America’s economy has become a capitalist dystopia.
By Patrick Foulis and cross-posted from The Economist (Behind Paywall)
One bright morning earlier this year your correspondent travelled from New York to the University of Chicago to attend a conference on the threat to prosperity posed by monopolies. The journey began with an alarm beeping on a handset made by Apple (which has a 62% market share in America), then a bumpy taxi ride to the airport paid for using a piece of plastic issued by one of the three firms, American Express, MasterCard and Visa, that control 95% of the credit-card market. In the terminal, breakfast was scoffed from a supersized fast-food chain, while emails were checked using Google, which has 60% of the browser market.
The mobile signal was transmitted on one of the three networks that control 78% of the telecoms market. The flight was with one of the four airlines that control 69% of journeys within America. In Chicago your correspondent checked into the LondonHouse hotel, which looks like a boutique but turns out to be part of Hilton, which controls 12% of all rooms in America, and 25% of the new rooms being built. The booking was made on Expedia, which has 27% of the North American online travel market.
The firms involved in the journey made profits of $151bn and had a median return on capital of 29% last year. An equally weighted basket of their shares—call it the monopoly money portfolio—beat global stockmarkets by 484% over the past decade. Collectively, 17% of the companies’ shares are owned by just three investment mega-managers, BlackRock, Vanguard and State Street.
Described this way, America’s economy has become a capitalist dystopia…