Monday, July 04, 2016

Can You Imagine Hillary Ever Giving A Speech Like This One Elizabeth Warren Just Gave?


Elizabeth Warren, like FDR who saved capitalism from its own excesses, isn't much liked by banksters and capitalists. The banksters have spent more money trying to defeat her than they have on any other Senate candidate in recent years-- although at the rate they're contributing against Alan Grayson's campaign in Florida-- he could soon catch up with her. "Strong healthy markets," Warren explained in a keynote address last week at the New America think tank in DC, "are the key to a strong, healthy America." That doesn't sound anti-capitalist to me. "Anyone who loves markets knows that for markets to work, there must be competition." It's true... everyone does know that. But greed-driven capitalists and banksters just can't help themselves. Without strong, smart regulations-- which they loath-- they go overboard trying to eliminate the very competition that keeps the system alive and well. The threat of concentration and monopolization was the subject of her talk and, believe me, it's worth listening to-- far more so than bothering with the pathetic media circus around a ginned up war with Donald Trump over Pocahontas. That's far easier for the poor morons who pass themselves off as journalists than a substantive, if slightly abstract ("it threatens our economy and it threatens our democracy"), address like the one Warren made last week for New America.

"Reigniting Competition in the American Economy" wasn't a speech just about too big to fail banks. She lit into the monopolization of the airline industry, something anyone who flies regularly-- unless you fly on a private jet-- can attest is nothing short of a disaster for consumers. $22 billion in profits for them-- increasingly shoddy and predatory service for us. Same with health care insurers and cable TV providers. You really ought to listen to the whole speech; it's why I embedded it up top.
In the last decade, the number of major U.S. airlines has dropped from nine to four. The four that are left standing-- American, Delta, United, and Southwest-- control over 80% of all domestic airline seats in the country. And man, are they are hitting the jackpot now. Last year those four big airlines raked in a record $22 billion in profits.. Eighteen billion alone came from fees for baggage and legroom and pay toilets. Ok, the last one was a joke, but what have passengers received in return for their higher costs? Fewer flights and worse service. Airline complaints rose 30 percent just from 2014 to 2015.

The list goes on. A handful of health insurance giants-- including Anthem, Blue Cross Blue Shield, United Healthcare, Aetna, and Cigna-- control over 83 percent of the country’s health insurance market.

Three drug stores-- CVS, Walgreen’s, and Rite Aid-- control 99% of the drug stores in the country.

Four companies control nearly 85% of the U.S. beef market, and three produce almost half of all chicken.

Some people argue that concentration can be good because big profits encourage competitors to get into the game. This is the perfect stand-on-your-head-and-the-world-looks-great argument. It says that there’s no competition today, but maybe there will someday be competition. The truth is pretty basic-- markets need competition now. So I want to talk about five reasons to be concerned about the decline of competition.

The first problem is that less competition means less consumer choice. When consumers can purchase similar products from multiple competitors, they force market players to constantly seek out new ways to reduce prices and increase the quality of goods and services to get their business. But when companies consume their rivals instead of competing with them, consumers can get stuck with few or no alternatives. Prices go up, and quality suffers.

Consider Comcast, the nation’s largest cable and internet service provider. Comcast has consolidated its position by buying up rivals. Today, over half of all cable and internet subscribers in America are Comcast customers. And last year was Comcast’s best year in nearly a decade. But while big telecom giants have been consuming each other, consumers have been left out in the cold—facing little or no choice in service providers and paying through the nose for cable and internet service. Over a third of Americans who theoretically have access to high speed internet don’t actually subscribe because the price tag is too high. And the data are clear: Americans pay much more for cable and internet than their counterparts in other advanced countries and, in return, we get worse service.

The second reason the decline in competition should cause concern is that big guys can lock out smaller guys and newer guys. Take a look at the technology sector-- specifically, the battle between large platforms and small tech companies.

Google, Apple, and Amazon provide platforms that lots of other companies depend on for survival. But Google, Apple, and Amazon also, in many cases, compete with those same small companies, so that the platform can become a tool to snuff out competition. Look at some examples.

In 2012, FTC staff concluded that Google was using its dominant search engine to harm rivals of its Google Plus user review feature. Among other things, the staff produced evidence showing that Google promoted its own Google-branded content over its rivals even though those rivals would have otherwise had top billing through its organic search algorithm. The FTC commissioners ultimately sided against the conclusion of their staff, but the European Commission has moved forward with formal charges on similar allegations, and Europeans may soon enjoy better protections than U.S. consumers.

Apple has received attention over similar issues. The latest example is its treatment of rival music-streaming companies. While Apple Music is easily accessible on the iPhone, Apple has placed conditions on its rivals that make it difficult for them to offer competitive streaming services. The FTC is investigating those issues and deciding whether to sue Apple for antitrust violations.

Amazon has faced similar charges. Last year, groups representing thousands of authors claimed that Amazon uses its position as the dominant bookseller to steer consumers to books published by Amazon to the detriment of other publishers and that it extracts larger and larger shares of book profits from publishers, which discourages publishing houses from publishing risker books or books written by lesser-known authors.

Google, Apple and Amazon have created disruptive technologies that changed the world, and every day they deliver enormously valuable products. They deserve to be highly profitable and successful. But the opportunity to compete must remain open for new entrants and smaller competitors that want their chance to change the world again.

The third problem created by less competition is that when competition declines, small businesses can be wiped out-- and our whole economy can suffer. Look at what is often referred to as the Wal-Mart effect. Wal-Mart is big, and it’s powerful. It delivers anywhere from 30 to 50 percent of the products Americans consume, and it controls over half of all groceries sold in some major cities.

Wal-Mart’s gigantic size gives it a competitive advantage over small businesses. And often, when Wal-Mart moves into town, small businesses collapse because they can’t compete with the price leverage Wal-Mart has built with its suppliers.

Wal-Mart is notorious for the low wages and poor working conditions it offers, and the Wal-Mart effect has an impact on suppliers as well-- forcing them to cut their own workers’ wages and benefits to keep Wal-Mart’s business. Workers who cannot survive on those wages turn to public assistance, including housing, health care and food stamps, that is subsidized by other taxpayers. Wal-Mart workers alone are estimated to collect about $6 billion a year in federal taxpayer subsidies just to survive. That means the low, low prices that Wal-Mart advertises are paid for, in part, by high, high tax subsidies that every other American pays for. In the meantime, Wal-Mart’s investors pocket the high, high profits.

The fourth problem is that concentrated markets create concentrated political power. The larger and more economically powerful these companies get, the more resources they can bring to bear on lobbying government to change the rules to benefit exactly the companies that are doing the lobbying. Over time, this means a closed, self-perpetuating, rigged system-- a playing field that lavishes favors on the big guys, hammers the small guys, and fuels even more concentration.

This is a big one-- and it should terrify every conservative who hates government intervention. Competitive markets generate so many benefits on their own that the government’s only role in those markets should be simple and structural-- prevent cheating, protect taxpayers, and maintain competition. Concentrated markets dominated by a handful of powerful players, on the other hand, don’t produce the consumer benefits that flow from robust competition. Instead, the benefits are sucked up by a handful of executives and large investors, and their lobbying remains focused on protecting the giant corporations. Government intervention in concentrated markets inevitably becomes more and more complex and technocratic, as it attempts to impose complicated regulations in an effort to recreate the benefits of competitive markets.

It’s costly, it’s inefficient, and it plays right into the hands of the big guys, who can afford to throw armies of lawyers at the regulatory process. Small players end up having to shoulder regulatory compliance costs that make it even harder for them to compete, while big players use their resources and political clout to win loopholes, carveouts, and rollbacks that favor themselves and make it even harder for new competitors to survive. Over time, the result is a trifecta: more intrusive government, more concentration, and less competition.

Finally, concentration has contributed to the decline of what was once a strong, robust middle class in this country. As corporations get bigger, and bigger, and bigger, a handful of managers get richer, and richer, and richer. And god-bless-- in America, we celebrate success. But what about everybody else? What about small business owners and community bankers-- people who used to be able to hold their own with big guys but now find it harder and harder to keep up with the armies of corporate lawyers and lobbyists determined to rig the economy against them? What about the employees at Wal-Mart who scrape by on help from the food pantry and Medicaid, but who never have enough money to build any security? What about them? They are stuck.

Concentration is not the only reason for rising economic insecurity, but it is one of them. Concentrated industries result in concentrated profits. It’s the ultimate price squeeze. When markets are not competitive, big businesses are able to extract monopoly profits by setting prices that are higher and higher above the cost of making an item or providing a service. In 2014, the top 500 largest firms pocketed 45 percent of the global profits of ALL American businesses. And the vast majority of those profits went to the wealthiest of the wealthy. As of 2013, the wealthiest 1 percent of Americans held nearly half of all the stock and mutual fund assets held by all Americans.

And who gets a shot at their own dream? When big business can shut out competition, entrepreneurs and small businesses are denied their shot at building something new and exciting.

Left unchecked, concentration will destroy innovation. Left unchecked, concentration will destroy more small companies and start-ups. Left unchecked, concentration will suck the last vestiges of economic security out of the middle class. Left unchecked, concentration will pervert our democracy into one more rigged game.

And, she offers solutions, many of them uniquely American but all of them absolutely crucial for economic and social health. Let's hope her pal Hillary is paying attention-- not to mention some of the dullards and feeble-minds she's been out campaigning for who are running for the U.S. Senate. Keep in mind, the DSCC has as great a percentage of candidates hostile to Warren's ideas as the NRSC does, bankster drones like Patrick Murphy (FL), Ann Kirkpatrick (AZ), Ted Strickland (OH), Patty Judge (IA), Katie McGuinty (PA), Michael Bennet (CO), Baron Hill (IN)... and I have my suspicions when it comes to Tammy Duckworth (IL) and Maggie Hassan (NH). I guess we can hope Warren will sit down with each one of them and walk them through it... as she has with Hillary over the years.
First: Hold the line on anticompetitive mergers. The DOJ and FTC are at the front lines of the battle over mergers. These two agencies already have the authority to stop harmful mergers in their tracks. Too often, though, they don’t use that authority. There’s no question that antitrust enforcement has picked up since the Reagan administration. The largest increases in merger challenges were during the Clinton and Obama years, and the Obama administration has challenged a higher percentage of mergers than any administration since before Reagan’s. But mergers are outrunning enforcement. While the DOJ and FTC have opposed some huge mergers recently, many others have slipped through with little push back. In fact, 2015 was the biggest year for mergers in U.S. history-- both in terms of the number of mergers and the size of mergers.

It has become fashionable in recent decades for the DOJ and FTC to allow mergers with serious antitrust implications to go forward IF the merging entity agrees to certain conditions. For example, one or both of the merging companies might need to sell off parts of its business, or the new entity might agree to change business practices in ways that supposedly would preserve competition despite increased market concentration. These conditional approvals are sold as a win-win. There’s just one problem-- too often, they don’t work... [W]here a merger raises fundamental antitrust concerns, regulators need to stand tall and say no.

Number Two: Closely scrutinize vertical mergers. Vertical monopolies exist when one company owns multiple parts of its supply chain – manufacturing, production, distribution, and sales. Again, size creates an advantage. When there’s no competition anywhere in the chain, other businesses are locked out and die. The DOJ and FTC should approach vertical mergers with the same skepticism as horizontal mergers. As an aside, the guidelines that apply to vertical mergers haven’t been reissued since 1984, and the world has changed a lot since then. Revising those guidelines would be a good start.

Number Three: Require ALL agencies to promote market competition and appoint agency heads who will do so. Too often, the DOJ and FTC are viewed as the only agencies responsible for promoting competition. Promoting competition should be taken seriously across the Executive Branch.

...Strong Executive leadership could revive antitrust enforcement in this country and begin, once again, to fight back against dominant market power and overwhelming political power.

But we need something else too-- and that’s a revival of the movement that created the antitrust laws in the first place.

For much of our history, Americans organized and protested against the forces of consolidation. As a people, we understood that concentrated power anywhere was a threat to liberty everywhere. It was one of the basic founding principles of our nation. And it threatens us now.

Competition in America is essential to liberty in America, but the markets that have given us so much will become corrupt and die if we do not keep the spirit of competition strong. America is a country where everyone should have a fighting chance to succeed-- and that happens only when we demand it.
No one has to explain this stuff to Bernie Sanders or Alan Grayson (who told me this afternoon that Warren "is right; antitrust law is dead, and that has crippled the economy; we have trillions of dollars of capital chasing and maintaining monopolies") or Tammy Baldwin, Jeff Merkley or Sherrod Brown. Beyond that, we hit some pretty rocky turf and Wall Street has their own secret weapon: Chuck Schumer, who they've given a mind-boggling $25,548,058 in bribes since 1990, over double what they've given any man or woman who hasn't run for president! Wall Street's other non-presidential top half dozen, all-time recipients of bribes do not even come close to what the banksters have doled out to Schumer, soon, tragically, to be Democratic Party Senate leader:
Mitch McConnell (R-KY)- $11,754,976
Marco Rubio (R-FL)- $9,568,397
Richard Shelby (R-AL)- $8,599,008
Rob Portman (R-OH)- $8,499,386
John Cornyn (R-TX)- $8,175,066
Mark Kirk (R-IL)- $8,022,252
That's what Elizabeth Warren and her ideas are up against. (The good news, though, is that half of them look like they could well lose their reelection bids in November.) Want to make it a little easier for Senator Warren and her ideas and proposals in the Senate next year? Here's how:
Goal Thermometer

Labels: , , ,


Post a Comment

<< Home