You write as if the concept of the dangers of market consolidation is new to you, although I'm skeptical. For readers seeking to know more about the ways monopoly power can be corrosive, try reading Matt Stoller[1]. His book Goliath was eye-opening for me.
0. https://theweek.com/articles/736059/what-beer-reveals-about-...
I promise, I hate, e.g., the local cable internet monopoly as much as anyone, but Starlink and our municipal fiber initiative are going to crush them. That's not to say there's never a role for government intervention, but I think we're all much better off approaching the exercise of that power with caution, and more likely to make headway against the purported social ills if we stop shadowboxing against consolidation.
Regarding the beer industry, the article you linked from TheWeek[0] is mostly hand-waving. Put aside the fact that I can (and do) buy %90 of my beer now from one of the dozen local to local-ish New England breweries near my small town. Put aside the fact that I have more options than ever, at competitive inflation-adjusted prices [1]. It makes the case that several giants dominate the mass-market beer business, fine. But what are the harms of that consolidation? It alleges:
- "a long decline in beer prices reversed over the last few years" (see my footnote 1)
- "AB InBev [one of the beer giants] is even buying up beer reviewing websites and delivery operations now." and "if a massive brewer can own a stake in a major beer rating site, it could well influence what beers that outfit recommends to customers in the first place." (emphasis mine)
And that's it. The stake in the review website is kind of gross, I agree, but I find that hard to lay at the feet of market consolidation.
0. https://theweek.com/articles/736059/what-beer-reveals-about-...
1. The 2017 NYT article linked by TheWeek is evidence against this, but only weak evidence. I didn't have time to dig deeply into it, but noticed that it raises the alarm based on a small price increase over a very short timescale. Moreover, it merely assumes that consolidation is driving that price increase.
At what point do corporate consolidation and vertical integration become enough of a problem that we need to do something?
I think you have a misplaced focus on the (unfortunately popular) word, "monopoly". A true monopoly is the problem we are facing brought to its absolute extreme. We may not be seeing many instances of literal monopoly, but we are still experiencing anti-competitive behavior that has the same structure and effect that monopoly has. We shouldn't wait until literal "monopoly" happens to stop anti-competitive practices.
1) Consolidation as such is not intrinsically dangerous, especially when "consolidation" refers to "five large firms."
2) The Open Markets Institute website doesn't provide actual evidence of anti-competitive behavior. Instead, they use "monopoly" as an inaccurate scare word to muster a factually defective narrative about the source of social ills.
Their website enumerates actual anti-competitive practices for 2/36 industry headings (pharmaceuticals and automobile components). The rest just promote a simple idea, "big is bad," using an extremely flexible definition of what constitutes a market (where cowboy boots is only the most comical example).
Monopolies are qualitatively different than duopolies, to say nothing of quintopolies. It's not a smooth gradient of danger. Highly consolidated industries deserve more scrutiny, but they are not obviously and inevitably dangerous, especially in a globally competitive market.
I am against anti-competitive practices, and absolutely happy to discuss specific instances of those. But the lack of rigor here means I can't take Doctorow or the OMI seriously.
There's always room for renegotiating the allocation of profits, especially when new technologies unsettle established norms. But Doctorow's arguments depends on an idiosyncratic view of monopoly power and a romanticized vision of the struggle between artists and publishers/distributors, whose contributions to creative economies are often illegible to most observers. Tweet twenty-six reads:
> These monopolies have captured every sector of the economy - from beer and pro-wrestling to health insurance and finance:
> https://www.openmarketsinstitute.org/learn/monopoly-by-the-n...
Beer? There's no way to conceive of monopoly power that means anything and also includes beer, at least in the USA. I started to do some research, but the idea that beer is imperiled by consolidation is so contrary to my every day experience that I feel trolled.
Nonetheless, I decided to check the link to the "Anti-Monopoly Basics" page at the "Open Markets Institute" website, which immediately moves from anti-monopoly rhetoric to a more defensible "industries are getting more consolidated" position: "There are many indicators that economic concentration is increasing", "Nearly every marketplace in America is vastly more consolidated than a generation ago", before pivoting back to the original idea with their list of "monopolies", which is mostly a list of industries with dominant but not seriously monopolistic players. Worse, their list zooms in and out of the map, sometimes considering international competitors and other times ignoring them to make dominant American firms seem more threatening than they are. Some examples:
- Defense Contractors: "Since 1993, consolidation has reduced the number of large defense firms from 107 to five." Five large firms sounds like a reasonably competitive market. Obviously collusion is possible, but that's not alleged here, merely that five competing firms amounts to a monopoly.
- Food Service: "In 2015, the FTC and Justice Department successfully blocked a proposed merger of Sysco and U.S. Foods, the two biggest companies in the food services industry. Since then, the two companies have continued to consolidate nonetheless, as Sysco acquired North Star Seafood and U.S. foods acquired Cara Donna Provision Co." Hard to know what threat this poses when there's no denominator, no sense of scale.
- Cowboy Boots: "Four of the biggest brands – Justin Boots, Tony Lama, Nocona, and Chippewa – are all owned by Berkshire Hathaway." No denominator. Four brands out of how many? What percentage of the market do they take up? WAIT A MINUTE, don't cowboy boots compete against other types of footwear? Are "mystery novel monopolists" a thing too?
- Appliances: "Whirlpool’s takeover of Maytag in 2006 gave it control of 50 to 80 percent of U.S. sales of washing machines, dryers, and dishwashers and a very strong position in refrigerators. Maytag also controls the Jenn-Air, Amana, Magic Chef, Admiral, and KitchenAid brands and holds a dominant position over supply of Sears Kenmore products." First of all, look at those error bars ("50 to 80 percent"!). But more importantly, here they are zooming in on the USA market, when this is simply a global market.
- Internet Searches: "Google controls 64 percent of all desktop searches and 94 percent of all global and mobile tablet searches." Ok, I'll give them this one.
If this organization reflects Doctorow's evidentiary standards, I'm not interested.