How diminishing competition is undermining America’s success
Stephen E. Herbits is an American businessman, former consultant to several Secretaries and Deputy Secretaries of Defense, executive vice president and corporate officer of the Seagram Company, advisor to the President's Advisory Commission on Holocaust Assets, and secretary general of the World Jewish Congress. He was the youngest person to be appointed commissioner on the Gates Commission. Herbits' career has specialized in "fixing" institutions – governmental, business, and not-for-profit – with strategic planning and management consulting.
Competition has been, since its inception, essential to America’s success and global leadership and prominence. Competition has influenced our culture, policies, and economic landscape. It remains a necessary component of preserving our democracy. From the fundamental principles embedded in the structure of our Constitution that provides for the checks and balances between our separate branches of government to the very essence of the electoral process, competition is deeply intertwined with the American way of life.
Of course, in today’s political climate, politics comes to mind first; but our engagement in competition is historic, pervasive, deep, and essential.
Consider the teaching of sports in our schools. The U.S. adopted the British elite secondary school system and democratized it. In addition to instilling a spirit of competition, school sports teach the meaning of healthy regulated behavior, rules, and enforcement – helping establish and promulgate a responsible individual role in promoting competition in all sectors.
When it comes to ideas, science, research, creativity and intellectual achievement, our Constitution provides two critical motivations for competition: the First Amendment right to free speech and Article I, Section 8, Clause 8’s protection for copyrights and patents “to promote the Progress of Science and Useful Arts by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”
Competition in our institutions of higher learning and not-for-profits for grants from the government and private sector spurs the exploration of valuable solutions to our future issues and a means of bettering ourselves. Even in the entertainment industry, reality TV shows are designed to make competition an entertaining spectacle, not to mention the plethora of choices of entertainment each of us has to enjoy and, from time to time, learn from others’ experiences.
Competition among nonprofit organizations allows them to organize, raise funds, attract workers and volunteers, and serve the public good. Even within religious institutions, competition for adherents fosters a diversity of approaches and permits individuals to disengage from rituals that no longer serve their needs.
Most importantly, though, competition in the political arena is paramount. Our government is the primary vehicle through which members of society engage one another on the most important battlefield – the rules and regulations we seek to live by and the support of programs, projects, and institutions to help and protect us.
Amending our Constitution to provide benefits to all our citizens has strengthened all of us and our opportunities, with much left to be done. One of the most notable examples of political competition is the battle through marches, dissent and voting for women’s suffrage, which granted women the right to participate in elections. This historic moment marked a pivotal turning point in American history.
Today, however, it is crucial to understand that some Supreme Court decisions, particularly those led by Chief Justice John Roberts, have raised concerns about the competition for votes – the most fundamental aspect of America’s success. A detailed report from the non-partisan Campaign Legal Center has demonstrated a continuous pattern to his decisions that have systematically shifted the power from voters deciding for whom we can vote to those elected officials already in place to decide who can vote
It can be argued that the Roberts court has resulted in unlimited dark money for elections, excessive gerrymandering, and the diminishment of the Voting Rights Act. This trend challenges the foundational principle of "one-man (now one-citizen), one vote." Addressing these structural inequities and stopping any further erosion of our voting rights is imperative now to ensuring that the spirit of competition remains ingrained in our electoral process and in our governmental system – executive, legislative, and legal branches.
When most people think of competition, they often conjure its place in the economic realm. Antitrust laws, dating back to the late 1880s, have been instrumental in preserving competition and preventing monopolies. Historically and still today, monopolies have wielded excessive power over consumers, affecting pricing and product quality, stifling innovation, and prioritizing our own interests over excessive greed and power.
In recent years, as The New York Times Editorial Board has pointed out, “concentration in various domestic industries has increased, granting more power to corporations to raise prices, squeeze suppliers, suppress wages, and influence policymakers since the 1980s.” Supply-side economics has now had forty years to prove its validity as the income disparities between the top 1% and the rest of Americans has grown.
Take, for instance, our healthcare sector, where the introduction of Medicare's ability to negotiate prices for pharmaceutical products has become a pressing issue. U.S. residents currently pay more for prescription medications than anyone else globally, with pharmaceutical companies dedicating significant resources to protect excessive profits and exorbitant executive compensation at the expense of public health. Hospital care competition itself is diminishing with super-investors acquiring hospitals across the nation. In Western North Carolina (where I live), county and city officials have taken multiple legal actions against the behemoth HCA Healthcare for cost-cutting measures that jeopardize patients' well-being while violating their agreements with local governments to continue to serve the public with agreed standards. These "extra" profits not only harm their patients but also burden taxpayers who must pursue governmental corrective actions.
Since the end of the 19th century, piece by piece, the Federal government established regulatory agencies as the "Fourth Branch" of government. Each was created to address and offer protection for complex and technical issues that are often too political and/or bureaucratic for the executive branch, too slow for the judicial branch, and too intricate for Congress. As the processes were created, regulation became the mediator among competing interests, including big businesses and consumers, and sometimes between big businesses themselves. Even China has replicated many of our protective agencies.
There is no doubt that these agencies are long overdue for updating processes, technology, and personnel to safeguard the citizens’ roles in informing those agencies. For instance, the tragic events involving the Boeing 737 Max aircraft serve as a stark reminder of the consequences of lax regulatory oversight when those responsible become lazy and delegate their own oversight to the manufacturer of the products or services they produce. Consulting company McKinsey-style examination and reform recommendations for every agency should take place.
Crucially, competition serves as a catalyst for stimulating, testing, assessing, and enhancing ideas and benefits while ensuring fairness. Fair competition thrives with the mediating role between the public and corporations and depends on their rules, regulations, and enforcement. Critics have questioned regulations since the “populism” of the 1980s, but they are indispensable for maintaining a level playing field where competition can thrive without harm or unfairness.
The mediating functions of regulatory agencies are the foundation of our regulatory system, designed to protect the public from uncompetitive behavior. This system requires strengthening, rather than its consistent and unrelenting demonization by big businesses and politicians who benefit most from the unlimited dark money flowing into the system thanks to decisions of Chief Justice John Roberts. His decisions have consistently demonstrated a commitment to the wealth theories of the Reagan era, and have chipped away at these fundamental protections, posing a threat to effective competition and the crucial mediating role of government agencies.
Competition remains a cornerstone of America's success, influencing various aspects of our society, from politics to economics, from science to culture to education. Recognizing the importance of competition and preserving its integrity through informed regulation and legal reform is essential to continue fostering the spirit of innovation, fairness, and individual engagement that has propelled America to greatness. America faces an existential danger if we ignore the necessity of managing competition. It is basic to every one of our lives in one way or the other.
Is it time for a national public commission to review the issues around competition and its preservation?