How to end the Australian Oligopoly

Recent pundits from John McDuling to Jessica Irvine have criticized the "rent seeking oligopolists" that "dominate the Australian business community."

McDuling complains that Australia's largest companies are also its oldest and Irvine bemoans a deeply risk-averse business culture.

Both consider inertia a possible response from an ageing corporate structure and an ageing population. They are barking up the wrong tree by blaming risk aversion on our nation's demographic.

Instead, they should look towards the main cause of the problem: regulations that support an oligopoly, red tape that stifles innovation and labour laws that make it impossible for companies to grow. The institutionalized structure of oligopolies is a direct result of government intervention in markets. They create barriers to entry and a complex tax structure that only the biggest (and perhaps oldest) companies can cope with.

Yet Irvine claims that the problems created by the state can be solved by the state as "there are several things the government can do to unleash innovation." She wants to see an end of oligopoly and a growth of entrepreneurship , yet she believes a command style economy will take us there.

Federal funds directed towards certain industries, certain universities and certain business ventures will not unleash our creativity, they will instead create a new generation of rent seekers. The very rent seekers that will keep oligopoly intact.

An end to oligopoly requires a dynamic corporate culture. Emerging companies do not need more subsidies, regulations or taxes but the freedom to enter the market and innovate as they see fit.

 

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