California and the Eleven Dwarfs Take on the Paramount-Warner Bros Merger

In Wealth of Nations, Adam Smith foresees that capitalist industrialists could collude with government at the expense of labor. In On the Genealogy of Morals, Friedrich Nietzsche argues that keeping laborers to a subsistence wage is necessary for capitalists to have enough wealth accumulated to invest in culture. Rather than being immoral, exploitation is simply part of life and thus the resulting economic inequality cannot be removed at its source. Low wages may simply be a feature of how labor supply typically relates to business demand for workers, whereas highly educated professionals are not so numerous and can demand higher compensation. Meanwhile, what about consumers as capitalist industrialists continue to accumulate capital in part by being able to pay large workforces subsistence wages and engage in mergers and acquisitions, such that competitive markets are turned into oligopolies and even, as in the case of Rockefeller’s Standard Oil in the 1870s, monopolies capable of extracting “monopoly rents”? In the U.S., the Sherman and Clayton Acts in the early 1900s were oriented to safeguarding competitive markets from being undermined by business titans, but enforcing those federal laws would seem to fly in the face of collusion between capitalists and their respective governments. As a case in point, the U.S. Justice Department gave the green light to Paramount’s take-over of Warner Brothers/Discovery even as President Trump had a financial interest in the deal going through. In the American federal system, the state governments could act as a check, and on July 13, 2026, the announcement came that California plus eleven other states, led by their respective attorneys general, filed a lawsuit challenging the merger on the basis that it would violate Section 7 of the Clayton Act. American consumers had reason to be thankful that they were still in a federal republic of republics, even though the growth of power at the federal level had nearly eclipsed the federalism, at least as it was originally intended—as enabling checks by the feds on the states and vice versa.

The Clayton Act “holds that mergers that may substantially lessen competition or tend to create a monopoly are illegal.”[1] In seeking to acquire Warner Bros. Discovery for $111 billion, Paramount’s mega-merger was raising concerns before closure that “combining two major Hollywood studios would hurt the industry while giving too much power” to Paramount’s CEO, David Ellison, in the film and television industries.[2] Hence California Attorney General Rob Bonta “led a group of 12 attorneys general in filing a lawsuit challenging the merger, claiming it would ‘lead to higher prices, lower quality, and less content for film and television, harming movie theaters, basic cable distributors, and ultimately audiences on every sofa and movie theater seat in the U.S.’”[3] In other words, all that typically goes with a competitive market becoming first an oligopoly, with just a few suppliers each with substantial market-share and thus market-power with which to become price-setters rather than takers, and then possibly even a monopoly in which consumers have only one choice of supplier and thus must pay whatever that supply decides. Because Paramount had completed an $8 billion merger with Skydance Media in 2025, the addition of Warner Bros. Discovery would give rise to tremendous market-power, hence occasioning an oligopolistic industry-structure. 

It is because the U.S. Justice Department announced on July 10, 2026 that even incorporating Warner Bros. Discovery would not harm competition and could even “strengthen competition across the media and entertainment industry, including in streaming video, traditional television and theatrical film distribution” that California and eleven other states jumped into action on the following Monday.[4] That a supplier with such massive market-power would actually make the industry more competitive is hard to believe, for, as Adam Smith lays out in his classic text on competitive markets, each supplier must be small enough relative to the entire market that no one supplier could set prices, but instead would have to take whatever prices are set by supply and demand, mechanistically in the market rather than by the intention of a dominant CEO.

Fortunately, under the U.S. federal system, “state attorneys general retain independent authority under antitrust laws, and the DOJ’s decision [would] not prevent additional legal challenges” to the proposed merger.[5] The personal financial interests of high officials in the U.S. Government, whether in the White House or Congress, could be checked, in effect, by the governmental sovereignty retained by the states, for in U.S. federalism, like E.U. federalism, governmental sovereignty has been divided between the federal and state levels, such that each would have an autonomous basis upon which to challenge over-reaches by governmental institutions on the other level. Put crassly, wealthy capitalists seeking a mega-merger would be best advised in both the E.U. and U.S. to pay off enough key federal and state officials so no one on either level would be motivated to institute a judicial contest. Other things equal, a federal system means that corruption by business of government costs more.

Federalism itself can thus be seen as serving a public purpose for the good of the whole. Were governmental sovereignty to reside exclusively only at one level—federal or state—as in a consolidated government and a confederation, respectively, it would be easier for powerful CEOs of large corporations to be able to engineer mega-mergers at the expense of market competition. In 2026, it was thus in the interest of American and European consumers to balance their respective federal systems, with more governmental autonomy going to the American states at the expense of the federal government, and more governmental authority going to the E.U. at the expense of the member-states. Perhaps as a result, more industries could be remade into competitive markets from being too oligopolistic and even de facto monopolies. 

To be effective, anti-trust laws must be enforced even if business executives and boards don’t exactly like the idea and would rather buy off governments at the expense of labor, consumers, and even the economic systems themselves, for there is a certain beauty to forces of supply and demand finding equilibria without any one participant (or few participants) being a price-setter as well as a policy-setter for an industry as a whole. The sheer frustration that typically goes with calling a company’s customer “service” phone-bank cries out for the existence of competition, and thus consumer choice. When that choice has to do with entertainment, and thus with which stories get told and with how much creativity and variety is possible, having a number of struggling suppliers (i.e., different gate-keepers) rather than just a few centralized powers is arguably crucial.

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1. Brian Flood, “Paramount Advisors Push for California Exit as State Sues to Block Warner Bros Discovery Merger: Report,” FoxBusiness.com, July 13, 2026.
2. Ibid.
3. Ibid.
4. Ibid.
5. Ibid.

The E.U. on Anti-Trust Enforcement: The Case of Google

On June 19, 2025, when the European Court of Justice, the E.U.’s supreme court, received a nonbinding opinion from the advocate general, Juliane Kokott, recommending that Google’s appeal against an anti-trust fine of €4 billion be dismissed by the court. The E.U.’s executive branch, the Commission, had found in 2018 that the company had “used the dominance of its mobile Android operating system to throttle competition and reduce consumer choice.”[1] I contend that the company’s written statement in response can be characterized as “stone-deaf” or oblivious to the issue at hand. Such is not an effective way of managing threats in the environment of business. Moreover, the response itself illustrates why governmental action on anti-trust on behalf of market competition is valid and necessary. I contend that the invisible-hand mechanism of a restored competitive market is more reliable than depending on managerial intentions even if they are to be based on motivation that is social-engineered from fines.

The fine of €4 billion is part of a total of €8 billion against Google for anti-trust violations over a decade, including on the company’s digital ad unit. So, a pattern of restraint of trade can be inferred. As if obvious to it, the company statement in reaction to Kokott’s recommendation included, “Android has created more choice for everyone and supports thousands of successful businesses in Europe and around the world.”[2] That the advent of android technology had given consumers another option says nothing about whether Google was also curtailing other options. That many businesses were using android technology is not a rebuttal to the government’s claim that Google was operating in restraint of trade. In fact, that many businesses were using Google’s technology means that the company’s market share, and thus market power, were enough for the company to be able to restrain competition in the industry. In wanting to brag (or advertise), the managers at Google who wrote and approved the statement were unwittingly making the government’s case. Unsuccessful companies do not have sufficient market-power to restrict or curtail competition as John D. Rockefeller’s Standard Oil did in the U.S. until that company was broken up (rather badly) by the U.S. Supreme Court on anti-trust grounds. This example begs the question of whether merely slapping Google with fines is sufficient to arrest the company’s pattern of restraining trade. Both the pattern and the bragging illustrate the tone-deaf feature of greed that narrows cognition and perception. In applying a fine to Google, the E.U. regulators would be naïve in believing that the company’s managers would then be motivated to stop curtailing competition. At the very least, the Commission’s commissioner for competition would still need to watch Google like a hawk.

I contend that it is vital to the public interest, or common good, of a society that competitive markets be protected and even created out of oligopolies by governments; this is a legitimate role for government because price-competition forces suppliers to be price-takers rather than price-setters. Only as the former are suppliers oriented to demand. This crucial role of price in a competitive market was arguably Adam Smith’s best contribution, or “value added,” to economic theory. The “invisible hand” by which buyers and sellers are both price-takers can be understood as an impersonal mechanism that constrains self-interest and even gives rise to unintended beneficial consequences of self-interest as goods and services are allocated efficiently rather than according to the self-interested will of a monopolist.

Even more abstractly, self-interest stems from the sin of self-love, which is the putting of one’s own happiness above love directed to God, so constraining especially narrow self-interest is important so as to obviate the baleful effects from greed that is oriented only to one’s own private benefit. In other words, that such self-interest is based ultimately on the sin of self-idolatry (i.e., worshipping one’s own happiness even at the expense of loving God) means that a society is wise at the very least to constrain even self-interests that are economically aggregated with unintended beneficial consequences. Smith’s “invisible hand” impersonal mechanism, if protected by government anti-trust enforcement, is more reliable, I submit, than even intended beneficial consequences that are conditional on human intention and thus motivation. This is why downsizing Google in the E.U. is preferable to trying to motivate Google’s management to stop restraining competition in its industry by means of fines.

Pierre Nicole, a Jansenist priest in the seventeenth century, argued that self-love can have beneficial consequences. The consequences are intended, but only in so far as the benefits going to others are in one’s own self-interest. Courtesy, for example, although rooted in self-love and thus fully in accord with self-interest, constrains immediate or narrow self-interest that runs unfettered in Hobbes’ state of nature. Simply put, we can get more by being social with other people than by taking their food and even killing them. Smith’s impersonal market mechanism also constrains narrow (or immediate) self-interest, such as raw greed, even though the untended aspect of the invisible hand differs from Nicole’s intended courtesy, and the impersonal aspect of Smith’s market mechanism differs from Nicole’s personal motive to extend courtesy to others because it is in one’s interest to do so. Also, whereas the invisible hand constrains self-interest itself, though competition may ultimately be in a company’s long-term best financial interest, extending courtesy to others only constrains narrow (or immediate) self-interest. In other words, narrow self-interest, in which only private benefits to oneself are sought, is constrained by both approaches and so they can be compared. But courtesy can easily be turned off, as it depends on intention, whereas the invisible hand’s operation does not depend on market participants intentions to constrain their own self-interest. As self-love is a manifestation of the foundational sin of pride, according to Augustine, a person’s intentions to constrain one’s own self-interest in actions cannot be relied upon even though it is laudable when a person assumes an enlightened self-interest and even acts altruistically. In assuming a managerial role in a company, a human being comports oneself to one’s narrow economic role, which willows one’s intentions that go beyond immediate or medium-term financial interests, both in terms of salary and company profitability.

It bears remembering that even though part of the literature on corporate social responsibility in the twentieth century includes ethical principles, CSR programs have become largely marketing. Indeed, the fiduciary duty of managers to the stockholders as a group mandates that the managers be oriented to maximizing profit (and thus dividends and the stock price). This legal infrastructure encases narrow self-interest, which benefits from restraining trade in order to increase market power and profit. Therefore, it should not be surprising that Google’s written reaction to the judicial opinion of the advocate general bears no traces of responsibility to uphold a competitive market for the good of society, but can instead be interpreted as sheer marketing. Lots of businesses use our product! Rockefeller could have said the same. That titan, who viewed himself as a “Christ figure” and a Noah in saving rival refiners from destructive competition in the 1860s by forcing them abord his “combination,” was also found guilty of restraint of trade. His self-deluded intentions certainly could not be trusted by the Supreme Court justices who ruled in favor of breaking up his company. In the 2020’s, the E.U. was surpassing the U.S. on anti-trust enforcement, but even so, I submit that motive-triggering fines are not sufficient to restoring and protecting market competition once there is an egocentric giant in the room.

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1. “Google Hits Setback in Bid to Overturn Multibillion EU Antitrust Fine in Android Case,” APnews.com, June 19, 2025.
2. Ibid.

Musk vs. Trump: American Business and Government at Loggerheads?

When the wealthiest person in the world and the President of the United States cross swords, people are bound to notice. Such a very public clash between billionaires, one of whom is the most politically powerful person in the U.S., should not lead the rest of us to infer that the interests of large corporations and the U.S. Government, including the respective executives and elected representatives, typically conflict. Corporate and individual mega-donations to political campaigns, the proverbial “revolving door” between working in government and at a corporation, the reliance of regulatory agencies on information from the regulated companies invite the exploit of conflicts of interest such that legislation and regulations are even written by corporate lawyers for their respective companies’ financial interest. Furthermore, that many very large American-based corporations have interlocking boards of directors gives corporate America considerable unified force in seeing to it that Congress and the federal president remain friendly to business interests. That both benefit from the status quo and have de jure or de facto vetoes of reform proposals reinforces the staying power of the club. Even as U.S. Senator Bernie Sanders enjoyed considerable media attention and crowds in his speaking tour against oligopoly (i.e., consolidation within an industry such that companies can set prices at will and can thus extract extra profit beyond that which would accrue in a competitive market), it would be wildly optimistic to hope for an onslaught of anti-trust enforcement from a Republican or Democratic administration.

Even though U.S. President Trump claimed in early June, 2025, that he had told Elon Musk to leave the Administration because Musk was “wearing thin,” and Secretary of State Rubio would doubtless attest to that, it should not be forgotten that Musk had spent more than $250 million “helping President Donald Trump win a second White House term.”[1] Musk “also spent more than $19 million in the final weeks of the 2024 election cycle to help Republicans win narrow majorities in Congress.”[2] Even though Musk was the richest person in the world at the time, to spend so much money and yet be inattentive to how his companies could benefit from government contracts and electric-car subsidies defies human nature. Indeed, even though Musk denied opposing Trump’s tax and government spending “Big Beautiful Bill” because of the cuts to EV subsidies, Trump had a point that the negative financial impact on Tesla was not a point in the bill’s favor to Musk. To be sure, Musk’s complaint about too much “pork” and thus deficit spending being major problems in the bill that the U.S. House had recently passed by a single vote is valid. Nevertheless, lest it be assumed that a dispute on public policy between two billionaires is in the interest of the poor and middle-class, Musk registered no complaint about the cuts to Medicaid, which finances healthcare for the poor who cannot afford private health-insurance, and food assistance for the poor.

Even in the midst of an argument between billionaires in business and government, we cannot assume that the conflict of political-economic interests among the elite results in the enactment of public policy that is in the public interest. In Trump’s bill, for example, even though less money would subsidize electric vehicles, there were no reductions of subsidies in the bill that passed the House for coal and oil companies. The grip of those companies in Congress and the Trump Administration could be assumed to be tight in spite of the global average temperature having reached 1.5C degrees, which the Paris Accord of 2016 set as a threshold. The cozy relationship amid climate change puts in stark relief the distinction between private interests and the public interest.

When asked at the Qatar Economic Forum in 2025 whether he would continue making political donations as he had in 2024, Musk replied, “I think I’ve done enough.”[3] It should not be missed that he added, “Well, if I see a reason to do political spending in the future, I will do it.”[4] It would be of value to the American political economy if he would do contribute to political campaigns aimed at breaking up the cosy relationship that CEO’s and (and the corporations) have with elected officials and regulators at both the state and federal systems of government in the U.S.; by “breaking up,” I mean something more substantial and structural than barring government officials and employees from being hired by corporations that have benefitted from the work of the officials and employees.

Instead, I recommend a return to competitive markets and even possibly limiting political-campaign contributions of corporations and the ultra-rich, for the financial influence of large concentrations of wealth on elected officials and appointees tilts the political economy away from being oriented to the public interest, which is not arrived at by the entanglement of certain powerful private interests. To be sure, going so far as trying to eliminate the gravitas of wealth politically would be utopian and thus a fool’s errand, but public policy could be formulated and enacted that is aimed at reversing or countering at least some of the self-interested tilt of the American political economy that so benefits members of the club—Trump and Musk included. Nor is Socialism necessarily the answer to protecting the poor and middle-class from the self-interested endeavors of the interlaced economic and political elites, for Adam Smith’s invisible hand can do wonders to regulate price if only competition is restored to oligopolistic industries, which includes even social-media companies.

Trump’s threat to cut off Musk’s SpaceX from government contracts and Musk’s acknowledgement that he might make sizable political donations even though he was disappointed in Trump’s bill for its pork and probable significant addition to the U.S. federal debt indicate that politicians have considerable discretion being able to benefit companies financially and that CEO’s can make use of such discretion by legally paying off political candidates and those office-holders who are up for re-election and would all too easy exploit a personal conflict of interest by bending public duty to private campaign-interest. Using ambition to check ambition is part of the genius of the American political system of checks and balances, but as the ambitions are solely among the wealthy, it cannot be assumed that the public interest is necessarily being served by the resulting public policies, for collusion even between contending ambitions does indeed exist even if the publicly-aired arguments among the elite of the political economy are more titillating.

1. Kevin Breuninger, “Elon Musk Says He Will Spend ‘A Lot Less’ on Future Campaign Donations,” CNBC.com, May 20, 2025.
2. Ibid.
3. Ibid.
4. Ibid.

The Tech Industrial Complex

Democracy, Plato and Aristotle both theorized, is a governmental system that is most susceptible to the mob—meaning mob-rule. Accordingly, the Electoral College and the appointments of U.S. Senators by state governments, the latter being the case from the establishment of the U.S. Constitution to a few decades into the twentieth century, were meant to limit any damage from momentary passions of the People to the U.S. House of Representatives. The governments in the United States, like those in the European Union, are republics in which democracy is a part rather than the whole. What neither Plato nor Aristotle could foresee in their agrarian city-states is the threat to democracy by plutocracy—the system of government in which private wealth rules. It is less understandable why the American electorates have ignored repeated warnings of the threat, especially as governmental power has concentrated at the federal level since the war between the CSA and the USA in 1861.

Much like U.S. President Dwight Eisenhower had done “in 1961 when he expressed concerns about the ‘military industrial complex’ in his farewell address,” President Biden said in his address, “’an oligarchy is taking shape in America’ as power and money become more concentrated in the hands of the few.”[1] Biden “criticized the ‘tech industrial complex’ and social media, where ‘the truth is smothered by lies for power and for profit.’”[2] It seemed likely in 2025 that Biden’s warning would not eventuate in any policies oriented to breaking up the concentrations of private wealth, which I submit are inherently incompatible with a democracy. Simply put, seeing billionaires visibly chatting with government officials during President Trump’s second swearing-in presents a picture that may suggest that the influence of private wealth on public policy (and thus government officials) had gained such a foothold that the confluence could be shown brazenly without fear that the American people might vote for candidates campaigning on enforcing anti-trust law and raising the effective tax-rates on billionaires to the point that, with anti-trust, being so rich from an oligarchic business would not be possible going forward.

Tech titans amid the incoming administration: Just the visible tip of an iceberg. (Getty)

Besides Elon Musk, perhaps the richest billionaire in the world at the time, Mark Zuckerberg of Meta (Facebook) as well as the titans of Amazon, Google, Apple, and Microsoft could be seen on television in front of, and amicably chatting with the incoming administration's Cabinet secretaries. Musk was chatting with Trump's proposed secretary of defense in spite of the conflict of interest in Musk owning SpaceX. Zuckerberg could feel comfortable being seen chatting with secretaries and President Trump’s adult sons in spite of his power to minimize political dissent on social media. With 90 days to decide whether to close down or sell Tik Tok, President Trump expressed interest in a news conference in the evening of his second inaugural in letting rich Americans buy into a 50/50 joint venture that would allow China to continue Tik-Tok operations in the United States. Were Zuckerberg or Musk to invest enough that they could exercise control on the company through the American half, the investments could put the two social-media titans closer to achieving monopoly control over social media in the United States. 

The real power evinced in the inaugural ceremony was in the seating area where the Cabinet nominees, the tech titans, and Trump's business-oriented relatives were sitting. At one point prior to the arrival of Trump himself, all of the living former U.S. Presidents, Democrats and Republicans, were looking across the aisle at the cadre of Trump’s nominated cabinet secretaries, the billionaire tech titans, and Trump’s business-family. Those former presidents undoubtedly knew where the real power was, and perhaps they were surprised to see the public-private collusion so brazenly visible. After the ceremony, hidden from the public’s view at the lunch in the Capitol, members of Congress, “Cabinet nominees and business titans within Trump’s inner circle” mingled.[3] The luncheon was an “opportunity that VIPs use to mix and mingle with members of the administration and advance their policy priorities. Apple CEO Tim Cook [was] seated between Donald Trump Jr and [U.S. Senate] Minority Leader Chuck Schumer.”[4] I submit that most such mingling takes place behind closed doors, even and especially in regard to the writing of laws. It is not uncommon for Congressional committee to use language written by the companies to be regulated.  

Lest President Eisenhower’s warning of the dangers to democracy from the military-industrial complex be replaced by Biden’s warning of a tech industrial complex as if the former had gone away on its own,  President Trump promised in his second inaugural address, “Like in 2017, we will again build the strongest military the world has ever seen.” Lest it be forgotten, President Biden has approved weapon-sales to Israel even as it ravaged the residents of Gaza on a scale that openly deified international human-rights law. Rather than assuming that Eisenhower’s problem was only existed in the second half of the twentieth-century, the American people in the twenty-first century would not be wrong in perceiving the tech industrial complex as being on top of the continuing military industrial complex. How many such complexes must there be before a existential threat to democracy itself be recognized and combatted? The sheer power of huge sums of private money, such as the influx of Elon Musk’s millions in Trump’s 2024 presidential campaign, and the magnitude of the discretion that Zuckerberg showed he had in unilaterally firing fact-checkers on his social-media company, can indeed be peeled back to reveal just how much the American voters could be manipulated on whom to vote for and even what issues to focus on. Rarely, if at all, did a candidate for federal office propose applying anti-trust law to the social-media’s big companies in the U.S.—an oligopoly. Nor was there any traction from the few voices in Congress suggesting that maybe the U.S. Government should stand up to military contractors by refusing to buy weapons for Israel and give that country’s government money to buy even more American weapons. The shop was open for business; human rights be damned.

The point is seldom made in American public discourse that had the U.S. Government enforced anti-trust law, including stopping tech giants like Facebook and Twitter from peremptorily buying up potential new-entrants in the first two decades of the twenty-first century, a billionaire class would not have been so large, and thus such an implicit threat to democracy. Just in how social-media company financial (and political) interests can be tacitly presented to manipulate internet users in feeds without the voters realizing it, the reason why Biden’s warning was not likely to be heeded at the ballot box can be understood. I submit that the televised images of tech “competitors” sitting together at Trump’s second inaugural points to an inter-related oligopoly instead of a competitive market (wherein new entrants are not bought up). But this is not all that we can take away from having watched the ceremony; we could also see the billionaires amicably chatting with likely high officials in Trump’s second administration, with Musk’s SpaceX having a financial interest in being NASA’s exclusive space-sub-contractor, and with Musk’s “X” and Zuckerberg’s social-media giant having a financial interest in what the Trump administration does about Tik-Toc. 

Extreme personal and corporate wealth literally in front of government officials at the inauguration in democracy's own Capitol Rotunda. 

My point is that, had the inherent threat that having billionaires poses to a viable republic been grasped by the American public, then governmental power would have been used such that the Musk, Zuckerberg, Bezos, and other tech managerial-visionaries would not have been able to become billionaires in the first place. As of 2025, and perhaps even back in 1961 concerning the military contractors, the proverbial horses were almost certainly already out of the barn. Thus, the electoral grass-roots energy going forward from 2025 needed to upset the proverbial apple-cart being steered by individual teckie billionaires to advance the financial interests of their respective companies in the halls of American government would be, realistically speaking, virtually unattainable. One of the most remarkable visuals from President Trump’s second swearing-in ceremony was that of the former presidents all looking over at the billionaires' very visible nicities with the incoming Trump officials and Trump's financially-inclined scions. The former presidents looked like bystanders rather than as pillars of power in themselves even though power had presumably been given to them by the People. I’m just glad that it does not fall to me to get the horses back in the barn. Ultimately, the American People since World War II are to blame for not having minded the proverbial shop as a going concern, for they should have known from the Titanic that most of an iceberg is hidden from view under water. Yes, I think people should know that, even with respect to icebergs in the ocean of political economy. Perhaps, though, I think too highly of popular sovereignty, which, unfortunately, is admittedly quite vulnerable to being manipulated. Both the manipulation itself and the sources are very difficult for the public to detect. Whether through social and/or mass media, even just a few very rich people or a large company, or a network of large corporations with  oligopolistic shared financial interests can frame what is debated, and keep out what is not. It is precisely because detection is so rare that the visuals coming out of Trump's second inaugural are so important, for they give us a rare glimpse of the nature and dynamics of real power in America.

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1. Chris Megerian and Colleen Long, “Five Things To Know about Biden’s Farewell Address that Also Served as a Warning to the Country,” APnews.com, January 15, 2025.
2. Ibid.
3. Michelle Shen, “Trump Attends Congressional Luncheon Where Key Politicians and Business Leaders Mingle,” CNN.com, January 20, 2025.
4. Ibid

On the Hidden Police Power of Corporate America

After the UnitedHealthcare chief executive “was gunned down by a masked man outside a Manhattan hotel” in New York City, “a days-long manhunt” occurred that “spanned several states.”[1] The fact that only a few days were needed to find the suspect, Luigi Mangione, indicates just how massive and public the manhunt was. For it was not just any murder, as if the murder of a person who is the chief executive of a large corporation were worth so much more than that of the rest of us. I suspect that the influence of the company, and, moreover, corporate America, on local police in any U.S. member state is more than reaches the headlines. The case at hand my even suggest that that influence includes even tacit instructions to treat anti-corporate suspects of murder violently both in retaliation and as a visible reminder to other potential killers that CEOs are off-limits.

As Pennsylvania sheriff employees took Mangione from a vehicle to the back door of a courthouse, at least two of the employees shoved the suspect—and, remember, in the U.S. a suspect is presumed innocent unless or until proven guilty in a court of law—into a wall even though the wall was not on the way from the vehicle to the back door. In other words, the unnecessary violence was not on the way to the back door, and nor was the suspect resisting going into the courthouse. I contend that the unnecessary violence was at the behest of the corporation whose CEO the suspect allegedly shot. At that time, the evidence that would be found had not yet been found, as per the defense attorney’s statement in the courthouse. Whether the violence being maliciously applied by sheriff employees was merely to show the world how a suspect accused of killing a CEO gets treated by law enforcement, or to stop the suspect from speaking to the media present on his way to the backdoor is not clear. It seems to be possible, at the very least, that corporate instructions given to the police in Pennsylvania included: Don’t let the guy get his anti-corporate message out. This would be ironic, given that corporations had at the time the right of free speech, even through spending as if money constitutes speech.

That Mangione was not resisting going into the courthouse and yet was manhandled rougher than suspects were typically treated at the time may give Americans, as well as the world, a glimpse into the power that large concentrations of private wealth (which is what a corporation is) even as translated into raw violence. The use of police by companies in twentieth-century America to beat workers on strike is well documented. What I am suggesting is that local police were still susceptible to wealthy private interests such as corporations into the next century, at least as of the 2020s. I contend that any contact between police departments and the healthcare insurance company would properly have been limited to the police gaining information in the search for the killer.

Another indication of an over-reaction by local police occurred days after Mangione had been arrested, when Briana Boston was charged with a felony “with one count of making threats to conduct a mass shooting” during a phone call with Blue Cross Blue Shield, her health-insurance company, which was denying a claim that she had submitted. Obviously angry, she said, “Delay, deny, depose. You people are next.”[2] The phrase, “delay, deny, depose,” had been written on bullets by Mangione in reference to tactics that insurers use to avoid paying out claims and had become popular online. Because of the popularity, it could not be assumed that the woman was planning on writing the three words on bullets; the phrase had entered the lexicon. In fact, “(a)ccording to a consumer survey by KFF, more than half of insured [American] adults [had] experienced problems with their insurance provider, and some [of those adults] reported serious consequences.”[3] Strangely, the local police in Lakeland, Florida, said that her statement could be taken as probable cause of “making a threat to conduct a mass shooting . . ., according to the affidavit.”[4] A reasonable interpretation of, “you guys are next,” is that if Blue Cross continues to screw policy holders who do their part in paying premiums, someone may eventually go too far in retaliation. She did not say that she was going to take any violent action, or what that action might be. Given that she was momentarily angry, and perhaps justifiably so, the police employee who leapt to the conclusion that the woman was saying she would conduct a mass killing is ludicrous, and yet the police had the discretion (and thus power) to make an example of the woman by charging her with a crime carrying a fourteen-year sentence, without her having done anything. Had being angry at customer-service employees become a crime? Or, had free-speech that is objectionable to big business become a crime? If so, could corporations next go after certain thoughts, using employees of local police departments who dismiss protecting the public as dutiful sycophants?

We can turn the Lakeland police investigation on its head by investigating that department. It is significant that “Lakeland, Florida police said they were contact by the FBI . . . in response to the alleged threat.”[5] That the police did not waste any time and did not seem to second-guess the FBI may suggest that the FBI had been determined to snuff out the “potential” copy-cat. To be sure, the FBI may simply have been over-cautious, but even that could have been due to pressure from Blue Cross or elected officials who have received campaign contributions from the giant company. That both the FBI and the local police department in Florida would knowingly seek to charge an angry policy holder of a crime that carries a sentence of 14 years in prison indicates a grossly disproportionate reaction, which itself could point back to the deference that the FBI (and local police) give to business in doing its bidding, even to scare the public.

As an anecdote, once when leaving a restaurant after barely eating a very badly cooked meal, I was speaking to people in the shopping center’s parking lot about the food. The manager of the restaurant got wind of this and approached me even though I was no longer on her establishment’s property. “The police here are my friends!” she warned me. “Keep talking about my restaurant and I will get them to make you leave.” The manager’s sheer presumptuousness was laughable, so I kept talking as was my right. She did call her friends, who told me I had to leave the parking lot even though that lot was not owned by the restaurant. That the police dismissed my legitimate objection told me enough; I moved to another suburb of Phoenix only months later; Mormon-run Mesa was simply too corrupt (and drug-ridden).

If my small window into the deference that local police pay to small business in falsely enforcing law that is not really law is correct, it is not difficult to conjecture that the FBI as well as local police may be unduly biased towards, perhaps even de facto working for, large corporations. The sort of unaccountability in accusing a distraught policy-holder of mass murder (even without noticing that she had no record of violence and not even a gun!) and being willing to put her in prison for fourteen years, likely to send the public a message from the large corporations, is consistent with the lack of accountability generally on market participants that are so large and wealthy that even competition is stifled that so enrages consumers and thus prompts anti-corporate politics. The connection can be found in Adam Smith’s claim that one of the main rationales for government is to protect the wealthy from the poor, who would otherwise steal the wealth. Does this hold of the governments in the U.S., or is the public to be served? The official answer may differ from the real answer.

That the governments in the U.S. have allowed companies to become so large as to choke competition without anti-trust law being enforced—something that Adam Smith would not like—is yet another indication of the “under the table” power of large corporations in the United States, thanks in part to unlimited political campaign contributions being legal. Perhaps elected officials were the people delivering the instructions from the health insurance company to the Pennsylvania sheriff in Altoona: Be rough with the guy and don’t let him speak to the media. Push him up against a wall if you want. Grab him by the neck. Show the world what happens if someone goes up against corporate America.  Hence the anti-corporate political movement in a democracy that is premised on accountability rather than plutocracy with impunity.

My main point is that institutionally, or structurally, very large and wealthy private companies, whether corporations or privately held, are incompatible with not only market competition, which ensures fair prices (even at grocery stores after a pandemic), but also political democracy, wherein one person has one vote and thus is just as important as the next. Whether a man on the street or a corporate CEO is murdered, the police-response should be the same in terms of the cost and effort in the manhunt and how the suspects are treated. Innocent until proven guilty means that police violence against a suspect who is not being violent or resistant is itself a crime regardless of how rich the victim’s family or company happens to be. 

The case of the health insurance CEO’s murder in December, 2024 was deliberately not supposed to be a vehicle for getting an anti-corporate message out—with even violence being used to enforce this proscription—but how the Pennsylvania police aggressively treated the suspect unabashedly in public view can be seen as a poster advertising the interlarding of corporate power at the expense of accountability in American democracy. Both economically and politically, it can be asked whether large corporations are accountable in the United States; politically, the same question may be asked of the local police departments in the member states. The American governments in the U.S. could do worse than apply anti-trust law to a variety of markets and apply criminal law to local police departments whose actual paymasters can be characterized proverbially as the man behind the curtain—an allusion to the hidden Wizard in the film, The Wizard of Oz. Then again, perhaps Mr. Smith Goes to Washington is a more pertinent film, as the senator played by Jimmy Stuart filibusters for hours and hours against corruption in his home state.

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1. Jessica Parker and Nadine Yousif, “Luigi Mangione Fingerprints Match Crime-Scene Prints, Police Say,” BBC.com, December 11, 2024.
2. Pocharapon Neammanee, “Woman Arrested After Saying ‘Delay, Deny, Depose’ On Call With Insurance Company,” The Huffington Post, December 12, 2024.
3. Ibid.
4. Ibid.
5.Ibid.

Adding Anti-Trust to Monetary Policy: The Case of Groceries

Monetary inflation is a complex phenomenon. Not only can its causes be several; it can make it more difficult to distinguish immediate and medium-term economic conditions from more long term, or structural changes impacting our species economically.  Of the former, the relationship between inflation and whether the markets are competitive or oligarchic (or even monopolies) can be better understood, and this in term can put us in a better position to assess the impact of longer-term changes, such as those stemming from the huge increase in the population of human beings since before the industrial age. The price of food (i.e., groceries) is a case in point. Specifically, the impact from presumably temporary shocks during the Covid pandemic should be distinguished from the impact of oligopolistic markets in keeping prices high, and of the increase in human mouths more generally (and longer term) representing increased demand for foodstuff in on a relatively fixed planet.

In addition to a spike in the prices of raw materials, or, moreover, factors of production, and a growth in the money supply above the growth in GNP, the gradual consolidation of an industry from market competition to oligopoly and even a monopoly can increase inflation. The consolidation of the U.S. meat-producer market, for example, could be expected to result in higher meat prices at grocery stores. Similarly, barriers to entry facing discount grocery stores could result in food prices staying high even after a temporary increase in factor costs. In short, government action to keep markets competitive or return them to the discipline of competition should go side by side with monetary policy, lest it be assumed that inflation is primarily a result of the growth in the monetary supply. Otherwise, keeping interest rates higher than would otherwise be the case could unnecessarily put a damper on job growth.

In June, 2024, the U.S. official unemployment rate increased to 4.1 percent; the next month, that figure was even high, standing at 4.3 percent. This triggered the “Sahm rule,” according to which “a recession is imminent or underway if the three-month moving average of the unemployment rate rises by 0.5 percentage points or more relative to its prior 12 month low.”[1] The U.S. economy added 114,000, rather than the expected 175,000 jobs in July, and some people were nervous that a recession might be on the way.[2]

Accordingly, U.S. Sen. Elizabeth Warren wrote, “Fed Chair Powell made a serious mistake not cutting interest rates. . . . He’s been warned over and over again that waiting too long risks driving the economy into a ditch. The jobs data is flashing red.”[3] The Fed kept the interest rate in place in order to fight inflation even though 4.3 percent is above the acceptable range for unemployment according to the Fed. In fact, Austan Goolsbee, President of the Chicago Federal Reserve, said at the time that 4.3 percent was something the Fed “has to respond to” by cutting interest rates.[4] Besides, he added, the “trends show inflation coming down across the board, multiple months in a row” as the labor market was cooling.[5]

Anyone shopping in a grocery store, however, would beg to differ, however, as the rise in food prices during the Coronavirus pandemic had not come down after the shocks, which included shipping as well as hoarding, had ended following the pandemic. Meat prices in particular had stayed very high even though such levels would be expected to attract new suppliers (or more supply) in a competitive market. But the meat-producer industry had been consolidating so a few large companies could essentially dictate prices to grocery stores, a related industry that had itself become oligopolistic. That the discount chain, Aldi, was not in the San Francisco region of California, for example, even in 2024 while Safeway and Whole Foods kept prices high suggests that the competitive mechanism, which protects consumers from the excessive greed of producers unrestrained by market discipline, was not working, for the basic logic of market competition holds that higher prices (and profits) attracts new producers such that supply increases and prices fall rather than stay high unless the cost of a factor of production has increased and stayed high.

To be sure, limits to the supply of food (and the cost of fuel for shipping) could be expected to become more salient as the human population level continues to increase dramatically. Whereas the 20^th century had begun with about 2 billion human beings on the planet, the 21^st century mark stood at 6 billion; by just 2023, that number had increased to 8 billion. At some point, the Earth’s agricultural potential being relatively fixed, could be expected to run up against increased demand for food. The common experience of having to pay more for groceries during and even after the pandemic due to temporary shocks and the lack of competition that would otherwise increase supply and thus reduce prices could be just a taste of what humans could expect in the 22^nd century.

That a species’ population can increase beyond its ability to feed itself was posited by Thomas Malthus (1766-1834) in An Essay on the Principle of Population, published in 1798. The theological significance alone was startling, as the possibility threw off the notion that God had designed Creation and so the existence of God could be inferred from the excellence of the design found in nature itself. Malthus also claimed that famine, war, or disease is nature’s means of naturally correcting a schizogenic (i.e., maximizing) population, and subjecting the creatures who are in God’s image to such hardship hardly seems like part of the design of an omnibenevolent deity.

Therefore, the mechanism of a competitive market assumes not only lower barriers to entry, but also the capacity for increased supply when prices are relatively high, and this second assumption may be increasingly untenable as our species continues to grow while the natural resources of Earth remain relatively fixed, allowing of course for efficiency gains from technological advances. At the very least, from this macro perspective, governments should not shy away from enacting and enforcing anti-trust mechanisms so prices reflect not only demand, but also whatever supply is possible, given the Earth’s natural resources, especially in terms of energy and food (and also housing). Moreover, concurrent and sustained increases in several industries oriented to human sustenance ought to be especially concerning regarding toll from both uncompetitive markets and our species’ growth.

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1. Alicia Wallace et al, “Markets End the Day Sharply Lower . . . “ CNN.com, August 2, 2024.
2. David Goldman, “Elizabeth Warren: The Fed Made ‘a Serious Mistake,” CNN.com, August 2, 2024.
3. Ibid.
4. Ibid.
5. Ibid.

U.S. Anti-Trust Law: Applicable to Amazon?

In September, 2023, the Federal Trade Commission and seventeen states sued Amazon on ant-trust grounds for restraining trade and excessively raising prices on third-party sellers and consumers. Three months later, a leaked internal memo revealed Amazon’s anti-labor strategies of buying off local politicians and gaining reputational capital through well-publicized charitable work. Such work, as an anti-union strategy, demonstrates that the very expression, corporate social responsibility, is an oxymoron, or at the very least a misnomer (i.e., misnamed); a more accurate, and thus revealing, label would be corporate marketing. One effect of the “responsibility” connotation is that companies such as Amazon with mammoth market power could effectively hide strategic efforts in restraint of trade, and thus curtailing competition. Combined with feckless anti-trust prosecution, the result is an American economy that has not lived up to Adam Smith’s theory wherein competition via the price mechanism is necessary for individual self-interests to have beneficial unintended consequences systemically and thus in terms of the public good.

The civil case accused Amazon “of engaging in anti-competitive practices through measures that deter sellers from offering lower prices for products on non-Amazon sites.”[1] Amazon was being accused of deprioritizing listings of products sold at lower prices on non-Amazon sites, forcing merchants to raise their prices on Amazon’s platform and other sites “in order to keep their products competitive on Amazon.”[2] The customers suffer as relevant results of searches are replaced by paid advertisements that favor Amazon’s own brands. Also, the company was charging third-party sellers nearly half of their total revenue as fees for using Amazon’s platform, the result being higher prices for the consumers. The company was also compelling the sellers to use the company’s logistics service in order to qualify for Amazon Prime. With nearly 40 percent of the e-commerce market, Amazon was allegedly flexing its muscle at the expense of competition.

Yet the chairperson of the Federal Trade Commission, Lina Khan, was not asking the court to break up the mammoth company, preferring instead to limit herself to “liability.”[3] I contend that such an avenue falls short as a vehicle for instituting a competitive market. Firstly, a company with market power of nearly half of the e-commerce market can be expected to use its muscle in restraint of trade even while paying out liability claims because the oligopolistic excess-profits (akin to “monopoly rents”) more than compensate for the (tax deductible) expenses. Secondly, I submit that it is utterly unrealistic to suppose that a company with such overwhelming market power will not use it merely because of external disincentives such as civil fines. The use of “sticks” and even “carrots” to get such a company to not act as a profit-maximizer comes up short because such “motivating” tools are tertiary; they do not shake the fundamentals, whereby a non-competitive market is restructured to be competitive and thus composed of price-takers rather than a price-setter.

It is worth expanding on the tactics that an oligopolistic company can use to protect itself from extraneous attempts to fundamentally change the market. We get a glimpse of Amazon’s “play book” from an eight-page memo that reveals how one of America’s largest companies “executes on its public relations objectives and attempts to curtail reputational harm stemming from criticisms of its business. It also illustrates how Amazon [sought] to methodically court local politicians and community groups in order to push its interest in a region where [the company] could be hampered by local moratoriums on warehouse development, and [where the company was] facing resistance from environmental and labor activists.”[4] Knowing the company’s tactics in Southern California can give us an insight into how the company’s management blunts federal legislative action that could break up Amazon itself in order to create a competitive playing field in e-commerce.

In a nutshell, Amazon’s strategy was to create the illusion of on-going charity work and to pay off elected government officials to, among other goals, resist unionization of the company’s workforce and restrictions on where the company can build. Specifically, the management “’cultivated’ Michael Vargas, the mayor of the town of Perris, through pandemic-related donations” ostensibly to “support the region,” but actually to buy off his support for new warehouse construction.[5] This is proof that companies use money even aside from political campaign “donations” to get elected representatives to affect public policy favorably to the companies themselves. If this is so locally, we can be assured that companies as large as Amazon wouldn’t withhold the tactic from being used to buy federal lawmakers, whose power could include breaking up the company.

In regard to Amazon’s corporate “social responsibility” programs, the leaked document includes plans to have employees drop off food to the Los Angeles Food Bank “in big media moments that are broadcasted/posted.” The illusion of ongoing charitable work would of course work to the company’s advantage in public relations. As the “memo suggested curating similar moments during a back-to-school donation event and a [Christmas] toy drive, where drop offs occur and Amazon executives, as well as groups who receive grants from the company, ‘speak about Amazon’s impact” to the media present, even as the company planned on cutting off groups that “did not result in measurable positive impact,” charity was clearly viewed by Amazon’s managers as a promotional tactic.[6] The false societal image of a benevolent oligopolistic company could be expected to shield governmental efforts to break up the company and perpetuate the erroneous assumption that civil liabilities (i.e., verdicts against the company) are enough to safeguard consumers because the company’s management is benevolent.

In conclusion, the Federal Trade Commission shirked its governmental mandate to enforce the Sherman Antitrust law from the onset of the litigation, thus hampering the ability of the judiciary to order an effective remedy. In a large industry in which one company has 40 percent market share, and that company actively buys government officials and strategically uses public relations, the danger is not just to competitive markets, but also to American representative democracy and the rule of law itself. It is, I submit, no accident that the chairwoman of the FTC did not include breaking up Amazon as a remedy. We need only look at the company's strategially placed political contributions to surmise which elected officials might have put political pressure on the FTC. The company’s memo reveals that Amazon uses its extraordinary wealth to bend public policy away from the public good, like a black hole in space bends even space itself, to protect the company's viability by donating directly or indirectly to elected officials. I submit that plutocracy, rather than mob rule, is the greatest threat to American democracy.  At the very least, private wealth knows how to protect itself politically, and even how to cover its tracks under the patina of corporate social responsibility.

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1. Haleluya Hadero, “Amazon Sued by FTC and 17 States over Allegations It Inflates Online Prices and Overcharges Sellers,” APNews.com, September 26, 2023 (accessed December 7, 2023).
2. Ibid.
3. Ibid.
4. Haleluya Hadero, “Amazon’s Internal Plans to Advance Its Interests in California Are Laid Bare in Leaked Memo,” APNews.com, December 7, 2023.
5. Ibid.
6. Ibid, for the quoted material, which is both from the article and the memo itself.

Speculators and Price Volatility: The Case of Gasoline

According to The Huffington Post, “Oil prices took a nosedive [on May 5, 2011] in a historic selloff, erasing weeks of gains and indicating that the months-long climb in energy prices may have hit a ceiling. Crude oil plunged 10 percent as startled investors unloaded their positions and a weeklong decline accelerated into an outright freefall. The price of U.S. crude went from triple digits to double digits, falling below $100 after opening at close to $110. Brent crude, a European benchmark, lost $12 at one point in a sell-off that exceeded the one following Lehman Brothers' collapse.”  The question, for course, is why, the answer of which can lead us to consider some public policy recommendations. Understanding the previous price rise is a first step both to answering this question and for evaluating public policy solutions.

The price of oil had been increasing, according to the Huffington Post, “as fighting escalated in the Middle East and investors feared a supply shortage.” Even as the Organization of Petroleum Exporting Countries was pledging to correct any oil supply disruption, the price of a barrel of crude continued to rise. Before the drop, Brent was up 50 percent compared to the same time the year before. Indeed, the rise could not be explained in terms of actual supply being threatened, as Libya represented only 2 percent of world supply at the time.

The fear was likely of a domino-effect that could potentially compromise even Saudi crude—as if Sunni protesters in Bahrain would spill over into Saudi Arabia (rather than tanks from the latter “spilling over” into Bahrain).  The fear, in other words, may have been exaggerated—even facilitated by speculators taking advantage of the general sense of instability in the Middle East. "Clearly these markets were overblown," said Nariman Behravesh, chief economist of IHS Global Insight. "We've been saying all along the fear factor has probably added 10 to 15 dollars to the price of a barrel." The ensuing “freefall” might have been a correction for this “fear factor.”

However, that the oil-price drop was accompanied by other commodities and even stocks could suggest that larger forces were involved. According to Reuters, “World stocks fell and the 19-commodity Reuters-Jefferies CRB index dropped more than 4.9 percent, heading for its biggest weekly decline since December 2008.” An oil-centered drop alone could be expected to result in higher stock prices as expected lower gas prices would be expected to have a stimulating effect on the U.S. economy. So it would appear that broader factors were at play—things that could have triggered the fear-correction.

Reuters reports that “(w)eak economic data from Europe and the United States fed concerns that have battered commodities all week. German industrial orders fell unexpectedly in March while U.S. weekly jobless claims hit eight-month highs, sparking a fourth day of profit taking in early trade. . . . Additional pressure came from news OPEC was considering raising formal output limits when it meets in June to convince oil markets it wants to bring prices down and reverse the impact of fuel inflation on economic growth.” However, it is not clear that the market was being so rational.

"This is just a market that rolled over and started feeding on itself," said John Richards, head of North American strategy for the Royal Bank of Scotland, according to the Huffington Post. "There was no triggering single event of news that would account for this. It's just much more the market's own internal dynamics taking prices down here," Richards added. “Internal dynamics” sounds a lot better than “feeding on itself.” The latter implies a growing disjunction between price and the “underlying” supply and demand for the commodity, whereas the former intimates a self-sustained system tending to equilibrium. 

Broadly speaking, the question may be whether a market for X tends internally to a homeostatic state of equilibrium or a schizogenic condition wherein a maximizing variable breaches any equilibrium-enforcing features. In ecological terms, by analogy, the question is whether a species tends to maximize its growth even at the expense of the overall ecosystem. In terms of the oil commodity market, the question is whether people simply betting on the price without any intended future use effectively divorce the market price from the actual and expected supply and demand. Moreover, does the disjuncture increase such that the betting acts as a maximizing variable at the expense of any equilibrium-tending mechanisms of the market itself?

Even if the “freefall” drop in the price of oil evinces a return to equilibrium closer to supply and demand, the disjuncture itself caused people to put off vacations and spend less on even necessities, and generally feel poorer. There is thus an ethical question regarding the legitimacy of betting on a commodity that people need. This includes not only oil, but food as well. Specifically, is the freedom to bet on necessities (even if necessities in the short run) worth the ensuing harm to consumers? Moreover, is trading on a commodities market inherently intended or designed for bets or, more narrowly, to arrive at a price whereby consumption demand meets supply? What, in other words, if economic liberty undoes the purpose of a market?

According to Bart Chilton, a top regulator at the Commodities Futures Trading Commission (CFTC), the number of speculative bets on oil and food were at record levels at the time of the price increases in both oil and food. President Barack Obama created an oil market fraud group in April to provide enhanced regulatory scrutiny of potential fraud and manipulation in the oil futures and derivatives markets, but most speculation was perfectly legal at the time so the reach of the group was rather limited in comparison to the problem.

Eric Holder, the U.S. Attorney General, wrote in a letter to the group, "Of course, there are lawful market forces that lead to price fluctuations and to differences between wholesale and retail price trends in these markets.” He urged the group “to identify whether fraud or manipulation played any role in the wholesale and retail markets as prices increased. If wholesale prices continue to decrease, fraud or manipulation must not be allowed to prevent price decreases from being passed on to consumers at the pump." However, manipulation in the form of betting was legal at the time. Even so, the financial reform bill passed in 2010 requires the CFTC to craft rules reining in excessive speculation. Nevertheless, citing inadequate market data, the agency failed to meet a key deadline on those rules in early 2011.

Accordingly, U.S. Sen. Bernie Sanders (D-VT) sent a letter to President Obama on the day of the “freefall” urging that regulators impose limits on oil speculation. “There is mounting evidence that the skyrocketing price of gas and oil has nothing to do with the fundamentals of supply and demand, and has everything to do with Wall Street firms that are artificially jacking up the price of oil in the energy futures markets,” Sanders wrote. “In other words, the same Wall Street speculators that caused the worst financial crisis since the 1930s through their greed, recklessness, and illegal behavior are ripping off the American people again by gambling that the price of oil and gas will continue to go up.” The question is whether “artificially jacking up” prices of commodities that people need ought to be illegal, and, if so, whether such a law could even be enforced.

Should futures traders be required to take delivery and use the commodity they have purchased? If so, people seeking to hedge risk may not be able to do so. Is not the “too big to fail” story about too much risk? Perhaps other means of hedging could be used. Furthermore, it may be that the government officials were not going far enough structurally. Were they to have incorporated anti-trust law, applying it strictly, perhaps a more competitive oil market would obviate the baleful effects of speculators. Even if there would be some opportunity costs in the reduced economies of scale enjoyed by oil companies (and gas stations), a market mechanism running on more competition would be worth that cost to the particular firms. The common good outweighs that of individual companies.

In going after “excessive” speculation or oligopolies, the devil may be in the details. For example, regulation may be difficult to write—assuming the corporate lobbyists do not obstruct it from even getting to that point (e.g., the failure of the CFTC to issue regulations)—not to mention enforcement. In a system of corporate capitalism, moreover, representative democracy may not be able to provide a homeostatic remedy after the horse has run out of the barn.

Sources:

Matthew Robinson, “Oil Crashes 10 Percent in Record Rout,” Reuters, May 5, 2011.

William Alden, “Oil Prices Plunge in Record Sell-Off,” The Huffington Post, May 5, 2011.

Zack Carter, “Eric Holder to Fraud Squad: Oil Price Plunge Should Benefit Consumers,” The Huffington Post, May 6, 2011.

On the United Technologies-Raytheon Merger: The Macro Level of Analysis

In analyzing a merger, incorporating the macro context is vital. For very large mergers, for instance, public policy concerns inevitably surface even if they are typically ignored not only in merger analyses, but also by in societal and even governmental public discourse. Analysis at this level takes a societal standpoint, including on the relationship of business and government. This does not diminish the salience of firm-level analysis, for even how the respective organizational cultures would mesh is very important to a functional merged company. This is even true regarding the respective business-ethics climates, for it is not a given that a healthy organizational culture dominates an unethical one.

In June, 2019, United Technologies “doubled down on the aerospace market with an all-stock deal to merge with defense contractor Raytheon Co., after UTC executives early chose to exit from the escalator and air-conditioning businesses.”[1] The anticipated combined company, “valued at more than $100 billion after planned spinoffs, would be the world’s second-largest aerospace-and-defense company by sales behind Boeing.”[2] The annual revenue for 2019 would be $74 billion. UTC’s CEO at the time estimated a billion dollars in cost-savings. Additionally, spending on research could be increased.

On the macro scale, the merger would intensify the consolidation in the aerospace and defense industry. Better terms from supplies and the Pentagon had been putting pressure on contractors “to cut costs and invest more of their own money in new technologies, such as space systems and cyber security.”[3] Consolidation has a major drawback, however, in that competition and thus trade can be stifled. Society, through its government, rather than consolidated industries must resolve anti-trust problems, and this is difficult when those industries have significant power over legislative bodies and regulatory agencies. Hence, for example, anti-trust law had not been applied to the five largest American banks even after their complicity in the financial crisis of 2008. In fact, the bankers were able to use government funds to pay themselves bonuses!  So the question can legitimately be raised whether anti-trust law even can be enforced when the consolidated company or industry is not in favor.

If very large consolidated companies can rebuff regulatory attempts to constrain or limit those companies, then even very unethical managements can enjoy perches of power that are worrisome from a societal standpoint. In the late 1990’s, for example, Hughes Aircraft merged with Raytheon Missile Systems. In 2002, dioxane, a carcinogenic chemical that Hughes Aircraft/Raytheon had been using as a solvent, was discovered in the ground water under South Tucson, Arizona. Previously, Hughes had used cancer-causing trichloroethylene since 1981, and several local residents had won settlements on that chemical from Hughes.[4] Perhaps Raytheon’s management fail to use adequate oversight over Hughes, especially given that company’s track record, or was the purchasing company tacitly involved. Something to ponder for a company on the cusp of growing substantially through another merger in 2019, for an environmentally callous group to be so big would indeed be a big deal.

At the company level, a board of directors subservient to management or even a sordid corporate culture, such as that of Enron, can be enough to thwart efforts to clean up from unethical conduct. Wells Fargo, for instance, faced an entrenched corporate culture in “efforts” to stop charging customers for unordered products. Plutocracy, or the rule of wealth, at a governmental level means that such companies can not only continue acting unethically but also extract monopoly or oligarchic rents. In the case of the defense industry, the increasing power of the major contractors can even result in pressure on lawmakers to go to war when diplomacy would have been a better route. Indeed, a government’s spending can become loop-sided in favor of defense because the major contractors are powerful enough to demand it because it is good business. Hence U.S. President Lyndon Johnson kept the Vietnam conflict going in large part because he was getting kick-backs from certain contractors. In short, from being able to evade anti-trust enforcement to being able to pressure or pay off presidents in favor of military engagements, consolidated defense contractors can be said to have too much power. 

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[1] Cara Lombardo and Doug Cameron, “Merger to Create Aerospace Giant,” The New York Times, June 10, 2019.

[2] Ibid.

[3] Ibid.

[4] Tony Davis, “South-side Tucsonans Mobilize for Another Water-Pollution Struggle,” Arizona Daily Star, April 16, 2017.