21 December 2005

Government favours industry concentration

A recent report by the ETC Group, Oligopoly, Inc. 2005 points out, inter alia, that in the past two years alone:
  • the world's top 10 seed companies have increased their control from one-third to one-half of the global seed trade;
  • the top 10 biotech enterprises have raised their share from just over half to nearly three-quarters of world biotech sales; and
  • the market share of the top 10 pesticide manufacturers rose modestly, from 80 to 84%, but industry analysts predict that only three companies will survive the next decade.

I think government intervention tends to favour oligopolies, in that it favours big business at the expense of small businesses and natural persons. Government identifies big business with economic success, and most corporate welfare programmes go to the largest companies. Agricultural subsidies, for instance, are claimed to be for 'family farms', but they mainly go to wealthy landowners and large agribusiness corporates. (Import barriers for food, as well as hurting the third world, also transfer cash from poor (western) consumers to wealthy farmers.) Big business can manipulate the regulatory environment, eg regarding health and safety, to make it very difficult for small businesses. The result is increasing concentration in industries like agriculture, where government intervention is dominant and sustained.

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