Applying 1984 lesson of AT&T breakup to reignite job growth and innovation.

AT&T broke itself up into several much smaller firms in 1984. This happened after a settlement was reached for a 1982 antitrust case brought by the Department of Justice against AT&T. One of the driving reasons of the Department of Justice to file the 1982 case had to be opportunity for AT&T to use “unfair competition” against other providers. A large enough footprint of a company in the economy made enough of a difference to signal “unfair advantages” to what otherwise should be a level playing for all participants.

What happened next is a fierce competition and endless innovation from the “Baby Bells”, combined with other technology related innovations and companies that ignited a technological and economic boom benefiting most business and consumers.

The 1984 breakup of ATT is a first rate lesson in the kind of activity today’s economy requires in order to unleash competition and innovation leading to job creation.  What we have instead is a policy in place that provides endless support for “too big to fail” corporations everywhere you look. Instead of breaking up companies having “unfair advantages” to encourage competition and innovation, current regulatory direction is for more regulation and endless support for ever bigger corporate footprint. Instead of breaking down the walls and inviting more players to participate in the economic activity sandbox, current policy is to erect ever higher walls and keep more and more players out.

Just looking at the banking industry, is anyone really surprised when almost everyday regulators are shutting down another small bank while “too big to fail” banks continue to make record profits. Instead of seizing an opportunity during 2008 October market crash to formulate an orderly and proper breakup of the “too big to fail” banking institutions, exactly the opposite happened. The result is a very predictable loss of jobs, innovation and competition that followed. Is the current regulatory policy body missing the AT&T lesson of 1984? Here is the FDIC list of recently failed banks.

While it is generally true that Government cannot create jobs, moreover most jobs created under the Government umbrella is a direct drag on a real economic expansion. The real elephant in a room is the current regulative policy. A Government policy direction has an enormous role that does directly and indirectly influence investment levels and economic activity in every market economy.

We can ill afford to make mistakes when the lessons are so apparent. We need to start the next breakup cycle of the “too big to fail” and “unfair advantages” corporations, change policy direction, and accelerate the job creation miracle of the market economy.