Saturday, January 29, 2011
M&A Madness. Comcast cable company was permitted by the FCC to take over the NBC television network and its Universal Studios/theme parks subsidiary. The merger went into effect this week. I left this comment at an AOL News story about that acquisition.
Here again we have major corporations wasting money on mergers and acquisitions that accomplish NOTHING of value to society. BILLIONS of dollars change hands among the millionaires, and not one benefit of any kind accrues to the working people or taxpayers or society at large. Can we expect, as happens so often in mergers, that layoffs of "redundant" employees will ensue, so that working people are actually injured by this pointless merger?(The current U.S. military death toll in Iraq, according to the website "Iraq Coalition Casualties", is 4,436 — for Israel.)
There ought to be a total ban on mergers and acquisitions by major corporations except for the very rare case where a substantial economic entity would go out of existence without being bought. Mergers are wasteful and anticompetitive; many acquisitions are done to destroy competitors, despite our scarcely-ever-enforced antitrust laws. Over time, merged corporations become "too big to fail", setting taxpayers up for a costly bailout if they would otherwise fail. Better to prevent them from becoming too big to fail in the first place.
99% of mergers and acquisitions are of absolutely no value to society; perhaps 50% of them are anticompetitive and produce the shedding of jobs to pay for the costs of a pointless merger. The fewer corporations, the more powerful each, and the less powerful the public as regards reining in abuses. Business-school grads in management are keen on proving how smart they are by building enormous, but often shaky, empires that provide absolutely no value to shareholders or society. Money that should be used to develop technologies, extend and improve services, provide jobs, etc., is instead wasted on insane transactions that render increasingly larger swaths of the economy into a house of cards. We need to destroy the cult of mergers and acquisitions before it destroys us.
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