In business, bigger is not better

Before World War II, some nations experimented with fascism, an economic doctrine where government leaders direct a capitalistic economy.  This doctrine, dirigisme, differs from our traditional laissez-faire.  Dirigiste policies include indicative planning, state-directed investment, formation of oligopolies/monopolies, and the use of market instruments to incentivize markets to fulfill state economic objectives.  

Laissez-faire relies on competition in a free and fair marketplace to set prices, match production and supply, set prices, and determine competitive winners and losers.  To maintain the free and fair marketplace, the government regulates competition by preventing mergers that form oligopolies.

So is the government turning a blind eye to encourage oligopolies?  Whatever happened to antitrust?

For many years, the FCC played a major role in assuring free speech and an open marketplace for radio and TV.  From 1934 through the 1970s, the FCC acted to preserve media diversity and prevent media consolidation, putting in place regulations that discouraged any one corporation from owning too many newspapers or television stations or from reaching too large an audience.

By the early 1980s, most U.S. media were held by just 50 corporations.  In 1996, the Telecommunications Act of 1996 provided a massive dose of deregulation that dramatically raised the number of local newspapers and television stations owned by a single corporation as well as the percentage of the national audience. Today, 90% of media are owned by six megafirms.  Any wonder it is difficult to discern alternate views of the news?

In the 21st century, add social media to the monopolies.  While they don't write what appears on their platforms, they decide whether it appears or not.  And using viewer demographics, they manage to influence their readers.  Shamefully, our leaders have not prevented these firms from buying up their most effective competitors.

In 1933, the Glass-Steagall Act was enacted to prevent another financial disaster like 1929.  It was clear to lawmakers then that commercial banks and investment banks must be separate entities, including their ownership.  Sixty years later, the 1999 Gramm-Leach-Bliley Act reversed this separation, which has led to the oligopolistic megabanks of today.

Uncle Sam allowed unhealthy consolidations of the pharmaceutical and hospitals industries.  One person has been allowed to head our space program, the same person to develop electric cars.  Both efforts receive massive funding using taxpayers' dollars.    

Our leaders have chosen to ignore and weaken the antitrust laws that are meant to counter the concentration of economic power in the hands of few.  Over the last two decades, more than 75 percent of United States industries have experienced an increase in concentration, while Wall Street has lost almost 50 percent of its publicly traded firms.  There are many other examples where mega-anything is considered good by our politicians. 

Certainly, we would never let government direct the flow of capital as did dirigiste policy.

Or would we?  Does not our government use funds to unlevel the competitive playing field in many markets and many ways?

Not only does government use public funds to help the richer buy electric cars, but it gives subsidies directly to the electric car producers and suppliers.  And our government also subsidizes windmills, solar power, ethanol, and the list goes on.

At the same time, our government increases rules and regulations on markets that don't fit their worldview.  This is a large list, which includes carbon credits. 

How did we forget that America is the only nation to pioneer antitrust as a check against political dangers of private power? 

We need Congress, judges, and prosecutors who understand that "free enterprise" does not co-exist with bigness, neither in business or government.  Our leadership needs to bring big cases with the courage of trustbusters like Theodore Roosevelt, FDR, and Ronald Reagan. 

The sooner, the better.


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