The Oligopoly Problem

I wrote about oligopoly power in the telecom and cable TV industry back in January. The issue is not any one particular way they price gouge you but the structure of the sector as a whole. As an oligopoly all the firms involved can really choose to gouge you any number of ways, you don't have any other options.

Tim Wu's latest post at the New Yorker suggests a potential regulatory solution:

The rise of the American oligopoly makes it an important time to reëxamine how antitrust enforcers and regulators think about concentrated industries. Here’s a simple proposal: when members of a concentrated industry act in parallel, their conduct should be treated like that of a hypothetical monopoly. Of course, that doesn’t make anything necessarily illegal, but abusive or anticompetitive conduct shouldn’t get a free pass just because there are three companies involved instead of one.

Some interests more special than others

Some of the senators who voted against the background-check amendments have met with grieving parents whose children were murdered at Sandy Hook, in Newtown. Some of the senators who voted no have also looked into my eyes as I talked about my experience being shot in the head at point-blank range in suburban Tucson two years ago, and expressed sympathy for the 18 other people shot besides me, 6 of whom died. These senators have heard from their constituents — who polls show overwhelmingly favored expanding background checks. And still these senators decided to do nothing. Shame on them.

I watch TV and read the papers like everyone else. We know what we’re going to hear: vague platitudes like “tough vote” and “complicated issue.” I was elected six times to represent southern Arizona, in the State Legislature and then in Congress. I know what a complicated issue is; I know what it feels like to take a tough vote. This was neither. These senators made their decision based on political fear and on cold calculations about the money of special interests like the National Rifle Association, which in the last election cycle spent around $25 million on contributions, lobbying and outside spending.

Gabrielle Giffords on the Senate's failure to pass any of the three gun control legislation measures today. When something like the Toomey-Manchin bill which would extend background checks and which 90 percent of the country supports gets rejected by the Senate, it's clear who the Senate represents. It's not the majority.

You can peruse the list of Senators who voted for and against the measure. All but four Republicans voted against the measure, and four Democrats defected and voted against the measure.

Even if the Senate had passed the measure, the Republican-controlled House of Representatives would have ended its hopes.​

If there is any consolation in this effort, it's that the Senators who voted against the measure were acting not as representatives of the people but as self-interested politicians. It means that there is a clear path to defeating the NRA: deliver more money and more votes.

Obama summed up the situation clearly:​

They are better organized, they are better financed, they’ve been at it longer and they make sure to stay focused on this one issue during election time. That’s the reason why you can have something that 90 percent of Americans support and you can't get it through the Senate or the House of Representatives.

Your Senator will represent you, but it's going to cost you.​

Return-free tax filing

Imagine filing your income taxes in five minutes—and for free. You'd open up a pre-filled return, see what the government thinks you owe, make any needed changes, and be done. The miserable annual IRS shuffle, gone.

It's already a reality in Denmark, Sweden and Spain. The government-prepared return would estimate your taxes using information your employer and bank already send it. Advocates say tens of millions of taxpayers could use such a system each year, saving them a collective $2 billion and 225 million hours in prep costs and time, according to one estimate.

The idea, known as "return-free filing," would be a voluntary alternative to hiring a tax preparer or using commercial tax software. The concept has been around for decades and has been endorsed by both President Ronald Reagan and a campaigning President Obama.

"This is not some pie-in-the-sky that's never been done before," said William Gale, co-director of the Urban-Brookings Tax Policy Center. "It's doable, feasible, implementable, and at a relatively low cost."

So why hasn't it become a reality?

Well, for one thing, it doesn't help that it's been opposed for years by the company behind the most popular consumer tax software—Intuit, maker of TurboTax. Conservative tax activist Grover Norquist and an influential computer industry group also have fought return-free filing.

Timely, from Mother Jones.​ Opponents to return-free filing say it's a conflict of interest for the same entity that collects taxes to calculate your taxes, but essentially they have to do the work every year anyway, they'd just be sharing their calculations ahead of time. And of course you wouldn't have to accept their calculation, you could amend or reject it. Given the immense national suffering imposed by tax day each year, a shift like this could turn it into a national holiday.

​Not surprising for special interests to spend millions of dollars lobbying to protect their revenue stream, our government structure practically invites it, but it's still disappointing to see Intuit acting this way. TurboTax has always been a brand people view positively, but this is like discovering your caretaker has been shielding you from a better life in order to protect a paycheck.

If we could just collect a fraction of the tax preparation fees spent each year we could out-lobby Intuit and its partners here easily. That's the power of a motivated minority, though.

A complex turnaround job

For some reason, Downcast wasn't automatically grabbing new episodes of Planet Money for me the past two months, so I'm just catching up on a long list of episodes.​ The good episodes have a long shelf life, though.

I enjoyed this episode compiling advice from consultants about a massive global institution in need of a turnaround. It's an institution started with just 11 members and has grown to have more members than Facebook, over 1.2 billion.

A ​Fortune 500 corporation? ​A Chinese social network?

Not exactly.

The Catholic Church.​

​Structurally, though, the Catholic Church is very much like a business, so analyzing it as such might reveal possible solutions to its current crisis. The consultants identified several problems.

For one thing, key employees aren't in key growth markets — only half of priests are in countries with the most Catholics and the highest growth rates. The church also fails to leverage its membership to drive down its procurement expenses. I chuckled at the idea of carrying an official Catholicism membership card and using it to get 10% off at Jamba Juice.

I was amused by discussion of Jesus as more of the visionary founder and Peter as the operational CEO he brought in to lead the Church to global expansion. Much like Facebook, the Catholic Church used a free model to achieve hypergrowth, only monetizing after it achieved scale.

2,000 years. Just think how much more quickly the Catholic Church could have reached that scale had they had cloud infrastructure and the internet.

The invisible bike helmet

Watch to the end of the video to see just how they made it invisible.​ Very clever.

After you've watched the video, you can go to the online shop if you're interested in purchasing one. It's not cheap, but I was shocked that it's actually purchasable already. I just assumed it was just an industrial design concept.​

Unfortunately it doesn't look like you can ship it to outside of Europe yet (once you've seen how it works you'll understand why). Also, should you need it to save your head during a fall, you won't be able to use it again. It's a one-time insurance policy.

That's not too different from most bike helmets, however. I had a serious bike accident once and my helmet cracked, and even if it hadn't, it's not recommended to keep using a helmet that's been in a fall. The structural integrity might be compromised.​

I wish I had been wearing one of these invisible bike helmets when I had that accident, actually. It would have saved me some face on gravel contact that left me, for a period, looking like that guy from Boardwalk Empire with the half face mask.​

​This helmet addresses one of the problems with laws requiring bike helmets: many people hate wearing bike helmets and so they just don't bother cycling at all. I completely understand the statistics supporting the idea of not requiring bike helmets in order to spur more cycling instead of driving. However, having been in that one bad accident, one that had the hospital suspecting for a while that I had broken my neck, I have a mental block against riding without a helmet, invisible or not.