Monday 12/12 - Jesse Eisinger - Pro Publica - Profs make millions on corporate mergers

Monday 12/12
Jesse Eisinger
Pro Publica
Profs make millions on corporate mergers

Business in 1897, their sales pitch was simple, “See yourself as others see you.”

Remember, back then, almost no one had ever seen themselves in anything but the flat frozen frame of the still camera picture, so seeing yourself, even bigger than life-size, walking or talking, dancing or prancing on a big white-sheet screen, was a pretty big attraction.

So the first commandment of the Mitchell-Kenyon film school was go where the customers are, so you can see them, film them and show them to themselves and their friends and neighbors the next night at a local church or grange hall. They went to factory gates when masses of workers were arriving or leaving, or to football stadia where local soccer teams drew thousands of fans to within easy reach of the camera.

And they went downtown, to the High Streets of the British Midlands to capture as many people as were on informal parade, and there the documentarians captured not just potential customers, but history as it was happening.

On those High Streets, big changes were coming. People were moving along at foot-speed, travelling maybe just a little bit slower than the horses drawing wagons.

But look, coming into the frame, what’s that? A municipal omnibus, and behind it a truck, and car, all moving much faster than the human or horsy pedestrians. How to keep them from killing one another in the battle to set the tempo for traffic on Main Street?

The answer is just a short pan of the camera away. There, on the corner, a traffic cop. “You walkers wait, bus driver, trucker, proceed…and you on the wagon – Hold Your Horses! Now you can go.”

New technologies create new situations, which demand new services, and create now jobs, new careers.

It wasn’t long before Mitchell and Kenyon were supplementing their “Hey, look at you” films with one-reel comedies about foolish police officers.

And then they made dramas in which lawyers defended citizens against police charges. A whole new economy was wheeling into England.

In America, in the 1980s, a new wrinkle in the economy of big business was the riot of mergers and acquisitions, the continuous consolidation of companies until, in many, many markets, customers had very few competitors to choose among, despite decades of anti-trust laws and practices designed to protect competition and consumers.

Until a new school of lawyers changed the rules, and a new school of academic economists convinced courts to accept the weakening of anti-trust protections by claiming they could prove that mergers increased efficiency, lowered prices and were good for everybody.

New situations, new services, new careers. For the economists, rich new careers, assuring regulators that having 4 big phone companies is more than enough…that having 3 manufacturers corner 85% and more of the washer/dryer/dishwasher market was a good thing — paid big bucks. One consultancy could out-earn a lifetime in the classroom.

Often, though, the merger benefited only the surviving manufacturers who not only eliminated pesky competitors, they trimmed their own products lines and raised prices. The “scientific proof” and behind the consultants’ good news merger scenario turned out to be a mistake…or was it a lie?

Our guest today, Pulitzer Prize winning investigative reporter Jesse Eisinger of Pro Publica says there’s a crew of multi-million dollar academics with careers built on defending mergers to complacent pro-big business regulators…and if you want to hold them – or anyone in this whole process—accountable, you can’t, because almost everything they do or say is kept secret.

Why it’s almost as if the whole point of the system is to hide how the rich get richer, even if it costs you an extra $10 a month for your phone calls…or $50 more for your new dishwasher.



Jesse Eisinger is a senior reporter at ProPublica. In April 2011, he and a colleague won the Pulitzer Prize for National Reporting for a series of stories on questionable Wall Street practices that helped make the financial crisis the worst since the Great Depression. He won the 2015 Gerald Loeb Award for commentary. He has also twice been a finalist for the Goldsmith Prize for Investigative Reporting.





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