Consolidation Nation: Under Obama, Big Is the New Normal
One of the hallmarks of government-managed economies is a handful of large private companies dominating several industries.
How do they amass such power and suffocate the competition? Government regulation that favors big players with high-powered lobbyists and lots of campaign cash. Those regulations ensure the big companies survive by making it difficult or impossible for new competitors to enter the field.
That’s exactly what we are seeing in the two economic sectors where President Obama’s policies have played the biggest role: the financial and health care systems.
Remember how Obama’s other signature legislation, the Dodd-Frank financial reform, was going to address the too-big-to-fail threat? Well according to Bloomberg News: “Two years after President Barack Obama vowed to eliminate the danger of financial institutions becoming ‘too big to fail,’ the nation’s largest banks are bigger than they were before the nation’s credit markets seized up and required unprecedented bailouts by the government.”
Bloomberg says the five largest banks—JP Morgan Chase, Bank of America, Citigroup, Wells Fargo and Goldman Sachs—had assets equal to 56 percent of the U.S. economy in 2011. Five years earlier it was only 43 percent.
In other words, a small number of banks are getting bigger in spite of the legislation—or maybe because of it. Thank you Dodd-Frank … and President Obama.
Something similar can be said for health care. While consolidation was going on before Obama became president, ObamaCare has fast-tracked that trend.
Hospitals are buying up physicians’ practices in droves, and the big health insurers are getting into the game. The Wall Street Journal reports that there were 86 hospital mergers in 2011 valued at about $8 billion. The consolidation has become so intense that the Obama administration is worried that it will squelch competition. Well, duh. Had the president ever run anything more than a community organization, he might have understood what would happen.
By injecting politics and regulation into the financial and health care sectors, the president is killing the innovation and competition that occur in markets that are easy to enter. Big companies that cater to the government rather than the consumer will soon be the new normal.