Issue 115

A big success

Delivered on 08 June 2021 by Justin Pyvis. About a 3 min read.

The Australian government's attack dog has given itself a big pat on the back for successfully shaking down Google and Facebook with its News Media and Digital Platforms Mandatory Bargaining Code:

Rod Sims, chair of the Australian Competition and Consumer Commission, told the Financial Times on Tuesday that the country's world-first news media bargaining code had forced big technology platforms to the negotiating table to agree deals with publishers.

"We are on track for deals all around. It's been a big success," Sims said in an interview. "We are just about there and the media companies are happy — and that's the key point."

The word "deal" is a generous use of the English language, which defines it as "an arrangement for mutual advantage". These deals are only mutually advantageous to the extent that the legislation allows Australia's Treasurer to arbitrarily "designate a digital platform as being under the news media bargaining code", unless a deal is struck resulting in "no need for designation under the code".

In other words, the costs being "designated" by the Code are so significant that it's in Google and Facebook's interest to agree to a completely one-sided deal to avoid having to "bargain" in the ACCC's kangaroo court. There's a serious lack of transparency: no details of any of the "deals" have been made public, although they're each rumoured to be in the tens of millions.

Essentially Facebook and Google have to pay a secret 'protection fee' to Australia's archaic, highly concentrated media companies or the government will beat them down with a big stick known as the News Media and Digital Platforms Mandatory Bargaining Code. The public is completely in the dark, the media companies are unaccountable to the taxpayer and any potential entrant must now compete against these dinosaurs plus the extra tens of millions of dollars with which they're now being subsidised.

No doubt a lucrative advisory gig at one of the legacy media companies awaits ACCC chair Rod Sims when his term expires in July 2022.

Solar policy and unintended consequences

A few days ago Bloomberg published a good piece summarising the demise of the US solar industry. It's a warning for fans of so-called industrial policy, with good intentions ruined by unintended but entirely predictable consequences.

The [solar] industry failed to take root in the U.S. despite billions of dollars in government incentives and nearly two decades of pledges from presidents, starting with George W. Bush, that the nation would be a clean-energy superpower.

In the early 2000's China was emerging as a major solar competitor to the US. So successive Presidents – before the 'Tariff Man' Donald Trump even came to power – whacked them with tariffs, with Obama raising them "as high as 249%", which... "spurred retaliation instead of a manufacturing renaissance":

Manufacturers responded by moving operations out of China, but they didn't head to the U.S. Instead, large manufacturers skirted the U.S. tariffs by building facilities to assemble solar cells and modules across Southeast Asia.

But it gets better:

Making matters worse, China retaliated by imposing its own duties of up to 57% on imports of U.S.-made polysilicon -- tariffs that crippled U.S. producers of the conductive material used in solar panels.

Instead of affordable, Chinese-taxpayer subsidised solar panels that made "solar as cheap as coal", the US raised the domestic price of solar, did not save the industry, and accidentally managed to kill off its thriving polysilicon industry, going "from making 50% of the world's polysilicon in 2007 to less than 5% today".

Unintended consequences from poorly conceived policy strike again. What's the saying about good intentions again?

Issue 115: A big success was compiled by Justin Pyvis and delivered on 08 June 2021.