The Myth of Capitalism: Monopolies and the Death of Competition
a book by Jonathan Tepper
(our site's book review)
The Amazon blurb says that The Myth of Capitalism: Monopolies and the Death of Competition tells the story of how America has gone from an open, competitive marketplace to an economy where a few very powerful companies dominate key industries that affect our daily lives. Digital monopolies like Google, Facebook and Amazon act as gatekeepers to the digital world. Amazon is capturing almost all online shopping dollars. We have the illusion of choice, but for most critical decisions, we have only one or two companies, when it comes to high speed Internet, health insurance, medical care, mortgage title insurance, social networks, Internet searches, or even consumer goods like toothpaste.
Every day, the average American transfers a little of their pay check to monopolists and oligopolists. The solution is vigorous anti-trust enforcement to return America to a period where competition created higher economic growth, more jobs, higher wages and a level playing field for all. The Myth of Capitalism: Monopolies and the Death of Competition is the story of industrial concentration, but it matters to everyone, because the stakes could not be higher. It tackles the big questions of: why is the US becoming a more unequal society, why is economic growth anemic despite trillions of dollars of federal debt and money printing, why the number of start-ups has declined, and why are workers losing out.
Around 130 years ago, robber barrons used unfair monopoly tactics to get an exclusive place at the money trough, while the rest of us got scraps; the bad news is monopolists are at it again, but it's even worse
Monopolists and oligopolists are gorging themselves at the trough while the rest of us are stuck with frantically licking up the few scraps they leave us—if they're feeling generous
Monopoly: the rich get richer, but the rest of us get screwed
“In a compelling and deeply researched polemic, Tepper and Hearn
describe a market that is broken. Increasingly, instead of delivering the
benefits of competition to all, it is driving monopoly profits to the
few. Regulatory and policy capitulation in the face of market
concentration has put a dead weight on productivity and fostered
inequality not just in the United States but globally. Their call to free
markets from private monopolists and oligopolists should unite both
left and right the world over.”
—Charles Kenny, Senior Fellow, The Center for Global Development, Author of Getting Better
Workers move so frequently between agency and industry positions that they are said to pass through ‘revolving doors’ as they move from public- to private-sector roles. Long before ‘draining the swamp’ became a campaign position of the current US administration, economists raised concerns that lax regulation might be exchanged for lucrative subsequent employment, resulting in agencies that serve the interests of industry over the very public they were designed to protect (Source: Revolving doors and regulatory capture, Haris Tabakovic, Thomas Wollmann, Voxeu)
“This is an extremely important, timely and well researched book.
jonathan Tepper is himself a successful entrepreneur and he knows
what “good” capitalism looks like. The current system, suborned by
market abuse, corporatism, cronyism and regulatory capture and
resulting in increasing inequality and anger amongst the wider
population, is badly in need of reform. If it is not reformed by people
who believe in markets it will be reformed by people who don’t and
that would be bad news for everyone. Jonathan Tepper understands this
well and I recommend his book to every member of the US Congress.”
—Sir Paul Marshall, Chairman of Marshall Wace Hedge Fund Group
If you want to understand the real cause of rising inequality, read The Myth of Capitalism: Monopolies and the Death of Competition
"If you want to understand the real cause of rising inequality, discard Piketty and read Tepper instead. This is a tract for the times with a rare bipartisan appeal."—Niall Ferguson, Milbank Family Senior Fellow, the Hoover Institution, Stanford, and author of The Ascent of Money
"At a time of extraordinary partisanship in the U.S. Congress and legislative bodies all over our country, the need for some common grounds of public policy is imperative to create new jobs, new industries, new standards of economic and political freedom, and new leaders who will provide a more stable base for American and world peace and justice."—Senator Richard Lugar
“A broad-ranging and deeply-researched analysis of the inexorable growth of monopolies and oligopolies over the past four decades. Tepper makes a compelling case that the government’s failure to rein in tech titans and other corporate behemoths is at the root of perhaps the most troubling macroeconomic trends of our time, including rising inequality and slowing productivity. Clear and highly accessible, the book takes no prisoners, arguing that monopolists’ funding and sloppy thinking has corrupted every aspect of the system, from politicians to regulators to academics.”—Kenneth Rogoff, Thomas D. Cabot Professor of Public Policy and Professor of Economics at Harvard University, author of the bestselling book This Time is Different
Monopolists’ payoffs and sloppy thinking has corrupted every aspect of the system, from politicians to regulators to academics, destroying democracy in the process; here an oligarch buries U.S. democracy
“A deeply insightful analysis of the rapidly creeping tentacles of the corporatocracy and the devastating impacts of a predatory form of capitalism. By discouraging competition, empowering the very few — the very rich oligarchs — and demolishing the very resources upon which it depends, predatory capitalism has created a failed global economic system, a Death Economy. This book helps us understand the importance of replacing it with a system that is itself a renewable resource, a Life Economy.”—John Perkins, former chief economist and author of New York Times best-selling books including Confessions of an Economic Hitman and The Secret History of the American Empire
The final result of the Death Economy if we change nothing for the rest of the century
Predatory capitalism has led to an economic system Perkins calls the Death Economy. “We’ve really created a global empire; it’s a corporate empire; it’s controlled by big corporations; the government is controlled by big corporations. It’s based on ravaging the earth and warfare, and it’s a terrible failure — it’s not working. [except for the monopolies and oligopolies]”
Here's an insightful partial summary from Able Foxtrot: "From the Introduction: 'Capitalism without competition is not capitalism.'
Competition is essential to the moral success of capitalism, as was well known to the Founders of the American republic as contemporaries of Adam Smith. The benefits of free market capitalism include:
- Creates clear price signals, efficiently balancing supply and demand
- More choices, innovation, and economic growth
- Prevents unjust inequality, dispersing economic power and strengthening democracy
- Promotes individual initiative and freedom
"The credibility of libertarianism, however, has been consistently damaged by its alleged [feigned?] naivete regarding the problem of monopolies. The absence of a governmentally imposed antitrust policy, runs the popular argument, would permit either voluntary cartelization or 'cut throat' competition which, in turn, would result in the emergence of a few giant corporations able to use their monopolistic positions to tyrannize over society." (Source: The Free Market and the "Tyranny of Wealth", David Osterfeld, FEE)
Rod Serling, brilliant creator of the Twilight Zone
In a Twilight Zone mood, we are now submitting for your approval: "We’re hurtling down a one-way road toward the new world economic order at mind-boggling speeds, the terrain is getting more treacherous by the minute, and we’ve passed all the exit ramps. From this point forward, there is no turning back, and the signpost ahead reads 'Danger.'"
We are hurtling toward an economy with few lords and millions of serfs—today's tech giants have the best monopolies that money and influence peddling can buy
The first thing Obama did as president is to give away a trillion bucks of OUR money without even asking. Many have asked why and how this could happen. The great and growing damage of monopolies running the show in the USA have led to inequality, political dysfunction, diminishing opportunities, and the rise of too-big-to-fail companies that get rewarded for failure while we pay the penalties for their failures. We need to stop admiring the tech titans for their successes and begin noticing that they became big by killing and swallowing and acquiring companies full of jobs, as well as lobbying for deregulation and creating a few jobs as they killed many jobs.
Democracy in Chains: The Deep History of the Radical Right's Stealth Plan for America concludes that we have at most two or three years to prevent the completing of the stealth takeover of our democracy. The author—Nancy MacLean—tells us that the "Kochtopus" tentacles are sunk deep in every nook of American democracy. The author connects the dots and follows the money to show who's behind the subversion of democracy for the benefit of the billionaire class. She follows the money and traces its history back to the start of libertarianism. Note: Kochtopus refers to the many-tentacled Koch network run by Charles G. Koch and David H. Koch for the benefit of themselves and the other oligarchs in their democracy-stomping network.
What's the idea of noticing me? The Kochtopus is a sneaky covert superpowered network not to be examined in the light of day—we do NOT want citizens to see what's really going on! Got it?!!
Trump: Make American Oligarchs Even Richer Again is the real motto, even though Make America Great Again is the sucker come-on in his campaign posters—as you can see, Trump 'watching out for the little guy' is a joke: he's watching out for oligarchs
With fake capitalism, CEOs cozy up to regulators to get the kind of rules they want and donate to get the laws they desire. The government has done little to prevent monopolies and in fact has done much to encourage monopolies. A few years after the monopolies of the Robber Barrons were at their most egregious, a boardgame Monopoly was created by stenographer, reporter, short story and poetry writer, comedian, stage actress, feminist, and engineer Elizabeth Magie. Ironically, people hated Robber Barons' greed, but loved simulating this greed in creating monopolies in the game! See The Soul of America: The Battle for Our Better Angels.
With fake capitalism, CEOs cozy up to regulators to get the kind of rules they want and donate to get the laws they desire
Regulatory capture is an economic theory that says regulatory agencies may come to be dominated by the industries or interests they are charged with regulating. The result is that the agency, which is charged with acting in the public's interest, instead acts in ways that benefit the industry it is supposed to be regulating. This is happening with the tech giants, but it also occured with the crash of 2008.
Today, the government, as referee, has not enforced rules that would increase competition—through regulatory capture it has created rules that decrease competition, which is good for big business and bad for small business
Today, the government, as referee, has not enforced rules that would increase competition. Through regulatory capture it has created rules that decrease competition. Many large companies have captured their regulators, and regulation mainly exists to keep out new entrants. Top Comcast employees have gone through the revolving door to work at the FCC, and later they'd return through that same door to work at Comcast. When Comcast purchased NBCUniversal, Comcast had 78 former government employees registered as Comcast lobbyists. So in spite of a buttload of antitrust concerns, the deal went through.
In order to reliably generate returns, pension fund managers look for large, too-big-to-eat fish that can feast on tasty young companies too yummy to pass up
What is good for the corporatocracy is not good for the economy as a whole. It is logical for big companies to increase efficiency by acquiring competitors, pay lower wages, negotiate to whittle down costs of resources from small companies—hurting them—and increase their own income, but when all companies try to do this simultaneously, everyone suffers. As everyone does this stuff at once, wages and growth decrease, there is less investment and higher inequality, and the national economy suffers as do individual consumers who get a smaller piece of the pie as their lowered wages take their toll.
If bankruptcy rumors cause depositors to all remove their money from a bank at the same time, they will cause the very bankruptcy they wished to steer clear of. Money is a zero sum game. More for one, less for the other. So the only fair arrangement is balance so everyone both gets and gives. This is not happening nearly as much as it used to, so there is a lot of unfair inequality with the gap between rich and poor wider than ever. As oligarchs are created, paupers follow closely behind. The rich have the rest of us somewhat convinced that a progressive tax structure is unfair to them as well as bad for the economy.
Neoliberalism—what was demonstrated was not trickling down for the little guy but trickling ON the little guy
Ronald Reagan had the more gullible of the population of the U.S. convinced that if we had a less progressive tax structure and engaged in neoliberalism, the rich would get more wealth and they would invest more and that would lead to trickling down to the rest of us. But, over time, what was demonstrated was not trickling down for the little guy but trickling ON the little guy. Elites were doing to nonrich what dogs do to fire hydrants.
Tepper says "Western Union . . . sold its telephone network to Bell in exchange for 20% of Bell’s telephone rental revenue. AT&T built a formidable monopoly that completely eclipsed Western Union’s previous control over American life. This cycle of David turning into Goliath is told in Professor Tim Wu’s dazzling book The Master Switch. In 'The Cycle', businesses go from somebody’s hobby to somebody’s industry; from jury-rigged contraption to slick production marvel; from a freely accessible channel to one strictly controlled by a single corporation or cartel — from open to closed system. It is a progression so common as to seem inevitable, though it would hardly have seemed so at the dawn of any of the past century’s transformative technologies.”
Monopolies, duopolies and cartels all lead to a huge income gap that highlights the endless greed of the rich, especially oligarchs
"We must make our choice. We may have democracy or we may have wealth concentrated in the hands of a few, but we can't have both.—Louis Brandeis
We seem to have chosen wealth concentrated in the hands of a few as the controlling power of the nation, so that means democracy is just the pretense, oligarchy the reality
Requiem for the American Dream: The 10 Principles of Concentration of Wealth & Power is one of the most important books (and films) ever written. It is by Noam Chomsky, beloved around the world for the strength of his personal commitment to the truth as he sees it and for the brilliance of his ideas. He has been called the wisest and most insightful and important intellectual alive. It is a coherent narrative of the corruption of our American socio-economic-political systems. According to Chomsky, the first principle of concentrating wealth and power is to reduce democracy. See Democracy—an American Delusion.
Noam Chomsky—the wisest and most insightful and important intellectual alive
Monopolists welcome watchdogs and regulators as powerful, government-appointed allies. They shrug at the threat of antitrust laws, which they have hijacked through economists and lawyers for hire, says Tepper. This is how government functions when it has been corrupted. In Tepper's closing chapters, he uses terms like we should . . . , we must . . . , and if we do not . . . But Congress, lobbying, revolving doors, and monopolies have incredible power and are set up to work a certain way. They will spend billions of dollars to prevent change. Where will the billions of dollars to empower change come from?
True capitalism works because it provides freedom. It improves everyone's lot because it expands the limits on the possible. It rewards risk taking and invention, hard work, and ingenuity. Capitalism and invention stagnate without competition. That is the current status of the USA.
Tepper's principles of reform are quite insightful. So are his ideas about what we can do. If only his advice is heeded!
Monopolists welcome watchdogs and regulators as powerful, government-appointed allies; they shrug at the threat of antitrust laws, which they have hijacked through economists and lawyers for hire, says Tepper—this is how government functions when it has been corrupted
- How Will Capitalism End?: Essays on a Failing System
- The Shock Doctrine: The Rise of Disaster Capitalism
- The Postcapitalist Manifesto: How Robots, Digital Products, and Automation Could Give us Basic Income, Meaningful Work, and a Climate Change Solution
- Four Futures: Life After Capitalism (Jacobin)
- Optimism over Despair: On Capitalism, Empire, and Social Change
Unless American citizens start defecating money, the debt has put us all in deep doo-doo