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The greatest challenge to America is workers being laid off through greater efficiency. So, it was a huge relief to see lawmakers finally waking up to the problem this week in a House Judiciary hearing on antitrust, particularly members decrying mergers that increased efficiency, leading to fewer jobs. Think about it: one big motivator for mergers is to gain efficiencies either through economies of scale or eliminating redundant functions. What are those efficiencies? Job cuts made on the altar of lowering prices.
Until now, people have insisted that the point of antitrust law is to ensure fair competition that boosts consumer welfare. But what about workers?! Antitrust has failed workers, because antitrust enforcers have forgotten about any interests they may have other than as consumers. This must stop; otherwise, unfair competition will mean mass unemployment.
You will often hear that solutions to this crisis do not exist, and even if they do, they do not pertain to antitrust laws. What an insincere tribute to the beautiful tradition of our antitrust laws! Solutions to protect the American workers exist, and antitrust laws can be made fit for the purpose.
These solutions are simple: not only ban all mergers but break up big companies into pieces. Multiple pieces—scattered pieces of corporations littered all around the economy will ensure enough inefficiency so that no worker ever loses their job (unless, of course, the company they work for competes internationally, and then they will lose their job when their company goes bankrupt.)
These companies that have scale and efficiencies so that they can lower prices (and increase wages) are the real threats to our economy. American institutions are daily imperiled because innovative combinations are focusing exclusively on creating new products or on lowering prices at the expense of the honest, hard-working, American worker.
It is time for antitrust to be worker-centric. Accordingly, Congress needs to pass antitrust legislation which will:
- Prohibit mergers, especially those resulting inefficiencies and job losses: Mergers which put productivity, lower prices, international competitiveness, and higher wages before protecting workers from being displaced should be per se illegal;
- Require any company requesting to merge to be instead broken up into at least two equal and smaller pieces, so that less efficient companies will have to hire more workers;
- Establish a per se limit on the size of companies: no company with fewer than 500 workers will be allowed to become big unless they seek and obtain a special dispensation from the Chair of the Federal Trade Commission. Given that small business is the backbone of the American economy, this will save hundreds of thousands of small business owners from the curse of becoming a medium-sized or, even worse, big-business owner.
- Establish a new code of conduct whereby companies must commit to aligning their interests with the American people by supporting job creation rather than reduced prices and higher wages. Companies will thus have to commit to not engaging in technological improvements that could boost productivity and lower prices or increase technological advantages, unless explicitly authorized by the Chair of the Federal Trade Commission. To paraphrase Milton Friedman, when building our better future, it is time for American companies to commit to equipping their workers with “spoons” rather than bulldozers.
With these simple and easily administrable rules, Congress will effectively preserve American jobs for a democratized, albeit stagnant and poorer economy.
The quicker Congress acts, the sooner the American worker will be better protected. No worker should ever lose their job, even if it means higher prices, lower productivity growth, and falling U.S. competitiveness.
Using antitrust to not only stop all mergers, but to break up big companies and keep small companies from succumbing to the curse of bigness is the key to achieving this glorious future: “Workers of the United States unite, the only thing you have to lose are your higher paychecks.”