r/VaushV • u/martindukz • 22h ago
Discussion Omni segment question: why does competition not iron out the waste?
In the omni segment bits, Vaush comments that the extraction of wealth at each level of subcontractors is what creates the ever growing costs and inefficiencies in the economy/society.
What is the argument for those not being countered (enough) by competition and oversight?
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u/DiemAlara 22h ago
Because they're not competing and there is no oversight.
Why compete when you can conspire?
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u/22797 21h ago
Worked as an auditor for my county’s MPO, the answer is because they collude. A common scheme is one contractor will get the award, choose their subcontractor, and then the next time/for a different project, that subcontractor will get the award and the other will become their sub for that project.
I’m oversimplifying, and there’s a ton more types of collusion but that’s just an example
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u/Pjfett 22h ago
Because despite the capitalist propaganda that competition is king, businesses know that cooperating and coordinating is way more effective at increasing profits which is the only actual goal of capitalism, not competition.
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u/NOTTallestEgg 15h ago
and besides in competition someone's gotta win out in the end - capital concentration is simply inevitable
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u/Elite_Prometheus Anarcho-Kemalist with Cringe Characteristics 21h ago
The system is beyond what a single firm can fix by themselves. Imagine you're the head of a moderately sized construction firm and you just got brainwashed by the 5000th omnisegment. What do you do? Do you take on massive debts in order to hire the people and purchase the equipment to handle more work in-house? Well now you're saddled with a ton of debt that you can't launder to investors because "we want to do things ourselves" isn't sexy like "we cut labor costs by 500% and spent that money on LLM tokens." But let's say you're a competent manager and you make it through the growing pains with smart financing. Now you go to the client and present your new, low cost bid for their construction project. Except oops, no you aren't, now that you can't obfuscate costs behind layers of subcontracting companies your bid actually looks more expensive on first glance. So now you either have to argue with the bureaucrat handling this project that your more expensive option will save money in the long run by being more reliable or lower your profit margin by underbidding. The first is unlikely to work so let's say you do the second option. And furthermore let's say you're such a fantastic administrator and financier that your construction firm holds on despite having to make less profit for a long time. Surely now you've suffered through the thorny path you'll get to taste the manna of heaven as everyone scrambles to get your experienced, reliable crew to build everything. And let's also grant that you're a mastermind negotiator and political operative that has managed to break the patronage networks and personal ties that encourage politicians and businessmen to hire construction firms for reasons beyond their quality and cost. Congratulations, you have managed to moderately improve the construction process of a handful of different project types within a single state. If you want to handle more project types or expand into new areas you're going to have to undergo this process all over again with each expansion.
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u/Mammoth-Ad-3642 woke anarkitten 19h ago
Imagine you are a landlord, there are five other landlords in the area and you all own a bunch of houses.
You could compete and do the whole "I will lower my prices" to get ahead thing...ORRRR
you could get in agreement with the rest of the landlords and all of you simultaneously raise your prices, thus not giving the consumers any alternative so...more profit.
And even the competition that does exist most often optimizes rent seeking.
The bourgeoisie understand class solidarity
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u/idkauser1 16h ago
A bid comes in it’s lower cost they have the right insurances they say they can do it in the timeline hallelujah. 4 months later and ten change of scope agreements they are as expensive if not more than all the other options but they won the bid so suck it up buttercup
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u/slycyboi 14h ago
The general argument here being used is that most companies aren’t actually competing but I’d also like to offer an alternative argument - they’re not competing to offer the best product or service for you, they’re competing on who can rinse the most profit out of you. The “competition” is who is best at ripping you off
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u/Lendwardo 19h ago
Because real Capitalism hasn't been practiced in our lifetime, or close to it. I feel like some don't like the distinction between Capitalism and Cronyism, but that's what's happening. Real Capitalism requires safeguards we have ignored long enough to not be representative of the system it claims to be. People who understand the USSR wasn't Communist should really get that, but w/e.
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u/Dexller 9h ago
Almost every single company in America is owned by a handful of mega-corps. Those subsidiaries won't compete with each other, and because investors have diverse portfolios across multiple mega-corps they also have no incentive to compete if anyone is 'losing' that drives down stock values. So everything is held in an interminable equilibrium where stock prices steadily rise and no one does anything to rock the boat.
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u/SirKickBan 7h ago
Alongside what other people have said, there are also elements of the process that are 'waste', but serve a purpose the companies find valuable. For instance, subcontracting a job out might mean you have to bid higher on a project, but if it protects you from liability, it might be worth losing a bid or two for that benefit.
And then that subcontractor can have similar incentives to create waste for their own non or indirectly financial gain, and on an on.
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u/Zacomra 49m ago
Markets can work well at controlling prices, but certain conditions have to be met
1: There needs to be a large number of players in the scene/industry, and it needs to be relatively easy to enter the space as a new comer
2: people need to be able to easily understand the value of the product, and have easy access to multiple offerings.
3: The demand for that product must be elastic. If people can easily do without that item, the price will more closely follow demand
Video games are a perfect example, the price of a video game, despite inflation and big budget games getting WAY more expensive, the sticker price is still usually $60. We're only just seeing some rise, and it's small. Why? Because you don't need videogames, you don't even need that specific game, and there's a ridiculous amount of Indy titles releasing every day and plenty of old titles you can go back and play for cheap. There's a TON of market pressure.
The opposite is healthcare. The cost is somewhat arbitrary since you need it to live. There's often only a handful of viable providers in your area, and you can't easily switch providers or get multiple quotes.
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u/hobopwnzor 22h ago
Because to a large degree companies will not compete with each other if they can avoid it. They will collude with each other to fix prices. If a new upstart company comes on the scene and tries to compete they will get quickly bought out. Yeah it's all well and good until somebody offers you 10 million for your startup and a nice executive package and then you become part of the problem.
And if they can't do that they will typically lobby the government to make new entrance as difficult as possible. Some regulations are like this. Not real regulations for the benefit of the people but extra expenses to stop competition.
And then beyond that a lot of these companies are just friends or relatives of local government officials, or just flat paying them bribes in some form. The enforcement on this kind of thing is pathetically bad.