Does the Economy Serve Us or Them?
Let’s talk about the destruction of the American economy – mergers and acquisitions style. As The New York Times points out, back in 1994, Massachusetts allowed its two most prestigious hospitals – Massachusetts General and Brigham and Women’s Hospital – to merge. The two hospitals came together to form Partners HealthCare, and according to investigations by the Massachusetts Attorney General’s office, that merger meant healthcare started to get really expensive for the people of Massachusetts. The merger gave the two hospitals incredible market power, allowing them to drive up healthcare costs in the Boston area.
Today, Partners HealthCare is the largest healthcare provider system in Massachusetts, with over 6,000 doctors and 2,800 beds across its various medical centers and hospitals. And it’s looking to get bigger and more powerful. An investigation by the Massachusetts state legislature found that Partners HealthCare’s plan to acquire South Shore Hospital outside of Boston would drive up total healthcare spending in the region even higher, by up to $26 million per year and maybe more.
Because when you own a market, when you're close to having a monopoly, you can charge whatever you want. People have very limited choices about anyplace else to go. The situation that the people of Massachusetts are facing with Partners HealthCare is the perfect example of how destructive market-dominating corporations can be to our economy and the marketplace.
Basically, in order for an economy and marketplace to work for everyone, there have to be rules in place that facilitate competition, because competition is essential in a free market economy. You can’t have virtual monopolies in commerce. It’s that simple. But ever since Reagan came to Washington and stopped enforcing the Sherman Anti-Trust Act, it’s been the same old story: Big companies buying out little companies, merging with other big companies, and forming giant corporate powers.
Competition in the American marketplace has become a joke. Take the banking industry for example. Twenty-five years ago, Americans had a wide variety of banks to choose from, from local and regional banks, to national banks. And back then, even the national banks weren’t that huge.
Slowly but surely however, the competition in the banking industry has disappeared, thanks to a never-ending process of mergers and acquisitions. As Mother Jones brilliantly points out, 37 banks and financial institutions back in 1990 have slowly transformed into the big 4 banks we see today (Citigroup, JPMorgan Chase, Bank of America and Wells Fargo). Those are the same 4 big banks that essentially control most of Wall Street, and that have played major roles in America’s economic and financial decline. But the banking industry isn’t alone in its stunning lack of competition.
Right now, there are 10 giant corporations that control, either directly or indirectly, virtually every consumable consumer product we buy. These corporations are Kraft, Coca-Cola, PepsiCo, Nestle, Proctor and Gamble, General Mills, Kellogg’s, Mars, Unilever, and Johnson and Johnson. These 10 corporations in turn own, market, or distribute what people believe are the products of hundreds of other companies. But they're not owned by other companies; They're owned by one of these monopolistic giants, doing business under small-brand names.
For example, Proctor and Gamble is best known for its cleaning and personal hygiene products, like Tide detergent, Ivory hand soap and Joy dishwashing liquid. But the company also owns or markets other products, from IAMS dog food and Pepto-Bismol to Duracell batteries and Metamucil. And many American consumers know Nestlé for its Nescafé espresso, Nestlé ice cream or Nesquick chocolate milk. But this coffee and chocolate milk conglomerate also owns or helps market Purina dog and cat food, Gerber baby food, Ralph Lauren cologne, and Garnier hair care products.
These giant corporations essentially have a stranglehold on America’s consumer market. And it’s the same competition-destroying story with America’s media and telecom industries too.
Back in 1983, 90% of American media was owned by 50 companies. As of 2011, that same 90% was controlled by just 6 massive corporations: GE, Newscorp, Disney, Viacom, Time-Warner, and CBS.
The bottom-line is that ever since Ronald Reagan came to Washington, competition has left the American marketplace, and we’ve all suffered as a result. The endless stream of mergers and acquisitions over the past 34 years has taken away most all of the competition, and concentrated far too much power in the hands of too few players.
The only way we can have an economy that works for everyone again is by undoing the damage that Reagan caused, by putting the Sherman Anti-Trust Act on steroids, breaking up America’s giant corporations, and ensuring that competition is again a major force in our marketplace.