Business review; Antitrust laws

From the national educational radio network here is a Business Review ASSOCIATE PROFESSOR ROSS Wilhelm of the University of Michigan Graduate School of Business Administration presents is abuse and Kamens of business and economic activity in recent years there's been increasing pressure upon the president and Congress to take action which would modify the end of trust laws so that large corporations such as General Motors Ford and Chrysler could be broken up into perhaps two or more new companies each. A task force of university professors and non-government lawyers appointed by President Johnson made such a recommendation. In addition there is sentiment within the Federal Trade Commission and they have a trust division of the Justice Department to prevent conglomerate firms from being formed or expanding a conglomerate as a corporation which consists of many different divisions or subsidiaries. Each of which is in an unrelated line of business a steel chemical as women's rate aware and brewing. The basic argument for breaking up big firms are for a permit for preventing firemen from becoming big. Is the fear

of the concentration of economic power. A great economic power is feared because it felt that such institutions would not be responsive to the changing demand and supply conditions. Unless they can slow down or prevent economic progress we fear that big firms can force us to take products we do not want because there will be no alternatives open to us in the marketplace. I find this argument difficult to accept because there is simply too much evidence to the contrary in the world about us. Let's consider the American automobile industry and what's happened to it since World War 2. The American automobile industry is concentrated by every definition. General Motors Ford and Chrysler are among our among the world's largest companies. These are companies which are most often mentioned when the anti-trust people talk about breaking big firms. And yet let us look at what has happened and is happening in our American automobile industry. The giant firms are the ones who are on the defensive today and this has been true for the past 14 years. We all know that there has been a flood of small foreign cars into the United States.

Despite their size and efficiency the big three in the American automobile industry have not been able to prevent tiny foreign car companies in Europe and Japan from coming into our market and capturing an increasing share of our car sales. If the big three automobile makers have economic power it certainly doesn't mean much. Just count how many foreign cars you see on our streets every day. Every car you count as clear conclusive evidence that the big firms in our nation stay big only so long as they're able to better serve the market than our other firms. And if this is the case and it is the case then there's no need for any fair about the big firms or for saddling them with for the government controls. Consider the steel industry and the United States since the 1930s the American steel industry has been the prime example put forth by trust busters as a concentrated monopoly power industry. And yet today the American steel industry is facing fierce competition in the United States from European and Japanese steel makers. The high and growing proportion of the

steel we consume comes from overseas. It's a very real question as to how large a steel industry we will have in the United States in future years. And again this experience by every reasonable test demonstrates that bigness does not mean power to permanent change nor just to have self-perpetuating institutions. Look at retailing since World War 2 and see how small discount houses revolutionized the department store business and forced many of the huge stores in downtown areas to the wall or even out of business. Or consider the impact of television upon the mass entertainment industry with the introduction of television the giant motion picture companies and the giant radio networks where for all practical purposes eliminated from the business of producing films and radio programmes for the mass market it was the giant firms who were unable to maintain their position in the market and who thrived and grew in the face of television competition in a small motion picture producers who today are making most of the films we see in the small local radio stations who adapted their

programming to give us Entertainment Television does not give us. Today we have twice as many radio stations in the United States as we had before television. Survival in America does not depend upon size. Simply because a company as big is no guarantee of its survival as a D.H. Kaplan said many years ago. The top is a slippery place. Just look at automobiles steal department store the motion picture companies the radio networks. If you want evidence as to why we have little to fear from the economic power of big firms. That was Associate Professor Ross Wilhelm of the University of Michigan Graduate School of Business Administration with his views and comments on business and economic activity. Business Review is recorded by the University of Michigan broadcasting services. This is the national educational radio network.