Just in time for #Davos, here’s 'Taken, not earned: How monopolists drive the world’s power and wealth divide," a report from a coalition of international tax justice and anti-corporate activist groups:
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If you’d like an essay-formatted version of this thread to read or share, here’s a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
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@pluralistic@mamot.fr > TRUTH 💯👍🥹
Everyone - even the World Economic Forum - says that wealth inequality is a serious problem, corroding our politics and our social cohesion. What this report does is link that inequality to monopolies, which produce the billionaires who are wrecking the world.
The rise of monopolies over the past 40 years came about as the result of specific, deliberate policy choices.
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As the report documents, the wealthiest people in America funneled a fortune into neutering #antitrust enforcement, through the “consumer welfare” doctrine.
This is an economic theory that equates monopolies with efficiency: “If everyone is buying the same things from the same store, that tells you the store is doing something right, not something criminal.” 40 years ago.
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Ever since, the wealthy have funded think-tanks, university programs and even “continuing education” programs for federal judges to push this line:
https://pluralistic.net/2021/08/13/post-bork-era/#manne-down
They didn’t do this for ideological reasons - they were chasing material goals. Monopolies produce vast profits, and those profits produce vast wealth. The rise and rise of the super rich cannot be decoupled from the rise and rise of monopolies.
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If you’re new to this, you might think that “monopoly” only refers to a sector in which there is only one seller. But that’s not what economists mean when they talk about monopolies and monopolization: for them, a monopoly is a company with power. Economists who talk about monopolies mean companies that “can act independently without needing to consider the responses of competitors, customers, workers, or even governments.”
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One way to measure that power is through #markups (“the difference between the selling price of goods or services and their cost”). Very large companies in concentrated industries have very high markups, and they’re getting higher. From 2017-22, the 20 largest companies in the world had average markups of 50%. The 100 largest companies average 43%. The smallest half of companies get average markups of 25%.
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Those markups rose steeply during the covid lockdowns - and so did the wealth of the billionaires who own them. Tech billionaires - Bezos, Brin and Page, Gates and Ballmer - all made their fortunes from monopolies. Warren Buffet is a proud monopolist who says “the single most important decision in evaluating a business is pricing power… if you have to have a prayer session before raising the price by 10 percent, then you’ve got a terrible business.”
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We are living in the age of the monopoly. In the 1930s, the top 0.1% of US companies accounted for less than half of America’s GDP. Today, it’s 90%. And it’s accelerating, with global mergers climbing from 2,676 in 1985 to 62,000 in 2021.
Monopoly’s cheerleaders claim that these numbers vindicate them. Monopolies are so efficient that everyone wants to create them.
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Those efficiencies can be seen in the markups monopolies can charge, and the profits they can make. If a monopoly has a 50% markup, that’s just the “efficiency of scale.”
But what is the actual shape of this “efficiency?” How is it manifest? The report’s authors answer this with one word: power.
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