Energy Markets for Corporate Control

Managers differ in their ability to maintain productivity, or in their incentive to try. This can make low performing firms targets for acquisition by higher performing firms. A recent study of thousands of US power plant ownership changes by Demirer and Karaduman finds a 2% average increase in efficiency for acquired plants.

Our evidence suggests that high-productivity firms buy underperforming assets from low-productivity firms and make them as productive as their existing assets through operational improvements.

These mergers move power plant assets from low value uses into higher value uses.

[2016]: Political compromise is like collusion, ...

... in that both harm consumers.  Steven Landsburgh's famous essay from The Armchair Economist:

Driving through northwest Washington, D.C., I remarked on the opulence that is so conspicuous in that quarter of the city. My friend Jim Kahn, in the passenger seat, wondered how such great wealth could have accumulated in a city that is notorious for producing almost nothing of value. I was too quick with the obvious cynical response: Most of it is the moral equivalent of stolen, partly through direct taxation and largely through political contributions that constitute the collection arm of a vast protection racket. 

But Jim was quicker than I and saw that according to economic theory, my explanation was not cynical enough. In the presence of competition between the parties, all of those ill-gotten gains should be used to buy votes. If the Republicans are in power, pocketing $100 billion per year, then the Democrats can offer to duplicate Republican policies exactly plus give away another billion per year to key constituents. Unchallenged, this strategy would enable them to buy the next election, pocketing a net $99 billion. But the Republicans would counter by offering to give away an extra $2 billion and settle for $98 billion for themselves. Our experience with competitive markets tells us that there is no end to this bidding war until all excessive profits are competed out of existence. 

When an industry is dominated by two highly profitable firms, theory tells us that if there is no price war then there is probably collusion. In the case of the Republicans and Democrats, the requisite collusion is on display for all to see. It is called bipartisanship. 

When Republican and Democratic legislators meet to "hammer out a compromise," they are engaging in an activity that could land any of their private-sector counterparts in jail. We do not allow the presidents of United and American Airlines to hammer out compromises regarding airfares. Why do we allow the majority and minority leaders of the Congress to hammer out compromises regarding tax policy?

Adam Smith observed that "people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." That truth is the basis for the antitrust legislation that attempts to prevent such conspiracies and contrivances from getting off the ground. When the president of United runs into the president of American at a picnic, he is forbidden by law to say "I will not undercut you on the Chicago-to-Los Angeles route provided that you do not undercut me on New York-to-Denver." Yet we allow Republican leaders to greet Democrats with offers like, "I will support housing aid to your urban constituents if you will support agricultural programs for the farmers in my district.”

When people get rich running airlines, I can surmise that it is because they have an extraordinary talent for delivering good air service. When people get rich in the political establishment, I am reluctant to surmise that it is because they have an extraordinary talent for delivering good government. Economics provides an alternative explanation: the absence of political antitrust [enforcement].

I propose that all political compromise—indeed, all discussion between candidates, officeholders, or officials of competing parties—be fully subject to the same provisions of the Clayton and Sherman Antitrust acts that regulate the activities of every private business in America. I predict that political antitrust legislation will confer on voters the same benefits that economic antitrust legislation confers on consumers. Once the wealth of northwest Washington is depleted by the resulting political price wars, politicians might be forced to compete by offering more efficient government. 

Correlation is not causality: income and health

MarginalRevolution:

This paper provides new evidence on the causal relationship between income and health by studying a randomized experiment in which 1,000 low-income adults in the United States received $1,000 per month for three years, with 2,000 control participants receiving $50 over that same period.

We can rule out even very small improvements in physical health and the effect that would be implied by the cross-sectional correlation between income and health lies well outside our confidence intervals.

In other words, in this randomized control trial (the gold standard in causal inference) higher income does not cause better health. The other explanation goes by the name of "selection bias" or "omitted variables bias," i.e., there is some other factor that causes both.  And this leads into the nature vs. nurture debate, covered so well in Steven Pinker's The Blank Slate.  (Earlier blog post on Pinker's book, Is Nature Stronger than Nurture.)

Book Review: The Venture Mindset

Summary by author in HBS:

"In the late 1970s, the firms on the S&P 500 had been on that list for 35 years, on average; by 2019, the average tenure was closer to 20 years. And rapid advances in technology mean that even the most stable industries risk being upended by start-ups that can reach scale on ever-faster timelines."

• Consensus decision making doesn't work because "contrarian ideas because those are the ones that deliver outsize returns....At successful VC firms, individuals are not trumped by the group." For example Reid Hoffman backed Airbnb even though his fellow investors were opposed to the idea. 
• Keep teams small: "Think of Amazon, where meetings with more than 10 participants are quite rare. Communication in smaller teams is faster and clearer, and there is greater accountability. The setup not only streamlines decision-making but also ensures that diverse perspectives—crucial for innovative outcomes—are heard and considered."
• Assign a devil’s advocate.: To ensure that opposing views are heard, many VC partnerships make it a standard practice to assign the role of contrarian to one person or to a small team. For example, a16z often designates a “red team” of people who argue against a deal. 

What interested me most was:

• discussion of "the jockey [the team] vs. the horse [the idea]."  A bad team with a good idea is doomed to failure but a good team with an OK idea can pivot to a new idea as they learn more.  
• the books hostility to "team building," "consensus," and "bureaucracy."   [professors learn this from faculty meetings]

[2019]: Do incentives imply inequality?

To engage students, I sometimes ask "who thinks income inequality is a good idea?" When no one raises their hands, I follow up with "who thinks incentive pay is a good idea?" Almost everyone raises their hands. Then I ask "who thinks incentive pay leads to inequality?" At this point, debate turns passionate, and my only role is to ensure that it stays civil.

I spent the morning searching for an old Economist article on this topic, and came up with these citations:

https://www.economist.com/special-report/2006/06/15/the-rich-the-poor-and-the-growing-gap-between-them

AMERICANS do not go in for envy. The gap between rich and poor is bigger than in any other advanced country, but most people are unconcerned. Whereas Europeans fret about the way the economic pie is divided, Americans want to join the rich, not soak them. Eight out of ten, more than anywhere else, believe that though you may start poor, if you work hard, you can make pots of money. It is a central part of the American Dream.

The political consensus, therefore, has sought to pursue economic growth rather than the redistribution of income, in keeping with John Kennedy's adage that “a rising tide lifts all boats.” The tide has been rising fast recently. Thanks to a jump in productivity growth after 1995, America's economy has outpaced other rich countries' for a decade. Its workers now produce over 30% more each hour they work than ten years ago. In the late 1990s everybody shared in this boom. Though incomes were rising fastest at the top, all workers' wages far outpaced inflation.

…

Other rich countries are watching America's experience closely. For many Europeans, America's brand of capitalism is already far too unequal. Such sceptics will be sure to make much of any sign that the broad middle-class reaps scant benefit from the current productivity boom, setting back the course of European reform even further.

https://www.economist.com/books-and-arts/2013/08/24/from-the-gut

Views of income inequality are divisive. Leftists blame uneven distribution on outside factors, such as poor education and corporate misconduct. Conservatives, meanwhile, tend to view these differences as a fair consequence of an individual’s choices and abilities. These beliefs have little to do with personal wealth: Mr Tuschman cites a California survey in which the poorest respondents were the most likely to say people get what they deserve, and were also the most religious. Yet he fails to explain properly why this might be.

https://www.economist.com/special-report/1999/05/06/the-politics-of-envy

Elsewhere, there is often great reluctance to believe that people are—or should be—motivated much by money. “Britain”, says Hermes's Mr Ross Goobey, “is a smaller, more enclosed society than America, and people still work for position, status, to be part of the great and the good.” Countries, like companies, will remain free to engineer greater or lesser degrees of equality. But there will be a price—as Sweden is discovering, and as Germany has already noticed. As the market for top talent grows more international, so it may force greater tolerance for inequality on countries that have spent half a century trying to root it out.

https://www.economist.com/democracy-in-america/2017/12/18/why-is-america-more-tolerant-of-inequality-than-many-rich-countries

A second reason Americans may differ in their view of inequality is that they seem not to trust the government to fix the problem—or to believe that this is part of its job. The researchers from Dalhousie University suggest that American respondents tend to be more sceptical about the role played by government in reducing inequality. And when Jan Zilinsky at the University of Chicago randomly exposed a sample of Americans to information about inequality in America, it made them depressed about the issue but no more likely to support cash transfers to the poor. Most Americans may dislike a tax bill that increases inequality. But that does not mean they would support one that did the opposite.

https://www.economist.com/leaders/2006/06/15/inequality-and-the-american-dream

Look around the world and the supremacy of “the American model” might seem assured. No other rich country has so successfully harnessed the modern juggernauts of technology and globalisation. The hallmarks of American capitalism—a willingness to take risks, a light regulatory touch and sharp competition—have spawned enormous wealth. “This economy is powerful, productive and prosperous,” George Bush boasted recently, and by many yardsticks he is right. Growth is fast, unemployment is low and profits are fat. It is hardly surprising that so many other governments are trying to “Americanise” their economies—whether through the European Union's Lisbon Agenda or Japan's Koizumi reforms.

Why fewer unicorns [firms worth $1B] in China?

Economist:

In 2020 Mr Xi began worrying about a “disorderly expansion of capital” as tech giants moved into businesses over which the state wanted tight control. Regulators lashed out, alarming entrepreneurs and investors. ...

The environment has become so forbidding that some firms are switching nationality [to the US]. ...

The Chinese government may now see the error of its ways. Mr Xi and the prime minister, Li Qiang, have been meeting entrepreneurs, urging them to invest and innovate. ...

US financing has fallen off, above, so the Chinese Government is stepping in. But, this investment comes with strings, and threats:

“Our job all day,” says one fund manager in Beijing, “is to figure out where the government is going to be investing and bet on it.” And investors who lose money, as VCs often do, risk graft charges when using state funds.

 

President Biden proposes nationwide rent control, then offers to help landlords who are hurt by policy

WSJ Editorial:

Higher mortgage rates and home prices are pushing Americans out of the home-buying market. This is contributing to higher demand for rental housing. Rents on average nationwide have risen 30% over the last four years and even more in Sun Belt states with fast-growing populations. Evictions are also increasing in many markets.

Enter Mr. Biden, who on Tuesday pitched conditioning “valuable federal tax breaks” on landlords capping rent increases at 5% annually. The White House says its plan would apply to “corporate” landlords with more than 50 units, covering more than 20 million units or roughly half the country’s rental stock.

If the "valuable federal tax breaks" offset the loss in profits from "capping rent increases," the only effect of the policy would be to increase the number of government employees who must oversee it.  

Sportsbooks Avoid Bets from Winners

Gamblers who manage to beat sportsbooks say they are often shut down when they succeed too much.

Dave Holmes, a sports bettor in Chicago, said that as he started to win more using a math-based wagering strategy, companies including BetMGM, ESPN Bet and Caesars began rejecting his bets.

It is not surprising that sportsbooks are limiting adverse selection. Limiting risk this way may or may not be fair, but it is profitable.

Is using data analytics for betting more like casinos banning blackjack players from counting cards or  more like day-traders developing sophisticated algorithms to arbitrage implied differences in security prices? Securities markets are positive-sum games and better analytics generate more informative price signals for many others to use. Gambling on sportsbooks, like gambling at casinos, is a zero-sum game and "the house" only earns money because the odds are in their favor. Eliminating that edge could make the whole enterprise nonviable. Or it could just mean that the house must do better at developing mechanisms that balance the odds.

Ignore the polls, prediction markets have Trump at 66% chance of winning the election

CNN Interview of Rutgers Statistics professor, Harry Crane.  Below are graphs of the prices of a Trump, Biden, and Harris futures contracts that pays out $1 if they become President.  In the last day, the Trump contract has increased by 6¢, indicating a 6% increase in President Trump's election chances.  The blue bars indicate the increase in volume in the betting market.  

Is Hermes leveraging its "monopoly" over handbags to monopolize shawls and belts?

From John Yun:

Aggrieved ... plaintiffs in California have filed a class-action suit against Hermès alleging that [customers are] “coerced” to spend $1,300 on a shawl or $820 on a belt before being “allowed” to hand over an additional $12,000 or more for a Birkin bag...

In antitrust language, the specific allegation is that Hermès is engaged in an illegal tying scheme—where the French company is leveraging its market power in handbags (i.e., the “tying product”) into ancillary goods, such as scarves, belts, jewelry, and shoes (i.e., the “tied products”).

Thus, the Birkin and Kelly bags represent what is called a “single-brand monopoly.” In support of this claim, the complaint identifies Air Jordans and the Love bracelet as other examples of iconic products that, apparently, also have no substitutes.

Of course, this theory makes no economic sense.

if Hermès really wanted to implement a plot to extract more money from its consumers—which is the end goal of a tying scheme—they could do so without tying. Both the Birkin and Kelly bags have a fixed supply because they are handmade. Given the overwhelming excess demand for these bags, it seems fairly clear that Hermès could charge significantly more for them.

Why is housing inventory for sale increasing in TX and FL?

From CalculatedRisk.com:

Q: What is causing the sharp increase in inventory in the South, especially in Florida and Texas?

Inventory is up sharply, and already above 2019 levels in many parts of Florida. I think the primary reason is the lack of affordable homeowners’ insurance because of destructive storms and rising sea levels due to climate change. A year ago I wrote: The Long-Term Housing and Population Shift. I noted that a combination of water availability and widespread use of AC drove the growth in the West and South over the last 60 years. However, climate change might make some areas further north more desirable. I think we are starting to see the start of that trend

Brainiacs drive growth, but our education system is producing fewer of them

The Economist:

 
Better educated students drive growth, and growth makes the pie larger.

"...pushing up maths and science skills in the workforce by an amount equivalent to around 25 points on pisa tests (roughly the gap that separates American teenagers’ maths scores from those of their more numerate British peers). They found that this would increase annual gdp growth in rich countries by half a percentage point. They reckon that if a country were to start pumping out these smarter youngsters in 2030, it would finish the century with an economy about 30% larger than otherwise."

Growth means that we avoid a zero-sum fight over a fixed pie.

Incentives matter: induce labor to avoid taxes

 From MarginalRevolution:

There is in fact a pronounced “baby bump” in December. ...

Why? In the US, ... an extra child brings you a $3,600 child tax credit per year.

So — speaking strictly about the tax implications, of course — a New Year’s Eve baby is better than New Year’s baby: You can claim that little bundle of joy as a dependent for the entire year, even though they were only there for a day of it. 

Ranking countries by GDP/person

 Economist:  Take America first. Its gdp has been the largest at market exchange rates for over a century. But by income per person it falls to sixth, behind Luxembourg (first) and Switzerland (second). Adjusting for America’s higher prices pushes it down to ninth; accounting for its long workdays and limited holidays, to tenth. The results for China—the world’s second-largest economy in nominal terms—are even starker: it falls to 69th by gdp per person, 75th at local prices and 97th after accounting for hours worked.

Market Power and Political Power

The last four years of antitrust policy has reversed course on 40 years of a Chicago School inspired goal of promoting a "consumer surplus" in favor neo-Brandeisian"anti-bigness." In simplest terms, the Chicago School would ignore bigness, or firm profits, and only consider whether consumers are better off, for example as could be the case with economies of scale. Neo-Brandeisians' main argument is that this static calculation does not include all of the possible harm from bigness because bigger post-merger firms are better at skewing laws and regulation in their favor to the harm of consumers, for example by erecting legal entry barriers. 

Most academic antitrust economists, on the left and on the right, embraced the Chicago School thinking as more and more carefully conducted studies provided evidence for the ideas. The evidence for the Neo-Brandeisian view has largely been speculative. But recently, Cowgill, Prat, and Valletti have provided a model and some evidence that merging firms significantly increase their post-merger lobbying expenditures. This is not conclusive but it is a start. We still do not know if this lobbying effort tips the scales or is in response to a knee-jerk anti-bigness bias. But it is a welcome contribution. The future of antitrust policy should be settled by evidence and not polemics.

The last refuge of a vacant liberal mind: "Greedflation"

During the debate, President Biden once again blames inflation on corporate greed.  This follows an old, albeit-debunked, strategy that I first heard about as undergrad in the 1970's.  Here are some modern takes on it

 NYT (12/23):  

As rising inflation threatens his presidency, President Biden is turning to the federal government’s antitrust authorities to try to tame red-hot price increases that his administration believes are partly driven by a lack of corporate competition.

On Christmas 2021, the headline in the NY Times business section was "As Prices Rise, Biden Turns to Antitrust Enforcers."  Larry Summers immediately bashed the idea:

“The emerging claim that antitrust can combat inflation reflects ‘science denial,’ ” tweeted Harvard economist Lawrence Summers, a senior official in the Obama and Clinton administrations. “There are many areas like transitory inflation where serious economists differ. Antitrust as an anti-inflation strategy is not one of them.”

In the late 1970's at Stanford, I heard John Kenneth Galbraith, the economist in charge of price controls during WWII, call the idea "the last refuge of a vacant liberal mind."  The turn of phrase was so elegant and shocking--at the time, I was a liberal--that it has stayed with me.

Tractor Supply Ditches DEI, ESG After Online Attacks

• We will review and consider revising our current DEI goals while still ensuring a respectful environment. [Diversity, Equity, Inclusion]

• Withdraw our data on emissions and focus on our land and water conservation efforts. [ESG=Environmental, Social, Governance]

Stories: Bloomberg, Zerohedge

See also:

• The paradox of ESG investing
• What happens if we cannot measure ESG?
• How Saudi Aramco, world's largest oil company, became "green."

Higher interest rates in the US strengthen $ (or depreciate ¥)

Economist: The Japanese yen fell to around ¥160 against the dollar, its weakest level in almost 40 years. The currency has been falling because of the large gap in interest rates between Japan and America. 

• Investors earning 1% in Japan liquidate their investments, sell ¥ to buy $ to invest in the US where they can earn 5%; or
• Carry Trade:  Investor's borrow in Japan, sell ¥ and buy $ to invest in the US and earn money on the spread between the cost of borrowing (1%) in ¥ and what they earn on $ investments (5%).

 In both cases, the increase in demand for $ drives up the price of a $ (FX) relative to the ¥.

Why are house prices increasing?

 

It is likely that high mortgage rates are causing existing homeowners with low interest rate (3%) mortgages to stay in their current homes rather than buy new houses which would require taking out new mortgages at 7%.  This means that the supply of homes for sale is very low which drives up the price.  

Note that the supply of homes is usually measured by "months of inventory" which is calculated by asking "at the current rate of sales, how many months would it take to sell all the houses currently for sale?"  In the graph below, we see a negative relationship between months of inventory and the change in house prices.  When months of inventory is below 6 months, prices are likely to increase, and vice-versa.  

Currently there are four months of supply in the US.  But market definition matters here.  Most real estate markets are local, so it would be best to measure months of supply locally.  

Vertical Integration in Movie Distribution

A new paper, "Vertical Integration and Market Foreclosure in Media Markets: Evidence from the Chinese Motion Picture Industry," by Gil et al. casts even further doubt on vertical foreclosure strategies. The claim is that a retailer integrated with a producer could increase profits by disadvantaging independent producers. Alternatively, vertical integration could alleviate double marginalization issues so that profits increase by offering lower prices to more consumers. In the US, the Paramount decision required movie studios to divest their movie theaters based on the possible competitive harm from vertical foreclosure. But China still has both integrated and independent theaters.

... there is no evidence consistent with anticompetitive input and customer foreclosure in integrated theaters. On the one hand, integrated and independent theaters screen the same share of integrated and independent movies. On the other hand, revenue differences between continued theater-owned movies and discontinued independent movies are inconsistent with customer-market-foreclosure motives given existing differences in distribution incentives between integrated and nonintegrated structures.

The authors go on to estimate that integrated theaters deliver a higher level of utility with integrated movies due to moving down the demand curve with lower prices.

This finding is important to current events in antitrust policy for two reasons. Part of the FTC's current Amazon case, as with its other enforcement vertical actions, alleges foreclose of independent merchants. Movie distribution was the poster child for this theory. More broadly, it underscores the power of a consumer surplus standard. Why interpret the law so severely that it harms consumers?

More rent hikes coming?

 

From WSJ:

The least affordable home-sales market in decades is compelling more renters to stay put. Large apartment owners say fewer renters are moving out to buy homes than ever before, put off by record home prices, limited inventory and higher mortgage rates.

Competition comes to Private Credit

From The Economist:

The history of leveraged finance—the business of lending to risky, indebted companies—is best told in three acts. High-yield (or “junk”) bonds were the subject of the first. That ended in 1990 when Michael Milken, the godfather of this sort of debt, was sent to prison for fraud. In the second act, the extraordinary growth of private equity was financed by both junk bonds and leveraged loans, which require companies to pay a floating rate of interest rather than the fixed coupons on most bonds. Private-credit investors are now supplying the third wave of money. Since 2020 such firms, which often also run private-equity funds, have raised more than $1trn. ...

America’s $4trn leveraged-finance market now comprises junk bonds, leveraged loans and assets managed by private-credit firms, in roughly equal proportions. Yet owing to fierce competition to refinance debt and fund scarce new deals, private credit’s prospects may no longer dazzle. ...

As high interest rates put balance-sheets under pressure, for example, borrowers of private loans are increasingly negotiating to defer their interest payments. But healthier firms can afford to shop around. ... borrowers securing coupons that are 1.6 percentage points lower on average. Private lenders have had to slash the cost of their loans to compete. ...

the most likely outcome is that the line separating public and private loans will become increasingly blurred. That would mean a busy future for private credit—but one that is more commoditised and less profitable.

China's anti-growth policy

...China’s stockmarkets began falling in the second half of 2023, then plunged in early 2024 (see chart).

This led to regulatory scrutiny of new IPO's 

...On top of on-site inspections, regulators now review companies’ past business deals and trawl through executives’ bank accounts, according to Reuters, a news agency. Faced with this, at least 80 companies withdrew their ipo applications in the first quarter of 2024.

When IPO exits are harder, fewer VC's want to invest:

...Just five Chinese companies listed on domestic bourses in April, down from 35 in April 2023. The ipo market raised 80% less capital in the first four months of 2024 than in the same period the previous year.

RIP James Lawson

James Lawson taught nonviolent resistance to a generation of civil rights leaders that ended government-imposed discrimination.  

•  The protests forced a reckoning, and Nashville became the first Southern city to desegregate its downtown lunch counters in 1960. 
• Vanderbilt expelled Lawson in 1960 due to his leadership role in the sit-ins. Lawson later reconciled with Vanderbilt, and the university created an institute in his honor.

Obituary:  Axios Nashville

Price controls deter voluntary, wealth-creating transactions: CA minimum wages increase to $20/hour

 When staking out a position, it is rare for a politician to acknowledge any tradeoffs.  For example, a politician in favor of a minimum wage increase will praise the increased wages for workers, but won't acknowledge that businesses will shut down or fire workers.  That job is left to those on the other wide of the issue:

Nearly 10,000 California fast food workers have been firedthanks to the state's new $20 minimum wage, according to the California Business and Industrial Alliance (CABIA), which slammed Governor Gavin Newsom for the law which went into effect April 1.

Source: ZeroHedge

Why organizations commit less visible errors or why Anthony Fauci didn't test

When one type of error (e.g., doing something you ought not to do) is less visible than the other type of error (e.g., not doing something that you ought to do), employees are more likely to commit less visible errors, as they are less likely to be punished for doing so.  

In addition, employees have an incentive to conceal errors, which may explain the lack of follow up, e.g., to test whether action or inaction was the right thing to do.  For example, Anthony Fauci conducted ZERO tests of non pharmacological interventions (lockdown, social distancing, wearing masks, border closure), despite claiming that doing so would help prevent spread of the virus.  

Testing would have made visible the costs of Fauci's errors which could explain why he didn't test.

Here are other posts related to managing errors.

When life imitates comedy: FTC's Amazon Flip Flop

Nobel Laureate Ronald Coase once quipped that he left antitrust because "When prices go up, its monopolization, when prices fall it's predation, and when they stay the same it's collusion." As if to illustrate this idea, the FTC's Chair is reversing herself to bring a case against Amazon.

On one hand, booksellers argue that Amazon uses its clout to obtain and sell books at lower prices, forcing them to cut their own prices [Chair Khan's former position]. On the other, the FTC says Amazon uses its market power to block other businesses from selling at lower prices [Basis of FTC's current position]. (WSJ)

When an Agency with enormous prosecutorial discretion abandons principle, it loses credibility:

The progressive antitrust movement that Khan leads is ideologically incoherent. Progressives believe that the government should break up Amazon simply because it is a big company and will say or do anything to reach their desired goal. The FTC’s and ABA’s arguments, while contradictory, both amount to the legal equivalent of flinging spaghetti at the wall and seeing what sticks. (Nat'l Rev)

There is also a rumor that the FTC might be offering VERA-VSIP (early retirement with an incentive payment), perhaps to rid themselves of the remaining staffers who still care about principle, i.e., protecting competition.  

DISCLAIMER: I have worked at the FTC and done consulting work for Amazon.

Costco's Price Discrimination

There is a great episode of the Acquired podcast about the Costco business model. It is three hours long and full of history, anecdotes, and, importantly, lots of business insights. One is just how important two-part pricing is to their business model. Customer/members pay an annual membership fees to pay much lower prices. Costco limits product markups to 14% when the standard for traditional retailers is 100%. This means that 70% of the net income is from memberships and only 30% is from retailing. Another is how scale economies feature throughout their operations, from pallets on the floor to the Kirkland Signature brand. Their low margins and scale economies are meant to deliver huge consumer surpluses that they then extract with the membership fee.

Migrants Bear Costs of Biden's Changing Immigration Policy

PHOTO May 23, 2024: Migrants in Salina Cruz, MX, heading to US 

NY Times: Migrants from all over Central and South America's are exhausting their savings to come to the US, 

But instead of landing closer to the U.S. border, they are being hauled roughly 1,000 miles in the opposite direction — deep into southern Mexico in a shadowy program meant to appease the Biden administration and ship migrants far from the United States.

Mexican authorities rarely publicly acknowledge the busing program, making it much less contentious than the efforts by Republican governors to transport migrants to blue states that have become political theater in the United States.

BOTTOM LINE:  

In the first four months of 2024, U.S. border apprehensions plunged in one of the steepest declines in decades, giving the Biden administration some relief as immigration persists as a top voter concern in this year’s election.

HT: Chris

Why the shift from owning to renting, and why are rents going up? (and rent controls don't help)

Economist:

A sagging jobs market, high house prices, rising rents and tighter mortgage rules left many youngsters less able to afford a first property.

Owning is too expensive, so there is an increase in demand for renting, and rents have increased from 30% (for boomers) of income to 40% for todays homeowners.

And zoning controls prevent new supply from reaching the market

Rent controls first became popular in the aftermath of two world wars—a time when tenants were a large voting block. Milton Friedman attacked controls in an essay in 1946, warning that they would result in the “haphazard and arbitrary allocation of space, inefficient use of space, [and] retardation of new construction”. Liberal economists regard controls as a zombie policy.

No city today better demonstrates the distortions Friedman warned of than Stockholm. On paper Sweden’s system of rent controls, the hyresreglering is the strictest in the world. A powerful tenants’ union negotiates with landlords, holding rents as much as 50% below the market. In practice lots of people lose out. Swedes must join waiting lists for a rent-controlled apartment: in central Stockholm the average wait is 20 years; across the city it is about half that. Many who reach the front of the queue are in their 50s and own a home. Young Swedes often have to put up with expensive sublets agreed to under the table, laments Mr Persson.

Is there anything competition cannot do?

Politico: School choice programs have been wildly successful under DeSantis. Now public schools might close.

Gov. Ron DeSantis and Florida Republicans have spent years aggressively turning the state into a haven for school choice. They have been wildly successful, with tens of thousands more children enrolling in private or charter schools or homeschooling.

And, competition from private schools is putting the market pressure on underperforming public schools.

“If your product is better, you’ll be fine. The problem is, they are a relic of the past — a monopolized system where you have one option,” Chris Moya, a Florida lobbyist representing charter schools and the state’s top voucher administering organization, said of traditional public schools. “And when parents have options, they vote with their feet.” 

Booksellers are Straying from the Script

The parties that the FTC's case against Amazon is intended to protect are contradicting key elements of the FTC's case. A WSJ opinion claims that the FTC would like to prevent the American Booksellers Association (ABA) from permission to intervene in the case. “We believe the facts we bring to the table will significantly bolster key arguments made by the FTC in their already strong and compelling case,” says ABA CEO Allison Hill. The FTC wrote a brief opposing this "help" from the ABA because the ABA contradicts some FTC claims about the case.

What is the market definition?

The FTC narrowly defines the market in which Amazon competes as “online super stores”—namely, Walmart, Target and eBay—to argue that it has monopoly power. But small booksellers rightly argue that they also compete with Amazon.

Higher prices or lower prices?

On one hand, booksellers argue that Amazon uses its clout to obtain and sell books at lower prices, forcing them to cut their own prices. On the other, the FTC says Amazon uses its market power to block other businesses from selling at lower prices.