Companies more powerful than governments

Levels of income inequality and corporate concentration in the US  have reached extreme levels  not seen since the Gilded Age, as our antitrust and monopoly laws, have just become just as weak and inefficient.

Standard Oil and US Steel were more powerful even than the government. Today the so-called FAANGs of the tech sector is mightier than the government.

Tim Wu, a law professor from Columbia University , explains why corporate wealth and power have grown so concentrated in the past four decades and why that might be a problem for democracy. Historian and academic Wu who is neither a democratic socialist nor a populist, makes a case for a return to an earlier interpretation of antitrust law, one focused on power.

Louis Brandeis, the advocate, reformer and Supreme Court Justice who grew up around the mid-to-late 1800s in Louisville, a diverse and decentralised midsized American town  free from “ curse of bigness”. It was big enough to prosper, without industrial  concentration. It was a place where small farmers retailers and professionals and manufacturers all knew each other, worked together and shared a moral framework which was key to well-functioning markets.

The case against Morgan’s New Haven Railway exposed the underside of monopoly power – cartel pricing, bribes to officials and accounting fraud.

The result was break-up of the railways and according to Wu a new approach to antitrust, and public belief in the idea that government should punish those who used abusive, oppressive or unconscionable business methods to succeed as they are wrong and reduces the liberty and prosperity of ordinary people.

Several industries from airlines to media to pharmaceuticals were allowed to reach unprecedented levels of concentration . The tech business in which the products and services are not cheap but free or rather bartered in exchange for personal data, that illustrates the need for radical turn back to  the earlier interpretation of monopoly power.

To Wu Google, Facebook and Amazon are Standard Oil or US Steel of  our day – companies that are more powerful than the governments and post a threat to liberal democracy unless they can be curbed through a broader view of monopoly.

 

The Curse of Bigness: Antitrust in the New Gilded Age by Timothy Wu, Columbia Global Reports $14.99, 170 pages.