INTRODUCTION
In the 1930’s through the early 1970’s our nation had strong regulation over the economy. This was in response of the catastrophic failure of laissez-faire capitalism that resulted in the Great Depression. Starting in the 1970’s Democrats followed the Republican lead on deregulation and consolidation. This issued in an era of unmatched consolidation of wealth and power. We’ve got to start fighting back, things are out of control and dangerous.
“We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.” Supreme Court Justice Brandeis
For some reading on how we allowed the tenants of the New Deal to fall to the wayside I recommend reading How Democrats Killed Their Populist Soul. It’s rather long, so bookmark it and read it later. Here’s a sample:
In fact, the central tenet of New Deal competition policy was not big or small government; it was distrust of concentrations of power and conflicts of interest in the economy. The New Deal divided power, pitting faction against other faction, a classic Jefferson-Madison approach to controlling power (think Federalist Paper No. 10). Competition policy meant preserving democracy within the commercial sphere, by keeping markets open. Again, for New Deal populists like Brandeis and Patman, it was democracy or concentrated wealth—but not both.
BREAK UP MONOPOLIES IN 6 STEPS
I came across this great article entitled 6 Ways to Rein In Today’s Toxic Monopolies published in The Nation last year. It’s not long and worth reading in its entirety. I’ll give you some selected quotes, hopefully not too many.
After nearly four decades of lax antitrust policy, during which a handful of corporations have been allowed to gobble up market share like a horde of deranged amoebas, the consequences of unfettered monopoly have become painfully apparent. Competition has fizzled, replaced by pockets of extreme concentration. The number of new businesses has plunged. Wages have stagnated. Inequality has spiked. And extreme wealth—alongside its evil twin, extreme power—has pooled in fewer and fewer hands.
1. HOLD FIELD HEARINGS ON THE IMPACT OF CONCENTRATED ECONOMIC POWER
The public already favors breaking up monopolies. We just need our elected officials to begin fighting for us on this subject. To start, we need to hold public hearings similar to those of the 1930’s to inform the public on the negative impacts of monopolies on competition, wages and prices.
It’s no wonder that about two-thirds of Americans believe the economic system “unfairly favors powerful interests.”
That sentiment should prompt members of Congress to organize regional field hearings to investigate the real-world impacts of concentrated economic power and engage citizens in a conversation about what to do about it.
For inspiration, they might draw on hearings held in the late 1930s by what newspapers at the time often referred to as the “Monopoly Committee.”
2. BRING DAYLIGHT TO THE NATION’S ANTITRUST AGENCIES
The DOJ and FTC are responsible for anti-trust activities and have operated in near secrecy in recent years. We need to shine a bright light on their decisions to further bring the public on our side.
In 2012, for example, Obama’s DOJ closed a three-year investigation of the agricultural-chemical producer Monsanto—a case closely followed in rural America—without issuing a statement.
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It wasn’t always this way. When Franklin Roosevelt decided, in his second term, that restoring prosperity would require breaking the grip of dominant corporations
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Under his direction, the division opened regional offices across the country to uncover antitrust violations, and it began issuing detailed public statements with every case it prosecuted.
3. SET A HIGHER BAR FOR APPROVING MERGERS
About three-quarters of industries are more concentrated than they were 20 years ago, and much of this increase has been fueled by mergers. The tipping point came in 1982, when Ronald Reagan’s DOJ adopted new guidelines for reviewing mergers. Prior to this, the DOJ’s merger guidelineshad focused on market structure, and embodied the idea that having many competitors in an industry generally produced the best outcomes. The guidelines even stipulated specific market-share thresholds that would generally cause a merger to be opposed by the government.
Things changed dramatically when the Reagan administration adopted a new school of thought championed by Robert Bork (yes that guy) out of the “Chicago School” of economics. They argued lower prices, rather than competition, should be the guiding principle in approving mergers. It turns out lower anticipated prices is a terrible metric because:
In 75 to 80 percent of the cases, he found, they had led to sizable price increases.
So we end up with less competition, lower wages and higher prices.
4. BREAK UP BIG TECH
We all love our big tech like Google, Amazon and Facebook but their power poses a danger to democracy. In part they need better regulation. But equally concerning is they operate with massive conflicts of interest. To resolve these conflicts of interest they must be broken up into distinct businesses. I’d argue that other industries need similar action to infuse competition back into the marketplace (resulting in higher wages, lower costs for consumers, more innovation).
One reason these pervasive digital platforms constitute an existential danger is that they control the fates of so many other businesses. Retailers and manufacturers at once compete with Amazon and depend on it to reach the market.
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What would breaking up these companies look like? It would essentially mean removing the conflicts of interest at the heart of these digital giants by compelling them to spin off their platforms, which provide market access for other firms, from the other parts of their business that compete with those same firms.
5. BLOCK BIG CORPORATIONS FROM USING THEIR FINANCIAL MIGHT TO CRUSH SMALLER COMPETITORS
Nobody likes a bully, especially if they are cheaters.
Today’s monopolists have found that they don’t have to out-compete their smaller competitors to gain market share. Instead, they can use their size and financial resources to muscle them aside.
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Walmart, for instance, demands that, for 80 percent of the groceries it buys, suppliers offer it prices that are 15 percent lower than those they give to its competitors.
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US antitrust law technically bans this kind of behavior.
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What changed is that, in the 1980s, as the consumer welfare framework took hold, the US Supreme Court began to shift how it viewed predatory pricing and price discrimination cases. Consumers, the Court reasoned, were benefiting from lower prices. It therefore set an almost impossibly high bar for ruling against such behavior, even if it harmed competition.
Monopolies by definition, have little competition, so their prices will be higher than in a competitive market place; efficiency is offset by greed. Their bullying nature ensures smaller competitors are either priced out of the market (by pricing goods at a loss) or they just outright buy the competitor after weakening them. Past Supreme Court rulings on this subject need to be challenged in the courts. This work is underway.
“While predatory pricing technically remains illegal, it is extremely difficult to win predatory pricing claims,” notes Lina Khan, a legal scholar with the Open Markets Institute.
Khan argues that the doctrine the Supreme Court adopted in the 1980s to analyze predatory pricing cases urgently needs to be revisited.
6. PASS ANTI-MONOPOLY POLICIES AT THE LOCAL LEVEL
It turns out that local governments have enormous power to curtail monopolies. There are already some notable actions taken at the local level. We need to unite these far flung actions into a movement across the country.
A growing number of places are taking up the cause. In a statewide referendum in 2016, Oklahoma voters strongly favored a policy to check the power of large agribusiness. A few years ago, Jersey City capped how much space chain retailers may occupy in its downtown, as part of a broader effort that has led to the opening of hundreds of new local businesses. In 2014, the citizens of North Dakota voted overwhelmingly to keep their state’s pharmacy ownership law, which mandates that pharmacies be independently owned and has largely spared North Dakotans from the higher prices and other harms that the rest of the country is seeing as a result of concentration in the prescription benefits industry.
Let our politicians know we support taking on the monopolies. We need to push our politicians. These powerful monopolies have deep pockets for lobbying and campaign donations. These monopolies are bad for wages, prices, innovation, and democracy.