Trust Bustin'

Kaniela Ing is the most progressive member of the Hawaii state legislature and Blue America and other progressive groups are trying to persuade him to run for the open congressional seat in Honolulu. If you wonder why, consider this statement he gave us today on anti-trust efforts: "In today's political climate, no entrepreneur looking to grow his or her business should ever consider voting Republican. The GOP's pro-oligarchy agenda has rigged the American economy against both workers and the majority of business owners. A handful of multi-national corporation and Wall Street investment firms are seeing enormous gains, while everyday entrepreneurs are being hung out to dry. Now that the GOP controls Congress and the White House, it's no wonder so many corporations are driving up prices, lowering wages, and shipping jobs overseas. The greatest threat to American innovation, small business, and a resilient economy is the monopolization of industries. Democrats must lead the fight to break apart monopolies and big banks, and build a future economy that leaves no one behind."

  The other day, in the post about the undrained, fetid Trump Swamp, we included two lists of the worst Wall Street bribe takers in Congress. Although Ryan led the House list with $10,955,550 and McCain led the Senate list with $39,398,887, the Democrats who were taking the most in Wall Street bribes were virtually all influential party leaders. McCain was at the top of the list primarily because he ran for president. Exclude him and the biggest crook in Wall Street bribe congressional history-- excluding presidential candidates-- is Democratic Senate Leader Chuck Schumer ($26,628,675), who gobbled up more than the Senate's two top Republicans-- McConnell ($12,149,201) and Cornyn ($8,649,666)-- combined! The top 5 crooks in the House were all Republicans but the 4 of the 5 Democratic crooks run the congressional party:

• Joe Crowley, the heir apparent- $6,491,559
• Steny Hoyer, the Whip- $6,094,848
• Jim Himes, head of the New Dems- $5,773,452
• Nancy Pelosi, top dog- $3,650,387

To understand how internal party power is won and maintained, you have to understand the money flows from the banksters to the corrupt politicians, who lead each of the political parties. For example, it's important to understand the depth of Democratic Party corruption to fully understand the import of Danny Vinik's story about the new monopoly-busting.

Anti-trust crusader Barry Lynn and his operation, Open Markets, "has spent six years arguing that the Democrats have become too comfortable with corporate money and power, and need to rally around a new principle: breaking up monopolies. As the party remains locked in a struggle to reboot itself, unable to craft a unifying vision in the Trump era, Lynn and his group are trying to push it into a new fight against global corporate titans, targeting big companies like Google by name, and arguing that it’s time to use federal antitrust law to chip away at their influence. They see the fight as both a boon to democracy and a political framework that could excite voters in a new, more energized populist moment."

The problem, of course, is that Google and other tech giants-- and their multimillionaire executives-- are underwriting the Democratic Party and the careers of many of its leaders. Last cycle alone, computer software companies, for example, gave $10,438,708 to candidates for Congress-- $6,970,066 to Democrats and $3,354,067. Electronics manufacturing and equipment (which includes companies like Oracle, Microsoft, Qualcomm, Cisco Systems, Apple, Intel, IBM. Hewlett-Packard and other tech giants) contributed $26,349,245-- $16,837,279 to Democrats and $9,292,413 to Republicans. Among the biggest winners in the House were party leaders who did not have contests races but who always appreciate the help with building their power:

• Paul Ryan (R-WI), Speaker- $236,065
• Kevin McCarthy (R-CA), Majority Leader- $153,550
• Nancy Pelosi (D-CA), Minority Leader- $91,187
• Steny Hoyer (D-MD)- Minority Whip- $75,400

In 2016, Google's company PAC spent $2,178,015 on candidates, although more on Republicans than on Democrats. Candidates they maxed out to ($10,000 each) included committee chairmen and party leaders like Ryan (R), McCarthy (R), Pelosi (D), Hoyer (D), Jim Clyburn (D), Steve Scalise (R) and Cathy McMorris Rodgers (R). And they gave $30,000 each to the DCCC, the DSCC, the NRCC and the NRSC, as well as $10,000 pops to the corrupt leadership PAC run by criminal elements like Wasserman Schultz, the Blue Dog PAC, the New Dem PAC, Hoyer's PAC and so on.

Lynn, a former journalist, has spent years building a public case that corporate monopoly is a growing threat, hiring like-minded thinkers and writers to advance the cause. The rest of his team has become increasingly high-profile, including Lina Khan, who earlier this year wrote an influential law-journal article attacking Amazon as the new shape of anticompetitive corporate behavior; Matt Stoller, a prolific Twitter warrior who communicates weekly with lawmakers like Ro Khanna, the Silicon Valley-based congressman. Zephyr Teachout, the New York law professor and darling of the progressive left, will chair the board of the Open Markets Institute.

Open war with a powerhouse like Google, risky as it sounds, is typical of Lynn’s team, which is making a name for itself going after the largest possible targets in the Democratic universe. Khan’s article spent 40,000 words targeting one of the biggest names in the Democrat-friendly tech industry. Stoller, who frequently trades barbs with leaders of the Democratic establishment, is known for frequent attacks on Barack Obama himself, who he has called a “bad president” who is “ideologically averse to democracy” and whose policies “entrenched fraud and monopoly as the guiding principles in our commercial system.” At a time when Obama might be the only figure with some unifying power among Democrats, that amounts to something of a frontal attack on the very identity of the national party.

“[Barry has] been fearless and persistent in pushing these issues,” said Jonathan Kanter, an antitrust lawyer at Paul Weiss. “It’s hard to think of somebody more central to the discussion than Barry and Open Markets.”

Lynn and his team argue that the concentration of money and power in a small number of companies is a huge danger to our economy and politics, and that Washington's main weapon to combat it, antitrust law, has become rusty from lack of use. They want to revive the New Deal antitrust regime that prioritized competition and worried about the political power of large companies—a reform that would represent a reboot of antitrust thinking for the new tech age and the kind of new political rallying point that Democrats have been looking for.

Politically, it's novel territory: A populist philosophy that rejects both the technocratic approach of the Obama and Clinton administrations and the centralization at the heart of Bernie Sanders-style democratic socialism. Lynn and his team see themselves as essentially pro-competition and pro-business, creating new openings for smaller companies being boxed out by giants. At a time when the new Bernie-bro energy seems to be pulling the party toward its left fringe, they see this philosophy as offering a middle way, a populist agenda that can bring in independent-- maybe even Republican-- voters, appealing to a farmer in Des Moines, a small businessman in Dallas and a single mother in Detroit.

...[F]or all the Democratic Party’s renewed interest in antitrust, it has still not adopted the more ambitious and controversial aspects of Open Markets’ broader political philosophy. Notably, none of the new plans target Amazon, Google, Facebook or the other big tech firms that Open Markets believes are becoming the biggest threats to commercial freedom-- but are big political allies of the Democrats.

...In theory, Washington had a tool to deal with this problem in the form of antitrust law, which was once used to break up immense monopolies like Standard Oil. But in practice, that no longer happened. In 2006, in a much-discussed article for Harper’s, he called for the break-up of Walmart, saying that the retail giant had too much power over its suppliers and workers. That eventually turned into his second book, Cornered, which came out in 2010 and traces the rise of modern-day antitrust policy. Since the New Deal, policymakers had looked skeptically on large firms, preventing mergers that would create huge corporations and breaking up companies that grew too big. But in 1978, the conservative legal scholar Robert Bork published “The Antitrust Paradox,” a nearly 500-page book that argued that antitrust policy should be concerned only with “consumer welfare,” generally measured by consumer prices, and should not concern itself with the structure of markets. If prices were low, he argued, the market was working. Bork’s consumer-focused approach gained the support of prominent liberal economists like John Kenneth Galbraith, and under President Ronald Reagan it became national policy. The "consumer welfare" framework has driven antitrust policy under both Democratic and Republican administrations ever since.

Lynn argued that this approach was far too narrow and that it left the government powerless to fight some of the most damaging effects of corporate concentration. A monopolist can keep prices down and still cause harm-- by underpaying workers, for example, or influencing the political system. Lynn considers himself a deep believer in free market competition, a difference between the new antitrust movement and leftists, but he believes the government needs to play an active role in keeping those markets competitive. This philosophy dates back to the country’s founding, when Thomas Jefferson and James Madison argued that the government must protect individual citizens from monopolies; it was later reinvigorated by Supreme Court Justice Louis Brandeis. (For that reason, the new antitrust movement is sometimes called the “New Brandeis” movement; Stoller prefers Jeffersonian Democrats.)

If that sounds grandly historical, Lynn has never been shy about the import of what he's doing. “We are resurrecting a lost language of political economics,” said Lynn. “The word 'political' has been lopped off from the word economics. We’ve been taught to see economics as an entirely technical sphere. We have these experts who study problems, like doctors studying a body, and they tell us what to do. The traditional political economics is all about the engineering of power.” In this view, the shape of markets is inherently a political decision, but for decades it has been depoliticized under the guise of economics. “When the technocrats tell you it’s science, that’s bunk.”

“It is the extension of checks and balances into the political economy,” he added. “Competition policy determines how individual citizens compete with one another. It is the way that we make our society. It touches on absolutely everything.”

The Open Markets view is that government should use its antitrust powers broadly, to structure industries to meet societal goals. That structure would look different depending on the industry; industries that mass manufacture goods-- chemicals, cars, metals, for instance-- should be allowed to vertically integrate as long as they have real competitors, said Lynn. For farming, retail and services, antitrust would promote individual ownership, so that “people who want to be an independent farmer or insurance agent or restaurateur, if they had the wherewithal to do so, could run their business without facing giant, super-capitalized predators.”

In 2011, Lynn launched the Open Markets program at New America, an effort to take the ideas he developed in “Cornered” and bring them to a wider, more influential audience. Lynn’s first hire, Lina Khan, spent significant time out West, interviewing farmers and telling stories about their run-ins with the big meatpackers, like Tyson and Perdue. But more recently, Open Markets has become especially focused on the tech industry. The Silicon Valley behemoths, in this view, pose something of an existential threat not just to the economy but to democracy itself. “We see these institutions as incredible, powerful and very useful,” said Stoller, “but as concentrations of power that are dangerous.”

The argument runs like this: By exerting such near-total dominance of their own channels-- Google in search, Amazon in e-commerce, Facebook in social sharing-- the tech firms have become 21st century informational gatekeepers, controlling unprecedented quantities of data and building giant-- if unseen-- entry barriers that make it impossible for anyone to challenge them. But because these dangers are posed by companies offering consumers totally free services, or very low prices, they fly under the radar of current antitrust policy.

...Over the past two years, Open Markets’ influence has grown quickly: The Obama administration warned last year about corporate concentration; Hillary Clinton issued a fact sheet calling for aggressive enforcement of antitrust laws; Democrats adopted an antitrust plank in their 2016 platform; and Democrats prioritized antitrust in their “Better Deal” agenda. Open Markets has been involved in all these plans.

Open Markets doesn’t operate like a typical Washington think tank, spitting out an endless supply of white papers and policy memos and jamming them into the hands of congressional aides. In fact, it publishes very few papers at all. Instead, it focuses on conducting original research and writing articles for mainstream publications (including Politico, where Khan argued for significant reforms to the FTC). “With a few exceptions, there’s no reason to write up a policy paper and then convince a journalist to mention it someplace,” Lynn said. “We can vertically integrate and do the writing ourselves.” The Washington Monthly, a left-leaning magazine founded in 1969, has become a frequent place to find work by Open Markets scholars; recent stories have focused on concentration in the airline and poultry industries and blamed monopolies for the decline in black-owned businesses and the rise in regional inequality.

Lynn has also proven adept at managing and developing outside relationships, building a movement that extends beyond Washington. Joe Maxwell, a former lieutenant governor of Missouri and executive director of the Organization for Competitive Markets, which focuses on antitrust and trade policy in the agricultural industry, first met Lynn a decade ago at the OCM’s annual convention. Antitrust looms large in the agricultural world, in which many industries are dominated by a couple of major companies. Lynn has worked hard at building relationships with farmers like Maxwell and, importantly, bringing them together to form a more powerful political force. “The central conduit was Barry Lynn,” said Maxwell. “We discovered that there were more and more of us who thought the same way.”

In early 2016, Lynn and a few colleagues had dinner with Senator Elizabeth Warren, who had read some stories by Open Markets scholars and wanted to learn more about rising corporate concentration and the new antitrust movement. Soon after, a Warren aide contacted Lynn to say that the Massachusetts senator wanted to give a speech on antitrust. That speech, held in June and sponsored by Open Markets, marked a pivotal moment for the antitrust movement. “I love markets,” Warren exclaimed to a packed room. “Strong, healthy markets are the key to a strong, healthy America.” She went on to refute the Bork framework on antitrust and lamented that “competition is dying.”

In a speech in October, Hillary Clinton delivered her own criticism of rising concentration and released a fact sheet on antitrust. Amid the numerous distractions in the presidential election, Clinton’s commitment to stronger antitrust enforcement went largely unnoticed. But to the Open Markets team the message was clear: Mainstream Democrats had finally awoken to the problems of rising corporate concentration. It had been nearly two decades since the earthquake struck Taiwan and launched Lynn’s interest in antitrust, but finally Washington was listening.

But as Open Markets has begun to name names and push the envelope on what kinds of companies should count as a monopoly, it has run into some of the most powerful groups in Washington. During the drafting of the antitrust plank of the Democratic platform, Lynn and his colleagues pushed for language that would have directly targeted major technology companies, such as Amazon, Facebook and Google. But each time they added that language to the platform, it would get removed; ultimately, it was dropped altogether. Likewise, the Democrats’ “Better Deal” agenda called out the airline, beer and eyeglasses industries-- but it doesn’t mention the tech industry.

Lynn is still thrilled with the platform and “Better Deal” agenda; that antitrust policy has become a top priority for the Democrats is clearly a big victory for him. But the refusal to target the big tech firms is the clearest signal that Democrats aren't ready to jettison the consumer welfare framework and haven’t yet totally bought into Open Markets’ philosophy.

“They’ve made a major step forward,” Lynn said. “[But] the difference is bigger than they realize.”

“We’ve seen that academic thinking can filter into policymaking. That’s what Bork did,” said Representative Khanna. “My hope is that Lina Khan’s work will reorient antitrust to a concern on jobs and communities and concentration of power and move away from an absolutism about consumer prices.”

To the new antitrust movement, the tech firms are something of a litmus test for the Democratic Party’s commitment to the Brandeis and Jeffersonian vision of antitrust policy. To Stoller and Lynn, Obama clearly failed that test. The Obama administration largely embraced the tech companies, with a revolving door to the industry: Numerous tech workers, especially from Google, temporarily joined the administration. Obama campaign manager David Plouffe left politics to become Uber’s top lobbyist, and now has a senior role at the private foundation of Facebook founder Mark Zuckerberg. More broadly, Democrats draw on Silicon Valley both for money and expertise. If Democrats were really to target these firms-- by calling for utility-like regulation, for instance-- the political consequences could be severe.

Philosophically, it’s hard for the Democrats to let go of the centrist dream of the 1990s, one that Bill Clinton rode to such success—that good technocratic governance is perfectly compatible with staying friendly to big global corporations. That technocratic approach achieved a lot of good, Democrats argue, and blowing it up-- whether for the sake of principle, or to chase a new populist coalition-- is unnecessarily risky. And it may not be a turnkey solution to today’s economic problems and the party’s political issues. “Antitrust is a critical part of this,” said Neera Tanden, the former Obama adviser who now runs the Center for American Progress. “It’s not the only issue that progressives need to address.”

For Open Markets, this philosophy is not just about antitrust. It’s about structuring markets to promote competition. Stoller draws a direct line from the Bork revolution to the election of Donald Trump. Rising concentration, in this view, has led to a litany of economic and social ills, enabling corporations to amass huge amounts of power over working Americans and fostering a deep-seated anger at the political establishment. “The New Dealers were very worried about autocracy and financial autocracy,” he said. “They would’ve understood that Trump is a result of a society that has lost control of its ability to manage its commercial institutions.”

He added, “We’re trying to bring this tradition back."

Orlando Democrat Alan Grayson explained why he sees this kind of antitrust action as important in the current political climate: "The secret ingredient to capitalism is competition. Without competition, capitalism doesn’t work. Monopolies and oligopolies grow larger and larger, and wealth and power accumulate in a small number of small hands. That threatens democracy, and impels us toward a Soviet-style economy and polity." Even a Republican should be able to understand this and see the dangerous implications.

It wasn't that long ago that Congress had an effective and powerful spokesperson for economic populism from the state of North Carolina-- Brad Miller. As soon as the Republicans gained control of the state legislature and governor's mansion they set about to gerrymander Miller out of his seat-- which they did in 2012. We still harbor hopes that he'll get back into elective politics at some point. Anti-trust and monopoly issues are part of his bailiwick and we asked him to comment about the politics behind the effort. His response is very much worth reading:

This is now the fault line between the establishment and reform wings of the Democratic Party. Voters may not be antitrust policy wonks, but they get the problem with the concentration of power. Internet and cable providers are always high on the list of the most hated companies in America. It will not be hard to persuade voters that the problem there, the reason Americans have the crappiest and most expensive internet service in the developed world, is lack of competition. And that because economic power has become so concentrated, competition in many industries has been smothered in the crib. They know that the companies with monopoly economic power have way, way too much political power, and that they get screwed as a result.

This was a big issue in the behind-the-scenes jostling between the establishment and reform wings over the expected Clinton transition. Reformers were not going to accept nominees for antitrust policy spots on the Federal Trade Commission or the Department of Justice who went to good schools and did well and then went to work for prestigious law firms, but thought we just needed to restore the economic status quo that we had before the financial crisis. We wanted people who had a credible commitment to bring back antitrust.

I polled in my own district the legislation to break up the big banks. I figured since I’d introduced it, I should probably figure out if voters liked it, although I had a pretty good idea. The two reasons I gave in the poll question for the bill was that we shouldn’t ever have to bail the big banks out again, and because they had too much power. It was wildly popular.

The problem in the poll and in politics generally is that people are pretty skeptical now of what politicians say. There was a pretty good-sized chunk of voters who liked the bill, but didn’t really believed I’d introduced it, or thought there was some catch. They certainly didn’t think it was something that really made me different from other Democrats.

Voters now think that whatever politicians say in public, something else happens when the doors close in Washington and the real decisions are made. And they’re right about that.

Tim Canova is a Florida law professor who has been fighting these kinds of battles against big money interests for many years. Now it's spilled into politics as he takes on one of the most craven ands corrupt protectors of corporate dominance: Debbie Wasserman Schultz. "Democrats have been far too complicit for far too long in the gutting of antitrust enforcement and the rise of monopolies and cartels that gouge consumers, exploit workers, and corrupt our political system," time told us this morning. "In addition to renewed antitrust enforcement to prevent mega mergers and break up huge concentrations of corporate power, we need to reform the board rooms of giant corporations as well. As long as corporate CEOs effectively handpick board members, the gains from their cartels will flow mainly to top management and the wealthiest shareholders. If publicly-traded corporations were required to include representatives of workers, environmentalists, and taxpayers on their boards, there would likely be more effective oversight of management, less systematic frauds on consumers, and less damage to the environment. None of these needed reforms are possible as long as we keep electing career politicians who are taking huge campaign contributions from big corporate interests. That's why we need campaign finance reform, publicly financed elections, free TV and cable airtime for federal candidates, and much higher progressive tax rates on the super-wealthy to prevent them from corrupting the political process with huge campaign contributions."