America is not the land of the free but one of monopolies so predatory they imperil the... - 0 views
www.theguardian.com/...datory-they-imperil-the-nation
us oligopoly market fundamentalism corporate power influence elections political
shared by Javier E on 01 Dec 19
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over the last 20 years per capita EU incomes have grown by 25% while the US’s have grown 21%, with the US growth rate decelerating while Europe’s has held steady – indeed accelerating in parts of Europe. What is going on?
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Philippon’s answer is simple. The US economy is becoming increasingly harmed by ever less competition, with fewer and fewer companies dominating sector after sector – from airlines to mobile phones
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Market power is the most important concept in economics, he says. When firms dominate a sector, they invest and innovate less, they peg or raise prices, and they make super-normal profits by just existing (what economists call “economic rent”)
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So it is that mobile phone bills in the US are on average $100 a month, twice that of France and Germany, with the same story in broadband
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US healthcare is impossibly expensive, with drug companies fixing prices twice as high or even higher than those in Europe; health spending is 18% of GDP.
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Google, Amazon and Facebook have been allowed to become supermonopolies, buying up smaller challengers with no obstruction.
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Because prices stay high, wages buy less, so workers’ lifestyles, unless they borrow, get squeezed in real terms while those at the top get paid ever more with impunity. Inequality escalates to unsupportable levels. Even life expectancy is now falling across the US
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why has this happened now? Philippon has a deadly answer. A US political campaign costs 50 times more than one in Europe in terms of money spent for every vote cast. But this doesn’t just distort the political process. It is the chief cause of the US economic crisis.
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Corporations want a return on their money, and the payback is protection from any kind of regulation, investigation or anti-monopoly policy that might strike at their ever-growing market power
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this is systemic; how both at federal and state level ever higher campaign donations are correlated with ever fewer actions against monopoly, price fixing and bad corporate behaviour.
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In Europe, the reverse is true. It is much harder for companies to buy friendly regulators. The EU’s competition authorities are much more genuinely politically independent than those in the US
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As a result, it is Europe, albeit with one or two laggards such as Italy, that is bit by bit developing more competitive markets, more innovation and more challenge to incumbents while at the same time sustaining education and social spending so important to ordinary people’s lives
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The EU’s regulations are better thought out, so in industry after industry it is becoming the global standard setter. Its corporate governance structures are better.
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to complete the picture, Christine Lagarde, the incoming president of the European Central Bank, in the most important pronouncement of the year, said the environment would be at the heart of European monetary policy. In other words, the ECB is to underwrite a multitrillion-euro green revolution. In short – bet on Europe not the US.