Why do businesses act this way? At the core, as we’ve already said, it’s to advance their self-interests. But it’s also because we let them. Like it or not, we as individuals and the businesses we create are inextricably linked with our government. The question for us at this point is whether our government is more biased toward our businesses at the expense of individuals, more biased toward individuals, or not biased either way. This essay and the past decade suggest that the first of these is currently more true – that government is more biased toward business at the expense of individuals. But it doesn’t need to be that way. We are still citizens of a country in which the will of the people can prevail. We don’t need to let ourselves be misled, cajoled, and otherwise manipulated into choosing political candidates more supportive of business than of us. We can and should insist on politicians not bought and paid for by big money. We can and should insist on politicians who understand what public service is truly all about and the self-sacrifice that goes along with it (with no offense meant to the politicians who already fit this bill).
Okay, so that’s the “why.” What about the “how”? To succeed, businesses seek to exploit any advantage that they can, honorable or otherwise. An advantage can be gained through such things as collusion (as with our baker), technological advancement, other innovations, subterfuge, fortunate timing, exploitation, luck, hostile actions, political maneuvering, and so on. Once a business entity achieves an advantage beyond pure price competition, that advantage can be leveraged into undue influence and then, in the absence of externally applied impediments, into a nearly impenetrable concentration of power that takes the form of a monopoly or something similar.
In the US, because externally applied impediments are occasionally erected in the form of (increasingly feeble) antitrust efforts, oligopolies form instead of monopolies. An oligopoly is a market or industry dominated by just a few companies (instead of just a single company as in a monopoly). Choose almost any industry you can think of – airlines, hotels, rental cars, automobiles, package delivery, cell phone providers, etc. – and you can probably name the big 3 or 4 in that industry (although sometimes you need to dig a little to find the owners of various brands that might appear to be independent – take a look at the rental car industry, for example). An oligopoly is close enough to a monopoly to make its concentration of power adequately impenetrable.
We gave a short list of tools businesses use to establish excessive advantage and then undue influence and then a nearly impenetrable concentration of power. Here’s a longer list:
- large armies of lawyers
- volume discounts
- mergers and acquisitions
- non-compete clauses, even for unskilled workers
- intentionally taking a loss to drive a smaller competitor out of business
- abuse of the patent system
- exploitation of lower-wage workers in other countries
- battalions of lobbyists and other spin doctors
- continually chipping away at labor unions (which themselves try to be monopolies but are, nonetheless, one of the few muscles employees have to flex in the workplace)
- willingness to take excessive risk due to almost assured government bailouts
- tax incentives to try to attract big companies to particular locations (these are tax breaks mostly offered by states and localities in the name of attracting employment, which is noble; but they give the biggest companies yet another advantage over the smaller ones and end up meaning that smaller businesses and individuals have to subsidize the big ones because somebody needs to pay the taxes)
- super PACs (In 2010, the Supreme Court upheld the right of corporations to make political contributions by right of free speech as guaranteed by the First Amendment, apparently misreading “We the People of the United States” at the beginning of the Constitution as “We the Corporations”. This is not the first time the court has had this particular vision problem.)
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