Monopolistic businesses are the most profitable (three chapters combined into one)

Able to make money, able to make money for a long time, and a high return on investment—Wang Xiuyuan's question lingered in everyone's ears.

On the surface, Wang Xiuyuan seemed to have asked three questions, but in reality, he was establishing three standards. In the end, he only posed one question, and those with insufficient intelligence couldn't even grasp the logic hidden behind it.

As these Second-generation rich connected these three questions together, a very important keyword appeared in their minds.

"Monopoly!"

"A monopolized business!"

"Control pricing power through a monopoly!"

Terms related to monopoly blurted out from the mouths of these Second-generation rich, and at the same time, this meant they would be able to understand the point Wang Xiuyuan wanted to convey next.

Wang Xiuyuan snapped his fingers happily: "Exactly, it's monopoly.

As long as we can monopolize an industry, we can control the pricing power of that industry and then sweep all the profits into our pockets.

It's that simple."

"But the White House and Congress have long established strict Antitrust Laws specifically to combat monopolistic behavior; no one can achieve a true industry monopoly.

Setting aside whether we can actually achieve a monopoly, even if we luckily did, we'd be hounded by Congress and the Prosecutor's Office. In the end, the enterprise we worked so hard to build would be forcibly broken up.

I suggest you give up on that idea."

"That's right, Wang Xiuyuan, I suggest you give up on this idea; it's simply unfeasible."

"Monopoly businesses definitely can't be done. Let's just hear what business you want to do; as long as it makes money, we can do it."

"Yeah, at the beginning of this year, Congress just passed the Antitrust Procedural Improvements Act to supplement the previous antitrust legal system. The White House and Congress won't tolerate the existence of an industry-monopolizing company."

These Second-generation rich had all been exposed to their family businesses to some extent, so they naturally knew the profits brought by monopoly, but they understood even better that the American government wouldn't sit idly by while a single enterprise completely monopolized an industry.

The American government enacted the world's first Antitrust Law, the Sherman Antitrust Act, back in 1890.

This law aims to prohibit a single enterprise or multiple enterprises in an industry from joining together to reach monopoly agreements and exclusive behaviors, thereby protecting the majority of enterprises in the industry to compete freely with each other. This Sherman Antitrust Act has been the cornerstone of the American antitrust legal system since the day it was enacted.

In 1914, the American Congress passed the clayton act and the Federal Trade Commission Act to supplement the antitrust legal system. The clayton act mainly targets mergers and market concentration, while the Federal Trade Commission Act focuses on consumer rights protection and prohibiting unfair competition.

In 1950, the American Congress once again passed the Celler-Kefauver Anti-Merger Act, which further strengthened the review of market merger behaviors.

Twenty-six years later, in 1976, the American Congress passed the Hart-Scott-Rodino Antitrust Improvements Act, which established a pre-merger notification system on top of previous foundations.

Finally, there was the Antitrust Procedural Improvements Act that a certain Second-generation rich just mentioned. With the implementation of this revision, the American antitrust legal system officially became a complete entity.

Even these Second-generation rich knew these common-sense business issues; could a person as smart as Wang Xiuyuan not know them?

"Guys, I'm naturally aware of what you're saying. Haven't you ever wondered why I'm still bringing up the matter of industry monopoly with you?

The American government has specifically formulated a set of detailed and strict laws for tax collection called the internal revenue code. They also established a department with boundless power like the Internal Revenue Service to strictly investigate tax evasion.

Currently, all ordinary people, the middle class, and high-income groups in America are honestly paying their taxes. Even if some people take their chances and evade taxes, it's only a matter of time before they're caught by the IRS.

So, can any of you tell me which of your parents or family businesses hasn't utilized the legal loopholes in the internal revenue code to avoid taxes?

I'm afraid the taxes they pay aren't even as much as those paid by a middle-income family."

This question left the group of Second-generation rich incredibly embarrassed. They weren't even qualified to touch such core data in their family businesses, so how were they supposed to answer?

Although they didn't know the specific core data, there was one thing they definitely knew: their families and family businesses employed a dedicated financial team.

The daily work of this financial team was to study the American internal revenue code, finding and utilizing the legal loopholes within to avoid taxes for their own enterprises.

In the future, America would have a particularly unreliable president, Mr. Donald Trump, who is a classic example.

In the sixteen years from 2000 to 2015, he paid zero taxes for ten of those years. In 2016, he was elected President of the United States; for that year and 2017, his tax payment was seven hundred and fifty dollars.

In 2020, he stepped down as President of the United States, and that year was also zero tax.

This future President of the United States was a wealthy real estate businessman, a super-rich individual, yet his total tax payments over twenty-one years might not even equal the income tax paid by an ordinary white-collar worker in a single year.

Isn't this some kind of international joke?

"Perhaps you don't know the specific numbers, but there's one thing I can tell you for certain: the taxes your family businesses and parents pay are very little, with a high probability of being less than what a middle-class family pays.

They can set up companies offshore and keep all the company's profits there. As long as the profit funds don't return to American soil, the IRS can't expect to get a single cent in tax.

For an enterprise to develop long-term, it's impossible not to invest heavily in R&D. Therefore, the profits generated within America can be completely spent through R&D, scientific research, personnel salaries, and so on.

If they invest a bit more in R&D, the company's books might even show a loss. What reason would the IRS have to collect taxes then?

But the laughable thing is that the financial reports disclosed to shareholders show the company made tens of millions or even hundreds of millions of dollars in profit this year, and the stock price soars.

Examples like this are everywhere. Why?

Because from the day they were established, the rules of capitalist society have been ropes used to restrain ordinary people. The strong in capitalism choose to break the shackles of these rules and utilize them to strengthen themselves.

While the weak can only struggle for survival within the cage of rules. This is the logic of survival in this world.

The internal revenue code enacted by the American Congress isn't meant to guide you on how to pay taxes; its correct use is to study how to pay less or even no tax. Do you understand!

The Antitrust Laws you just mentioned work on the same principle. Antitrust Laws are bear traps used to restrain those fools who lack foresight. What does that have to do with any of you sitting here?

We must become familiar with the application of rules, then understand their operational logic and loopholes, and finally utilize the rules to strengthen ourselves.

We are natural-born strongmen, a group of big shots destined to stand at the very top of this era.

Tell me, what does a measly Antitrust Law amount to!"

"It's nothing! It's just a measly Antitrust Law!"

"Exactly, the Antitrust Law isn't worth a damn. As long as we plan properly, there will be absolutely no problem."

"That's right, if we can't even handle a measly Antitrust Law, why should we stand at the peak of the era!"

A group of ignorant Second-generation rich were whipped into a frenzy by Wang Xiuyuan's rhetoric. Please do not doubt whether these rich kids were deliberately acting to cooperate with Wang Xiuyuan; they truly, from the bottom of their hearts, accepted the logic he was feeding them.

Europe and America are strange places. People who grow up there are naturally accustomed to self-intoxication and self-brainwashing, so they appear exceptionally confident to others.

When these people consider problems, they use linear thinking: cause-process-result, and then nothing else.

Therefore, a phenomenon often occurs when Westerners handle problems: they always lack foresight and contingency plans for various emergencies.

Once an emergency occurs, the result will definitely deviate. If they encounter several more emergencies, the result might deviate to a point beyond their wildest imagination.

In contrast, Chinese people will consider every possible issue that might be encountered during the execution of a problem and then prepare different response strategies to ensure the target result is achieved.

So, when Wang Xiuyuan presented a plan that was essentially sound, this group of Second-generation rich naturally got carried away.

Even if there were minor flaws, given their discernment and thinking habits, they would automatically ignore those flaws or mentally fill in some remedial plans, eventually forming a logically consistent result.

The plan Wang Xiuyuan just mentioned indeed had flaws, but it could indeed bypass the restrictions of Antitrust Laws to ultimately achieve monopoly-style high profits, provided the company structure was designed correctly from the start.

The high profits that industry monopoly can bring are truly astonishing; this is common knowledge.

So, the Second-generation rich, caught up in Wang Xiuyuan's hype, continued to cheer as if massive amounts of green cash had already entered their pockets. Finally, Wang Xiuyuan spoke up to interrupt them.

"Hold on a moment, guys. It's a bit too early to be happy; things haven't been settled yet."

"Wang Xiuyuan, hurry up and tell us. We'll listen to you."

"That's right, since you said the restrictions of the Antitrust Laws can be bypassed, you must have a complete plan, right!"

"Hurry up and say it, we'll do as you say!"

These people were still immersed in the grand vision Wang Xiuyuan had painted for them, unable to pull themselves out, and unanimously expressed their support for all of Wang Xiuyuan's decisions.

"I'll tell you the specific details of the business cooperation last. Let's first talk about how to bypass the restrictions of the Antitrust Laws."

"OK."

"Go ahead and speak."

These people naturally had no objection to a minor issue of sequence.

"Based on the numerous legal clauses and rules of the American Antitrust Laws, there is one most direct way for us to evade their restrictions.

That is to open three companies, with each company's market share not exceeding fifty percent.

This way, it won't trigger the most core prerequisite of Antitrust Law: [occupying the market dominance and pricing power of a certain industry]."

Wang Xiuyuan's answer was simple and crude: as long as the enterprise does not hold absolute market dominance and pricing power, there is no issue of a monopoly. In that case, the Department of Justice and Congress would have no reason to target them.

However, this method would also create new problems.

"Your method won't work. While opening three companies in the same industry can indeed bypass antitrust restrictions..."

"...it will also cause our capital and resources to be spread thin. Three companies that aren't powerful enough could easily fall behind in competition with others, eventually leading to a situation where not even one survives."

"Exactly. Your method seems feasible on the surface, but there are too many problems in actual operation. It won't work in the end; we need to find another way."

"Yes, I think we should think of another way and see if there's any other possibility to make it work."

"You all forgot another problem: a person cannot serve as a board member in two competing companies."

"In other words, even if all three companies grow, our entry into the boards will be a major issue. If we can't control the board, is it still our enterprise?"

The crowd discussed animatedly, every sentence hitting the core pain points of the issue. But Wang Xiuyuan wasn't angry, because these people were exploring solutions rather than just finding problems and complaining.

"So that is exactly why I called all of you here, because this is a brand-new business, a brand-new industry."

"Only in a brand-new industry can our three newly established companies be in an absolute leading position from the start, and then take all the market share before others can react. This way, others won't even have a chance to step over the threshold."

"Every one of you has a powerful family behind you. The reason these families have stood tall for so many years is because they possess a vast network of interpersonal relationships."

"From the White House and Congress at the federal level to the legislatures of every state and city, there are friends and supporters of your families everywhere."

"With the support of these people, we can quickly seize all the market share and then hide at home to divide the cake."

"What do you think?"

At this moment, Wang Xiuyuan was exuding dominance. Everyone could see a mountain of confidence in him, as if everything was under his control.

Then, a weak voice sounded: "What about the shares of those three companies? That restriction still hasn't been bypassed. Are we really not going to join the boards?"

The speaker was Salmer Koch. His family's company was not listed, but he had raised a very good question.

According to Section 8 of the Clayton Antitrust Act of 1914, it is clearly stipulated...

...that no natural person shall at the same time be a director in any two or more competing corporations engaged in the same industry, where the combined capital, surplus, and undivided profits exceed one million dollars.

The purpose of this provision is to prevent the weakening of competition between enterprises through personnel links. Even if a single natural person does not have direct equity control, the overlap of board seats alone could constitute monopolistic behavior.

However, there is still a way to legally circumvent this. Antitrust Laws focus on control and influence at the management level of the company, rather than simple equity ownership.

Even if a person holds a large number of shares in two competing companies, as long as that natural person does not serve on the boards of both companies simultaneously, it generally does not constitute a violation of Section 8 of the clayton act.

Furthermore, according to Section 7 of the Clayton Antitrust Act, as long as a single natural person does not hold a large number of shares in two competing companies and gain actual control—such as being able to dominate their business decision-making—it usually does not constitute an antitrust violation.

In other words, simply holding large amounts of shares in multiple competing companies is a legal business investment that does not constitute a monopoly, but one cannot hold board seats in multiple competing companies at the same time.

Although the question Salmer Koch raised was professional and important, Wang Xiuyuan felt the guy was being a bit of a pedant.

"Salmer, since you noticed the requirements for shareholders serving on boards in the Clayton Antitrust Act, you must have done some research on this act."

"Answer me one question: why do you absolutely have to serve on the boards of all three companies at the same time?"

"This..." Salmer was stunned. He really hadn't thought about that. Was it necessary?

"In my opinion, you are the person among everyone here who should least be asking this question, because your family's Koch Industries has not gone public to this day."

"You should understand better than anyone else that the so-called board of directors is essentially a company's core decision-making group."

"Who opened these three companies? When you look at the core decision-makers, who are they? Isn't it still everyone sitting here?"

"By serving on the board of Company A, you can fully understand all of its operating conditions. If you own a certain number of shares in Company B, can you really not get the core financial reports?"

"Simply put, all of us will own a portion of the shares in these three companies, but we will only serve as board members in one of them. Then, through these three companies, we will achieve a monopoly in the true sense of the word."

"Does anyone still have any doubts regarding how to achieve an industry monopoly?"

Doubts? What doubts could they possibly have?

Wang Xiuyuan had already bypassed all behaviors that could potentially trigger Antitrust Laws and explained it so clearly. Naturally, everyone agreed with both hands and feet raised.

"No problem, I support it."

"No problem, I think it works."

"No problem, let's do as Wang Xiuyuan says."

Everyone cast their vote in favor; it was time to move to the next stage.

"Since no one has any issues, I'll tell you in detail how we're going to do business and what kind of business it is."

"Same as the old rule, before I speak, I'll ask you a question to test if you're smart people."

"The purpose of everyone doing business is to make money, so exactly what kind of industry can ensure that you definitely make money? And make big money!"

This seemingly normal question made everyone's heads almost start smoking. A business that could ensure making money, and big money at that.

'Bro, do you hear what you're asking? Or is there something wrong with my ears?' This was everyone's first reaction upon hearing the question.

But on second thought, this question was not simple at all. Based on their few brief interactions with Wang Xiuyuan, he would definitely not just make something up to mess with them.

Since Wang Xiuyuan asked this question, there must be a reason for it; it was just that their own level wasn't high enough to have discovered it yet. Thus, everyone began to rack their brains frantically.

The luxurious living room suddenly fell into silence. Industry after industry surfaced in their minds and was then quickly eliminated. They still couldn't find a business that met Wang Xiuyuan's criteria.

Until more than ten minutes later, the businesses everyone thought of became increasingly outrageous.

But they discovered a terrifying problem: the more outrageous the business, the more it fit the criteria Wang Xiuyuan had just mentioned.

Because those businesses were all written in the Constitution of the United States—they were all illegal businesses!

Needing a network of connections throughout all levels of the American government, ensuring certain profit, and making big money... damn it, aren't those the standards only illegal businesses can reach!

Sanchez Roosevelt swallowed hard. "Brother, you're not thinking of dragging us into doing something illegal, are you? Let's get this straight, I definitely won't get involved in illegal things."

"If I did something illegal like that, my family would definitely kill me directly."

*Thump*

After hearing Sanchez Roosevelt's words, the others' hearts skipped a beat because they were shocked to find they weren't the only ones who had thought of this outrageous answer. Didn't that mean it was the correct one?

"Yeah, Wang Xiuyuan, those old fogies at home would never allow us to do illegal business. The business content must be legal."

"A few minor illegal acts during the course of business are no big deal."

"But businesses like drug trafficking, operating illegal casinos, or illegal arms dealing are absolutely impossible."

"It has to be a legal business, otherwise my family will kill me."

Who knows what these guys were imagining, but Wang Xiuyuan was truly getting annoyed now.

"What the hell are you all thinking? Illegal business?"

"I'm currently worth nearly ten billion dollars, and it's all in cash. Do you think I need to do illegal business for a bit of chump change!"

"Drug trafficking?"

"We Chinese hate that drug trash the most. If any of you dare to touch that stuff, we don't need to be friends anymore!"

"Operating illegal casinos?"

"If you want to open a casino, wouldn't it be better to just go to Las Vegas? Or just find an Indian tribal chief to partner with!"

"Why must you open some illegal casino? You'd have to find a way to launder the hard-earned money. Are you crazy or am I?"

"As for illegal arms dealing, isn't that even more ridiculous?"

"Gun sales aren't prohibited on this American soil. How did a legal business become illegal in your mouths?"

"As for selling abroad, who are the world's biggest arms dealers? Isn't it the American government and its rival, the Red Giant government? Am I tired of living that I'd try to steal their business?"

"I'm talking about a legal business, legal!"

"If I dragged you into doing illegal business, the elders of your families would kill me first to vent their anger. I still want to find a bunch of beautiful women and have a bunch of kids!"

Wang Xiuyuan was very angry at this moment. He felt he had been deeply insulted by these idiots. Did he, a super-rich man worth nearly ten billion dollars, need to do those shady illegal businesses?

He had plenty of ways to make money; there was really no need to break the law.

Unless it was for the sin points in the system, but that was another matter.

(It was under review last night and only released this morning.)

(PS: Seeing brothers voting to support all the time, I am extremely grateful, so here's an extra update~ There must be an extra update. Even if it didn't reach 200 recommendation votes, there must be an extra update. This chapter includes the base two chapters of four thousand words and an extra chapter of two thousand words. Yesterday and today I received 36 recommendation votes and 5 monthly tickets. The data isn't very ideal, brothers, please support with recommendation votes, and please follow and bookmark. Thanks.)