Weekend reads: Big is bad edition — Truth on the Market

Big is bad, part 1: Kafka, Coase, and Brandeis walk into a bar … There’s a quip in a well-known textbook that Nobel laureate Ronald Coase said he’d grown weary of antitrust because when prices went up, the judges said it was monopoly; when the prices went down, they said it was predatory pricing; and when they stayed the same, they said it was tacit collusion. ICLE’s Geoffrey Manne and Gus Hurwitz worry that not much has changed since Coase’s time:

[C]ompetition, on its face, is virtually indistinguishable from anticompetitive behavior. Every firm strives to undercut its rivals, to put its rivals out of business, to increase its rivals’ costs, or to steal its rivals’ customers. The consumer welfare standard provides courts with a concrete mechanism for distinguishing between good and bad conduct, based not on the effect on rival firms but on the effect on consumers. Absent such a standard, any firm could potentially be deemed to violate the antitrust laws for any act it undertakes that could impede its competitors.

Big is bad, part 2. A working paper published by researchers from Denmark and the University of California at Berkeley suggest that companies such as Google, Apple, Facebook, and Nike are taking advantage of so-called “tax havens” to cause billions of dollars of income go “missing.” There’s a lot of mumbo jumbo in this one, but it’s getting lots of attention.

We show theoretically and empirically that in the current international tax system, tax authorities of high-tax countries do not have incentives to combat profit shifting to tax havens. They instead focus their enforcement effort on relocating profits booked in other high-tax places—in effect stealing revenue from each other.

Big is bad, part 3: Can any country survive with debt-to-GDP of more than 100 percent? Apparently, the answer is “yes.” The U.K. went 80 years, from 1779 to 1858. Then, it went 47 years from 1916 to 1962. Tim Harford has a fascinating story about an effort to clear the country’s debt in that second run.

In 1928, an anonymous donor resolved to clear the UK’s national debt and gave £500,000 with that end in mind. It was a tidy sum — almost £30m at today’s prices — but not nearly enough to pay off the debt. So it sat in trust, accumulating interest, for nearly a century.

fredgraphUK

How do you make a small fortune? Begin with a big one. A lesson from Johnny Depp.

Will we ever stop debating the Trolley Problem? Apparently the answer is “no.” Also, TIL there’s a field of research that relies on “notions.”

For so long, moral psychology has relied on the notion that you can extrapolate from people’s decisions in hypothetical thought experiments to infer something meaningful about how they would behave morally in the real world. These new findings challenge that core assumption of the field.

 

The week that was on Truth on the Market

LabMD.

[T]argets of complaints settle for myriad reasons, and no outside authority need review the sufficiency of a complaint as part of a settlement. And the consent orders themselves are largely devoid of legal and even factual specificity. As a result, the FTC’s authority to initiate an enforcement action  is effectively based on an ill-defined series of hunches — hardly a sufficient basis for defining a clear legal standard.

Google Android.

Thus, had Google opted instead to create a separate walled garden of its own on the Apple model, everything it had done would have otherwise been fine. This means that Google is now subject to an antitrust investigation for attempting to develop a more open platform.

AT&T-Time Warner. First this:

The government’s contention that, after the merger, AT&T and rival Comcast could coordinate to restrict access to popular Time Warner and NBC content to harm emerging competitors was always a weak argument.

Then this:

Doing no favors to its case, the government turned to a seemingly contradictory argument that AT&T and Comcast would coordinate to demand virtual providers take too much content.

 

 

The crazy mixed up world of “free” electricity where the homeless get arrested and Tesla owners get subsidies

In Portland, OR, Street Roots reports that a homeless former social worker with muscular dystrophy was hit with a misdemeanor theft charge for charging her phone from a plug on a planter-base on a sidewalk. She then spent a day in jail when she missed her arraignment.

The electricity she used to charge her phone was worth a fraction of a cent. Worried that a pleading guilty would put a black mark on her record that would interfere with her ability to get social housing, she pled innocent. After two court dates with two different public defenders, the DA finally dropped the charge.

Late last year, the Oregonian reported that the Portland mass transit agency, TriMet, cut off free electricity to battery-depleted commuters who discovered not-so-hidden power outlets tucked under its light rail schedule/map kiosks.

Now, the Portland Business Journal reports that the Oregon Legislature is considering House Bill 2092, which would award rebates to Oregonians who buy Nissan Leafs, Chevy Volts, Volkswagen e-Golfs and other all-electric vehicles now on the market, including the high-end Tesla Model S.

The legislation would provide a $3,000 rebate to buyers of electric cars and $1,500 to buyers of plug-in electric vehicles.

Already, in Portland, electric vehicles have priority parking and get to plug in to free electricity for the time that they are parked.

At the same time, on the other side of the country, the state of Georgia is pulling its electric vehicle subsidies. On top of that, Vice News reports that the state is about to get rid of its $5,000 tax credit and, on top of that, add a $200 a year electric vehicle tax to recoup the state’s drop in gasoline tax revenues.

Who would have thought that a few electrons would cause so many headaches?