Corporate or American Growth?

The US continues to give priority to corporate interests as the principle economic driver.  The country has thus consolidated growth interests into the success of concentrated conglomerates – and at the peril of small and medium sized businesses. 

Competition leads to innovation and growth.  It’s the plain and simple foundation of economics.  But our oligopolistic society is straying from its capitalistic "Land of Opportunities" dream. Corporate conglomerates dominate an overwhelming aggregate of industries.  Motivated by “global competition,” companies win subsidizing government breaks to perpetuate their economies-of-scale production efficiency.  The US trade balance currently registers a deficit of $458.5 billion, while the Chinese trade balance chalks-up a surplus of $170.4 billion.  Where does that leave the US in terms of global competition?  Regulatory concessions aren’t making US businesses more internationally attractive.  We’re only left with a second-rate export industry.  Domestically it’s worse.  Giving preference to larger establishments smothers smaller competition and leads to a weaker national business environment.

In perfect competition, which as a capitalistic democracy we hypothetically strive for, no participant has market power.  Wal-Marts bankrupting local shops and business does not create healthy competition.  It suppresses it.  Too-big-to-fail financial institutions do not encourage competitive forces.  They squash them.  Conglomerates force out competition through predatory economies-of-scale practices, raising barriers to entry and to success across all industries (ie a minimum size requirement).  This hinders competition, which thwarts innovation, which curbs growth.

In politics, conservatives look more like Russian oligarchs than liberals do Red Scare socialists.  Liberals needs to create a cohesive message on this front.  Anti-big business is not anti-capitalist.  Attacking corporate powers is indeed beneficial for the US economy.  Corporations are not creating jobs, despite record profits and record capital stocks.

This past quarter, American companies declared $1.659 trillion in profit, the highest amount ever recorded.  In this same time period, unemployment rates rose from 9.6% to 9.8%.  And worst of all, corporations do not redistribute these earnings throughout the economy.  Since the end of 2008, as corporate profits rose 57% or $572 billion, average workers’ salaries dropped $121 billion.  Corporate cash stockpiles grew to a historic $837 billion.  America’s corporations are monopolistic oligopolies that hoard wealth.  Companies are buying back shares instead of reinvesting profits.  They aren’t actively producing business competition.  Corporations amusingly watch as smaller competitors struggle to weather the storm of the recession.  It’s a power grab!  Corporate, “too-big-to-fail,” market dominance holds the US economy hostage in the treasure hunt for profit.

The American economy needs to reintroduce strong regulation.  Regulation that limits market power; that separates commercial and investment banking; that eliminates polarity and restores income equality; that gives preference to medium sized businesses over conglomerate consolidation; that promotes competition, job creation, and innovation in the face of bottom-line production efficiency; that cures profit-maximizing addiction so as to align business and societal ambitions.  The US is straying from the capitalistic principles that let it prosper over aristocracies.  The country needs to restore competitive capitalism in order to regain economic prosperity.

Corporate or American Growth?