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13 sats \ 4 replies \ @KoreaComK 2 May 2023 \ on: Why America will soon see a wave of bank mergers tech
When the government regulates any area of the economy, the tendency will always be towards centralization and the creation of oligopolies. The less regulation and more free market, the greater the decentralization and the impossibility of creating oligopolies.
For those that haven't studied this topic. One of the primary reasons for what @koreaComK is saying is that the state through the monopoly on force is the central authority. Naturally this centralization of power will lead to players in markets to go to them and lobby them for regulation/rules/laws that favor their business over competitors. If you run a business in an industry and do not play this game your competitors will and they will use the state power against you. This is also one of the primary reasons for corruption in the state. Besides the fact that the existence of the state it self is a corrupting force.
This is not to say their is no place for governance or regulation. In free markets where the state is lacking or failing to regulate effectively industry and/or consumers create organizations to be watchdogs or provide standards and testing. The key difference is there is competition for regulation/governance, it is voluntary, and there is not monopoly.
Centralization is simpler to get your head around but it suffers from the knowledge problem. Even the smartest people can't know what should be done or shouldn't be done. This is the magic of the market. Millions of participants are knowingly and unknowingly participating in experiments all the time to see what does and doesn't work. While government regulation may make people feel safe it in practice is the wrong approach. We can have voluntary non-violent governance.
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About decentralization vs centralization
No centralized entity, no matter how good and specific it may be, is better than several decentralized entities.
There is a study that was done asking people the weight of a cow. People were ordinary individuals without any knowledge of this animal. There were more than 17,000 people, and the average response was very close to the animal's true weight. The funny thing is that the result was much closer than when they asked the same question to people who were from the area, but with fewer people.
This shows that society manages to reach a consensus closer to reality than any centralizing entity. This proves that any centralized decision is worse, by definition, than a decentralized one.
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Another interesting thing about this how it is more frightening to many people that "no one" is in charge than having a small number of people with a lot of power. I have thought a lot about this and logically this fear makes little sense. But then, most people don't think or act logically. We follow the crowd and are easily influenced. We are influenced to trust "authority" from a very young age in school and it is re-enforced all over the place.
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Yep. In my experience people don't really understand the fatal flaw of socialism/communism. Its this very issue. Central planning doesn't work. You can see people don't get that when they say they hate communism but embrace the same principles of centralized command and control.
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