Why Aren't More Democrats Using Anti-Monopoly Arguments In Their Congressional Campaigns?

"Democrats don’t know how to use this rhetoric politically, since they haven’t really paid attention to the politics of commerce for decades. They are starting to learn."
-Matt Stoller

Obviously, Bernie, Elizabeth Warren and a few progressives in the House like Mark Pocan (D-WI), Rick Nolan (D-MN), Keith Ellison (D-MN) and Ro Khanna (D-CA) are very involved with the anti-trust movement. And Blue America has endorsed a handful of candidates who are campaigning on anti-trust issues, particularly former Obama Administration employees Lillian Salerno (D-TX) and Austin Frerick (D-IA). But I'm not getting a sense that monopolies are part of the Democratic Party national discussion-- certainly not the way healthcare, Putin-Gate and #MeToo are. Yesterday, The Hill, of all places, published a good look at the recent efforts Warren and some other Democrats are making to put monopoly issues back on the front burner. "Democrats," wrote Ali Breland, "aren’t just taking aim at the behemoth deals themselves: they’re looking at the specific government policies that permit them. Sen. Elizabeth Warren (D-MA) on Wednesday directly attacked the Chicago school of economics-- the principles that have significantly influenced how federal regulators evaluate mergers. Warren and other Democrats say that these principles allow and, in some cases, encourage larger mergers, which they believe threaten competition and potentially hurt the public as well."

Democrats’ criticism comes amid a new wave of mega-mergers in 2017, which Wall Street expects to continue into 2018. Over the past year, companies including AT&T and Time Warner, CVS and Aetna and Monsanto and Bayer have pursued multibillion-dollar mergers. Overall, billion-dollar plus mergers are up from a year ago.

The debate could have impacts on how mergers are treated down the road. Disputes over merger policy have already played a part in a controversy over how to handle AT&T’s $85 billion merger with Time Warner.

In her Wednesday speech, Warren said that adopting such laissez-faire frameworks for enforcing antitrust means government tools meant to increase competition in markets are “gathering dust.”

“With the growth of Chicago school economics in the 1970s and 1980s … instead of blocking mergers that posed significant threats to competition, [antitrust enforcers] signed off on settlement agreements that allowed bad mergers if the companies promised to take actions later on that were supposedly designed to protect competition,” she said.

The Chicago school of economics, named after the University of Chicago whose faculty, including economist Milton Friedman, were largely responsible for its intellectual underpinnings, preaches aggressively free market capitalism and an aversion to regulation.

Warren’s complaint lies with how the Chicago school, and contemporary federal antitrust policy in the government treats vertical mergers-- deals between two companies that aren’t direct competitors, like Amazon’s recent $13.7 billion acquisition of Whole Foods or AT&T’s now-contested merger with Time Warner.

Generally, vertical mergers don’t cause problems within the Chicago school ideology of economics-- or, as a consequence, with the Justice Department. When antitrust regulators raise concerns, a merger can still be allowed after companies agree to government stipulations meant protect competition.

Warren isn’t the only Democratic lawmaker scrutinizing the ideological underpinnings of antitrust law.

“I think the Chicago school has basically made consumer welfare the litmus test, the gold standard of antitrust policy,” Rep. Ro Khanna (D-Calif.) who co-chairs the House Antitrust Caucus and represents Silicon Valley, told The Hill on Wednesday.

Khanna argued that antitrust policy should factor in the overall impact of consolidation on the public, including how a merger would affect product quality and price.

“What we need to do is go back to our roots and that means considering the impact of mergers and economic concentration have on wages, job and communities,” he said.

Former Treasury economist Austin Frerick, running in Iowa's third district, is as outspoken about this as Elizabeth Warren. I can't wait to see the two of them working together on the issue! "This anti-monoploy message," he told us today, "only connects with Americans if you actually name corporations, because otherwise folks just think of that board game that takes forever to play. But it is risky to name names. You can't put a bigger target on your back then when you say a merger shouldn't happen or a company should be broken up. Since August, I've not only opposed the Monsanto-Bayer merger, but I've also called for Monsanto to be broken up. No one else in my primary of 7 has come out to join me in opposing this merger. Heck, after my announcement, Monsanto donated $5,000 to the Republican opponent David Young and $2,700 through their Iowa lobbyist to Democrat Theresa Greenfield in my primary. I've called on both to return that money and oppose this merger, but it's been over a month and neither have done so."

Hawaii Rep. Kaniela Ing is Majority Policy Leader in the state legislature and a candidate for Congress. He's been the tip off the spear for progressive legislation in his state and it's no surprise that he's leading on anti-trust issues as well. This morning he told us how he sees it:

It's a shame that we're still talking about austerity economics in America, let alone needing to argue against it in our political discourse. The anti-community, anti-human Chicago-school way of thinking has already obliterated economies across the globe.

The truth is most American economists know better-- that we need to defend against concentrated market power in order to save capitalism. As for the others, I suggest following the money.

The dangers of monopolization goes beyond price controls. Here's an example:

Monsanto, a chemical company, is already among a handful of multi-national corporations that control America's seed supply. This allows them to create varieties of crops that best respond to Monsanto's patented pesticides, force farmers to use them, and ultimately sell more chemicals. Meanwhile farmers and consumers lose options and inevitably pay more. Now, Monsanto wants to merge with Bayer, the drug company. Are we really going to allow a single corporation to have market power over medicine and (when unregulated) sickness-causing chemicals at the same time?

When austerity politicians say there's no such thing as a free lunch, Democrats should respond there's no such thing as a free-market. We know that systems concentrate and funnel power and wealth upward, and it's up to our elected leaders to shift it back to the working and middle-class people who drive our economy. Democrats must lead the way to save capitalism from itself.

The Guardian ran Elizabeth Warren's Wednesday speech at the Open Markets Institute as an OpEd, Three ways to remake the American economy for all. "The central question America faces today is this: who does our government work for? Does it work only for giant corporations, for the rich and the powerful? Or does it work for everyone? This isn’t hard to understand. Americans don’t need to review the complexities of the Herfindahl-Hirschman Index to get what’s going on in this country. Folks at the top are getting more and more and everyone else is left to fight over the scraps. Powerful interests have invested eye-popping amounts of cash into making sure it stays that way-- tilting the playing field against small businesses, against entrepreneurs, against innovators, against workers, and against just about everyone else. To keep us distracted, those in power tell lies built on fear-- fear of people who look different than we do or worship differently than we do or come from a different nationality. All the while, those powerful interests have been locking down their control over our economic system. Strong, healthy markets are the key to a strong, healthy America. But today, in every corner of our economy, big, powerful corporations are killing off competition. Airlines, banking, healthcare, pharma, agriculture, telecom and tech-- in industry after industry, monopolies, duopolies, and oligopolies are calling all of the shots-- exerting alarming control over markets. The results are devastating."

This is why we love her. This is why the country so desperately needs a Sander-Warren partnership in 2020.

When those giants kill off competition, prices go up, quality goes down, and jobs are eliminated. But that’s not all. Massive consolidation means the big guys can lock out smaller, newer competitors. It means the big guys can crush innovation. It means the big guys can muzzle ideas they don’t like and voices they don’t like. Studies show that consolidation even contributes to driving down wages and driving up income inequality.

Concentrated market power also translates into concentrated political power-- the kind of power that can capture our government. And that’s exactly what’s happening, as President Trump and the Republicans in Congress bow to the power and influence of these industrial giants and financial titans.

Donald Trump used to talk about the danger of monopoly. But that talk has pretty much disappeared now that he is president. Once he took the oath, he began stacking his administration with a who’s who of former lobbyists, Wall Street insiders, and corporate executives committed to tilting the scales even further in favor of their powerful friends and against everybody else. And just days ago, the Republican Congress handed out a giant tax giveaway to Wall Street corporations and the super-rich, leaving working families and college students to pick up the tab.

To rebuild an economy that works for everyone, not just the big guys, it is critical to reduce concentrated power in our markets. The federal government has the tools to do it; Congress handed antitrust enforcers those tools over a century ago. But those tools have been sitting on the shelf for decades, gathering dust.

Antitrust enforcers placed those tools on the shelf when they adopted Chicago School principles that narrowed the scope of antitrust laws; they moved away from the goal of protecting competition. It’s time to demand that antitrust enforcers pick up those tools, dust them off, and start enforcing the law again. Let’s talk about how.

Here's where she outlines the 3 steps. If you have the time, read the entire explanations. I wish I had a video of the speech, but these are the 3 steps:

• Step one: block mergers that choke off competition

• Step two: it’s time to crack down on anti-competitive conduct

• Step three: get all government agencies in the game