Terence Tao: The role of small organizations in society has shrunk significantly

> Interestingly, in the past, the US federal government actively made efforts to keep private organizations from becoming too dominant.

Yes but one can't just ignore the federal government itself, as if this wasn't an organization. In this framing of small organizations kept small by the government the largest organization is the State. Indeed in this framing the State's job is to control other organizations. While a democratic state is different than a private organization in that it derives legitimacy from its voters, I'd be hard pressed to say that the state is sufficiently different from any other large organization. We can certainly see this now in the US in highly polarized times where the State bears opposition from half the country depending on who is in power.

I think this "anti-monopoly" framing is a bit dangerous as it smuggles a political position into a much more complicated situation. There is an overall decline in the West of small association groups. More and more of these groups happen on Discord voice chats and are divorced from the real life constraints that offer a more "grounded" character. And I think this issue has been written about much less than the "anti-monopoly" one. Even if you fervently believe that the State needs to play an aggressive role in policing private organizations, I think it's more thought-provoking to think about ways to encourage more grassroots organizing.

- What if Google didn't have more money than god, and couldn't afford to bankroll Waymo ~10b?

- Would TSMC have gotten as far if Apple couldn't reliably buy out months of capacity on the next node, bankrolling TSMC's tech development?

- Would we even have >10B-param LLMs at all?

There is something to be said for the concentration of resources, such that they can be deployed on projects with payoffs years or decades later. The same could be said for all the tech that came out of Bell Labs or PARC. Advocating for smaller businesses is advocating for shorttermism to some degree; even startups today are funded based on the premise that they could potentially capture an entire market in a few years.

> Interestingly, in the past, the US federal government actively made efforts to keep private organizations from becoming too dominant.

They seem to do the opposite now because small businesses can expect little support from the government (and surely no big subsidies like the large players are getting in for example the Stargate joint venture). Especially COVID was seen by many small business owners are extremely tough since larger stores were allowed to stay open while the small businesses were not.

It's the natural result of tech gaining value, and a lot of it staying closed source: Once you are scaling, scaling very high isn't that difficult once you have the best offering, and when you are big you can do optimizations that would be seen as wasteful at a small scale. streaming service that has wide reach isn't that different when it is dealing with 10 million or 100 million subscribers, but dedicating a guy for 3 months to save 2% of your costs through some arcane fiddling is much more profitable when you have 100 million, and then your costs per subscriber can be lower.

We also have plenty of problems that are natural monopolies. Take, for instance, credit card fraud detection. High level detection involves giving a risk score to a transaction. I sure can give a better fraud score if I see almost every transaction this card makes, and I have a very high percentage of visibility of all transactions in the world, than if I had to do the calculation by just knowing what, say, my boardgaming website has seen. The smaller contender has to be so much better algorithmically to be able to compete with a massive advantage in data quantity and quality.

And that's the real problem we have with monopolies right now: The bigger company often doesn't have a huge advantage because they are making extra shady deals, or they have to compete less, but because being bigger makes them more efficient in some ways that are completely above board.

This is also just a consequence of globalization. A small company cannot compete globally, which means less power for the US government abroad. So it's not in the interest of the US government to break up Apple or Google or Microsoft. Look at how both the US and China can just bully Europe.

This is the classic tradeoff. (it's similar to the bias variance tradeoff, or fox and hedgehog analogy)

Monolithic systems are scalable and efficient when well-governed, but brittle under errors or bad leadership (e.g. China closing its ports in the 14th century had centuries-long repercussions).

Distributed systems are less efficient but more resilient to errors and poor governance.

It’s not always one or the other though. American founding fathers found a right set of tradeoffs in designing checks and balances (like separation of powers) and federalism structures that harden the system against bad governance (though this is under strain today).

I would point out that, regardless of the US federal government's stance on monopolies, any legislation or civil action toward that end would be far less applicable today, because of globalization.

If your country prevents any domestic tech companies from becoming trillion-dollar behemoths, but such things are still permitted in at least one other country with a similarly-sized economy to yours, then that just means that all your smaller domestic tech companies are going to be outcompeted by the foreign trillion-dollar behemoth selling into your domestic market.

> * The Bell system was broken up, resulting in a geographically distributed telecom network: https://en.wikipedia.org/wiki/Breakup_of_the_Bell_System : Your phone company was local.

It's worth noting that Bell's size and reach allowed it to create Bell Labs, and the subsequent breakup led to their eventual demise.

The reduction of volunteer organizations started long before COVID: "Bowling Alone" was written in 2000, and documents much of the same changes.

The trend has been resistant to any particular link to localized economic ups or downs. Characterizing the 2023-2025 era (at least in the US) as "a time of scarcity" is divorced from any sort of factual reality; there is no quantitative data to support this idea and it seems to mostly be based on social media vibes (hence the oft-commented "vibecession").

One could make a much stronger argument exactly to the opposite: wealthier societies tend to become more individualistic and separated, people choose to live on their own if possible, and in bigger places; large companies have such attractive economics and pay people so much more than small companies do that it is difficult for small organizations to compete for talent.

I’d imagine the death of volunteering and civic life has a lot to do with two income households becoming the default. A family that works forty or fifty hours a week has a lot more time to give than one that works eighty to one hundred (don’t forget commuting!)

People's time is conserved, so a couple of questions: 1. What percentage of decline can be attributed to social media purely as a time sink? 2. What percentage of decline can be attributed to increased political polarization encroaching/claiming/colonizing formerly and nominally neutral spaces?

One remarkable counter example in my neck of the woods is the Orthodox Church, which has done extraordinarily well since covid, picking up tons of converts. Of course, people themselves are conserved, too. That growth has come at the expense of protestant churches which in my reckoning sorta stopped being churches during covid. I'd estimate 1/3 of my local congregation is non-Greek converts who seemingly have no intention of learning the language (services regularly run 1.5 to 2 hours, largely in koine Greek)!

> And then when times are bad, small organizations are the first to die, because they lack the economies of scale and financial reserves that allow them to weather a contraction.

Not sure it is bad times which drives this. Plenty of examples in human history of the tendency of humans to form small local support groups when times get tough.

Volunteerism has been on a massive decline my entire life, good decades and bad decades. There is some other force in our current social order which is tearing it apart.

Don't agree - just as an example, the poorest Irish immigrants in NYC were part of Tammany Hall wards. I think technology has reduced the need for economic/political actors to organize via hyper-local blocks.

There was a wave of less formal topic based community groups when Meetup launched, but COVID + Meetup buyout & price hikes has led to most of them shutting down.

> I'll posit a mechanism: when times are good, small organizations are born, growing out of people's spare time and sense of security in the future. After all, by definition organizations start small. And then when times are bad, small organizations are the first to die, because they lack the economies of scale and financial reserves that allow them to weather a contraction.

I think the biggest flowering of organizations both small and large happened in the post-WWII period. In the US sure that was a very hopeful time. But many of the other belligerents were reduced to rubble and Germany and Japan were occupied by foreign powers. Yet organizations did still sprout in this period of, what we modern people would probably think as, utter despondency. I think there's more to it than just time and security.

I worry that theres a cyclical nature to it all. When society has smaller organizations, people saw what community organizing looked like, and folks were far more likely to have a hand being leaders simply by virtue of there being so many businesses when they were smaller and more distributed.

What terrifies me is a pocket thesis I have that the local leadership—the local activating & bringing people to a purpose— vanishing is a symptom or symptoms directly coupled to Piketty's Capital in the 21st Century. Capital swallowing up all the wealth & managing the world from the top down means there are way less people with Buck Stops Here responsibility, and that they tend to be in much loftier offices, far more remote and detached from the loved experiences of the business. Capital manages the world from afar now, exacts it's wants and desires via a very long arm of the invisible hand, and it doesn't involve us, doesn't involve humanity anymore.

We humanity don't see the world working before us, and are thrown into the world without much chance to carve a meaningful space out for ourselves. It's all very efficient and the scale of capital enables great things, but it deprived us of the human effort of stumbling through, deprives us of ingenuity's energizing reward of seeing things around us change and improve, seeing people connect through and around our actions. Society at a distance isn't social media & it's parasocial relationships: it's the new megacongolmerated world that left us Bowling Alone in 2000.

MBA-ification of our professional lives erodes the social animal. The less social animal, lacking experience, does not build social and business organizations around themselves. The social environment degraded further, the center cannot hold, we are moored less and less to purpose and each other.

I would concur. It's my observation from 20 years of watching and participating - the volunteers are the retired, the wealthy, the underemployed, and the stay at home parent. "Normal" working people are not volunteering and handling the complexity of doing these things, they are at their work. I can only imagine that prior generations had the working parent participate through the free time freed up by the stay at home parent.

It suggests to me that there is a long running flaw. I believe Bowling Alone pegs the inflection point in the late 50s or early 60s, ('57?) and the substantative issues came about with the generation hitting the workforce in something like 1960. So the kids born in the 1935-1945 era had something in their culture materially different than prior eras that kept on spreading.

Interesting take. What is the market-serving product you mentioned?

I think this is what Tao is saying that large organizations are filling the niche that was previously served by smaller organizations. eg. Discord, Slack, and other online platforms like Twitter, Snapchat, YouTube, Fortnite, Roblox, etc., are being used instead of smaller forums and local communities.

On one hand you’re saying property rights and free markets, on the other you’re saying private entities should be kept in check (by who? I assume the government). Isn’t that a contradiction?

Yeah, I remember he commented on every town having its own local newspaper too, which has obviously been replaced by commercialized mass media today.

Tocqueville is the first person I thought of reading this!

> I just got to buy whatever walmart or bestbuy was willing to sell us.

There was a lot of stuff available that was advertised in magazines and stuff as well. To use one niche as an example: I'm thinking of the ads in computer magazines sometimes with hundreds of obscure items crammed into a page.

Those tiny businesses are reasonably well-coordinated, so its not really the same type of "small organization" as what Tao is talking about.

I think there’s a difference between tiny and small. There are a ton of tiny companies that essentially buy services from fortune 50s and lease from big real estate firms.

Businesses with 50-100 people are pretty rare compared to the past

Many big corps launch small brands to fake authenticity

Two decades ago department stores were not making products. They were and still are leasing shelf space. The only difference between them and modern amazon is that their shelves are finite, so some level of quality control was done to ensure the shelves would be stocked with things people are actually interested in and wouldn’t fall apart and jam up the returns department too badly.

There is nuance here. What you say is true but big organizations have grown as well.

I think in the big picture I would say overall it’s the big organizations that have grown dominant. The inductive reason is because it is the goal for small organizations to become big so that’s where things head logically speaking.

From an evidence based standpoint, in the end, look at YouTube and Amazon. In the end the big organizations are in control. YouTube for example can cut off their creator and it’s pretty much over for them no matter how popular they once were.

I'm sorry, but you are very incorrect.

In Amazon... You'd be surprised to know how many brands sell 90% of the products availabile there.

The same applies to Youtube, you'd be surprised to know how many channels per country gets 90% of the views.

It's an illusion. We have billion of people...

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I've recently finished Tribe by Sebastian Junger. I highly recommend it as well.