05/04/2013
It’s difficult to recall how attitudes were very different at various points in the past.
For example, today, the topic of corporate collusion — of big companies teaming up, formally or informally, to charge consumers more or pay workers less — is of strikingly little interest. If Exxon and Mobil want to become ExxonMobil, well, sure, why not? The free market will make sure everything comes out okay!
But it wasn’t always like that. My recollection is that public suspicion of the big boys engaging in cartelization and monopolization was near-obsessive up through the 1970s, in leftwing, populist, and federal government circles.
To sniff out evidence of collusion, the government had all sorts of tests, both the equivalent in discrimination law terms of "disparate treatment" (a colleague told me that at a previous job he had to submit his appointment planner to the FTC to prove that he'd never been in the same town on the same day as various counterparts at another company suspected of price-fixing with his company) and "disparate impact" (the government had all sorts of complex formulas involving market shares that it used as prima facie evidence of anti-trust violations).
In the late 1970s, I took an Economics course at Rice that presented the now-dominant view that anti-trust had been overblown and there was little to worry about from mergers & acquisitions. The professor very much believed that he was part of small vanguard of intellectual rebels dissenting from stifling orthodoxy.
I came out of the class a true believer that there was very little need for anti-cartel laws.
But, a few things started to chip away at my faith. I read a little pre-1911 business history and a standard scene in any new industry was a meeting at hotel among all the competitors, where the most respected industry leader would open the meeting by saying, "Boys, we've got a problem: too much competition, and that leads to price-cutting. All this cut-throat competition just isn’t American. Here in America, we cooperate, we get organized. So, what I’m suggesting is … " This was not a last resort, either, it was the first thing businessmen in nascent industries did. It was, indeed, the American way.
Also, I then studied corporate strategy in MBA school. The main point of strategy is this: You know that Econ 101 example about how a wheat farmer in South Dakota is in a situation of "perfect competition" where he can’t make any excess profits because he has countless competitors? Well, you don’t want to be a wheat farmer in South Dakota. You want to find or concoct a situation of "imperfect competition" where you enjoy some kind of monopolistic advantage so you can make a higher return on your investment than that poor bastard in South Dakota.
Finally, I got a job and wound up doing some corporate strategy. And it turned out that, just like John D. Rockefeller had explained, competition was awful. My boss negotiated a lucrative merger with our archrival, but the Reagan Administration shot it down because customers complained that we wouldn’t cut prices as desperately if the industry consolidated from three to two firms. (Our customers happened to be giant corporations with lobbyists, not disorganized nobodies, so their complaints were heeded.)
But interest in the whole topic of corporate collusion has waned significantly over the last generation. Today, the notion that companies have an interest in coordinating in various ways to make higher profits at the expense of workers and consumers sounds like, frankly, a Conspiracy Theory. And we all know about Conspiracy Theorists, don’t we?
In contrast to current complacency about cartelization and monopolization, we live in age obsessed with rooting out white racism. The real threat in 2013, it appears from reading the newspapers, is not ExxonMobil and the like, but the Ku Klux Klan.
You might almost think that ExxonMobil and friends like it that way, but that would be a Conspiracy Theory, so forget I ever mentioned it.
This is a content archive of VDARE.com, which Letitia James forced off of the Internet using lawfare.