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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ANTITRUSSSTTT! (Bernie Sanders did SO talk about antitrust during his campaign. A LOT. But thank you, Elizabeth Warren, for picking up that mantle now.)

A detailed update follows the original post.

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Is the window closing on Bernie Sanders’s moment? A number of folks, your humble blogger included, have suggested as much. We’ve argued that with Democrats seeming to unite behind Hillary Clinton, it’s possible that the longer Sanders withholds his endorsement for her in the quest to make the party platform more progressive, the less leverage he’ll end up having.

But a new battleground state poll from Dem pollster Stan Greenberg’s Democracy Corps suggests Sanders’ endorsement could, in fact, still have a real impact, meaning he may still have some genuine leverage to try to win more concessions designed to continue pushing the party’s agenda in a more progressive direction.

A Sanders endorsement of Clinton could still make a big difference, Greg Sargent, The Plum Line, Washington Post, yesterday at 3:24 p.m.

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Paul Glastris reports that a speech Elizabeth Warren gave that was virtually ignored by the news media could provide a template for an argument about the economy that changes the course of the presidential election. — gs

— Greg Sargent, The Plum Line, Washington Post, yesterday at 6:21 p.m.

Just about exactly a year ago—early last summer—as Clinton was picking up the pace of her campaign appearances and formulating her substantive arguments, she said something that the news media caught onto immediately as really strange.  In an attempt to woo aspiring and current small-business owners, she did her default thing: She adopted a Republican slogan and cliché, this one that government regulation and bureaucracy are the main impediments to starting and expanding small businesses, and are, well, just making the lives of small business owners miserable.

Federal regulations and bureaucracy, see.

It shouldn’t take longer to start a business in America than it does to start one in France, she said, correctly.  And it shouldn’t take longer for a small-business owner to fill out the business’s federal tax forms than it takes Fortune 500 corporations to do so.  Also, correctly.  And as president she will … something.

There were, the news media quickly noted, though, a few problems with this tack.  One was that regulations that apply varyingly to other than a few types of small businesses—those that sell firearms and ammunition, for example—small-business regulations are entirely state and local ones and are not of the sort that the federal government even could address.

Another was that Clinton was relying upon a survey report that provided average times to obtain business licenses in various cities around the world, for companies that would employ a certain number of employees within a numerical, midsize range (or some such), and that cited Paris as the only French cities; showed that the differences in the time it took on average to obtain a business license there and in several American cities was a matter of two or three days, and that only Los Angeles (if I remember correctly) among the American cities had a longer average time than did Paris; and that the all the cities listed had an average of less than two weeks.

Some folks (including me, here at AB) also noted that the actual time it takes to open a small business depends mostly on the type of business, often the ease of obtaining a business loan, purchasing equipment such as that needed to open a restaurant, leasing space, obtaining insurance, and ensuring compliance with, say, local health department and fire ordinances.

And one folk (me, here at AB) pointed out that the relative times it takes to fill out a federal tax form for a business depends far more on whether your business retains Price Waterhouse Coopers to do that, or has in-house CPAs using the latest software for taxes and accounting, or relies upon the sole proprietor to perform that task.

But here’s what I also said: Far, far more important to the ease of starting a business and making a profit in it than regulatory bureaucracy—state and local, much less and federal ones—is overcoming monopolistic practices of, well, monopolies.*

I didn’t just mean Walmart and the like, I explained.  I also meant the monopolistic powers that aren’t obvious to the general public.  Such as wholesale suppliers and shippers.  And such as Visa and Mastercard, which impacts very substantially the profitability of small retailers and franchisers.

Which brought me then, and brings me again, to one of my favorite examples of how the Dems forfeit the political advantage on government regulation by never actually discussing government regulation, in this instance, what’s known as the Durbin Amendment.  It limits the amount that Visa and Mastercard—clearly critical players in commerce now—can charge businesses for processing their customers’ credit card and ATM card transactions.

Talk to any owner of a small retail business—a gas station franchise owner, an independent fast food business owner, an independent discount store, for example—about this issue, as I did back when the Durbin Amendment was being debated in Congress.  See what they say.

The Durbin Amendment was one of the (very) precious few legislative restrictions on monopolies, on anticompetitive business practices, to manage to become law despite intense lobbying of the finance industry or whatever monopolistic industry would be hurt by its enactment.  To my knowledge, though, it was never mentioned in congressional races in 2010 or 2014, or in the presidential or congressional races in 2012. Antitrust issues have been considered too complicated for discussion among the populace.

Which presumably is why the news media never focused on the fact that Bernie Sanders discussed it regularly in his campaign.  And that it resonated with millennials.

And also presumably, it’s why the news media ignored Elizabeth Warren’s speech on Wednesday entirely about the decisive, dramatic effects of the federal government’s aggressive reversal over the last four decades of antirust regulation and the concerted failures of one after another White House administration (including the current one) to enforce the regulation that remains.

Here’s what Glastris wrote in preface to his republishing of the full Warren speech:

Yesterday, straight off her high-profile campaign appearance Monday with Hillary Clinton, Sen. Elizabeth Warren gave a keynote address about industry consolidation in the American economy at a conference at the Capitol put on by New America’s Open Markets program. Though the speech has so far gotten only a modicum of attention—the press being more interested in litigating Donald Trump’s Pocahontas taunts—it has the potential to change the course of the presidential contest. Her speech begins at minute 56:45 in the video below.

Warren is, of course, famous for her attacks on too-big-to-fail banks. But in her address yesterday, entitled “Reigniting Competition in the American Economy,” she extended her critique to the entire economy, noting that, as a result of three decades of weakened federal antitrust regulation, virtually every industrial sector today—from airlines to telecom to agriculture to retail to social media—is under the control of a handful of oligopolistic corporations. This widespread consolidation is “hiding in plain sight all across the American economy,” she said, and “threatens our markets, threatens our economy, and threatens our democracy.”

As our readers know, economic consolidation is a subject the Washington Monthly has long been obsessed with—see hereherehereherehereherehereherehere, and here. In our current cover story, Barry Lynn (impresario of yesterday’s event) and Phil Longman argue that antitrust was the true legacy of the original American Populists and a vital, under-appreciated reason for the mass prosperity of mid-20th Century America. But this legacy, and the new Gilded Age economy that has resulted from its abandonment, is not a narrative most Americans have been told (one reason why even the “populist” candidates running president have shied away from it).

What amazed me yesterday was how Warren synthesized the main points of virtually everything we’ve published into a single speech that, while long and wonky, was Bill Clintonesque in its vernacular exposition. You can imagine average Americans all over the country listening, nodding, understanding.

Though many in the press didn’t notice the speech, you can best believe Hillary Clinton’s campaign operatives were paying attention (Trump’s too, I’ll bet). That’s why I think the speech has the possibility of changing the course of the campaign. The candidate who can successfully incorporate the consolidation message into their campaign rhetoric will an huge, perhaps decisive advantage. Hillary has already signaled, in an op-ed she published last fall, that she gets the larger argument. Yesterday, Elizabeth Warren showed her how to run on it. You can read the full prepared text below.

I’m thrilled.  Except for that parenthetical that says “even the “populist” candidates running president have shied away from it, which is inaccurate regarding Bernie Sanders. The link is to an article by Glastris in the November/December 2015 edition of Washington Monthly titled “America’s Forgotten Formula for Economic Equality,” which regarding Sanders concludes based upon an answer to a question by Anderson Cooper at a then-recent televised debate in which Sanders asked the question about how he expected to win the presidency as a democratic socialist failed to mention the issue of antitrust, that Sanders did not campaign on the issue of the demise of antitrust law and enforcement.

But as it happens, I knew that was incorrect.  One of my fondest memories of the Sanders campaign dates back to a detailed first-person report by a journalist covering the Sanders campaign in Iowa last summer, who attended a rally not as journalist but instead from the cheap seats in the midst of the attendees.  I can’t remember the journalist or the publication, and was unable to find it just now in a search.  But I remember this: He sat next to a young woman, blond, cheerleadery-looking, who whenever Sanders said a word or phrase referencing one of his favorite topics, would stand up, thrust her arm up in a punch-the-air motion, and shout the word or phrase.  Cheerleader-like, the reporter said.

One of the words?  Antitrust.  Or, as the young woman said it, “ANTITRUSSSTTT!”

In searching for that article, which as I said I couldn’t find, I did find a slew of references by Sanders to antitrust—the economic and political power of unchecked and ever-growing monopolies—in reports about his rallies.  One, about a rally in Iowa, for example, quoted Sanders as saying that Agribusiness monopoly has reduced the prices human farmers receive for their products well below their market value in a competitive economy.

Other statements made clear the critical reason that Sanders has so focused on the call to break up the big banks: their huge economic and political power.  Including the resultant demise of community banks of the sort that made America great when America was great—for obtaining small-business loans and mortgages, anyway.

So here’s my point: If you click on the link to that Democracy Corps poll, you’ll see what so many people whose heads are buried in the sands of the pre-2015 political era (including the ones who constantly trash me in the comments threads to my posts like my last one) don’t recognize.  All that the Democrats need do in order to win a White House and down-ballot landslide is to campaign on genuinely progressive issues, and genuinely explain them.

Which is why Warren is so valuable to the Dems up and down the ballot.  And why Sanders is, too.

Warren endorsed Clinton last week, and on Tuesday campaigned with her in a speech introducing her, singing her praises, and trashing Donald Trump.  Headline-making stuff.  But not the stuff that will matter most.  When she goes on the road and repeats her Wednesday speech, not her Tuesday one, and then asks that people vote Democratic for the White House on down, it will matter far more.

And that is true also for Sanders. But I don’t expect many politicos over the age of 40 to recognize that.

Glastris’s piece yesterday in titled “Elizabeth Warren’s Consolidation speech Could Change the Election.” Yes.  Exactly. Consolidation.  As in, monopolies. And monopolistic economic practices and political power.

Antitrusssttt!

Surprisingly, apparently in response to the release of the Democracy Corp poll yesterday, hours after suggesting that Clinton was about to begin campaigning as a triangulator because Sanders was refusing to endorse her, and anyway that’s what some Clinton partisans have been urging, someone in the Clinton campaign rescinded that, indirectly.  Presumably, it was someone under the age of 40.

Or someone who reads Angry Bear.  Probably someone who’s under 40 and reads Angry Bear.

Rah-rah! Sis-boom-bah!

*Sentence edited slightly for clarity. 7/2 at 10:43 a.m.

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UPDATE: Greg Sargent is reporting now:

The latest draft of the Democratic Party platform, which is set to be released as early as this afternoon, will show that Bernie Sanders won far more victories on his signature issues than has been previously thought, according to details provided by a senior Sanders adviser.

The latest version of the platform, which was signed off on recently by a committee made up of representatives for the Sanders and Clinton campaigns and the DNC, has been generally summarized by the DNC and characterized in news reports. Sanders has hailed some of the compromises reached in it, but he has vowed to continue to fight for more of what he wants when the current draft goes to a larger Democratic convention platform committee in Orlando coming weeks, and when it goes to the floor of the convention in Philadelphia in late July.

But the actual language of the latest draft has not yet been released, and it will be released as early as today. It will show a number of new provisions on Wall Street reform, infrastructure spending, and job creation that go beyond the victories that Sanders has already talked about. They suggest Sanders did far better out of this process thus far than has been previously thought. Many of these new provisions are things that Sanders has been fighting for for years.

We already know from the DNC’s public description of the latest draft of the platform that it includes things such as a general commitment to the idea of a $15-per-hour minimum wage; to expanding Social Security; to making universal health care available as a right through expanding Medicare or a public option; and to breaking up too-big-to-fail institutions.

Warren Gunnels, the chief policy adviser to the Sanders campaign, is Sargent’s source.  Gunnels listed six additions to the platform draft:

1) Eliminating conflict of interest at the Federal Reserve by making sure that executives at financial institutions cannot serve on the board of regional Federal Reserve banks or handpick their members.

2) Banning golden parachutes for taking government jobs and cracking down on the revolving door between Wall Street and Washington.

3) Prohibiting Wall Street from picking and choosing which credit agency will rate their product.

4) Empowering the Postal Service to offer basic banking services, which makes such services available to more people throughout the country, including low-income people who lack access to checking accounts.

5) Ending the loophole that allows large profitable corporations to defer taxes on income stashed in offshore tax havens to avoid paying less taxes.

6) Using the revenue from ending that deferral loophole to rebuild infrastructure and create jobs.

Okay, folks.  While being credited to Sanders, this far more likely is a blunt-force impact of Warren, since every one of these points concerns Warren’s particular area of interest: financial industry regulation.

But there are, I believe, clear Sanders hallmarks in there, too: particularly item 4, empowering the Postal Service to offer basic banking services, which makes such services available to more people throughout the country, including low-income people who lack access to checking accounts.

In other words, Warren is the intermediary between the Clinton and Sanders campaigns.  And in exchange for her unbridled campaigning for and with Clinton has combined her own top priorities—precise legislative ones that Warren has the deep expertise to demand and to draft, e.g., items 1 and 3—with one very specific one of Sanders and with more generic ones of his as well, e.g., items 2 and 5.

This will be an unbeatable platform and team.  During the campaign, and in the four years that follow.

Game on.

Update added 7/1 at 3:34 p.m

 

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Why Does Hillary Clinton Think We Want Elizabeth Warren to Be Vulnerable?

Hillary Clinton says women are “held to a totally different standard” in politics — and that it’s been that way since she first ran for office.

“You’re expected to be both strong and vulnerable at the same time,” Clinton said in BuzzFeed’s “Another Round” podcast that was published online Sunday. “That’s not easy to do.”

The Democratic frontrunner said it’s “frustrating” for women in “any profession” to be criticized for being themselves.

“It’s just so hard to get people to realize that, you know, we’re all different,” Clinton said. “We may all be women, but we all have our strengths, we all have our weaknesses. We get up every morning and do the best we can. And eventually people either get you or they don’t.”

Clinton said she faced similar sexist questions when she first ran for Senate in 1999 and again during the 2008 presidential campaign — but, interestingly, not during her time as secretary of state.

“Because I wasn’t in politics, people were really nice,” Clinton said. “They said all kinds of nice things about me, which, you know, I appreciated.”

But that changed when she announced her 2016 presidential bid.

“How is a woman supposed to behave? Well, how about the way she is,” Clinton said. “And then people have to figure out her as opposed to her having to figure out everybody else.”

Hillary Clinton: ‘How is a woman supposed to behave? Well, how about the way she is’, Dylan Stableford, Yahoo Politics, yesterday

Yup.  We definitely expect Elizabeth Warren to be both strong and vulnerable.  And since she’s only one of those things, we Democrats are darned lucky that she’s not running for the presidential nomination!

Heck, I’m not sure Warren will even be reelected to the Senate, unless she adopts Barbara Mikulski’s or Debbie Stabenow’s feigning-vulnerability thing. They did it so well that they have both had a cakewalk to reelection.  Mikulski, repeatedly!  And Stabenow, in a swing state!

What concerns me most about Hillary Clinton’s candidacy is that she believes, obviously unshakably, that what really matters in this election is herHer personality.  Her gender.  Her ongoing, decades-long war with the Republican Party, not about policy but instead about her.  It permeates every single thing about her campaign.  Because ultimately, yes, it does show, to use her words, the way she is.

One of the ways she is is a politician who is paying consultants exorbitant fees to advise her that she should be a guest on one after another comedy-skit show or women’s daytime interview show, and talk about herself and act silly.  But who apparently don’t advise her that, maybe, her actual problem is that she never actually engages in a back-and-forth discussion publicly about policy specifics and their impact, and that her vaunted toughness toward Republicans has almost nothing to do with the specifics their economic and fiscal policy proposals but instead in defending herself against their allegations of misconduct.

See?  She can go toe-to-toe with those Republicans!  Just not in explaining that, contrary to their incessant claims, this country’s most successful and creative period was when income taxes were far more progressive, and far higher for higher-income individuals and for corporations, than they have been during periods of slow economic growth.  And that it was during those decades that most of this country’s dramatic upward mobility occurred.

And that while, say, Marco Rubio makes patently ridiculous claims like that Uber couldn’t exist in any other country because only in the United States is it not banned by regulations instituted at the behest of taxicab drivers and taxicab company owners.  And even here in the United States it didn’t exist in Miami when it did exist in New York City because of those of those regulations that taxicab drivers had managed to successfully lobby the city’s government to kill Uber’s plan to that city.

Mm-hmm.  Only the likes of taxicab drivers lobby for favorable legislation and contracts.  Not, say, private prison corporations.  Although, of course, private corporations taking over government functions in exchange for payment to them of huge public funds and payment by them to, say, Marco Rubio’s campaign funds is capitalism!  And democracy!  Unlike taxicab driver and labor union lobbying.

And Uber operates not just in the United States but in cities all over the world.  Even in Scandinavia.  And also in Miami.  But it didn’t start in Miami.  Probably because of the strength of the taxicab driver lobby there.

For months and months after Clinton announced her candidacy, as it started to become clear that it wasn’t quite taking off as they’d expected, her campaign engaged in an intense attempt via political journalists to characterize her as a wonk. Repeatedly, sometimes several within a few days, there were articles describing her as a wonk.  Which, it turns out, now means, simply, a claimed interest in policy.  (Jeb Bush began to borrow the he’s-a-Wonk-campaign campaign strategy, also with some success.  Jeb Bush is not a wonk, but he is a Wonk.  Then again, he can explain why the left wants slow growth; it’s that it means people are more dependent upon government.”  The thing is, though, that he can’t explain why his brother wanted slow growth.  Or at least wanted much slower growth than lefty Obama has wanted.  Or, if he’s wonkish enough to know why, he has so far kept it to himself.)

After reading yet another Hillary-Clinton’s-a-wonk article, circa July, shortly after she made political headlines with an addition to her website in which she assured small-business owners and people who aspire to be one that she fully understood that the biggest problem in starting and then in owning a small business is federal regulation, and that she planned to get right on that as soon as she’s inaugurated, I said to myself:

Yep.  She’s a wonk.  It’s just that she’s a wonk who thinks small businesses are regulated mainly by the federal government, and  thinks that the locale and the nature of the business are irrelevant to the type of regulations required to start and then operat a small business.

It didn’t occur to her, apparently, to not condescend to small-business owners and aspirants, and state that most small-business regulation is not by the federal government but by states and municipalities. Much less did she think that maybe she should point out that, regarding small businesses, federal regulation usually supports them as against mega-businesses that control such things as credit/debit card payment methods and fees, and as against business-sector monopolies.  That’s what the Durbin Amendment and the Sherman Antitrust Act respectively do.

Then again, in order for her to do that she’d have to have the ability to do that, as well as the willingness to do it.  Bernie Sanders has the ability to do that.  And does do it. So does Clinton’s husband, even now; he did it, extemporaneously, on some complex subject—I can’t remember what, but I read about it—when he appeared recently on some interview show.  Granted, they’re both men.  But Elizabeth Warren is a woman, and she can, and does, do it too.

Hillary Clinton speaks only in soundbites because, apparently, she thinks only in soundbites.  And because, maybe after all, and for all her feminism talk, she believes that complex discussion of such things as the Sherman Antitrust Act and the level of its enforcement (or lack of it), and of Keynesian economics, and of the actual history of federal taxation, spending, and regulation—and the actual nature of federal regulation—are subjects only for male politicians to discuss with journalists for the enlightenment of the hoi polloi.

Clinton doesn’t have to show she’s vulnerable.  But, oh, she does.

And she doesn’t realize that it is she who is really the one with the gender bias.  Or at least for whom it will forever be the 1990s.

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