Ban All Big Mergers. Period

Ban All Big Mergers. Period(theatlantic.com)

48 points by flancrest 5 years ago | 22 comments

leksak 5 years ago |

Block megacorps from acquisitions of smaller companies as well.

When a corporation is large enough to wield significant political influence, allowing them to buy up and coming disruptors makes it even easier for them to, as the article writes, make a mockery of democratic norms. And thus, by the same token argument, the acquisition of smaller entities should similarly be blocked.

mqus 5 years ago | |

This is a very controversial opinion in a startup forum :)

But that aside, how would you handle public trading companies, where you can simply buy an influential part of a company?

It is not the same as owning or merging but having board influence can also be detrimental.

leksak 5 years ago | | |

Controversial, sure, however I presume it is controversial because it has become a common trajectory to launch with an intent to eventually be acquired by a bigger player. Has this always been a common intent of new businesses?

Depends. What are the arguments for a company holding shares in another?

If the purpose a company X has shares in Y and Z to diversify their income stream then perhaps non-voting stocks would be suitable.

If a company holds shares in another company because they are somewhat dependent on it being run and facilitated in a certain way, it makes sense that they'd want to have an influential share but if they are rich enough to acquire such a stake then they are probably a valuable enough customer that the company they depend on won't do much that upends the entire business relationship. Or is that naive of me?

If all big mergers are banned and if all megacorps are banned from acquisitions, then maybe also ban the idea that companies should have voting rights in other companies? Now, a wealthy enough CEO might sidestep that as a non-corporate entity, and may do so by some degrees of separation if they themselves are judicially blocked from such holdings so I don't have a ready-made fix for that.

dublin 5 years ago | | |

Owners of Standard Oil made more from the stocks of the companies spun off than they ever would had it been allowed to continue. That's one example of a breakup that led to massive growth in jobs, competition, and an entire host of supporting companies.

himinlomax 5 years ago | |

This would have a lot of unintended consequences.

pietrovismara 5 years ago | | |

Everything has unintended consequences. That shouldn't stop change. Especially considering that the current situation is flawed and already has many unintended consequences.

fatnoah 5 years ago | | |

I'm especially interested to see how this would affect funding for startups. What types of exits would be possible? Would investors be willing to fund in this environment. The net effect might (I say might, because I really don't know) be to actually cement big companies' hold on things because it may prevent potential challengers from even getting started.

mensetmanusman 5 years ago |

A simpler solution is to implement progressive taxes to counteract the natural Pareto distribution of wealth accumulation.

Society should come to some consensus on an ‘I win at life in this society’ amount of income, after which it should just level off like a ceiling function in a feedback loop.

ledauphin 5 years ago | |

this sounds like a far more mathematically reasonable proposal.

dublin 5 years ago |

Perhaps employee count is be a more useful cap than money? It should at least be a factor. Not sure we really need many (any?)companies with more than 5,000-10,000 employees. Perhaps allowing more if the company manufactures physical products in the US, and more again if the product is otherwise only available from foreign manufacturers. There is strong precedent for breaking up too-large companies (Standard Oil comes to mind, everyone won on that deal), but it hasn't been done much in the last century, barring AT&T, which asked for it.

trestenhortz 5 years ago |

And short selling.

Plus, companies should pay taxes fair and square.

Pet_Ant 5 years ago | |

Short selling is necessary to counteract hype. Only naked short selling is a problem.

dublin 5 years ago | | |

The need for shorts largely goes away if you make stock buyers hold for at least a year before selling.

Remember, the purpose of the market is as a funding mechanism for companies to pursue growth and innovation, not to allow a bunch of "banksters" to game the system. That means that investment should always be longish-term. So let's make their stupid games not worth playing.

FWIW, If you do allow intra-day trading, applying a random delay of up to, say, four hours would eliminate most of the problems...

scotty79 5 years ago |

Why do we think it's ok for one company to own another?

pixelbath 5 years ago | |

Because a company is an asset, not a person.

scotty79 5 years ago | | |

So what? It enables so many pathologies.

Company is an asset, can be a liability, consists of people, is basic unit of economy that the whole strength of capitalism is funded on. It's so many things more than just an asset.