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There’s a growing appetite across industrialized nations to crack down on large firms. In the United States, there are bipartisan efforts to flex the federal government’s anti-monopoly powers against big tech firms. In France, big tech firms were seen as exploitative and a GAFA (Google, Amazon, Facebook and Apple) tax was adopted in 2019 to deal with “injustices.” In Canada, attempts at consolidation and mergers between telecoms companies and airlines have been met with claims of rising market power and monopolies. The common denominator is that “big firms” are exploitative monopolies.
Article by Vincent Geloso from AIER.
However, and there is no way around it, bigger is better. That is if you are familiar with the work of economist Harold Demsetz. In the 1970s, Demsetz published an influential article in the Journal of Law and Economics that pushed back against the view that higher concentration facilitated collusion and the exercise of market power by large firms (thereby generating monopoly profits). He argued that people had been getting things backwards: larger firms arise because they are more efficient than their competitors. Thus, according to Demsetz, it is entirely possible to observe competition-like outcomes on a market even if a single firm has 100% of market shares.
When Demsetz is correct, there are important benefits for workers and consumers. Large firms, when they are more efficient, are able to offer higher wages to attract workers. Consumers can also benefit from lower prices when an inefficient producer is bought out.
Unfortunately, there is a condition that matters. If we want to say that bigger is better, there must remain the threat of competition. There need not be any competition, merely the possibility of new firms to challenge incumbents. Most importantly, those challenges do not need to come in the form of direct competition. They can come in the form of substitute products. If such challenges are possible, incumbents must remain vigilant to discourage entry.
In other words, bigger is better if challenges are possible. The problem is that governments place multiple barriers in the way of potential challengers. Consider the case of Canada’s telecoms industry, which has been featured heavily in the news recently as Rogers (the big player on the market) announced it wanted to buy Shaw (the second largest firm).
If Rogers is buying Shaw, we can safely assume that it believes that it can use the workforce, infrastructure, and equipment to generate greater value than the latter. However, those concerned with consumer welfare point out that Canada already has high prices for telecoms services and that the deal would make things worse. It isn’t strictly true that Canada has high prices, but the deal could indeed make things worse if the purchase makes it harder for new firms to challenge Rogers.
The problem is that Canada’s government makes challenges incredibly harder to mount because of federal legislation. According to federal legislation, all firms with more than a 10 percent market share cannot have more than 20 percent of the voting shares owned by non-Canadians. This essentially limits the ability of firms from the United States, which tend to be able to offer much lower prices than Canadian firms, from entering the Canadian market. In other words, legislation and not market structure make challenges harder.
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In fact, if you take a hard glance at instances of big firms being accused of acting like monopolies, you will often find something similar to the Canadian telecoms case. This has an important implication for those who propose remedies to deal with “big firms” (which they take to mean monopoly). Indeed, rather than placing the onus on governments to intervene to regulate these big firms, one is forced to assign blame to governments for protecting some big firms from the threat of competition.
Will America-First News Outlets Make it to 2023?
Things are looking grim for conservative and populist news sites.
There’s something happening behind the scenes at several popular conservative news outlets. 2021 was bad, but 2022 is proving to be disastrous for news sites that aren’t “playing ball” with the corporate media narrative. It’s being said that advertisers are cracking down, forcing some of the biggest ad networks like Google and Yahoo to pull their inventory from conservative outlets. This has had two major effects. First, it has cooled most conservative outlets from discussing “taboo” topics like Pandemic Panic Theater, voter fraud, or The Great Reset. Second, it has isolated those ad networks that aren’t playing ball.
Certain topics are anathema for most ad networks. Speaking out against vaccines or vaccine mandates is a certain path to being demonetized. Highlighting voter fraud in the 2020 and future elections is another instant advertising death penalty. Throw in truthful stories about climate change hysteria, Critical Race Theory, and the border crisis and it’s easy to understand how difficult it is for America-First news outlets to spread the facts, share conservative opinions, and still pay the bills.
Without naming names, I have been told of several news outlets who have been forced to either consolidate with larger organizations or who have backed down on covering certain topics out of fear of being “canceled” by the ad networks. I get it. This is a business for many of us and it’s not very profitable. Those of us who do this for a living are often barely squeaking by, so loss of additional revenue can often mean being forced to make cuts. That means not being able to cover the topics properly. Its a Catch-22: Tell the truth and lose the money necessary to keep telling the truth, or avoid the truth and make enough money to survive. Those who have chosen survival simply aren’t able to spread the truth properly.
We will never avoid the truth. The Lord will provide if it is His will. Our job is simply to share the facts, spread the Gospel, and educate as many Americans as possible while exposing the forces of evil.
To those who have the means, we ask that you please donate. We have options available now, but there is no telling when those options will cancel us. We just launched a new GiveSendGo page. We also have our GivingFuel page. There have been many who have been canceled by PayPal, but for now it’s still an option. Your generosity is what keeps these sites running and allows us to get the truth to the masses. We’ve had great success in growing but we know we can do more with your assistance.
Thank you, and God Bless!
When preparing for societal collapse, don’t forget the water!