Venture capitalism and monopolies
A few years ago a video entitled 'America first, The Netherlands second' (https://www.youtube.com/watch?v=ELD2AwFN9Nc) went viral. The video mocked the inauguration speech of Donald Trump, where he first pitched his American unilateralism planned for his term as a president.
One of the brains behind this video, Arjen Lubach, is an incredible talented artist (award winning novelist, musician and presenter), who hosts the show ‘Zondag met Lubach’, sort of a Dutch John Oliver clone. Recently, they made an interesting item on capitalism and venture investments.
Capitalism is a model that helps make things more efficient. If you only have one car manufacturer in the world, there is no reason for the company to improve production quality and price or treat workers better. Consumers will have to buy the car anyway and automotive engineers will have to work there anyway. However, recently the system that leads to this healthy competition is under threat.
Consider you want to start a taxi company (dubbed Taxi Mariska in the segment). You borrow some money from some rich uncle to buy your first taxi. You work hard until you make a bit of profit, buy another taxi and hire another driver. If you do this well and people like your product, the company will thrive. If not, you will go bankrupt and some other company with a better product will take over. This is the common path for company development and results in progress and innovation.
On the other hand, you have companies that do not start with a product and make money, but start with money with the goal of eventually building a product. These companies are often backed by massive amounts of venture capital. An example of such a company is Uber. Uber has billions of dollars in VC money and is trying to compete with existing taxi services. Because of this massive investment, they can essentially just charge half the price of other companies and take losses for years in a row, until all competitors run out of business. Now they can crank up the prices and make large profits.
Similar things are happening to delivery services, online stores, co-working spaces and rental chains. In the end there will only be monopolies and the whole reason why capitalism is such an effective system, (friendly) competition, disappears. Prices will go up, workers will not be treated well anymore (already seen at Amazon) and product quality will suffer.
For the full item (in Dutch) see:
https://www.youtube.com/watch?v=VIc5crNUBBU&t=3s
