By Patrick Metzger
John Oliver’s recent piece on corporate consolidation is a fantastic rundown of recent mergers and acquisitions and the troubling implications that they have for our daily lives. This article seeks to note some additional consolidations of economic power that were not included in his thorough analysis.
First, a rundown of the high-level shocker statistics that Oliver mentioned in the Last Week Tonight episode:
- U.S. Airline Industry: There were 10 large airlines in 2000, but only four large airlines today, which make up 83% of the U.S. airline market.
- Due to airline consolidation, baggage fee revenue skyrocketed from $543 million in 2007 to $4.2 billion in 2016.
- U.S. Rental Car Industry: 90% dominated by 3 companies (AVIS, Hertz, and Enterprise)
- U.S. Beer Industry: 70% dominated by 2 companies (Anheuser-Busch InBev and Molson Coors)
- U.S. Banking Industry: 4 banks dominate the market (J.P. Morgan Chase, Wells Fargo, Citibank, and Bank of America). They collectively capture 75% of large corporate banking in the U.S.
- U.S. Health Insurance Industry: 5 companies dominate (Anthem, United Healthcare, Cigna, Aetna, and BlueCross BlueShield)
- Online Search: 77% of all global searches are Google searches
- Luxottica (with a 14% share of the global eyewear market) is merging with Essilor (with a 13% share of the global eyewear market).
- A Time Warner / AT&T merger is in the advanced stages of review by the Justice Department.
- U.S. Casket Industry: Dominated by 3 companies (Hillenbrand, Matthews International, Aurora)
With these statistics in mind, let’s examine a few more examples of extreme consolidation of ownership and power within the United States and the world at large.
The Bayer / Monsanto Merger
Bayer and Monsanto are the latest seed and agrochemical companies to attempt a merger. The EU is now scrutinizing this merger, which, if it were allowed to proceed, would form the world’s largest integrated pesticides and seed company. All this comes as Dow Chemical and DuPont merged earlier this year, and ChemChina acquired Syngenta.
This is problematic, because every seed that Monsanto (or any of these companies) genetically engineers is, by our current legal system, the intellectual property of Monsanto. Since seeds and pollen travel through the wind and are carried by insects and animals without a care for property lines (and since so many farmers use Monsanto seeds), there’s real potential for the nearby crops of small farmers to be inadvertently mixed with Monsanto’s seeds. Ever since the farmer Vernon Bowman lost a court case with Monsanto and was forced to pay them for having grown seeds that he simply acquired from a kind of “mixed bag” grain silo from other nearby farmers, a dangerous precedent has been set that blurs the lines of who owns the plants that become our food. Monsanto investigates roughly 500 farmers every year.
In addition, Monsanto manufactures the very weedkiller (Roundup) that their seeds are genetically resistant to. This improves the yield of farmers growing Monsanto crops to be sure, but it also makes farmers more intimately dependent on Monsanto, further increasing Monsanto’s control over the cost and profit margin for every aspect of food production.
There simply has never been such complete control over the supply of the planet’s food. It hearkens back to the days of fiefs, lords, and serfdom, but of course the world was less populated then. Even if about 90% of people in Medieval Europe lived the life of an impoverished peasant, the sheer magnitude was so much smaller. In 2009, 93% of soy beans and 80% of corn grown in the United states contained Monsanto-patented genes. As of 2013, 40% of all United States crop acreage contained Monsanto crops. Worldwide that year, Monsanto crops were grown on 282 million acres of farmland. The boldness of this most recent attempt to own and control the subsistence of so many humans is really unprecedented.
So the trouble with GMOs is not that they present a health risk (there is currently no evidence of adverse effects on health), but rather that their propagation could result in our enslavement to a corporate system that can literally own our source of sustenance.
Walgreens Purchases Rite Aid Stores
As of September 2017, Walgreens has acquired roughly 43% of Rite Aid’s stores. Remember that Duane Reade is also owned by Walgreens, so this really leaves CVS as Walgreens’ only major competitor in the entire national market.
Walgreens now owns the most pharmacies in the United States, raising serious concerns (including from FTC Commissioner Terrell McSweeney) about the potential for generic drugs to get more expensive now that Walgreens has so many fewer competitor stores to contend with.
One might make the argument that corporations like Walgreens are creating jobs, and thus contributing to the economy, and thus contributing to the overall wellbeing of American citizens. However, mergers and acquisitions in the pharmaceutical industry have led to the loss of hundreds of thousands of jobs in recent years. This brings up the human impact of corporate ownership and price gouging, which deserves its own distinct section.
Slave Wages and the Prison Industrial Complex
As discussed above, pharmaceutical mergers lead to major layoffs in the workforce. This is a fairly well-understood effect of mergers and acquisitions in general. Meanwhile, research shows that both the acquired and the acquiring company tend to benefit from mergers, with profits increasing at the expense of both producers and consumers.
If companies crowd out enough of their competitors, an oligopoly can result. The cousin of a monopoly, an oligopoly is a situation in which an extremely small number of companies control an entire market. After reading the examples above, this situation should sound frighteningly familiar.
When a market is entirely controlled in this manner, the price of goods can be set almost arbitrarily, and new competitors can be kept from entering the market. This gets especially dangerous when government regulation does not intervene. There have been no major oligopoly-busting cases in the U.S. since the 1970s. Barry Lynn points out in his book, Cornered, that this kind of market domination by only a few companies has been increasing rapidly since the 1980s.
Meanwhile, the purchasing power of the minimum wage has decreased over the past 50 years—adjusting for inflation, the minimum wage peaked in 1968. This means that millions of restaurant workers, grocery store clerks, and construction workers with a family of 3 who were briefly able to keep their family above the federal poverty line in 1968 have been forced back below it for half a century.
All of this while CEOs earn between 300 and 400 times more than workers (a ratio that is drastically underestimated by Americans). This gap in pay has been getting worse every year.
One might suggest that a worker in this situation can still put in some elbow grease and follow the “American dream” of social mobility to rise up out of their poverty. Unfortunately, this is all but impossible in the America of today. 43% of Americans raised in the bottom quintile of family income stay there their whole lives, and only 4% go from the bottom quintile to the top. And since the 1980’s, social mobility has only gotten more difficult.
This degree of wage slavery severely limits the agency that workers have. If someone can’t even buy food for their family, they can hardly be expected to become socially or politically active, or advocate for their own rights in opposition to the policies of their employer.
So corporate power effectively keeps workers enslaved in jobs they hate, taken away from the family for whom they are working so diligently. This is one way that humans are owned by this system of oppression. Another way is through the American prison system, which plays out a legalized version of slavery every day in this supposed “land of the free.” Ava DuVernay’s documentary, 13th, popularized what is now a growing awareness in this country: that when the 13th Amendment to the constitution outlawed slavery “except as punishment for a crime,” a loophole was left open that allowed for slavery to persist in the United States. Couple this with the facts that one in three black men can expect to be incarcerated in their lifetime, and that African Americans and Hispanics make up 56% of all incarcerated people in the U.S., despite comprising only 32% of the country’s population, and it becomes clear that the enslavement of people through the prison system is a legacy of America’s racist, genocidal roots.
Remember the social mobility numbers discussed above? They showed how difficult it was for Americans to get out of the bottom quintile of family income. Well, that was the average across all races. Whites have a leg-up, with only 33% stuck in the bottom quintile, while 53% of blacks get trapped at the bottom. Due to generations of systematic disenfranchisement, the median net worth of whites is 10 times the size of blacks’, blacks and hispanics are more likely to have lower credit scores than whites and Asians, and many banks have operational tactics that evade people of color seeking loans. Even computer algorithms, because they are built by humans, can have a racial bias. One algorithm—used by judges, police forces, and parole officers across the country—was meant to calculate the risk of recidivism for defendants, but it turns out it mistakenly labeled white reoffenders as “low risk” twice as often as black reoffenders.
People of color face a daunting school to prison pipeline, and companies profit off of it. Private prisons—where the largest 3 firms provide over 96% of all private prison beds—house 8% of the total prison population in the United States. The two largest firms together make over $3.3 billion dollars in annual revenue. In addition, many adjacent private industries profit off of the private, federal, and state prison systems, like the prison phone industry that makes $1.2 billion dollars every year.
Even if one doesn’t consider prison to be a form of slavery, there are still 60,000 slaves living in the United States—30 million slaves worldwide. That means 1 out of every 250 people on the planet is a slave, in the most medieval sense of the word. Right now. In 2017.
So humans are owned in more ways than one by private interests across the globe.
Control of Nature and Its Resources
Fundamentally, humans need natural resources like plants and water in order to survive. It’s safe to say that if one or a few profit-driven companies owned all natural materials and could control their dispensation, that would be very frightening indeed.
It should cause some concern, then, that as much as 90% of the global grain trade is controlled by just four traders. Or that 10 companies control most of the food and drinks found at the average grocery store (with companies like Kraft Heinz putting out feelers for further consolidation). Or that water companies utilize public-private partnerships to reap profits from somewhere between 2% and 12% of the world’s population—a $600 billion dollar market.
11% of the world (815 million people) is chronically food-insecure. Earlier this year, as food rationing brought extreme hunger to Venezuela, the country’s military was given complete control of the food supply. This resulted in extreme price gouging, with government officials and black marketeers alike profiting from the starvation of citizens. In 2015, Oxfam published a report detailing how French banks had, despite promises to the contrary, continued to engage in speculative agricultural commodity trading, which drove up food prices and contributed to the food insecurity of developing countries.
10% of the world (700 million people) suffer from water scarcity. In 2015, the water crisis in Flint, Michigan brought this issue home for many Americans as serious levels of lead were found in the drinking water. The effects of that crisis continue to this day, while just outside town Nestlé continues to pump 150 gallons per minute from the ground for a $200 yearly fee that translates into millions of dollars in profit. Similarly, in 2016, during California’s five-year drought, Nestlé extracted 36 million gallons of water from a national forest in order to sell it as bottled water. In the United States, for-profit water companies charge an average of 58% more than public water utilities (sometimes as much as 84% more). In India, Delhi has been facing a water crisis for years, which came to a head this year as treatment plants ran far below capacity and briefly delivered 80 million fewer gallons per day than the legal share of water allocated to Delhi. Many Indian citizens across the country are outraged by water privatization efforts and the false promises of companies in this industry.
All of this while megadroughts from climate change are likely to have a devastating impact on the aquifer and agriculture of the American Southwest along with other parts of the globe by the year 2100.
As the global population grows and resources become more constrained, we should expect more conundrums of this variety in our future.
The Top 0.1%
So far, this article has discussed the control that large entities wield over citizens, through the social construct of ownership. However, behind and inside of every imagined community—such as corporations or governments—one finds human beings. Individual people are ultimately the agents who choose to permit or constrain the freedoms of others, to provide for the common good or to plunder citizens’ wellbeing for their own profit. Since we have decided to bestow value on fiat money in a market economy, those with the highest dollar amount of net worth wield an incredible amount of power. So it becomes very important to know just how much power is wielded by the wealthiest people in the world and what their motives might be.
Wealth inequality in the United States is the worst it’s been since the Great Depression, and the divide has been widening at an accelerating rate in recent years. Workers’ wages have been essentially stagnant since the 1970s, despite increased productivity, while the after-tax incomes of the top 1% have increased by 192% since 1979. The top 1% in the United States wield a great deal of power, but it’s nothing compared to the concentration of wealth in the top 0.1%. The 160,000 families in the top 0.1% now own as much wealth as 90% of the rest of the country. This increase in inequality is mirrored across the world in the wealthiest nations in the G20.
The net worth of Forbes’ 2017 list of the The World’s Billionaires is $7.67 trillion. If these 2,043 people were a country and their net worth was their country’s net national wealth, they would be the 3rd wealthiest nation in the world. The eight wealthiest people in the world own as much wealth as the poorest half of the entire global population.
A recent Princeton study showed that “the preferences of the average American appear to have only a minuscule, near-zero, statistically nonsignificant impact upon public policy.” Meanwhile, the interests of economic elites have been a near-perfect predictor for U.S. policy since 1981. This is because corruption is legal in the United States—a situation that organizations like Represent.Us are trying desperately to remedy.
In 2015, The New York Times published an in-depth profile of the 158 families that contributed nearly half of the early money for the 2016 U.S. presidential campaigns. All but 20 of these families contributed to Republican campaigns.
“Not since before Watergate have so few people and businesses provided so much early money in a campaign, most of it through channels legalized by the Supreme Court’s Citizens United decision five years ago.” —Nicholas Confessore, Sarah Cohen and Karen Yourish
An anonymous investment manager wrote in 2011 about the 2008 subprime mortgage crisis, “Most of the serious economic damage the U.S. is struggling with today was done by the top 0.1% and they benefited greatly from it.” This is borne out by research at U.C. Berkeley, which showed that the wealth held by households in the top 10% recovered quickly after the financial crisis due to asset diversification, while those in the bottom 80% lost a large part of their wealth and have not recovered.
The more power that private corporations have, the more civic welfare is in danger. After all, corporations are legally obligated (due to a weak precedent set by Dodge v. Ford and reaffirmed by eBay v. Newmark) to maximize wealth for shareholders regardless of the impact to the planet and the people on it. Governments, nonprofits, and civic organizations are the entities that have the greatest capacity for improving the quality of life for citizens without a conflict of interest, but they have been weakened by corruption and the influence of money on every aspect of life on this planet.
The 19th Century economist Henry George pointed out how capitalist landlords profit from the increased value of land, even though they don’t generate anything new or contribute to the wealth of society the way that labor and capital do. Michael Kinsley, analyzing Henry George in Vanity Fair, extends the metaphor of “land” to include all unproductive forms of capitalism. He specifically critiques finance, where money can be moved from one place to another in order to generate more money, but without creating anything of value in the physical world.
Henry George suggested hefty taxes to decrease the power of landlords and return the value of the land back to public benefit. Bernie Sanders is not the first to suggest taxing the 0.1%, and hopefully the discussion above illustrates why. Wealth redistribution is not some cheap attempt to take rich people down a peg. Workers are starving and underpaid and overworked, and it’s not because there aren’t enough resources to go around. The wealthy in this country are simply not being taken to task for draining labor from impoverished people at slave wages. This is what tyranny looks like, and democracies were invented to protect citizens from this degree of abuse.
The only things historically that have reliably led to a decrease in inequality are: war, revolution, state collapse, or catastrophic epidemics. Either we’ll have the foresight this time to avoid violence, or suffer the consequences when that violence inevitably comes.
If we’re going to keep this country from catastrophe, we need to break up and regulate oligopolies, we need to invest in infrastructure in order to retain resources like water as public utilities, we need to get money out of politics, we need to restrict gerrymandering that so effectively rigs elections, we need to close corporate tax loopholes, we need to raise the minimum wage, we need to close the gender pay gap, we need to make reparations to black families whose labor and wealth has been stolen for centuries. Oh, and we should tax carbon emissions because climate change is killing us.
Simple enough, right? Let’s get started.
2 thoughts on “Who Owns the World?”