Saturday, August 19, 2006


Corporate Monopolies "Tax" The Middle Class

According to Dr. Richard Levins, author of Middle Class: Union Made, corporate price gouging is a modern version of "taxation without representation". Relentless consolidation through mergers and takeovers has created near monopolies that can fix prices without fear of being undercut by competitors, and therefore fix prices as high as possible.

For instance, there have been 2,600 mergers in the oil and gas industry in the last 15 years. Under normal circumstances, this pooling of resources into the hands of a few corporations would reduce costs, and therefore allow prices to be cut - but that hasn't happened. Gasoline prices have risen 60 percent in the last five years, allowing the top oil companies to post record profts in the last year - over 100 billion dollars. When the Senate Judiciary Committee questioned the oil companies about their vast profits, industry leaders attributed them to the law of supply and demand. This is an explanation that pleases the more complacent friends of the business world and fools all but the most astute - but not everyone. The Attorneys General of Illinois, Iowa, Missouri and Wisconsin rejected this explanation upon discovering that the cost of heating oil had risen $250 per consumer in their states in the last year alone, despite that demand had actually fallen.

Dr. Levins uses this and other examples from the pharmaceuticals, retail and insurance industries to demonstrate that big corporations have joined together to raise prices far beyond what is warranted by the dynamics of ordinary economic forces, and have imposed their will on the American people like feudal despots demanding tribute. Dr. Levins calls this not just a "tax", but "taxation without representation", because there is no counterforce to hold these corporations in check. They have Congress in their pockets, the unions are weak, and the American consumer is at once intimidated and apathetic. Nor are there any champions anywhere else to defend us from these suicidal corporate predators who are so determined to drive their own customer base into poverty.

"Corporate price gouging a hefty 'tax' on Americans" from The Timberjay Newspapers
"Middle Class Losing Economic Power, New Book" from CommonDreams

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