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December 12, 2015

Anatomy of an Oligopoly: the Beer Industry

By Jeff Nielson, Sprott Money News 
Why has the standard of living across most of the Western world fallen by more than half over the past 40+ years? Why is Western unemployment at an all-time high, with more than 100 million permanently unemployed people who are not allowed to work? Why does most brand-name beer taste like swill?
Most readers will see no connection between these questions. Some will see a connection between the first and second, and very few will see a common link between all three. In fact, we can answer all of these questions (at least in part) the same way, and the answer is spelled O-L-I-G-O-P-O-L-Y.
For those reading this who are unfamiliar with this concept, let’s take a moment for the definition of terms. An oligopoly is where a handful of corporations (or corporate fronts) have total control over a particular industry or sector. Once they have such control, these corporations inevitably engage in predatory behavior, such as price-gouging consumers and bribing public officials in order to obtain preferential treatment .
Such behavior is so common in the corporate world that Western (“capitalist”) societies have some of their strongest laws– our “anti-trust” laws – in place to prevent any group of corporations from acquiring such a chokehold. Unfortunately, our governments have ceased to enforce those laws (except in very rare circumstances), for more than an entire generation.
Why have Western governments collectively ceased to enforce some of our most important laws? How have these governments been so corrupted? Again, we can reply to these questions with a single answer: because the largest corporations have (systematically) bribed our public officials in order to obtain preferential treatment.
We see endless examples of this political corruption in the service of the mega-corporations, such as in theheadline below.
Obama Seeks Trade Deals Sought by Biggest U.S. Companies
Want more evidence? Just look at all of the corporate welfare handed out to these corporate welfare-bums: trillions every year, in direct and indirect hand-outs. The larger the corporation, the more it mooches.
Our governments slash-and-burn our social programs, renege on pension obligations and do nothing about extreme unemployment, extreme poverty and the (even more despicable) epidemic of homeless people, all the while claiming that “we” don’t have the money to continue to properly fund necessary programs. Meanwhile, these same Traitor Politicians can always find a few billion more (of our money) to stuff into the pockets of their corporate masters.
What is the direct connection between oligopolies, which now infest virtually every sector of our economies, and record unemployment? It’s very simple: large corporations don’t create jobs. Large corporations destroy employment . This was the subject of a detailed three-part commentary. Those readers who want to read the complete explanation of how our large corporations create (massive) unemployment should refer to that previous series.
What is the direct connection between oligopolies and the collapse in our standard of living? Simple. The collapse in our standard of living has two components: massive unemployment and the staggering plunge in our wages (in real dollars).
The link between oligopolies and unemployment has already been noted. In addition, oligopolies = low wages (for everyone not in management). Why? Because, by definition, oligopolies destroy competition , and it is competition that leads to higher wages for employees.
How do companies “compete” with each other? One way is by competing for employees, with the workers being the winners of this competition. The best workers are offered the highest wages , which provide further incentive for employees to engage in their best efforts. By definition, oligopolies mean zero competition, and zero competition (plus massive unemployment) equals the lowest wages .
For many readers, these connections and explanations will be somewhat familiar and thus easily understood. What is more complex, and much less understood, is why the fact that the beer industry is an oligopoly is the sole reason why most “brand name” beer tastes like swill.
First some details on the beer oligopoly, via Bloomberg:
…the American beer market was already shifting to favor a handful of brewers. Anheuser Busch, Miller Brewing Company, and the Adolph Coors Co. led the way. From 1947 – 1981, the five largest U.S. brewers grew their market share from 19 percent to 76 percent . Last year they controlled 84%.[emphasis mine]
This is totally illegal. This is also a classic example of precisely the sort of scenario that our anti-trust laws are supposed to prevent from ever occurring. Why? Because once a handful of corporations have such overwhelming control over an industry (and its market), they can permanently prevent any other/new companies from competing against them.
How, precisely, do oligopolies destroy competition? This aspect of their predatory nature comes in two forms. One is simply buying-out any/all competitors who try to enter the marketplace. If the would-be competitor refuses to sell (or they refuse to buy), the oligopoly switches to Plan B.
“Plan B” is to destroy the would-be competitor, directly. The corporate conspirators do this via scorched-earth. They price their product below the cost of production, deliberately absorbing a loss on their operations. However, with their massive size (and massive financial resources) these mega-corporations could, if necessary, sustain such losses for years. Conversely, the much smaller, would-be competitor has only a tiny fraction of those resources, and thus can only continue to remain in business (at below-cost prices) for a much shorter period of time than the Corporate Cannibals of the oligopoly. Death by starvation: the oligopoly wins.
As a more general alternative, the oligopoly funnels some additional bribery-dollars to their political servants, getting them to enact “regulatory” changes to the sector that inhibit or even prohibit new competitors from entering the marketplace. Still, most readers will see no connection between the chokehold of these Corporate Cannibals and the swill-in-a-bottle they call “beer.” This brings us to another “quality” of all oligopolies: poor quality.
In a world where competition exists, what is another way in which companies compete against each other? They compete in terms of quality. In a world of competition, the best quality is rewarded (with increased market share), and so competing companies strive to produce the best product possible.
In the no-competition world of the oligopoly, quality becomes irrelevant. By definition, oligopolies forceconsumers to buy their products, no matter how poor the quality. If they wanted to, these “beer” makers could pee in a bottle and sell that to consumers, assuming those doing the urinating had a high enough blood-alcohol content. Meanwhile, cutting costs (by reducing the quality) fattens the bottom-line for the Corporate Cannibals.
Many readers will remain unconvinced. You can’t “force them” to buy particular products. Those skeptics need to read further into the Bloomberg article previously referenced:
Anheuser-Busch InBev, the world’s largest beer company, and home to more than 200 brandsincluding Budweiser, is putting together an offer to acquire SABMiller, the world’s no. 2 brewer.[emphasis mine]
This is ludicrously illegal. If our corrupt governments had not completely abandoned the Rule of Law, Anheuser-Busch would never even attempt such a take-over, because (being so totally illegal) they would never-in-a-million-years get approval for such a transaction.
What would be the effect of such a take-over on consumers? Bloomberg, which is a part of the Corporate Media oligopoly, can’t help but gloat over the significance. It does so by describing how a “beer store” would look after the take-over.
This new mega-beer company could control a staggering 71 percent of the market, including every beer on the shelf here.
Drink this “mega-beer company’s” swill-in-a-bottle, or drink no beer at all. Your choice. Note that even if this illegal take-over is not approved, all it means is that two companies will keep manufacturing swill-in-a-bottle – and forcing you to drink it. See how oligopoly-member Bloomberg laughs at the slack-jawed serfs who drink this swill:
Bud Light brand, the no.1 selling beer in the country, has about $6 billion in annual U.S. sales and, despite its poor reputation among beer aficionados, accounts for one in every six beers Americans drink.
Translation? The serfs will drink whatever swill we put into a bottle, no matter how poor the quality, as long as we “market” it with enough girls in bikinis.
This is the world we have created for ourselves. We ignore the rampant corruption in our governments. Weignore the refusal of these puppet governments to enforce our laws. We ignore how these oligopolies have pillaged and plundered our economies – laughing at us as they do so.
If readers are not already nauseated, stay tuned. Next for publication is an analysis of the Food Oligopoly and what they deceive us into putting into our mouths. Warning: for strong stomachs, only.
Courtesy of Jeff Nielson for Sprott Money News 

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