As I'm writing this the stock market is having the opposite take on this than I Would have expected. Netflix is down while the providers (ATT, Verizon, Comcast) are up.
Is there something going on here that's not obvious?
Is there something going on here that's not obvious?
In a nutshell, in order for big business to cut production and raise prices, they need the state to act as an enforcer or regulator for their cartel. Their strategy has been to lobby under the guise of a public good, in this case "net neutrality" (a term which I'd bet has its origins with some very expensive marketing/PR firm), but the end effect is for state regulation to create artificial scarcity and subsidize costs to increase profits for big business. This is state capitalism, or corporate liberalism - how corporatism operates in the U.S. Big corporations want regulation because they fear competition.
Before the Progressive Era, big businesses wanted to cut production and increase prices, but failed in doing so in the (relatively) free market that existed at the time. New competitors would arise or cartel members would cheat and lower prices, and the cartel agreement would fall apart. This kept prices low, trending toward the cost of production, which was great for consumers.
However, with state regulation, cartels can be maintained. The state can raise barriers to entry to protect cartel members from competition, and it can also bring down the hammer on cartel members who cheat and try to lower prices.
Of course, this isn't how it's sold to the public. Lobbyists tell the story of how "big bad corporations" need to be reigned in for the public good by benevolent big government, and voters seem to buy it every time. Behind the scenes, big business is colluding with the state for monopoly privilege. See the history of railroads, Big Agri, Big Oil, the telecoms, the Federal Reserve for examples of this playing out.
The state has granted corporations so many privileges, it's really quite unbelievable -- tariffs, patents, copyrights, licensing, regulation -- all of this subsidized by the public to grant corporations the privilege of giving us less for more. For our own good, of course.
This is how the rich get richer, and wealth continues to centralize and concentrate. By conning the public, and using the state as a blunt force instrument to keep competition out, and keep prices high.
Murray Rothbard gave a short lecture on the history of progressive regulation [1], and he also wrote a book called Power and Market [2] if you want a detailed overview of power dynamics in the market.
Rothbard was heavily influenced by Gabriel Kolko, a Progressive Era historian and leftist anti-capitalist, who wrote:
> Despite the large number of mergers, and the growth in the absolute size of many corporations, the dominant tendency in the American economy at the beginning of this [the twentieth] century was toward growing competition. Competition was unacceptable to many key business and financial interests... As new competitors sprang up, and as economic power was diffused throughout an expanding nation, it became apparent to many important businessmen that only the national government could rationalize the economy. Although specific conditions varied from industry to industry, internal problems that could be solved only by political means were the common denominator in those industries whose leaders advocated greater federal regulation. Ironically, contrary to the consensus of historians, it was not the existence of monopoly that caused the federal government to intervene in the economy, but the lack of it.
[1] https://www.youtube.com/watch?v=62rI8OYFzGg
[2] http://mises.org/sites/default/files/Man,%20Economy,%20and%2...