Most people believe that the American dream is withering away and only available to a select few. And they’re correct. But there is a hidden cause that few are aware of that renders American capitalism itself a myth.
Here’s the real cause of inequality that no one is talking about. 71% of us believe that the economic system is rigged. And both Donald Trump on the right and Bernie Sanders on the left gained ardent support in the 2016 elections with this claim.
America has gone from an open competitive marketplace to an economy where very powerful companies dominate key industries that affect our daily lives. Two corporations control 90% of the beer Americans drink, four airlines dominate all air traffic, five banks control over half of the nation’s banking assets, Google controls over 90% of online searches, and Facebook has more than 70% of all social networking traffic.
Competition is dying in the United States. And capitalism without competition is not capitalism. It is happening across most of the economy. From birth to death, from hospitals to funeral services, and in nearly all industries we have the illusion of choice, but for most critical decisions, we only have one or two companies.
This is called industry concentration. A study by Gustavo Grullon at Rice University revealed that 75% of industries in the U.S. have become more concentrated in the last 20 years. It’s everywhere.
Kidney dialysis, eyeglasses, hospitals, insurance, meat production, and agriculture. The list of industries with dominant players is endless.
Today we find ourselves living in a second Gilded Age. In the 1980s, President Reagan relaxed the merger guidelines and in each decade since then we’ve had a wave or mergers and acquisitions, each consecutively bigger than the last.
The major tech firms – Google, Amazon, Apple, Facebook, and Microsoft – have acquired over 500 firms in the last decade alone. Simultaneously, the Federal Trade Commission and the Department of Justice have failed to bring antitrust cases against companies, because they focus on what’s known as the consumer welfare standard.
As long as companies claim that a merger will reduce prices for consumers, it is allowed. The only problem is that in 95% of cases, prices actually rice following a merger. This is because when competition withers away, companies become price makers and dictate what you pay for their goods or services.
Every day the average American transfers a little of their paycheck to monopolists and oligopolists. If you’re wondering why inequality is so high, it is because the wealthy own the toll roads of American life and everyone else must pay to use them.
Inequality is a symptom, not the disease. The true disease is industry concentration. This matters to everyone and the stakes could not be higher. Industry consolidation helps explain why economic growth is anemic despite trillions of dollars of federal debt and money printing, why the number of startups has declined, and why workers are losing out with lower wages.
We need vigorous antitrust enforcement to return America to a period where competition created higher economic growth, more jobs, higher wages, and a level playing field for all.
Some senators have already begun to act. Senator Amy Klobuchar of Minnesota has introduced a bill called the Consolidation Prevention and Competition Promotion Act to expand antitrust enforcement.
This bill also has support from Republicans, like Senator Mike Lee of Utah. Senator Elizabeth Warren’s Accountable Capitalism Act aims to reform corporate governance by having 40% of board seats elected by workers, among other measures. Republican Senator-elect Josh Hawley of Missouri wants to go after big tech companies and hold them to account.
This will be a key issue of the 2020 elections and we hope our book “The Myth of Capitalism: Monopolies and the Death of Competition” will help inform, educate, and agitate you into action.
It’s time to restore competition and promote an economy that WORKS FOR ALL.
You can learn more at www.mythofcapitalism.com.
Note: This video was first published on Facebook by the Now This Election page. The transcript is ours.