(*Editor’s note: This is another excerpt from a series of occasional commentaries on the history of monopoly power in the United States.)
By Justin Stofferahn
“Oh, yes, they will lower the prices. They will have loss leaders. And after eliminating all traces of competition, they will fix the prices. »
It was prophetically New York State Senator Albert Lewis in April 1975, when the state legislature repealed its Fair Trade Act, which had given manufacturers the ability to set minimum prices for the sale of their products, thereby protecting retailers from large discount chains. The OPEC oil embargo in 1973 had caused prices to skyrocket, and fair trade laws became the target of policymakers seeking to fight inflation.
At its peak, 45 states had passed fair trade laws, but by the end of 1975, Congress passed legislation banning them. In a sign of the changing terrain in DC, the bill met with little opposition — only Minnesota Sen. Hubert Humphrey voiced his disapproval.
For nearly three decades after World War II, aggressive efforts to reign in concentrated corporate power helped create a strong middle class, expand entrepreneurial opportunities, and even narrow racial income gaps despite Jim Crow and d other racist economic barriers. Yet despite this, inflation and recession opened the door to a pro-monopoly intellectual revolution.
From One Roosevelt to Another: How We Repressed Corporate Power and Built a Middle Class
Throughout the 1960s and 1970s, Professor Aaron Director of the University of Chicago influenced a new generation of conservative thinkers. One of the most influential: Robert Bork, who in 1978, after serving as United States Solicitor General under President Richard Nixon, wrote:The antitrust paradox. He argued that antitrust enforcement should focus narrowly on economic efficiency and consumer impacts.
As conservatives built this intellectual framework, big business also activated and created new organizations like the Business Roundtable, which targeted antitrust and other regulations.
These right-wing movements coalesced with Ralph Nader’s consumer movement on the left and the new generation of Watergate Democrats in Congress to form a bipartisan coalition seeking to eliminate certain regulations, believing it would cut costs for consumers. The result was the deregulation of the airline, rail, and trucking industries under President Jimmy Carter.
The election of Ronald Reagan in 1980 brought the ideas of the University of Chicago’s economics department to the White House, and in 1982 antitrust was eviscerated without a vote. The Department of Justice has implemented new guidance on Bork-inspired mergers. He asked regulators to focus on the potential impact of a merger on prices, relying heavily on technical economic analysis that ignored other consequences of the concentration of power. These new merger standards, lax enforcement of the Robinson-Patman Act’s price discrimination prohibition, and a light touch on Wall Street all helped open the door to decades of corporate consolidation.
We’ve fought monopoly power before – we can do it again | Opinion
One way to contextualize these policy shifts — which have been accompanied by a pro-monopoly legal system — is to consider the rise of Walmart. What started as a five-cent store has grown from a regional chain of 38 stores in 1970 to a retail giant that today controls 50% or more of the various local grocery markets.
The death of fair trade gave Walmart its first opening to undermine local retailers. The shutdown of the Robinson-Patman law enforcement gave the company the ability to use its growing size to strike preferential deals with suppliers, which further reduced prices for smaller retailers.
These vendors, permitted by the new merger guidelines, have begun banding together to counter the rise of Walmart. This in turn; produced the food giants that squeezed family farmers and the industrial titans that sent jobs overseas.
The 1990s cemented the dominance of corporate power. President Bill Clinton has embarked on his own program of deregulation, working with Republicans in Congress to remove constraints on consolidation in the telecommunications and financial sectors. A new consensus in Washington was born and would continue through the Bush and Obama years. One of the few to see what was going on was Minnesota Senator Paul Wellstone.
Wellstone voted against Clinton-era pro-monopoly laws and warned of the consequences of corporate consolidation. He even came up with a three-point plan to limit monopoly power in America. In a New York Times article on the lack of popular political agitation against the rapid consolidation of the economy, Wellstone was presented as one of the few dissenting voices. Wellstone noted in the article that the pro-monopoly revolution was as much ideological as the result of corporate influence. Washington was plagued, he said, with “a set of shared assumptions about what is needed these days to survive in a global economy.”
For decades, issues like exploding inequality, stagnating wages, the decline of high street businesses and the loss of our manufacturing base have been presented as the inevitable consequence of impersonal forces like globalization and technology. . Wellstone understood this, as did generations of Americans before him.
Now we must relearn those lessons. The Federal Trade Commission is once again standing up against anti-competitive behavior; the Department of Justice seeks to toughen merger guidelines; policymakers like Minnesota Senator Amy Klobuchar are advocating for antitrust reforms, and in the last legislative session, the Minnesota House did the same.
The monopolists have won a series of battles over the past four decades, but history shows there is nothing inevitable about their ultimate victory.
Justin Stofferahn lives in White Bear Township and is a public affairs professional who has worked on a variety of tax and economic development issues. He wrote this article for the Minnesota Reformer, a sister site to the Pennsylvania Capital-Star, where he first appeared.