Paul Glastris ends his editor’s note to the current edition of the Washington Monthly with this:
Here’s hoping the [2016 presidential] candidates start debating Robinson-Patman as vigorously as Glass-Steagall.
In case you don’t remember, during the last Democratic presidential debate, both Bernie Sanders and Martin O’Malley criticized Hillary Clinton for not including a reauthorization of Glass-Steagall (the 1930’s act that separated commercial banking from securities firms) in her Wall Street reform proposal.
But to my knowledge, no one has proposed reinstating the 1936 Robinson-Patman Act – which Phillip Longman described this way in his article titled Bloom and Bust.
Sometimes referred to by its supporters as “the Magna Carta of Small Business,” Robinson-Patman prevented the formation of chain stores even remotely approaching the scale and power of today’s Walmart or Amazon by cracking down on such practices as selling items below cost (a practice known as “loss leading”). The legislation also prohibited the chains from using their market power to extract price concessions from their suppliers.
All of that points to Glastris’ definition of the “secret sauce” that – as Clinton said during the debate – “built the greatest middle class in the history of the world.”
These laws and rules, covering everything from transportation to retail, are now largely forgotten (ever heard of the Robinson-Patman Act?). But they comprised a system of managed market competition—enforced by federal political power but aimed at decentralizing economic power—that was American’s unique and successful alternative to socialism.
So the question becomes, in order to combat income inequality, why is all the focus on re-instating Glass-Steagall? Why aren’t we talking about reinstating things like the Robinson-Patman Act?
I suspect that part of the answer to that question is that large chain stores weren’t at the root of the problem that caused the Great Recession – and there is still a lot of anger at the financial firms who were. But a sole focus on Wall Street as the culprit of income inequality misses the mark and mistakes the trees for the forest.