skews13
Diamond Member
- Mar 18, 2017
- 9,364
- 11,722
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So how did we get here?
Prices in America used to be regulated by something called competition.
If one company raises prices above a reasonable level, another company will offer products at a lower price and take away their customers. As long as there are multiple companies in every market sector, and new businesses can easily enter the marketplace to compete with larger companies that have gotten lazy or greedy, competition regulates prices very efficiently.
What blows this up is when companies get large enough that they can use their size and market dominance to keep competitors out of the marketplace.
John D Rockefeller, for example, used to buy up all the available railroad contracts for shipping oil to prevent smaller competitors from getting their product to market. Once they were in trouble financially, he’d give them “an offer they couldn’t refuse” and buy them out, making his large company even larger.
Andrew Carnegie did this with steel and JP Morgan did it with banking; there were trusts and monopolies in fields as disparate as manufacturing matches, refining and selling sugar, and building railroad cars.
By the late 19th century the situation had become so intolerable that Congress put into place the first anti-trust laws.
Before the Reagan Revolution, those anti-trust and anti-monopoly laws — dating all the way back to the Sherman Anti-Trust Act of 1890 — were largely enforced and kept big corporations in check.
The Federal Trade Commission (FTC) was created in 1915 by Democratic President Woodrow Wilson, specifically to break up concentrated business trusts and monopolies, using the Justice Department as its prosecutorial arm. It came into being against a backdrop of public outrage over giant corporations screwing consumers and owning captive politicians.
As President Teddy Roosevelt, the great trust buster, said a decade earlier, “There can be no effective control of corporations while their political activity remains.” Indeed, it took a decade to create the agency that Roosevelt had proposed, as I detail in The Hidden History of Monopolies: How Big Business Destroyed the American Dream.
Probably the FTC’s most well-known effort was breaking up the telephone behemoth AT&T, an action started during the Nixon administration that, when completed in 1982, produced an explosion of competitive activity that dropped phone call costs, increased availability, and spurred the creation of hundreds of new companies in the telecom arena.
Even the Supreme Court, back in the day, agreed that giant corporations dominating markets was bad for the economy and our political system.
In the 1962 antitrust case of Brown Shoe Co. v. United States, for example, the Supreme Court agreed with the FTC and blocked the merger of Brown and G. R. Kinney, two shoe manufacturers, because the combination of the two would have captured about 5% of the US shoe market. For comparison, Nike today has 19% of the US shoe market.
All of that anti-trust activity came to an end in 1982 when President Reagan appointed William C. Miller III, his former executive director of the Presidential Task Force on Regulatory Relief, to take over the FTC. Miller was the first pro-corporate leader in the nation’s history to corrupt the agency that was supposed to regulate corporate misbehavior.
That year (as it had been since the 1930s) most of this nation’s business activity was centered in the cash registers of our small- and medium-sized companies. The total value of America’s largest corporations — those listed on stock exchanges — was equal to just 39.4% of the entire nation’s economic activity or GDP in 1981.
Miller, however, declined to continue enforcing our anti-trust laws and in 1983 Reagan instructed the DOJ to, essentially, stop prosecuting companies that were violating those laws through mergers and acquisitions, and to only go after the most egregious and flagrant acts of corporate collusion and price-fixing.
As a result, large companies became behemoths, and pretty much every industry in America is today dominated by a small handful of companies that carefully monitor each other to function, essentially, as cartels. When United raises ticket prices by $50, for example, American does the same three hours later.
Which is why today the total value of America’s exchange-listed corporations is 194.9% of GDP, elbowing out most small- and medium-sized companies.
As Jonathan Tepper pointed out in The Myth of Capitalism, fully 90% of the beer that Americans drink is controlled by two companies. Air travel is mostly controlled by four companies, and over half of the nation’s banking is done by five banks.
In multiple states there are only one or two health insurance companies, high-speed internet is in a near-monopoly state virtually everywhere in America (75% of us can “choose” only one company), and three companies control around three-quarters of the entire pesticide and seed markets.
The vast majority of radio and TV stations in the country are owned by a small handful of companies, and the internet is dominated by Google and Facebook.
This has handed enormous power to the CEOs and senior managers of America’s largest companies, all of them multi-multi-millionaires and many billionaires.
These are not people who want to pay more in taxes. Nor do they want unions or to have their industries regulated in any meaningful way; they’d like things to stay the way they’ve been since the Reagan Revolution.
But President Joe Biden has been working with Senator Bernie Sanders (Chair of the powerful Budget Committee) to create a whole plethora of progressive legislation that would raise corporate and billionaire taxes and increase corporate regulation. Not to mention Democrats’ advocacy of those hated unions.
And this fall, if all goes well, Democrats might even expand their control of the House and Senate in the wake of mass shootings and the Supreme Court’s Dobbs abortion ruling, meaning even more aggressive promotion of unions, regulation, and tax increases could be on the horizon.
Compounding corporate fury, this morning Reuters carried this headline: “DoJ expected to file antitrust lawsuit against Google in weeks.”
Is there any doubt in your mind that most of these titans of industry don’t want monopoly breakups, unions, regulation, and higher taxes? Every president since Reagan, Democratic and Republican, has gone along with this neoliberal deregulation, anti-union, and low-tax scheme.
Big business doesn’t want the Reaganomics gravy train to stop and, so far, they’ve been able to buy enough politicians to keep it that way. Until this unholy alliance of Biden and Sanders.
Prices in America used to be regulated by something called competition.
If one company raises prices above a reasonable level, another company will offer products at a lower price and take away their customers. As long as there are multiple companies in every market sector, and new businesses can easily enter the marketplace to compete with larger companies that have gotten lazy or greedy, competition regulates prices very efficiently.
What blows this up is when companies get large enough that they can use their size and market dominance to keep competitors out of the marketplace.
John D Rockefeller, for example, used to buy up all the available railroad contracts for shipping oil to prevent smaller competitors from getting their product to market. Once they were in trouble financially, he’d give them “an offer they couldn’t refuse” and buy them out, making his large company even larger.
Andrew Carnegie did this with steel and JP Morgan did it with banking; there were trusts and monopolies in fields as disparate as manufacturing matches, refining and selling sugar, and building railroad cars.
By the late 19th century the situation had become so intolerable that Congress put into place the first anti-trust laws.
Before the Reagan Revolution, those anti-trust and anti-monopoly laws — dating all the way back to the Sherman Anti-Trust Act of 1890 — were largely enforced and kept big corporations in check.
The Federal Trade Commission (FTC) was created in 1915 by Democratic President Woodrow Wilson, specifically to break up concentrated business trusts and monopolies, using the Justice Department as its prosecutorial arm. It came into being against a backdrop of public outrage over giant corporations screwing consumers and owning captive politicians.
As President Teddy Roosevelt, the great trust buster, said a decade earlier, “There can be no effective control of corporations while their political activity remains.” Indeed, it took a decade to create the agency that Roosevelt had proposed, as I detail in The Hidden History of Monopolies: How Big Business Destroyed the American Dream.
Probably the FTC’s most well-known effort was breaking up the telephone behemoth AT&T, an action started during the Nixon administration that, when completed in 1982, produced an explosion of competitive activity that dropped phone call costs, increased availability, and spurred the creation of hundreds of new companies in the telecom arena.
Even the Supreme Court, back in the day, agreed that giant corporations dominating markets was bad for the economy and our political system.
In the 1962 antitrust case of Brown Shoe Co. v. United States, for example, the Supreme Court agreed with the FTC and blocked the merger of Brown and G. R. Kinney, two shoe manufacturers, because the combination of the two would have captured about 5% of the US shoe market. For comparison, Nike today has 19% of the US shoe market.
All of that anti-trust activity came to an end in 1982 when President Reagan appointed William C. Miller III, his former executive director of the Presidential Task Force on Regulatory Relief, to take over the FTC. Miller was the first pro-corporate leader in the nation’s history to corrupt the agency that was supposed to regulate corporate misbehavior.
That year (as it had been since the 1930s) most of this nation’s business activity was centered in the cash registers of our small- and medium-sized companies. The total value of America’s largest corporations — those listed on stock exchanges — was equal to just 39.4% of the entire nation’s economic activity or GDP in 1981.
Miller, however, declined to continue enforcing our anti-trust laws and in 1983 Reagan instructed the DOJ to, essentially, stop prosecuting companies that were violating those laws through mergers and acquisitions, and to only go after the most egregious and flagrant acts of corporate collusion and price-fixing.
As a result, large companies became behemoths, and pretty much every industry in America is today dominated by a small handful of companies that carefully monitor each other to function, essentially, as cartels. When United raises ticket prices by $50, for example, American does the same three hours later.
Which is why today the total value of America’s exchange-listed corporations is 194.9% of GDP, elbowing out most small- and medium-sized companies.
As Jonathan Tepper pointed out in The Myth of Capitalism, fully 90% of the beer that Americans drink is controlled by two companies. Air travel is mostly controlled by four companies, and over half of the nation’s banking is done by five banks.
In multiple states there are only one or two health insurance companies, high-speed internet is in a near-monopoly state virtually everywhere in America (75% of us can “choose” only one company), and three companies control around three-quarters of the entire pesticide and seed markets.
The vast majority of radio and TV stations in the country are owned by a small handful of companies, and the internet is dominated by Google and Facebook.
This has handed enormous power to the CEOs and senior managers of America’s largest companies, all of them multi-multi-millionaires and many billionaires.
These are not people who want to pay more in taxes. Nor do they want unions or to have their industries regulated in any meaningful way; they’d like things to stay the way they’ve been since the Reagan Revolution.
But President Joe Biden has been working with Senator Bernie Sanders (Chair of the powerful Budget Committee) to create a whole plethora of progressive legislation that would raise corporate and billionaire taxes and increase corporate regulation. Not to mention Democrats’ advocacy of those hated unions.
And this fall, if all goes well, Democrats might even expand their control of the House and Senate in the wake of mass shootings and the Supreme Court’s Dobbs abortion ruling, meaning even more aggressive promotion of unions, regulation, and tax increases could be on the horizon.
Compounding corporate fury, this morning Reuters carried this headline: “DoJ expected to file antitrust lawsuit against Google in weeks.”
Is there any doubt in your mind that most of these titans of industry don’t want monopoly breakups, unions, regulation, and higher taxes? Every president since Reagan, Democratic and Republican, has gone along with this neoliberal deregulation, anti-union, and low-tax scheme.
Big business doesn’t want the Reaganomics gravy train to stop and, so far, they’ve been able to buy enough politicians to keep it that way. Until this unholy alliance of Biden and Sanders.
The Big Business Plot to Overthrow Democrats Revealed?
“[T]he monopoly which our manufacturers have obtained against us … like an overgrown standing army, has become formidable to the government, and upon many occasions intimidate the legislature.” — Adam Smith, The Wealth of Nations, 1776 There’s lots of...
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