American Consequences - October 2021

machine” that looked positively ancient relative to the equipment used in the U.S. Greenspan observed about the tractor: Like the 1957 Chevrolets on the streets of Havana, it embodied a key difference between a centrally planned society and a capitalist one: Here, there was no creative destruction, no impetus to build better tools. NOTHING IS SACRED In a capitalist system, there are no sacred cows... What no longer meets the needs of shareholders, customers, or both generally ceases to exist. In centrally planned societies, that which employs us is generally a forever concept – hence the economic desperation. Described more vividly, if readers are looking for evidence of economic retreat, they need only find the countries in which the lineup of top businesses remains the same year after year, decade after decade. It’s a near-certain sign of decline because growing country economies are magnets for copious investments that relentlessly fund the replacement of existing commercial giants. For example, while Circuit City was the top-performing U.S. stock in the 1980s, by the 2020s it had vanished. Blockbuster’s story is much of the same. In the ‘80s and ‘90s, “Blockbuster Nights” were so common that the home-video-rental leader continued trying to expand the business model into the 2000s. In 2005, the FTC actually disallowed Blockbuster’s planned acquisition of Movie Gallery on the belief that the combination UNTOUCHABLE

would be too powerful. Notable here is that a largely unknown company by the name of Netflix twice offered itself up for sale to Blockbuster (no antitrust opposition there!), only to be rebuffed both times. Readers know how this story ended... Considering the early part of the 21st century, when Blockbuster was still prominent, it’s fascinating to contemplate other corporations that were similarly well-positioned. General Electric (GE) was the most valuable company in the world, with a market cap of $585 billion. The company viewed as the next GE, and crowned as such on the cover of Barron’s, was Tyco. Enron was then seen as one of the best-managed companies in the world. The Internet increasingly factored into how we lived and worked, at which point Yahoo and AOL were the dominant players. So powerful was AOL that its merger with Time Warner was held up for a year based on the worry that such an influential combination would bring on “servitude” for customers with realistically nowhere else to turn... In a capitalist system, there are no sacred cows... What no longer meets the needs of shareholders, customers, or both generally ceases to exist. In centrally planned societies, that which employs us is generally a forever concept – hence the economic desperation.

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October 2021

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