“The growing economic gap between prosperous coastal cities and struggling cities in Middle America is often blamed on impersonal forces like globalization and technological progress. But some thinkers have started pointing to another culprit: little-noticed shifts in antitrust enforcement, beginning in the 1980s, that allowed a string of mega-mergers.”
One of Ronald Reagan's most disastrous policies (there were many) was to weaken antitrust oversight. His administration's lax enforcement unleashed a wave of mergers that have allowed corporations to consolidate their market power and squash competition. Up until then, antitrust officials at the Department of Justice and the Federal Trade Commission were quick to intervene to prevent monopolies from forming. Today, from tech and pharmaceuticals to agriculture and retail, mega-mergers are commonplace in every industry.
Not only are these monopolies horrible for competition, but they have also contributed to the decline of American cities. As Brian Feldman explains, St. Louis was home to 23 Fortune 500 companies in 1980. Today, after decades of mergers, that number today has dwindled to fewer than 10. Thousands of middle-class jobs are gone too, communities have been upended, and infrastructure has fallen into disuse. Once vibrant cities across the country have been abandoned as wealth has concentrated around mega-corporations in a few locations.
Unless we begin once again vigorously enforcing antitrust laws, a handful of companies will continue to amass incredible market power, competition will suffer, and cities will decline.
By Timothy B. Lee
