Robert Bork helped dismantle anti-monopoly policy, and we’re living with the consequences
Sen. Paul Wellstone was a lone voice of dissent
Photo by Justin Sullivan/Getty Images.
This is the third in an occasional series on the new threat of monopoly power on America’s economy and political system. Read part 1 on efforts to curb monopoly power in the 19th century. And part 2 on how the successful effort to curb monopoly power helped build the middle class.
“Oh, yes, they’ll cut prices. They’ll have loss leaders. And after they’ve cut out every hint of competition, they’ll set the prices.”
That’s New York state Sen. Albert Lewis prophetically in April 1975 as the state legislature repealed its fair trade law, which had given manufacturers the ability to establish minimum prices for the sale of their products, protecting retailers from large discount chains. The OPEC oil embargo in 1973 had sent prices skyrocketing, and fair trade laws became a target of policymakers looking to combat inflation.
At its peak, 45 states had adopted fair trade laws, but by the end of 1975 Congress passed legislation prohibiting them. In a sign of the shifting ground in D.C., the bill faced little opposition — only Minnesota Senator Hubert Humphrey voiced disapproval.
For nearly three decades after World War II, aggressive efforts to reign in concentrated corporate power helped create a strong middle class, expanded entrepreneurial opportunities, and even reduced racial income gaps despite Jim Crow and other racist economic barriers. Yet despite this, inflation and recession opened the door to a pro-monopoly intellectual revolution.
Throughout the 1960s and 70s University of Chicago professor Aaron Director influenced a new generation of conservative thinkers. One of the most influential: Robert Bork, who in 1978 after serving as the U.S. solicitor general under President Richard Nixon, wrote “The Antitrust Paradox.” He argued that antitrust enforcement should be focused narrowly on economic efficiency and consumer impacts.
These movements on the right fused with Ralph Nader’s consumer movement on the left and the new generation of Watergate Democrats in Congress to form a bipartisan coalition seeking to strip away some regulations, thinking it would lower costs for consumers. The result was deregulation of the airline, railroad and trucking industries under President Jimmy Carter.
Ronald Reagan’s election in 1980, brought the ideas of the University of Chicago’s economics department into the White House, and in 1982 antitrust was gutted without a vote. The Department of Justice implemented new merger guidelines inspired by Bork. It instructed regulators to focus on a merger’s potential impact on prices, leaning heavily on technical economic analysis that ignored the other consequences of concentrated power. These new merger standards, lax enforcement of the Robinson-Patman Act’s prohibition on price discrimination, and a light touch on Wall Street all helped blow the door open to several decades of corporate consolidation.
One way to contextualize these policy changes — which were accompanied by a pro-monopoly judiciary — is to consider the rise of Walmart. What began as a five-and-dime store grew from a regional chain of 38 stores in 1970 into a retail giant that controls 50% or more of various local grocery markets today.
The death of fair trade gave Walmart its first opening to undermine local retailers. The halted enforcement of the Robinson-Patman Act gave the company the ability to utilize its growing size to cut preferential deals with suppliers — further undercutting small retailers. Those suppliers — given the free pass by the new merger guidelines — began consolidating to counter to the growing power of Walmart. This in turn,; produced the food giants that have squeezed family farmers, and the industrial titans that shipped jobs overseas.
The 1990s cemented the dominance of corporate power. President Bill Clinton embarked on his own deregulatory agenda, working with Republicans in Congress to remove constraints on consolidation in the telecommunication and financial industries. A new consensus in Washington had been born and would continue through the Bush and Obama years. One of the few to see what was happening was Minnesota Sen. Paul Wellstone.
Wellstone voted against Clinton-era pro-monopoly laws and warned of the consequences of corporate consolidation. He even developed a three-point plan for curbing monopoly power in America. In a New York Times article on the lack of popular political agitation against the rapidly consolidating economy, Wellstone was highlighted as one of the rare dissenting voices. Wellstone noted in the piece that the pro-monopoly revolution was as much ideological as it was the result of corporate influence. Washington was in the grip, he said, of “a set of shared assumptions about what is necessary these days for survival in a global economy.”
For decades problems like exploding inequality, stagnant wages, the decline of main street businesses, and the loss of our manufacturing base have been framed as the inevitable consequence of impersonal forces like globalization and technology. Wellstone saw through this — just like generations of Americans before him.
Now, we’re having to relearn these lessons. The Federal Trade Commission is once again standing up to anticompetitive conduct; the Department of Justice is seeking to toughen merger guidelines; policymakers like Minnesota Sen. Amy Klobuchar are advocating for antitrust reforms, and just this past legislative session the Minnesota House did the same.
Monopolists have won a series of battles these past four decades, but history shows there is nothing inevitable about their ultimate victory.
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