Mergers and monopolies aided and abetted by lobby money.
“Figuring out why has become a core part of Philippon’s academic research, and he offers his answer in a fascinating new book, “The Great Reversal: How America Gave Up on Free Markets.” In one industry after another, he writes, a few companies have grown so large that they have the power to keep prices high and wages low. It’s great for those corporations — and bad for almost everyone else.”
We are paying more for everything from cell phones (Cuba is higher)and broadband to appliances and airfare. And not because of overseas subsidies, but our own emasculated free market bought and paid for by approved mergers that promised efficiencies and cost savings the consumer never sees.
And now that corporate taxes are low, non-existent for multinationals, our companies are in hog heaven.
Consumers? Not so much.
Keeping the government out of business is not always good for the market with regards to competition.
Tidewater News and Opinion Forum 
The Libertarinas are going to lynch you for this one.
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Why would you think that? We have been warning you of exactly that for 30 years.
Monopolies cannot be maintained absent the support of the government. Big, established companies demand to be regulated heavily because they can afford it and the barrier of over regulation in insurmountable for start ups. Other barriers like protectionist tariffs and restrictive licensing are used to squelch competition.
We have warned consistently that the only way to keep government from being sold to the highest bidder is for it to have nothing to sell.
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The major issue for much of the problem was mergers and acquisitions. The government is the only one that could stop that with anti-trust regulations.
Absent that or at least a weak, compliant one, companies will do what profits them and if that includes buying out the competition, so be it.
Also, the EU has strict rules about cellphones and broadband with regards to renting or sharing infrastructure. Realizing that running 5 sets of cables is silly, the license requires a sharing system that fosters competition. Unlike Cox, for example.
Monopolies can very well defend themselves from competitive upstarts with pricing, supply lines or endless court battles. Carnegie did just that with no government support.
The problem is not too much government interference, but not the right kind.
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Money will see to it that it is never the “right kind” The only right kind is to exclude force and fraud and otherwise let the market work.
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How much “force or fraud” was involved in major mergers? The market says let them merge.
Well, the offshoot of that is that we have 80% of our air travel business among only 4 airlines.
Europe has 40% among their top four, the rest are smaller lines. Their ticket prices are lower.
I agree that some licensing for various professions is unnecessary for all services. We don’t need MD’s prescribing cough medicine, for example. Taxis can be loosened up. Hairstylists don’t need elaborate training, etc.
Monopolies, however, are never a good thing. And if they are big enough, competition is very, very difficult.
And we are paying for that to the tune of about $5000 per year in higher costs of just about everything.
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Only?
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Dr. Philippon makes an interesting point when he observes, paraphrased, that Europe has become more capitalistic while America has become more socialistic. Once again we find that the European economic model is not as our media and politicians make it out to be. And neither is the American economic model.
Dr. Philippon’s thesis is that lax enforcement of antitrust principles has allowed the formation of monopolies in America which, once formed, operate inefficiently, costing all of us more money in the form of higher consumer prices. I don’t doubt it. Still, the irony of Dr. Philippon’s solution — resurgent antitrust plus close management of competitive micromarkets — should not be lost on anyone: You don’t get less socialism/more capitalism by expanding government’s regulatory role in the economy.
I would caution people not to get carried away with Dr. Philippon’s analysis and misinterpret it to mean that monopolies are inherently evil or represent a failure of capitalism. His analysis is actually consistent with the views of Milton Friedman, who argued that truly free markets tend to prevent the formation of monopolies such that only “overt and covert government assistance” allows them to form (Free to Choose) in the first place.
Once you accept that government meddling causes the problem you want to solve, the idea that more government meddling is the solution loses some of its luster.
In case it may be of interest, The Atlantic published an adapted excerpt of Dr. Philippon’s book last month:
The U.S. Only Pretends to Have Free Markets
https://www.theatlantic.com/ideas/archive/2019/10/europe-not-america-home-free-market/600859/
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“… misinterpret it to mean that monopolies are inherently evil or represent a failure of capitalism.”
Monopolies are not a failure of capitalism. In fact it might be the ultimate goal because capitalism is nothing more than the concept of ownership.
However, monopolies are the failure of the free market. Once a monopoly controls a market in such a manner as to stifle or eliminate competition, the market is no longer free.
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RE: “capitalism is nothing more than the concept of ownership.”
Capitalism is far more than that. Some would argue that capitalism derives not from ownership but from contracts.
RE: “Once a monopoly controls a market in such a manner as to stifle or eliminate competition, the market is no longer free.”
That’s glib, but not accurate. It is true that monopolies control markets, but it is also true that government actions (regulations) control markets. This is why both Friedman and Philippon agree that monopolies tend to be transient in free markets.
A monopoly may stifle or eliminate competition for a time, but in the absence of government protection of the monopoly, the emergence of competition is inevitable.
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@Roberts
“Once you accept that government meddling causes the problem you want to solve”
You can deduce anything you want when you start from false premises.
Government regulation of corporate giants came to be because predatory monopolies (or – as the were called then – “trusts”) were egregiously harming the common good. The formation of such trusts in the 19th century with virtually zero government regulation of such activities gives the lie to your false premise.
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RE: “Government regulation of corporate giants came to be because predatory monopolies (or – as the were called then – ‘trusts’) were egregiously harming the common good.”
I’d say that’s a debatable proposition. In its popularized form, the antitrust movement was never entirely rational. For example, the “robber baron” railroad tycoons built a transportation infrastructure that contributed mightily to general economic prosperity. But they were hated for it.
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You picked a poor example with respect to the nefarious trusts of the 19th century. Railroad infrastructure was created by government action, not by the robber barons who attracted hatred because they greedily converted public goods into private wealth. Without the massive amount of free land and unfettered eminent domain they were given that massive infrastructure would not have been built.
Irregardless, the historical emergence of powerful trusts without government regulation still refutes your false premise. The evidence is in. Without regulations, unfettered capitalism leads to monopolies and ultimately to harm to the common good by price gouging and the stifling of innovation and competition.
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RE: “You picked a poor example with respect to the nefarious trusts of the 19th century.”
That just shows that the proposition (that predatory monopolies egregiously harmed the common good) is debatable, as I said it was.
RE: “Irregardless [sic], the historical emergence of powerful trusts without government regulation still refutes your false premise.”
My premise is actually the premise both Milton Friedman and Thomas Philippon put forward as standard economic thinking: That government regulation creates monopolies that would not otherwise exist or last long in free markets. You, yourself repeat the very same idea in your post above criticizing the “robber baron” railroad tycoons of the 19th century.
RE: “Without regulations, unfettered capitalism leads to monopolies and ultimately to harm to the common good…”
Your own example refutes your own statement: “Railroad infrastructure was created by government action, not by the robber barons.” Your beef is that government action created the railroad monopolies. I agree, but point out that the resulting infrastructure was generally and profoundly beneficial.
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My beef is not that the government created the railroad monopolies – railroads are a natural monopoly similar to utility companies. My beef and the beef at the time is that the railroads abused the monopoly power that they were given. The answer then and the answer now when too much power is in private hands is to regulate that power for the public good.
I will agree that is some circumstances regulations may create monopolies that might not otherwise exist. When that happens reform is called for which, given the unrestricted power of money in our political system, is often hard to achieve.
I hope you will agree that the history of 19th century unregulated capitalism shows that damaging monopolies arise without regulation being the cause. You might have trouble agreeing to this since it so obviously true and does not support your doctrinaire anti-government ideas.
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RE: “I will agree that in some circumstances regulations may create monopolies that might not otherwise exist.”
That’s a start. Friedman and Philippon go a step further by noting that monopolies which emerge in free markets tend to be transient. This one observation makes all the difference.
RE: “I hope you will agree that the history of 19th century unregulated capitalism shows that damaging monopolies arise without regulation being the cause.”
Nope. You would have to show that capitalism in the U.S. in the 19th century was in fact unregulated. But you have already argued that government action created the railroad monopolies. So I see no evidence in your comments to support the idea that a lack of government control over markets enabled the formation of monopolies.
As I said, originally, “Once you accept that government meddling causes the problem you want to solve, the idea that more government meddling is the solution loses some of its luster.”
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“You would have to show that capitalism in the U.S. in the 19th century was in fact unregulated.”
No, I don’t. The history is clear. There were no regulations of any sort until very late in the century. It was, for example, not until 1906 that it became illegal to sell tainted meat.
The government grants of millions of acres and right-of-ways to the railroads was hardly regulation. In fact, one of the early problems was the lack of regulation on the gauges of the tracks with different companies using different widths. There was no serious regulation until 1887.
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RE: “There were no regulations of any sort until very late in the century.”
Is that the best you can do, resorting to semantic distinctions between government actions and government regulations?
It is certainly true that the massive regulatory agencies of the federal government that we know today didn’t exist in the 1800s, but you have already argued that government actions created the monopolies of the 1800s which you consider to have been undesirable. Semantics aside, if government created the monopolies, it remains illogical to assume that government can manage or control them for the general good.
In any case, what you haven’t shown is that the great railroad monopolies came into existence as the result of free markets.
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