Oligarchies, monopolies, and monopsonies

I highly recommend this article by John Quiggin:

Analyses of the upsurge in inequality since the 1970s have pointed to monopoly and monopsony power as a major factor. As Brett Christophers observed in his book of the same name, competition has ceased to be the “great leveller.” Or, to quote Nobel laureate Joseph Stiglitz, “As inequality has widened and concerns about it have grown, the competitive school, viewing individual returns in terms of marginal product, has become increasingly unable to explain how the economy works.”

The importance of monopoly and oligopoly in generating inequality has also been highlighted by bodies such as the Economic Policy Institute and the Open Markets Foundation, as well as by David Autor and other leading economists.

As is usual in economics, most discussion focuses on the United States. What about Australia? Last December, the Grattan Institute released a report seeking to debunk the idea that monopoly power creates serious costs for Australian consumers. Understanding this counter-intuitive finding takes some digging, but it turns out that the analysis rests on a simple, but dubious, choice of metric.

One useful measure of monopoly power is the proportion of household expenditure that goes to monopoly or oligopoly businesses. On the income side, economists worry about the extent to which large businesses can act as monopsonists (single buyers) using their market power over their suppliers, franchisees and workers. Taken together, the share of household expenditure and income that involves dealings with monopolists represents a reasonable measure of monopoly power.

Grattan’s analysts do something subtly, but crucially, different. They use the “gross value added,” or GVA, recorded in the national accounts to identify industries dominated by a few private firms. Their striking finding is that only about 20 per cent of the economy falls into this category. These firms account for a substantial share of the average household’s expenditure, but a much smaller share of GVA.

Why is this the case? Arriving at the GVA for any given firm involves subtracting from its sales revenue the inputs purchased from other firms. In Australia, those inputs are mostly services supplied by firms ranging from labour hire and cleaning services at the bottom end of the market to legal and accounting services at the top. In all but a handful of cases, these markets are highly competitive.

On any reasonable accounting, the fact that monopoly businesses deal mostly with competitive suppliers — suppliers that can be replaced if they don’t cooperate — makes the problem worse, not better. By using GVA as its measure, the Grattan analysis reaches the opposite conclusion.

591 thoughts on “Oligarchies, monopolies, and monopsonies

  1. Good morning Dawn Patrollers. Understandably the Christchurch attack is still dominating the media.

    Michael Daley has given an “ironclad” guarantee he would not water down gun laws as the Liberals step up pressure and roll out anti-gun advertisements featuring John Howard.
    The Australian family of Brenton Tarrant have expressed sorrow and pain towards the victims of the Christchurch massacre, declaring his violence “unrepairable”.
    Greg Barton asserts that ultimately, we need to address the permissive political environment that allows such hateful extremism to be promulgated so openly.
    Matilda Boseley uncovers what goes on in the alt-right internet subculture that Tarrant was part of. It’s not nice.
    The White House has been forced to defend the US President after the alleged shooter in the Christchurch mosque terror attacks wrote that he admired Donald Trump.
    Jenna Price tell us that more than one million people have signed a petition to remove Queensland Senator Fraser Anning from Parliament after his remarks following the Christchurch mosque massacre.
    And Shane Wright reports that all major parties will unite to censure Queensland Senator Fraser Anning, accusing him of trying to incite fear and division across Australia on religious grounds in the wake of the Christchurch terror attack.
    Sean Kelly pointedly writes that our PM is telling fairy tales while Ardern does something radical. He says Morrison meant well, but what he said was absolute rot.
    The SMH editorial says the Christchurch attack has brought into sharp relief the rise of right wing extremism and he divisive politics that enable it.
    Former NSW assistant police commissioner Nick Kaldas laments that Australia has eight police forces but none are tracking hate crimes. He provides an interesting insight.
    Security expert Clive Williams explains how New Zealand security authorities seem to have been mainly focused on Islamist extremists and not to have taken the extreme-right seriously enough.
    The Australian reports that Australia’s top national security officials will today hold an urgent meeting to brief ministers on Australia’s response to Friday’s terrorist attack in Christchurch, offering a review of the threat posed by right-wing extremists.
    Michelle Grattan writes that a truly inclusive society requires political restraint.
    Jason Wilson writes the Australians are asking how did we get here. Well, Islamophobia is practically enshrined as public policy he says.
    Rebecca Peters, who was a leader in the gun control movement in Australia all those years ago, writes that New Zealand is 20 years behind Australia in gun control.
    Morrison has called for live-streaming to be suspended as politicians around the world condemned big technology companies for failing to stop the spread of video footage of Friday’s terrorist attacks in Christchurch.
    Greg Sheridan writes that the appalling slaughter of the innocents in Christchurch demonstrates the growing power and reach of a repellent, extreme, right-wing and racist ideology. He says the centre must rise against the extremes.
    Sam Maiden writes that Home Affairs Minister Peter Dutton and Health Minister Greg Hunt have revealed what really went on during secret party room discussions about Muslims, denying they were urged to use Islamophobia to win votes.
    Phil Coorey asks us to imagine if an Australian politician blamed the victims if those slaughtered were Christians worshipping at church and the terrorist was a Muslim. What Anning did was no less appalling. He calls for politicians and others to stop the dogwhistling.
    Eryk Bagshaw writes that the next few weeks will determine whether the Coalition is finally able to capitalise on an economic gift from Labor: Its plan to abolish franking credit tax refunds.
    The RBA has sounded the climate change alarm. Time to sit up and take notice says Greg Jericho.
    John McDuling wonders what it is that Murdoch is hoping to gain from breaking up Google and Facebook.
    Dana McCauley writes that Shorten is under pressure to unveil a comprehensive plan to deliver universal dental care, as he makes health a central focus of his campaign to win the coming federal election.
    Paul Karp advises us that Labor has pledged $1bn to upgrade public hospital facilities, promising more beds, emergency department upgrades and new palliative care and mental health facilities.
    The cost of going to the dentist had become so out of reach for a Northern Territory cattle station worker that he travelled to Cambodia to have 30 years of delayed treatment attended to in three days. Two million Australians avoid or delay going to the dentist each year because they cannot afford it, a new report from the Grattan Institute says.
    Patients who need x-rays and ultrasounds will end up paying less under a new Morrison government pledge to reduce out-of-pocket expenses for the services.
    Cole Latimer reports that a new trial has been launched to cut power prices and make wind and solar energy more predictable by letting renewable generators forecast their own electricity production. Australian Renewable Energy Agency (ARENA) chief executive Darren Miller said with better forecasting it will ultimately lead to lower power costs by removing the unevenness in wind and solar generation.
    “Are we approaching a new economic period where competition is but a distant memory, replaced by monopolies and concentrated business power?”, asks Paul Budde.
    A young Catholic activist faces expulsion from Queensland’s Liberal National Party after she called on fellow party members to send letters of support to convicted cardinal George Pell.
    America’s cut to aid in Palestine promises greater regional instability.
    Disturbing numbers of discarded syringes are washing into river beds as the Yarra reaches the inner city, posing fears for safety around the waterway. Charming!
    Before attending church on Sunday, Donald Trump defended a Fox News host who was taken off air after she questioned whether a Muslim congresswoman’s religious beliefs were compatible with the US constitution.

    Cartoon Corner

    What a beauty from David Rowe!

    A telling contribution from Jim Pavlidis.

    From Matt Golding.

    A poignant effort from Pat Campbell.

    Sean Leahy looks at Anning’s future.

    From the US

    • Last week Bill was allegedly “under pressure” to release Labor’s climate policy.

      Meanwhile the government has not yet released one policy and the media still haven’t noticed.

      Bill’s response is always the same – policies will be released when Labor wants to release them, he’s not going to blurt out all Labor’s policies just because the media demands he does it right now, at a presser called for another reason.

    • Yes, it drives me nuts, but I guess this is what we’ll get from now on, even after the election if Labor win, and it won’t stop until they have lnp in gov again. Funny how all these vital important things only matter when Labor are in.

  2. TLBD, thee will be lots more of this as the MSM wriggles and writhes in their own excrement trying to polish the LNP Turd by the only means they have, “Kill Bill”.

  3. Shane Wright gives us yet another example of the media choosing to ignore a Labor initiative.

    At 2.30 last Saturday afternoon Bill Shorten held a presser to announce Labor wanted the parliament to censure Anning. He said Penny Wong had already approached the government on this and the government had agreed to a censure motion.

    The video was posted here not long after the live presser.

    More than 24 hours later Wright produces an article that gives the government all the credit.

  4. Also on that Shane Wright article –

    FauxMo is noted as having attended a Coptic church. Big deal! He’s been making a fuss about attending a variety of churches over the weekend. First a mosque, then an interfaith remembrance service for the Christchurch victims and then a service at a Coptic church.


    Is he trying to play up his “man of faith” fake image? Is he trying to appear concerned and compassionate after years of being the one leading the whipping up of hate and religious bigotry?

    No matter what FauxMo does and says now about Christchurch, about New Zealanders being “family”, about his alleged deep concern for families of the victims it all seems very false, very much like attention-seeking.. We know what he has been doing for years, we know he wanted the Liberal Party to ramp up hatred of Muslims because he saw that as a vote-winning tactic. We know that if the Christchurch massacre had not happened FauxMo would have been using hate and religious bigotry as a campaign tool come the election campaign. We have his very recent comments about refugees on Manus Island as proof.

    This creature now expects us to forget all his past actions and believe he is deeply compassionate. Just how dumb does he think we are?

  5. I just had a recorded message from Hanson about electricity prices. I said: ‘Shut up you b£tch!’ She brings the worse out of me.

    • She can’t do anything about electricity prices anyway.

      Speaking of Hanson –

      There’s this comedy item on the ON website –

      Pauline gets fired up over $200,000 pension for Julie Bishop
      Sorry in advance for getting so fired up but the thought of Julie Bishop walking away and pocketing a political pension of $200,000 plus makes my blood boil!

      One Nation has consistently fought for a freeze on politicians pay but every other political party, including Derry Hinch, has voted against us! Politicians should be leading by example.

      We have pensioners unable to pay their bills to keep the lights on yet politicians keep giving themselves fat pay rises, it is no surprise Aussies think most politicians are parasites


      Says the woman who lived high on the hog on her own parliamentary pension for almost 20 years.

      “Leading by example” Pauline?

  6. Worth remembering –
    Julia Gillard had an egg thrown at her by a 55 year old alleged man who should have known better. The man(?) was not charged. The egg missed Julia and hit a female police officer. Julia laughed off the attack. She did not feel the need to slap the thrower, or to have her security people throw him to the ground, kick him and sit on him.


  7. NZ police have sent notice to the owner of the Kiwi Farms internet message board demanding the preservation of IP addresses and email addresses associated with posts related to the Christchurch shootings:

    At around the time of the shooting there were a number of posts and links posted on kiwifarms.net relating to the shooting and TARRANT. We would like to preserve any posts and technical data including IP addresses, email addresses etc linked to these posts pending a formal legal request. Could you please advise what legal process you require for this request and also confirm preservation of the data requested pending legal process

    Responding to the preservation request, Kiwi Farms owner Joshua Moo, a Pindo citizen living abroad, asked:

    Is this a joke? I’m not turning over information about my users. The person responsible for posting the video and manifesto PDF is myself.

    I feel real bad for you guys, you’ve got a quiet nation and now this attack is going to be the first thing people think of for the next 10 years when they hear the name New Zealand, but you can’t do this. Tell your superiors they’re going to make the entire country and its government look like clowns by trying to censor the Internet. You’re a small, irrelevant island nation barely more recognizable than any other nameless pacific sovereignty. You do not have the clout to eradicate a video from the Internet and you do not have the legal reach to imprison everyone whose posted it. If anyone turns over to you the information they’re asking for they’re not only cowards, but they’re fucking idiots.

    My name is Joshua Moon, I’m a US Citizen living overseas. My company is contained within a Florida company. If you need an address to send physical documents to this works.

    Lolcow LLC
    913 Beal Pkwy NW
    Suite A-1017
    Fort Walton Beach, FL 32547

    If you’re wondering, no. Kiwi Farms has nothing to do with New Zealand. Our name is a pointed jab at some of the mushmouthed autistic people we make fun of. Absolutely nothing about our community is NZ oriented.

    And I don’t give a single solitary fuck what section 50 of your faggot law say about sharing your email. Fuck you and fuck your shithole country.

    – Josh

    Moon has posted this warning to users at the top of Kiwi Farms:

    If you are from New Zealand, your government is hunting you. Read this letter from NZ Police, then change your email address if you’re using a personal account. Start using a VPN everywhere. I’m setting data retention to zero for the immediate future. Warrant canary is in the footer.

    Good alter-ego email services not associated with me: Cockli, ProtonMail
    Logless VPNs: PrivateInternetAccess, NordVPN, ProtonVPN


  8. Wise move imo, they are actually red no black:

    Ethiopia snubs FAA, sends ‘black boxes’ from crashed Boeing 737 Max to France

    Ethiopia has sent the “black box” recording devices from a crashed Boeing 737 Max jet to France for analysis after refusing to hand them over to U.S. authorities, who had kept the Max model flying after most other regulators had grounded it.

    The flight data and cockpit voice recorders have arrived at France’s Bureau of Inquiry and Analysis for Civil Aviation Safety, known by its French abbreviation BEA, with coordination meetings underway and technical work set to start Friday. The BEA said it will download data but hasn’t been asked to conduct an analysis.

    Ethiopian Airlines, which operated the crashed jet, says the decision to send the devices to a European agency was a strategic one after the U.S. Federal Aviation Administration was left isolated in arguing that the Max should continue flying. The U.S. regulator finally grounded versions of the Max on Wednesday amid mounting concern about similarities between the African tragedy and a crash in Indonesia in October in which a computer system took control of a flight.

    Germany’s Federal Bureau of Aircraft Accident Investigation earlier declined to work on the boxes, saying it wasn’t technically possible. France has a direct link to the crash, which killed 157, since the Max’s engines are made by the CFM International venture of General Electric Co. and Paris-based Safran SA./blockquote>


  9. Listening to ABC News fanfare about their raids on the homes of the shooter’s family, I wonder whether NZ Police requested the raid or was Berijklian trying to look tough on terrorists 5 days before teh NSW election

    • FauxMo never tried to threaten Lenore Taylor with defamation in 2011.

      Comments about that particular article, and links to it, started appearing online before Aly made his remarks. Is FauxMo going to threaten everyone who posted a link to the story with defamation?

      Everything this man has done for most of his time in parliament has been about ramping up fear and loathing of anyone who is not white and allegedly Christian. Now, suddenly, he’s getting very touchy about references to his past behaviour popping up in the media.

      Why is he now threatening Walled Aly? Because he’s about to call an election he knows he will lose, and he’s so desperate he is prepared to lie about his past tactics.

      FauxMo might like to think back to remarks he made during his self-promoting trip to Christmas Island less than two weeks ago, where he claimed the mostly Muslim men currently on Manus Island were criminals and therefore would not be permitted to enter Australia for medical treatment.


  10. Weather vane

    Scott Morrison has called on Australians to “disagree better” just hours after Peter Dutton accused Greens politicians of being just as bad as the disgraced far-right senator Fraser Anning.

    In a speech to the Australia-Israel Chamber of Commerce in Victoria, the prime minister also said he wanted the nation to “reject the thinking that one person’s gain is another’s loss”.

    Earlier this month, the prime minister said it was “simple math” that medically transferred asylum seekers would take the place of Australian citizen patients in hospitals. He had spoken up in support of Dutton after his home affairs minister had made similar claims.


  11. How on earth is the Federal election campaign going to run now? Putting aside the question of probable Morrison hypocrisy for a moment, he’s facing a very practical difficulty here. ‘Border protection’, National security’, ‘Terrorism’ and all the associated denigration of Muslim/Islamic peoples has been one of his most effective points of differentiation with the ALP. Arguably the only effective one. He’s been forced to take the opposite stance to that over the weekend. And it is of course now a very open wound for all of us.

    Even after some of the immediacy dies away, an act of terrorism by a white Australian male is going to be the most recent ‘terrorism’ reference point we have. For Morrison, there’s no segueing from his new ‘enlightened’ persona back to his old rabble-rousing one. Can’t be done. So what on earth does he fight the election over? At best he’s going to be offering mixed messages on national security. At worst (for him) he’ll be forced to fight all his battles on Labor territory.


    That’s a practical question. But I have been meditating mostly on the after-effects of Friday’s tragedy, in particular the media reaction. Which has been, as usual, disappointing. We probably had 24 hours of sombre reflection before they started letting right wing voices enter the discourse again. All I’ll say at this stage is the the default media position on anything is “We’re not wrong.” So, in a situation where they’ve had to own the repercussions of appeasing racist voices (in the guise of ‘balanced reportage’) their only available response is to pretend racist media voices had nothing to do with it, and carry on as normal. And I can’t tell you how depressing that is.

  12. Giving that F#cking Anuswipe (i refuse to give his name any more google stats by using it.) a dominent role in the media instead of reflecting our grief and anguish is a disgusting rightwing media tactic. Stories of heroism, the stories of slain individuals as people, the aftermath, the interviews that the media clamber for usually are missing.

    We are not allowed to connect with the humanity of the victims. FA is just a dope. His nasty letter should have been relegated to the bottom of the news pile. But no, it is all about us, not them.

    Never let the people of Australia see Muslims as people, with hopes, dreams, families, as victims of tragedy, in grief, or as good citizens.

    Maintain the abstract, the object. Don’t let common humanity prevail.

    (On on fb post from Save Australia FB page by a woman, she said ‘The mosque got what it deserved’. Before I reported her to FB I replied that the mosque did not get it, people at prayer got it, including a four year old girl who died, That is what we are up against.)

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