Monopolies Are Good !
Hareesh Tibrewala
CEO : Anhad | Co-founder : Mirum India | Consultant : Stanford Seed | Partner : SVP Partners | Certified Independent Director | AI Evangelist
Have been reading Peter Thiels book "Zero to One". Peter seems to have some very radical views on economy and capitalism . (Peter Theil is the co-founder of Paypal...for those who may not have heard about him)
He believes that economic growth in society is actually driven by monopolistic businesses and not by businesses who compete. He goes on to cite two examples in favour of his argument.
He says that tech industry has generally been dominated by monopolies. Earlier it was IBM, then Microsoft, then Google and perhaps now Apple. Each of these companies made obscene amount of profits in their hey days. Which allowed them to pay their people very well, with all the silicon-valley-creature comfort stories that we hear about. They were able to constantly experiment and invest in innovation as well. Which means they did well for their people and for society in general.
On the other hand the airline industry is an example of an extremely competitive marketplace. As per Theil the industry earns less than a dollar for every passenger flown in the year. Employees are underpaid, overworked and there is no serious innovation.
Thus contrary to what we are taught in our MBA Economics class, Theil believes that monopolies are good and competing businesses should actually try to merge or collaborate.
Interesting and very contrarian view point !!