Do Not Pass Go
We’re losing the American Dream because the establishment— including some Democrats — is too scared to stand up to monopolies.
Whenever I mention “the rigged economy,” heads nod. People in this district know that you face an uphill battle supporting your family, competing in the workforce, or starting a new business. Folks who’ve been out in the real world for a while will also almost all say that it didn’t used to be this hard.
So what happened?
Part of the answer is that the Reagan administration pulled the rug out from under labor unions, tipping the scales against better wages and workers’ rights.
Less commented on, but just as important, is the way the Reagan administration rewrote the rules of capitalism to allow monopolies to form more easily. The rise of monopoly power enabled by Reagan — and then left largely untouched even under Democratic administrations — depresses wages, kills small business profits, and constitutes a direct attack on our liberty.
This is already relevant to the Democratic primary in the 21st Congressional District of Texas. Some candidates in this race have already described the just-announced purchase of Whole Foods by Amazon as a “success story.”
That’s exactly what it’s not. Amazon’s purchase of Whole Foods will be bad for consumers. It’s the latest sign of the rise of dangerous monopoly power that threatens our bank accounts, worsens inequality, and undermines our political liberties. That’s why the Institute for Local Self-Reliance condemns Amazon’s behavior as “stifling competition, eroding jobs, and threatening communities,” and why New America Foundation’s Open Markets program condemned the Whole Foods deal.
In simple terms, a monopoly is “exclusive control of a commodity or service in a particular market, or a control that makes possible the manipulation of prices.” Monopolies are dangerous because they can rig the rules of the market to bilk consumers and suppliers out of money. A monopoly can, for example, bully suppliers into selling it materials at costs so low that the supplier can’t make a profit. It can force the supplier to go bust, and then gobble it up. The monopoly can then sell the goods it makes out of those materials at a price much higher than it could get away with if it faced real competition.
All that amounts to a hidden sales tax — levied by people for which no one voted.
“Voting with your dollars” under a monopoly becomes a joke, because there’s only one candidate to vote for. Monopolies leverage their illicit profits and their control of the market to buy off the political process, grab hold of the regulatory and legislative processes, and bend the rules of the system in their favor. Eventually, their lobbying and campaign spending can yield more return on investment than productive economic activity.
Under monopolies, corporations call the shots, not voters. That’s how we get the rigged system. That’s also why we pay too much for goods and services like health care, food, cable and Internet, and plane tickets. That’s why we have a harder time making a profit in the market, and face a huge uphill battle in starting and maintaining small businesses.
Monopolies also contribute greatly to economic inequality because they draw resources out of the hands of working class people and into the hands of the super wealthy and corporations. Federal Reserve Chairman Marriner Eccles described this kind of outsized domination of the market as “a giant suction pump . . . draw[ing] into a few hands an increasing portion of currently produced wealth.”
Our antitrust laws were originally written to prevent this from happening, serving four main goals:
- Protecting consumers from anticompetitive overcharges,
- Protecting small producers from anticompetitive underpayments,
- Preserving open, competitive markets, and
- Dispersing economic and political power.
Legislators knew that monopolies weren’t just bad for business — they were threats to democracy. How free can you be if you are forced to do business with a company that’s bilking you and overriding your influence with lawmakers? Americans lose billions each year to the predatory practices of monopolies and oligopolies — and we’re losing our democracy along with our money.
Amazon is a perfect example of the rise of a kind of company that should not have been possible if either Republicans or Democrats were enforcing the original intent of the antitrust laws. As Alex Shephard wrote in The New Republic yesterday, “Amazon’s goal is a takeover of retail itself, both physical and digital.” Here’s Barry Lynn, director of the New America Foundation’s Open Markets program, in the same article, writing about Amazon’s acquisition of Whole Foods:
“This is the crushing of competition. Amazon is monopolizing commerce in the United States. It set out to become the company that when you said to yourself, ‘I’m going to go buy something online,’ you would say, ‘I’m going to go to Amazon.’ Now Amazon is seeking to become the company when you say to yourself, ‘I’m going to go buy something’ you think Amazon.”
Think about the economic and political leverage Amazon is constructing. It dominates online commerce, grabbing 43 percent of all online sales. It’s fighting to dominate brick-and-mortar commerce with its entry into the bookstore and grocery store businesses. It’s automating its way into the delivery business with its drone fleet. Amazon controls between 33 percent and 42 percent of the cloud storage market. Its CEO, Jeff Bezos, owns The Washington Post, and is one of eight men who own as much wealth as the bottom half of the planet.
The saying during the past few election cycles was, “try to find a way to vote against Goldman Sachs.” Soon, the saying will be, “try to do business without paying Amazon.” (P.S., Goldman Sachs is providing the bridge financing for the merger.)
Lynn goes on to say:
“We’ve got ourselves a little challenge here in America: On one side you have Jeff Bezos and on the other side you’ve got democracy.”
The question is, in this election cycle, with monopoly power gutting our economy and our freedoms, which side will Democrats be on? Failing to take on companies like Amazon and other monopolists means we’re on the side of the rigged system that makes it harder for people in this district to thrive. That’s a recipe for electoral, political, and economic disaster.
Voters want to know if our party will stand up for them against the corporations that are cheating us, robbing us, and rigging the system against us. The answer better be yes.
Derrick Crowe is a Democratic candidate for the U.S. House of Representatives in the 21st District of Texas. Learn more at https://electcrowe.com.