WASHINGTON -- Competition is the driving force of free enterprise. Concentrated power is the greatest danger to capitalism.
Two government watchdogs are charged with protecting competition: the Justice Department's antitrust division, a creature of the executive branch, and the Federal Trade Commission, an independent agency created by Congress.
Oversight pays for itself; indeed, Justice brings in $10 in fines for every $1 in its budget. But both the FTC and Justice are overwhelmed by the rising momentum toward concentration throughout American big business.
If AT&T ultimately faces off against the proposed MCI-Worldcom- Sprint merger, the two would control 70 percent of their market, a monopoly in anybody's league. And monopolies lead to regulation, with government as the cartel-keeper. A return to regulation is what we do not want.
Such companies are so big, goes the anti-antitrust argument, that only another behemoth can compete. But that's how you get down to two oil companies, two telecommunications combines and two bank- brokerage-insurance leviathans. The ability for only two to fix prices or squelch innovation becomes infinitely easier.
Let's explode a few of the myths those superpowers are spreading:
Myth No. 1: Globalization requires American-based multinational giants to compete with giants overseas. But the weaknesses of Japan's keiretsu and South Korea's chaebol have been manifest for a decade, and Europe is now reacting against the anti-innovative sclerosis of corporate giantism. As our trading partners discover the economic blessings of antitrust enforcement, why should the United States now take the route of semi-monopoly? That only leads to another cycle of regulation.
Myth No. 2: Democrats crack down on too-big business, while Republicans defend it. In truth, enforcement has been a mixed bag. Teddy Roosevelt invented trust-busting; Dwight Eisenhower's Justice Department aggressively defended competition. Compared with them, Republican Reagan's record (except for AT&T) was poor and Democrat Clinton's (except for Microsoft) is fair.
Myth No. 3: If a cartel or an industry with only two companies can deliver the efficiencies of low cost, the consumer benefits. …