Corporate mergers are bad news for the thousands of workers who lose their jobs. It's a different story for the CEOs who can earn hundreds of millions of dollars from the deals.

We are in the midst of a massive merger wave. Since the late 1990s, the number of major airlines has dropped from seven to four, and the number of major car rental companies has fallen from eight to three. There have been so many mergers over the past twenty years that the Wilshire 5000, a common stock index, contains only 3,500 firms, because there aren’t enough eligible companies.

There are many reasons for this, but a key one often goes overlooked. Executives and bankers are paid a lot of money when they sell firms, regardless of whether it’s a good idea. If Congress wants to reduce unnecessary mergers, stopping these kickbacks is an important way to do it.

Take the AT&T-Time Warner merger. This was a controversial deal, challenged by the Trump administration. The government made the case that allowing the two companies to combine would be bad for consumers, while the CEOs – Jeff Bewkes for Time Warner and Randall Stephenson for AT&T – argued the opposite. During the debate over the merger, we heard a lot of talk about content, prices, and distributors, as well as Trump’s potential intervention. But what we didn’t hear was that Time Warner CEO Jeff Bewkes would make over $400 million for selling his company, in one of the largest ‘golden parachutes’ of all time. And now the layoffs are starting, as they often do after mergers.

Such golden parachutes, or payouts to corporate executives when a company is sold, are common. This has transformed the corporation and turned it into a mechanism to extract cash for the wealthy. And it has become so pervasive that it is a de facto backdoor public policy.

Consider CVS’ $69 billion deal for health insurer Aetna. By combining thousands of pharmacies, urgent care centers, a health insurer, and a middleman in the pharmaceutical business, this deal changed the way Americans produce, use, and distribute medicine. It’s a hugely consequential change that will have wide ramifications, some of which likely haven’t been imagined yet.

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