Thanks for sharing
This is indeed the central theme of what has happened to America. In the later quarter of the 19th Century, prices of goods and services were dropping due to advances in technology and industry. The USA was leading the world in this (USA deflation was twice what Great Britain for example). As the cost of things came down, the general population, for one of the first times in history, had a surplus of money and this was one of the most prosperous times in history.
Many industrialists were, however, not content. They felt that their efforts were what caused the economic boom and they deserved to get more. But how was this to be done? There were many competitors and if one tried to raise margins, the other producers would take their market share. So, they began the process of creation cartels. Agreements were made that all the producers would keep their margins and prices high even though their costs were coming down. ..... I didn't work.
Seeing an opportunity and even more net profit to be made, some producers made secret deals with their customers....and the customers of the other members of the cartels. So prices for goods and services continued to decline. Those that had made deals for price cuts increased their overall market share. Eventually, the word got out and the cartel members sought a way to find out what prices were being offered to the customers.
Their answer was to go to the Federal government and claim that there needed to be transparency in transactions. Of course this would allow the other members of the cartels to know and to put pressure on those that were lowering their prices. Under the guise of "transparency" the government began the regulation of producers forcing them to publicize their prices.
That didn't work either. Although the cartel members were now keeping prices and margins high, the potential for high profits in a economy were production costs were decreasing brought new players into the market place. Mostly these new players came from disgruntled employees that saw they could do better because their ideas for innovations had been suppressed as unneeded in a market place which was little need to be competitive. Suffice to say, these new players caused the cycle of lower prices to continue.
What was to be done? The cartels were losing power and market share, so they sought a way to manipulate and control the market again. This time by going to the federal government and complaining that the new producers were offering substandard products and their working conditions were lacking. (Untrue by the way). So, the federal government stepped in to regulate the new producers. Those producers were less able to fend off the regulators (which were routinely bribed by the cartels). They suffered and late in the last decade of the 1800, prices stopped going down as the cartels were, at last, able to keep their margins high.
This post was modified from its original form on 10 Dec, 17:53
The failure of the economy to keep prices coming down caused significant economic disruption, and the potential for increasing prosperity for the general public was reduced, but the momentum of the economy was still positive. Unfortunately, the pattern had been set that the government was now empowered to intervene in the market place for the benefit of the powerful. Those that were powerful were encouraged to seek new ways to use the government to protect their interests. Other power groups began to coalesce and to form the special interests we see today.
Sorry for the lack of formatting the above. I had a software "upgrade" the has apparently caused the paragraphs to lump together in mass. Along with other problems with care2.
I have that same problem...unable to paragraph break.