Monopolies Everywhere

By James Kwak

Thomas Frank has a review in the Wall Street Journal (behind a paywall, but Mark Thoma has an excerpt) of Barry Lynn’s new book Cornered, which apparently documents the prevalence and power of monopolies and oligopolies in lots and lots of industries, not just finance. (I guess one response would be that we have been too harsh on the banks, since everyone’s doing it; but I still think banks are special for all sorts of reasons I won’t go into here.)

The problem, as Frank says, is that “the antimonopoly tradition is a museum piece today, and antitrust enforcement has been largely moribund since federal officials during the Reagan Revolution lost interest in this most brutal form of economic intervention.” Antitrust enforcement became a question of measuring predicted changes in consumer welfare, which meant that it became the province of models. More importantly, we are now in at least our fifth consecutive administration that sees big, profitable companies as inherently good, without stopping to question how they extract those profits.

The solution is already there to hand — go back to enforcing the existing antitrust laws. And appoint Supreme Court justices who are interested in enforcing them. But that assumes that the administration cares about the issue. Do they?

(For one thing, I applied for an internship in the DOJ’s antitrust division for this coming summer . . . and I was turned down.)

46 responses to “Monopolies Everywhere

  1. Perhaps I’m naive, but I always thought that “monopoly” did not automatically mean bad. If a company earned a monopoly by simply being better than all their competitors, they deserved it unless they got complacent and started abusing said monopoly.

    Granted, it’s not an argument against enforcing the laws, but it’s certainly an argument for being careful not to be too gung ho about them either.

  2. At minimum, the Fed will exceptionally allow a duopoly (Visa/MasterCard, AMD/Intel) and prefers a triumvirate. No serious competitive theorist (or practitioner) accepts monopolies as the unique fruit of “innovation”.

  3. Well, James, being a prolific blogger in and around the area of economics is a pretty good reason for the DOJ to turn someone down. It’s a choice you make that enhances some options and forecloses others. And I don’t know, of course, whether that factored into the DOJ’s decision. But the possibility that they might be compromised by your past (or future) blogging — think of (appearance of) conflict-of-interest or (appearance of) bias issues etc. — is more ethan sufficient reason for them to pass. In fact, they might be irresponsible if they did not.

  4. Walter Jesse Smith

    The FED has a rigid tradition of doing nothing in the public interest when it might conceivably in the wildest imaginations of the fiercest & most reckless bankers/financiers possibly someday impinge upon their “no matter how ill-conceived” banking interests. For once, the anti-FED crowd has the correct assessment of the FED: strip away all those public interest powers the FED refuses to vigorously embrace immediately and without internal restraint. Until that is done, the FED continues proving itself to be nothing but the reckless lap dog of the worst bankers/financiers.

  5. “For one thing, I applied for an internship in the DOJ’s antitrust division for this coming summer . . . and I was turned down.” Hire a blogger?

  6. I’m interested in Mr. Lynn’s book, but keep in mind that the alternative view of the history of antitrust enforcement is that beginning in the 80s antitrust has moved toward the realm of the empiracle and toward an actual economic underpinning based on the now almost uniformly accepted view that antitrust is about maximizing consumer welfare.

    There are some truly astounding antitrust cases that pre-date this evolution.

  7. Incidently, a google search for new age of monopolies will get around the paywall, although Thoma quotes most of the piece.

    Thomas Frank really hasn’t been paying attention if he wasn’t aware of some of the things he says were new to him.

  8. Bryan Caplan discusses monopolies (tangentially) here http://econlog.econlib.org/archives/2010/03/why_cronyism_do.html

  9. unless they got complacent and started abusing said monopoly.”

    Emphasis added.

    There is no “unless”. There’s no exceptions to the rule that no one “competes” as a good textbook “capitalist” for one day longer than he has to. The very first day he’s strong enough to stop fishing in the river, drag a chain across it, and set up a tollbooth, he will. All of history proves this.

    So any entity which reaches a certain size becomes a guaranteed existential menace, and has to be broken up before it gets strong enough to assault society.

    It’s a strike against an enemy who is guaranteed to assault you the moment he’s strong enough to do so.

  10. I dunno, I always kind of figured that “innocent until proven guilty” was a reasonable policy. Perhaps it’s overly optimistic, but despite my own cynicism about corporate behavior (yes, I still believe fundamentally most businesses behave as psychopaths), I’m still willing to give them a chance to do the right thing before assuming they’ll do wrong and penalizing them immediately.

  11. The other noteworthy aspect of rent seeking business/business people is how exploitive they are – to the detriment of us all. Big Tobacco, Big Oil, Big Finance, Big Auto, Big Pharma, Big Food, Big Defense . . . and more have all been caught in scandals that collectively demonstrate that there is something fundamentally wrong with corporate governance and government regulation.

    And it seems clear that that fundamental flaw is that Corporate Boards (owners Representatives) are captured* by Management and Regulators/Legislators (Societal Representatives) are captured* by Business Interests. This combination gives *far* too much power to Management – especially the CEO.

    While this seems to be well recognized today, no one seems to have an answer for reform that is both practical and likely to be implemented. As a result the underlying issues are not given the attention they deserve. For example, MSM generally ignore the systemic issues and turn scandals in to a story of individual greed and poor ethics, while CEOs are treated like celebrities (exacerbating the problem).

    Is this a social doom-loop?

    * by “captured” I don’t mean to imply that they rubber stamp. The degree of capture varies but on the whole Management/Business interests get their way on issues more often than not. And often Management/Business will revisit the issue with different stratagems and when different circumstance present themselves until they get what they want.

  12. We’d probably be better off as a planet/society/nation if we were run by a monopoly with a heart, a benevolent dictatorship. But how to find that benevolent dictator, and how to keep them on the straight and narrow. Absolute power corrupts absolutely, but maybe there’s a way to prevent this.

  13. 3-D I think what you’re missing is that if there’s only one firm setting the price of a product (== monopoly) then that firm will often find that producing a small quantity at a high price is more profitable than producing a large quantity at a low price. This is likely to be inefficient because the public’s welfare will often be better served by a large quantity at a low price — which the firm could choose to do, but often doesn’t want to.

    There’s no issue of “innocence” or “guilt” it’s just that when monopolies go about earning healthy profits, there are no countervailing forces pushing them to make decisions that are consistent with what’s in the interests of the general public.

    Laws that force small independent firms to compete without coordinating their decisions are as old as capitalism — and necessary to protect it’s vitality. Anti-trust law is just an adaptation of this ancient tradition to a world with stock markets and huge firms.

  14. You are two degrees of Kevin Bacon away from Pete Peterson and you got turned down for an internship at the DOJ Antitrust division?

    This doesn’t smell right.

    And things are not as they seem over there. Here’s the DOJ photo of Christine Varney, Ass’t Attorney General for Antitrust:

    And here’s the New York Times version:

    Ms. Varney’s bio always includes: “She also pioneered the application of innovation market theory analysis to transactions in both electronic high technology and biotechnology.”

    What the heck is “innovation market theory analysis”? And where did she pioneer this? At the White House when she was minister without portfolio during the Clinton Administration? While she ran at the FTC? While she “attended” Trinity in Ireland?

    Varney went to govt. from Hogan and Hartson. Auspicious?:

    Hogan opened his law practice in Washington, D.C. in 1904, quickly earning fame as America’s leading trial lawyer as a result of a string of successes in high-profile, politically charged cases. In 1924 Hogan represented oil magnate Edward L. Doheny who had been indicted in the “Teapot Dome” scandal on charges of bribery and conspiracy to defraud the United States.

    Any relation to this Fox News fellow who attended LSE?

    http://www.foxnews.com/bios/talent/stuart-varney/

  15. Oh I understand what typically does happen, and I’m not saying we shouldn’t penalize such behavior. But simply busting up monopolies because they’re a monopoly that hasn’t necessarily done anything damaging yet strikes me as a unnecessary. If the pattern becomes “Yes, you may have a monopoly IF you continue to behave reasonably”, then obviously your best chance for high earnings might become following the law and not abusing your position. But that would require consistent enforcement for both well and poorly behaved monopolies.

    Of course, I would suppose what really breaks the whole idea is the concept of lobbying and capture of government through the massive profits, which I would suppose is quite typical amongst poorly behaved monopolists. I’m not saying it’s a simple problem, but I suppose I just see that a balanced approach is necessary so that we don’t wind up throwing out the baby with the bathwater.

  16. Agreed. I figure the largest problem is that the kind of man most likely to be able to handle the position is the kind least likely to want it. The ones most likely to try for it are the most likely to abuse it.

    Strangely enough (I know it’s very sci-fi for now), I have the feeling the best “person” for the role is not a person at all, but an AI without emotion at all. Were it programmed to not want power and money for itself but simply to look out for the good of human kind as a whole, the decisions could potentially be uncorrupted and reasonable, devoid of greed and emotion.

    But of course, it doesn’t exist right for now, so we’re stuck with what we’ve currently got: a bunch of hairless apes still fighting for their own selfish goals. I’m not certain there’s a way to prevent the corruption, but I agree with you. Trying to search for a way to prevent the corruption is a worthy goal, even if it seems impossible for now. There’s very little in this universe that’s impossible, just a lot of things that are really really tough.

  17. In the case of some financial institutions, guilty till proven guilty might be a more prudent approach in avoiding systemic risk.

  18. @3-D: This is a job for the Mechanical Turk

  19. “Yes, you may have a monopoly IF you continue to behave reasonably”

    In order for the government to gather enough information to determine whether or not the firm in question is behaving “reasonably” the government will have to gather information that it does not gather from non-monopolies. In other words either we treat these firms like public utilities, or we break them up. If the purpose of law and regulation is to promote public welfare, I’m not sure there’s much space to maneuver between these two options.

    The problem with monopolies is that the natural economic forces that would push them to make decisions consistent with the public welfare just aren’t there.

  20. The pragmatist

    If you really believe in free markets you cannot defend even monopolies that are seen as “benevolent”.

    Monopolies exist outside of all the theoretical and practical principals of free markets. No corporation ever acts in the interest of society, outside of maximizing profits for the owners (or as is often the case in modern mega-corporations maximizing the income to management). Only the “invisiible hand” of the market results in the greater good.

    In the years since the government essentially abandoned anti-trust actions we have seen wealth being concentrated in fewer and fewer hands at the expense of the middle classes.

    The trouble with the conservative movement (not traditional conservatism) is that they espouse a belief in free markets while vehemently defending monopolies and anticompetitive forces.

  21. then i guess they failed that maximizing consumer welfare test. cause it certainly didn’t work out that way

  22. Big banks are the new monopoly, number one. It’s not against the law to be a monopoly, just to use that power against others.

    Now the big four are using monopoly powers against others. There are plenty of studies that show the industry is overconcentrated and show anti-competitive pricing.

    “Big Four” is Now a Term on Wikipedia as of December 2009. It’s still a stub article, but it’s there. Help fill it out:

    http://en.wikipedia.org/wiki/Big_four_banks

    The big 4 banks together are a dangerous entity in society. Together, they pose danger to society, the economy, and politics. They each have past the size of a company that makes a company more efficient and have become giants that hold the strings to our country. They have gone into the territory of overpricing, dominating politics, and taking down the country without remorse when they fail.

    How are the big 4 banks dangerous? These big 4 banks have grown to infallible proportions. They have killed off any real competition and now anything they want, including the dangerous stuff, is deemed okay.

    Most likely, your wages haven’t gone up in the past 20 years, we have around 20% un(der)employment, millions of foreclosures, $700 billion of household debt, lack of individual political power, & our state and local budgets have been wiped out.

    We have Greece’s debt turned into a money-making insurance policy by a Big 4 and a Big 6. Bankster’s blog explains Greece: “It’s “like selling a car with bad brakes and then taking out an insurance policy on the driver.” Greece is “too-big-to-fail”. Goldman Sachs helped get more debt, and then sold “insurance policies” on Greece’s debt, betting on it going bust.

    http://banksterusa.org/content/how-goldman-wins-no-matter-what

  23. well thats true. consider that the biggest stock holder in a company maybe a stock fund. and they don’t inquire of those who contributed to that fund as to how they want to vote on the issues brought to stock holders. instead the fund asks management what it wants. mostly because they want to attract more business from that company and because they don’t want take the time to ask. the other is that when management (and nobody else can) proposes directors, stock holders can only vote for those directors. and if that doesn’t work out, and they don’t win, and in fact nobody does, the board can appoint directors without stock holders approval. and the other part of this is that the vast majority of stock holders buy the stock to sell it, they don’t care who runs it or how (and maybe part of the reason for management basically taking over). so decisions as public companies are all what ever management wants for the most part

  24. Are there really people who still believe in free markets, or who think they exist? Who are these people? They’re pretty silly.

  25. I dunno, I always kind of figured that “innocent until proven guilty” was a reasonable policy.

    Equating corporations with flesh-and-blood human beings, I see. Which in practice always means palcing them above people.

    Anyway, “innocent until proven guilty” is fine for people. The point of having a society is for the weal of people.

    But I reject the premise that large profit-seeking organizations are either necessary or desirable in the first place, so I’d certainly never accord them the same “rights” as people.

  26. Not to step on the good line, but Mr. Lynn is advocating a different emphasis in antirust – protecting competitors instead of competention – at least that is my read of his Harper’s piece. http://www.harpers.org/archive/2006/07/0081115

    Part of what he is arguing is that competition law should force everyone to pay higher prices for consumer goods in order to prevent Walmart from getting too strong (and thereby lead to all kinds of sometimes inconsistent bad results). It is old skool antitrust that is largely abandoned because of pretty widespread agreement that higher prices for good makes us all poorer.

    Which, btw, is what is meant be maximizing consumer welfare.

  27. It depends on the law of the state of incorporation, but in general anyone can propose directors, not just management. The question is whether you have to pay for your own proxy materials, but the answer is not uniformly yes (not really a corporate lawyer).

  28. I’d like my own nuclear bomb. Give me one, please. After all, I’m “innocent until proven guilty.”

  29. Well, I am a 2L at Yale Law School, and I took graduate micro and industrial organization with a guy who used to be chief economist of the antitrust division, and I was a McKinsey consultant, and I was a software entrepreneur. You’d think it would be a good fit.

  30. The pragmatist

    There are no free markets without government

  31. Were you given any reason for your rejection? Like details?

  32. All the more reason to think that the reason for your rejection could be your blogging activities — past/current as much as future. That would be a very appropriate reason for a public-sector agency to take a pass. We can assume that you’re quite capable and yet the DOJ would still have a very good reason to avoid choosing someone with a paper trail that shows them to have strong personal opinons that could result in an appearance problem. They must be able to credibly say in all cases that their personnel did not prejudge issues. As a blogger, you make some fairly broad generalizatons. For very good reason, regulators usually strenuously avoid doing that. They are different roles, and the demands of one may tend to disqualify you from the other.

  33. It not an argument against enforcing the law. It is the law. It isn’t illegal to be a monpoly.

  34. The province of British Columbia where I live owns the car insurance company. If you own a vehicle you must buy “basic” car insurance from this company. It’s called ICBC. People who believe in “competition” don’t like this.

    About eight years ago our right-wing government decided to privatize our publicly-owned car insurance company. So they replaced the CEO with (if I recall correctly) a CEO from the private sector with all the right credentials. However he resigned after two years, or so, because (reading between the lines) he could not in good conscience after objectively assessing the options privatize our government-owned car insurance company. He wouldn’t do it because it was not in the public interest. The government then backed down on its privatization plan.

    To top this off, in 2010, with the country still struggling out of recession, the province decided to take $778 million in profit from our government-owned car insurance company and put it into general revenue. Which is going to help because the province is projecting three more years of deficit budget.

    So our government-owned “monopoly” car insurance company has really worked out well for our province. At least in my opinion.

  35. Tippy Golden

    Correction:

    $778 million surplus

  36. chuck roast

    Geez, is this an econ/finance blog? Did we forget everything that we learned in school about why monopolies are not a good thing? Here’s a refresher on monopolies:
    •They use market dominance to engage in restraint of trade
    • They engage in rent seeking behavior
    • They are able to diminish necessary supply
    • Their prices are excessive and they are not limited by marginal costs
    • They suppress and may actively deter socially beneficial innovation
    • They use bargaining power to suppress wages

    Now we even have monopsonies (Walmart) – only a theory 30 years ago and now an all too comfortable reality.

    Remind me why monopoly dominance in every sector of the economy is beneficial to the 95% of the population who are not enjoying substantial equity dividends from this dominance. And further remind me why support of this kind of political economy is supportive of a democratic society.

  37. To the extent that they prefer to give internships to people they want to hire permanently, your resume would certainly give rise to doubts about your long term interest in DOJ.

  38. Exactly who is arguing in favor of monopoly? The disagreement between Mr. Lynn and those he seeks to critique is over what constitutes a monopoly, and what ills antitrust policy should be seeking to address, not over whether monopoly is a good or a bad thing.

    Also, while there are many ground on which one can critize Walmart, I think the monopsony argument is a stretch because it is not so large as to be able to foreclose it’s competitors from supply or increas its competitors costs. Lynn tries to make the latter argument in Harper’s but does not assert that Walmart is able to negotiate prices below its suppliers’ costs, nor does he explain why those suppliers have the power to impose higher prices on Walmart’s competitors.

  39. Be careful James. You are starting to sound like me — 180+ credits with a background in many subjects as you know from my comments. The internet is a great tool, but it can be a death sentence when too much information is out there. All you have to do is type in my name and every comment I have made in the Wall Street Journal is out there for all to read. If you know my name for Market Watch, it is out there also. It is no different then “facebook” and our names do not let us hide behind say a John Smith where there are many.

    IF you really believe in your work, then you must face the realities of no pay or low pay. I have. It is still a club and if you are not in the right circle you will never break in unless you are like Per Kurowski and force the issue and I do not think he gets the credit he deserves. Me, I could have 500 credits in culture and trade relations through history and archaeology and I would still be snubbed and called the Arm Chair Economist as everyone seems to think trade is a 20th century invention and economics was started with Adam Smith (who cares if Romans kept extra pillars in their villas as an item of trade/money and why. Or that there seems to be an increase in trade in what is now England with Rome prior to the second invasion suggesting the invasion was for government controlled trade relations (need for materials) then a few instigators in Gaul. who might have come from the Island); add that I am dyslexic so my sentence structure, punctuation, etc. sucks when I do not let it set for a few days and you get grounds for total dismissal.

    All you can hope for is one person to believe in you and let your voice be heard. You have a voice here and you are being heard. I know, it does not pay the bills and we do not live in a time where work is sponsored by well to do families.

    When I was in college the first time we studied the break-up of Ma Bell. When my husband went back for his MBA and I had switched from business to history before transferring to another U as he was going to teach there, we talked about the bank deregulations, EU, and the S &L crises. I still today feel we place too much emphasis on money and banking for recessionary causes and not enough on population and its age — banks are a symptom of other factors…. And if you think we have problems now, wait until we hit 50% of boomer retirement and what it will do to tax revenues for government.. We will have some good times still economically, but they will never be what they were and we in my belief are headed for much tougher times.

    This leads to your point on monopolies. Too Big to Fail, Too Big to have social responsibilities based on many factors such as size, international places to move to and therefore exploit laws that are more favorable, etc., do not allow them to be regulated by rules. They become greater then the countries they are in and have no problem making sure laws are favorable with a few crumbs scattered to keep the masses happy or fighting — today we fight over abortion payments in a health bill and the insurance companies laugh. The banks do what they wish; everyone drags their feet and hopefully the economy will get better and we can just forget it all. This time things are not going to get back to where they were due to demographics. This time last year I made the comment when everyone was talking about the shape of the economic curve “W” “U” “L” etc. I said the end of a roller coaster ride. Meaning ups and downs, most likely independent of the stock market, which is investment based, but never returning fully to the high before until the boomers retire and a healthy balance of young and working to retired is reestablished or we become a straight column shape with either extremely more government involvement of social programs or barebones. Immigration both illegal and legal was helping to keep a healthy balance for a while.

    Unfortunately, Congress is made up of people who have forgotten their job is to represent the people. Moral issues are a family matter and cannot be legislated. Therefore, it is up to the individual as to whether or not they use a service or not, but that service cannot be denied to another. IF the masses do not understand that then our educational institutions have failed to teach the basics of our government. This is why Congress is broken. They have stopped being leaders and are more worried about the next election then telling the people where we are headed or doing the job that is going to be so odious in just a few short years after saying yes to business and the individual for so long.

    I apologize for any rambling or unclear points.

  40. I’m not sure why you would conclude that because a monopoly is profitable, it is a good thing, even if government owned.

    In other words, what you are saying is that a government owned monopoly is preferable to a privately owned monopoly. Which is a statement that you have to be pretty far to the right to disagree with. But that isn’t the same as saying that a government owned monopoly is better than competition.

    Also, you do realize that the people of BC paid that $778 million in insurance premiums, right? If it is government owned, and therefore has no need to make a profit, why is it collecting even one penny of premiums more than it needs to cover liabilities?

  41. Tippy Golden

    ICBC is required to carry a surplus for future claims. If it were a private company the $778 million would have been profit to the shareholders. I’m fine with the taxpayers getting to keep this “profit”.

    What I find interesting is the guy they hired to dismantle ICBC came out of the private sector. He was a savy businessman but he was not an idealogue.

  42. ICBC is a Crown corporation. In other words, it is owned by the Province and the “shareholders” in ICBC are the taxpayers / citizens. ICBC has a monopoly over “basic” car insurance. There is competition in optional “extended coverage”.

    My thought is if we had a fully-privatized / fully-deregulated car insurance system it would be dysfunctional. Right now our car insurance system is probably one of the best in the world.

  43. 3-D, the traditional argument against breaking up a monopoly has been that certain types of industries naturally tend toward monopoly because of economies of scale and high startup costs for competitors seeking to enter the market(such as energy companies). However, the alternative usally offered is rather strict regulation of the industry to protect the consumer. That’s why most power companies have to go through some state board before they can raise your rates, get approval for new facilities etc.

    The argument is usually that even if you break up a monopoly such industries will consolidate again fairly rapidly so regulation is the better alternative. You could also make a socialist argument that such industries should simply be government run. The supposed benefit of a free market system flows from competition. Without competition, there is no reason to prefer an unregulated market based system in a particular industry to a socialist one.

    I would also recommend Barry Lynn’s very good article on the Wal Mart monopsony which is available online free at Harpers.

    http://harpers.org/archive/2006/07/0081115

  44. AJ, you seem to be better versed on the economics of this than I am. What I find odd is, what is it about the nature of the modern retail industry, that seems to lead to the outcome where one retailer like Wal-Mart seems to dominate the biz? Is it something about the particular economic situation or is Wal-Mart really just that much better?

    I get how the energy industry for example might tend toward monopoly and lack of competition due to the advantages of economies of scale and the start up costs being a barrier to new competitors.

    But how did Wal-Mart get to the position they are in now where they have such leverage over producers?

  45. BC Hydro the electric power utility in British Columbia used to be a monopoly. Ie, a corporation owned by taxpayers / citizens. It has served our Province incredibly well. I could not understand why (after the Enron scandal and the failure of California’s attempt to privatize its energy sector) our government has moved forward with privatizing BC Hydro. It did not make sense. Since reviewing some of Thomas Frank’s ideas (he’s new for me) I understand. The plan to privatize BC Hydro is driven by ideology. If this plan is fully realized there is potential for a few to be enriched while citizens end up with a dysfunctional power system.

    America seems to be trapped (?) in a — constructed mythology — where the choices are limited to a free-market economy (espoused by Ayn Rand, Greenspan, etc) and the “big government” of Stalinist Russia. The evidence suggests both these paradigms are dysfunctional. Perhaps the reality of a functional political-economy lies somewhere between the black and white extremes of Rand’s mythology.

    Speaking here as a non-expert.

  46. The best answer I can come up with is that ever since Reagan, conservatives in America (and a lot of centrist DLC type Democrats) have continually confused pro-business policies with free market policies. They’ve adopted the idea that the private sector is always more efficient than government. But they’ve forgotten that the supposed superiority of the private sector comes from competition, the fact that consumers have options, not from any magic properties that supposedly private business has. So in a monopoly type situation, there is no reason to prefer a privately controlled monopoly to a democratically controlled one. Note that I said democratically controlled one, not just government monopoly. In an non-democratic system, a government run monopoly would be the same problem as a private monopoly, in that it is accountable to no one.

    If you want to check out a good book on how this mind set came to dominate our thinking, check out Joseph Stiglitz’s “The Roaring Nineties”. I would agree that, all other things being equal, a free market with significant competion is preferrable to a regulated one with limited competition. However, regulated businesses environments usually came about precisely because they were in an industry where there was a natural tendency to concentration or some other type of market dysfunction. Stiglitz had a chapter on telecommunications deregulations in his book. He asked the perfectly logical question, “If telecommunications deregulation really was going to stimulate competitition, then why were all the telecomm companies lobbying for it, instead of against it?” You don’t find many businesses actually lobbying in favor of something that will increase competition and reduce their profits.

    I don’t know the specifics of the BC Hydro situtation. But I would bet that there are Canadian politicians who have fallen under the same spell and have confused pro-business policies with pro-market policies. The other possibility is if the BC government is in financial difficulties they could be looking at privatization (that is, if they are auctioning BC Hydro) as a short term way to get out of their problems without having to take the political hit that comes with raising taxes. However, this is extremely short term thinking and is mostly about perceptions only, since the customers of BC Hydro will most likely ending up paying increased rates. I doubt if BC citizens will be happy with not having their taxes raised if the price of that is seeing their electricity rates go up.