Tech Companies Have Amassed Too Much Power – Teddy Roosevelt Would Be Ready For A Fight

The high tech economy has led to rapid innovation and generated vast riches, but it has also concentrated wealth and power in the hands of a few corporations.  Today just five technology companies (Apple, Microsoft, Amazon, Google and Facebook) account for twenty percent of all United States stock market value.  These companies also control roughly 40 to 90% of their respective markets.  There have been valid complaints from both the political right and left that some technology companies have unfairly controlled the flow of reliable and unbiased information upon which a healthy democracy depends.  The sheer size of these companies and their practice of buying up small competitors may eventually stifle competition and innovation.  The success of high tech companies and the rapid climb in their share price has also contributed to income inequality. The richest one percent of citizens now control about 30% of the nation’s wealth while the richest ten percent control almost 70%.  This has led to increasingly loud calls for sensible new regulation to make the economic system work better for all Americans.  It has also caused an increasing number of people to question the entire concept of well-regulated capitalism as the best way to organize our economy.

The current situation is not without precedent. When Teddy Roosevelt become president in 1901, he faced remarkably similar challenges.  The country was growing rapidly as cutting-edge technological innovation spread through the economy.  Instead of cell phones, software, social media and online retail think of steel, oil, railroads, meat packing and telephones.  Similarly wealth was also becoming more and more concentrated in the hands of the captains of industry who both contributed to and controlled the technological advances.  Instead of Bezos, Gates, Zuckerberg, Buffet, Ellison and Musk; think of Rockefeller, Morgan, Carnegie, Armour and Vanderbilt.   A few hundred companies controlled almost half of the US economy.  Monopolies were common, the system dramatically favored capital over labor, inequality was high and revolution was in the air.

Roosevelt was by no means a revolutionary.  He was wealthy himself and respected many of the men who had enriched the nation through their hard work and intelligence.  However, as he said,  “Too much cannot be said against the men of wealth who sacrifice everything in getting wealth.” He understood that well-regulated large companies can allow economies of scale and efficiencies that benefit everyone; but left unchecked, some unscrupulous large corporations could also reduce competition, harm workers, damage the environment, increase prices and stifle innovation. Through moderate sensible reform he strove to protect the unregulated capitalism of his time from its own worst excesses and to break the hold of the “malefactors of great wealth” on the economy and government.  He became famous as a trust buster who broke up the large monopolies that were harming the country and concentrating power into the hands of a few people.

Within six months of taking office, Roosevelt began the first major antitrust lawsuit pursued by the national government against the Northern Securities Company, a new large railroad monopoly that controlled rail transport across much of the northern and western United States.  The massive railroad network was eventually broken up into several competitors.  This was the first of roughly 40 antitrust actions against monopolies in oil, meat packing, railroads and many other industries.  Business interests and conservative members of Congress pushed back  against these reforms, while more liberal politicians complained that they did not go nearly far enough.  However, Roosevelt pressed ahead and also helped pass a series of laws to oversee and regulate large corporations.  He hoped to ensure that these companies were acting not only in their own self-interest, but in the broader interests of society as well.

Roosevelt also intervened in the labor disputes of the day to ensure that the workers were treated fairly because he believed, “We must treat each man on his worth and merits as a man.  We must see that each is given a square deal because he is entitled to no more and should receive no less.”  In 1902 a bitter and sometimes violent strike began in the coal mines of Pennsylvania as workers sought higher wages and a shorter work day.  If left unresolved it threatened to leave much of the eastern United States without any means of heating or power generation for the approaching winter.  The mine owners refused to negotiate until Roosevelt threatened to call out the army to seize the mines and reopen them for production.  Eventually an arbitration commission was established by Roosevelt that granted many of the worker’s demands.  This was the first time a president had intervened on the side of labor instead of the large business owners.  Late in his presidency Roosevelt also began pushing for income and inheritance taxes to try and address the extreme income inequality of his time and to limit the creation of an aristocracy of wealth-without-work that crossed generations.  Later administrations successfully implemented these programs within a decade.

In sum, these moderate efforts helped rebalance the playing field to the benefit of consumers, workers and small businesses.  However, they were not so extreme as to stifle large-scale business and free enterprise.  This would have harmed the broader economy and ultimately hurt everyone. Given the similarities between Roosevelt’s era and our own, perhaps it is time to once again implement moderate, sensible reforms to ensure freedom of speech; and to rebalance and revitalize our economy, while ensuring that all citizens are given a new “square deal.”

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