The ABC journalist Ian Verrender tells us that the major reason big business is making big profits and giving poor service is market concentration. He gives the examples of the supermarkets, the banks, gas industry and airways.
I have no doubt that the local (but mainly overseas owned) gas cartel has been having a loan of us. Verrender points out that the industry protests that the government is interfering with a free market are truly humorous as it isn’t anything like free. But this has only become an issue in the last 10-15 years however.
We have seen the way Colesworths operate, they are at once a duopoly (two sellers) and a duopsony (two buyers) who exploit both their customers and their suppliers using market power.
I have some problems though with the details however.
The gas market concentration has only come to the fore as our markets were linked to overseas through bulk exports but the supermarkets, banks and airways have been very concentrated for many decades. So how is it that, as presented in the article, this is suddenly a problem?
I would also add that I see no explanation in this for the second part of the headline, that wages are crawling. Attributing all the latest profits by Coleworths and Qantas to market concentration seems rather simplistic.
The article points out some real problems but, to me, lacks depth of explanation and doesn’t address solutions. Sadly there don’t seem to be many solutions to market concentration once governments permit it. There have, at times, been laws made to compel monopolies or near monopolies to be broken up. The moves to head off extreme gas shortages were fairly well accepted by the public but breaking up Qantas, for example, would run into serious headwinds.
The article possibly presents populist views, rather than based on unequivocal evidence. Even the ABC has had a recent article that debunks some of the inferences made on the supermarkets…
It is unfortunate that many news organisations post journalist opinion pieces to make news. These type of articles aren’t limited to the ABC, but occur within News Corp, Fairfax, Nine etc organisations.
It’s a problem worldwide. Price Gouging took off once the Shackles of the Covid Pandemic were broken. Making up for lost profits/ growth during the Pandemic they saw an opportunity to pounce. All these people had saved money by not spending on non essentials and rents, mortgages were kept low as was Petrol and Energy. They would seize the opportunity as now the people were cashed up and would go back to frivolous spending and travel. Governments have been mostly trained not to stop Price Gouging (ACCC has no laws). Some countries taxed huge profits but too few to make a difference. Of course Inflation took off with all this spending and Fossil Fuel benefited when Russia invaded. All the Stars were aligned for what they really wanted. The People who OWN most things had been suffering since 2008 as their Interest rate Profit margins were kept low. Now the Inflation bottle was opened (by them not wages) they could get their puppets MSM and Government to flood information on the ONLY way to fix Inflation. Higher interest Rates which will ensure the Inflation spiral continues in the Rental and Mortgage market. Meanwhile real wages will drop and people will slow spending on pesky things like Electricity, Food, Health etc. Bringing us closer to Recession. A Win Win for the Big Cashed up Owners. Get much cheaper Real Estate in a recession and accumulate more wealth whilst keeping annoying costs like wages down and a Triple Win if unemployment goes up as the Private sector can get relief as Governments socialise their sackings. I remember Interest rates going down and .75% wasn’t passed on so they have that margin already built into their Profits. And No Media or Government will ever point that out. The System works…for the few.