibilities and authority back to us collective individuals? When the people themselves actally do collectively run the country will we matter as more than mere sucker consumers fit only to be otherwise incarcerated or eliminated and only then. And Only Then.

Has there ever been any mass deconsolidation in history? Is there any sort of model whatsoever? Is there even sort of speculative theory? If not, what does that say?

What other time or nation ever had such opportunity, means, or motivation for direct governance? The population explosion is only going to increase. While we rely on representation rather than direct governance will things worsen rather than improve.

Deconstruction is called for *now*.
Chalmers Johnson says dismantle the Empire. It needs go further, beyond demilitarization (which amounts to the same in any case) but there is not only no model, there's no consensus on questions and issues never laid on the table. Where's the bloody table anyway?

Deconsolidation may begin with slack; small business loans? No, screaming advocacy. Beyond preference for independent media; independent everything. Everyone.

The assembly line has trapped us. And there will never be handbuilt computer chips.

There is a standard business growth model that most economists and analysts accept, which argues that a new product or service attracts many new entrants, but fairly quickly consolidation begins until the product or service reaches maturity, at which there are usually only three or four corporations left competing with very narrow profit margins but a relatively secure revenue and profit base.

This model works well in many manufacturing industries - autos being the best example - and not so well in service industries (hair salons being the opposite example).

What is complicating this picture is the general slowdown in growth and productivity in the U.S. economy, mostly as a result of globalization. This development tends to accelerate consolidation because companies must find some way to grow their profit even if the underlying economy is not growing as fast as it used to. This is the approach taken by financial companies.

Unfortunately in finance when you consolidate banks you consolidate risk and heighten systemic risk. That is why in Canada, which is down to six banks, each of them is too big to fail. My impression of Bank of Canada regulation is that it is tighter than the Fed is because the stakes are so much higher. Still, that hasn't prevented some of the Canadian banks from getting sucked into the U.S. mortgage problem.

In the U.S. we let securitization, deregulation, and consolidation brew up an unhealthy level of risk to the economy. Now all we can do is argue whether the taxpayer should cover all or some of the losses, and whether any major changes are going to occur once this is cleaned up.

banks are pretty strongly regulated. Every few years they try to convince the government to let them buy each other up and go down to 3 years. Even the Conservatives tell them no. Bad enough that there are only 6.

That said, they aren't as strongly regulated as I'd like, in certain respects. We repealed our 4 pillars legislation too, and just as in the US, that was a mistake in my view.

Doesn't this then imply that under a Globalization model, there will be just three or four corporations worldwide in each sector, instead of three or four nationwide in each sector?

Doesn't that mean that though the rewards will be greater, the risks will be even greater?

It seems to me that such a model has hurt the middle class, because this has distilled the economy into a "top tier" level of employees, and an "everyone else" level of employees. There is no middle left because the middle is the piece that is made redundant to gain efficiency. Instead of each metropolitan area housing a number of companies, each needing accountants, a sales force, etc., those functions are consolidated too.

While having just 3 or 4 companies worldwide that do everything might be the most efficient, I doubt that is the best path for the world economy.

One thing that strikes me is that the ultimate end-game of both pure capitalism and pure socialism are essentially the same -- a perfectly efficient corporation that is in control of everything. The only difference is that under socialism, that corporation would be owned by everyone -- one person, one vote, while under capitalism, that corporation would be owned by a few, one dollar, one vote.

http://zuma.vip.warped.com/portal.htm#nopolitician

George Orwell

WELLS, HITLER AND THE WORLD STATE (1941)

* It is interesting to notice that Mr Kennedy, USA Ambassador in London, remarked on his return to New York in October 1940 that as a result of the war “democracy is finished”. By “democracy”, of course, he meant private capitalism. (Author’s footnote.)

Meanwhile Prescott Bush, George Herbert Walker Bush's father, had been funding Hitler's rise. To such desired ends:

If Hitler wins this war he will consolidate his rule over Europe, Africa and the Middle East, and if his armies have not been too greatly exhausted beforehand, he will wrench vast territories from Soviet Russia. He will set up a graded caste-society in which the German HERRENVOLK (“master race” or “aristocratic race”) will rule over Slavs and other lesser peoples whose job it will be to produce low-priced agricultural products. He will reduce the coloured peoples once and for all to outright slavery. The real quarrel of the Fascist powers with British imperialism is that they know that it is disintegrating. Another twenty years along the present line of development, and India will be a peasant republic linked with England only by voluntary alliance. The “semi-apes” of whom Hitler speaks with such loathing will be flying aeroplanes and manufacturing machine-guns. The Fascist dream of a slave empire will be at an end. On the other hand, if we are defeated we simply hand over our own victims to new masters who come fresh to the job and have not developed any scruples.

Tarpley's biographical history book on the Bushes is eye-openingly educational:
http://www.tarpley.net/bushb.htm#Table

A zip of it is available as well.

...With all that said first I then suggest reading
1984.

And I highlyhighly recommend the audio book version as well:
George-Orwell-1984-Audio-book

It directly addresses these things you raise.
Many have noted we are effectively living the book now.

One thing that strikes me is that the ultimate end-game of both pure capitalism and pure socialism are essentially the same -- a perfectly efficient corporation that is in control of everything. The only difference is that under socialism, that corporation would be owned by everyone -- one person, one vote, while under capitalism, that corporation would be owned by a few, one dollar, one vote.

This is exactly the argument of the New World Order conspiracy theorists. It's starting to look like there is more than an element of truth to it.

The problem is not "capitalism" equating with "socialism," however. It's that both monopoly capitalism and socialism eventually result in command economies supported by the state. The former tends toward fascism and the latter in totalitarianism. Market capitalism that is sufficiently decentralized does not, nor does progressive socialism.

The answer is not more government intervention, which just increases centralization. It is a revamping of the US socio-economic system away from monopoly capitalism/fascism toward decentralized markets and progressive social programs.

If we don't do this soon, US liberal democracy is threatened with replacement by plutocratic oligarchy and the tendency will be toward fascism (military-industrial-financial-governmental revolving door).

There are too many constricting factors. Labor is not mobile across borders with different languages and cultures. Exchange rates add a level of complexity and risk as well. We are tending to see some examples of global maturity and consolidation, starting with the airlines, but it remains to be seen whether we will get down to only three or four carriers globaly.

Now all we can do is argue whether the taxpayer should cover all or some of the losses, and whether any major changes are going to occur once this is cleaned up.

It's a hell of a time to alienate taxpayers.
With our citizenship amounting to less than a hill of beans, this bottom line adds to tax revolt temptations.

Iraq may end up costing so much the number's meaningless, so: we're at war with Iran now as well. Brilliant.

Patently America's government is her own largest and most intractable opponent by far far far, not to mention at bottom one could say her only real opposition.

We the taxpayers are ruled by lawbreakers, capos, irresponsible unconscioanable villains and we have such evidence. We are *not* represented by them. We are ruined by them. There is easily a case to be made that such bill due be paid by Them not us. Our government may or may not be bankrupt, but we systemically are, and no $600.00 check covers it. A $6,000.00 check might begin to, if half of that goes abroad to pay off our debt even only on interest due, but of course there's no such capital available; it's all in the pockets of a consolidated few. Who must be made to own up.

Systemic Chapter 11. A reconstitution. Now.
Direct governance. Now. Rather than later.
Different degrees of clean up by far. Far far far.

I just wrote the following to someone who objected to the idea of breaking up some of these companies and to restricting the types of securities:

Companies that are "too big to fail" are huge causes of moral hazard. There is also the political power that mega-corporations wield to consider. Any company that is "too big to fail" should either be a government monopoly or so heavily regulated that it might as well be (as the old utilities were). True free enterprise requires that companies be allowed to cleanly fail. If Bear Sterns was too big to fail, then Bear Sterns was too big to operate effectively as a private enterprise. If the government has to be the insurer for your downside losses, then the government should be making the profit in the good times too, or at least making sure you aren't doing foolish things.

I'm not a fan of credit default insurance - it just displaces risk, but what we're finding out is that it doesn't seem to actually reduce systemic risk, but increase it. Small companies, each bearing their own risk seem preferable. You may lose a few more companies every year, but the systemic risk is a lot smaller - one domino going down won't take everyone down, and by making sure that companies know that they are responsible for their own borrowers defaults you make them actually pay attention to the /real/ default risk, which as the current crisis tell us, isn't what that AAA rating may have made you think it was. Outsourcing checking credit-worthiness and default risk is one of the worst things that happened.

In any case, the point is that Wall Street has shown that they can't manage these exotic instruments. They have blown it. At this point either the instruments should be taken away from them, or heavy regulation including strong and unavoidable leverage-ratio caps and so on need to be put in place. If the economy is genuinely at risk (and I believe it is) because these instruments have been mishandled, then one would have to find that such financial instruments have made a big upside difference to real economic growth (not Wall Street's profits, but actual growth). I'd be very surprised if there's evidence that the effect has been more than minor, and the financialization theory of such people as Phillips is that,financialization is actually one of the roots of the US's economic issues, such as stagnant real wage growth for most Americans, debt, and so on. And exotic instruments are a big part of that. Making real new goods and services, not financial ones, is what makes for widespread prosperity in a country.

That said, I'm open to ideas for regulating this stuff, and keeping it available. But the bottom line has to be "how are we going to make sure that we don't have to bail these idiots out yet again?" Say what you will about the New Deal Framework, but it did very well at making sure there were no repeats for a very long time - until, in fact, it was deliberately repealed step by step. It pretty much worked. Maybe it needed updating, but instead it was just gotten rid of.

this graf was a gem:

Companies that are "too big to fail" are huge causes of moral hazard. There is also the political power that mega-corporations wield to consider. Any company that is "too big to fail" should either be a government monopoly or so heavily regulated that it might as well be (as the old utilities were). True free enterprise requires that companies be allowed to cleanly fail. If Bear Sterns was too big to fail, then Bear Sterns was too big to operate effectively as a private enterprise. If the government has to be the insurer for your downside losses, then the government should be making the profit in the good times too, or at least making sure you aren't doing foolish things.

and oh so true.

It brought the old AT&T to mind.
100+ years ago, our family fortune established itself by going from town to town, erecting and establishing phone companies, and then selling them to AT&T as went.
Now we're back, more or less, to competing phone companies, albeit in a different manner.

It brought the internet to mind as no one entity globally owns or 'oversees' it. (How can we do more of that? I don't think we can.)

It brought states and states right to mind.

It made my head hurt for all the economic folderol.

But then ya brought it in for a sweet landing every Mr. and Mrs. Joe G.I.Bill can feel, th New Deal.
(Ya, I know the G.I. Bill came later and was about something else, but it was in the same spirit that altogether is so under attack, so defeated, today.)

It was a particularly extra-good comment, one to bookmark.

Corporatism and fascism isn't what ought to be made failsafe, *we* the citizenry are. American Citizenry Incorporated.

yeah, let's go for 'small' government by 'privatizing' it to us all.

wait, i smell 1984 in my air...

[zuma fans the room out]

whew, a lot of food for thought here. rich food. too rich.

Companies that are "too big to fail" are huge causes of moral hazard. There is also the political power that mega-corporations wield to consider. Any company that is "too big to fail" should either be a government monopoly or so heavily regulated that it might as well be (as the old utilities were). True free enterprise requires that companies be allowed to cleanly fail. If Bear Sterns was too big to fail, then Bear Sterns was too big to operate effectively as a private enterprise. If the government has to be the insurer for your downside losses, then the government should be making the profit in the good times too, or at least making sure you aren't doing foolish things.

This is the essence of it. The answer is decentralization. This is accomplished by anti-trust legislation. If a company is too big to fail, it is by definition a trust and should be broken up into separate entities that actually compete in the market with each other. If this cannot be done effectively (like public utilities), then such entities should either be nationalized or heavily regulated as public utilities.

right to a certain extent. But that time is coming to an end anyway. And for most people it was always an illusion, they were never going to make the big score.

What you're really talking about, for most people, is the housing pyramid - get in when you're 30 or so, sell when you retire, move to the south and have poor people take care of you when you're old. That machinery is ending. I don't think we can fix it, or if we can, it'll be one more cycle at most, with real spending power completely erroded as the price of it.

Wall Street per se has not taken care of most people though, it has been the housing market that has, and that only became a big Wall Street game in the last decade or so, really. Forsaking the regular gains for the big bubble gains has probably destroyed the game for everyone about one cycle earlier than it might have lasted otherwise. And yet the psychology of wanting something for, effectively, nothing, indicated that it had to end this way.

If the dooms dayers are correct, and I suspect they are, that era is coming to an end. People in general about to become very risk adverse, and companies also. It's going to get much more difficult to get credit, let alone become overextended. Instead, the new watchword is going to be economic security.

You hear it all the time from banks. They do not have the economies of scale to afford the technology to stay competitive. They must merge and combine expense bases to afford new software, hardware, etc., and cut other extraneous expenses. Sometimes I think it is the major reason for some of these bank mergers.

At some stage, the costs of administering a large enterprise cause dis-economies of scale (the larger the company, the greater the percentage of overhead).

You hear it all the time from banks. They do not have the economies of scale to afford the technology to stay competitive. They must merge and combine expense bases to afford new software, hardware, etc., and cut other extraneous expenses.

The "extraneous expenses" are people. It's the incredible shrinking payroll.

People are the major expense. Those who can eliminate the most jobs will be the most competitive. Machines, especially intelligent machines, are much more productive than people.

Think what society would be like if the people running our legal systems treated the power they managed the same way the people running our financial systems take advantage of every opportunity for personal gain.