Here's
the first part of New York Times columnist David Leonhardt's latest on
the intensification of the monopolization of the U.S. economy. While
the growth of inequality has been much
discussed, monopolization hasn't and it's the same thing at the level of
the corporation. Important stuff. Tom
"The popular telling of the Boston Tea Party gets something wrong. The
colonists were not responding to a tax increase. They were responding to
the Tea Act of 1773, which granted a tea monopoly in the colonies to
the well-connected East India Company. Merchants based in the Americas
would be shut out of the market.
"Many colonists, already upset
about taxation without representation and other indignities, were
enraged. In response, dozens of them stormed three ships in Boston
Harbor on the night of Dec. 16, 1773, and tossed chests of East India
tea — “that worst of plagues, the detested tea,” as one pamphlet put it —
into the water.
"A major spark for the American Revolution, then, was a protest against monopoly.
"A strong strain of anti-monopoly sentiment has run through our
politics ever since. America was born as “a nation of farmers and
small-town entrepreneurs,” the historian Richard Hofstadter once wrote,
“anti-authoritarian, egalitarian and competitive.” Hostility to
corporate bigness animated Thomas Jefferson and Teddy Roosevelt, as well
as the labor movement, Granger movement, Progressive movement and more.
"Of course, monopolies and other corporate giants have fought back
against these assaults on their power, and sometimes succeeded for years
or decades at a time. It happened during the age of Rockefeller and
Morgan. Over the past 40 years, it has happened again.
"The
federal government, under presidents of both parties, has largely
surrendered to monopoly power. “The ‘anti’ in ‘antitrust’ has been
discarded,” as the legal scholar Tim Wu puts it in his new book, “The
Curse of Bigness.” Washington allows most megamergers to proceed either
straight up or with only fig-leaf changes. The government has also done
nothing to prevent the emergence of dominant new technology companies
that mimic the old AT&T monopoly.
"This meekness has made
possible the consolidation of one industry after another. For a long
time, though, it’s been hard to figure out precisely how much
consolidation. The available statistics just aren’t very good, which
isn’t an accident. In 1981 — around the time that the Reagan
administration was launching the modern pro-monopoly era — the Federal
Trade Commission suspended a program that collected data on industry
concentration.
"Fortunately, researchers in the private sector
have recently begun filling in the gaps. On Monday, the Open Markets
Institute — an anti-monopoly think tank — is releasing the first part of
a data set showing the market share that the largest companies have in
each industry. You can see the main theme in the charts here: Big
companies are much more dominant than they were even 15 years ago.
"Mergers are one big reason. Another is the power of so-called network
effects — in which the growth of, say, Facebook makes more people want
to use it. True, a few industries have become less concentrated, but
they are exceptions. If anything, the chart here understates
consolidation, because it doesn’t yet cover energy, telecommunications
and some other areas. It also doesn’t cover local monopolies, such as
hospitals that are dominant enough to drive up prices.
"The new
corporate behemoths have been very good for their executives and largest
shareholders — and bad for almost everyone else. Sooner or later, the
companies tend to raise prices. They hold down wages, because where else
are workers going to go? They use their resources to sway government
policy. Many of our economic ills — like income stagnation and a decline
in entrepreneurship — stem partly from corporate gigantism...."
