Industries are becoming highly concentrated in the hands of very few players, with little real competition. Capitalism without competition is not capitalism.
The following book excerpt is an adaptation of the introduction to “The Myth of Capitalism: Monopolies and the Death of Competition,” by Variant Perception‘s founder Jonathan Tepper and head of business development Denise Hearn. Cross-posted from Business Insider.
On April 9, 2017, police officers from Chicago’s O’Hare Airport removed Dr. David Dao from United Express Flight 3411.
The flight was overbooked, but he refused to give up his seat. He had patients to treat the next day. Fellow passengers recorded a video of him being dragged off the plane. You could hear gasps of disbelief from fellow passengers.
In the video he could be seen bleeding from the mouth as police dragged him down the aisle. The video quickly went viral. Eventually, the outrage was so great that the CEO apologized and the airline reached an undisclosed settlement with Dr. Dao.
Years ago, such a public relations disaster would have caused United’s stock to stumble, but it quickly recovered. Financial analysts agreed that it would have no effect on the airline. Once investors started focusing on United’s dominant market position, the stock price, in fact, went up.
The analysts were right. The American skies have gone from an open market with many competing airlines to a cozy oligopoly with four major airlines. They have the landing slots, and they are willing to engage in predatory pricing to keep out any new entrants. At 40 of the 100 largest US airports, a single airline controls a majority of the market.
The United episode became a metaphor for American capitalism in the twenty-first century. A highly profitable company had bloodied a consumer, and it didn’t matter because consumers have no choice.
Something is broken
All around the world, people have an overwhelming sense that something is broken. This is leading to record levels of populism in the United States and Europe, resurgent intolerance, and a desire to upend the existing order. The left and right cannot agree on what is wrong, but they both know that something is rotten.
Capitalism has been the greatest system in history to lift people out of poverty and create wealth, but the “capitalism” we see today in the United States is a far cry from competitive markets. What we have today is a grotesque, deformed version of capitalism…