Phil Ebersole: Monopoly power and what to do about it
Blogger Phil Ebersole writes today in a post titled “Monopoly power and what to do about it” (all boldface in original):
The trouble with the U.S. economy is monopoly power.
Concentrated business power means less consumer choice, less opportunity for entrepreneurs and greater concentration of wealth.
Senator Elizabeth Warren
Senator Elizabeth Warren described the problem very well in a speech on Wednesday. If you care about this issue, I strongly recommend that you click on the first link below.
She noted that five banks have been designated as “too big to fail” by the Federal Reserve Board and the Federal Deposit Insurance Corp.
But that situation is not limited to the banking industry. Four airlines (down from nine in the past 10 years) control 80 percent of all airline seats. If American, Delta, United or Southwest were to be in danger of ceasing operations, could there be any doubt that the government would want to keep them flying at all costs?
There’s another problem with concentration in the transportation industry, and that is the incentive to abandon small and remote communities and concentrate services in a few hubs. The second article linked below describes how concentration in the airline, railroad and trucking industries has harmed small cities in the Heartland. “Flyover country” wasn’t always flyover country.
Concentration means less consumer choice. Warren pointed out that more than half of Americans who with Internet or cable television service use Comcast. Yet, she said, a third of U.S. citizens who theoretically have access to high-speed Internet service can’t afford it. Americans pay more than Europeans for Internet service and get worse service.
Concentration gives large companies the power to block emerging competitors. Recently, Warren said, complaints have been filed against Google for using its search engine to harm rivals of its Google Plus user review feature, against Apple for making it difficult for rivals of Apple Music to offer streaming services via i-Phone and against Amazon for steering customers to books published by Amazon to the detriment of other publishers.
Even with straight-out competition, there is the “Wal-Mart” effect. When a big box store comes to town, small locally-owned businesses fail.
And when economic power is concentrated in the hands of a just a few, the “job creators” have the power to drive down middle-class wages while enriching themselves.
The solution to this problem, Warren said, is simply to enforce the anti-trust laws as originally written.
The reason that they aren’t is a neoliberal philosophy of business regulation that took hold in the late 1970s, which held that the most important thing was not competition, but business efficiency. If Amazon can serve customers more efficiently that a local bookstore, then, according to this idea, there was no reason for the local bookstore to exist.
That could be true only if Amazon, Wal-Mart, Comcast and other big corporations were owned and operated by altruists, who passed along the gains in economic efficiency to customers, workers, suppliers and the local community.
But even when consolidation produces economic efficiency that benefits consumers, economic efficiency isn’t everything. Concentration of economic power means concentration of political power, which results in the kind of dysfunctional economic system we have now.
The benefit of Warren’s proposals is that they do not require action by Congress. All they require is enforcement of the letter of the law.
I myself would go beyond this. In banking, for example, and maybe Internet service and other industries, there is a benefit in a public option. And in some cases, there is a need for public utility-type regulation. But a return to traditional anti-trust enforcement, as Warren proposes, would be a big change for the better.
Elizabeth Warren’s Consolidation Speech Could Change the Election by Paul Glastris for the Washington Monthly. This includes the complete transcript of Warren’s speech. Of course what’s important is whether her proposals are actually put into practice, not whether they help Hillary Clinton against Donald Trump.
Bloom and Bust: Regional inequality is out of control, here’s how to reverse it by Phillip Longman for the Washington Monthly.
Monopoly Power Is on the Rise in the US: Here’s How to Fix That by Mike Konczal for The Nation.
ANTITRUSSSTTT! (Bernie Sanders did SO talk about antitrust during his campaign. A LOT. But thank you, Elizabeth Warren, for picking up that mantle now) by Beverly Mann for Angry Bear.
Okay, so other than that Ebersole listed my post after those articles by those two lesser lights, this is thrilling. I mean, that this issue, so critical to the central themes driving this election cycle, is actually gaining genuine attention, so long overdue.
This movement, our movement, which began in the fall of 2011 with Occupy Wall Street, is on track to cause a political and economic earthquake.
And Clinton went on the record last fall with an op ed in Quartz similar to Warren’s speech. http://qz.com/529303/hillary-clinton-being-pro-business-doesnt-mean-hanging-consumers-out-to-dry/h . The challenge is how to turn that into campaign language that the public understands and the press will not be able to keep hidden. There was no need for it during a primary campaign, since Clinton and Sanders have similar positions, but if done well could become a big plus for her in the general. It can be tied, too, to the low wages/inequality issue, since a small number of companies in an industry have an easier time keeping wages low (e.g., Silicon Valley deal on keeping a cap on programmers’ compensation).
One prioblem with the antitrust issue might be reaching millenials with it. Unlike us old folks who remember a richer commercial environment, they have known no other world except one with Banana Republic, Best Buy and Walmart. Also the cable companies — maybe the best way to connect with the entire public when it comes to monopoly abuse — got their advantages are on Bill’s watch. She can distance herself from it, though, as with NAFTA, and say that those provisions were a mistake and need to be fixed — and get points for idependence in the process.
The trouble with the US across the board, not just the economy, is the MONOPSONY power of employers. W/O that all the other evil weeds would be choked off by labor unions.
Cannot believe even Elizabeth Warren cannot keep up intellectually with Jimmy Hoffa.
I’m getting to the point that I cut-and-paste this to the end of every comment everywhere:
But as long as nobody else talks about re-unionization (as the beginning and the end of re-constituting the American dream) — nobody thinks it is possible to talk about …
… or something.
Easy as pie to make union busting a felony in our most progressive states f(WA, OR, CA, NV, IL, NY, MD) — and then get out of the way as the first 2000 people in the many telephone directories re-define our future.
Do this or do nothing!
The idea that enforcement doesn’t require an act of congress is kind of ridiculous. That kind of enforcement requires an army of lawyers, and there’s certainly inadequate budget to generate the required resources and take those cases to court.
Executive and regulatory actions aren’t free.
So there you have it where the economy has gone full cycle back to 1948 to where Walter Reuther began the modern day legacy costs of unionism . It grew in popularity and numbers until the Toyota Production System took hold and took over. The big points most often missed on the unions legacy cost was the fact that the Japanese were actively manipulating their currency for their advantage…Union busting would become a hard thing to prove I would think with all the concentrated power…
Union busting is “proved” all the time. Then, nothing happens to deter it happening again. You know; the employee is re-hired and most often (stats) fired again within a year for “something else” — there being no union to prevent unfair firing.
RICO could become a big deterrent to “playing around” with firing organizers and joiners. By the time an employer is finished playing around with firing organizers supposedly for something else (talking about the first time around now) they can have built up a persistent pattern for RICO prosecution. (33 states have their own RICO statutes.)
Usually the courts want more than one year of continuing offenses to fulfill RICO requirements. Exceptions can be for example demanding so much money every month for an automatic continuing offense. The nature of union busting could be sort of a hybrid — allowing RICO invoked after only a year, depending on how the (Hillary?) courts go. Be a big deterrent to playing at firing for “other reasons.”
Sum up: anyway, we have to do it anyway. Why should the only market not covered by felony penalties for warping and unfairly manipulating the market be the most important market of all: the labor market — given both the across the board impact on the great majority’s incomes AND on their political power?
No other modern economy that I know of is union-free. Freed by pure intimidation and market power. Biggest road block may be our culture of thinking of firing organizers as some part of a free society or whatever — it’s the culture, folksies.
Just another thought on the non-enforceability of labor organizing law (while laying in bed, staring at the ceiling): today’s strength of enforcement is as if if you were caught robbing a bank you only had to give the money back (re-hire the organizer or joiner). Only the comparison breaks down when the employee is re-fired for “something else”, usually, and usually within one year.
Certainly robust competition in markets is essential for efficiency, and I would agree that anti-trust laws are too rarely and too unequally applied for many recent decades. But the labor unions and patents are monopolies as well and not controlled by anti-trust law. I would prefer to see some proportional cost applies as competition fails (is there a reasonable economic measure or proxy for competition in markets?) rather than count on the erratic application of anti-trust law.