For more than four decades, Democrats governed from this vantage point. They sustained majorities in both the House and the Senate for nearly all of those years.
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But then, in the 1970s, the party underwent an ideological shift. A group of young, newly elected lawmakers spurned economic populism and dismissed concerns about the power of big business as old-fashioned. This new bloc used its growing majority in Congress to marginalize the party’s long-standing anti-monopolists. It helped elect Carter, who, beginning with the airline and trucking industries, dismantled regulations that had previously constrained big business. Ronald Reagan continued this project in sweeping fashion. His Justice Department reinterpreted the nation’s antitrust laws in a way that all but gutted them.
Clinton went further still. In 1992, the Democratic Party scrubbed all references to economic concentration and antitrust from its platform. Clinton then led a successful, multiyear effort to overturn the Depression-era laws that had constrained the size and reach of banks. Obama followed in the same vein, presiding over a period of extreme consolidation that saw aggressive new forms of monopoly power emerge, uninhibited, from Silicon Valley and Seattle. While Democrats still evoke the image of small business in political speeches, it’s not a serious focus of the party’s policy making.
Meanwhile, small businesses have seen their numbers and market share plummet in one industry after another. From 2005 to 2015, the number of independent retailers fell by 85,000 and small manufacturers by 35,000. Local pharmacies, community banks, family dairy farms, and independent grocers have all been in decline. Meanwhile, starting a business has become much harder. The number of new firms launched each year has fallen by nearly two-thirds since 1980.
These trends are often dismissed as proof that larger corporations are simply better and more efficient than smaller ones, but the evidence suggests otherwise. Take local pharmacies. As they shutter their doors, we assume that they just can’t compete with national chains. But according to studies by Consumer Reports and by my organization, local pharmacies provide lower drug prices and better care. The problem is that their reimbursement rates are set by three dominant pharmacy-benefit managers, all of which also run their own competing pharmacies. Last year in Ohio, the largest of these, CVS Health, further slashed the rates it pays local pharmacies and then sent many of them letters offering to buy their struggling stores.
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This kind of predatory behavior is widespread. It can be found in the hefty swipe fees Visa and Mastercard impose on independent retailers that have no alternative but to pay up, and in the loss of shelf space that local breweries face when Anheuser-Busch InBev buys or bribes their distributors. Over the past few years, I’ve talked to hundreds of small-business owners about the challenges they face. Most describe dynamics in their industry that are largely about the exercise of unconstrained market power. In 2016, my organization surveyed more than 3,000 independent businesses. By a 61 percent to 7 percent margin, they said the federal government “should more vigorously enforce antitrust laws.”