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The Economics Thread

Post by infidel » Thu Nov 17, 2016 10:31 am

infidel wrote:The Pressing Problem Nobody Dares Discuss
The list of pundits jostling for air time to add their two cents to discussions of hot-button issues such as immigration is endless. The airwaves and social media are overflowing with people wanting to comment on hot-button social issues, but when it comes to the the one truly critical dynamic that will shape the future--everyone's strangely silent.

The reason nobody dares address this problem is that it has no solution within the current mode of production, i.e. the status quo. The problem is an oversupply of labor.

One of the key takeaways from historian Peter Turchin's new book Ages of Discord is that real wages stagnate or decline in periods of labor oversupply and rise in periods of labor shortages.

This is common sense: the price/value of everything is ultimately set by the dynamics of supply and demand: the price/value of anything that is overly abundant drops. Or put another way: if demand is outstripped by supply, prices decline as long as there is surplus supply.
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Re: Economics

Post by Del » Thu Nov 17, 2016 12:52 pm

Jobs are leaving America faster than we can kill our children. That's not just an "over-supply of labor"; it's a death-spiral.

Our task is to grow our economy and bring jobs back. We will have to lower our expectations of income, to get ourselves more in line with the rest of the world.
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Re: Economics

Post by infidel » Wed Nov 23, 2016 10:36 am

An economic rather than patriotic argument for reshoring:

http://charleshughsmith.blogspot.com/20 ... y-way.html
Reshoring the entire supply chain so it can be trusted is the low-cost solution once you add up the total lifecycle cost of a hopelessly counterfeit global supply chain.

There are two basic arguments against bringing manufacturing that was transferred overseas (offshored) back to America (reshoring):
1. It's too costly
2. The supply chain is now in China/Asia and it's not possible to source the parts needed to bring manufacturing back to America.

I beg to differ on both counts: nothing is more costly and destructive to profits than defective, pirated parts made overseas. Counterfeits made to look like legitimate parts are highly profitable to the counterfeiter and immensely damaging and dangerous to the manufacturer and end-user.

In a global economy burdened with massive overcapacity, the only way to maintain profit margins is to lower costs by cutting corners: in effect, defrauding customers by delivering deceptively reduced quantity and quality, and/or defrauding the end-producer by shipping low-cost counterfeit parts that mimic legitimate products.
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Re: Economics

Post by Thunktank » Wed Nov 23, 2016 12:09 pm

infidel wrote:An economic rather than patriotic argument for reshoring:

http://charleshughsmith.blogspot.com/20 ... y-way.html
Reshoring the entire supply chain so it can be trusted is the low-cost solution once you add up the total lifecycle cost of a hopelessly counterfeit global supply chain.

There are two basic arguments against bringing manufacturing that was transferred overseas (offshored) back to America (reshoring):
1. It's too costly
2. The supply chain is now in China/Asia and it's not possible to source the parts needed to bring manufacturing back to America.

I beg to differ on both counts: nothing is more costly and destructive to profits than defective, pirated parts made overseas. Counterfeits made to look like legitimate parts are highly profitable to the counterfeiter and immensely damaging and dangerous to the manufacturer and end-user.

In a global economy burdened with massive overcapacity, the only way to maintain profit margins is to lower costs by cutting corners: in effect, defrauding customers by delivering deceptively reduced quantity and quality, and/or defrauding the end-producer by shipping low-cost counterfeit parts that mimic legitimate products.
A balanced workforce that produces many of it's own goods has so many intangible benefits. Economic models just don't seem to consider the whole person in my experience. It doesn't measure pride in work, ingenuity that meets local needs and quality of life beyond consumerism.

Long ago I worked in the steel factories and wore a hard hat. The rest of my family still does. They are commercial construction contractors for steel companies and other manufacturing companies. My folks are in the service industry serving American manufacturing. And yes, American manufacturing is better than that of China and other third world countries. It's also more expensive as it should be. I don't only buy American, I will happily buy manufactured goods from any first world country that takes pride in it's work, pays it's labor a fair wage and follows the good manners of intellectual ingenuity. :wink:

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Re: Economics

Post by infidel » Thu Jan 26, 2017 11:13 am

What is this ‘Crisis’ of Modernity?

Image

TL;DR: the "good times" of the past were due mostly to the energy return on investment, meaning the amount of energy produced minus the amount of energy spent to extract/refine/transport it. Once the EROI dropped below 30:1 the resulting slowdown of economic growth has been offset by public debt.
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Re: Economics

Post by infidel » Fri Jan 27, 2017 10:26 am

What Would a Labor-Centered Economy Look Like?

Image
So here's a new idea: why not create new money at the bottom of the pyramid when people perform useful work in their communities? How about paying people for being producers, rather than paying them to be consumers?
How about paying people to do work that isn't profitable enough for global corporations to churn out robots to perform the work, but that is useful to the community?

How about moving the power to create money from the apex of the pyramid down to its lowest level? Impossible, you say? Not at all. We now have a new form of symbolic capital called cryptocurrencies--"money" that can easily be created in the accounts of people doing useful work, as opposed to being created in the accounts of the already-obscenely wealthy, as we do now.

Rather than trickle down, money would trickle up the pyramid, if the wealthy actually produced goods and services of value.
Does this sound anything like Distributism?
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Re: Economics

Post by wosbald » Sat Jan 28, 2017 12:30 pm





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Re: Economics

Post by Del » Sat Jan 28, 2017 1:07 pm

infidel wrote:
Fri Jan 27, 2017 10:26 am
What Would a Labor-Centered Economy Look Like?

Image
So here's a new idea: why not create new money at the bottom of the pyramid when people perform useful work in their communities? How about paying people for being producers, rather than paying them to be consumers?
How about paying people to do work that isn't profitable enough for global corporations to churn out robots to perform the work, but that is useful to the community?

How about moving the power to create money from the apex of the pyramid down to its lowest level? Impossible, you say? Not at all. We now have a new form of symbolic capital called cryptocurrencies--"money" that can easily be created in the accounts of people doing useful work, as opposed to being created in the accounts of the already-obscenely wealthy, as we do now.

Rather than trickle down, money would trickle up the pyramid, if the wealthy actually produced goods and services of value.
Does this sound anything like Distributism?
Yes, it does. Kinda.

Modern economic policy is all about "strategies." Strategy looks at how we ought to accomplish things. Strategy ignores the "goals," assuming that we all share the same goal already. "We all know that we need economic growth, right?" Maybe. Maybe we need certain types of growth, and we want to avoid other types of growth. We haven't really talked about it.

Distributism is about the goals. We need to promote an economy of relationships with our neighbors. "Solidarity," in the language of Catholic moral theology... doesn't matter what we call it. Just that we know we need to do it.

This sort of economy means that we allow local communities to define our own relationships. In other words, we don't want the federal government to have so much power that they can define Walmart's ability to put Drucker's General Store out of business. All we need from federal and state government is enough protection for small business so that we can decide for ourselves whether we want to buy from Sam Walton or Sam Drucker.


The strategy proposed in your link might help us to meet our goal of Distributism. Sounds complicated, though.
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Re: Economics

Post by infidel » Thu Feb 23, 2017 3:17 pm

Blog synchronicity today regarding the gold standard. Both are good reads if you're so inclined.

When was America's Peak Wealth?
It is with much justification that this period is often described as the Golden Age. It wasn’t just that so many people were living well. It was a time when the working class seemed to have been most comfortable with their civilization. I put it down to people having full permission to be as wasteful as they wanted.

It could not last. The rulers filled with hubris arrogantly declared simultaneous war on poverty, Viet-Nam and the Moon. While also running a bodacious arms race with the USSR. At first it seemed to bode well for old GI Joe. The already very active military industries had to gear up to supply the weapons, munitions and materiel. Not to mention moon rockets. More good jobs to be had. But, as it turned out only the Moon war went mostly as planned. Though there were casualties. The flamboyant Gus Grissom and two crew mates were burned alive in a sealed Apollo capsule while waiting for launch. The Moon war ended with a unilateral cease fire when it was finally determined there was nothing there worth destroying. Aside from some junk scattered across the Lunar landscape, the Moon was left largely unmolested. Except for a few pounds of stolen rocks.

...

The Golden Age was over. Worse yet, petroleum geologist M. King Hubbert’s prediction of a peak of US oil production in the early 70’s was about to come true. Confidence began to wain and habits changed. Auto buyers increasingly focused on finding a model that might last long enough to get it paid for and be economical to operate. The door was opened for Japan and Germany to sell cars here and they soon sold a lot of them. US manufacturers fell victim to a labor force that no longer believed and management hubris.

The nation was hemorrhaging dollars to Europe, Japan and the OPEC cartel. According to the Bretton Woods agreement, those dollars were convertible to gold. Some nations, in particular France under de Gaulle, decided they wanted the gold. As the gold pile diminished, Nixon had no choice and closed the so called gold window thus breaking the Bretton Woods agreement. The subsequent creeping expansion of poverty and financial insecurity has reduced our civilization to a sullen mockery of its glory days.
The Problem with Gold-backed Currencies
Many proponents of sound money identify President Nixon's ending of the U.S. dollar's gold standard in 1971 as the cause of the nation's financial decline. If our currency was still convertible to gold, the thinking goes, the system would never have allowed the vast pile of debt to accumulate.

The problem with this line of thinking is that it is disconnected from the real-world mechanisms of capital flows and the way money is created in our financial system.

This article explains why Nixon took the USD off the gold standard: since the U.S. was running trade deficits, all of America's gold would have been transferred to the exporting nations. America's gold reserves would have disappeared, leaving nothing to back the dollar. The U.S. Empire Would Have Collapsed Decades Ago If It Didn’t Abandon The Gold Standard.

...

Simply put, there is no way to back a reserve currency or a fractional reserve banking system with gold. It's easy to say that a world with very little credit would be a good world, but it would be a world with limited debt-based consumption, i.e. a world with little "growth." And without "growth," the system implodes.
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Re: Economics

Post by infidel » Thu Mar 30, 2017 11:01 am

Our Economies Run On Housing Bubbles
That’s right: the survival of our economies today depends one on one on the existence of housing bubbles. No bubble means no money creation means no functioning economy.
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Re: Economics

Post by gaining_age » Thu Mar 30, 2017 11:46 am

infidel wrote:
Thu Mar 30, 2017 11:01 am
Our Economies Run On Housing Bubbles
That’s right: the survival of our economies today depends one on one on the existence of housing bubbles. No bubble means no money creation means no functioning economy.

That's an odd article.

I know the attitude about debt has changed -- at one time it was very shameful. Now it seems like a "near requirement" to acquire debt at some stage of life. It seems to me we are having a "revival" of sorts where debt is being seen as bad again. We have many financial gurus that promote the same language-- get rid of painful debt-> and all debt.

Debtor's prison was a big cultural shaming and it looks like it may be coming back in some form these days: http://www.motherjones.com/politics/201 ... ng-fathers


But I would think we're facing a culture that is polarizing (at least by stages) where many (or a decent portion) is pushing away from debt and minimizing their wading into debt.

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Re: Economics

Post by infidel » Thu Mar 30, 2017 12:15 pm

gaining_age wrote:
Thu Mar 30, 2017 11:46 am
infidel wrote:
Thu Mar 30, 2017 11:01 am
Our Economies Run On Housing Bubbles
That’s right: the survival of our economies today depends one on one on the existence of housing bubbles. No bubble means no money creation means no functioning economy.

That's an odd article.

I know the attitude about debt has changed -- at one time it was very shameful. Now it seems like a "near requirement" to acquire debt at some stage of life. It seems to me we are having a "revival" of sorts where debt is being seen as bad again. We have many financial gurus that promote the same language-- get rid of painful debt-> and all debt.

Debtor's prison was a big cultural shaming and it looks like it may be coming back in some form these days: http://www.motherjones.com/politics/201 ... ng-fathers


But I would think we're facing a culture that is polarizing (at least by stages) where many (or a decent portion) is pushing away from debt and minimizing their wading into debt.

G.
The whole issue is like a big fractal, there are so many facets it's impossible to pick it apart and examine it. The point of the article is mainly that our entire economic system requires growth, or the illusion of it, for no other reason than to keep the debt cycle going because without debt there is no money. We're reaching a point now where the all the juice the Fed can inject is barely enough to push GDP growth to a percentage or two. That's why it is de facto mandatory to be a debtor, the system needs it, more of it, all the time.
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Re: Economics

Post by gaining_age » Thu Mar 30, 2017 1:00 pm

infidel wrote:
Thu Mar 30, 2017 12:15 pm
gaining_age wrote:
Thu Mar 30, 2017 11:46 am
infidel wrote:
Thu Mar 30, 2017 11:01 am
Our Economies Run On Housing Bubbles
That’s right: the survival of our economies today depends one on one on the existence of housing bubbles. No bubble means no money creation means no functioning economy.

That's an odd article.

I know the attitude about debt has changed -- at one time it was very shameful. Now it seems like a "near requirement" to acquire debt at some stage of life. It seems to me we are having a "revival" of sorts where debt is being seen as bad again. We have many financial gurus that promote the same language-- get rid of painful debt-> and all debt.

Debtor's prison was a big cultural shaming and it looks like it may be coming back in some form these days: http://www.motherjones.com/politics/201 ... ng-fathers


But I would think we're facing a culture that is polarizing (at least by stages) where many (or a decent portion) is pushing away from debt and minimizing their wading into debt.

G.
The whole issue is like a big fractal, there are so many facets it's impossible to pick it apart and examine it. The point of the article is mainly that our entire economic system requires growth, or the illusion of it, for no other reason than to keep the debt cycle going because without debt there is no money. We're reaching a point now where the all the juice the Fed can inject is barely enough to push GDP growth to a percentage or two. That's why it is de facto mandatory to be a debtor, the system needs it, more of it, all the time.
Yikes.

Unfortunately, my optimistic viewpoint and hopefulness is dashed... as a whole our culture is debt forward. The subcultures of "debt free" will be "the survivors"... I hope.

http://money.cnn.com/2017/02/16/pf/amer ... t-in-2016/
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Re: Economics

Post by infidel » Wed May 03, 2017 12:49 pm

Redefining the Middle Class: It Isn't What You Earn and Owe, It's What You Own That Generates Income
Many households enjoy incomes above $100,000 annually but they own essentially nothing. By income alone, we categorize the household as "middle class."
But if we consider their total debt load, their ownership of income-producing assets and assets they own free and clear--essentially nothing--then they must be re-categorized as well-paid proletarians.

Image

No wonder the "middle class" has lost political power--it has lost the economic power of the ownership of productive assets, which is the foundation of political power. A class of well-paid proletarians burdened with debt is not middle class --it is a class of debt-serfs who have been persuaded that debt-fueled consumption is wealth because this delusion is politically useful to the self-serving elites who own the wealth and thus the power.
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Re: Economics

Post by ReverendThom » Sat May 06, 2017 10:41 pm

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Re: Economics

Post by infidel » Tue May 09, 2017 3:19 pm

What's Killing the Middle Class? (Part 2)
...

Central banks have lowered interest rates to near-zero, gutting the interest income of regular savers, i.e. the middle class. Financiers don't need to earn interest on savings; they leverage their credit lines to buy apartment complexes, corporate bonds, etc.
Interest income matters to the middle class, which has to avoid risky financial leverage lest the household wealth vanish in another 2008-09 Global Financial Meltdown. By lowering the cost of money to private-sector banks (1% or less), central banks effectively transferred billions of dollars in interest income from the middle class to the Too Big To Fail money-center banks.
Meanwhile, asset prices has skyrocketed, pricing out most of the middle class and impoverishing those who do buy at nosebleed valuations. Nothing says "debt-serf" quit like $100,000+ student loans and a $300,000 mortgage.

...

3. The financial sector has financialized the core services that enabled a middle class: housing, higher education and healthcare. Back in the glory days before central banks and finance dominated the economy, healthcare was cheap, higher education was cheap and housing was cheap.
These were cheap because they were operated as utilities. Nobody got super-wealthy operating a hospital, originating Mom and Pop mortgages, or running a state university.
Now all three have been financialized into immense profit centers that are enriching the few at the expense of the many. Once the federal government guaranteed mortgages and student loans, and took control of the healthcare industry, prices skyrocketed and those at the top of the wealth-power pyramid skimmed staggering profits from sectors that were once like utilities: boring, low cost, efficient.

...

Note what happened when financialization really kicked in circa 1981: income skewed asymmetrically to the top.

Image
End the Fed!
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Re: Economics

Post by Del » Wed May 10, 2017 5:43 am

infidel wrote:
Wed May 03, 2017 12:49 pm
Redefining the Middle Class: It Isn't What You Earn and Owe, It's What You Own That Generates Income
Many households enjoy incomes above $100,000 annually but they own essentially nothing. By income alone, we categorize the household as "middle class."
But if we consider their total debt load, their ownership of income-producing assets and assets they own free and clear--essentially nothing--then they must be re-categorized as well-paid proletarians.

Image

No wonder the "middle class" has lost political power--it has lost the economic power of the ownership of productive assets, which is the foundation of political power. A class of well-paid proletarians burdened with debt is not middle class --it is a class of debt-serfs who have been persuaded that debt-fueled consumption is wealth because this delusion is politically useful to the self-serving elites who own the wealth and thus the power.
This was the thesis of Robert Kiyosaki's Rich Dad, Poor Dad.

If you buy something like a house or a car... making payments and paying for maintenance... then that purchase is a "liability." It takes cash out of your pocket.

We must learn to buy and manage things like rental properties and work trucks.... things that put money into our pockets. These are "assets."

Our entire education system is geared toward teaching us how to be good employee and consumers. We are not taught how to be financially independent... because corporations need employees in cubicles, and governments need wage-earning taxpayers.

We have to learn how to be financially independent with self-study and mentors, and we must teach this to our children.
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Re: Economics

Post by wosbald » Sun May 28, 2017 12:00 pm

+JMJ+

A supposedly anti-capitalist pope channels his inner entrepreneur
Image

In terms of broad public perceptions, Pope Francis is often seen as hostile to Capitalism and no real friend of corporate culture. Yet on Saturday in Genoa, he delivered a reflection on business activity worthy of a graduate-level MBA program, among other things arguing that exploiting workers isn't just immoral but also economically self-defeating.

[…]

In effect, Francis made four business management points on Saturday.
  • Exploiting and mistreating workers isn’t just morally and spiritually wrong, it’s economically self-defeating.
  • The concept of a “meritocracy” that’s at the heart of some self-congratulating capitalism rhetoric is false.
  • There’s a difference between entrepreneurship and “speculation,” with the former being noble and the latter dangerous and unethical.
  • Successful businesses are essential to democracy.
“Many of the new values of the great companies and financial systems aren’t consistent with human dignity and Christian humanism,” he said. “The accent on competition, beyond being an anthropological and Christian error, is an economic error because it forgets that a company is above all about cooperation.

“When it’s a system of individual incentives that puts workers into competition among themselves, you can obtain some advantages, but it ends up ruining the trust that’s the soul of any organization,” the pope argued. “When a crisis comes, the company falls apart. It implodes, because there’s no longer any accord.”

Note that’s not primarily a moral argument against an excessively competitive conception of things, but a business one.

The pope then tried to debunk the idea that the distribution of wealth in the post-modern world is primarily the result of a ‘meritocracy’ in action.

“That fascinates us because it uses a good word, ‘merit,’ but it uses it in an ideological way,” he said. “Exploiting the good faith of many, it provides ethical legitimacy to inequality.

“The new capitalism, through the idea of ‘meritocracy,’ gives moral cover to inequality,” Francis said. “It sees the talents of people not as a gift but a ‘merit,’ determining a system of advantages and disadvantages.”

He argued that the ideology of a ‘meritocracy’ also colors the way we see the poor.

“A second consequences [of a ‘meritocracy’] is a change in the culture of poverty,” he said. “The poor person is considered to not have merit, and therefore to be guilty. They’re dishonored. That’s the old logic of the friends of Job, who wanted to convince him he was guilty.

“That’s not the logic,” Francis said, “of the Gospel or of life.” …




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Re: Economics

Post by wosbald » Sat Jun 10, 2017 6:33 am

+JMJ+

Pope says work and family, not 'speculation,' are keys to growth
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ROME - Pope Francis said Saturday that stable employment coupled with government policies in favor of the family, as opposed to merely “speculative” forms of business enterprise, are the pillars of “sustainable development and a harmonious growth in society.”

“I confirm an appeal to generate and accompany processes that can give rise to new opportunities for dignified work,” the pope said. “Unease among youth, pockets of poverty, and the difficulties young people face in starting families and bringing children into the world, have their common denominator in the lack of sufficient job openings.”

During a visit to the Italian city of Genoa in late May, Francis criticized business models based on “speculation and short-term profit, and he repeated the point on Saturday.

“An alliance of synergies and initiatives is needed so that financial resources are placed at the service of [supporting work and families], which is of great breadth and social value, and not diverted and dispersed in largely speculative investments that denote the lack of a long-term design,” he said.

In the end, Francis said, speculative forms of business activity suggest “weakness and an instinct to flee from the challenges of our time.”

Providing adequate employment and support for families, he said, are essential to allow people to look to the future “not with resignation and fear, but with creativity and trust.” …




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Re: Economics

Post by wosbald » Fri Jun 16, 2017 8:43 am

+JMJ+

Policing the power of tech giants
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Rebecca Zisser / Axios

The world's largest tech companies — Google, Facebook, Amazon, Microsoft and Apple — have become enormous concentrations of wealth and data, drawing the attention of economists and academics who warn they're growing too powerful. "Platform companies have captured the economy," said Jonathan Taplin, who argues in a new book and a recent NYT op-ed that the dominant platforms are so big that they're undermining competition.

Our thought bubble: Despite populist promises, cracking down on Silicon Valley is not one of President Trump's near-term priorities. Makan Delhrahim, Trump's top antitrust enforcer at the Justice Department, has pledged to to enforce antitrust violations with respect to online platforms just as he would with any other industry, but insiders expect him to be cautious. And Maureen Ohlhausen, acting FTC chair, said in a recent speech that the agency has no intention of meddling in the way tech companies use algorithms and data.


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  • Facebook, Amazon, Apple, Microsoft and Google parent company Alphabet are the top five contributors to the S&P's 500 gains this year and their climbs helped drive the stock market's recent rally
  • These mega-cap tech stocks have earned the acronym FAAMG from Goldman for their performance, adding $660 billion in market value this year.
  • The market cap of tech giants is already greater than the GDP of large U.S. cities: On that basis, Google is bigger than Chicago, Amazon is bigger than Washington DC.
  • "It could ultimately lead to populist calls for redistribution of the increasingly concentrated wealth of Silicon Valley as the gap between tech capital & human capital grows ever-wider," according to a recent Bank Of America Merrill Lynch note.
    Economists tend to agree that concentration has increased across U.S. industries, including the internet platform industry. What they don't agree on, though, is whether it's time for antitrust authorities to step in and if there's even a legal mechanism to do so.

Economists tend to agree that concentration has increased across U.S. industries, including the internet platform industry. What they don't agree on, though, is whether it's time for antitrust authorities to step in and if there's even a legal mechanism to do so. …




"In the end, My Immaculate Heart will triumph." - Our Lady of Fatima

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