The U.S. Justice Department has given the thumbs-up to the merger of Sprint and T-Mobile, and now all that stands in the way of the two communications giants completing the deal is a lawsuit filed by the attorneys general of 13 states, including Wisconsin’s.
Thanks to DOJ’s approval, there’s widespread belief that there’s no stopping the merger despite a fear it will severely exacerbate the already anti-competitive wireless market, concentrating enormous economic power in the hands of just three huge corporations — the merged Sprint/T-Mobile, AT&T and Verizon.
Mergers and acquisitions have been proceeding at a record pace. It’s almost as if we no longer enforce the nation’s antitrust laws that have been in place for more than 100 years to stop anti-competitive mergers and bust up those that gain a stranglehold on the American economy.
When he became president in 1901, Theodore Roosevelt’s main goal was to break up the railroad cartels that fixed transportation prices, the meat conglomerates who controlled markets and pushed out small competitors, the merger-crazed oil industry that regularly priced gas so low that mom-and-pop service stations lost money if they tried to match the big boys, and the tobacco industry where five corporations merged to control markets. In all, some 40 trusts formed through mergers in the 1890s were broken up by an aggressive Roosevelt, who pointed out how they were hurting ordinary Americans.
Throughout the country’s history, though, trust-busting has seemed to be an afterthought. Except during strong presidencies like Teddy Roosevelt and then later by his distant cousin Franklin D. Roosevelt, who tore apart the loosely regulated financial industry during the Great Depression, getting the government OK for a big merger often has been routine.
William T. Evjue, the founder of the Capital Times, would devote his Saturday “Hello, Wisconsin” column in the ’50s and ’60s to list all the mergers that had been approved during the previous week. And then he’d ask the simple question: “Are we headed toward a dictatorship of wealth?”
The answer is, “yes.”
Dayen says that Bork, a Yale law professor, succeeded in his lifelong crusade to redefine antitrust as something involving only delivering goods at low prices, with nothing to do with economic liberty or protection of markets. He sold his theory to influential economists, who often praised the efficiencies mergers could deliver.
“The next 40 years tell the rest of the story,” Dayen writes. “We’ve seen economic gains funneled to the very top; monopolization of core industries in technology, health care, communications, defense and agriculture.”
In turn, we’ve watched corporate profits soar amid low private and public investment, a degradation of quality service because monopolists don’t have to compete for your business to thrive and a slow death of entrepreneurship and innovation.
Not to mention, of course, a democracy that all too often only responds to the very few.
“Whether you’re an environmentalist trying to save the planet from devastation, or a fast-food worker in need of a living wage for your family, or a student survivor of a mass shooting who wants to save lives, you’re fighting concentrated corporate power,” he adds.
Examples of what he writes are everywhere: the difficulties travelers experience flying on huge airlines that have merged into a very few, in grocery stores where many of the products and brands are made by the same company, the few choices consumers have to connect to the internet, all examples of once thriving competitors now merged into monopolies.
And don’t forget the biggest fiasco of all, the banks that were too big to fail during the Great Recession of 2007-08. The Justice Department, Congress and all the oversight agencies sat on their hands while local and regional banks were gobbled up by big national institutions to form financial conglomerates that nearly had the American economy on its knees.
It’s time for America to stop driving down this road before we add even more strength to this dictatorship of wealth that Evjue warned about.
But we have to get excited about it and demand that the people who run government must stop granting virtually automatic approval to mergers that concentrate this power in fewer and fewer unaccountable hands.