Lobsters and the limits of neoliberalism

We don’t need an abundance agenda for *everything*

A lobsterman unloads his catch. (Photo by Johner Images)

I’ve been thinking a lot the last few weeks about Graham Platner’s ode to the Maine lobster industry. He mentioned lobstering as an example of how policy shapes markets, in his view for the better.

The ins-and-outs of lobster regulation are complicated, but I would say the most important thing to know is that lobstering is structured, by policy design, to be done by a fleet of small owner-operators. To catch lobsters, you need a license and there are only so many licenses. The lobsters must be caught in traps that are standardized — you’re not allowed to develop some kind of super-trap that out-competes your rivals. There are also limits to how many traps you can put out and where. You can get a larger boat if you have the money, but you can’t use it to double the number of traps you put out.

It’s a good illustration, in that sense, of the distinction between policy aimed at promoting fragmentation and policy aimed at promoting competition.

Lobstering has very little concentration. But it also has relatively little competition.

If one captain is marginally more efficient than another captain, he’ll maybe earn a little more money or work somewhat shorter hours. But he’s not going to put the other captain out of business and take over that guy’s territory. You can’t just decide you could do a better job than the people already out there and try to out-compete them. Investors can’t do leveraged buyouts of badly run lobstering franchises, install new management, and aim for expansion.

As a result, you can’t get really rich lobstering. There are tons of unglamorous lines of small business ownership that are capable of minting great wealth through a mix of hard work, talent, and good luck. Not lobstering, though, because you can’t expand. On the other hand, if you’re a 40th percentile lobsterman who’s willing to work hard and endure difficult hours and weather, you’ll do okay. Everyone who works in lobstering has their place as long as they want it and are able to put in the effort.

This is quite different from the logic driving economic liberalism, or “neoliberalism,” as people were saying for a while, or “abundance liberalism” as they might say more recently. And I think it’s an interesting example of an exception that proves the rule.

Meaning not that the existence of an exception to the rule that “economic regulation should promote efficiency” demonstrates that the rule is true, but that the exception tests the rule and forces those of us in the abundance camp to state more clearly what exactly we think.

There’s actually not plenty of fish (or crustaceans) in the sea