[HN Gopher] How important are 'economies of scale'?
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How important are 'economies of scale'?
Author : simonpure
Score : 70 points
Date : 2020-02-22 14:12 UTC (8 hours ago)
(HTM) web link (mattstoller.substack.com)
(TXT) w3m dump (mattstoller.substack.com)
| roenxi wrote:
| :/ I've got strong opinions here, even if they might be a bit
| radical to all jam in one post. It is likely that the reforms of
| the 1970s broke the US [0] and if it wasn't them then something
| changed (maybe access to cheap oil, maybe other nations
| recovering from WWII) that really broke the environment where the
| US understood how to be successful. The US has to ask itself how
| effective its 'capitalist economic system' really is.
|
| * It has a higher tax:GDP than China [1]. That is to say, the
| nominal ratio of money siphoned into government vs money retained
| by private citizens is less free than China's. There isn't really
| a point of comparison here because the two countries are so
| different (eg, China has state ownership) but there is some shock
| value in just how large the US government is in the economic
| sphere.
|
| * It has socialised access to capital. Large banks have the power
| to create new money and the US government steps in during
| crisises to pick winners and losers when the lenders are proven
| to be incompetent at taking risks (eg, 2008 era). China does this
| too, but the battle becomes which government is more astute at
| supporting bad risks rather than which system is more effective.
| China is probably more long-term strategic, using the money to
| build useless infrastructure instead of the US using money to
| uselessly boost asset prices. This point is a huge deal to me and
| really undermines my faith in the effectiveness of free markets
| used elsewhere in the system.
|
| * A complicated IP law system where people are prevented from
| doing things they know are good ideas. China largely ignores this
| system.
|
| This article teases at one point; which is socialised access to
| capital favours companies that are too large to compete but can
| negotiate for loans and are known to government/large investors.
|
| [0] https://www.epi.org/publication/charting-wage-stagnation/ &
| _EDITED_ from 1980s, a decade too late.
|
| [1]
| https://en.wikipedia.org/wiki/List_of_countries_by_tax_reven...
| TaylorAlexander wrote:
| It has amazed me how much innovation there has been in FDM 3D
| printers since the patents expired in the mid 2000's. In 2012
| Stratasys published an article congratulating themselves for
| the ten year anniversary of the release of their "low cost"
| $30,000 3D printer. [1] Meanwhile I'd been playing with my
| first open source 3D printer which was $1900. The designs did
| not come from one monolithic corporation but a distributed
| group of hackers and 3d printing enthusiasts from around the
| world. Interested parties from all over the world improved on
| open source 3D printer designs and released their findings for
| free to be taken up by the community.
|
| 8 years later and you can buy a beginner's 3D printer for $250,
| a very reliable open source machine for $1000, and a super high
| end machine for $15,000.
|
| To say that patents always stimulate innovation is obviously
| false to me. Patents may stimulate innovation at times but they
| also clearly stifle it. I was thinking today how the Prusa 3D
| printer is no more technologically complex than a pen plotter
| from the 1980's. If it had not been for patents, many companies
| could have competed for the high end 3D printer market in the
| 1990's, prices would have been perhaps a few thousand dollars
| for a printer in the year 2000, and the spread of personal
| computers would have led to the same hacking and innovation to
| lower costs we've seen but perhaps ten years earlier.
|
| And the second order effects of this are I think dramatic. 3D
| printers accelerate innovation by dramatically reducing the
| cycle time for iterative development of mechanical parts. In
| the 1990's if you designed a mechanical part you had to wait
| weeks for it to come back from a machine shop if you could not
| hire a 3D printer. With a 3D printer in your office you can get
| a mechanical sample of your design the next day, and go through
| 5 design iterations in a week.
|
| Instead of allowing for cheap and ubiquitous 3D printing, we
| chose to give a legal monopoly to stratasys who got to profit
| greatly for it. And I think society suffered economically
| because of it.
|
| It is a source of great frustration to me that people
| dogmatically believe patents cause innovation. It is quite
| obvious to me that there are benefits to innovation even
| without intellectual property protection. Prusa Research still
| makes all of their products open source and they appear to be a
| healthy, growing, multi-milion dollar a year business. Chinese
| clones flood the market and are great for broke students, but
| those who want more reliability still source from Prusa. It
| seems there is room in the market both for the OEM and clones
| as they serve different groups.
|
| The only reason business people love patents is that in a world
| where patents exist, you have an incentive to collect them. But
| I think the second order negative effects of this dramatically
| slow innovation and harm society economically. If Prusa can
| exist without patents in a market where competitors still use
| them, we can obviously make functional an entire economy with
| less intellectual property restrictions.
|
| Unfortunately this is seen as arcane or obscure and nobody
| cares. Its a HUGE issue that I think affects our ability to
| innovate broadly but I fear the business community would be
| against the change we need.
|
| My only hope is that competent and respected economists could
| examine this issue. People who know China well already know how
| much innovation can flourish in an open business community [2]
| but we need to convince the American business community to buy
| in to IP reform.
|
| [1]
| https://www.businesswire.com/news/home/20120217005877/en/Str...
|
| [2] https://www.bunniestudios.com/blog/?p=284
| WalterBright wrote:
| > To say that patents always stimulate innovation is
| obviously false to me.
|
| Yeah, the historical record says it doesn't work. The same
| for copyrights. In the 1800s Germany had no copyright laws
| and their economy and innovation boomed. US industry was
| founded on ignoring British patents.
|
| Today, look at innovation in open source software - without
| patents and copyrights, it proceeds at a breakneck pace.
| snowwrestler wrote:
| Open source software depends on copyright to work.
|
| Ignoring IP laws is a great way to catch up to stronger
| economies that are growing on innovation. Once you catch
| up, though, the only way to keep growing is to develop your
| own innovations... at which point you start caring more
| about IP laws. The U.S. went through this transition and
| China will too, pretty soon I think.
| abetusk wrote:
| That's like saying "antibiotics don't work without
| bacteria".
|
| In my opinion, open source is so successful because the
| current copyright laws have overreached. My feeling is
| saner copyright duration would probably make open source
| all but disappear.
| OnlineGladiator wrote:
| >The only reason business people love patents is that in a
| world where patents exist, you have an incentive to collect
| them. But I think the second order negative effects of this
| dramatically slow innovation and harm society economically.
| If Prusa can exist without patents in a market where
| competitors still use them, we can obviously make functional
| an entire economy with less intellectual property
| restrictions.
|
| You make some interesting points, however generalizing one
| example from 3d printers and concluding "patents are clearly
| bad" is really oversimplifying the issue by _a lot_.
|
| There are plenty of examples of patents stifling innovation
| (oftentimes purposefully, where a company buys a patent just
| so nobody else can use it). There are much more complicated
| examples though, such as the pharmaceutical industry. At
| least in the US, which funds most of the world's drug
| research, the entire business incentive for developing new
| drugs would evaporate without patents. Now there are lots of
| problems with the pharmaceutical industry, however developing
| new innovative drugs (with the intent of profiting from them,
| often viciously) is not one of them.
|
| Everybody agrees the patent system is broken. The problem is
| nobody can propose a better alternative.
| mrfusion wrote:
| Totally agree. And speaking to that, what major patents are
| expiring in the next few years? It could be an interesting
| HN thread in itself.
| balfirevic wrote:
| > Everybody agrees the patent system is broken. The problem
| is nobody can propose a better alternative.
|
| I have two proposals, pick the one you like better:
|
| 1) Abolish patents completely.
|
| 2) Abolish patents, except for pharmaceutical industry.
|
| If anything, proposal number 2 should be strictly better
| than the status quo.
| mrfusion wrote:
| Monkeys didn't need a patent system to come out of the trees.
| WalterBright wrote:
| > Large banks have the power to create new money
|
| They always have since the creation of fractional reserve
| banking. Supply & demand forces keep the creation in line with
| growth in value in the economy.
|
| Ever since the Fed started up in 1914, however, they create far
| more money, are not constrained by supply & demand, hence
| endemic inflation.
| roenxi wrote:
| Yes and no. That is one phrase in a larger sentence where the
| important part is the 'government steps in during crisises to
| pick winners and losers'.
|
| The world has seen at least 3 currency regimes since 1914
| (pre-Bretton Woods, Bretton Woods, post-Bretton Woods) and
| possibly more. Exactly what 'monetary creation' means changes
| depending on the system and isn't as much a problem as
| government interference when the market tries to purge big
| chunks of the economic elites from power.
|
| If the market is blocked from getting rid of idiots, it is
| expected that idiots will end up in charge of important
| things. Anyone can see these banking collapses a mile away;
| look at Uber's valuation vs losses! The problem is that
| blindly optimistic idiots are being given far too much money
| to play with and big players are allowed to dodge the pain
| when obvious risks become realities in a crisis.
| eanzenberg wrote:
| This is probably one of the dumbest things ive read.. thx for
| that
| yjftsjthsd-h wrote:
| That doesn't add anything to the conversion. Could you
| specify what you find implausible/problematic?
| paganel wrote:
| > Please keep sending me info on what you're seeing in terms of
| supply chain disruptions. I think that is one of the biggest
| stories in the world right now
|
| Preceding the article and not directly related to it, but imho I
| also find this subject one of the biggest stories right now and
| it's a pity that it hasn't yet been discussed on HN the way it
| should have been (or at least I didn't see it discussed that
| way), probably because of some active moderation efforts
| concerning covid-19.
| soniman wrote:
| What is "legal" scale? He just says "and then there's legal
| scale" and doesn't define it.
| prostheticvamp wrote:
| Legal scale is being big on paper, such as a single corporate
| entity owning multiple others. This implies, but does not
| require, efficient operational amassing of men and capital.
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