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Why don't we just ban the buying, selling, and merging of companies?
With the ever-growing stream of acquisitions and mergers, it got me thinking: Why do we permit companies to do this?
What would the harm be in banning this practice? If a company is becomes insolvent, release all of it's IP to the public domain, dissolve all patents/trademarks, and sell off physical assets to pay debtors (first of which should be former employees IMO, but that's a separate discussion).
Edit: I think my original intention of the post to kick off some interesting discussion has worked. Thank you to all current and future posters!
Respectfully, this seems really poorly thought out. Maybe as a thought exercise this is interesting, but it is not something that could be effectively implemented without vast changes to "the system" and if we were going to go through those vast changes, then I think this is too close to what we have to be worthwhile.
Insolvency isn't the only reason that mergers and acquisitions happen; it's probably not even the primary reason, which is probably market share. What about the other reasons for mergers / acquisitions?
What about each of these reasons to sell or change?
The release of intellectual property to the public domain is also very likely abusable.
This whole system would also be very difficult to enforce, and would require more government control than most people would be comfortable with.
Each of the reasons you listed are the reasons I would cited for not allowing sales. Insolvency is the one case where a sale makes sense, since the company's assets probably shouldn't dissolve into thin air (although, maybe letting any IP becoming public domain or the relevant equivalent, and physical assets auctioned off would work just fine).
I think you are likely looking at this through the lens of "we shouldn't let Amazon do these things" which is probably fair and reasonable. But almost 100% of companies aren't Walmart, Amazon, Google, Volkswagon, Exxon, etc. While it's true that those companies need more oversight, preventing any of these things for small companies would be absolutely devastating.
Consider a small mom and pop convenience store. It's owned by a couple; one of them dies and the other cannot run the business on their own. In this system, that business simply fails. This means that all the workers are now out of a job. Wonderfully their "Intellectual Property" is now public, and their store gets sold off. This accomplishes nothing. What happens next? No store takes its place; people go to Walmart instead.
Or consider a small tech company - $20M annual, not publicly traded. The owner decides to retire. They have 1500 clients whose web properties they manage and host. All 1500 clients now have a huge problem; they need to find alternate hosting (at a minimum; maybe also email solutions, telephony, or other core parts of business that they've outsourced).
This idea doesn't work. It is a fundamentally broken idea.
I think that there is an underlying issue here that is important; big companies shouldn't get away with doing this to the detriment of the world and maybe that's what the original post is about, and I missed that. But as it is laid out, the end result is going to be the death of small business, and the utter dominance of businesses that can afford to find the loopholes to get around these issues.
I addressed some of these concerns in this reply.
The core idea is to prevent consolidation of ownership, which @nacho helped me flesh out via his thoughts. I think transfer of a company would be acceptable to anybody who doesn't have stake in any other company.
Edit:
Additionally, the idea is to discuss this. Maybe as I initially pitched it wouldn't work, but with modifications I think it could. We have it in the form of anti-trust (or did before it was gutted). We used to break up companies that were too large. By banning merging/acquisitions, it would limit the necessity of doing so.
I think that the argument that needs to be made is that we need better, global anti-trust laws, because multinational companies have too much wiggle room. That is something that is 100% correct; Fortune 500 companies wheelings and dealings need more oversight, and need it at a global level.
I think that preventing mergers and acquisitions would both be more difficult and less effective than global oversight for large companies.
Global is better, I agree.
I think anti-trust has proven insufficient, given that it's a punitive measure, rather than a prevention measure.
Why break up a massive company if you can prevent its formation?
Anti-trust isn't a punitive measure though. All of these major mergers go through regulatory review before closing. The fact that the mergers keep getting approved is problematic, but I'm really at a loss as to what we're supposed to do about the fact that existing laws are no longer consistently and evenly enforced. Passing more laws doesn't really seem like an answer though.
Pass new, simpler laws that have (hopefully) less loopholes. The fact that the current regulations are ineffective due to lax enforcement means they are sufficently flawed to justify change.
Also insuring the capitalists that own everything can't also be in charge of the regulating bodies would help tremendously.
The review for approval was a part of the process, yes. So was tearing apart companies that grew too large. So let's reduce number of needed tear-aparts by not enabling rapid expansion via aquisition.
The merger of any/all communication companies (telecom and broadcasting) and media companies is a travasty.
I touched on this more broadly here, in particular in the case of retirement/end of life, but to address some of your other thoughts directly:
Your concerns mostly seem to be concerned with growth of a particular company. I would contend that on aggregate the growth should be done organically via the strengths of that individual company.
Market share and competitive advantage should not be accomplished by buying out competition. It should be done by developing internally and sinking/swimming on that company's own merits and driving out competition by providing the better service.
I'm not sure about how hard it would be to enforce, especially if the IRS is involved to detect violations. As far as government control, I've been told many times that capitalism isn't the problem, it's a lack of regulation. We've tried lack of regulation and it's caused a lot of problems. Perhaps it is time to try the opposite.
I'm not sure what you mean. When a company is sold, the seller shouldn't have a say in the leadership anymore.
It would be beneficial to elaborate, with an example or two, as I personally see 0 downsides.
"Leadership issues for the seller" means that the company being sold doesn't have solid leadership, and so is being sold to another company with better administration.
But why couldn't we enforce that new leadership comes from within?
Why do we feel the need to artificually keep dying companies alive or enabling other companies to grow larger and more profitable exclusively on a failed company's IP and other assets? It fosters a system where the largest companies will grow faster and faster than smaller ones simply by virtue of starting with the most money.
By releasing IP to public domain, both the hypothetical buyer and any other interested party could build upon it. This fosters competition instead of stifling it.
Have a lottery for rights to purchase any physical assets at an indepentantly valued price.
Whoa, dude. Slow your roll. I'm not the OP, and I was only providing clarification to resolve your lack of understanding of the point.
Could you walk me through how you see this working day-to-day for businesses and their owners in practice?
I'm very interested in seeing where you're coming from as I personally can't see this working out at all in the scenarios I can envision.
If I were to spend some significant amount of time thinking through this, I'm not at all sure the following are important, but off the top of my head things similar to the following, just to give some examples, not as a suggesting of a list of important things that'd have to be "solved" for this to work or anything.
What happens if I start a store, then am done with building a store. Is there a net good for society if my fully functioning store is just dismantled?
What if I'm really good at starting up a new business from scratch, say I'm good at starting up hairdressers?
What if there's a large company that can mass-produce things, saving money due to scale. How can that situation ever change if buying/selling or merging companies is disallowed?
What about large projects, say like sending people to mars, or building something big, like a fusion power plant. How'd that work in this setting?
I think @vord's intention is to prevent a new Gilded Age like we're seeing now. There are a ton of companies in need of being antitrusted and stronger enforcement of those laws would probably alleviate a lot of the issues they're thinking of. At least in technology we've reached a point where everything that you might have even heard of gets snapped up by one of the big companies and inevitably corrupted or ruined.
Sure, that would naturally imply more stringent antitrust regulation. But banning all M&A is like using a meteor to demolish a house. You get the job done... But with so, so many casualties.
I'm not sure I would say no mergers or buyouts ever, but it really does feel like everyone involved is worse off except for the buying company and the people cashing out. The exceptions would be where one business is going to fail if it's not bought out by a competitor and situations where the owner's health is failing or something similar, but I don't think decisions on that level should be made unilaterally or without the workers having a say in it anyway.
My primary concern is one of excessive corporate consolidation in the name of 'efficiency.' It gives too much power and makes it harder to discern when a company is 'too big'. There's no significant reason we couldn't have huge numbers smaller companies. To address some of your points:
It is a valid concern to permit transfer of a company in the case of retirement or starting a business as a job (you don't retain stake, you just get paid a wage for performing the 'startup' duties). I think if that happens, it would be acceptable to sell or hand off the company to another individual or group of individuals on the condition that said people do not have stake in any other company (or would be willing to give said stake up) to prevent violating the spirit of 'no mergers'.
If a company is good at mass producing things there is no need for corporate consolidation, and it could be detrimental. Mass produce things for other companies, the way the different chip fab operations do. It lowers barrier to entry for competitors to mass-produce better.
As far as every one of those massive projects, we use the same model we used to get to the moon. Public ownership and management of the project via NASA (or Energy Department for electric plants), with contracting out parts and labor as needed to private companies.
The anarchal-social-commun-ist in me thinks there should be no profit from ownership of a company in and of itself. You earn a wage like every other employee in a business (even if a higher wage for being the 'owner'), and when you leave the company you own, you don't retain ownership or persistent profits from it.
The problem with toy examples is that their simplicity can be used against them. At the level of detail you've described things, Why won't Star Widgets and Widgets-'R-Best just continue the race to the bottom? Unless you're arguing that duopolies are someone a more natural state than monopolies, this doesn't read as an argument in favor of anything to me.
I've been told numerous times this is a feature of a market economy, not a detriment. Without that brutal competition, there is no need to innovate to reduce costs or improve the products.
Edit: Technology and IP sharing can happen via licensing or being released to public domain so society as a whole benefits.
But why is it benefical to society as a whole? Especially within the context of an ever-consolidating tech trust.
Whtaboutism goes both ways.
How many other competitors or better products have died out because continual consolidation increased barriers to entry?
Regarding the examples, maybe android wouldn't have been needed. Maybe the vast competition in carriee, phone providers would have fostered more open standards and cooperation to give a competitive advantage.
If satellite radio failed with 2 companies, maybe it should have died. Satellite TV does ok with multiple parties. Maybe a new business owner could be formed off existing satellites or newly released IP.
No one in this thread is addressing the elephant in the room and it's that the capital-owners are in charge of making the rules therefore you will never ever make a rule that completely screws them all over unless they are voluntarily doing it because they feel a need to in order to suppress the potential for revolution. FDR's new deal for example was one such instance where the capital-owning class voluntarily took a hit because they perceived dangers to themselves and the system they control if they did not.
They currently don't perceive that as was clearly demonstrated by their willingness to completely screw even a mild socdem who wanted mild socdem improvements for society.
They're never going to willingly take on a rule like this because it would be absolutely devastating to their wealth and power.
This is true of virtually every regulation, especially upcoming needed ones to insure our survival.
What I've laid out (in OP and other replies) would constitute a reasonable policy change to de-escalate the infinite growth of the tech giants and other mega-conglomerates.
The alternative is to take their capital the same way it was initially aquired: by force.
Not literally every regulation, because many regulations are supported or opposed by people within their class who have competing interests that benefit or gain.
The difference here is that you're making something that affects their ENTIRE class, not something that affects a small section of them.
I'm fairly confident this is the only option and Marx was right all along. They won't go willingly into the night, anyone that attempts to take it from them via electoralism will simply be killed/couped in efforts to prevent it as we have seen globally with other electoral victories for socialists. We're heading towards a situation where a fight occurs where they either win, keep their wealth and guarantee near extinction for everyone else or they lose and we at least mitigate some of the damage to the world.
I think mitigating the giants would be lovely. They need breaking up but they're not going to break them up when they're fearful of the rising China tech and online sector.
I agree with everything here. When people say we have to work within the system, there has to be an understanding it will require this level of drastic, unwanted (from the top anyhow) policy changes to do what is needed. If not for this particular issue, certainly in effecting genuine progress on inequality and climate change.
Socialism or extinction. ✊✊✊