Labor calls out government’s free market Venezuelan socialists
Bad news. Andrew Leigh, Australian Financial Review, December 17:
(As we see in the US) an economy with just a few big firms may be bad news for start-ups.
Bad news? US Bureau of Labour Statistics, November 16 last year:
The number of start-up firms … rose to 415,226 in the year ended March 2017 … (and for the past two years) has been above the 1994-2017 average.
FAANG kill zone. Leigh again:
This is a particular challenge in the technology space … Around the FAANGs — Facebook, Amazon, Apple, Netflix and Google — there is now a “kill zone”, in which companies are either acquired or quashed.
FAANG kill zone? Tae Kim, Barrons.com, November 23:
The FAANGs … have lost $1.1 trillion since their peaks.
Research backs this. Leigh again:
Overly concentrated markets aren’t just bad news for consumers. Increasingly, economists are coming to the view that monopoly power is part of the explanation for wage stagnation and underwhelming business investment. The topic was a focus for this year’s gathering of world central bank governors in Jackson Hole, Wyoming, where attendees discussed research that when industries become more concentrated, they tend to be less productive and pay lower wages.
Research backs this? Professor John Van Reenen, Jackson Hole, August 23-25:
In recent decades the differences between firms in terms of their relative sales, productivity and wages appear to have increased in the US and many other industrialised countries … (leading) to the concern that product market power has risen substantially which is a potential explanation for the falling labour share of GDP, sluggish productivity growth and other indicators of declining business dynamism. I suggest that this conclusion is premature (and not due to) a generalised weakening of competition …
Decline here, too. Leigh again:
In Australia, we are also seeing a steady decline in the rate at which new businesses are being created: falling from an average of 16 per cent before 2010 to 13 per cent since then.
Here, too? ABS, February 20:
Entry rate of businesses in Australia. . 2013-14: 13.7 per cent. 2014-15: 13.4 per cent. 2015-16: 14.6 per cent. 2016-17: 15.1 per cent
Monopoly bad. Leigh again:
From … insurance to internet providers, many Australian industries are dominated by a few big firms. For consumers, this can be dangerous.
Bad? Paul Fletcher, Australian Financial Review, September 23, 2010:
In June this year broadband minister Stephen Conroy announced … Labor’s policy is to replace one monopoly fixed network operator (Telstra) with another one (NBN).
Big firms = Chicago. Leigh again.
Australia’s competition problem has deep roots … Under the Fraser government, the test for companies to merge was weakened … (it) was finally tightened up again under … Keating … Underpinning this thinking was the idea — developed at the University of Chicago in the 1970s — that big firms are good.
Big stick = Venezuela? Craig Emerson, Australian Financial Review, December 3:
Prime Minister Scott Morrison’s “big stick” bill (to break up big electricity firms) … would make Venezuela’s revolutionaries proud.