“The trusts are hijous monsters. On the one hand they must be crushed underfoot; on the other hand not so fast.” So spake Mr. Dooley, the fictitious Irish bartender and font of wisdom created by Finley Peter Dunne in the late 19th century. Trusts were the form monopolies took at the time. Dooley captured Americans’ schizophrenic attitude toward successful big businesses. We make them big and successful by buying their products-J.D. Rockefeller’s petrol, Andrew Carnegie’s steel, J.P. Morgan’s loans, Ma Bell’s telephone network, American Tobacco’s cigarettes-then worry that they have too much power and call in the trust busters.
In fact, schizophrenia is something of a misdiagnosis. Bigness alone has never been considered by the courts to be an evil. In the language of the Supreme Court, monopoly power that is the result of “a superior product, business acumen, or historic accident” in unobjectionable. So why, then, are some hedge funds shorting the stock of Amazon in anticipation of a government move to break up Jeff Bezos’ creation or somehow restrain its growth? And why do we see articles in the New York Times headlined ” Amazon’s Growing Monopoly Bite” and ” Is it Time to Break Up Google?” And why is the Wall Street Journal warning that “Tech Companies Spread Their Tentacles” thus “concentrating power and wealth in the hands of a few companies in a way not seen since the Gilded Age.” Not to be outdone by the Economist, which leads with “A giant problem” and goes on to what for it is a near-hysterical statement, “The rise of the corporate colossus threatens both competition and the legitimacy of business … using the dark arts of management to stay ahead.”
Let’s start with some facts, using Amazon as the poster boy for a possible new documentary, The Company That Ate the U.S. Economy. Statistics about the company are hard to come by, so we must rely on probably the best guesses available, those of Consumer Intelligence Research Partners (CIRP). Amazon Prime, the offering that provides “free” shipping, exclusive access to movies, television shows, photo storage and a host of other goodies, costs $99 per year, counts as members some 80 million U.S. households, about two out of every three in the country, up from 58 million only one year ago. That certainly is a lot of customers.,,,