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Fabius Minarchus's avatar

Quite the tour de force!

My inclination is for brute force antitrust measures, some of which are compatible with libertarian sentiments.

By brute force, I mean a general downscaling of the biggest corporations, whether they be true monopolies or not. For a tiny niche, the value of economies of scale may outweigh monopoly pricing. If the niche is small, raising capital to invade the niche is feasible, so the implied threat of competition can be more credible than in an oligopoly of giant firms.

There are simple, rule-of-law compatible measures to do this. For starters, let's recognize that overregulation of public corporations increases economies of scale. Thanks to Dodd-Frank, small investors are "protected" from being able to invest in growth companies while they are still in full-on growth mode.

Another measure is the level the cost of capital for new firms vs. giant firms retaining earnings. Amazon can enter a new niche using pre-tax retained earnings. Some kind of cap on using R&D for new businesses as a deduction against existing products may be in order. (Or this might be too complicated.) Note that Amazon grew enormous while showing no profits for years -- and they didn't require mass infusions of fresh capital.

Finally, make the corporate income tax truly progressive. Currently, the rate is flat. Back in 2017, it was lumpy, with the highest bracket being 39% for $100,000-335,000. The rate for the kinds of corporations you see listed on exchanges was 35%, with no difference between an Apple and a penny mining stock.

Make the brackets step on on the major lines of a log graph, and the market will break up the behemoths. Indeed, corporations with high retainable earnings may function as incubators. DuPont was a prime example of this model. They would develop a product and this spin it off. At one point they owned General Motors.

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Thomas Umstattd Jr.'s avatar

One thought I had was to tax social networks based on Metcalfe's law. The value of a social network is equal to (n-1) squared where n is the number of nodes on the network. Current tax systems are linear while the value of networks scales exponentially with the number of users.

Basically structure the taxes in such a way as to discourage social networks from getting too big. More smaller social networks will reduce their power over the individual. With just one social network embracing free speech the other networks have taken a step in that direction. So more competition is better.

But the tax would only apply if the social network used an algorithm to sort content. The power is mostly in the algorithm.

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