The popular telling of the Boston Tea Party gets something wrong.
The colonists were not responding to a tax increase. They were responding to the Tea Act of 1773, which granted a tea monopoly in the colonies to the well-connected East India Co.
Many colonists, already upset about taxation without representation and other indignities, were enraged. In response, dozens of them stormed three ships in Boston Harbor on the night of Dec. 16, 1773, and tossed chests of East India tea into the water.
A major spark for the American Revolution, then, was a protest against monopoly.
A strong strain of anti-monopoly sentiment has run through our politics ever since. America was born as “a nation of farmers and small-town entrepreneurs,” historian Richard Hofstadter once wrote, “anti-authoritarian, egalitarian and competitive.” Hostility to corporate bigness animated Thomas Jefferson and Teddy Roosevelt, as well as the labor movement, Granger movement, Progressive movement and more.
Of course, monopolies and other corporate giants have fought back against these assaults on their power, and sometimes succeeded for years or decades at a time. It happened during the age of Rockefeller and Morgan. Over the past 40 years, it has happened again.
The federal government, under presidents of both parties, has largely surrendered to monopoly power. “The ‘anti’ in ‘antitrust’ has been discarded,” as legal scholar Tim Wu puts it in his new book, “The Curse of Bigness.” Washington allows most mega-mergers to proceed either straight up or with only fig-leaf changes. The government has also done nothing to prevent the emergence of dominant new technology companies that mimic the old AT&T monopoly.
This meekness has made possible the consolidation of one industry after another. For a long time, though, it’s been hard to figure out precisely how much consolidation. The available statistics just aren’t very good.
Fortunately, researchers in the private sector have recently begun filling in the gaps. On Monday, the Open Markets Institute – an anti-monopoly think tank – released the first part of a data set showing the market share that the largest companies have in each industry. The main theme in the charts: Big companies are much more dominant than they were even 15 years ago.
Mergers are one big reason. Another is the power of network effects – in which the growth of, say, Facebook, makes more people want to use it. True, a few industries have become less concentrated, but they are exceptions. If anything, the chart understates consolidation because it doesn’t yet cover energy, telecommunications and some other areas. It also doesn’t cover local monopolies, such as hospitals that are dominant enough to drive up prices.
The new corporate behemoths have been good for their executives and shareholders – and bad for almost everyone else. They tend to raise prices. They hold down wages, because where else are workers going to go? They use their resources to sway government policy. Many of our economic ills stem partly from corporate gigantism.
So what are we going to do about it? Top Democrats believe that anti-monopolism can be a political winner for their party. Sen. Amy Klobuchur of Minnesota, a potential presidential candidate, has offered a good bill that would raise the legal standards for merger approval. But preventing future mergers won’t be enough. Eventually, the government will probably need to break up existing giants. One obvious candidate is Facebook.
And corporate bigness doesn’t need to be a partisan issue. Sen. Mike Lee of Utah is among the Republicans who have expressed concern about it. Conservatives, after all, are supposed to care about the ideals that monopolies undermine. Ultimately, monopolies aren’t only an economic problem. They are also a political one.
“We may have democracy, or we may have wealth concentrated in the hands of a few,” Louis Brandeis, the Supreme Court justice, said a century ago, “but we can’t have both.”
David Leonhardt is a columnist for The New York Times.