A critique of how the American economy has evolved to protect giant corporations and their profits. A call to break the grip – with competition.
Champions of American capitalism celebrate the U.S.A. as the land where competition gets things done. Brings everybody the most for the least. But look around. American corporations’ profits are now at super-high levels compared to our GDP. Way higher here, at home, than their return on investment abroad. Big chunks of the economy just ruled by a handful of firms. Critics are saying the game is rigged. We need more competition. This hour On Point, where’s the competition in the U.S. economy?
-- Tom Ashbrook
From Tom’s Reading List
Washington Post: Pfizer and Allergan call off their $160 billion merger after U.S. move to block inversions — "The Dublin-based Botox-maker Allergan announced early Wednesday it would abandon its mega-merger with U.S. pharmaceutical giant Pfizer after new government regulations made the tax advantage of the cross-Atlantic deal more difficult to achieve. The move is a huge victory for the Obama administration in its campaign against inversions, in which U.S.-based companies buy or merge with smaller foreign firms and move their headquarters overseas to lower their tax bills."
The Economist: The Problem With Profits — "Getting bigger is not the only way to squish competitors. As the mesh of regulation has got denser since the 2007-08 financial crisis, the task of navigating bureaucratic waters has become more central to firms’ success. Lobbying spending has risen by a third in the past decade, to $3 billion. A mastery of patent rules has become essential in health care and technology, America’s two most profitable industries. And new regulations do not just fence big banks in: they keep rivals out."
Reuters: Consumers prop up U.S. economy, but profits under pressure -- "Relatively strong consumer spending underscores the economy's underlying strength and should further allay fears of a recession, which triggered a massive stock market sell-off early this year. That, together with a tightening labor market and rising inflation likely keeps the Federal Reserve on a path to gradually raise interest rates this year."
This program aired on April 7, 2016.