Monopolies Rule

Only one anti-monopoly enforcement since the year 2000 - one!

I've written about the rise of monopoly power in the US and found Matt Stoller's book Goliath to be a great US history book focusing on wealth and power.  I latched onto the section about the Democrat Watergate babies - the new Democrat senators who came and pushed the old Democrats aside in the 1970s.  These new Democrats are still around and pushing their lack of care.

They did not care about concentration of wealth and power as long as it was good for the consumer.  It did not matter for awhile, but we've gotten to the point that it is causing serious concentration of power in America. We have slipped into the new Gilded age - the last one did not end well.

But is seems it was not just the Democrats that changed in the 1970s. The Republicans in the 80s as read below lost their way and were led their by Robert Bork's book, The Antitrust Paradox.

It seems this philosophical shift was preached at the Chicago School of Business the seeds of which had been planted much earlier. It led to many changes: 1) the shareholder is all that matters 2) monopoly pricing power is more profitable and good 3) so competition is bad so merge or acquire them 4) corporations gained legal standing so managers do not have to go to jail.

The last bullet reminds me of the gun debate - punish the people not the gun.  We have punish the corporation not the managers in the political-economy today. Where are those who stand up and say, "No, punish the people making the decisions in the corporation".

This next article does not talk about the Democrats and how they are not the defenders of competition they should be.  Stroller's book goes into detail on that. But this article does show that a new Republican Party could pivot to again be the defenders of capitalism but they have to abandon those who support the oligarchy we have developed into.

A progressive Republican Party?

The Conservative Case For Antitrust 28 January 2019 by Jonathan Tepper at The American Conservative

Excerpts:

On the campaign trail in 2016, Donald Trump did not sound too far from Bernie Sanders. Trump appealed to working class voters telling them, “It’s not just the political system that’s rigged, it’s the whole economy.”   

Some commentators fretted that Trump was abandoning conservative tradition. Trump was in fact returning to the American and Republican traditions of opposing monopolies and industrial concentration.

[My Comment: I do not think he returned us there, he only campaigned there. The entrenched powers were too strong to overcome]

The thread opposing monopolies and concentrations of power runs from to the founding fathers to the present day. The Boston Tea Party was in response to the Company’s monopoly on tea.

Thomas Jefferson was in Paris during the Constitutional Convention, and he wrote to Madison his misgivings that the Constitution included no Bill of Rights, “First, the omission of a bill of rights, providing clearly, and without the aid of sophism, for freedom of religion, freedom of the press, protection against standing armies, restriction against monopolies [emphasis added]….”  For Jefferson, the freedom from monopolies was as important as First Amendment rights.

Gordon is right. Believe it or not, Republicans controlled Congress and the White House in 1890 when they passed the Sherman Antitrust Act.

In Eisenhower’s last State of the Union address attributed the strength of the U.S. economy to his administration’s “vigorous enforcement of antitrust laws over the last eight years and a continuing effort to… enhance our economic liberties.”

In the early 1980s, everything changed.

The Republican platform has come to ignore antitrust and the dangers of highly concentrated industries.  The Chicago School took over antitrust, and since then, antitrust enforcement has not so much collapsed as thudded into the abyss.

Republicans are generally thought of as the party of business and fierce supporters of capitalism. Yet over time by blessing egregious mergers and increasingly concentrated industries, they have become supporters of monopolies and less competition. 

The reason to support vigorous antitrust enforcement is not merely American and Republican tradition, but the support of capitalism with free, open and competitive markets.

If Adam Smith’s invisible hand required many buyers and sellers to find the right price, then the invisible hand has gone missing as we have moved towards oligopolies.

Capitalism without competition is not capitalism.

It is worth remembering that when Adam Smith wrote of “the invisible hand” in The Wealth of Nations, he was not simply praising the free market, but condemning the government acting on the behalf of large merchants who were furthering their own interests.

The Austrian economist Friedrich Hayek was a believer in free markets and railed against concentrations of power. He believed that inevitably once economic power was consolidated, the monopolies and cartels would become “governmental instrumentalities to achieve political ends.”

The conservative case for competition is also political. Broken markets create broken politics. Economic and political power is becoming concentrated in the hands of distant monopolists. The stronger companies become, the greater their stranglehold on regulators and legislators becomes via the political process. This is not the essence of capitalism.

When economists promised mergers and monopolies would create efficiency, Hayek wrote, “Personally, I should much prefer to have to put up with some such inefficiency than have organized monopoly control my ways of life.”

Milton Friedman, the arch free marketer, wrote, “Economic freedom is an essential requisite for political freedom. By enabling people to cooperate with one another without coercion or central direction, it reduces the area over which political power is exercised.” 

The principal reason for supporting free markets was not lower prices or consumer welfare, but strengthening of democracy and freedom. “In addition, by dispersing power, the free market provides an offset to whatever concentration of political power may arise. The combination of economic and political power in the same hands is a sure recipe for tyranny.”   

Later in life, Friedman changed his views on monopolies. It is the great irony of history that, while Friedman loved competition, his disciples have done so much to concentrate power and to convince conservatives that monopolies are good.