November 23, 1976

New Monopolies Threaten Economy

It used to be that bigger was better - but not any more.

General motors last week signed a new three-year labor agreement with the United Automobile Workers and announced that the settlement would add $500 to the price of an automobile.

Samuel I. Newhouse, the newspaper magnate, recently bought the Comcorp Cleveland weekly newspaper chain to add to his Cleveland Plain Dealer and now is in a dominant position to squeeze out the Cleveland Press and the last few independent weeklies there.

The American Telephone and Telegraph Company, which owns the Ohio Bell Telephone Company, now is so big that it can not be controlled or even audited says Congressman Charles Vanik.

There was a time when Americans applauded such bigness.  It indicated lower prices and better service.  Also, it was in line with the Great American Dream of an ever expanding economy.

At some point in the near past, however, many giant companies passed the point of efficiency into the area of unregulated monopoly.  Now the super corporations and super unions are in a position to gouge the public and make it stick.

A $500 increase in the cost of cars is clearly inflationary.  Ford Motor Company settled on that pattern last month, and Chrysler has no choice but to follow suit.  It is doubtful that little American Motors will be able to survive this latest leap in production costs.

Strangely, the hypocrisy of the UAW in campaigning against President Gerald Ford on the basis of inflation, while single handedly kicking off a new round of higher prices, staggers logic.

The big labor unions still are able to camouflage their favored positions behind a screen of class prejudice - that they are fighting the big, bad industrial firms on behalf of oppressed working men.

Yet, the fact is that more than half the nation's workers are not unionized and never can be.  Fifty-two percent of the U.S labor force depends upon small, independent business for a livelihood.  Full unionization would destroy the economic advantage of organization.

It is the small businessman and small union that has to survive under a system of fierce competition.  Big business and big labor - under the encouragement of big government - has risen above the demands of competition.

For all practical purposes, the U.S car market is split between the General Motors and Ford motor companies.  Newhouse now owns about 80 newspapers and allied publications - all of them big.  AT&T is a legal monopoly supposedly subject to regulation, but now too large to comprehend.

What is the answer?

Great Britain tried nationalization of industry under the insistence of its labor-oriented governments.  This was like giving the fox the keys to the hen house.  Government didn't have the guts to curb inflationary demands of the special interest that elected it.  Consequently the government staggers dangerously close to bankruptcy.

President-elect Jimmy Carter hints he may try price and wage controls.  However, our experience with this type of Big-Brother regulation during World War II proves conclusively it worsens the imbalance between organized and independent businesses and their employees.  Monopolistic forces have no trouble setting their own price and wage levels.  The competitive segments of the economy are shoved down another notch as the burden of inflation is laid entirely on their shoulders.

Inflation is exactly that portion of our spending in excess of total national production.  We create the illusion of prosperity by printing extra dollar bills in Washington - literally.

This cop-out has worked for four decades, but the debt it created has reached the limits of safety.  A little more and we will join Great Britain and Italy in chaos.

The only real solution involves self denial, hard work and a redress of economic balance between the monopolistic and independent work forces.  Such approaches have come to be thought of as un-American.  And this may be true to the extent that West Germany, Japan and Taiwan use them to take away our traditional markets.

Most of our transistor radios, optical equipment and clothing are manufactured by our foreign competitors.  With every labor settlement, Japanese autos look more attractive.

The big industries and their big unions enjoy prosperity at the expense of the rest of us.  The economic pie, which we call Gross National Product, is no longer growing so the big boys are taking their larger share of the pie by slicing away the share of others.

In lieu of greater production, near monopolies face government control.  Bigness has become bad simply because it can successfully challenge the public good.

The question now is: can we correct the inequity before it is too late?

Author: Lindsey Williams