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. Why does FauxMo have to make everything about himself?

    In a presser this afternoon he just had to mention he one lived in new Zealand. So what? Who cares? FauxMo’s fake condemnation is sickening considering everything he has been doing and saying for the past decade to whip up hatred, xenophobia and racism. He makes it all the more repulsive by using a tragedy for a bit of personal promotion.

    Today was not the day for talking about yourself.
    https://www.theguardian.com/world/live/2019/mar/15/christchurch-shooting-injuries-reported-as-police-respond-to-critical-incident-live

  2. The gun man was a bit of a fitness fanatic. Looking at this pic I wonder if he had been on steroids and had a bit of a ‘roid rage’ problem ? He recently went to Eastern Europe , to pick up more steroids ?

  3. Labor has asked the government to support censure of Fraser Anning. The government has agreed.

    Live from Melbourne: This is a time to come together. This is a time to show this act of evil does not speak for us

    • The kid’s already been released without charge. Tell you what, he’s braver than I am. There’s no way I’d pull a stunt like that in such a testosterone-charged environment.For most politicians, those counter-punches would be career-ending. But I think people expect it from Anning.

      The alt-right of course have done themselves no favours today. It’s pretty clear they believe violent over-reaction is the answer to everything. In that sense the egging has already been a success, no matter what commentary comes about as a result of it.

  4. In November, the Morrison government passed legal changes to override state donation laws, including Queensland’s developer donation ban. The finance minister, Mathias Cormann, offered one rationale for the change: to clarify whether state or federal laws applied to donations.

    That commonwealth power grab has now become central to former Liberal National party president Gary Spence’s challenge to Queensland’s ban, heard by a full bench of the high court this week in Canberra.

    In the hearings, the solicitor general Stephen Donaghue revealed two further purposes for the new law that the Coalition had been less keen to shout from the rooftops.

    The changes also ensure federal political parties are “not starved of funds” they need to influence voters and facilitate “participation” in public debate through the making of donations, Donaghue submitted on behalf of the commonwealth.

    It was, as chief justice Susan Kiefel noted, a law directed at “freeing up the flow of funds” from otherwise prohibited donors.

    https://www.theguardian.com/australia-news/2019/mar/16/court-challenge-shows-coalitions-changes-open-way-to-developer-donations

  5. YouGov Galaxy state poll for South Australia

    TPP: LIB 52 (0) ALP 52 (0)
    Primaries: LIB 42 (+4) ALP 37 (+4.2) SAB 7 (-7.1) GRN 7 (+0.7) AC 3 (0) OTH 4 (-1)

    https://www.adelaidenow.com.au/news/south-australia/sunday-mail-opinion-poll-yougov-galaxy-poll-of-south-australian-state-politics-a-year-since-march-election/news-story/7ea6625313507564f2e45d195b1fab1c paywalled

    Sunday Mail opinion poll: YouGov Galaxy poll of South Australian state politics a year since March election
    Paul Starick, Chief Reporter, Sunday Mail (SA)
    March 16, 2019 6:00pm

    Premier Steven Marshall’s Liberals are defying the party’s national support slump to extend a political honeymoon on their first anniversary of winning power, a Sunday Mail opinion poll shows.

    In the first major poll since last year’s March 17 election, the Liberal state government leads the Labor opposition 52-48 on two-party preferred support — effectively mirroring the election result.

    With the Nick Xenophon juggernaut evaporated, backing for his former party, SA Best, has eroded and reverted to the major parties, increasing their primary support to 42 per cent (Liberals) and 37 per cent (Labor).

  6. This attack would have spiked a number of dog whistles vuvuzelas they had primed for the election. How very sad.

  7. Guess who is very, very worried about losing his seat?

  8. Jacinda is a class act, much respect.

    I just saw a photo on abc wearing the hijab to show respect to the muslim community and her face tells the story of how she is feeling.

  9. Good morning Dawn Patrollers.

    Eryk Bagshaw reports that Ardern’s office says it was among dozens to receive a copy of the alleged Christchurch mosque shooter’s “manifesto” minutes before an attack that killed 49 people.
    https://www.smh.com.au/politics/federal/on-nobody-s-radar-anywhere-terrorist-escaped-australian-authorities-20190316-p514rw.html
    There was one hero inside the mosque. His actions disrupted the killer’s progress.
    https://www.smh.com.au/world/oceania/christchurch-shooting-man-tells-how-he-grabbed-gunman-s-rifle-and-scared-him-away-20190317-p514uo.html
    Peter FitzSimons declares that Ardern is a leader for our times, and we should follow her example.
    https://www.smh.com.au/national/ardern-is-a-leader-for-our-times-and-we-should-follow-her-example-20190315-p514lg.html
    Nick O’Malley looks at what might be if NSW id governed with a bunch of crossbenchers as kingmakers.
    https://www.smh.com.au/nsw-election-2019/nsw-election-what-s-in-store-for-the-state-if-crossbenchers-become-kingmakers-20190315-p514hw.html
    Caitlin Fitzsimons explains how donations more influential than polls in Australian politics.
    https://www.smh.com.au/nsw-election-2019/donations-more-influential-than-polls-in-australian-politics-20190314-p514cx.html
    British historian Ed Husain tells us how far-right racists want to destroy open societies.
    https://www.smh.com.au/world/oceania/far-right-racists-want-to-destroy-open-societies-20190316-p514qk.html
    Professor Katherine Lumby explains how notoriety inside the dark-web communities has heralded a new era for terrorism.
    https://www.smh.com.au/world/oceania/notoriety-in-dark-web-communities-heralds-new-era-for-terrorism-20190316-p514r7.html
    Jacinda Ardern has vowed to change NZ’s gun laws after confirming the “primary perpetrator” in Christchurch’s terror attack used five weapons.
    https://www.outline.com/W8xnqg
    Trump again denies white nationalism is rising threat.
    https://www.theguardian.com/us-news/2019/mar/15/donald-trump-denies-white-nationalism-threat-new-zealand
    Here is the transcript of Waleed Aly’s poignant statement about the Christchurch shootings on The Project.
    https://www.smh.com.au/world/oceania/the-most-dishonest-thing-would-be-to-say-that-i-m-shocked-20190316-p514q2.html
    The Guardian editorialises that the far right seeks to divide. It says responsible politicians ought, especially in times of grief and anger, to bring people together
    https://www.theguardian.com/commentisfree/2019/mar/15/the-guardian-view-on-the-christchurch-attacks-extremisms-rising-danger
    Treasurer Josh Frydenberg has raised fears the property downturn in Sydney and Melbourne could flow into the broader economy, hitting small businesses that have taken out loans on the value of their family home.
    https://www.smh.com.au/politics/federal/treasurer-s-warning-on-housing-20190314-p5148f.html
    Almost 128,000 Australians who have been approved for in-home aged care are still waiting for the support they need, with funding taking so long that some people have died before they receive any money. Also this has been increasing the acuity of those that do enter the homes, further tilting the balance there from aged care to health care.
    https://www.smh.com.au/national/elderly-australians-dying-while-they-wait-for-in-home-aged-care-20190316-p514qt.html
    In this week’s column in The Independent Australia, John Wren takes a look at more Liberal blunders, the unravelling of the Nationals and encourages striking students.
    https://independentaustralia.net/life/life-display/wrens-week-scomos-moronic-logic-needless-nationals-and-climate-change-kids,12475
    The EU is war-gaming for the fall of Theresa May amid a complete collapse in confidence in the prime minister after a week of chaos over Brexit, a leaked document seen by the Observer reveals.
    https://www.theguardian.com/politics/2019/mar/16/eu-war-gaming-for-fall-of-theresa-may-government
    Angela Shanahan tells us how a legal tactic backfired on Pell.
    https://www.outline.com/hjuKTs
    While a murderer was granted a visa back into the country by the L-NP’s handpicked AAT, Nauroze Anees faces an uphill legal battle. Eye-popping revelations from detained migrant Nauroze Anees (written with the assistance of investigations editor Ross Jones).
    https://independentaustralia.net/politics/politics-display/favouritism-rife-within-duttons-corrupt-aat,12476
    Robert Reich writes that Trump is cornered, with violence on his mind. He says we must be on red alert.
    https://www.theguardian.com/us-news/commentisfree/2019/mar/16/donald-trump-breitbart-interview-white-supremacy
    The British Parliament has ended a week of important votes on leaving Europe with the battle lines more clear but still stuck in a stand-off. Lee Duffield says the House of Commons has continued with a struggle to budge the Conservative Party Prime Minister Theresa May from the stand she has been taking.
    https://independentaustralia.net/politics/politics-display/one-week-of-warfare-yet-brexit-unresolved,12474
    Neil Breen writes that the scars won’t heal until we get the full story behind the ball-tampering scandal.
    https://www.smh.com.au/sport/cricket/scars-won-t-heal-until-we-get-full-story-behind-ball-tampering-scandal-20190315-p514hz.html

    Cartoon Corner

    From Matt Golding.


    Scry stuff from Matt Davison.

    Reg Lynch sums things up.

    Ouch! Glen Le Lievre.

    Peter Broelman and changed times.

    And he has thoughts for Christchurch.

    Zanetti breaks his good run.

    From the US.





  10. This is an excellent thread responding to the Dutton tweet I posted last night.

    “Guilty crisis management” is a wonderful summing up of the government reaction to the Christchurch massacre. (I can’t call it “shooting” because it was far worse than that.).

  11. The Insiders this morning has
    creeping Jesus – Gerard Henderson
    daughter of Shooters & Fishers founder – Laura Tingle
    lone voice of reason – Leonore Taylor

  12. Nick O’Malley needs to get his facts straight.

    He tells us NSW MLA Greg Piper is the independent member for “Port Macquarie”.

    No he’s not.

    Piper is the member for LAKE Macquarie.

    I should not be surprised by this example of journalistic incompetence. Even ABC newsreaders have been known to confuse the words “lake” and “port”.

    • Excellent point ! Especially such complaints from media attached to Rupert’s hate factory.

  13. Quite, Greg

    For most people with common sense, our current climate-change policy debate remains utterly frustrating. The problem is there are some in the conservative media and politics who, either due to gross stupidity or a willing desire to fake stupidity, are determined to continue that frustration.

    Now one might wonder why someone would actively choose to peddle lies merely to get a gig in the Liberal party or on some unwatched show on Sky News, or to be paid to write poorly some column or blog for News Corp papers.

    But at this point, who cares?

    Those people have tied themselves to the rotting carcass of climate-change denialism for reasons of profit. We should not now pretend that their views are not redolent with the putrid stench of obtuse irrelevance – an irrelevance made abundantly clear when on Tuesday the deputy governor of the Reserve Bank, Guy Debelle, delivered a speech titled “Climate Change and the Economy”.

    https://www.theguardian.com/business/grogonomics/2019/mar/17/the-rba-has-sounded-the-climate-change-alarm-time-to-sit-up-and-take-notice

  14. That’s class

    This morning outside the entrance to Hagley College, police armed with rifles have implemented a “zone of respect”; stretching 100 meters either side of the college and 60 meters across.

    The zone or “boundary” of respect is sacred, a volunteer told the Guardian, and media and members of the public are being politely asked not to enter it, and allow the families peace and privacy, following complaints from grieving families that they were being “hounded” by the press.

    https://www.theguardian.com/world/live/2019/mar/17/new-zealand-attack-christchurch-in-mourning-after-mosque-massacre-latest-updates

  15. From BK’s link above, re Morrison

    He said the views of white supremacists “were not new” and “sadly had existed in Australia for hundreds of years” with police and intelligence work in the area flying under the radar.

    Is he actually acknowledging the massacres of untold numbers of indigenous people by white supremacists in the 200+ years since they landed? I don’t think anything flew under the radar – the radar wasn’t ‘switched on’ and the actions of white settlers and police were reported on favourably.

    “These have always constituted a threat. There has always been an investment to ensure there’s a capability to address that element of the terrorist threat in Australia,” he said.

    Always a threat? Always an investment?

    At least he didn’t try to blame Labor, as far as I know.

    • No-one in Australia, except John Howard, has done more to support white supremacists, racist terrorists and anti-Muslim attacks than FauxMo.

      He’s running for cover with his blatherings about Christchurch and his nonsense about white supremacists shows his total lack of knowledge of Australian history.

      His attempts to sound statesman-like and empathetic are embarrassingly incompetent and very, very false.

      We have all been reminded of his attempts to get his own party to ramp up anti-Muslim feelings as a vote-winning exercise. Just a few weeks ago we had the unedifying spectacle of Morrison and Dutton telling us refugees on Manus Island were criminals, paedophiles and rapists.

      I really can’t be bothered with anything he says now, not after his first comment on Christchurch which was pretty much “we don’t know what has happened yet but have some thoughts and prayers while I work out what to say”.

      The man is a disgrace, his government is a disgrace.

  16. A very interesting article –

    Shitposting, Inspirational Terrorism, and the Christchurch Mosque Massacre

    In “The Great Replacement” [Tarrant] repeats a variety of “white genocide” talking points, and claims his murder of several dozen Muslims is because they are “invaders” outbreeding the white race. All the evidence we have suggests these are, more or less, the shooter’s beliefs.

    But this manifesto is a trap itself, laid for journalists searching for the meaning behind this horrific crime. There is truth in there, and valuable clues to the shooter’s radicalization, but it is buried beneath a great deal of, for lack of a better word, “shitposting”

    https://www.bellingcat.com/news/rest-of-world/2019/03/15/shitposting-inspirational-terrorism-and-the-christchurch-mosque-massacre/

    It makes you wonder when the powers that be are going to start taking notice of the way these nutters use social media. Maybe instead of spending millions of dollars watching what public servants and single mums say about government services that money could be better spent on some surveillance of extreme right-wing groups. Unless, of course, Dutton and his henchgoons are actually participating and egging the nutters on. It’s all anonymous, so no-one would ever know …..

    • They spend so much on Security and yet this massacre still happened. Tarrant’s statements should have been watched closely. Where does the money go?

  17. There’s a petition doing the rounds demanding parliament sack Fraser Anning.

    Well-meaning, but utterly useless, because the parliament doesn’t have that power.

    Here’s an explanation from Anne Twomey, Professor of Constitutional Law at the University of Sydney.

    Can a senator be expelled from the federal parliament for offensive statements?
    https://theconversation.com/can-a-senator-be-expelled-from-the-federal-parliament-for-offensive-statements-113711

  18. A very good thread from Alex McKinnon, morning editor of The Saturday Paper.

    It’s going to be extremely difficult to achieve any sort of “robust laws”. We will be deafened by screams about censorship as soon as someone tries.

  19. Fraser Anning says he is just weeks away from registering his own political party.

    He’d better hurry up if he’s planning on running candidates in the election.

    It takes at least 12 weeks to complete the registration process, and all applications in progress are frozen as soon as the writs for an election are issued. Applications frozen are not taken up again until the writs have been returned.

    https://www.aec.gov.au/parties_and_representatives/party_registration/index.htm

    Anning can’t get his party registered in time, not unless FauxMo has split elections.

    There’s also the trivial little matter of a month’s worth of public consultations, when we can all give our reasons why his party should be refused registration.

  20. The stories not making the MSM headlines, that would be if it was a non-white terrorist.

    Daughter of Christchurch victim: ‘My dad is a real hero. He got shot in the back to shield my brothers’.
    Khaled Mustafa’s long journey from the horrors of civil war in Syria ended with a different kind of barbarity in a place he thought would be a sanctuary for him and his family.

    Mustafa, his wife and children arrived in Christchurch a few months ago. On Friday he was shot dead along with 49 others attending prayers at two mosques in the New Zealand city. One of his teenage sons, Hamza, is missing; the other, Zaid, was recovering from surgery in hospital.”

    https://www.theguardian.com/world/2019/mar/16/relatives-those-killed-new-zealand-mosques-tell-of-anguish?utm_term=RWRpdG9yaWFsX0d1YXJkaWFuVG9kYXlBVVMtMTkwMzE3&utm_source=esp&utm_medium=Email&utm_campaign=GuardianTodayAUS&CMP=GTAU_email

    • Yes he would, assuming the sentence was a prison term of at least 12 months. In this case it’s likely to be just a fine or a bond.

      The problem is he first has to be charged, and then he has to be found guilty. Both seem very unlikely to happen. Anning wasn’t the one holding the kid down or kicking him, he just hit him twice after being egged and then his thugs took over.

      The boy could also be charged with assault, and you can bet Anning would call in a team of defence lawyers if the kid decided to press charges.

      What the whole thing achieved was showing us just how violent and rotten Anning is, and how he loves to surround himself with thugs. It’s done a lot of damage to his image and reputation at a time when he is hoping to retain his Senate seat.

  21. By journo from The Age.

    After the 17-year-old boy who egged Anning was violently gang-tackled to the ground by 5-6 men including Neil Erikson, @10NewsFirstMelb reporter and I asked the men to stop digging their knees and elbows into the boy and let him up after he was clearly restrained @theage— Paul Sakkal (@paulsakkal) 16 March 2019

    https://platform.twitter.com/widgets.js

    and

    I was then physically removed by Anning's supporters and accused of being a "filthy f******* journalist" by Neil Erikson. Several Anning supporters followed me out and held phones to my face demanding I tell them my name @theage— Paul Sakkal (@paulsakkal) 16 March 2019

    https://platform.twitter.com/widgets.js

  22. re: Pell
    I was listening to Jon Faine last Friday when a listener called in to say he believed the Pell was innocent.
    Jon Faine said that a jury had found Pell guilty in the most expensive defence mounted in Australian legal history with the best defence lawyer money can buy

  23. Yesterday I doorknocked for the ACTU out in Lilydale. My buddy described it as the heart of enemy territory – and all were staunch Liberal voters. We amused ourselves gawping at the housing, and admiring their views from the front doors, the McMansions on 1 hectare blocks and the older houses at the end of long driveways on 5 hectare blocks. The poor people on the lower side of the street in their modest housing all voted Liberal. ACTU gives you a map and says visit as many houses as you can get through

    Today I doorknocked for the Greens. They like you to doorknock by yourself, they are after every last vote, so they tell you which house to doorknock and who lives there according to the electoral roll. I played stupid so I was paired with someone, who would not admit that an “I’m busy” was code for “I vote Liberal” or “My vote is secret” indicates Liberal. One poor soul has not answered the door on 12 occasions – I think revisits there are borderline harassment.

    I prefer to work with the ACTU for the same candidate for the cameraderie and safety PLUS I think the Greens want young bright eyed doorknockers rather than jaded veterans

    • I was really irked when a voter who responded with a catchcry from one of the micro parties from the Victorian state election was marked as “undecided” ie to be doorknocked again. I only just remembered where I heard the catchcry – although I instantly recognised this was not a Greens or Labor voter

  24. Australia’s opposition leader, Bill Shorten, said a little earlier that rightwing politicians could not disown their hatred, racism and intolerance.

    “You who want to practice in the name of free speech hate speech, you who hide behind liberty to practice evil, well you have created this swamp of hate,” he told reporters in Melbourne.

    “You cannot disown what crawls out of your swamp.”

    https://www.theguardian.com/world/live/2019/mar/17/new-zealand-attack-christchurch-in-mourning-after-mosque-massacre-latest-updates

  25. Farking fickle fate !!
    .

    Khaled Mustafa and son Hamza, 16

    Khaled Mustafa and his family thought they had found safety in New Zealand after fleeing the bloody chaos of Syria only a few months ago.

    But he became a victim of hatred when he was shot while praying with his two sons,

    “They survived atrocities and arrived here in a safe haven only to be killed in the most atrocious way.

    Hamza is missing feared dead and Zaid, 13, is recovering from a six-hour operation on his wounds at Christchurch Hospital.

  26. Bill Shorten, with Tim Watts and Chloe Shorten this morning, at Newport Mosque in Melbourne for open mosque day.

    “The NZ terror attack was meant to divide us, but we won’t let it.”

  27. The below post on One Nation is worth a read

    • Hang around comfortably off middle class people in outer suburban regions for long enough, and you’ll hear various forms of the notion that Australia has an “immigration problem”. Here’s how the sentences often go – with one of them coming from the aftermath of the Christchurch mass murder:

      “I know we should open our arms to refugees, but look at how much development is happening”
      “I can understand why my immigrant parents don’t like the new migrants – the new ones get more support from the government than they did”
      “I don’t know how we can fit more people on our trains and roads”
      “How could such a nice kid from country NSW turn into a mass murderer?”
      “Headscarf people”
      “Tiger mums”
      “I know this isn’t politically correct, but…”

      Fifty percent of voters …

  28. A bit of a lol from ChCh. The two cops that rammed the gunman’s car and arrested him are out of town rural police and were called in from training they were doing. Their boss must be a scary guy 🙂 What did they do after the arrest ?
    .

    “One of the officers phoned me straight after to advise me that they’d damaged a car.”

    Stills said it was the second car from his patch damaged in a week and he’d previously told staff not to wreck any others as they were already short.
    https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12213551

  29. Which is why Tessa was kicking it down the road, hoping they would be so exhausted that they would vote for her nothing-changed package

    The former work and pensions secretary Esther McVey, who resigned in protest at the prime minister’s Brexit deal, has confirmed she now plans to vote for it this week, raising hopes that it could yet be approved.

    Theresa May’s deal was rejected by a majority of 149 last week, but McVey said she would “hold her nose” and approve it, after a pair of votes in parliament last week that rejected a no-deal Brexit and called for a delay.

    https://www.theguardian.com/politics/2019/mar/17/theresa-may-tells-mps-failure-to-back-her-plan-might-scupper-brexit

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