Monopolies Are Destroying Our Economy

Monopolies Are Destroying Our Economy

What can be done about it?

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In a functioning capitalist economy competition will drive down prices. You can't charge $10 for your deluxe foot washing massage chair invention when your competitor is selling their ultra massage chair (with foot washing attachment) for $9, you would need to reduce your prices, and your competitor would reduce their prices, and so on and so forth. All the while the consumers of massage chairs which also wash feet would be revealing in all of the money they get to save because of the low prices.

This is why the antithesis of a working capitalist market is the monopoly. Whether it's in the hands of a business, or a government, the typical market is worst off when it's in the hands of just one entity (there are definitely exceptions, some markets work best as monopolies, if you want to learn about them you can start here).

The World Economic Forum (WEF) looked at a working paper from the International Monetary Fund (IMF) which used markups to look for "market power" or for companies/industries which are closer to monopolies than they are to a competitive market. The WEF said "markup is how much a company charges for its products compared with how much it costs to produce an additional unit of this product, expressed as a ratio. This provides a measure of market power." As I said earlier, low prices come from competition, so the IMF used that logic, and looked at high markups to figure out where there was low competition. The IMF's finding can be seen in the following graph.

The WEF's analysis is eye-opening, and startling, they say "More in-depth analysis shows that the increase in markups in advanced economies is mostly driven by "superstar" firms that managed to increase their market power further, while markups in other firms have essentially been flat. Interestingly, this pattern is found in all broad economic sectors, not just in information and communication technology.

Should we be concerned about this rise in corporate market power in advanced economies? The short answer is yes, especially if this trend continues. Our paper finds that, starting from low levels, higher markups are initially associated with increasing investment and innovation, but this relationship becomes negative when market power becomes too strong. Further, the link between markups and investment and innovation is more strongly negative in industries featuring higher degrees of market concentration."

The increase in market power isn't only trouble for consumers though, it's bad news for workers as well. The WEF state that "labor (workers') share of income declines in industries where market power rises." and the WEF and IMF aren't the only groups looking at increasing market power. Another study "found that average markups, defined as the amount above cost at which a product is sold, have shot up since 1980. The average markup was 18% in 1980, but by 2014 it was nearly 70%." Although it wasn't the author's main purpose they do "offer a few possible explanations, including an increase in mergers and acquisitions alongside deregulation."

One big example of mergers leading to an increase in market power is the airline market. A ProPublica article reported that "for decades, the federal government directly regulated fares and routes. Amid runaway inflation in the late 1970s, the industry was deregulated on the theory that market forces would produce lower prices and more efficiency. Still, the father of deregulation, economist Alfred Kahn, argued the new market needed strong antitrust enforcement to preserve the benefits of competition that deregulation was supposed to produce." The article talks about how we have gone from having 9 to now 5 major airlines, and this has led to less routes, and higher prices.

One thing that seemed to work in the past in curbing market power were unions. A recent Bloomberg article states that "there's the chance that unions might be an effective remedy for the problem of increasing corporate market power -- evidence suggests that when unionization rates are high, industry concentration is less effective at suppressing wages." And the ProPublica article mentioned that "The union of mechanics and ground workers recently came to an agreement with American giving its members a large pay raise."

When the problem is consolidation of both wealth and power in the hands of few, it becomes apparent that the solution is to more evenly distribute that power.

Cover Image Credit:

Samuel Zeller

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An Open Letter to the Person Who Still Uses the "R Word"

Your negative associations are slowly poisoning the true meaning of an incredibly beautiful, exclusive word.
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What do you mean you didn't “mean it like that?" You said it.

People don't say things just for the hell of it. It has one definition. Merriam-Webster defines it as, "To be less advanced in mental, physical or social development than is usual for one's age."

So, when you were “retarded drunk" this past weekend, as you claim, were you diagnosed with a physical or mental disability?

When you called your friend “retarded," did you realize that you were actually falsely labeling them as handicapped?

Don't correct yourself with words like “stupid," “dumb," or “ignorant." when I call you out. Sharpen your vocabulary a little more and broaden your horizons, because I promise you that if people with disabilities could banish that word forever, they would.

Especially when people associate it with drunks, bad decisions, idiotic statements, their enemies and other meaningless issues. Oh trust me, they are way more than that.

I'm not quite sure if you have had your eyes opened as to what a disabled person is capable of, but let me go ahead and lay it out there for you. My best friend has Down Syndrome, and when I tell people that their initial reaction is, “Oh that is so nice of you! You are so selfless to hang out with her."

Well, thanks for the compliment, but she is a person. A living, breathing, normal girl who has feelings, friends, thousands of abilities, knowledge, and compassion out the wazoo.

She listens better than anyone I know, she gets more excited to see me than anyone I know, and she works harder at her hobbies, school, work, and sports than anyone I know. She attends a private school, is a member of the swim team, has won multiple events in the Special Olympics, is in the school choir, and could quite possibly be the most popular girl at her school!

So yes, I would love to take your compliment, but please realize that most people who are labeled as “disabled" are actually more “able" than normal people. I hang out with her because she is one of the people who has so effortlessly taught me simplicity, gratitude, strength, faith, passion, love, genuine happiness and so much more.

Speaking for the people who cannot defend themselves: choose a new word.

The trend has gone out of style, just like smoking cigarettes or not wearing your seat belt. It is poisonous, it is ignorant, and it is low class.

As I explained above, most people with disabilities are actually more capable than a normal human because of their advantageous ways of making peoples' days and unknowingly changing lives. Hang out with a handicapped person, even if it is just for a day. I can one hundred percent guarantee you will bite your tongue next time you go to use the term out of context.

Hopefully you at least think of my friend, who in my book is a hero, a champion and an overcomer. Don't use the “R Word". You are way too good for that. Stand up and correct someone today.

Cover Image Credit: Kaitlin Murray

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5 Thoughts You've Probably Had About The Government Shutdown If You, Like Cardi B, Are Paying Attention

I'm not sure if Trump thinks he's playing a real-life game of "The Sims," but I can assure you that a wall will not keep out those that are truly determined to get in.

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2019 — what a time to be alive, am I right? Normally I would use that phrase sarcastically, but each day I am more and more confused, transfixed, and curious (with just a dash of anticipation) about our current state as a society and the direction we're going. Even though most of the time the world seems like sh*t, you've got to admit that out of all the times in history, the current one we're in has a lot of cool perks. I mean, 70 years ago, who would've guessed that there'd be computers and a world wide web filled with endless information and apps that allow 125 million people to see cute pictures of Kim Kardashian's baby. And compared to life in the 1600s, an airplane seems just as extraordinary as the second coming of Jesus.

We're making a lot of wonderful and exciting progress, like our advancements in medicine, but for some reason, we've hit an impasse in terms of social improvement. Not even three years ago would I have guessed that the U.S. would elect an unqualified, most likely racist, reality TV star as president, but alas, here we are, which brings me to his latest antics.

The government shutdown.

Despite how bleak the future seems, a little part of me is just a tad grateful that I'm alive to see this all go down. Like everyone else, however, I've had quite a few thoughts about it all over the past few weeks...

1. So we're screwed, right?

We briefly had a government shutdown in 2013, but for some reason, I have absolutely no recollection of it (my 14-year-old self was probably too preoccupied with who was posted on my high school's Instagram "thot page." Spoiler alert: I was), so this is like my first experience dealing with one. There have been more than a dozen in U.S. history, but the current shutdown is the longest out of the list. My first thought when hearing about the news was "what the hell does THIS mean?" I immediately jumped to the conclusion that we were in a total state of anarchy, but of course, that isn't even partially true. According to The Balance, a government shutdown is "when non-essential discretionary federal programs close." The shutdown doesn't affect state social services, like the Department of Public Safety, and thankfully for us broke college students, funding for financial aid was approved last September, meaning there's no current effect on student financial aid programs.

However, federal services and agencies like the IRS (don't get too excited... you still have to pay taxes), Department of Labor, Department of Housing and Urban Development, National Institute of Health, and the Food and Drug Administration are completely shut down while the budget process is in limbo. With no current end in sight, this is bound to get very bad, very soon.

Already, hundreds of thousands of government employees have been sent home without pay and will continue to not be paid as long as the shutdown is in effect. People living in low-income housing may be evicted as HUD freezes funds for programs. Without funding, all of these services very well may close. Not only that, but the shut down is costing us money: approximately $1.2 billion every week. I wouldn't normally be worried, but Trump is the exact type of immature and petty to where he'll keep this going until he gets his way (or he's impeached, whichever comes first). His attitude firmly suggests that he's not backing down, and if services do close, there will be terrible effects on affected departments and citizen well-being.

Should we just drink the kool-aid now?

2. All of this over... a wall?

Out of all of the things that a president could request funding for, the one we currently have wants $5 billion for a damn steel wall? I'm not sure if he thinks he's playing a real-life game of The Sims, but I can assure you that real humans are much more crafty than we give each other credit for and that a wall will not keep out those that are truly determined to get in. Trump has said that the wall is the "only solution for a growing security and humanitarian crisis at the border," yet common sense and many politicians/organizations can tell you that that's complete and utter bullsh*t. Not only that, but Trump's whole presidency has revolved around quelling illegal immigration, but no one has stopped to ask why he's only focusing on the border.

How would a wall decrease the number of people who overstay their visas? How would it decrease the number of illegal immigrants who aren't even crossing the border?!

While I am not well-versed in how much of a threat illegal immigration presents to the U.S. people and government, I still am convinced that there are way more important issues that the president should be concerned with. F*** global warming and renewable energy, let's build a wall, right?!?

Trump's obsession with his wall is a pathetic attempt to flex his self-professed prowess and a way to appease his hate-filled fanatics who only voted for him because he promised he could get it done.

What happened to Mexico paying for it? Oh right, that was just more bullsh*t.

3. People actually donated to this sh*t?

I just... People's stupidity and callousness never cease to amaze me. Before GoFundMe rightfully shut this fundraiser down, over 345,000 people actually donated $20 million dollars for a (wait for it) steel wall. Why is this the thing that people feel their money is worthy of being spent on? Imagine if we all banded together to raise $20 million dollars to help end homelessness or food insecurity. Or better yet, pay the federal employees who are getting screwed over by this whole ordeal.

4. How do Trump supporters feel about all of this?

I know that die-hard fans can take a lot of sh"t from their idols, but I think that after a while it's only natural for them to get fed up. Out of the 62 million people who voted for Trump, there's probably a good portion of them who are significantly affected by the shutdown. The ones who are government employees are feeling the brunt of it now, but if this continues on for months or even years like Trump is threatening, then we're all going to feel it and I can't think of any good excuses that someone could come up with in order to justify such a foolish and reckless decision made by the president. To a federally-employed Trump supporter, I can't imagine how it feels to go 26 days without a paycheck because the president you voted for is desperately trying to propose funding for a wall that you want to be built. It's got to be a catch-22, but hell, I feel like almost all Trump supporters are delusional anyway, so they're probably thinking they're undergoing some grand act of martyrdom.

5. Even Cardi B is worried... Now you know we're screwed.

Cardi B took to Instagram recently to post a video of her addressing her worries about the government shutdown. While not eloquently put, the rap princess is really only just voicing the thoughts and opinions of a lot of us out here. If Cardi B is taking the time out of her day to stop popping off at her haters and fantasizing about Offset's peen, then you know that this issue is a pretty big deal. The self-proclaimed gang member and boss bit** has admitted that she's scared. I think that warrants us to all be.

Well, there you have it, folks. Five of my most pressing thoughts about the government shutdown. As it continues, I'm sure they'll be thousands more that pop into all of our heads. But hey, let's look on the bright side -- we've made history; now's the only time we can say the government has been shut down all year.

Hopefully, we won't be able to say it for much longer.

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