Just in time for #Davos, here’s 'Taken, not earned: How monopolists drive the world’s power and wealth divide," a report from a coalition of international tax justice and anti-corporate activist groups:
–
If you’d like an essay-formatted version of this thread to read or share, here’s a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
1/
One way to measure that power is through #markups (“the difference between the selling price of goods or services and their cost”). Very large companies in concentrated industries have very high markups, and they’re getting higher. From 2017-22, the 20 largest companies in the world had average markups of 50%. The 100 largest companies average 43%. The smallest half of companies get average markups of 25%.
6/
Those markups rose steeply during the covid lockdowns - and so did the wealth of the billionaires who own them. Tech billionaires - Bezos, Brin and Page, Gates and Ballmer - all made their fortunes from monopolies. Warren Buffet is a proud monopolist who says “the single most important decision in evaluating a business is pricing power… if you have to have a prayer session before raising the price by 10 percent, then you’ve got a terrible business.”
7/
We are living in the age of the monopoly. In the 1930s, the top 0.1% of US companies accounted for less than half of America’s GDP. Today, it’s 90%. And it’s accelerating, with global mergers climbing from 2,676 in 1985 to 62,000 in 2021.
Monopoly’s cheerleaders claim that these numbers vindicate them. Monopolies are so efficient that everyone wants to create them.
8/
Those efficiencies can be seen in the markups monopolies can charge, and the profits they can make. If a monopoly has a 50% markup, that’s just the “efficiency of scale.”
But what is the actual shape of this “efficiency?” How is it manifest? The report’s authors answer this with one word: power.
9/
Monopolists have the power “to extract wealth from, to restrict the freedoms of, and to manipulate or steer the vastly larger numbers of losers.” They establish themselves as gatekeepers and create chokepoints that they can use to raise prices paid by their customers and lower the payout to their suppliers:
https://chokepointcapitalism.com/
10/
These chokepoints let monopolies usurp “one of the ultimate prerogatives of state power: taxation.” Amazon sellers pay a 51% tax to sell on the platform. App Store suppliers pay a 30% tax on every dollar they make with their apps. That translates into higher costs.
11/
Consider a good that costs $10 to make: the bottom 50% of companies (by size) would charge $12.50 for that product on average. The largest companies would charge $15. Thus monopolies don’t just make their owners richer - they make everyone else poorer, too.
This power to set prices is behind the #greedflation (or, more politely, #SellersInflation). The CEOs of the largest companies in the world keep getting on investor calls and bragging about this:
https://pluralistic.net/2023/03/11/price-over-volume/#pepsi-pricing-power
12/
The food system is incredibly monopolistic. The #Cargill family own the largest commodity trader in the world, which is how they built up a family fortune worth $43b. Cargill is one of the “ABCD” companies (“Archer Daniels Midland, Bunge, Cargill and Louis Dreyfus”) that control the world’s food supply, and they tripled their profits during the lockdown.
13/
Monopolies gouge everyone - even nations. #Pfizer charged the #NHS £18-22/shot for vaccines that cost £5/shot to make. They took the UK government for £2bn - enough to pay last year’s pay hike for NHS nurses, six times over,
But monopolies also abuse suppliers, especially their employees. All over the world, competition authorities are uncovering “wage fixing” and “no poaching” agreements among large firms, who collude to put a cap on what workers in their sector can earn.
14/