Relevant and even prescient commentary on news, politics and the economy.

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.

LINKS

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.

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Has Clinton Ever Actually READ the Protection of Lawful Commerce in Arms Act (the PLCAA)? She Doesn’t Seem to Know What It Says.

Blogger Phil Ebersole, who is a retired journalist, picked up and commented favorably on my Oct. 17 post refuting refuting Clinton’s statement during the Oct. 13 debate that the 2005 federal statute known as the Protection of Lawful Commerce in Arms Act (the PLCAA), which Sanders voted for and Clinton voted against, “give[s] immunity to the only industry in America — everybody else has to be accountable but not the gun manufacturers.”

Clinton’s full, five-sentence statement was:

Senator Sanders did vote five times against the Brady Bill. Since it was passed, more than 2 million prohibited purchases have been prevented. He also did vote, as he said, for this immunity provision. I voted against it. I was in the Senate at the same time. It wasn’t complicated to me. It was pretty straightforward to me that he was going to give immunity to the only industry in America — everybody else has to be accountable but not the gun manufacturers. And we need to stand up and say, “Enough of that.”

As I said in my initial post, the second-last sentence—“It was pretty straightforward to me that he was going to give immunity to the only industry in America — everybody else has to be accountable but not the gun manufacturers.”—contains two clear falsehoods.  The statute by no means gives blanket immunity to gun manufacturers and dealers. And no other industry in America is held accountable for the things that the PLCAA actually provides civil legal immunity for.

Nor, for that matter, did the statute change the law in any but a few legal localities (“jurisdictions”) in the country.

The Wikipedia entry for the statute begins:

The Protection of Lawful Commerce in Arms Act (PLCAA) is a United States law which protects firearms manufacturers and dealers from being held liable when crimes have been committed with their products. However, both manufacturers and dealers can still be held liable for damages resulting from defective products, breach of contract, criminal misconduct, and other actions for which they are directly responsible in much the same manner that any U.S. based manufacturer of consumer products are held responsible. They may also be held liable for negligence when they have reason to know a gun is intended for use in a crime.

This is accurate.  The statute prohibits states and municipalities from treating gun manufacturers and dealers differently than other manufacturers and retailers are treated in American jurisprudence.  The title of my post was long but captures the actual issue:

Why does Clinton keep getting away with saying that gun manufacturers are the only industry in America that is immune from being held accountable for criminal acts by the purchasers of their products?  Almost NO manufacturers are, by law, accountable for criminal acts by purchasers of their products.  Someone should ask her to name one that is.

Ebersole has now posted a blog entry titled “Second thoughts on Hillary Clinton and guns”, about his earlier post about my post.  He begins by saying,“I have to backtrack a little bit on a previous post, in which I cited the following question.  What I wrote was not exactly wrong, but not the whole story.”  He quotes the full title of my post, then says:

True, no manufacturer is held responsible for the criminal use of their legal products, unless it can be shown that they knowingly or negligently sold the products to criminals.  What makes gun manufacturers different is that in their case, this is spelled out in positive law, a law that Bernie Sanders supported.

Hillary Clinton was giving a dog whistle to members of the anti-gun movement, who would have understood she was referring to the Protection of Lawful Commerce in Arms Act.

Based on the exceptions written into the PLCAA, I don’t think it bars reasonable lawsuits against gun manufacturers or dealers.  The significance of the issue in the context of the Democratic Presidential debate is that it shows Bernie Sanders has more sympathy for gun owners and gun manufacturers than Hillary Clinton does.

All true, certainly.  But also not itself quite the whole story.  What makes gun manufacturers different is that in their case, this is spelled out in positive law, a law that Bernie Sanders supported.  But that law was proposed because gun manufacturers and dealers were different in that a few municipalities—most prominently Chicago, but a few others as well—were enacting ordinances that altered state common law to permit civil liability solely against this industry when their product is used by a purchaser to commit a criminal act in the absence of negligence or willful misconduct by the manufacturer or dealer.

This is known in legal jargon as “strict liability”—liability even absent fault.  And no other industry is held “strictly liable”, I believe, anywhere in this country, for criminal acts of purchasers or users of their product absent negligence or willful misconduct by the manufacturer or the retailer. Which is why the gun industry is different in that this statute spells out the absence of strict liability for criminal acts of purchasers or users of their product absent negligence or willful misconduct by the manufacturer or the retailer.  All other industries have that immunity from strict liability in such instances, even though there is no federal statute spelling out in positive law.  At the time the PLCAA was enacted, the gun industry, too, still had it in most jurisdictions in this country.  But not all.

If it really was pretty straightforward to Clinton that he was going to give immunity to the only industry in America — everybody else has to be accountable but not the gun manufacturers, then Clinton was seriously misinformed about the state of strict-liability tort law in this country.  Then again, her comments seem to indicate that she did not know, and still does not know, that the statute ensures immunity only from strict liability, not negligence or willful misconduct, regarding criminal use of the product by a purchaser.*  Did she not read the legislation before voting on it?

In two recent posts on another of Clinton’s misrepresentations-via-snappy-soundbite-sleight-of-hand-zinger-at-the-end-of-a-response-or-retort, I said that the more seriously you actually take a subject, the less likely you are to misrepresent or cry ‘wolf’ about it.

And I’ll reiterate this from another of my recent posts: I don’t think Clinton and the supposed establishment Republican candidates realize how out-of-sync this type of campaign tactic is with this political moment.  If, as seems likely, Clinton is the Democratic nominee, she will have forfeited a potent argument.  She will not be able to claim convincingly that the Democrats respect the public enough to make straightforward arguments based on tangible, accurately presented fact.

In any event, it will not be true.

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* The clause at the end of the sentence, saying “regarding criminal use of the product by a purchaser”, added for clarity after initial posting, to make the distinction in that paragraph between criminal use of the product–the only issue that the PLCAA addresses–and traditional products-liability safety issues. The distinction was made in an earlier paragraph, but to avoid confusion on what (Clinton’s protestation notwithstanding, actually is complicated) needed to be made again in this paragraph.  11/2 at 7:05 p.m.

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