Free markets? No, competition does that. Competition requires free markets but free markets don't guarantee competition.

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maxglute 17 hours ago | parent [-]

I poorly paraphrased profits converge to zero under perfect competitive market. Yes real world not perfect competitive markets. Oligor/duo/monopolies form, sometimes subsidies other shenanigans pick winner(s), winners extract huge margins/rents to build moats lock out new competition. Sometimes they collude / settle on business model with higher margins, i.e. 10-20% being normal/commodity, 50% for software and semi is top end of luxury goods. New state backed competitor enters and decides they can live on 10% margin, and then incumbants business model falls apart unless state also steps in to match.

E: And state can, but I don't know if state generally willing/able to backstop companies to 50% margin long term. I can't think of any, maybe some major state oil. Nvidia/TSMC with $$$ margins getting some CHIPs injection really meant for bailing out broke ass Intel was already anomalous, and it was basically to bribe them to onshore production.

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mlyle 12 hours ago | parent [-]

Note "converging to zero" doesn't really mean zero because economics includes opportunity costs. It just means that outsized gains don't exist over the longer term without some kind of market power. In the long run, most industries end up making the same returns.

	▲	spwa4 7 hours ago \| parent [-]
		I've found that this does not match reality. People have strong beliefs in value of specific things, even when that value is not economically there. The value of software is indeed zero, which seems to make people value hiring software engineers greatly over paying for software, and, tbh, that makes approximately zero sense in a lot of cases. The value of medical care is high, even when it's not (meaning there is plenty of medical and "medical" products that don't have real value). The value of houses is high and absolutely certain. Thinks like certain brands (even when the company behind them has disappeared), most obviously of watches. This tends towards the economic reality but it certainly does not match it.