monopoly

Antitrust for Fun and Profit: The Democrats’ Better Deal (Part 3)

This continues Part 1 and Part 2 of my critique of the arguments for aggressive antitrust activism offered in Steven Pearlstein’s Washington Post article, “Is Amazon Getting Too Big,” which is largely based on a loquacious law review article by Lina Kahn of the Google-funded “New America” think tank. 

My previous blogs found no factual evidence to support claims of Pearlstein and Kahn that many markets (which must include imported goods and services) are becoming dominated by near-monopolies who profit from overcharging and under-serving consumers.  

Yet the wordiest Kahn-Pearlstein arguments for more antitrust suits against large tech companies are not about facts at all, but about theories and predictions.

Trump Is Right & His Critics Are Wrong: Let Consumers, Employers Buy Insurance Across States Lines

An important part of Donald Trump’s health care agenda is his pledge to let consumers and employers avoid unwanted regulatory costs by purchasing insurance licensed by states other than their own, a change that would make health insurance both more affordable and more secure. The Congressional Budget Office has estimated that allowing employers to avoid these unwanted regulatory costs would reduce premiums an average of 13 percent.

Unfair Postal Competition

With the rise of electronic communications, the volume of snail mail has fallen precipitously, and the U.S. Postal Service (USPS) has been losing billions of dollars. The 600,000-worker USPS is an unjustified legal monopoly that is heavily subsidized. It is a bureaucratic dinosaur that Congress should put on the way to extinction.

In April, I highlighted an excellent study by Robert J. Shapiro that described USPS subsidies in detail. The subsidies include: exemption from taxes, low-cost government borrowing, monopoly protections, and other special benefits.    

Shapiro completed another study in October, which is a great addition to the postal debate. He details how government-conferred advantages have translated into cross-subsidies from USPS monopoly products to products sold in competitive markets. The USPS uses its monopoly over letters and bulk mail to unfairly compete with FedEx, UPS, and others on express mail and packages.

Shapiro finds that USPS raises prices on its monopoly products, and uses those extra revenues to artificially push down prices on its competitive products. For USPS, this makes sense because consumers are less price sensitive for the monopoly products than for the competitive products. Shapiro concludes, “USPS has strong incentives to cross-subsidize its competitive products with revenues from its monopoly operations,” and it does so by $3 billion or more a year.

TPP Ends Up with Pleasantly Mild Rules on Biologic Drug Monopolies

The Trans-Pacific Partnership will reportedly include an obligation for every country to provide at least 5 years of market exclusivity for new biologic drugs.  Technically, this counts as a loss for U.S. negotiators, who started with a demand for 12, lowered that to 8, reconfigured 8 into “5+3”, and at the VERY last minute—despite direct calls from President Obama to foreign leaders—were forced to acquiesce to 5 years.  The U.S.

The Post Office Is Broke: End Washington’s Postal Monopoly

The United States Postal Service has run up $4 billion in losses so far this year, on top of last year’s $15.9 billion deficit. Washington should get out of the mail business. 

Congress created the Post Office in 1792, turning it into an important patronage tool. Legislators also passed the Private Express Statutes, giving the government a monopoly over first class mail.  

Washington imposed fines on early competitors, including the famed Lysander Spooner. Uncle Sam continues to rigorously police his monopoly.  

The Postal Service boasts that it would rank number 42 on the list of the Fortune 500—but that is only because the other 499 companies on the list, as well as everyone else, are barred from competing to deliver mail. Unfortunately for USPS, government lawyers cannot force people to send letters. The number of pieces of mail delivered dropped from 213 billion in 2006 to 160 billion last year. 

In 1971 Congress voted to turn the post office into a quasi-private company. However, Washington preserved the monopoly, retained control over system operations, and preserved a variety of indirect subsidies. For instance, USPS is exempt from taxes, regulations, and even parking tickets.

From Russia with Butter

Just in time for the Christmas baking season, Norwegians are facing an acute butter shortage. Last Friday, customs officials detained a Russian trying to smuggle 90 kilos of the creamy goodness into the country by car.

Wait. What?!? Isn’t Norway that rich Scandinavian country with all the oil ?

Yup, that’s the one.

Wow… This European debt crisis is already causing shortages of staples?

Postal Reform in the Lame Duck?

According to the Hill, policymakers are “scrambling” to do something about the U.S. Postal Service in the current lame-duck session of Congress. The USPS’s recently announced $15.9 billion loss for 2012 apparently inspired policymakers to act.

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