Opinion by Mathew Carr
April 26, 2024 — Antitrust regulators should prevent the takeover by BHP of Anglo American.
As the Financial Times says below, the resulting company would have 15% of global copper supply. That’s too much because copper is the most crucial ingredient of the global climate transition to electrification from dangerous unabated fossil fuels.
Such an important industry should have at least 10 players, with a maximum of 10% of market share each.
The world’s market structure in the fossil-fuel era worked against 99.9% of people because the markets were rigged, eg by OPEC. We must learn from that mistake.
Just like in banking …those banks which are too big to fail should be broken up until they no longer are.
A company with “only” 10% of a global market is less likely to ruin other industries if it goes bust vs one with 20%.
This “bigger is better capitalism” needs to stop.
Competitive tension in mature commodity markets is more important than “economies of scale.” Supplying countries need to be able to play producers off against each other. Buyers need to be able to switch easily to rival producers.
The key focus on the benefits of economies of scale has led to global unfairness, where a small group gets the financial reward and big groups get exploited. CEO pay demands are out of control. That’s partly because companies are allowed to get too big.
In other words, we need to tackle inequality, where huge corporates are able to simultaneously rip off their suppliers and their customers…and reward their executives for doing so.
Middle men should face extra scrutiny, especially those dealing with least-developed nations, where financial pressures are greatest.
Ultimately, giving global corporations too much market power will reward greed and lead to more climate change, nature destruction and social unrest.
Companies based in Anglo-Saxon countries such as America, Britain and Australia have had more than their fair share of supernormal profits over the past 200 years.
**see notes, which test a few of my opinions
Because of the “Anglo” in the name of the target company … and worsening inequality, I’m tackling race and culture in this story just a little … also because Elon Musk (for instance), one of the world’s most wealthy people, is saying there is systematic discrimination/racism against white people.
Notes:
**
Can we say the Anglo Saxon race has been the most exploitative in world history?
Google Gemini (unedited …my prompts) — No, we can’t say the Anglo-Saxon race has been the most exploitative in world history. Here’s why:
- Race as a Monolith: The concept of race is complex and doesn’t fully capture the nuances of history. Anglo-Saxons themselves are a mix of ethnicities.
- Exploitation Throughout History: Many civilizations throughout history have engaged in exploitative practices like colonialism, slavery, and resource extraction.
- Comparative Analysis: While the British Empire has a long history of colonialism, empires like the Roman Empire, the Mongol Empire, and various African and Asian empires also had periods of significant exploitation.
A more productive approach would be to look at specific historical periods and the actions of particular nations. Here are some points to consider:
- The British Empire: Undoubtedly one of the largest empires in history, responsible for colonizing vast areas of the globe and exploiting resources and people.
- Other Empires: Compare the British Empire’s actions to those of other colonial powers and see how they stack up in terms of exploitation.
- Focus on Systems: Look at the economic and political systems that enabled exploitation, rather than focusing solely on race.
Here are some resources for further exploration:
- Books on colonialism and imperialism
- Websites of reputable historical institutions
Ultimately, understanding history requires a nuanced approach that goes beyond attributing blame to a single race.
What share of global profits do Anglo-Saxon countries have?
It’s difficult to pinpoint the exact share of global profits “Anglo-Saxon countries” hold due to two main reasons:
- Defining “Anglo-Saxon Countries”: The term “Anglo-Saxon” has a cultural background, not a strictly economic one. There’s no single, universally agreed-upon definition of which countries fall under this umbrella. It typically refers to countries with historical ties to England and its Germanic roots, but the specific inclusions can vary.
- Measuring “Global Profits”: Accurately measuring global profits is complex because of:
- Variations in Accounting Practices: Companies may follow different accounting standards, making direct comparisons difficult.
- The Informal Sector: Many economic activities occur informally and escape measurement in official statistics.
Here’s what we can do instead:
- Look at economic data for some of the countries typically considered Anglo-Saxon:
- United States: Large and influential economy.
- United Kingdom: Significant economy.
- Canada, Australia, New Zealand: All important economies.
- Analyze their contribution to global GDP (Gross Domestic Product) to get a general sense of their economic weight.
However, this wouldn’t necessarily translate directly to their share of global profits.
For a more nuanced understanding, you could look into:
- Profitability of Multinational Corporations: Many large corporations with Anglo-Saxon roots operate globally. Researching their profits might shed some light.
- Global Distribution of Wealth and Income: Reports by organizations like the World Inequality Lab explore wealth concentration across the world.
While a definitive answer to your initial question is elusive, these alternative approaches can provide valuable insights.
Are ‘economies of scale’ more important in global markets than ‘competitive tension’?
In global markets, the importance of economies of scale versus competitive tension depends on the specific industry and stage of development. Here’s a breakdown:
Economies of Scale:
- Advantages: Larger companies can spread fixed costs (facilities, research & development) over a larger output, leading to lower per-unit costs. This allows them to undercut smaller competitors on price.
- Impact: Economies of scale are crucial in industries with high fixed costs, like manufacturing cars or semiconductors. They can create barriers to entry for smaller players.
Competitive Tension:
- Advantages: Competition drives innovation, improves product quality, and keeps prices in check. It motivates companies to be more efficient and develop new products to meet consumer needs.
- Impact: Competitive tension is vital in dynamic industries like technology or fashion, where constant innovation is key.
So, which one is more important?
- Early Stage: In the initial stages of a global market, economies of scale might be more important. Companies need to achieve a certain production volume to be profitable.
- Established Market: Once a market matures, competitive tension often takes center stage. Consumers have more choices, and companies need to differentiate themselves through features, branding, or customer service.
Here are some additional factors to consider:
- Government Regulations: Antitrust laws can limit the power of large companies and promote competition.
- Globalization: Global competition can intensify pressure on companies to be efficient and innovative.
In conclusion, both economies of scale and competitive tension play crucial roles in global markets. Their relative importance depends on the specific industry and its stage of development.