Do we need better umpires to regulate industries?
This was article was inspired by Scott Galloway’s article “Umpires Not Kings” on medium.
For sure we need umpires from time to time. But sometimes it just doesn’t matter because the total available market is too big for any company to dominate, and changes are so fast the rules today might not fit what is coming in 6 months.
I retired as an electrical engineer from Intel and saw the continuously improving Intel products drive the performance/cost of microprocessors for decades and therefore computers to amazing levels. Faster, cheaper better products every 18 months. The power of a $10,000,000 computer in a decade became $1000, then $100.00. So, Intel held a near monopoly, a dominate market share, but customers saw more for less every 18 months. Just use the Intel CPU architecture and all will be good.
The CPU architecture is just a really basic foundation for software to run on. Early on, there was another CPU architecture with a really small market share. This was called ARM. The ARM architecture CPU could be made really cheap and so found it’s way into small devices like alarm clocks, appliances, cars and eventually cell phones and now it is in computers.
Intel lost it’s dominance in the CPU market because there were so darn many low cost applications and ARM just kept growing and the applications got bigger but kept using ARM. At the same time, TSM or Taiwan Semiconductor Manufacturing made the ARM chips and grew as well, continuously improving their manufacturing processes.
Did Intel use its near total dominance to hold market share in computers. Of course, it did. But the market grew too quickly for Intel to dominate all of it. Did Intel try for an unfair advantage with its size? In a way yes. It had the scale to invest several $ Billions in new production lines, which gave Intel a price and performance advantage in computers, but not in small controllers.
My point is Umpires tried to nudge Intel from time to time but what really opened the competition was the total available market grew too fast for Intel to deal with it all.
In markets where hardware is continuously improved by engineering with research and development, the large market share corporations may still face a level playing field when the entry price for a share of the market is low and the total available market is large. This was the case for electric cars and why Tesla quickly established a large share of the EV market. They invested in new manufacturing processes and new methods of design so they could innovate faster on a scale that let them offer more for less than gas alternatives. Their progress in products and manufacturing automation is now basically self-funding the growth in new factories and continuous engineering improvements.
Does this need an umpire? Most likely no, the market size is large enough to attract the capital needed for several competitors. But industry might grow faster with a coach and cheer leaders. Perhaps the umpire, coach and cheer leader is actually us, the voter and consumer.
When do you need the voter as an umpire? One case for sure is when clear harm is being done no matter who makes the product and the industry pays lobbyists to win support from legislators, ignore the harm and or slow down alternatives.
The Tobacco industry lying about the health risk of their product is one example where the problem was known but action delayed from the efforts of the tobacco industry lobby.
Purdue pharma and their lying about the benefits and potential for addiction is another case. Why did it take decades to address this issue and 100,000’s of deaths as the problem was known for years? Yup, industry lobby and control of just enough legislators to put off the inevitable.
What about the fossil fuel industry? Are there lower costs alternatives with less health issues from pollution? Of course, solar, wind and battery produce electric power at a lower cost now and those benefits will grow as the engineering continues to improve the products.
Has the oil industry used it size and funds to slow down the adoption of these alternatives? Yes, of course. However, it is a trillion-dollar opportunity so there is funding to continuously improve the energy industry in terms of price and pollution. But the benefits could come faster.
In the case of electric cars, it is possible to reduce gas consumption in 10 years by 50% and save about $315 Billion a year in fuel, maintenance and replacement cost. Is the oil industry using it size to slow this growth? Yes, but who should be the umpire?
The umpire needed is us, the voter. In every case, Tobacco, Pharma, Oil industries pay lobbyist to maximize their profit at the expense of us, both in terms of cost and health. They use money to influence law makers. The same issue for high tech social media companies where propaganda of lies is ignored in favor to advertising income from more clicks.
The voter is an essential umpire to call “you are out” in America’s favorite election games. Yes, it is hard to know if someone is being more of an industry advocate than an advocate for lower cost and safer products. My guess, if you spend about 4 hours total each election cycle doing an internet search on law makers/candidates on your voter list, you will discover actions or experience that suggests a bias for industry or a bias for the general public. Not too much to ask, right? Over time you will get better at choosing wisely and being a great umpire.
