How corporations are crippling U.S. prosperity
By David Worthington | October 15, 2012
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A dearth of competition in major U.S. industries and a government that’s policy making has been severely corrupted by moneyed interests has led to depressed wages and stifled innovation, a Pulitzer Prize winning journalist says in a new book.
In essence, you’re being ripped off, and those responsible are taking everyone’s money while assuming very little risk.
David Cay Johnston was awarded the Pulitzer Prize for reporting the inequalities and loopholes that exist in the U.S. tax code and exposing corporate tax evasion. His latest work, The Fine Print: How Big companies Use “Plain English” to Rob You Blind, examines his findings about how the U.S. economy has strayed away from capitalism and into “corporate socialism,” where the free market, its engine of prosperity, has stalled.
Some argue that globalization has caused a smoothing of salaries as developing economies grow. We asked Johnston to make his case about how the alleged subversion of competitive markets could actually be what’s responsible. Here’s our interview with David Cay Johnston:
SmartPlanet: Are our markets competitive or is the game fixed?
David Cay Johnston: A growing number of industries are monopolies, duopolies and oligopolies even as they claim to be in highly competitive markets. Cable, Internet and telephone provide a good example of this. In most places you have one phone company and one cable company offering similarly slow, by world standards, Internet speeds and very similar prices. Computers make it possible for companies to match prices quickly, as airlines do in just a few minutes for millions of fares when one airline changes its pricing structure.
SP: Are we paying too much for goods and services?
DCJ: We pay four times what the French do for a triple play package of cable, Internet and telephone — and they get worldwide TV, not just domestic; their Internet is ten times faster and instead of two country calling, they get long-distance to 70 countries at no extra charge. All that for $38 compared to the U.S. average of $160 including taxes. By one measure we pay 38 times as much as the Japanese per bit of information on the Internet. In states where the electric utilities were broken up so power generation could be a competitive business prices did not fall. Instead since 1999 they rose 48% more than inflation, compared to just 8 percent in states that retained traditional regulation. Everywhere there is a lack of competition, or only the appearance of competition, we pay way too much.
