Economics: Do We Really Need Antitrust?

 (Drivebycuriosity) - Did you ever hear of antitrust? Most people might not know it. The term seldom appeares in the headlines of the popular media and cannot be translated into other languages. But politicians and lawyers are obsessed with it and there are huge antitrust lawsuits against Google, Amazon, Meta and other big corporations, all based on the claim that the accused abuse monopoly power.

 

               Crack Down On Big Business 

Antitrust existed already in the Renaissance, if not earlier. Georg Steinmetz describes in his biography "The richest man who ever lived", the growing political pressure against Jacob Fugger, who acquired in the early 16th century an immense wealth as a shrewd investor and financier of Popes & Emperors (amazon ). Naturally Fugger`s outstanding success created envy & political resistance. His opponents, including unsuccessful competitors, debtors, political & religious reformers claimed that Fugger`s business was too big and the banker abused his monopoly power. The knight Ulrich von Hutten, a supporter of Martin Luther, turned Fugger into a public enemy and demanded the execution of Jacob Fugger & Nephews. Thomas Müntzer, a self-proclaimed mystic, lead a peasant revolution army in order to "throw away the profiteering evildoers", especially his arch-enemy Fugger. Martin Luther was more modest, but pleaded with the princes "to crack down on big business". 

Antitrust got established in the USA with the Sherman Antitrust Act from 1890. Since then US politicians have been fighting against alleged monopolies. The governments punished corporations that were considered being too big and accused them crushing competition & harming consumers. In 1911 Standard Oil got split into 33 companies, even though their market share fell already from 85% to 60% before the antitrust legislation. President Theodore Roosevelt, who subscribed to "government knows best", promoted a public relations image of being a trust buster and sued 45 companies under the Sherman Act.

During the Reagan area in the 1980s politicians and regulators had a more sanguine approach, influenced by Milton Friedman and the Chicago School of Economics, who focused on consumer welfare (low prices, fast & reliable services) supported by the greater efficiency of big corporations (economies of scale). After 2020 the Reagan administration started a new antitrust movement. America`s huge antitrust agencies FTC (Federal Trade Commission) and the Antitrust Division of the US Department of Justice (DOJ) got controlled by zealots like Lina Khan and Jonathan Kanter. Both declared Big Business as evil and their agencies started crusades against Amazon, Meta & Google and other big companies for alleged monopolistic practices. These lawsuits continue till today, notwithstanding the political change in Washington DC.

 

Antitrust is based on the belief that the government has to fight against "unchecked corporation power". But does it really exist? History shows that whenever a firm has success, others  - inventors, investors & entrepreneurs - follow and try to get a share from the pie. Who remembers MySpace? The company was once the leading social network and regarded as a monopolist ( theguardian). But then came Zuckerberg out of nowhere and destroyed MySpace`s "monopoly" by creating Facebook.

 

                  Inspired Copycats 

When Jeff Bezos started Amazon in the year 1994 his online bookshop was a monopolist, but just for a very short time. Amazon`s success story inspired worldwide others, the copycats, to offer similar services.

 

  (source )

Today there are thousands of companies selling online, including giants like Walmart, Target, Best Buy & Costco, who all developed large online departments; and there also exist a lot online platforms like Overstock, Shopify, Wayfair, Etsy & Ebay, who all are successfully copying Amazon. They get joined by innovative newcomers, who are aggressively entering the highly competitive market, like TikTok`s online shop, the Chinese shopping app Temu and the online shopping platform Shein. And  Amazon competes globally with Alibaba, Tencent (both China), Rakuten (Japan), MercadoLibre (Latin America) and others. Notwithstanding in September 2023 the FTC started a law suit against Amazon, claiming that the company is a monopoly and stifles emerging competition. The law suit is still running. 

In 2020 the FTC also suit Meta (the mother of Facebook & Instagram) and claimed that the company illegally maintains a personal social networking monopoly and imposes anti-competitive conditions on developers. But recently a court dismissed the law suit and the monopoly claim. The judge noticed that Facebook & Instagram are competing with similar platforms like X (formerly Twitter), YouTube, Snapchat, BlueSky, LinkedIn and TikTok.

 

                   Endangered By AI 

The Department of Justice (DOJ) started two main antitrust lawsuits against Google: one concerning its search engine and another concerning its digital advertising technology. The first lawsuit intends to break up Google`s alleged "monopoly" and wants to force the company to spin of their Chrome Browser. As a response Perplexity made an offer to purchase Google`s Chrome for $34.5 billions ( cnbc). Who is Perplexity? The company, founded in 2022, is a start up, an American privately held software company offering a web search engine that processes user queries and synthesizes responses (wikipedia).

Perplexity is a nice example for companies that suddenly come out of nowhere and attack the alleged monopolies. The fact that Perplexity, that exists only for 3 years, expected to get $34.5 billions from investors shows that there is a lot of money available to enter an attractive market and to challenge the leader.

The DOJ - and other monopoly callers - ignore that Google, who gets most of the revenues from advertisements on their platforms, is competing against Meta and other giants and is already losing market share to Amazon`s advertising business ( realclearmarket). The DOJ also ignores the fast rise of Artificial Intelligence. AI endangers Google Search primarily by fundamentally changing user behavior and threatening Google's core advertising-based business model. Instead of users clicking on links to find answers, AI provides synthesized, direct answers, reducing the need to visit external websites.

 

         How To Kill 2 Monopolies With 1 Tool 

Another example for competition out of nowhere and disruptive innovators is Substrate, a US startup, that has invented a new X-ray lithography tool; disrupting both ASML’s and TSMC’s effective monopolies ( semianalysis). 

The FTC and DOJ ignore that the technological progress is accelerating and markets are changing faster and faster, disrupting monopolies. Their lawsuits are based on the belief that "Big is Bad", which was already used against Jacob Fugger. The Renaissance banker defended himself and declared, that companies like his benefited all level of society, producing jobs and wealth for all. Sure, self interest propelled them, he conceded. But they knew better than to cheat on their customers. Reputation was everything and the importance of credibility checked the urge to lie, gouge and steal.

Contemporary studies confirm him. Today`s giants grew so much and got huge because they are efficient - more efficient then their competitors - and their services are reliable. Their size reduces the average costs (economies of scale) which allows them to demand relatively low prices.  A study by the Federal Reserve Board also shows that mega firms are driving technological progress because their size enables them to be more innovative than smaller firms ( edwardconard ). And Edwin S. Rockefeller claims in his book "The Antitrust Religion" that antitrust "has often served to shelter inefficient firms from lower prices and innovations" ( amazon).

There is of course the risk that firms break the law and cheat. But this a case for regular courts. Criminal cases do not require 2 huge antitrust agencies that have together about 1,300 employees, including legions of highly paid lawyers. 

Conclusion: Antitrust costs a lot of tax payer money and - to make things worse - occupies ample management capacities. It is slowing decision processes - making business more complicated and costly. The victims are tax payers and consumers.

  
 

Art Market: Highlights From Fall Auctions 2025 @ Phillips New York

 

(Drivebycuriosity) -  It`s November again and the world`s largest auction houses have their annual huge fall auctions in Manhattan. This post is about the galleries @ Phillips, the number 3 of the global auction houses (phillips ). The company has the reputation to be more focused on contemporary works than her bigger competitors and to show more cutting edge art by up-and-coming artists. But they also had some big names. I display here some of my favorites from the exhibition - as usual a very subjective selection.

  This time the most interesting exhibits were fossils. On the top of this post you can see “Cera” - The Most Complete Juvenile Triceratops Skeleton Ever Unearthed, circa 66 Million years old - Cera was discovered in 2016 in the fossil-rich badlands of Perkins County, South Dakota.

Cera is followed by "King Gidhora" - A very fine subadult Pteranodon -mImmature male from the Smoky Hill Chalk (Niobrara Fm. Western Kansas
Upper Cretaceous circa 87 Million Years Ago 60 1/2 x 132 7/8 x 1 in. (153.7 x 337.5 x 2.5 cm).

 

Above follow the "Guardian of the Fossil Lake" - Exceptionally Large Amia Fossil - Eocene, 50 Million Years Ago - Kemmerer, Wyoming, USA
96 x 46 in. (243.8 x 116,8 cm) & "The Ouroboros-Steneosaurus bollensis" - A world-class specimen preserved without restoration Lower Jurassic (Toarcian, "Lias &") circa 180 Million Years Ago - Urweltsteinbruch Holzmaden Quarry, Baden-Württemberg, Germany length of fossil 66 7/8 in. (170 cm) slab 70 7/8 x 70 7/8 x 2 3/4 in. (180 x 180 x 7 cm).

 

                         Animal Abuse 

 

The image above this paragraph tells a heartbreaking story of animal abuse: Walton Ford`s "Guilty Elephant". Apparently the innocent animal gets electrocuted as victim of a cruel physical experiment.  

Ford specializes in animals, often in historic settings. I admired his majestic Berber Lions at Gallery Kasmin (my report ) and Milanese heiress Luisa Casati with her fancy leopards at Gagosian ( driveby).

 

Above follow 2 images by German artist Sigmar Polke: "Untitled (Crime Story-Happy End)" plus "Untitled".

 

                            Islamophobic? 

  

Above this paragaph you can see: Jll Mulready`s "Schindler House"; Reggis Burrows Hodges`"Swimming in Compton: Look Ma'"
 & Ben Aston`s "Chasing Waterfalls". 

 

Last but not least Banksy. Will the woke and the libtards call this work Islamophobic? 

Stay tuned 

Books: Tidbits From "Why Machines Learn: The Elegant Math Behind Modern AI"

 

 (Drivebycuriosity) - AI is eating the world. There are not many parts of the economy that are not yet influenced by Artificial Intelligence and its influence is rising with exponential speed. Anil Ananthaswamy describes in "Why Machines Learn: The Elegant Math Behind Modern AI" how mathematicians developed the building blocks (algorithm) for ChatGPT and other versions of machine learning ( amazon).

Ananthaswamy narrates the evolution of AI, the breakthroughs, the setbacks and the fermentation process of thinking. Scientists have been developing algorithms that can learn to discern patterns in data without being explicitly programmed to do so. "Machines can learn because of the extraordinary confluence of math and computer science, with more than a dash of physics and neuroscience added to the mix".

The book is full of information, spiced with mathematics & anecdotes. This humble blog can only present some tidbits here:  

 

                   Inspired By Biology

 

The AI developers are inspired by biology and evolution. For instance: "Even fruit flies are thought to use some form an algorithm to react to odor: When a fly senses some odor and another odor most like it for which it already has the neural mechanisms to respond behaviorally."  

The scientists noticed that "our brains learn because connections between neuron strengthen when one neuron`s output is consistently involved in the firing of another, and they weaken when this is not so". 

Psychologist Frank Rosenblatt designed "artificial neurons that reconfigure as they learn, embodying information in the strength of their connections".  The machine (the algorithm), once it had learned, contained knowledge in the strengths (weights) of its connections. 

 

              Learning About Patterns 

In 1982 the American Physicist John Hopfield declared that neurobiological systems - our brains included - are dynamical and can be mathematical modeled as such. Given one instance of data, the network can memorize it. But an awful lot of the learning our brains do is incremental: Given enough data, we slowly learn about patterns in them. 

An LLM (Large Language Model) is an example of generative AI. It has learned an extremely complex, ultra-high-dimensional probability distribution over words, and it is capable of sampling from this distribution, conditioned on the input sequence of words. There are other types of generative AI, but the basic idea behind them is the same: They learn the probability distribution and then sample from the distribution, either randomly or conditional on some input, and produce an output that looks the like training data.   

Ananthaswamy writes "Every deep neural network today - with millions, billions, possibly trillions of weights - uses some form of gradient descent for training". Google AI explains: "Gradient descent is an iterative optimization algorithm used in machine learning to find the minimum of a function by taking steps in the opposite direction of the function's gradient. It works by repeatedly calculating the gradient of a cost function and updating the model's parameters (like weights and biases) to reduce the cost. This process is repeated until a minimum is reached, which can be a local or global minimum".

 

                    Listening To Neurons

 

ChatGPT & Co. are based on huge networks. A network could solve a problem or have a function that was beyond the capability of a single molecule and a linear pathway. In our network each neuron is listening to every other neuron. Neuron 1 is getting inputs from 99 other neurons. Then neuron 1 will calculate the weighted sum of the inputs from 99 neurons and will set its output to 1+ if the weighted sum is greater than zero; otherwise to -1. Of course, these network are simulations inside a computer, so they don´t really have a physical energy. But one could use this formula to calculate a number that`s analogue to physical energy.  

The French-American computer scientist Yann André Le Cun said: "I always thought that human engineers would not be smart enough to conceive and design an intelligent machine. It will have to basically design itself through learning. I thought learning was an essential part of intelligence."

A team member who was training the neural network went on vacation and forgot to stop the training algorithm. When he came back, he found to his astonishment that the neural network had learned a general form of the addition. It`s as if it had understood something deeper about the problem than simply memorizing answers for the sets of numbers on which is was being trained.

 

               Broadly Accurate Predictions 

If the network works on something for long enough time, which is a very long time, many orders of magnitude longer than it takes to memorize the training set, then suddenly they figure out the deeper underlying patterns and are able to generalize and kind of make broadly accurate predictions about the other problems in the dataset. 

These large networks are extremely adept at machine learning, meaning figuring out the patterns that exist in data (or correlations between inputs and outputs) and using the knowledge to make predictions when given new inputs.  

Most of the mathematics is beyond me, but Ananthaswamy reintroduced me into the magic of calculus - and I learned much more. Anyway, the book helps me to follow the discussion about AI which is getting more important every day.  Recommended! 

Art Market: Tidbits From Fall Auctions 2025 @ Sotheby`s New York

 

(Drivebycuriosity) -  It`s November again and the world`s largest auction houses have their annual huge fall auctions in Manhattan.  This post focuses on the auction galleries  @ Sotheby`s (sothebys).

They had moved from the banks on the East River to Madison Avenue, close to Central Park. For financial reasons they gave up their huge tower and squeezed their administration and the auction galleries into the smaller Breuer Building, famous for its "Brutalist" architecture.  

Unfortunately the new location and apparently a huge buzz on Instagram and other social media attracted quite a crowd and I had to stand in line about 30 minutes to be allowed in, the first time at any auction gallery visit. There were no crowds at Christie`s & Phillips, who had their autumn auctions as well. The crowd, apparently steered by influencers on Instagram and other social media, clustered in some rooms and made them barely accessible, but many remarkable works, including some Magrittes, were ignored. 

Anyway - as usual - quality & quantity of the displayed art works were overwhelming and admission was free. I display here just my favorites, a very subjective selection. 

I start the post with 2 works by Mark Tansey. I have been a sucker for his surreal compositions for a while. The first image is called "The Myth of Depth". Their website explains: “The artist transposes the biblical miracle of Christ walking on water into a contemporary drama of twentieth-century art history, recasting its spiritual protagonists as the champions of Abstract Expressionism and its theoretical apostles. The daring Christ figure becomes Jackson Pollock, striding audaciously across the rippling teal surface, while in the lifeboat to the left, Clement Greenberg lectures an uneasy congregation of Kenneth Noland, Helen Frankenthaler, Mark Rothko, Robert Motherwell, and Arshile Gorky".   

The second image is called "Nature´s Ape". Fortunately both paintings didn`t get the attention of the Instagram crowd.

 

                          Concealed Orgies 

 

Above this paragraph follows another favorite of mine: Dorothea Tanning with "Interior with Sudden Joy". I discovered her surreal worlds at show at London`s Tate Modern in Summer 2019 (driveby ).  

 

Cecily Brown likes to paint concealed orgies. Above you can study her "High Society". I had enjoyed her exhibition at Paul Cooper gallery in 2017 ( driveby).

 

 

Above are 2 of René Magritte`s masterpieces: "La Représentation" & "Le Symbole Dissimulé". 

 

Above follow Neo Rauch with "Production"  & Huddon Sundbloom with "Around the Corner from Everywhere".

 

I also admire Andrew Wyeth´s realist paintings: Above his "East Waldoboro". 

 

Aren`t they cute? Maurice Dennis`"L'ORATORIO POUR 'L'ÉTERNEL PRINTEMPS" 

 

Carlos Enriquez`s "Banistas" remind me August Macke and other representants of German Expressionism. 

 

                               Bohemian Life 

 

Above you can see Pierre Auguste Renoir`s  "Femme Nue` Assise"; Paul Devoux`s "Composition"; Phillip Pearlstein`s "Nude on Kilim Rug"  & Hans Bellmer`s "Les Bas Raves".

 

And last but not least Richard Overstreet`s "Scenes from Bohemian Life - No. 5". 
 

Stay tuned

 

Economics: Was China`s One-Child Policy Really So Bad?

(Drivebycuriosity) - There is much lamentation about China`s One-Child-Per Family policy. Was it really so bad?

"China's one-child policy significantly influenced population growth by dramatically slowing it. The policy, implemented in 1979 and ending in 2016, is credited by the Chinese government with preventing an estimated 400 million births.", says Google´s AI (google ).

We don´t know how accurate the official numbers are. But if China had kept the original population growth the country today might have some hundred million people more. A higher population growth might have led to more economic growth, but not very much because the construction of the necessary infrastructure (railways, streets, energy plants etc. ) got already stressed. So, without the One-Child policy China would have to feed more people; as a result the incomes per capita (GDP divided by population size) and living standards would be lower. Would the Chinese be happier?

If China today would have a far larger population, the country would emit even more greenhouse gases, making the global warming issue even more severe. 

If China would have continued an unconstrained population growth the country would today consume more oil, more rice, pork, more of everything. The global prices of oil, rice, pork and many other commodities might be higher today and slowing global growth.

It seems that China did the world a favor. We should be grateful for that! 

Art Market: Tidbits From Fall Auctions 2025 @ Christie`s

 (Drivebycuriosity) - It`s November again and the world`s largest auction houses have their annual huge fall auctions in Manhattan. This post focuses on the auction galleries @ Christie`s (christies). As usual quality & quantity of the displayed art works was overwhelming and admission is free. I display here just my favorites, a very subjective selection as usual.

 

On top of this post you can see David Hockney`s "Christopher Isherwood and Don Barchady" (acrylic on canvas 83 ½/2 x 119 ½ in. (212 × 303.5 cm.) followed by Francis Bacon`s violent lover Lucian Freud with "The Painter Surprised by a Naked Admirer" & Genieve Figgis`"Sunday Tee in the Garden".

 

Above this paragraph follow Rudolf Bauer`s huge nipple "Composition with Red Circle" & Firelei Báez`s "Untitled ((Colonization in America, Visual History Wall Map, Prepared by Civic Education Service).

 

                         Consent S&M? 

 

Artists like to provoke: Maurizio Cattelan`s "Untitled" (2007, resin, paint, human hair, clothing, packing tissue, wood and screws). A crime scene or consent S&M? Anyway I spotted this girl already at Christie´s Spring Auction in 2017 (driveby ) & Takashi Murakami`s "Miss Ko (Project Ko)".

 

Above you can see Cecily Brown`s "It`s not yesterday any more" & Adrian Ghenie´s "Bogeyman".

 

Then follow George Condo`s "Untitled" & John Currin`s "Lake Place".

 

                   Forests With Tiny Figures 

 

Tomás Sanchez specializes in huge forests with tiny figures. Above his "Discovering the other Shore".

 

 

Then follow Julia Jo`s "Rhyme or Reason" & "Catherine Goodman`s "Solo".

 

And last but not least Caroline Walker´s "Study for Troupes, Backstage I" & John Singer Sargent`s "Corner of the Church of San Stae. Venice". 

To be continued.