The Obama administration is seeking to undo yet another leftover from the Bush years by strengthening antitrust laws, the New York Times reports in leading off its business coverage.
In a speech later today, the Justice Department antitrust chief, Christine A. Varney, will lay out new "plans to restore an aggressive enforcement policy against corporations that use their market dominance to elbow out competitors or to keep them from gaining market share."
During the Bush years, the newspaper points out, the cards were stacked in favor of the corporate defendants facing antitrust claims. The White House is looking to level the playing field, restoring a policy "that led to the landmark antitrust lawsuits against Microsoft and Intel in the 1990s," the newspaper writes.
Intel, it should be pointed out, is about to hear the EU decision on its monopolistic tendencies.
Why is this important now?
In the midst of an economic recession or depression, there is a strong urge, indeed a strong rationalization, that stronger players in iffy markets buy up the players who are on the ropes, essentially creating at the very least an oligopoly, if not an outright monopoly.
Indeed, one might make the case that Herbert Hoover's relaxation of oversight on business combinations paved the way for the Great Depression by allowing banks to create credit consortiums that effectively froze out smaller banks from access to money to lend to their customers.
And certainly, the case against Standard Oil was based squarely on its actions in the period running up to and including the recession of 1907.
The trick this time around is to increase the economic productive of weak sectors like banking and housing while avoiding the temptation to use public funds to create megalodons of the market.
The structure of this recession/depression is such that more monopolies are likely to form as credit lines remain dried up, meaning that only companies who can finance internally (through their own cash reserves or by issuing private debt) will be able to survive in style.
And naturally, that will imply size as a factor in survival. The American capitalist system has tended towards "bigger is better" for decades now, when in point of fact, classic capitalism requires quite the opposite: smaller players competing for expanding markets.
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