Feel cheated all the time? Here’s the reason — and the solution. Time to start a new era of Trustbusting

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Choice.  It makes a free market work.  Yet how many times recently have you tried to do everyday things like book a flight, purchase cable TV, get Internet service, even buy eyeglasses…and discovered you don’t really have much of a choice.  Instead, you face a giant corporate monopoly.  Sure, perhaps you have two options — two airlines flying your route — but they charge precisely the same fare.  A duopoly. No choice.

Do feel like you are getting cheated all the time?  Like you have to constantly be looking over your shoulder; like you dread opening every email (or, God forbid, piece of small mail you get from a corporation?) I do.  Sure, it sounds paranoid.  But as someone who has spent 20 years writing about consumer headaches, I feel certain many of you feel the same thing.  Misbehaving companies have perfected the art of working together in small groups to charge us all big bucks or make us suffer with crappy offerings.

In a real free market, they couldn’t get away with it. Consumers would “vote with their feet.”  But that’s not how things work in America today.  It can’t get much simpler than this: Remember how quickly airlines raised fares when the price of oil spiked in 2014?  Well, oil has crashed.  What has happened to ticket prices? They’re flat.  Airline company profits? They are cruising along at 35,000 feet.

If you are searching for a critical optic that Americans agree upon, I’m certain I’ve found one: mega-mergers and monopolies are killing the American way.   During his campaign, President Trump decried megamergers, using language that might as well have come out of Bernie Sanders mouth — or, more to my point, out of the mouth of Teddy Roosevelt:

“As an example of the power structure I’m fighting, AT&T is buying Time Warner and thus CNN – a deal we will not approve in my administration because it’s too much concentration of power in the hands of too few,” Trump said at Gettysburg on Oct. 22.

We will soon see if Trump meant the things he has said about concentration of economic power.  But you know as well as I that the vast majority of tongue-wagging that goes on by politicians is misdirection. If you want to know what’s going on, who has the power, you follow the money. In America today, that means who has the monopoly.

Last week, Sen. Chuck Schumer (D-N.Y.) finally shed some critical light on the problem when he announced a new focus for the Democratic Party.  Sadly, the part that deserved the most attention got the least — a promised crackdown on monopolies.  For a moment, try to put aside the D or R label on this platform. I am certain if Teddy were alive today, this is precisely what the great Trustbuster would be doing.

In “A Better Deal,” Democrats laid out the problem is stark terms:

Eyeglasses: With more than 200 million Americans affected by vision loss, eyeglass
affordability has become a critical consumer issue that affects the entire nation [CDC].
Eyeglasses are a necessity for many Americans, but due to consolidation and concentration in the
supply chain, they are increasingly difficult to afford. In fact, the current average price of
eyeglasses is now at $400, a cost in line with an iPad, and is steadily rising [Consumer Reports].
The current eyeglass industry, both in the U.S. and abroad, is largely dominated by one company
– Luxottica – which owns and manufactures most of the top eyewear and sunglass brands, such
as Oakley, Ray-Ban, and Persol, in addition to luxury designer brands. It also owns most of
major distribution chains like LensCrafters, Pearle Vision, Sears and Target Optical, and vision
insurance company EyeMed Vision Care.

Airlines: Despite a rapid decline in the cost of fuel, ticket prices continue to rise while the quality
of service declines. This is the result of a lack of competition in air travel; over the last two
decades, regulators allowed mergers that reduced ten major U.S. airlines to four megacarriers.
Currently, those four carriers serve 80 percent of the market.

Cable/Telecom: Access to cable and internet services are critical for American consumers,
workers, and small businesses to communicate and compete in today’s economy. Yet today, the
market for those services is so concentrated that consumers rarely have any meaningful choice of
provider, and prices are high enough to be prohibitive for many. In over 50 million households,
Americans have no choice at all for internet provider; they are forced to pay the exorbitant price
their single carrier requires.

Beer industry: As of 2016, five breweries controlled over 50 percent of global beer production
compared to ten companies in 2004. Although there is a burgeoning craft brewery industry, these
small businesses are under threat from large legacy brewers that are acquiring their craft
competitors or trying to block craft brewers’ access to the marketplace. In the last year, InBev
which owns Anheuser-Busch and is the world’s largest beer company, struck a deal to purchase
SABMiller, the second largest

Food Prices: The consolidation of six agricultural giants is set to threaten the safety of food and
agriculture in America. The merger of Dow with DuPont, Monsanto with Bayer AG, and
Syngenta with ChemChina, will result in the control of more than 61 percent of commercial seed
sales and 80 percent of the U.S. corn seed market.

If you can’t see the problem, perhaps it’s because you can’t afford the glasses you need. Yes, there are small exceptions in each other these industries — small craft breweries, for example — but they tend to be unicorns, lottery tickets.  Here’s the dirty little secret about the American economy right now.  Once upon a time, an Irish immigrant (like my dad’s great uncle) could arrive, work in a bar for years, eventually save enough to buy a bar, then move over the rest of the family. It was hard, but there was a path. Today, a bartender can squeak by a day-to-day existence (hey, he’s employed!) but there is no chance he can pull together the $1 million needed to open his own place. There’s too much competition from franchises. He has no clear path forward.

The reason economic data is so confusing is we have a two-tiered economy, and specifically, a two-tiered labor market.  There’s millionaire world-famous authors and basement bloggers.  There’s the CEO of a massive coffee chain, and there’s baristas.  There’s real estate magnates and there’s carpenters selling their day labor on TaskRabbit.  There’s Uber drivers making $13 an hour, and there’s Uber, making a handful of millionaires and a couple of billionaires. There’s no decent journalists making a decent living covering city hall in a mid-sized city.  No drivers who feel safe they can put their kids through college; no carpenters who would urge their children to be carpenters, too.

There’s too much concentration of economic power in the hands of too few people.

The real problem is that antitrust law has fallen helplessly behind the times.  Regulators tend to look for a few concessions that make a few consumers happy before a merger, then let it said through. Here’s the most egregious recent example. When regulators allowed American Airlines and US Airways to marry and become the world’s largest airline, they mainly required American to give up some “slots” at one airport.  That airport: Washington D.C.’s Reagan National.  So, things improved for D.C. fliers, the rest of the country be dammed.

Often, lackeys for mega-companies point out that grocery stores are full of exotic foods, and there’s plenty of flights, and there are more eyeglass frames than you could ever try on in a lifetime. So, mergers have *helped* consumers, and have increased choice!

You know better, of course. One of my favorite concepts is “inflation by degradation.”  Sure, the price is the same, but the quality, or quantity, has dropped.  Obviously, you get much less today when you fly than you did a decade or two ago. You get less space, less food, less respect.  And flight times have actually *increased* between cities.

Corporations are great at hiding the real price of things. That’s the whole concept of Gotcha Capitalism.  Regulators have largely missed this trend in their analysis of mega-mergers.  So while you and I are spending so much energy yelling at each other about made-up political controversies, mega-corporations and their owners are laughing all the way to the bank.

It doesn’t have to be this way.  Here’s a great example.

Whenever I would write a screed like this, I used to mention mobile phone service at the top of the list.  You remember “minute rationing.”  Waiting to call the family until after 7 p.m. (or was it 8?)  Being terrified of auto-launch video when you clicked around on a smartphone.  Not to mention horrible call quality. Well, a funny thing happened on the way to the mobile duopoly. Back in 2014, a proposed merger between Sprint and T-Mobile failed. And what has happened since? T-Mobile has consistently rocked the industry with cheaper and cheaper offerings, taking reluctant competitors with it. Verizon is still the heavyweight, but it’s not the 700-pound gorilla, and it can’t ignore the competition.

The end result?  If you aren’t paying less and getting much more from your smartphone than you did in 2014, you’re doing something very wrong.

Choice. It’s a beautiful thing. We can all agree on that. Let’s get to work on it. Object to the rest of Chuck Schumer’s plan if you must; but get on the Trustbusting train right now, whatever your feelings about D.C. politicians. Urge Trump to keep his promise and stop the concentration of economic power.  More than a century ago, Teddy Roosevelt awoke a dormant Sherman Antitrust Act and took on the biggest names in American business — starting with J.P. Morgan. and John D. Rockefeller.   What America needs now, what I believe consumers need now, is another Teddy Roosevelt moment. The world is more complex today, and monopolistic behavior is more complicated, but the problem is the same.

So is the solution.

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About Bob Sullivan 1077 Articles
BOB SULLIVAN is a veteran journalist and the author of four books, including the 2008 New York Times Best-Seller, Gotcha Capitalism, and the 2010 New York Times Best Seller, Stop Getting Ripped Off! His latest, The Plateau Effect, was published in 2013, and as a paperback, called Getting Unstuck in 2014. He has won the Society of Professional Journalists prestigious Public Service award, a Peabody award, and The Consumer Federation of America Betty Furness award, and been given Consumer Action’s Consumer Excellence Award.

4 Comments

  1. Bob, this is an article that more people need to read and understand. The US is overrun with large businesses creating lousy jobs and offering poor products and service. I have worked in a family business for years and compete with multi billion$ competitors. The government is the most restrictive part of being able to compete by requiring us to function as large businesses when our financial capabilities cannot approach them. We continue to survive through great efforts by our employees but the writing is on the wall for our future demise. If Americans will continue to believe the lies of marketing they will only have those that create the lies. Please do more on the lies of advertising and marketing. There lies the rotten heart of politics and business. Thanks for your ongoing quest.

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