My Speech to the California Democratic Party convention: Concentrated Corporate Power and the Age of Monopoly
I gave an address this weekend to the California Democratic Party convention, and many have asked me to publish the transcript. So here it is. The facts are all broadly available, but much if it is drawn from a feature I wrote for The American Prospect in 2015 called Bring Back Antitrust.
Hello Democrats! I always wanted to say that.
Thank you for that welcome, thanks to Chair Bauman for this honor. When he called about this, he said two things: we’re massively reducing the price of the lunch, and we really want you to speak at it. So thanks for that vote of confidence, Chairman!
I’m now a journalist, but in 2007 and 2008 I was a delegate to this convention. And I remember writing and memorizing a one-minute speech for the delegate elections. I went back and looked at it, there’s video online. I said I wanted to do my part to make the party more responsive and relevant to the concerns of everyday Americans, so people know what the party means and know what it stands for. I still think those two words are important, responsive and relevant.
The opportunity for Democrats and progressives in 2018 and beyond lies in understanding the real challenges America faces, in our economy and in our democracy, and rather than just communicating them to the public, doing something about them. And key to that is recognizing that these challenges existed long before Donald Trump, and will remain with us long afterward.
The last real wage growth for the middle class came in the late 1990s in Clinton’s second term. Productivity started to pull away from wages in 1979, meaning workers weren’t enjoying the benefits of increased economic output. The top 1 percent holds the largest percentage of total wealth since the 1920s. And we haven’t experienced a situation like we have now, with low corporate investment and high corporate profits, maybe ever.
Why is this all happening? I think it can be summed up in three words: concentrated corporate power.
That lies at the heart of every issue, and serves as the roadblock to progress at every level. Whether you’re an environmentalist trying to save the planet from devastation, or a fast food worker in need of a living wage for your family, or a student from Marjory Stoneman Douglas High School who wants to save the lives of children, you’re fighting concentrated corporate power. And let’s linger on that first word, concentrated. We are living in an Age of Monopoly that we have not seen in this country since the Gilded Age at the end of the 19th century.
More and more economic benefits have flowed into fewer and fewer hands, and I’m not just talking about personal inequality of income and wealth, a rot of a few dominant established players in sector after sector. Four banks control about 60 percent of all assets. Four airlines control 80 percent of the routes. We have four cable and Internet companies, usually only one available in your area. Two companies sell 70% of the beer in America. One company makes 70% of the syringes. One company makes pretty much all the eyeglasses, and one company makes up all the plastic hangers. This week gun control activists contacted three rental car companies to demand they end their discount program for NRA members, and they all said they would be canceling it March 26. It seemed weirdly coincidental, until you realize the three companies — National, Enterprise, and Alamo — all have the same corporate parent. We have the illusion of choice, but the reality of a consolidated, captured economy, and this has had massive effects on innovation, entrepreneurship, wages, quality of service, fragility of these sectors to glitches or financial shocks, and ultimately, on liberty and democracy, on the ability of someone with a good idea to use their talents to get it produced and put into the marketplace.
Maybe you believe this isn’t a great situation but it’s avoidable, something we can deal with after stopping Trump and ending hate and all the other important issues out there. But I truly don’t believe we can retreat to a place where concentrated corporate power is somehow a secondary factor. You can’t escape it.
Do you want to protect elections from foreign interference? Well, Facebook and Google control 99 percent of all new advertising in America and increasingly dictate what news people receive, how they communicate, and what messages they hear. Do you think the electoral college is an anti-democratic relic that must be abolished? I agree, but understand that the reason Trump snuck through despite losing the popular vote is that we have regional inequality, where a few superstar cities with dominant firms have pulled away from the rest of the country and left despair in its wake. Startups are heavily concentrated in big cities, chain stores have replaced mom and pop businesses, finance comes from Wall Street instead of local control, and money flows out of these regions instead of into them. That’s a monopoly problem.
You think student loans are a problem? The two largest student loan servicing companies, Great Lakes, and Nelnet, just merged and control a majority of all loan accounts, despite constantly denying borrowers the best options. Do you want to fight our affordable housing crisis? You should. Well the two largest Wall Street investors in single family rentals, Invitation Homes and Starwood Waypoint, just merged, creating the largest rental portfolio in the nation, with enough concentration in certain cities to move the market for prices. And taking all these homes off the market affects whether a first-time homebuyer can find a property to buy and outbid an all-cash financier. But the problem is that we need to build more, you say. Sure, but these same companies have build-to-rent initiatives to own the new housing stock while buying up the old, and they have massive tax preferences in the recent tax bill to keep that going.
How about immigration? Two private companies, CoreCivic and the Geo Group, run about 60 percent of our federal immigration detention centers, and the fastest-growing airline in America is the one they privately run to ship immigrants out of this country.
Do you think the opioid crisis is the deadliest epidemic we’ve seen in decades? You’re right, and it has a lot to do with how monopoly pharmaceutical companies transformed theories of pain management, and then oligopolies throughout the drug supply chain, from distributors to pharmacy benefit managers to pharmacies, all areas where three companies control most of the market, looking the other way while millions of pills got shipped and sold to small towns everywhere.
Do you think we need a single payer health care system in America? We do, and California ought to kick it off, pass a bill, and finish the job at the ballot as soon as possible, and those who Speaker Rendon is protecting from a tough vote ought to just get the hell out of the way. But if we don’t combine that with breaking up the unbelievably concentrated health care provider market, it won’t matter. We had 58 major mergers of hospitals and health care systems in the first six months of last year. Health insurers are merging with pharmacies and urgent care clinics. Amazon wants to sell drugs. There are two dialysis outpatient centers serving virtually everyone with kidney disease in America, and the main investor in one of them is Warren Buffett. It’s an endless race: team up with your rivals to get a leg up on negotiating with the people on the other end of the transaction. One end merges so the other end merges, and this concentration creep is great for bottom lines but terrible for patients, who face the highest prices for treatment anywhere in the world.
Some would say, if you nationalize the system, put the government in charge of the negotiation, that solves the problem. But the dirty truth we all know is that concentrated economic power begets concentrated political power. So when single payer meets single provider, we know what would happen behind the scenes so the provider protects its profits. You need to break up these concentrations of power first, before you can move forward and make progress on anything else.
The good news is that we don’t have to change a single word in the law in order to do that. We have the Sherman and Clayton Antitrust Acts, passed down to us from the last time we experienced a crisis of this magnitude in the 1890s, and they’re still on the books, ready to usher us out of this Second Gilded Age. Busting up monopolies is not an act of socialism, but of capitalism, out of a belief in competition as a great leveler, a way to boost worker power and consumer power and broad prosperity to all regions of the country. We don’t have a choice but to embark on this; it’s a generational challenge. But to do it, we need Democrats to be responsive and relevant to the public interest, to come back to those two words.
I believe people all across this country, no matter their political persuasion or even political engagement, understand intuitively that concentrated corporate power explains why America has gotten seriously and perhaps fatally off track. We have to make this a priority, indeed the priority. If you’re running for Congress, join the Congressional Antitrust Caucus, a new group formed to tackle this problem. If you’re an activist, pressure this party to foreground this fight. And no matter who you are, take a stand for liberty and justice. The country belongs to the people, not entities manufactured on paper and run for the benefit of investors. We are more than a nation of balance sheets, our value lies in more than just our Amazon Prime account. We are the people who can beat the oligarchs and restore our democracy. Thank you.