Content Editor, Dunham | 2025 ThinkAdvisor Luminary Award Winner | 2026 Wealthies Finalist — Thought Leader of the Year | Macroeconomics, markets, geopolitics & global trends
Key Takeaways
Since the 1980s, wealth inequality has widened, with the middle class losing ground while the wealthiest gained.
Corporate concentration has surged, with fewer firms controlling larger shares of major industries.
Repeated M&A waves have accelerated consolidation and shrunk the number of public companies.
Weak or inconsistent antitrust enforcement has allowed concentration to spread more easily.
Large firms can use lobbying and regulation to protect market share and raise barriers to entry.
The result can mean higher prices, weaker wages, less innovation, and fewer startups.
Ever since the 1980s, there have been huge changes in the economy.
And it appears many of those changes have led to the rich getting richer, the poor getting poorer, and the rest of us getting squeezed in the middle.
Now, I’m not making some blanket philosophical argument here. I’m personally a free-market fellow. But the data does show that inequality has widened over the last 40-odd years.
To put this into perspective, Federal Reserve data shows that wealth distribution has become more uneven since 1989, with the middle and upper-middle parts of the distribution losing relative ground while the top gained.
Again, that’s just the structure of the current system, unfortunately. And it’s not something that gets fixed easily.
But while the mainstream financial media argues over the smaller causes behind these problems, there’s a major issue that hardly gets enough attention in the inequality debate.
And that is this: ever since the 1980s, U.S. corporations have grown increasingly concentrated across major sectors of the economy, especially in the post-2008 era.
Put plainly, we’ve seen a major rise in oligopoly and monopoly power.
An oligopoly is a market where only a small number of firms dominate the field.
That matters because less competition tends to create a whole cocktail of structural problems: higher prices, lower wages, moral hazard, weaker investment, fewer startups, and less freedom of choice.
Let me explain.
Mergers, Weak Antitrust, and Rising Corporate Power.
Competition has long been the lifeblood of U.S. economic dynamism.
It creates wealth. It pushes innovation. It gives consumers lower prices and better products. And it gives workers more leverage.
But since the 1980s, businesses have spent decades aggressively consolidating to gain market share. In many cases, that has meant less competition, more pricing power, and fewer choices.
So what caused this reversal?
There are a few reasons, but I think two stand out.
First, there has been a huge surge in mergers and acquisitions, helped along in part by decades of easy money and cheap debt.
To put that into perspective, the U.S. has gone through several major M&A waves since the 1890s, and a large share of them occurred in just the last few decades.
Keep in mind that M&A waves tend to happen during stock market booms.
Why?
Because when stock prices are high, companies can use their shares like currency. That makes it easier to buy competitors. Add in cheap debt, and the whole machine speeds up.
So Wall Street and large firms benefited from rising asset prices while smaller firms were left trying to compete in a market that kept getting more expensive and more concentrated.
Second, antitrust enforcement weakened for a long stretch of time.
For context, the Sherman Antitrust Act was passed in 1890 to break up and prevent monopolies. It became famous for targeting giants like Standard Oil and American Tobacco.
But since the Reagan era, the broader posture around antitrust became more permissive. Over time, that made it easier for concentration to build.
Now, to be fair, antitrust policy has become more aggressive again in recent years. But the long-run trend is what matters here: decades of consolidation were allowed to pile up.
So between looser enforcement and merger-driven consolidation, inequality spread more deeply through corporate America.
Or putting it another way: big firms got even bigger by absorbing rivals while smaller firms struggled to gain any real footing.
That’s how markets become dominated by fewer and fewer players.
How Public Companies Disappeared Amid Corporate Concentration
To put this into perspective, roughly half of all public companies disappeared over the last few decades, while the companies that remained got dramatically larger.
Back in 1996, the U.S. had more than 8,000 publicly listed companies.
But by the late 2010s, that number had fallen to well under 5,000.
And although the exact total has shifted somewhat in recent years, the broader trend is clear: there are still far fewer public companies than there were in the 1990s.
At the same time, the market value of the companies that remain has exploded higher.
So we’ve ended up with fewer public firms, but much bigger ones.
That is a major signal of concentration.
And it doesn’t stop there.
The number of new public firms being born through IPOs has also been weak relative to earlier decades, aside from short-lived bursts like 2021.
All of this points to the same worrying trend - fewer new entrants, fewer listed firms, and more economic power concentrated in fewer hands.
Now, obviously, public companies are not the same thing as all companies. Private firms matter too.
But the public market still gives us a useful window into the broader direction of the economy.
And another example comes from food retail.
USDA research has shown that food retail concentration increased sharply at the national level over the last few decades.
That matters because when food markets become too concentrated, dominant firms gain more power over pricing, labor, and supply chains.
And when competition weakens in something as basic as food retail, regular consumers usually pay the price.
How Lobbying and Regulation Protect Corporate Giants
Thus it shouldn’t come as a surprise that big firms have rapidly increased9 their ‘lobbying power’ (aka how much firms spend to sway politics) over the last few decades.
And it seems to have paid off handsomely. . .
For instance – according to the Harvard Business Review10 - political activity and regulations have played an increasingly large role in corporate profit margins and valuations since the 2000s.
Or put simply, more money goes towards lobbying rather than research and development (R&D) and other costs.
This implies that as industries grew more concentrated – each ‘lobby-dollar’ has had a greater return by preventing harmful regulations and instead encouraging beneficial ones - such as tax breaks, higher barriers of entry that reduce competition, etc.
Maybe this is why Warren Buffet has a track record for buying firms with monopoly powers. They set prices and effectively keep out competition.
So – as we’ve seen – further regulation appears to only amplify market powers and profits for the big companies while making barriers of entry higher and costs harsher for smaller firms (limiting competition).
This creates a vicious feedback loop: greater corporate concentration –> greater market share –> higher margins –> increased lobbying power –> more favorable regulations –> greater corporate concentration; repeat.
It’s times like these that it’s so important to remember the great Austrian economist – Ludwig Von Mises’ – words.
“Monopolies owe their origin not to a tendency imminent in a capitalist economy, but to governmental interventionist policies directed against free trade. . .”
I believe prices are the most mean-reverting thing in finance. If prices are too high, it attracts competition – which eventually lowers prices from the added supply and vice versa.
So if prices aren’t reverting, then something is artificially holding them up - such as government regulations keeping out competitors (giving big business pricing-powers).
Conclusion: Let’s Wrap This Up
So – in summary – over the last few decades (especially since 2000s), industries have grown increasingly concentrated.
For example – in the US alone – we’ve seen estimates show:
70% of air travel is dominated by just five airlines.
Only two companies control 65% of the domestic beer market (by revenue).
The nation’s four largest railroads control 86% of all grain and oilseed traffic; a single railroad, BNSF, controls 47%.
The five big banks control over 60% of total banking assets.
Only three health insurers dominate the nation.
And roughly 75% of US households have only one option for internet.
This has led to a handful of companies having greater and greater market share while exerting their dominance via lobbying to keep out potential competition.
Now – keep in mind that big business itself isn’t necessarily ‘bad’ (many have done great things). But more often than not their size comes about through aggressive M&A’s and lobbying power. Both of which may have undermined the economy.
And this is just touching on a few variables. The topic is wildly complex and deep.
But the gist here is that as new firms are prevented from joining or older firms are absorbed – competition fades – thus leading to potentially anemic wages, higher prices, declining innovation, and weaker dynamism.
I believe all of these have helped widened wealth inequality steadily over the last 40 years.
Because as long as political incentives remain tied to concentrated corporate power, the problem may be harder to unwind than many people think.
Book Recommendations:
The Great Reversal: How America Gave up on Free Markets by Thomas Phillipon (2017)
The Myth of Capitalism: Monopolies and the Death of Competition by Denise Hearn and Jonathan Tepper (2018)
This communication is general in nature and provided for educational and informational purposes only. It should not be considered or relied upon as legal, tax, or investment advice or an investment recommendation, or as a substitute for legal counsel. Any investment products or services named herein are for illustrative purposes only and should not be considered an offer to buy or sell, or an investment recommendation for, any specific security, strategy, or investment product or service. Always consult a qualified professional or your own independent financial professional for personalized advice or investment recommendations tailored to your specific goals, individual situation, and risk tolerance.
