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January 23, 2010

Supreme Court Shifts Business Playing Field Away From Marketplace

-- by Dave Johnson

The Supreme Court ruling allowing corporations to use their vast resources to directly influence the political process shifts the business playing field away from competing in the marketplace with products and services, to purchasing government/legal/reguatory advantages, subsidies and monopolies.

The marketplace is now irrelevant - only company size matters. It is just more efficient to beat your competitors by buying legislation than it is by competing in the marketplace. When you can purchase $1 billion in tax breaks, subsidies, mandates, contracts, whatever by spending a few million on candidates/influence, etc. it just makes more sense to do so. The return on investment is just so much higher than building factories, spending on research, paying employees, and other tedious, time-consuming, capital-intensive work.

For some time companies have recognized that the rewards from lobbying outperform the rewards from competing in the marketplace, and this ruling just amplifies that. This 2006 New York Times article, Google Joins the Lobbying Herd, discussed how Google felt it had “no choice but to get into the arena” to start “spreading its lobbying dollars” around to politicians and quotes Lauren Maddox, a lobbyist for Google, saying the "policy process is an extension of the market battlefield." This supreme court ruling just clinches this shift away from markets.

The game is necessarily going to be to use the superior resources of larger companies to purchase barriers that block smaller, innovative companies from getting anywhere, and force them to be absorbed.

Companies that think they can opt out of this and continue to compete with innovation, superior products and services are just mistaken. Any company that doesn't see this change will find that their competitors are working to buy legislation/rulemaking against them, and won't last long.

It's going to take a little while for this to sink in, but it is inevitable now.

Posted by Dave Johnson at January 23, 2010 11:22 AM


Comments

From the book I'd finish, if I could ever find a publisher:

"[T]he human need for security and the illusion of certainty tends to encourage the leaders of businesses to collude to set prices, carve up markets, and combine forces by merging their companies. Totally unfettered, the end result of capitalism would be one big company that made and sold everything everywhere, and that kept competitive businesses from existing--by force, if necessary. If you were to want something not made by this master conglomerate, named something like MicroMax, perhaps, you would not be able to get it."

Carolyn Kay
MakeThemAccountable.com

Posted by: Caro [TypeKey Profile Page] at January 23, 2010 4:09 PM

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