BY LINA KHAN AND SANDEEP VAHEESAN June 13

Lina Khan is a policy analyst for the Markets, Enterprise and Resiliency Initiative at the New America Foundation. Sandeep Vaheesan is special counsel at the American Antitrust Institute.


Since the early 1980s, executives and financiers have consolidated control over dozens of industries across the U.S. economy. From cable companies and hospitals to airlines, grocery stores and meatpackers, where once many small and mid-size businesses competed, today we see a few giants dominate. They use their power to raise prices, drive down wages and foreclose opportunity. Wealth is transferred from consumers, workers and entrepreneurs to affluent executives and shareholders.

The ongoing debate in America over economic inequality — as seen, for instance, in the Occupy movement and the success of Thomas Piketty’s “Capital in the Twenty-First Century” — is a vital one. But it is incomplete. The challenge is not limited to the decline of organized labor, tax cuts for the well-off and the increased power of Wall Street. The lack of competition in many sectors of the U.S. economy is also a powerful driver of economic disparity.

Take the $2.5 trillion health-care industry, where rising costs are fueled in good part by consolidation. A frenzy of mergers starting in the 1990s has meant that most Americans today live in areas where there is little competition among hospitals. Studies show that after merging, hospitals routinely raise prices. As detailed in Time last year, many hospitals now mark up services from a routine blood test to chemotherapy by as much as several hundred percent. In health care alone, market power redistributes hundreds of billions of dollars in wealth upward annually.

The same is true in other sectors. Meager competition among cable providers and the growing market power of large content owners have enabled Comcast, Time Warner Cable and others to raise the price of subscriptions at close to three times the rate of inflation since 2008. High-speed broadband presents a similar picture: Americans now pay more than double what European consumers pay. Merger mania in the airline industry — where eight majors have combined to create four giant carriers over the past decade — has resulted in fare increases of as much as 65 percent on certain routes.

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