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OpEdNews Op Eds    H3'ed 2/17/09

Whatever Happened to Antitrust?

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By Dave Lindorff

Now here’s a word you’re not hearing in America these days: anti-trust (Note to OpEd News readers and editors: it's not even on the tag list!).

The country is being dragged down by monstrous businesses, all of
which, we’re told, are just “too big to fail.” As a consequence of
this, the nation’s taxpayers, and their progeny born and yet unborn,
are having trillions of dollars sucked away to prop up these giant
rotting corporate corpses.

Zombie banks, zombie automakers, zombie insurance companies, all bigger than nation states, and all on life-support.

There is a simple answer to this problem. Bust them up.

Looking at the nation’s largest banks—Bank of America, Citicorp, JP
Morgan Chase, Wells Fargo and others—it’s clear that some parts of them
are functional. They have, for example, massive deposits. They also
have massive debts, many of these toxic and pretty much worthless.
Instead of bailing these failed institutions out, which is not going to
work anyhow, and which only delays and makes more costly the final day
of reckoning, the answer is to have the government carve out the
profitable banking parts of these financial institutions, and set them
up as free-standing banks, and then let the rest of the carcass of each
bank go down the tubes, taking gullible shareholders and bondholders
with them.

Then the remaining banks left from this process should be broken up by anti-trust actions into regional or even state entities.

There is simply no need for national banks. Such institutions are a
disaster for smaller companies and individuals, since they are only
really interested in lending to big national or multinational
companies. I remember years ago, back in the early 1980s, when bank
consolidation was just getting underway, how Citibank began adding fees
to its checking services simply because it wanted to drive away small
customers. It was an indication of what was coming. Screw the little

It doesn’t matter to large companies if there are no national banks.
When they want a big loan, they simply arrange for a syndicate of
smaller regional banks to put a package together. That is the way
things used to be done, and it can be done again.

Insurance companies too should be broken up. It is ridiculous to
have companies the size of AIG or Aetna or Prudential, any of whose
failures can threaten the global economy. Again, there is simply no
rationale for the existence of such mega-corporations. Insurance
companies have ways of sharing risk through reinsurers, so that smaller
companies are no more vulnerable to disaster than larger firms. They
may, in fact, be less vulnerable, since their managers will be closer
to their customers and probably more careful about what they insure and
what they invest in.

Finally, let’s look at what used to be called “Detroit.” In its
heyday, there were many more car companies than simply three. There
were American Motors, Hudson, Packard, and Studebaker, there was Mack
Trucks. Then we had a wave of consolidation and bankruptcy. In the end,
several companies—Ford, GM and Chrysler—won the day, but not because
they had better products. Rather, they were bigger, and had bigger
marketing budgets and more extensive dealership networks. Unable to
compete, good companies went bust.

As the number of car companies dwindled, so did the need to
innovate. With Chrysler just a shadow of its former self, there are
really only two domestic carmakers today, and they have spent much more
time and money using their political clout to block efforts in Congress
to force them to make better, more efficient and more socially
responsible products, than they have devoted to actually competing in
the marketplace. They have become “too big to fail.”

So now we’re being asked to bail them out to the tune of tens of
billions, and ultimately probably hundreds of billions of dollars.

Okay, I’m willing to agree that it is a good idea for the US to
have a domestic car industry, but there is no reason why it should
consist or two or three giant companies.

Let’s break these companies up into smaller enterprises, each
making one nameplate, and let them compete. With smaller, nimbler car companies, we would see quality electric cars at affordable prices in
no time, and gas mileage would soar.

While we’re at it, let’s not stop there. The Federal Trade
Commission and the Justice Department should conduct a broad study of
the US economy, looking at every industry, with an eye to busting up
every company that is deemed “too big to fail” because of the impact
such a failure could have on the broader economy.

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Dave Lindorff, winner of a 2019 "Izzy" Award for Outstanding Independent Journalism from the Park Center for Independent Media in Ithaca, is a founding member of the collectively-owned, journalist-run online newspaper (more...)

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