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Monday, April 18, 2016

Paul Krugman, "Robber Baron Recessions": Ronald Reagan Is to Blame?

In a New York Times op-ed entitled "Robber Baron Recessions," Paul Krugman addresses the recent strike of Verizon workers and informs us  that "growing monopoly power is a big problem for the U.S. economy." Krugman proceeds to conclude that "we aren’t just living in a second Gilded Age, we’re also living in a second robber baron era." And who, according to Krugman, is to blame for the lack of competition? Ronald Reagan and the Republicans, of course. Krugman's explanation:

"For Reagan didn’t just cut taxes and deregulate banks; his administration also turned sharply away from the longstanding U.S. tradition of reining in companies that become too dominant in their industries. A new doctrine, emphasizing the supposed efficiency gains from corporate consolidation, led to what those who have studied the issue often describe as the virtual end of antitrust enforcement.

True, there was a limited revival of anti-monopoly efforts during the Clinton years, but these went away again under George W. Bush. The result was an economy with far too much concentration of economic power. And the Obama administration — preoccupied with the aftermath of financial crisis and the struggle with bitterly hostile Republicans — has only recently been in a position to grapple with competition policy."

Wrong. With regard to consolidation within the financial industry, for example, it was none other than Bill Clinton who was responsible for the repeal of Glass-Steagall, which in turn gave rise to giant financial institutions, whose rapacity ultimately threatened the collapse of the global economy.

And to whom did Hillary provide a speech in May 2013 for the sum of $225,000? None other than  Verizon. This seemingly relevant information is absent from Krugman's opinion piece.

And does Krugman mention the donation of Verizon to the Clinton Foundation in an amount between $100,001 and $250,000? Not a chance.

Let there be no mistake: I am a strong advocate of corporate competition, but pin all of the blame on Ronald Reagan and the Republicans? Get real!

1 comment:

  1. "...A new doctrine, emphasizing the supposed efficiency gains from corporate consolidation..."
    started in 1978, with the newly anointed economic science experts graduating with Harvard MBAs who, led by the executives of Primerica, to the 1978 announcement that American Can of the then DJIA would become a financial services company because "manufacturing is no longer profitable enough" (I was there and remember that word for word)

    Blame it on the convergence of the Great Inflation and a Wall Street paradigm that demanded double digit earnings increases, quarter after quarter.

    Who is to blame for the Oil embargo that led to the Great Inflation? Carter or OPEC?
    or, the idea that Business = Science, so enable the rule of the MBAs?

    chicken. egg.
    no mas. break all of it.