#oligopoly

[aunti-christ-ine]

What's happening now

[knightstones]

Go check out the latest updates on the OFFICIAL KNIGHTSTONES CHANNEL (and make sure to subscribe so you catch updates and episodes as they come out!)

KnightStones: Production Announcement

STARRING:  @adammyers7383 

Jayde Hemming

Sanskriti Dwivedi

Emily Dalton

Celestialrand

Avery Wooden

 TSDtalks  

@fordtato

@JessieGender1 

Additional Voices

Colin O'Donnell

Miranda Ketita 

& More

Art by @unseenhand1997 @hey-itsanny and Nemo_Bush_Statue

Music by Andres [ThatHoboRavioli]

Written by  @adammyers7383  Honey Payla &  @tumblingxelian 

Special Thanks to Evelyn Aurora

Directed by  @adammyers7383  and Honey Payla

[mostlysignssomeportents]

Boeing, Spirit and Jetblue, a monopoly horror-story

Catch me in Miami! I'll be at Books and Books in Coral Gables TONIGHT (Jan 22) at 8PM. Berliners: Otherland has added a second date (Jan 28) for my book-talk after the first one sold out - book now!

Last week, William Young, an 82 year old federal judge appointed by Ronald Reagan, blocked the merger of Spirit Airlines and Jetblue. It was a seismic event:

https://storage.courtlistener.com/recap/gov.uscourts.mad.254267/gov.uscourts.mad.254267.461.0_6.pdf

Seismic because the judge's opinion is full of rhetoric associated with the surging antitrust revival, sneeringly dismissed by corporate apologists as "hipster antitrust." Young called America's airlines and "oligopoly," a situation he blamed on out-of-control mergers. As Matt Stoller writes, this is the first airline merger to be blocked by the DOJ and DOT since deregulation in 1978:

https://www.thebignewsletter.com/p/antitrust-enforcers-block-the-jetblue

The judge wasn't shy about why he was reviving a pre-Jimmy Carter theory of antitrust: "[the merger] does violence to the core principle of antitrust law, 'to protect] markets –- and its market participants — from anticompetitive harm."

The legal arguments the judge advances are fascinating and worthy of study:

https://twitter.com/johnmarknewman/status/1747343447227519122

But what really caught my eye was David Dayen's American Prospect article about the judge's commentary on the state of the aviation industry:

https://prospect.org/infrastructure/transportation/01-19-2024-how-boeing-ruined-the-jetblue-spirit-merger/

Why, after all, have Spirit and Jetblue been so ardent in pursuing mergers? Jetblue has had two failed merger attempts with Virgin, and this is the third time they've failed in an attempt to merge with Spirit. Spirit, meanwhile, just lost a bid to merge with Frontier. Why are these two airlines so obsessed with combining with each other or any other airline that will have them?

As Dayen explains, it's because US aviation has been consumed by monopoly, hollowed out to the point of near collapse, thanks to neoliberal policies at every part of the aviation supply-chain. For one thing, there's just not enough pilots, nor enough air-traffic controllers (recall that Reagan's first major act in office was to destroy the air traffic controller's union).

But even more importantly, there are no more planes. Boeing's waitlist for airplane delivery stretches to 2029. And Boeing is about to deliver a lot fewer planes, thanks to its disastrous corner-cutting, which grounded a vast global fleet of 737 Max aircraft (again):

https://prospect.org/infrastructure/transportation/2024-01-09-boeing-737-max-financial-mindset/

The 737 disaster(s) epitomize the problems of inbred, merger-obsessed capitalism. As Luke Goldstein wrote, the rampant defects in Boeing's products can be traced to the decision to approve Boeing's 1997 merger with McDonnell-Douglas, a company helmed by Jack Welch proteges, notorious for cost-cutting at the expense of reliability:

https://prospect.org/infrastructure/transportation/2024-01-09-boeing-737-max-financial-mindset/

Boeing veterans describe the merger as the victory of the bean-counters, which led to a company that chases short-term profits over safety and even the viability of its business:

https://www.airliners.net/forum/viewtopic.php?t=213075

After all, the merger turned Boeing into the single largest exporter in America, a company far too big to fail, teeing up tens of billions from Uncle Sucker, who also account for 40% of Boeing's income:

https://www.thebignewsletter.com/p/its-time-to-nationalize-and-then

The US government is full of ex-Boeing execs, just as Boeing's executive row is full of ex-US federal aviation regulators. Bill Clinton's administration oversaw the creation of Boeing's monopoly in the 1990s, but it was the GOP that rescued Boeing the first time the 737 Maxes started dropping out of the sky.

Boeing's biggest competitor is the state-owned Airbus, a joint venture whose major partners are the governments of France, Spain and Germany – governments that are at least theoretically capable of thinking about the public good, not short-term profits. Boeing's largest equity stakes are held by the Vanguard Group, Vanguard Group subfiler, Newport Trust Company, and State Street Corporation:

https://prospect.org/blogs-and-newsletters/tap/2024-01-18-airbus-advantage/

As Matt Stoller says, America has an airline that the public bails out, protects, and subsidizes but has no say over. Boeing has all the costs of public ownership and none of the advantages. It's the epitome of privatized gains and socialized losses.

This is Reagan's other legacy, besides the disastrous shortage of air-traffic controllers. The religious belief in deregulation – especially deregulation of antitrust enforcement – leads to a deregulated market. It leads to a market that is regulated by monopolists who secretly deliberate, behind closed board-room doors, and are accountable only to their shareholders. These private regulators are unlike government regulators, who are at least nominally bound by obligations to transparency and public accountability. But they share on thing in common with those public regulators: when they fuck up, the public has to pay for their mistakes.

It's a good thing Boeing's executives are too big to fail, because they fail constantly. Boeing execs who are warned by subcontractors of dangerous defects in their planes order those subcontractors to lie, or lose their contracts:

https://www.levernews.com/boeing-supplier-ignored-warnings-of-excessive-amount-of-defects-former-employees-allege/

As a result of Boeing's mismanagement, America's only aircraft supplier steadily has lost ground to Airbus, which today enjoys a 2:1 advantage over Boeing. But it's not just Boeing that's the weak link aviation. US aviation is a chain entirely composed of weak links.

Take jet engines: Pratt & Whitney are Spirit's major engine supplier, but these engines suck as much as Boeing's fuselages. Much of Spirit's fleet is chronically grounded because the engines don't run. The reason Spirit buys its engines from those loveable goofballs at Pratt & Whitney? The Big Four airlines have bought all the engines for sale from other suppliers, leaving smaller airlines to buy their engines from fat-fingered incompetents.

This is why – as Dayen notes – smaller US airlines are so horny for intermarriage. They can't grow by adding routes, because there are no pilots. Even if they could get pilots, there'd be no slots because there are no air traffic controllers. But even if they could get pilots and slots, there are no planes, because Boeing sucks and Airbus can't make planes fast enough to supply the airlines that don't trust Boeing. And even if they could get aircraft, there are no engines because the Big Four aviation cartel cornered the market on working jet engines.

Part of Jetblue and Spirit's pitch was that they hand off the routes that they'd cut after their merger to other small airlines, like Frontier and Allegiant. But Frontier and Allegiant can't service those routes: they don't have pilots, slots, planes or engines.

Spirit hasn't been profitable since 2019 and is sitting on $4b in debt. Jetblue was proposing to finance its acquisition with another $3.5b in debt. The resulting airline could only be profitable by sharply cutting routes and massively raising prices, cutting 6.1m seats/year. With a debt:capital ratio of 111%, the company would have no slack and would need a bailout any time anything went wrong. Not coincidentally, the Big Four airlines also have debt:capital ratios of about 100-120%, and they do get bailouts ever time anything goes wrong.

As William McGee reminds us, it's been 14 years since anyone's started a new US airline:

https://twitter.com/WilliamJMcGee/status/1747363491445375072

US aviation is deeply cursed. But Boeing's self-disassembling aircraft show us why we can't fix it by allowing mergers: private monopolies, shorn of the discipline of competition and regulation, are extraction machines that turn viable businesses into debt-wracked zombies.

This is a subject that's beautifully illustrated in Dayen's 2020 book Monopolized, in the chapter on health care:

https://pluralistic.net/2021/01/29/fractal-bullshit/#dayenu

The US health care system has been in trouble for a long time, but the current nightmare starts with the deregulation of pharma. Pharma companies interbred with one another in a string of incestuous marriages that produced these dysfunctional behemoths that were far better at shifting research costs to governments and squeezing customers than they were at making drugs. The pharma giants gouged hospitals for their products, and in response, hospitals underwent their own cousin-fucking merger orgy, producing regional monopolies that were powerful enough to resist pharma's price-hikes. But in growing large enough to resist pharma profiteering, the hospitals also became powerful enough to screw over insurers. Insurers then drained their own gene pool by combining with one another until most of us have three or fewer insurers we can sign up with – companies that are both big enough to refuse hospital price-hikes, and to hike premiums on us.

Thus monopoly begets monopoly: with health sewn up by monopolies in medical tech, drugs, pharmacy benefit managers, insurance, and hospitals, the only easy targets for goosing profits are people:

https://pluralistic.net/2022/01/05/hillrom/#baxter-international

This is how you get a US medical system that costs more than any other rich nation's system to operate, delivers worse outcomes than those other systems, and treats medical workers worse than any other wealthy country.

Now, rich people can still buy their way out of this mess, but you have to be very rich indeed to buy your way out of the commercial aviation system. There's a lot of 1%ers who fly commercial, and they're feeling the squeeze – and there's no way they're leasing their own jets.

Stein's Law holds that "anything that can't go on forever will eventually stop." America's aviation mergers – in airlines, aircraft and engines – have hollowed out the system. The powerful, brittle companies that control aviation have so much power over their workforce that they've turned air traffic controller and pilot into jobs that no one wants – and they used their bailout money to buy out the most senior staff's contracts, sending them to early retirement.

Now, I'm with the people who say that most of US aviation should be replaced with high-speed rail, but that's not why our technocrats and finance barons have gutted aviation. They did it to make a quick buck. A lot of quick bucks. Now the system is literally falling to pieces in midair. Now the system is literally on fire:

https://www.nytimes.com/2024/01/19/us/miami-boeing-plane-engine-fire.html

Which is how you get a Reagan appointed federal judge issuing an opinion that has me punching the air and shouting, "Yes, comrade! To the barricades!" Anything that can't go on forever will eventually stop. When the system is falling to pieces around you, ideology disintegrates like a 737 Max.

I'm Kickstarting the audiobook for The Bezzle, the sequel to Red Team Blues, narrated by @wilwheaton! You can pre-order the audiobook and ebook, DRM free, as well as the hardcover, signed or unsigned. There's also bundles with Red Team Blues in ebook, audio or paperback.

If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2024/01/21/anything-that-cant-go-on-forever/#will-eventually-stop

Image: Vitaly Druchenok (modified) https://commons.wikimedia.org/wiki/File:ECAir_Boeing_737-306_at_Brazzaville_Airport_by_Vitaly_Druchenok.jpg

CC BY-SA 4.0 https://creativecommons.org/licenses/by-sa/4.0/deed.en

--

Joe Ravi (modified) https://commons.wikimedia.org/wiki/File:Panorama_of_United_States_Supreme_Court_Building_at_Dusk.jpg

CC BY-SA 3.0 https://creativecommons.org/licenses/by-sa/3.0/deed.en

[alizarincrims0n]

happy late anniversary of me not posting on tumblr online-only mutuals i'm not dead i'm just taking a semi-permanent break from socials because it got to a point where they were really damaging for me mentally and physically so i just. stopped. zero contact except when i steal someone's phone to look at tumblr

there's been a lot of crap i've wanted to post but i think the crowning achievement of me in 2024 was modifying the rules of monopoly to form an oligopoly, aka when multiple companies agree to function as a monopoly for mutual profit and market domination

[neoatlantiscodex]

Market Hegemony

For those that don't know, a Hegemony is not a country that conquered it's neighbour. It's a country that does not need to. Take any country near the US / China / Russia. Take any country near Sparta.

Competition is absolutely crucial to Capitalism. Monopolies are anathema to Capitalism, but Monopolies are pretty easy to recognize. Oligopolies / Cartels are a different story, along with vertical integration.

The best way to explain this comment is a pretty simple phrase: The is no shopping cart in the US that does not meet the standards of Walmart. This is because Walmart is so expansive, it has so many stores, that any shopping cart manufacturer would be foolish to not follow their standards. As such, Walmart has complete control of the shopping cart market.

For Oligopolies, (a small group of sellers):

How do you deal with oligopolies?

That one is actually pretty easy, lower the barriers to entry. In such a situation, a large corporation is less agile, and would have trouble keeping up with changes in the market. Note: Changes in the market happen all of the time. There are also some sneaky practices, like renting shelf-space.

Major companies will have their shelf-space - literally - rented by megacorp suppliers. If you go down the toothpaste aisle, with a hundred options, 94-95 of those options are from one of 2-4 companies. You'll then have one tiny section dedicated to non-megacorp toothpastes.

So:

Prevent large corporations from buying their rivals. I mean, imagine if Disney could not buy Star Wars?

Prevent them from renting shelf-space.

Regulation that supports small stores rather than large ones. Large stores have large footprints, and could only exist through public largesse. So, yes, our cities are creating regulation that supports megacorps.

Since every canton is nearly sovereign on their on, we have another weapon we can use: canton registration.

Legally, there is no such thing as an transnational corporation. What there is is a main/HQ, with every other branch registered in every - single - country, and in federated countries, in every single province/state.

Corporations will beg, they will wheedle, they will wine and dine, and they will bribe.

And the answer is NO.

[retrocgads]

USA 1990

[sunder-the-gold]

“Privatization” versus “Oligopolization”

Back when Elon Musk and Jeff Bezos were experiencing real success with their personal spaceflight programs, people were crying that it was the “privatization of spaceflight”.

I’d never heard the word before, and I should have known better than to take this crowd at their word when I assumed they knew what it meant.

"Privatization" means one of two different things. In both cases, a citizen (a private individual) buys something; either public property from a government, or a corporate company from its investors (with the corporation becoming a private company).

Since the United States government didn’t sell NASA to either man, spaceflight wasn’t being privatized in the slightest.

What I thought the word meant was that private citizens were breaking a government monopoly through entrepreneurship.

The proper word would have been oligopolization; like monopolization, but in reverse. A transition from a monopoly (one provider) into an oligopoly (few providers).

Generally, oligopolies aren’t much better than monopolies, but it’s definitely a step towards democratization of services rather than away from it. And realistically, no one but governments or billionaires is going to have the kind of wealth necessary to start such an enterprise.

[katchwreck]