Posted 11 months ago on Jan. 9, 2013, 4:03 p.m. EST by LeoYo
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Corporate America: A Whale in a Fish Tank
Wednesday, 09 January 2013 13:55 By Thom Hartmann and Sam Sacks, The Daily Take | Op-Ed
Sticking a whale in a fish tank is a bad idea. With its fat body pressed up against all four glass walls, there's no room for any of the other fish – goldfish, zebra fish, sucker fish – to swim about or even eat since, of course, the whale will eat all the fish food and likely the fish themselves.
Eventually all the other fish will die. Then, all you're left with is a whale, alone, in a fish tank. And what good is that?
The point is whales don't belong in fish tanks any more than giant transnational monopolies or oligopolies belong in our economy. Nature has a way of restricting the size of animals in their ecosystem making sure they don't get too big and cause problems for the other animals and organisms that call the same ecosystem home. Similarly, our economy must have mechanisms to restrict the size of corporations to make sure they don't become too big and cause problems for other businesses trying to make a living.
This was the intent of the Sherman Anti-Trust Act passed in 1890 during the height of the Gilded Age (also known as the long depression), when there were a bunch of whales in our fish tank economy.
But, the last great break-up of a monopoly happened in the 1970's and 80's when Richard Nixon's Justice Department went after AT&T, which at the time was the largest corporation in the world, for violating anti-trust laws. After a settlement, AT&T agreed in 1984 to break up its Bell System into seven different companies known as "Baby Bells."
That left the market open for new players to jump in offering new services and new prices. The AT&T whale was taken out of the fish tank, and in the end, it was good to all the investors involved. In fact, the value of AT&T and all its former subsidiaries tripled after the break-up.
Breaking up monopolies is good for the economy. Whether it's the break-up of Standard Oil and American Tobacco in the early 20th Century, or more recently the break-up of AT&T, removing the whale from the fish tank always leads to more competition in the market, which, to quote Conservatives, means lower prices and better products.
Unfortunately, there haven't been many success stories since the break-up of AT&T. That's because, in response to the AT&T break-up, Ronald Reagan stopped enforcing the Anti-Trust Act, and the monopolies and oligopolies have since returned. Even the "Baby Bells" began merging together again forming bigger and bigger telecom companies.
This week, Robert Reich warned that future bailouts of Wall Street are inevitable. Why? Because there's too many dang whales in the Wall Street fish tank.
As Reich points out, "The biggest Wall Street banks are now far bigger than they were four years ago when they were considered too big to fail. The five largest have almost 44 percent of all US bank deposits. That's up from 37 percent in 2007, just before the crash. A decade ago they had just 28 percent."
That means our entire banking system relies on just a few whales that must be saved at all costs from going belly up, or else, the entire system goes belly up.
While banking is the most notorious example of whales in a fish tank, it's not the only example.
Consider our food industry. According to Tom Philpott at Mother Jones magazine, agriculture oligopolies exist from farm to shelf. Just four companies control 90% of the global grain trade. Just three companies control 70% of the beef industry. And just four companies control 58% of the pork and chicken industry.
On the retail side, Walmart controls a quarter of the entire U.S. grocery market. And just four companies produce 75% of our breakfast cereal, 75% of our snack foods, 60% of our cookies, and half of all the ice cream sold in supermarkets around the nation. And then there's the health insurance market. Just four health insurance companies – UnitedHealth Group, WellPoint, Aetna, and Humana – control three-quarters of the entire health insurance market. And as a 2007 study by the group Health Care for America Now uncovered, in 38 states, just two insurers control 57% of the market. In 15 states, one insurer controls 60% of the market. Since there's no competition in this market, prices continue to get higher and higher while the profits for these whales skyrocket, too. In the cellular phone market, just four companies – AT&T Mobile, Verizon Wireless, T-Mobile, and Sprint Nextel – control 89% of the market. And in the internet market, just a handful of corporations – AT&T, Comcast, Time Warner, and Verizon – control more than half of the market.
Also, from newspapers to television, radio to movies, oligopolies – or whales – dominate the markets.
If we were to give the internet oligopolies the same treatment Richard Nixon gave AT&T in the 1970's, then maybe we Americans could enjoy the same super-fast internet speeds and super-cheap rates that most of the rest of the developed world, which have kept the whales out of the tanks, enjoys. For example, South Koreans get internet speeds 200-times faster than what most American get. Yet, they only pay $27 a month for their service. And similar success stories can be found all across Europe.
Rising healthcare, food, and energy costs can all be traced back to the whale in the fish tank problem of oligopoly in America. Recently, we unveiled the #NoBillionaires Campaign to draw attention to the parasitic effect billionaires have on our economy. You can check out the website at www.NoBillionaires.com.
But trillionaire transnational corporations are just as harmful to our economy. And we need lawmakers willing to stand up to these corporate whales and get back to enforcing the Sherman Anti-Trust Act once again.
Let the fish swim freely.
This article was first published on Truthout and any reprint or reproduction on any other website must acknowledge Truthout as the original site of publication.