Monopolies really bug me. Over the past few years, it has become clear that in a lot of very important industries there is a decreasing number of competitors. Businessmen pay a lot of lip service to the concept of competition (especially when they are trying to claim superiority over government-enforced monopolies) but when push comes to shove, they prefer to be the monopoly rather than face competition themselves. This sort of hypocrisy really gets under my skin.
Let us examine a few real-life examples of some of the developments that are leading to this outbreak of consolidation in various fields, trends involving culture as well as government. As a whole, these trends have some potentially ugly long term ramifications that have largely been unexamined. The business practices of this age look much like the Guilded Age, and that’s not a good thing.
Among the more unpleasant reasons why business consolidation is going on at such a high rate is that both Republican and Democratic governments in the past couple decades or so have been very lax about defending competition, for a variety of different reasons. Republicans have generally supported the weakening of such unions as exist and have supported the ballooning of corporate payouts to top executives and the concentration of more and more wealth in ever fewer hands. On the side of the Democrats, the expansion of bailouts and government “loans” in an attempt to jumpstart the economy has made it easier for large amounts of money to be given to a few companies (like AIG/Valic, or Bank of America) rather than to a large number of small companies, much less mom and pop stores. The “efficiencies” of scale, never mind the inefficiencies of the bloated company hierarchies themselves, makes it easier to have a few companies one is dealing with in key industries rather than deal with competition where failure is a real possibility. Plus, government influence and control is easier when the companies involved are ‘too big to fail.’ So, Republican odes to competition and Democratic condemnation of big business end up being merely lip service.
There are other reasons that consolidation is occurring in many fields. In fields as varied as agribusiness, oil, big pharma, cellular service, and bookselling, the pressures for combination are immense. Some of these industries have massive barriers to entry for research & development and capital investments, and extreme price pressures that mean only big companies get favorable discounted and fair treatment from suppliers. Additionally, the simultaneous decline of status of workers and of customer service (more automated help lines, lower status of frontline workers, and the outsourcing of certain functions to other countries has led to an increasingly wide disconnect between people and their goods and services and the companies that bring them. The claims of companies to make customer satisfaction their main objective ends up being lip service.
Another factor aiding the development of monopolies is the spread of this round of globalization. As was the case in the last round of globalization (extending throughout much of the 19th century and early 20th century) Foreign Direct Investment and trade imperialism led to the consolidation of large companies, with the resulting attacks against tariffs and support of ‘free trade,’ and the use of companies as the front of national interests. Only in an atmosphere of relative peace between the major powers (where competition existed on a national level through nonmilitary means) can this sort of situation endure. Should the current worldwide threat of conflicts endanger the long supply chains for major industrial powers (like Japan) or endanger the ability of other powers to finance their debt on the cheap (like the USA), or should a conflict in some backwater area trigger a chain of “defensive” alliances on both sides (as happened in Bosnia in 1914), the whole spread of globalization could easily be reversed as it was from 1914-1945. This is especially dangerous because prolonged depressions in countries used to a high standard of living often trigger either military coups or the rise of demagogues from the extreme right or left and the collapse of moderates.
There are competitions that are genuinely supported by different types of people, but the support is inconsistent and largely based on self-interest and worldview. People support types of competition that they believe to represent their best interests, while preserving those areas where the lack of competition serves to their advantage (or so they think). Companies like state governments competing over offering tax advances and cheap labor for their factories or call centers. Customers like the competition of businesses, which keeps prices low. Competition between ethnic groups or tribes in certain troubled regions (Afghanistan, Libya, Somalia, Iraq) keeps them unable to unite against their hostile neighbors. People, companies, and governments wish to unify what they can control and divide into impotence what they cannot directly control. When will we see that all of these things are connected, and that the people who wish to hold power in some sphere or another only pay lip service to ideals like competition and fair play?