Editorial Notebook

Corporatism in the U.S.

In early 2014, Comcast and Charter Communications began their formal bids for their acquisition of Time Warner Cable. Since the beginning of proposals, Comcast’s $45.2 million bid and Charter’s acquiescence to the proposed sale of 1.4 million subscribers to them from TWC by Comcast for an additional $7.3 billion have created a fervor online and offline against the merger. The merger of two of the largest telecommunications corporations in the United States would, according to Comcast vice-president David Cohen, be “all about increasing competition and creating more consumer benefit as a result of gaining additional scale.” A majority of the population, however, is opposed—a March 2014 Reuters/Ipsos poll concluded that over half of the American population was opposed to the merger, whilst less than a quarter, 22%, thought the merger to be beneficial. In March, as attention to the matter grew, the Senate Judiciary Committee, the Federal Communications Commission, and the U.S. Department of Justice began to review the merger, though the fact that the FCC’s current chairman was a lobbyist for Comcast caused a bit of a stir among many. Such a unified public opinion is quite rare to behold, and it begs the question—why are these sorts of mergers so commonplace anyways, when the supposed core tenet of capitalism is competition?

The mergers of large companies and purchasing of smaller ones across the last few years have reduced the number of corporations in major industry sectors. Apart from the cable and internet service provider sector, the airline industry, the banking industry, and the pharmaceutical industry, among others, have seen a decline in the number of businesses. The increasing consolidation of these sectors may seem positive in the short run, with corporations promising lower rates and better services through economies of scale. While those arguments may be true to an extent, it is important to note that all publicly-traded businesses, which many of the aforementioned sectors are occupied by, are solely profit-driven; after all, these businesses are beholden to their stockholders, and those stocks fluctuate based on quarterly reports and short-term news. The result of that is that despite whatever promises companies make, it is in their best interest, and perhaps sole interest, to increase profit margins at the expense of everything else.

The Citizens United v. Federal Election Commission decision in 2010, among other decisions and legislation, reduced the federal government’s ability and proclivity to resist campaign contributions that are given in a manner that expects legislative favoritism. Despite efforts to the contrary, most corporate lobbyists still have easier access to lawmakers and federal- and state-level administrators than the common populace, and that may lead to a skewed view on what those lawmakers and administrators view as what the populace wants. Laws and regulations are meant to protect the people from abuse or neglect by corporations, but when those corporations are the ones that have a bigger say in drafting those laws, or have favoritism from committees and commissions, it causes those parties to have an advantage in any decisions that involve them, despite the fact that the majority of the American population may be opposed to whatever decisions are being made. Corporatism, or the control of a nation by interest groups, has started become the norm in the United States over the last few decades despite antitrust laws, and though it may increase national wealth, it could be a danger to the future of the U.S. and the economic freedom many of us enjoy.

Do not think that this means I am opposed to capitalism, however. History has shown that the capitalist method, when regulated and set up properly, and tempered with public services, results in better quality of life than most any other economic system. The necessity of state-structured production in communism tends to lead to a totalitarian state, while the lack of structure in anarchist systems causes a complete breakdown of societal norms and economic integrity. Improperly regulated “capitalism,” however, can be just as damaging. The rampant corporatism around the turn of the 20th century led to businesses disregarding the safety of employees until worker safety laws came into effect. Massive vertically- and horizontally-integrated conglomerates controlled the economy. The danger that the future may bring, however, is the danger of a government controlled by a small number of colluding conglomerates. No one can tell for sure what that future may bring, but in order to prevent it, we must be cognizant of how our government works and whose best interests our representatives have in mind.