May 18, 2010    Volume 17, No. 8

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The Singular Threat Of New Monopolies; Small Business Generation Is Being Stymied By Corporate Giants

By Llewellyn King

They're not your grandfather's monopolies. They're not Standard Oil or Western Union or General Motors. But they're monopolies, scads of them, nonetheless, restricting competition and thrusting their hands in your pockets.

In his new book, "Cornered: The New Monopoly, Capitalism and the Economics of Destruction," Barry Lynn, a journalist and a senior fellow at the New America Foundation, lays out the case against the new monopolies and their role in stifling competition across the globe.

Where once monopoly watchers worried about steel, oil, electricity, primary goods and services, Lynn points out that the new monopolies are doing their thing -- cutting competition, reducing choice and manipulating the market -- in almost every business, affecting every aspect of our lives.

The old primary gang has become irrelevant as monopolies have sprung up in arenas where natural competition once reigned. The heavy hand of monopoly is dimming our choice.

Lynn cites the disturbing fact that 70 percent of the milk sold in New England is marketed by Dean Dairies; different labels on the bottles or cartons, same company. The same goes for bottled water; many labels, two principal suppliers: the Coca-Cola Company and PepsiCo.

Book publishing is in the thrall of two retailers: Wal-Mart and Amazon. It was once as much an art as a business with dedicated publishers, nursing geniuses into print and history. Now unknown writers are at a great disadvantage as the publishers try to confine their lists to proven names.

Chain stores are another bedeviling monopoly. They destroy small businesses as they spread across the country. For every Target, Wal-Mart, Home Depot, CVS, McDonald's and Starbucks, there are other entrepreneurial dreams dashed.

Bigness helps bigness. Big shopping center developers bring in big chains. Once, Lynn points out, every city proudly had its indigenous department store. Now it has chain stores.

Throughout the early part of the 20th century, antitrust law and practice looked at the impact of mergers and a reduction in competition. It fought against elephantine companies as being not in the public interest.

Enter Ronald Reagan and a philosophy that sought only to see the impact of mergers on consumer prices. Wal-Mart is the poster child for these arguments. So long as it appeared that consumers were getting a good deal, consolidation was not an anti-trust violation.

At first, according to Lynn, the new monopolies do reduce prices -- until it is safe to raise them. Witness the banks. Consumer prices also tell very little about the health of a society, its optimism and sense of possibility. Chain stores bring dead-end service jobs. Monopolies are stifling possibility for millions and, incidentally, killing innovation.

Politicians, foundations, chambers of commerce and the free enterprise crowd all blow kisses at small business, but they get between the sheets with the monopolists. It's cozy that way.

-- Llewellyn King is host of the TV show "White House Chronicle." His column is disributed by the Hearst-New York Times Syndicate.

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