Monopolies and regulation/deregulation and suchlike

[Dave2002]

Here is a news item about the possible take over of O2 - http://www.bbc.co.uk/news/business-30946005

One effect, if this goes ahead, is the reduction in the number of mobile phone operators. I can remember the end of the 1970s and the 1980s when a movement to split up monopolies such as BT spread around the world. It may have started in the USA. Some benefits were intended to come out of this, though in the case of technology companies it is surely difficult to say that they did, because there have been very significant improvements which may have had nothing to do with how companies have been organised. It is not that there haven't been improvements - there have - but to attribute these to a splitting up of companies may, with hindsight, be hard to prove.

The effect of some of these measures was, initially, the formation of a modestly large number of different companies operating within one field. A few years later the smallest companies had usually withered away, while some had coalesced to form larger, more viable companies. Decades later some of the more viable companies had themselves merged, or takeovers had reduced the number of companies in the market. There may be technical differences between mergers and takeovers (I don't know), but the effect of each is to reduce the number of competing companies in each market.

Perhaps this kind of cyclic process is inevitable. It certainly seems to have happened in the phone market (land lines at first, now mobile networks as well) - so that after 20 or 30 years we are almost back to the same kind of monopoly situation which prevailed in earlier years. Does this mean that the whole effort of trying to split up large organisations is, in the long term, pointless?

[Eine Alpensinfonie]

Related to this, high street pharmacies are being crushed by one giant: Boots. There might have been just one Boots in a town a few years ago, but over time, this company has, bit by bit, taken over the independent smaller companies. Where I live, there are three pharmacies - all of 'em Boots - and they all stock the same things. It has become a near monopoly in surrounding locations too, yet no-one seems to have noticed.

[LeMartinPecheur]

What's the surprise? Monopoly is the only logical outcome of unregulated capitalism. The weakest goes to the wall.

In UK we do have some checks and balances in the Competition and Markets Authority (formerly the Office of Fair Trading). Allegedly.

[Dave2002]

At a much smaller, but local level, one taxi firm has now surreptitiously driven most of the other operators out of business, or taken them over. We used to have a choice, but now if we are unable to get a taxi from one of the few remaining drivers who has managed to stay at least partially independent, we ring round the remaining firms, and discover that on each phone call we are talking to the same person, who has gobbled up all the business. As we live in an area near, but not too near, to airports, getting a taxi to take us to and from the local station (about 2 miles) is often very difficult, or expensive (now up to about £15! Note that's more than a taxi in central London re time and distance) because the taxi company would rather take people to and from the airport for at least £50 per time. We do not have any licensed taxis in our area.

So much for competition being good for the consumer.

[Flosshilde]

What's the surprise? Monopoly is the only logical outcome of unregulated capitalism. The weakest goes to the wall.

So much for competition being good for the consumer.

The idea that capitalism benefits the consumer is one of the biggest fallacies/cons going, one perpetrated/popularised by a certain female prime minister and followed by her successors.

[Eine Alpensinfonie]

When gas and electricity were publicly owned, there was probably greater competition than there is now. Providers today can sell both, whereas before the two fuels were competing against each other.

[Dave2002]

The idea that capitalism benefits the consumer is one of the biggest fallacies/cons going, one perpetrated/popularised by a certain female prime minister and followed by her successors.

It is my belief that the strangulation of BT and the efforts to privatise it set back the development of the domestic availability of broadband and internet by about 15 years. Even in the 1980s BT had viable systems which could have been deployed, but the deliberate restrictions to allow foreign "competitors" in was very damaging, according to some. I'm not sure that it's quite as simple as that, and arguably some good came out of the way things were done. Perhaps we would not have had ADSL - though on the other hand we could have moved directly to fibre broadband, without going up what may have been an unnecessary side alley. As with the French Revolution, as viewed by Mao, it's "too early to tell"(!!!), but some may indeed question whether Mrs T's persuasions actually set us back more than we really needed.

[richardfinegold]

In the States, we still sort of have a Private Health Care System, except that the Corporate Trends of Consolidation have now caused all Hospitals and Providers to join big "Networks" (which suppossedly enhances everyone's Bargaining Power), which are unwieldy Corporate Conglomerations. Business School Methods are applied to Health Care, with some improvements in efficiencies but more predictably with deep cuts in care. I threw my lot in a year ago (I am a Physician) with one and while I have had certain advantages overall I am very unhappy and suspect I will be working elsewhere and perhaps for more than one Employer before I play out the string (I turned 57 yesterday, another 8 years at this point).

[gradus]

In the States, we still sort of have a Private Health Care System, except that the Corporate Trends of Consolidation have now caused all Hospitals and Providers to join big "Networks" (which suppossedly enhances everyone's Bargaining Power), which are unwieldy Corporate Conglomerations. Business School Methods are applied to Health Care, with some improvements in efficiencies but more predictably with deep cuts in care. I threw my lot in a year ago (I am a Physician) with one and while I have had certain advantages overall I am very unhappy and suspect I will be working elsewhere and perhaps for more than one Employer before I play out the string (I turned 57 yesterday, another 8 years at this point).

I had the impression that medical insurance companies more or less ran private US health care system but perhaps I'm wrong, are these the organisers of the 'Networks' to which you refer? In the UK it's hard to get a handle on what actually happens with healthcare anywhere, it being such an emotive subject. In the US, is the alternative to joining the big boys some sort of freelance solo existence in which case who are the other 'Employers'.
Interesting to hear from you on this Richard.

[richardfinegold]

I had the impression that medical insurance companies more or less ran private US health care system but perhaps I'm wrong, are these the organisers of the 'Networks' to which you refer? In the UK it's hard to get a handle on what actually happens with healthcare anywhere, it being such an emotive subject. In the US, is the alternative to joining the big boys some sort of freelance solo existence in which case who are the other 'Employers'.
Interesting to hear from you on this Richard.

The Insurance companies have a lot of clout. This has led to Corporate Consolidation on the part of the Providers. Large networks of Doctors and Hospitals negotiating together ae supposed to get the best rates out of the Insurance Companies, essentially by behaving monopolistically. If you are a Private MD as I recently was you get the worst contracts and od not get economimies of scale. The regulatory environment makes it difficult for any solo Practitioner to do all that is required and still stay afloat.

[Dave2002]

I had the impression that medical insurance companies more or less ran private US health care system but perhaps I'm wrong, are these the organisers of the 'Networks' to which you refer? In the UK it's hard to get a handle on what actually happens with healthcare anywhere, it being such an emotive subject. In the US, is the alternative to joining the big boys some sort of freelance solo existence in which case who are the other 'Employers'.
Interesting to hear from you on this Richard.

My own experience as a Brit in the USA was that health care was in fact quite good - for those who were in appropriate work. However the whole market thing gets distorted, as people would also take jobs they didn't particularly like if they included health insurance. Thus we knew one ex pat Brit lady who worked in a store - think it was JC Penney - and her main motivation was that the employer provided the healthcare. She didn't dislike her job I recall, but she also felt she couldn't leave it. So jobs get linked to health care providers. Also, some healthcare provision is for the whole family, so one person may get locked into a job "simply" to ensure that all the family get covered.

Another linkage, which we don't have in the UK, is between the medical practitioners and the insurance companies. In the UK, at least for NHS patients, patients do not have to undergo tests or check ups simply because someone else says so. Whether that's a good thing or not - well - you can think about that - but there is "free will". In the USA failure to take monitoring steps such as check ups can invalidate one's insurance. For example, breast cancer screening - for women. Failure to have a scan or a cervical smear test can invalidate the insurance. Briefly returning to the "free will" business - there can be problems if some other organisation tries to dictate to the patient what monitoring is required. Breast cancer screening gives a good example - as in Sweden there were cases of women being called for screening every 3 months. It turned out that each screening session generated the equivalent of about £8 (say $12) for the hospital - and some hospitals were deliberately asking people for screening at ludicrously frequent occasions simply to increase revenue. This was, of course a scam, but it took some while to be uncovered and stopped.

The UK NHS still has rather a laissez faire approach to letting patients decide what to do with their lives. However, private medical care may be run on similar lines to that in the USA - with insurance companies trying to dictate what the patients must do, or risk being uninsured. I have very little experience of private medical insurance in the UK, though some experience of private treatment.

Finally, and contrary to what many in the UK believe, there is a public health care system in the USA, and sometimes it is very effective. Indeed I heard of one person who went to visit a public hospital, and then had a heart attack. The lady had health insurance and could have been moved to another hospital, but it was considered too risky, so the team in the public hospital looked after her for a few days - probably saved her life - after which she was then transferred back to the hospital linked to her health insurance. Another person I knew of (son of a colleague) had I think a motor bike or car accident, and again it was the public hospital which took care of him and gave him satisfactory treatment.

[gradus]

Thanks Richard, it sounds like Hobson's Choice for you.
Dave, I suppose that in a private insurance-controlled health system focusing on risk avoidance, there is a sort of logic in requiring people to be medically screened for serious diseases or face non-payment of insurance claims when something serious is discovered but it sounds hateful.
I've often wondered just how strong the case is for widespread preventative screening as opposed to trying to persuade people to visit the doctor when symptoms present. I have assumed that the case for health screening is self-evident but I believe that in some conditions, screening produces false positives quite often, thus much unnecessary worry and unquantified but perhaps substantial cost. If this is so, is a case to be made for reducing screening programmes for certain conditions with savings being used to fund more research into cures? Just a thought!