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Back in 2005, comedian George Carlin gave a ruthlessly cynical take on big business in America. To an audience of mostly regular workers, he said:

You have owners. They own you. They own everything. They got you by the balls.

He added that politicians exist to give you the illusion of choice while the wealthy capitalists pull the strings. It’s a pithy expression perhaps, but the sentiment resonated with many Americans for a reason.

Understanding the State of Play

Since the wind-down of the Cold War, capitalism has been heralded by the Western political class as the golden ideology. Human well-being is fostered through innovation and market forces, our leaders have told us each year at Davos.

As the government softened its regulatory hand, corporations gradually came to exert more control over the food we eat, the land we live on, and the information we hear.

The globalized high-tech world only reinforced economies of scale. Whereas self-sustaining communities of small businesses were once the norm, today a majority of households are Amazon Prime subscribers.

Firm entry rate has declined, young businesses are vanishing, and the biggest companies are exploding, all trends which were exacerbated during the pandemic.

Facebook may be the most egregious perpetrator of this trend. The tech giant has bought up its competitors, including Instagram and WhatsApp, becoming a de-facto monopoly with an enormous data advantage. As for the competitors that have resisted consolidation, Facebook steals their features.

The energy in entrepreneurship today is around mergers and acquisitions. Many CEOs aspire to be the Zuckerberg of their industry; those who don’t are encouraged to try. Investors don’t simply want to back the winning horse in a race, they want to feed the big fish that will gulp up the minnows.

After all, the collapse of small businesses often plays into the hands of Wall Street’s interests. Since Square announced that it would charge an additional ¢10 fee per transaction, putting the squeeze on small businesses that use the payment processor, its stock price has shot up.

And it’s not just Big Tech. Four agricultural companies control a majority of the world’s seeds, and by extension control most of the sustenance on which humanity and the ecosystem depend. The gap between consumer prices and farmer compensation is growing.

The consolidation in the market for snacks and drinks is equally stunning. Just about every cereal, candy, or soda brand you recognize is part of a larger conglomerate (see below).

I could show this sort of picture for nearly every industry. Ten banks control 54% of our financial assets. Verizon, AT&T, T-Mobile, and Sprint control 98% of the mobile services market. Following a series of mergers and acquisitions in the 2000s, four airlines now control two-thirds of the U.S. travel market.

This is the story of the 21st-century economy. Of course, many workers suffer from layoffs in mergers. But the effect on consumers can also be problematic. Consolidated airlines get away with fare increases and ancillary fees because travelers have no other choice. Healthcare consolidation has increased the average price of hospital services. Mobile service providers get away with data throttling, deliberately slowing speeds on plans advertised as “unlimited”.

Evidence also suggests that consolidated companies underinvest in innovation and depress overall job creation.

More capitalist-minded commentators might point to solid GDP growth or the socially conscious initiatives that these large companies perform. But history suggests that this degree of corporate concentration is unsustainable. Our current level of inequality resembles the “Roaring Twenties” –– the party that ended with the mother of all hangovers.

What Are the Solutions?

The U.S. legal system actually has antitrust regulations dating back over a century. The enforcement of antitrust law, however, has evolved on a case-by-case basis across different eras of history. In the early 1900s, federal courts vigorously pursued big companies, forcibly breaking up Standard Oil and the American Tobacco Company. But the post-Reagan era saw a major retreat from antitrust prosecution.

The Federal Trade Commission can bring forth lawsuits, as it has against Facebook, but these can be struck down by conservative judges. More significant is the fact that the FTC has the authority to define unfair methods of competition.

President Biden signed a recent executive order aimed at “spurring competition”. The provisions are useful, but Biden can direct his FTC to write more new regulations. For example, the FTC could prohibit hard-to-change default settings that prioritize dominant tech platforms.

Congress is also needed. Existing legislation sets a high bar to prove that companies are colluding and price-fixing. Today’s economy is dominated by oligopolies that engage in parallel pricing but no explicit conspiracy. New legislation could ban mega-mergers and level the playing field.

Antitrust measures have the people’s support but are stifled by a Congress that is deferential to the status quo. Corporate consolidation is the issue we need to talk about and pressure our leaders to address.

One hundred years later, it’s time to revive the age of trustbusting.