Monday, December 10, 2012

The Virtues of the Cartel

Did you happen to catch Adam Davidson's NYT piece a few years ago on the implications of monopoly in cable TV?   Shorter Adam: (1) it's greedy, predatory and generally evil; and (2) lucky us.

Oh I exaggerate, But not by a lot. Davidson's  point was that we are living in a golden age of high-quality TV which comes to pass because viewers demand good shows and because the greedy bastards down at the cable company have enough (of our) money to pay for them.

Look, is it just me?  Maybe, but anyway--seems like lately, every place I turn, I'm running across somebody who is saying good things about monopoly power.  Recall a while back I commented on Jon Gertner's The Idea Factory, exploring the argument that only a monopoly can afford to splash out on a huge research agenda?  This is akin to the point that Davidson is making here, yes?  A commentator in Davidson's thread makes essentially that same point.

And all that stuff about the 50s--how they were a golden age of strong unions, steady wages and CEOs not yet insulated from the rest of us.   There seems to be no consensus on how these good times came to pass, but one thing is clear: it was an age of cartels.  Tracking Michael Lind, I review the bidding: three car companies; three steel companies; three networks; two makers of jet engines; restricted-entry trucking and airlines; a regulated telephone monopoly, lots of regulated utilities, not to mention oil under the thumb of the Texas Railroad Commission?

We're glad to be rid of all that right?  Right?   Do I hear an echo?  Do I hear a bit of nostalgia for the old days?   I mean--okay, maybe we have more choice on the tube, but was it an improvement to trade Walter Cronkite for Rush Limbaugh?   Sure, plane ticket are cheaper but has service ever been more awful?  And trucking--well, if ever there was an industry that you'd think did not need cartelized regulation this is it, but could it be that if we had a bit less savage competition in trucking, we might have fewer driver pitching plastic bottles of pee out the window?

And the real clincher: every one of these cartelized industries had a union labor force.   I don't think this point should come as a surprise, but perhaps it does: in casual conversation I get the intuition that people aren't comfortable thinking of unions as just another part of the cartel.

I don't want to be read a making the strong case for cartels here.   The topic is rife with (at least) ambiguities and cross currents; the Davidson comment thread is an okay place to start.    And maybe I'm just dealing with a constant in human nature here: doesn't there always come a point in the new romance where you wonder for just a moment if maybe you'd been too quick to dump the old?

1 comment:

bjdubbs said...

The left used to be on the other side of cartels. From the Port Huron Statement:

American Telephone and Telegraph is an ideal example of both tendencies, that of irresponsible exercise of power and ineffective means of control. To protect its investments in existing facilities, A.T.&T. prevented the public use of one-piece telephones, modern switching equipment and dial phones long after such modern instruments were developed: nothing could be done to hasten the public use of the new equipment until such use was profitable to the corporation. Further the Federal Communications Commission negotiated a 6.5 percent increase in returns on phone rates with A.T.&T. in 1953 that has been consistently surpassed every year, resulting in an “overcharge” of $985 million to the American public.