Merit vs. Money

One of the hallmarks, if not the dominant trait, of capitalism is competition. Healthy competition can bring out the best in us. A good competition can inspire us to push past our self-imposed limitations. It can help us achieve what we thought we couldn’t.

A key component of true competition is a level playing field. Professional sports leagues have implemented regulations, restricting a team’s payroll for players or “taxing” them when they get excessive. Without those limitations, the Yankees could just buy World Series titles. Teams with the deepest pockets could almost always pay their way to victory, outbidding lower-revenue teams for the best players.

Switching sports to beat up a biking metaphor: The strongest rider should — and mostly does — win. The truly great ones set a high bar and encourage the field to catch or challenge them. They want to be pushed to perform even better.

We probably all agree it wouldn’t be acceptable for the lead rider to throw tacks or broken glass on the road behind them, or use performance-enhancing drugs. Nor should they be able to pay another rider to physically push them when someone threatens to take the lead. Just because a rider is ahead, they shouldn’t own the race officials and be able to change the rules to keep the lead.

But that’s where we are currently in “late-stage capitalism.” In their 19 July 2021 issue, the Visual Capitalist reported: “In 2020, the combined market cap of the world’s top 50 companies accounted for 27.6% of global GDP. This represents a significant increase from 4.7% in 1990, reflecting the growing dominance of large companies in the global economy.”

In response to the growing power of corporations, known as “trusts,” in the late 19th century, Congress passed laws and formed agencies to try to keep fairness in competition. These trusts could control entire markets, leading to higher prices, lower quality, and limited choices for the consumer.

The McCain-Feingold Act of 2002 was an effort to reduce the impact of money buying political decisions. But it was a small step and short-lived. By gutting campaign finance reform restrictions, the U.S. Supreme Court’s Citizens United decision in 2010 ensured the richest corporations could buy the officials meant to regulate American business. Corporations and billionaires now funnel billions of dollars into campaigns of candidates they know will treat them favorably. Instead of encouraging fair competition, government and courts increasingly rubber stamp or even facilitate consolidation as huge conglomerates continue to gobble up upstarts.

On April 12, 2023, ProMarket reported: “For example, take mergers, a key pathway to corporate consolidation since the 1980s when the Reagan Administration adopted big-is-better merger guidelines. The U.S. federal tax code fuels certain merger and acquisition deals via tax-free reorganizations by allowing sellers to defer (sometimes indefinitely) the gain of their sale to avoid tax liabilities. Tax policy also treats corporate debt preferentially, which subsidizes leveraged merger deals that much more. … Recent empirical research found that the top 10% of corporations pay 13% less in tax than the bottom 90% of firms. This is in contrast to near-equal effective tax rates in the 1970s between large and smaller firms.”

A friend of mine graduated from a military academy. He said their unofficial mantra was, “It’s not enough that I should succeed. I must ensure the failure of my friends.” We each smiled a twisted smile, knowing there was some truth behind the saying. In a hyper-competitive environment, there’s an incentive to weaken competition. Unfortunately, in an economy that kind of ideology will produce inferior goods and harm consumers. It undermines capitalism in its truest form.

Until we understand the value of competition as individuals or corporations, the inequity will continue to grow, aided by a huge thumb on the scale. There’s a very small percentage of people who have incomprehensible wealth. To some, the answer to “How much is enough?” is only “More.” Unless we learn that “enough” no longer means an insatiable desire for more, those who can cheat will continue to take more from anyone who can’t protect their “enough.”

My blind optimism for the way I wish things were formed in the early 1970s by songs like “I’d Like to Teach the World to Sing.” I was unaware that the original song, “True Love and Apple Pie,” was bought by an advertising firm and reworked to be the Coke ad we all knew. Money bought out and marketed optimism. Maybe things aren’t so different now after all.

Hearing “I think they can have two or three dolls (instead of 37)” sounds suspiciously like “Let them eat cake.” It didn’t end well for Marie Antoinette. I’m not sure an economy can continue to accept the ridiculous wealth disparity in current late-stage American capitalism. No one wants to race a bike with flat tires.

Mark Michel is a retired commercial airline pilot and a Key Pen Parks commissioner. He lives in Lakebay.