Applying Economic Concepts 12-1
Are Google and Facebook the Standard Oil of the Twenty-
First Century?
Many economists and policymakers have noted that corporate
profits, especially in the United States, have in recent years
been high by historical standards. While some argue that high
profits are simply the sign of successful innovation and
management expertise, others point to rising corporate
concentration and market power as driving causes, and as
problems in their own right. Before turning to some data on
current corporate profits, we begin with a little history.
The Robber Barons and the Rise of
Antitrust Policy
In the 1870s and 1880s, the U.S. economy was industrializing
quickly, and rapid growth and consolidation in key sectors led
to the rise of immensely successful and powerful industrialists.
Cornelius Vanderbilt in railways, Andrew Carnegie in steel
production, John Rockefeller in the production and refining of
kerosene (oil), and J.P. Morgan in banking were the four most
prominent Americans eventually known as the “Robber
Barons.” Through aggressive and sometimes ruthless
treatment of their business rivals, these men amassed
tremendous economic power in industries representing the
core of U.S. economic activity. They also used their economic