Will Hutton Really Doesn’t Understand Economics, Does He?

This weekend’s Willy Rant was about how America is becoming ever more concentrated in its economy. Monopoly not just thrives but expands and the economic rents from that explain all that ails the colonial cousins.

The problem with this being that there’s not an ounce of truth to it:

Except the latest research demonstrates the reverse is true. Britain is about to make a vast mistake. In the recently published The Great Reversal, leading economist Thomas Philippon of New York University and member of the advisory panel of the New York Federal Reserve, mounts a devastating attack on the conventional wisdom, so perfectly embodied by the witless Boris Johnson.

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How Remarkable – More International Trade Increases Competition In The Face Of Domestic Concentration

Not that this is a hugely surprising conclusion. If the domestic economy is thrown open to international trade then there’s an increase in competition for the domestic producers. This is rather the point of having that opening. But the implication of this is obvious. For those who worry about increasing market power, increased economic concentration, the answer is obvious too – have more free trade. Actually, this becomes a litmus test. For those who do so complain but don’t argue for lowering trade barriers we know they’re not being serious.

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Elizabeth Warren’s Against Monopoly – OK, Against In Education, In Guns?

Elizabeth Warren is arguing that Big Tech is getting terribly monopoly-like and we really ought to do something about that. Hmm, well, it’s an interesting contention at least. Certainly we should always be considering whether monopoly is arising, market power being accumulated and even, if it is, is it being exercised to the detriment of consumers?

So, the initial thought to be picking at, worrying about, seems reasonable enough:

The story demonstrates why promoting competition is so important: it allows new, groundbreaking companies to grow and thrive — which pushes everyone in the marketplace to offer better products and services.

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Warren’s Plan To Break Up Google, Amazon, Facebook Isn’t, Amazingly, Entirely Stupid

Elizabeth Warren has announced her plan to break up Facebook, Google and Amazon. Plus any other tech companies that grow to such sizes. The idea has its faults – it’s unnecessary and silly and is just someone looking for something to do rather than solving an actual problem – but, to the amazement of all, it’s not entirely stupid. She’s managed to get some of the background economics here right even if the overall idea lacks any useful justification.…

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The Problem With Modern Monopoly Theory – It’s About Monopsony

Noah Smith treats us to an overview of modern thinking – for which read progressives who just are darned well going to do something about large companies – on monopoly and antitrust. They’re beginning to come at this sideways, to insist that dominant companies are dominant in labour markets, therefore let’s break up Amazon and Facebook right now. There is a certain error to this argument. That error being that dominance in one market does not mean dominance in another.…

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To Celebrate The Bit Of Economics Karl Marx Got Right

We’re told that companies are starting to give pay rises – real income increases that is, above the rate of inflation – but also that to truly improve your lot you need to skip from one employer to the next. All of which is entirely correct and also the bit of economics which Karl Marx manged to get right. That’s what all that guff about the reserve army of the unemployed, monopoly capitalism etc is about.…

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The Nobel Laureate On Tech Company Monopoly And Regulation

It won’t have escaped your attention that rather large numbers of people are calling for the regulation of the tech companies. The Amazon, Google, Facebook (Apple and Microsoft often added, just because they’re large) nexus have lots of power over markets and thus therefore – well, therefore something. My own prejudice here is that certain people just cannot look at centres of power and or money without insisting that they, the complainers, should be the ones exercising that power and determining the disposition of that money.…

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Our Tech Regulation Problem – Monopolies With Network Effects Benefit Consumers

There are, of course, a number of different ways in which we can approach antitrust. One might be that any time anyone gains economic power then government should step in and take over. On, presumably, the grounds that it’s better if the people with all the guns are also the people with all the money.

That might not appear so attractive put that way. Another method might be that OK, some people will indeed gain significant economic power.…

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