Observing US: A column about America, by Marylaine Block originally published by Fox News Online, 1998-2000

#60, November 9, 1999

BIGGER, NOT BETTER

by Marylaine Block

Big banks are buying little banks, two drug companies are competing for the right to swallow up Warner-Lambert, MCI and Sprint are becoming one, and somehow AT&T now provides my phone service, credit card, and cable, too. The publishing and music industries are dominated by a few giant companies, and we're now down to one aerospace company. Perhaps some day there'll be just one master corporation, meeting all our needs, from diapers through college loans, wedding rings, and funerals.

I was under the impression monopolies were illegal, but aside from producing the most "well, duh" news headline ever -- "Microsoft a Monopoly" -- the government has done nothing to stop the wave of megamergers. We're told they're good for us, that they lower prices by eliminating redundancy and making business more cost-efficient.

Funny, but it doesn't always seem like that to us, possibly because "eliminating redundancy" means throwing a fair amount of us out of work, and "cost efficiency" often means cutting our pensions and medical benefits.

For another, megacompanies can be bullies in small ways and large, like the Archie comic books execs who sued the owner of Veronica.com for copyright infringement. They can wipe out competitors by selling below cost, like the two major carriers at our local airport who were threatened by the $99 direct flights to New York an upstart airline offered. Once they'd lowered their own fares for those routes and forced the small company out, they resumed the normal outrageous fares they can charge any midsize captive market like ours.

Megacorporations can also compete unfairly by lobbying for laws that benefit them. And by being "too big to fail," their highly-paid CEOs can screw up with impunity, knowing we taxpayers will be forced to bail them out.

Monopolies have the clout to get better prices from their suppliers, which is why Amazon and Borders can afford to offer 25% discounts on bestsellers. Small independent bookstores not only can't sell them that cheaply , they often can't even get the books from publishers in the first place - publishers can't make much money off small orders from small bookstores. That's why thousands of independent bookstores have died in the past few years.

Megacompanies don't care about individual communities, only about individual markets. WalMart stores, after driving local stores out of business, may be closed down themselves if they don't earn enough profits, leaving towns stranded without any stores at all. Interstate banks won't keep open branches that don't return enough profit, thus closing down loan options for local businesses and homeowners. Unless compelled by laws like the Community Reinvestment Act, they won't invest a community's money in its own renewal. Corporate hog farms, whose far away CEOs don't have to smell the consequences every day, permanently damage the soil and water -- in North Carolina, floods washed their huge manure piles into the rivers, spreading bacteria and disease.

Another rationale for corporate mergers is that research and development of new products requires a lot of capital, which is certainly true for big-ticket items like airplanes -- Boeing is the only remaining manufacturer whose commercial airliners are not directly subsidized by a national government.

Having abundant capital doesn't turn megacompanies into entrepreneurial risk-takers, though. More often it means they demand guaranteed return on investment, which actually ends up limiting our range of choices. Movie companies that spend $50 million or more on a project want imitations of previous blockbusters, stars with proven box office records, and splashy expensive special effects to draw teenage boys. Phenomenally stupid record companies offer lavish contracts to yesterday's stars, while letting the albums of their fresh young talent die unnoticed for lack of promotion.

For me one of the saddest signs of corporate giantism is the identical humor sections in every bookstore, filled with guaranteed sellers: Dave Barry, Dilbert, Jay Leno, Gary Larsen, and endless collections of "Garfield". The quirky little books I used to find, like Colin McEnroe's Lose Weight through Great Sex with Celebrities (the Elvis Way), aren't available anymore, nor are the collections of political cartoons I love.

Companies are fewer and bigger all the time, but I'm still waiting for those economies of scale to be passed on to me. I'm still wondering when my life, or my community, will get better because of it.

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