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Jorge Alarcon Ochoa @X1alejandro3x
, 21 tweets, 3 min read Read on Twitter
Powerless: How Lax Antitrust and Concentrated Market Power Rig the Economy Against American Workers, Consumers, and Communities…
Download the Powerless issue brief on race:…
"Mortgage companies and car insurance providers have been discovered charging consumers of color more, and there is some evidence that major retailers and travel sites offer different prices based on digital activity
– opening the door to discrimination based on technological characteristics tied to race."
"In 2011, 36 percent of black Americans, including 38.1 percent of black women, and 43.3 percent of Latinos, including 47.3 percent of Latinas, were employed in low-wage jobs, earning poverty-level incomes or less."
"For 40 years, median wages have stagnated, even as workers become more productive, and the share of GDP paid as income to workers has declined since 2000."
"When a company gains market power, it is no longer forced to compete for profits, so it can instead extract value. This results in what are sometimes called “alternative work arrangements”: outsourced jobs, contract jobs, temporary jobs, and work in the so-called “gig” economy"
"From 2005 to 2015, 100 percent of the net new jobs created were in these insecure alternative work arrangements." !!!
"As more and more jobs are placed outside of the traditional employer/employee relationship, more and more workers are excluded from the federal civil rights protections - including Title VII of the Civil Rights Act,
which prohibits employment discrimination on the basis of race, sex, and several other characteristics."
fun fact: OxyContin, a painkiller manufactured and marketed under false pretenses by Purdue Pharmaceuticals. OxyContin - part of a class of drugs responsible for 33,000 U.S. deaths in 2015, according to the American Society of Addiction Medicine (2016)
- has churned out $35 billion in revenue for Purdue. The company has yet to face legal repercussions.
"corporate profits - when measured as a share of the economy - are at a historic peak. And even though the cost of borrowing is low, incumbents are not investing or expanding operations to out-compete one another."
Instead of investing in R&D, many pharmaceutical companies plan their business models around their ability to purchase smaller firms that have shouldered the burden of developing new products.
Strategies like these are predicated on the notion that lax competition policy will green-light mergers with minimal scrutiny, even though this environment holds innovation back: Ornaghi (2009) finds that after merging, pharmaceutical companies have lower R&D spending,
fewer new patents, and fewer patents per R&D spending, compared to non-consolidated competitors. Among pharmaceutical firms in Europe, Haucup and Stiebale (2016) find that even competitors of merged companies innovate less. Nowhere else
could the costs of market power and anti-competitive behavior be more clear or more severe: Even when the discovery of a new product could save thousands of lives, powerful pharmaceutical companies have based their business strategies on acquiring and maintaining market power.
Amazon’s activity in shoe retail serves as another good illustration of the connection between competition policy, market power, and threats to consumer well-being. When executives refused to sell the company to Amazon in 2007,
Amazon began lowering its prices on Zappos shoes and offering additional services like free express shipping in an effort to out-compete the popular online shoe retailer.
Over the course of a two-year battle with Zappos, Amazon drew on its vast wealth, pre-existing distribution network, and large customer base, running up losses of $150 million in an effort to eliminate its competitor.
The tactic of lowering prices below cost in order to starve competitors (predatory pricing) is technically illegal, but Chicago School policymakers have raised the burden of proof so high that companies can employ this strategy without fear of triggering regulatory scrutiny.
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