In the cover story of the November/December 2017 issue of the Washington Monthly, executive editor Gilad Edelman chronicled how anti-monopoly politics, including revived antitrust enforcement, had “seemed to go from fringe argument to a pillar of the Democrats’ economic plan, at least rhetorically, overnight.” (It turned out that years of earnest Washington Monthly articles on the subject played a role.) But, he cautioned, things like merely including a section on corporate concentration in the Democrats’ “Better Deal” agenda were just “baby steps.” It remained to be seen whether the issue would develop into a real campaign topic.
Two things happened this week that suggest the answer may be “yes.” Yesterday, at a rally in Council Bluffs, Iowa, Senator Bernie Sanders, who recently entered the presidential race, delivered a speech about how to improve the fortunes of rural America that heavily emphasized the need to combat agricultural monopolies. The argument sounded strikingly similar to the ones recently made by the Open Markets Institute’s Claire Kelloway, in the Washington Monthly, and Austin Frerick, in the American Conservative.
The other big news came this morning, when fellow candidate Senator Elizabeth Warren made her own antitrust news by unveiling “a regulatory plan aimed at breaking up some of America’s largest tech companies, including Amazon, Google, Apple, and Facebook.” It’s a plan that sounds a bit like former Mark Zuckerberg mentor Roger McNamee’s groundbreaking 2018 Washington Monthly article, which sounded the alarm on the myriad threats posed by the platform monopolies. From the speech:
Among many other things that need to be done is for the federal government to enforce anti-trust laws, and I will appoint an Attorney General who will do just that.
It is not acceptable to me that the top four packing companies control more than 80 percent of the beef market, 63 percent of the pork market, and 53 percent of the chicken market.
And these numbers understate the situation.
In many communities, there really is only one buyer, which means food producers are at their mercy. They must use that corporation’s feed and livestock, they must accept that corporation’s costs, and they must accept that corporation’s lower and lower payment rates. In many cases, the farmer doesn’t even own the livestock or supplies — they are effectively contract employees who are forced to lease everything, and then get paid an inadequate wage for their very hard work.
With the federal government not enforcing antitrust laws, we have seen mergers like the Bayer-Monsanto approved, giving the two largest conglomerates 78 percent of the corn seed market.
Over the past couple of days, we’ve published a couple of articles that could be viewed as favorable to former vice-president Joe Biden, but now it’s time to issue him a warning. The Democratic Party is already on our antitrust bus, and he needs to get on board too, because his record as a senator on these issues is woeful.
People often mark the decline of antitrust enforcement as beginning with the election of Ronald Reagan, but that’s not accurate. The history is more complex, and anti-regulatory reform was a hot topic among a lot of Democrats in the 1970s, including many progressives like Ralph Nader. In a recent Huffington Post piece, Zach Carter takes us back to the history books, to a battle between Biden and Senator Ted Kennedy:
“When the Senator from Massachusetts moved up to the chairmanship of the judiciary committee this year, the hearts of antitrust activists beat faster,” The New York Times noted in 1979. Kennedy had his sights on a sweeping piece of legislation that would block corporate mergers based on the total size of the resulting company ― even if the company was a conglomerate of unrelated businesses, and the merger did not increase a firm’s share of business in a particular market.
But Kennedy almost immediately ran into problems with Biden. When Coca-Cola urged Congress to exempt the soft drink industry from these antitrust regulations, Biden joined Republicans to pass such a bill over the objections of Kennedy and Department of Justice antitrust expert Ky Ewing, who concluded that the bill was “special interest legislation” with “no evidence” to support it. . . . As Biden fought Kennedy on the Coca-Cola bill, he was also trying to thwart a Kennedy effort that would have empowered consumers to sue over a broader swath of antitrust violations.
The latter day villains in the antitrust battle are already revealing themselves in reaction to Senator Warren’s direct challenge to the power of platform monopolies:
Senator Elizabeth Warren proposed in a Medium post on Friday to dismantle so-called Big Tech — Facebook, Google, and Amazon — but antitrust experts found serious flaws in her proposal.
The presidential hopeful is using a “sledgehammer,” that is, breaking companies up, to address problems like data privacy that could be solved in other ways, noted Herbert Hovenkamp, a leading authority on antitrust law.
Because of economies of scale, Hovenkamp noted, bigger companies can offer cheaper products, and forcing them to spin off businesses could hurt consumers.
“Customers are not complaining about Amazon — it’s got some of the highest consumer evaluations in retailing. The story for smaller businesses is a little more mixed. But on balance, a lot of them like dealing with Amazon,” noted Hovenkamp, a professor at the University of Pennsylvania law school.
The tech companies have more money than a Saudi prince, and they have no shortage of “leading authorities on antitrust law” to provide quotes for Yahoo! Finance articles panning the proposals of the Democratic presidential contenders. This is going to be a major battle throughout the 2020 campaign and into the next decade.
Joe Biden was on the wrong side of this battle when it began in a very significant and major way. He’s going to need a “come to Jesus moment” on corporate consolidation and antitrust regulation if he wants to atone for his past and provide leadership for the future.