Will GOP trustbusters ride again?
Quick, who the greatest "trustbusting" president of the 20th century? If you posted William Howard Taft and Teddy Roosevelt somewhere at the top of that list you would be on target. And that goes to prove, we think, that Republican administrations and trustbusting -- efforts to halt large-scale mergers and acquisitions of firms -- are not totally incompatible.Skip to next paragraph
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All this comes to our thought because of persistent press accounts that the US Justice Department and the Federal Trade Commission may be abandoning efforts to curb conglomerate takeovers and mergers now that a more conservative Republican administration is sweeping into power. Moreover, Mr. Reagan himself was frequently critical of government anticonglomerate policies during the recent election campaign.
For our part, we hope that there is no total pullback from proper federal antitrust efforts. Perhaps Mr. Reagan will surprise us all, and turn out to be as wary of large-scale concentrations of economic power as Teddy Roosevelt at the beginning of this century. And no one thought of "Rough Rider" Teddy's as less than a strong presidency, which, we gather, is also Mr. Reagan's aspiration.
What is needed is a more judicious federal antitrust policy that is based not just on the view that "bigness is badness," as ralph Nader puts it, or an ideological frivolity that would break up a firm just because it is a leader in an industry. Critics insist that this has in part become the policy at Justice and the FTC during the Carter years, as seen in continuing efforts to break up the big three cereal manufacturers into smaller firms because taken together they somehow constitute a "shared monopoly." That case alone has been around for almost a decade now, with no legal resolution yet in sight.
Bigness, however, is becoming a way of life in the US, with disturbing implications. In 1976, the 451 largest US firms controlled 70 percent of the nation's manufacturing assets, and enjoyed a huge 72 percent of total profits. Compare that to 1960, during the last year of the Eisenhower administration, when a similar number of firms controlled about half the total US manufacturing assets and earned about 59 percent of total profits.
Acquisitions of giant firms are clearly increasing. But do acquisitions actually lead to greater efficiency, cheaper prices and more jobs? Many economists think not. Most US workers, it must be recalled, work for small and medium-sized firms, not giant corporations. Further, almost all the new job creation in the past decade took place in smaller-sized firms, where innovation is especially fostered.
Several antitrust bills are now before Congress that would prohibit large-scale mergers unless they could be shown to enhance competition. These bills should be given a fair hearing. Moreover, Mr. Reagan should be wary during the months and years ahead of any steps that would severely inhibit copetition and limit clothes -- whether by "big government" or by "big business." And that, TR would probably say, adds up to good politics as well as good government.