CNN Business reports that Exxon, which was the world’s largest company in 2013, is today being kicked out of the Dow. As CNN Business puts it, “Exxon is now a shell of its former self.” The company is losing money and its “market value has crumbled by a staggering $267 billion from the peak.”
What? That’s not possible! Haven’t we always been taught that big corporations just keep getting bigger and bigger? Don’t Keynesian economics professors all across America teach that oil companies are “oligopolies,” which enables them to raise their prices whenever they want and to make as much money as they want? Haven’t statists told us for years that it’s necessary for the federal government to break up these “big companies” because they have so much power over American consumers?
Well, if all that is true, then what’s the deal with Exxon? It was a big company. Why didn’t it keep growing?
What is happening to Exxon is just one more demonstration, among many, that no matter how big a company is, it can begin losing market share to competitors and even be driven out of business.
In a genuine free market, the consumer is sovereign. Through his buying decisions, the consumer decides which businesses are going to stay in existence and which ones are going to go out business. Those businesses that succeed in pleasing consumers with goods and services that consumers find attractive are the ones that are going to do well.
There is another factor involved here—the possibility of mismanagement or the making of bad or erroneous management decisions. That is one of the reasons for Exxon’s fall, given its heavy investment in natural gas more than ten years ago just before the price of natural gas collapsed.
Exxon’s fall goes to show that antitrust laws are ridiculous and destructive. They have no place in a free society. Bigness in a free-market system simply means that a company has pleased customers and made good management decisions. If a big company fails to please customers or makes one bad management or investment decision, it goes down.
Compare Exxon with a genuine monopoly, one that most leftists and Keynesian economics professors love—the Postal Service. It holds a privileged position in American society, because federal law protects it from competition in the delivery of first-class mail. If a private company tries to compete, a federal judge immediately orders it to shut down.
Imagine if Exxon had asked the federal government for a grant of monopoly. Why, statists would be screaming to the rafters—and rightly so. That is the type of “bigness” that is bad—because it is bigness based on government-granted monopoly privilege rather than on satisfying consumers and making sound management and investment decisions.
America should rid itself of monopolies, starting with the Postal Service, and restore a free market system to our land, one where company bigness reflects success in satisfying consumers and running a sound business.
