Even Goldman Sachs thinks monopolies are pillaging American consumers

If there's one thing politicians from Donald Trump to Hillary Clinton to Bernie Sanders can agree on, it's that the American economy could stand some serious improvement. Wages are stagnant, growth is weak, poverty is high, and we badly need a huge increase in social insurance.

However, most traditional methods by which these problems might be attacked are politically out of the question, at the moment. Given the Republican handicap in the House — and the fact that the Democratic Party elite is weak at best on these issues — huge new legislation for, say, $1 trillion in infrastructure spending or a robust child allowance is extremely unlikely.

But there's another tool on the policy table with enormous untapped potential: anti-trust enforcement. An endless spree of business consolidation has left many marketplaces dominated by a few gigantic corporate behemoths. The results are atrocious — but at any time, the government could simply change how it enforces anti-trust law, and force American businesses to compete. It might just be the cheapest and easiest way to help the average American.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

A Center for American Progress report by Marc Jarsulic, Ethan Gurwitz, Kate Bahn, and Andy Green recently gave us a great overview of American monopolization and anti-trust. It cites strong research showing consolidation leads to higher prices, a decrease in research, innovation, and corporate investment, and poor service quality. However, perhaps the most convincing testimony comes from quotes by Goldman Sachs analysts, rubbing their mandibles together in glee at the prospect of pillaging the American consumer:

This is basically banker jargon for "monopolies make it easier to extract huge profits from captive consumers without working hard" — and if there's any company that knows how to profit at the expense of the nation as a whole, it's Goldman Sachs. It's the left-wing case against monopoly, straight from the horse's mouth!

So why not start cracking up, say, Comcast? Back in the old days, from about 1933 to the late '60s, this would have been an easy decision. Back then market concentration in itself was considered justification to block a merger or break up a large company. But as the neoliberal revolution took hold in the '70s, a much more conservative, deregulatory ideology began to take hold. Under President Reagan, potential efficiency gains were to be considered for proposed mergers, and the government had to prove any anti-competitive effects

Those are hard things to demonstrate ahead of time, and present a slew of opportunities for corporate hack economists to overwhelm regulators with squid ink "analysis" demonstrating supposed lack of negative effects. As a result, anti-trust law became more or less a dead letter.

Even today, as regulators have gotten a little more spine (blocking a proposed merger between T-Mobile and Sprint, for example), often they opt for little niggling rules preventing anti-competitive behavior rather than just blocking the merger outright. To this day, anti-trust law is basically conducted on pro-corporate terrain.

As Jarsulic et al argue, what is needed is a return to jaundiced anti-corporate skepticism among federal law enforcement. Regulators ought to move the burden of proof to merger apologists, closely investigate anti-competitive behavior at huge companies, stop assuming even smaller mergers are no problem, end the presumption in favor of vertical integration, and a few other things. Some of that will be constrained by how the federal courts have interpreted anti-trust law since the neoliberal revolution, but there is still much room to move.

But the most convincing reason to attack corporate consolidation is that there is practically no downside. Cutting a corporate titan into pieces doesn't destroy business, it just splits it up — indeed, often the pieces are more valuable than the original whole. There is no reason whatsoever to think that forcing corporate combat will materially harm the American consumer — the opposite is quite obviously true. Anyone trying to argue otherwise should be met with derisive laughter.