The mythology of mergers: Can Washington learn from Ancient Greece?
Time and distance separate the legendary Oracle at Delphi from decision-making in the District of Columbia, yet a closer look reveals similarities between Ancient Greece and Modern America.
Mythology, democracy and bureaucracy loom large, but undergirding it all is this basic truth: Times may change — human nature doesn’t. That’s especially evident in the pending case of the proposed $4.4 billion acquisition of Aerojet Rocketdyne by defense giant Lockheed Martin.
Washington does not rely on a solitary high priestess — Pythia — to serve as Oracle; that’s a duty “democratized” within our government. But just as the powerful descended on Delphi and the Temple of Apollo to make requests of the Oracle and interpret responses, so too do they flock to government “shrines” with requests and interpretations.
The obvious distinction separating modernity from antiquity is our existence in the Information Age; nearly instantaneous communication via the internet and electronic media prompt prospective predictions — commonly called “spin” and speculation. As 2021 has given way to 2022, those activities are on the rise. Among those in the defense community, this proposed merger has been the “talk of the town” for over a year and leads the pack today, as Defense One correctly observes.
A review of recent press coverage reveals interesting strategies and tactics. The position of the pro-merger faction is to emphasize the “Lock” in Lockheed Martin, and imply the inevitability of the outcome.
One mid-December report appearing on a financial website did not utilize typical “journo-speak.” Rather than using “unnamed sources,” the writer opted instead for “someone.” It then reported a boost in the stock price of Aerojet Rocketdyne “after a report earlier that someone who has been opposed to the Lockheed Martin acquisition believes it will likely not be blocked by antitrust regulators.”
Another financial news outlet report from October noted that the Pentagon had just sent a letter with its view to the Federal Trade Commission. At the very top, the article included Lockheed Martin CEO James Taiclet’s optimistic comments about anticipation of closing in the first quarter of 2022, seeming to imply the Department of Defense’s view was favorable. But was it?
I hope the media got it wrong here and the reality is that DOD officials understand that continued defense industry consolidation will only lead to increased costs and less innovation.
Most assuredly this process does not occur in a vacuum; advocates of the anti-merger position have emphasized correspondence late last summer between Sen. Elizabeth Warren, D-Mass., and FTC Chair Lina Khan. The senator’s letter advocated a stronger antitrust stance on defense deals by the FTC; Khan responded that antitrust enforcers should take action to block such deals.
“I believe the antitrust agencies should more frequently consider opposing problematic deals outright,” Khan wrote.
Some observers believe that the current composition of the FTC is problematic; as it stands, the commission consists of two Democrats and two Republicans, with the Senate confirmation of a third Democrat delayed after Democrat Rohit Chopra departed a few months ago. Thus if a vote comes down to party lines right now, it would be deadlocked at two each.
Yet it is worth remembering that Republicans have traditionally taken the lead in antitrust initiatives. History recalls that GOP President Theodore Roosevelt was “America’s Trustbuster.”
“Corporations engaged in interstate commerce should be regulated if they are found to exercise a license working to the public injury,” said the nation’s 26th president. One way to define “public injury” is an increase in costs to taxpayers and a diminution of quality as industries are consolidated.
The proposed merger between Lockheed Martin and Aerojet Rocketdyne would result in such a public injury. That’s because it would cause a duopoly in the missile defense business — Lockheed Martin and Northrop Grumman would own America’s only manufacturers of solid rocket motors. American taxpayers are already on the hook for $770 billion in defense spending this year; we don’t need to see those costs rise any higher, nor quality to be diminished.
We’re already behind international rivals in some defense key areas. Per Space Force leaders, the U.S. is “not as advanced” as Russia and China in nuclear-capable hypersonic programs. This ought to set off alarm bells and underscore the importance of the first duty of our government — protection of the citizenry.
Back at Delphi, Croesus of Lydia sought success going into battle with the Persians.
He asked the Oracle if he would be victorious in a war against Persia. The Oracle responded that Croesus would “destroy a great empire.”
Croesus took that to mean that he would be successful; instead, he found out too late that he was the one who would face defeat at the hands of the Persians, and in so doing, “destroy a great empire” — his own.
The United States can ill afford to stifle innovation by curtailing competition in our defense sector.
The stakes are too high.
J.D. Hayworth represented Arizona in the U.S. House of Representatives from 1995 to 2007.