The Borking of America
The Hidden History of Monopolies: How Big Business Destroyed the American Dream
In 40 short years, America has devolved from being a relatively open market economy and a functioning democracy into a largely monopolistic economy and a monopolist-friendly political system. One of the principal architects of that transformation was Robert Bork.
Most Americans, if they remember Robert Bork at all, remember him as the guy who railed against homosexuality and “forced integration” in such extreme language that his nomination to the Supreme Court by Ronald Reagan had to be withdrawn. But Bork’s most important effort—one he worked on for more than 15 years nearly full-time—was in reshaping the business landscape of this country.
Attending the University of Chicago, Bork took a class in anti- trust from an acolyte of Milton Friedman’s, Aaron Director. Bork described the class as a “religious conversion” that changed his “entire view of the world.”68 After graduation, he continued working with Director as a research associate for Director’s “Antitrust Project” and repeatedly gushed about Director in his book The Antitrust Paradox, which is credited (at least by Wikipedia) for nearly singlehandedly changing America’s antitrust laws.
When, in the 1970s, Chilean dictator Augusto Pinochet’s private police force and army were taking democracy advocates up in helicopters and dropping them out from 3,000 feet over the Atlantic, Milton Friedman and his Chicago School boys enthusiastically signed up to help “reinvent” his economy. (A bizarre article in the libertarian magazine Reason argued, “Yes, it’s true—Friedman gave advice to Pinochet. But it wasn’t about how to find the best place at sea to dump the bodies of murdered political enemies.”69)
When the Soviet Union fell in the 1990s, Friedman’s men advised Russia on how to privatize its economy, doing so in a way that predictably produced both oligarchy and monopoly.
As long as Pinochet privatized Chile’s social security sys- tem for the benefit of that country’s bankers, and Russia sold off state-owned property to increase “privately owned wealth,” it was all good with Friedman and most of his associates.70
Bork argued, in one of the most influential essays (and, later, a book) of the 20th century, that the role of government relative to monopoly wasn’t to prevent any single company from getting so large that it could crush any competitor and capture the government that was meant to regulate it. The role of antimonopoly regulation was definitely not, he reasoned, even to promote competition.
It was, instead, all about “consumer welfare,” a term that he had brought into common usage and the Chicago School boys quickly picked up. In essence, he argued, it didn’t matter where a product was produced or sold, or by whom; all that mattered was the price the consumer paid. As long as that price was low, all was good with the world.
It sounded so Ralph Nader-ish.
Bork was a brilliant writer and used vivid imagery to make his points. “Anti-free-market forces now have the upper hand and are steadily broadening and consolidating their victory,” he wrote in “The Crisis in Antitrust,” published in 1965 in the Columbia Law Review and cowritten with Ward S. Bowman Jr.71 They “threaten within the foreseeable future to destroy the antitrust laws as guarantors of a competitive economy.”
Having staked out his position as the advocate of antitrust, he noted that the forces that he opposed had a “real hostility toward the free market,” which could be found “in the courts, in the governmental enforcement agencies, and in the Congress.”
Since the 1890 Sherman Antitrust Act, America’s political and judicial systems had embraced antitrust, Bork noted, so much so that in 1978 “they [antitrust doctrines] enjoy nearly universal acceptance,” although “these doctrines in their pres- ent form are inadequate theoretically and seriously disruptive when applied to practical business relationships. . . .
“One may begin to suspect that antitrust,” he wrote, “is less a science than an elaborate mythology, that it has operated for years on hearsay and legends rather than on reality.” In fact, Bork wrote, the entire notion of antitrust law as a vehicle to protect small and local businesses from large and national predators was a terrible mistake.
Trying to stop “a [market] trend toward a more concentrated condition” is a blunder, Bork said, because “the existence of the trend is prima facie evidence that greater concentration is socially desirable. The trend indicates that there are emerging efficiencies or economies of scale . . . which make larger size more efficient.” The current theory of antitrust, he noted, is “unsophisticated, but currently ascendant.”
Bork argued for the Walmartification of America, saying, “It would be hard to demonstrate that the independent druggist or groceryman is any more solid and virtuous a citizen than the local manager of a chain operation. The notion that such persons are entitled to special consideration by the state is an ugly demand for class privilege.”
He condemned “vague philosophizing by courts that lack the qualifications and the mandate to behave as philosopher kings. . . . [T]he system hardly deserves the name law.”
In Bork’s mind, when dozens of small companies are bought up by one large monopolistic company and their redundant R&D, HR, sales, and promotion/advertising departments are consolidated, laying off thousands of workers, that’s a good thing.
“If it now takes fewer salesmen and distribution personnel to move a product from the factory to the consumer than it used to; if advertising or promotion can be accomplished less expensively, that is a net gain to society. We are all richer to that extent. Multiply such additions to social wealth by hundreds and thousands of transactions and an enormously important social phenomenon is perceived. . . . To inhibit the creation of efficiency . . . is to impose a tax upon efficiency for the purpose of subsidizing the inept.”
In a particularly eloquent paragraph, he compared large companies buying up or killing off smaller competitors through predatory practices as “an evolutionary process.” After all, “[t]he business equivalents of dodoes, the dinosaurs, and the great ground sloths are in for a bad time—and they should be.”
To say that Bork’s paper (and numerous others, and 15 years of work advocating this position) changed America would be a dramatic understatement. As he himself pointed out in his paper, in the 1962 antitrust case of Brown Shoe Co. v. United States, the Supreme Court blocked the merger of Brown and G. R. Kinney, two shoe manufacturers, because the combination of the two would have captured about 5% of the US shoe market. (For comparison, Nike today has 18% of the US shoe market.72)
When Robert Bork said that the only thing that mattered was the price to the consumer, he never considered the value of good food freshly made in a local restaurant as opposed to things arriving from across the country in giant plastic boxes to chain restaurants; he never considered the value of a hardware store or a bookstore or clothing store or furniture store that would go out of its way to look through all the hundreds of suppliers to find exactly what you wanted and make sure you knew when it was available.
He never considered the importance of the local hotel and the local restaurant and the local five and dime and the local bank and 50 other local businesses all operating in a single cycle of local cash, each supporting all the others and all the others supporting each one.
He never considered new entrepreneurial opportunities for small and medium-sized businesses. He never considered keeping money within local economies. He never considered the impact on a community now having no say in how destructively businesses in that community were run. He never considered the impact on workers of giant employers engaging in nationwide union-busting and pension-stripping.
He never considered how many locally owned businesses would be wiped out when giant chains moved in and under- cut their prices while also undercutting the local wage floor. He never considered how massive political power—growing from overwhelming economic/market power—would dis- tort democracy from the level of town governance all the way up to the US Congress and the White House.
All Robert Bork thought about was low prices, because that’s all he knew. And that’s what he brought America.
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