EDITORIAL

The e-commerce company’s plan to buy Whole Foods portends a future monopoly.

Amazon’s plan to buy Whole Foods portends a future monopoly.

The Wal-Mart in a small, central Texas town never made a profit.

For 10 years, the megastore operated in Hearne, north of Bryan, with lower prices and better deals than local businesses. Wal-Mart eventually pulled the plug, but not before Hearne’s downtown was littered with empty storefronts. After the megastore closed, the closest place to buy basic necessities was a 26mile drive away.

Reading about Amazon’s plans to buy Austin-based Whole Foods for $13.7 billion, you’ve got to wonder how much longer until the entire nation ends up like Hearne.

When China exports tires or steel at a loss and puts U.S. competitors out of business, we declare it illegal and call it “dumping.” When Wal-Mart, Amazon or Uber does it, we declare it a good investment opportunity and call it the free market.

However, since the 2008 financial crisis, U.S. markets have become anything but free. Mergers worth $10 trillion have reduced consumer choices. Domestic profits are at record highs, competition has plummeted and the rate of small-business creation is close to its 1970s-era nadir.

The problem is worst in the tech sector. Facebook and Google each control at least 40 percent of their markets. Here in Houston’s energy industry, we’ve seen examples of corporate consolidation between Dow Chemicals and DuPont, and Baker Hughes and General Electric’s oil and gas division.

A report by The Economist found that two-thirds of the U.S. economy became more concentrated between 1997 and 2012, and dominant companies are using their growing control to squeeze cash from customers.

“Were America’s firms to cut prices so that their profits were at historically normal levels, consumers’ bills might be 2% lower,” the magazine stated in May 2016. “If steep earnings are not luring in new entrants, that may mean that firms are abusing monopoly positions, or using lobbying to stifle competition. The game may indeed be rigged.”

If the game is rigged, then it needs to be fixed. The government can start by blocking Amazon’s purchase of Whole Foods. Perhaps no other company represents the challenges of 21st century antitrust better than the e-commerce website. Amazon captures more than half of every new dollar spent online in America. It is the fifth-most valuable firm in the world, but more than 90 percent of that value reflects profits that investors expect to see after 2020.

Translation: Wall Street keeps giving money to Amazon so that it can grow bigger and undermine competition. Eventually it will control enough market share to jack up prices and make record profits.

Or, to put it simply: Amazon’s business model is to become a monopoly. Buying Whole Foods gives the online retailer its first major foothold in the brick-and-mortar grocery business.

They’re not the only ones trying to build a physical-digital mega-model. Wal-Mart is aiming at the goal from the other direction. Last year the superstore bought Jet.com, an Amazon competitor, expanding its reach into e-commerce.

Two corporate behemoths’ unencumbered expansion makes our nation look less like a rough-andtumble free market and more like a fight between Godzilla and Mothra. How can the citizens in the city below fight back? Better enforcement of antitrust regulations would be a start. However, the real challenge is in addressing the underlying problem of a political and economic order that not only allows anti-competitive behavior, but even encourages it.

It means fixing: a tax code that privileges shareholder profits ahead of workers’ paychecks; a free-for-all lobbying system that allows entrenched interests to craft regulations that keep out upstarts; overly broad intellectual property laws that empower companies to extract profits without creating new value; occupational licensing requirements that can stifle entrepreneurs; and an employment-based health-care system that burdens U.S. companies with the costs and bureaucracy of providing insurance.

Texas was once represented by men like U.S. Rep. Wright Patman, who fought to protect local retail shops from the big-box stores of his time. Now the loudest voice in Congress warning against the Amazon-Whole Foods merger is coming from freshman U.S. Rep. Ro Khanna. He represents Silicon Valley.

We’re waiting for a Texan to speak up — one who knows the lesson of Hearne.

Perhaps no other company represents the challenges of 21st century antitrust better than the e-commerce website.