Indeed if we could solve one thing with our gov't, I'd want it to be antitrust enforcement. For an ostensibly free market society we seem awfully willing to accept it being anything but.
I'd like corporations (bodies) to be prosecuted like human bodies, where bad behavior was noted, you got a record, and punishment increased through fines, restrictions all the way to forms of incarceration, and even the death penalty.
If you wanted to do the most to improve competitiveness possible, by far the most effective strategy would be free trade. Trade barriers prevent competition from overseas, making monopolies much easier to maintain.
Sometimes yes, sometimes no. Depends on the barriers to entry as an example. An effective anti-monopoly strategy needs different tools at different times.
Free trade has little impact on monopolies. The biggest corporations in the US are international and the massive amount of free trade we've had from Reagan to Trump's second term has only resulted in these companies becoming even more consolidated.
What free trade enables is for monopolistic corporations to take control of foreign resources to circumvent and undermine US labor laws. They'll buy the rights to the same crops growing in Mexico or Candida for cheaper than the US to undercut US farmers. None of that changes the price they are selling goods in the US and in fact ultimately results in prices going up in both Mexico and Candida.
You claim that a law that prevents or hinders you from making transactions with certain parties, while privileging other parties by exempting them from these restrictions, doesn't make it easier for the privileged parties to form a monopoly?
No, I claim that we spend 3 decades of free trade and we didn't see corporations get smaller. Republicans and Democrats had a free trade policy since Carter really.
If it were true that free trade results in more competition, then you'd expect that there would be more companies competing, not fewer. We see fewer companies.
Your theory has been tested in reality and it fails.
Free trade isn't the issue, the issue is monopolies. When there were 60 or 80 companies all in the same industry but in different states or counties, the economy was much healthier because those 80 companies had to have their own independent staff for functions like accounting. And they also had to compete with each other at the edges of their jurisdictions. None of them could become powerful enough to set policy across the nation and if a corporate policy was beneficial to the consumer, one of their competitors could enact it to compete. Now that there are only 2 or 3 nationwide providers of most things, those companies can just set their own policies whether hostile or not and the only control we have is regulation.
If you want to eliminate regulation and promote free trade then the best thing you can do is oppose the formation of monopolies and encourage enforcement of anti-trust everywhere.
There are many other factors affecting the size of corporations. For example, a significant increase in the amount of regulation in other sectors of the economy.
More importantly, the raw number of corporations isn't how you measure a monopoly. Profit margins are the key sign of monopoly pricing- but in practice, corporate profit margins have been relatively stable in percentage terms over time. Prices for virtually all consumer goods are way down in real terms over the last 30 years.
In particular, trade might get you more competition with fewer corporations, but via competition with overseas producers. These might show up as a few importing corporations, representing a whole slew of competitors abroad.
Free markets tend to produce monopolies. You know how economies of scale are a thing? That's another way of saying that small companies lose to large companies at scale. "Disruption" or "agility" is the only thing that small companies have going for them, but once the monopolist gets large enough they can just buy up any upstarts and keep the market all to themselves forever. This is why you require governments to periodically shake the snowglobe and restore markets to competitiveness... until the monopolist gets big enough that they just buy the government, anyway.
Can you find true monopolies in the free market, in the last 100 years, that have lasted for at least 20 years, without some kind of government backing/suppression of competitors? I only know of one.
Things only count as monopolies if they have monopoly pricing power; Google is not a monopoly, they cannot even charge 1 cent per search.
In practice, despite economies of scale, large companies age and become bloated, inflexible, etc. So there's typically plenty of room for new companies to compete.
If a monopolist buys all upstarts, then that creates an even stronger incentive to make competing businesses! You don't even have to succeed in the market, you just have to get bought up! The more they buy out, there stronger incentive there will be to enter the market. No one can do this indefinitely- except with some kind of government support- say a regulation that makes it difficult to enter the market.
Your definition of monopoly isn't what people are commonly talking about when they say "monopoly".
Granted, you have the correct definition, just not the colloquial one.
What people say "monopoly" what they are really talking about is industries captured by few big players. For example, grocery stores. There's not a true monopoly there but there is damage done by the fact that there's very little competition in that space. Both to consumers and product manufacturers. These big grocery chains use their leverage to get prices smaller chains can't compete with. Further, they have been trying to consolidate (see Kroger Albertsons merger) to further exert anti-trust behaviors.
A clear example of the damage done by this sort of hyper consolidation is what's happened to the memory market. Multiple times the 3 big players have been hit with anti-trust lawsuits because of the price fixing they've engaged in. It's true they are not true monopolies, but they exert exactly the problematic behavior of a true monopoly. It's very unlikely that the free market would ever fix this.
Groceries are an excellent example of competition. Profit margins on groceries are razor thin. The large chain leverage results in lower consumer prices. Large grocery chains don't have anomalously high profits, ROI, or really anything that would indicate harm to consumers. Groceries are cheaper than ever compared to median wages.
The memory market is international, its not clear what anti trust even means here. Even so, look at the price of memory over time, say the last 20-30 years. Adjust for inflation and its even more extreme. Sure, it is up recently with AI demand, but the general trend is drastically reducing cost and increasing quality. Memory technologies are evolving quickly and it's a capital-intensive business, so its not surprising that there are a few leaders. There's no guarantee of instant competition in free markets.
Cartels rarely last long without enforcement. There's such a strong incentive to defect and secretly sell more under the table. Even OPEC could not maintain one. Memory right now is expensive simply because demand outstrips supply and there is significant capital investment and lead time to increasing supply.
> Large grocery chains don't have anomalously high profits
Define "anomalously" What do you mean by this? You'd admit that large grocery chains do have high profits right? Even with "razor thin" margins.
Large grocery outlets do love to claim that their margins are razor thin yet somehow each of them are some of the wealthiest in the nation. How can that be if they are so good for the customers?
> its not clear what anti trust even means here.
Price fixing [1]
> There's such a strong incentive to defect and secretly sell more under the table. Even OPEC could not maintain one.
OPEC is the exception, not the rule. And enforcement is a lot easier when there are fewer players. The reason OPEC has a hard time enforcing it's prices is because there are are too many players. Were they standard oil, they'd almost certainly be able to maintain their prices and discipline.
Cartels very rarely dissolve on their own. The free market naturally tends towards consolidation and cartels forming.
I'd say exactly the same about antitrust. Can you give an example of a lasting monopoly not backed by some government policy? At any point in the last 150 years?
Exactly. If you ask anyone on the street, "is it easier for a fast food worker or a business-owning millionaire to make their next million dollars?", common sense will prevail.
Money begets money (and power). It doesn't require an economics degree to understand this positive feedback loop.
Wouldn't that be more of a negative feedback loop? My signals and systems class was a long time ago, but a system that throttles to extremes is negative, not positive feedback.
Nope, negative feedback is dampening and stabilizing. Antitrust enforcement represents a healthy negative feedback for the natural runaway concentration of wealth and power.
McDonald's might be the largest restaurant chain in Italy but that doesn't really mean much given how many small restaurants the country has with high quality food.
Also due to food standards a random McDonalds in a random village in Italy will have significantly better food than most restaurants in the US. The Italian McDonalds will use locally sourced fresh produce straight from the farm, cooked by high-end chefs to create a very good tasting meal that is super healthy and good for you.
There is a reason those Italians live so long. Their McDonalds is better than others. It is literally illegal to sell McDonalds foods the way Americans make it.