President Teddy Roosevelt broke up 44 monopolistic trusts in the early 1900s and now congressional leaders think it may be time again to address “creeping monopolization” at its impact on consumer prices and income inequality.
Roosevelt’s trust-busting occurred in a time similar to today when distrust of institutions was high and a few men accumulated enormous wealth. In his Square Deal, Roosevelt imposed regulations to tamp down free market excesses, such as railroad rate-setting and safety requirements for foods and drugs.
Last week, A Senate Judiciary subcommittee held a hearing on antitrust oversight, which revealed a bipartisan interest in doing more to block “cartel behavior and pricing abuse,” according to David Drayden, writing for New Republic.
Drayden calls antitrust regulation the “most important 2016 issue you don’t know about."
“The merger policy of our nation simply has failed,” Senator Richard Blumenthal said at the hearing. “As a national initiative we need to rethink the approach we have taken.” Blumenthal pointed to the airline industry, which has four carriers serving 80 percent of the U.S. Market, but also because some shareholders hold significant interests in more than one carrier.
Senators Orrin Hatch and Al Franken questioned Internet platform monopolies that “stifle competition and inhibit the free flow of ideas." Senator Charles Grassley discussed consolidation in the market for seed that has implications for the food-supply chain and food safety. The Albertsons-Safeway merger was singled out as a regulation failure after Haggen Food and Pharmacy bought 168 stores that the chain was soon required to sell, only to go bankrupt and sell back some of the stores to the merged company.
"We’ve seen plenty of economic issues discussed in this presidential election: the proper level of financial regulation, the high cost of prescription drugs, the clustering of wealth at the very top,” Drayden writes "But all of these things, and many more, boil down to one problem: Practically every major American industry has become extremely concentrated, and this creeping monopolization has increased inequality, created economic hazards where they previously didn’t exist, and heightened public anxiety."
"We need competition because it benefits consumers on price and quality – there’s no incentive for a monopoly to deliver good service if consumers have no options,” he explains. "We need it because consolidation creates a few winners economically amid many losers, and they use that power to influence politics and take even more gains. We need it because any problem with one big bank or one big food distributor magnifies when the company is one of a precious few.”
Drayden says there appears to a political consensus to become more aggressive in blocking and breaking up monopolies, which could be the single biggest action government could take to address rising prices, boost consumer choice and begin to level the income playing field. “Aggressively enforcing antitrust laws,” Drayden says, “would be one of the best ways to reinvigorate our economy.”