What Teddy Roosevelt Understood That We Don’t

Back when Republicans were responsible stewards of the public good, Teddy Roosevelt waged war on monopolies. He understood that the virtues of capitalism–and they are many–required government protection. American commerce was no longer characterized by small merchants and farmers competing on a more-or-less equal playing field, and that made it imperative to constrain the powerful from dominating the marketplace and squeezing out the little guys.

In a recent column, Nobel prize winning economist Joseph Stiglitz points out that the problem of monopoly power is still with us, and still an enormous impediment to the proper working of a market economy:

In today’s economy, many sectors – telecoms, cable TV, digital branches from social media to Internet search, health insurance, pharmaceuticals, agro-business, and many more – cannot be understood through the lens of competition. In these sectors, what competition exists is oligopolistic, not the “pure” competition depicted in textbooks….

US President Barack Obama’s Council of Economic Advisers, led by Jason Furman, has attempted to tally the extent of the increase in market concentration and some of its implications. In most industries, according to the CEA, standard metrics show large – and in some cases, dramatic – increases in market concentration. The top ten banks’ share of the deposit market, for example, increased from about 20% to 50% in just 30 years, from 1980 to 2010.

Some of the increase in market power is the result of changes in technology and economic structure: consider network economies and the growth of locally provided service-sector industries. Some is because firms – Microsoft and drug companies are good examples – have learned better how to erect and maintain entry barriers, often assisted by conservative political forces that justify lax anti-trust enforcement and the failure to limit market power on the grounds that markets are “naturally” competitive. And some of it reflects the naked abuse and leveraging of market power through the political process: Large banks, for example, lobbied the US Congress to amend or repeal legislation separating commercial banking from other areas of finance.

Bottom line lesson: government should be an “umpire,” ensuring a level playing field, rather than a member of the “team” that has most effectively used its greater resources to game the system and co-opt the process.

As Stiglitz notes, unequal distribution of power in the marketplace drives inequality and undermines democratic institutions. It’s hard to disagree with his conclusion:

If markets are fundamentally efficient and fair, there is little that even the best of governments could do to improve matters. But if markets are based on exploitation, the rationale for laissez-faire disappears. Indeed, in that case, the battle against entrenched power is not only a battle for democracy; it is also a battle for efficiency and shared prosperity.


  1. Not to mention that in over 1/3 of the American labor market the government itself is the monopolist (licensor), while farming out regulation of such market to prominent market players. Under such circumstances, is it realistic to expect from the government “umpire”-like protection of markets from monopolies?

  2. The corporate leaders that have been able to buy the politicians became more and more powerful over time. That power has given them even more money to buy more politicians. We lost our democracy decades ago. That is why so many people choose not to vote because it seems that everyone elected to congress is quickly purchased. Most are purchased while campaigning because it is impossible to get there without plutocratic money.

  3. We customers/victims of the monopolies understand perfectly what Teddy Roosevelt understood. President Obama’s CEA spotted the problems and made note of a few; it appears their “interest” ended there.

    Deregulation has made victims of the 98% on every level of day-to-day survival; “Dogs bark but the caravan moves on.”

  4. These days we rely on the EU to bring suit to stop the major players from disruption of markets.

  5. I believe that we, which includes myself, have a serious problem of images. Since the 60’s I’ve always looked to Martin Luther King as an inspirational image of courage. However, MLK would have little effect on present day America.

    My new image of REALISTIC courage is not from the U.S. or the E.U., it’s from Beijing, China in 1989 and it’s the TANKMAN against the tanks lined up against him at Tiananmen Square. The only difference now— it’s Hemming Plaza in Jacksonville, Florida instead of Tiananmen Square in Beijing. BASICALLY, in my estimation, it’s just a difference of time and place.

  6. Marv; I believe you are correct that Rev. Martin Luther King would have little, if any, effect on the public today. Violence and crime seems to rule in our cities; Officer Friendly is too often a thing of the past. Hard to know which ones are our friends and we aren’t safe anywhere today. I have learned in talking with people (black and white) in their 40’s who know little about the Civil Rights Movement and it’s many facets.

    Protection from monopolies should be another of our civil rights but greed and avarice rules our government today. MLK’s non-violent civil rights movement would fall on deaf ears and we are relegated into more than racially segregated groups. Our battles for all rights are on many fronts but the wealthy minority is winning the war.

  7. For most of the humans in history life has been little more than that of a plow horse due to the exercise of power – power enforced by force or by overpowering economics.

    Americans were among the first to figure out how to manage that power that always corrupts.

    We figured out how to manage economic power by insisting on competition and legal power by hiring and firing government leaders.

    For most of our history that simple formula worked exceedingly well.

    Now it’s under attack led by the teachers in our living rooms; our source of life instruction; our closest confidant; our TV.

    Can freedom survive such a powerful army?

    That’s yet to be determined.

  8. Pete,

    “Now it’s under attack led by the teachers in our living rooms; our source of life instruction; our closest confidant; our TV.

    Can freedom survive such a powerful army?”

    cher-ish (cher’ ish) vt. 1. to feel or show love for 2. to protect; foster 3. to cling to the idea or feeling of

    cyn’i-cal (-i kel) adj. l. denying the SINCERITY of people’s motives and actions 2. sarcastic, sneering, etc.—-cyn’i-cal-ly adv.
    ~Webster’s New World Dictionary and Thesaurus

    Easily, if the People would just cherish their freedom and not be so cynical. But as you said, “that’s yet to be determined.”

  9. When I am around people today in their late teens to their late thirties, it is striking how many are stuck in entry level employment via fast food restaurants, nursing homes, cut rate retail (as in Walmark and similar stores), and numerous other low paying, no benefits jobs. These are the jobs produced by our monopoly driven economy. The people employed in these jobs are usually working for two or more employers just to pay their basic bills. Many have no health insurance. If they have families they are hurting to support their kids. Many have moved back home to live with their parents out of financial necessity. Needless to say, I am only commenting on the obvious in terms of what young Americans are experiencing today.

    Many of these people are attracted to Bernie Sanders not because they believe Bernie can change the system, but because they believe he is the only politician that is willing to really challenge it … who isn’t simply saying stuff with lots of caveats and exceptions.

    Bottom-line, people from all sorts of demographic groups are really hurting and the nibbling around the edge of solutions approach isn’t doing much for them. We as citizens as a whole need to think about and then act on real solutions … that means more than election year politics. Can we do that? I don’t know. However, at age 65 I hope to not stand in the way if our fellow citizens under age 40 do figure out positive solutions to the problems haunting our current corporate dominated democratic society.

  10. Marv, point beautifully made.

    John, the problem now is clear, but as often is true the solution less so.

    We have we to start with the status quo and get to the promised land so we need boots on the ground in both worlds but clear goals and powerful leadership made temporary (only for the life of the problem) by democracy.

  11. John, I agree with you. As a Boomer, I see the same scenario being played out. Young people stuck in nowhere jobs. A higher education to improve job skills exists if and only if you can afford it and are willing to go into debt. Politicians and the Multi-National Corporations connived to send our manufacturing jobs off shore. Organized Labor which at one time had been a significant supporter in votes and campaign donations to the Democratic Party was thrown over side of the SS Corporatism. Sadly, it was a Democrat Bill Clinton who was Captain of the ship. What will happen to all the Carrier Workers here in Indy once their manufacturing is shifted to Mexico???

    Locally, here in Indianapolis politicians doled out territories to the cable companies. You have no choice if you want cable who your provider will be. You cannot select certain channels , you have to buy a package of Comcast’s choosing. It is a monopoly but there appears to be no controls on what Comcast chooses to charge or deliver as content.

    The other issue we have is the revolving door between business and government regulators.

  12. “Corporations, which should be the carefully restrained creatures of the people, are fast becoming the people’s masters.” President Grover Cleveland, 4th State of Union Address, Dec. 3, 1888.
    From wikipedia: “Cleveland was a leader of the pro-business Bourbon Democrats who opposed high tariffs, Free Silver, inflation, imperialism, and subsidies to business, farmers, or veterans. His crusade for political reform and fiscal conservatism made him an icon for American conservatives of the era.” You ask, what’s a Bourbon Democrat: was used mostly disparagingly, by critics complaining of old-fashioned viewpoints. ‘old-fashioned’: ripened in the barrel and favorite drink of Mad Men, as well as a preferred morning drink, a “cock tail”, beginning in 1806 (ah, America!).

  13. One of the complexities of modern life is to distinguish nostalgia from progress. It’s tempting to want to recreate the past as we remember it when it is in fact forever gone due to progress having changed the world.

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