For two hundred years, before Ronald Reagan came to Washington, small business in America was booming.
All across the country, small mom-and-pop shops were the name of the game. When people needed food, they went to their local grocer, bakery, or butcher. When they needed supplies to fix up their house, they went to the local hardware store. Clothing and even furniture, while manufactured by hundreds of companies all over America, were sold at retail by locally-owned stores. And while customer loyalty played a huge role in the success of these mom and pop shops, they had something else in their arsenal: The Sherman Anti-Trust Act.
The Sherman Ant-Trust Act was passed by Congress in 1890. In its heyday, the law prevented businesses from reducing competition in the market place, and even required the federal government to investigate any company that was in violation of the law. The Sherman Act was the first federal law to seriously limit monopolies in the workplace.
It was famously used by President Theodore Roosevelt to break up Standard Oil, and helped keep this nation’s early corporate tycoons, like John D. Rockefeller and Andrew Carnegie, in check. Thanks to the Sherman Act, small businesses were able to thrive, without the fear of having all their competitors bought out by large corporations and thus being pushed out of the market.
Unfortunately, all that changed with Reagan.
As soon as Reagan became President, the era of deregulation in America began. Within a few years of taking office, Reagan’s assault on small business was in full gear as he essentially stopped enforcing the Sherman Act. “M&A Artists” and “LBO Guys” and all manner of mergers, acquisitions, and leveraged buy-out hustlers rose to prominence, dominating the headlines through the 1980s.
As a result, all across the country, local businesses were being put out of business, as large corporations took over and dominated industry after industry. Giant megastores like Walmart and Target replaced local convenience and hardware stores. The local malt shop and burger joint was replaced by A&W and McDonalds. Large companies got even larger, and Main Street USA began thirty-year disintegration.
Capitalism without competition always leads to monopolies and oligarchies, and thanks to Reagan’s refusal to maintain competition in our markets by enforcing the Sherman Act, these formed in every major industry in America, from telecom to food and even the media.
Today, the Sherman Act is never used against the big boys. Big banks have grown out of control. Megastores like Walmart have wreaked havoc on local businesses, while telecom and cable companies like Comcast and AT&T have all of us in economic chains. Even our media has been consolidated.
Look at some of the companies that dominate the marketplace today. Google has 90% market share of internet search engines. Facebook has a 64% market share of social media sites. And Sirius/XM Radio has an astonishing 100% market share of satellite radio in this country.
In the rare instances when the Sherman Act is enforced, it’s a hollow pale shell of enforcement at best.
Unless you’re a small business.
Consider the story of James Bordinaro.
In 1991, Bordinaro was found guilty of conspiracy to restrain, suppress, and eliminate competition in violation of the Sherman Act. Bordinaro and a competitor were conspiring to rig bids on frozen seafood contracts for the Pentagon. He and his competitor would decide every week which of their two companies was going to be the high- or low-bidder on certain types of seafood, ensuring they both stayed in business and both made a profit. And, because of their anti-competitive collusion, they both kept other companies out of the market.
He was sentenced to 12 months in prison, given three years supervised release and ordered to pay a $55,000 fine. However, last Friday, Bordinaro was pardoned by President Obama.
Bordinaro’s story shows that the Sherman Act is at least still on the radar screen of the Justice Department. And it shows how it’s only applied to little guys like Bordinaro, and never to the big boys like ExxonMobil or United or AT&T.
During a time in our nation’s history when corporations have more power than ever before, we need to bring back the Sherman Act, and end Reagan’s devastating policies of deregulation.
It’s time to break up the big companies, from banks to retail chains to telecom groups, bring mom and pop shops back to Main Street USA, and kick competition killing duopolies and oligarchies out of the American marketplace.