Monday, April 16, 2012

Following on Fridays post about corruption, this article lays out a nice example of how things work.  They calculate that 80% of your cell phone bill is a direct result of corruption.  They tell a story of the squelching of a small telecom upstart and how large corporations collude with politicians and regulators to stifle innovation and competition, foster monopolization, and basically vacuum money out of the economy:

Why does the FCC and why does Congress want us to have high cell phone costs?  Well, they don’t, not really.  It’s more accurate to say they don’t particularly care about our problems, but are responding to an entirely different problem that is completely unrelated to cell phones.  The government is responding to the need for campaign contributions for politicians.
. . . politicians make sure that phone companies get to buy up other phone companies, eventually creating a near monopoly situation.  And we all know that monopolies charge more and deliver less to their customers.  As telecom legal expert Marvin Ammori said, “It’s proven cheaper to buy politicians than invest in high speed broadband or to provide good customer service at a fair price. ”
In other words, we are stuck with big bad cell phone companies not because those companies are good at providing cell phone service, but because they are good at corrupting markets through political donations. 
With similar stories playing out in every profitable industry it's no wonder that the US economy we experience feels so sclerotic despite all that money pooling at the top.