How tech monopolies are ruining our lives.
Do you think you should be considered first and foremost a consumer or, instead, a citizen with equal opportunities as anybody else to get and keep a decently paid job in line with your skills? Now take a pause, and answer this question before reading the next line.
The answer seems pretty obvious to me: if you don’t have a job — a decently paid job — you just can’t be a consumer as you won’t have — enough — money to be a consumer.
Nevertheless, you’re much more protected as a consumer than you are when it comes to evaluate your opportunities (freedom) to build your own career, be it as an employee or as an entrepreneur. Ever wondered why?
You’re taking as a given — they made you believe — that your success — by success I mean just the opportunity to decently stay afloat — in your working life only depends on your capabilities and on how hard you try, so if you fail it’s only your fault and, in any case, you don’t deserve any law to protect you, even if your failure in your working life is due to circumstances beyond your control or, even worst, if your “failure” was due to the will of a few rich men that decided so because that was necessary for their benefit (i.e. layoffs in case of mergers and acquisitions).
Do you buy into the narrative that trying harder and smarter will increase your chances of success or even better will assure your success? Or have you ever wondered if there is something to fix into the economic and political system we’re living to make this recurring fantasy — you own success is in your hands — come true, I mean statistically true? Do you really think your career is on the same level playing field as anybody else?
Since the dawn of time few men have ruled over the majority; even the first example of democracy in the history of mankind, the Athenian democracy, could guarantee freedom and democracy to its citizens thanks to the labor of — non citizens — slaves. In our contemporary western society there are still a few men that are ruling over the multitude, but the question we should ask ourselves is not whether this top down social structure is in place or not, but if the degree of freedom that is left to the majority of us is enough to guarantee a widespread level of welfare or not.
Then we should ask ourselves what are our priorities when it comes to evaluate our level of freedom: should we have to choose between our political liberties ( right to vote, freedom of speech) or, alternatively, having the possibility — freedom — to earn enough money to satisfy our basic needs (three meals per day, a roof over our head, dresses to protect our body when it’s cold etc) without having to beg favor of any other men, which of the two would we put first? The answer seems pretty obvious: both are important, but earning with dignity what is needed to survive clearly should come first.
Nevertheless, there is much more public debate over our political liberties than there is over the need to guarantee to everyone in our western society the economic freedom to access and keep a decent job, hence a decent life. Additionally: there are many — constitutional — laws protecting our political liberties — which is good — but there are nearly no laws at all protecting our right to have and keep a good job and, more in general, to have our economical and financial freedom guaranteed against the few -the monopolists- that are in a position to leverage their economical power against the majority and take away our economical freedom to their profit. And this happens each time a monopolistic company crushes or keeps under constant threat thousands of small businesses just because it has the capital that allows it to do so. If you’re not convinced that monopolistic behemoths such as Wal-Mart or Amazon have a power of life and death over their suppliers — small businesses — then you should have a chat with a few of them to find out.
Monopolies are always closely tightened to political powers, if they are not controlling them, and the Boston Tea Party, which kick-started the birth of the first modern democracy, is one such example: a political decision — the Tea Act voted by the British parliament — in favor of a monopolist — the British East India Company — allowed the latter to undercut the prices of Tea distributed by smaller colonial (American) importers, hence it would have put the majority of smaller American “business owners” out of business, if they had not reacted as they did.
Almost two and a half centuries later Amazon regularly undercuts prices — dumping — to put smaller and less capitalized companies out of business or to oblige them to surrender by selling themselves to the monopolist as it did, among others, with www.diapers.com: “Diapers.com revenue growth eventually slowed under Amazon’s pricing pressure, and the founders engaged in acquisition talks, agreeing to a $540 million buyout”.And now the political powers don’t even raise an eyebrow in front of such abusive practices; and there is no public debate on which consequences those unfair practices are generating.
It was clear to the American Colonists that there could be no freedom at all if their lives and their properties depended upon the choices of a few corporations closely tightened to the political powers that were ruling America at the time: the English Government. Now it is no longer clear to us how much monopolies are taking away our most basic liberty: accessing the possibility — freedom — to earn and keep a decent living during our entire life. A few data are sufficient: By 2010, just over 46 million people fell below the U.S. Census Bureau’s official poverty line. This means that roughly 15% (1 person out of 7) of the population in the world’s biggest economy are poor. This implies that they can still exercise their right to vote (in theory) and their freedom of speech but they have to rely on charity for their food and their basic needs. And a man relying on charity for his basic needs is not a free men. He is enslaved. They have taken away his dignity, they have taken away his right to carry on his pursuit of happiness, an inalienable right as recognized bu the founding fathers in the U.S. Declaration of Independence. Normally this issue that is undermining the concept of liberty in the U.S. should be the most important concern in the public and political debate; but there is much more literature about billion dollars unicorns and the habits of a few rich men instead.
When a few corporations have a monopolistic power over — nearly — the whole economy and the regulations limiting this absolute powers are either not enforced either are not existing at all, the downfalls on our — the common people — opportunities to earn a decent life are constantly reduced and/or put in danger. Monopolies are never benign, nor their absolute power is created randomly and/or by chance: it is the output of a predetermined will put in place by the few that are controlling our economy, hence our lives, hence our freedom.
One of those celebrated puppet masters, Peter Thiel, openly celebrates monopolies: “monopolies aren’t just good for the rest of society; they’re powerful engines for making it better”. So we can assume that Peter Thiel believes -wants to make us believe — that the tech companies’ (Apple, Google, Intel and others) wage fixing cartel that impacted over one million employees is a way of making a better society and not another way of limiting our freedom and our possibility to earn an income in line with our merits and our skills.
Such kind of practices are possible only if there are a few monopolistic companies that are controlling entire markets. They would not be possible if there were many companies competing in each market. In terms of employment bigger is not better, the bigger a company is the less people it employs as compared to the number of people that would be employed if there were more companies sharing its market. Mergers and acquisitions (creating a bigger company from the merger of 2 or more companies) always generate thousands of redundancies, hence they reduce the number of — good — jobs available in the job market.
As John Hope Bryant points out here on Linkedin: “ The majority of jobs (70% of all jobs) come from companies with 500 employees or less, with just about half of all jobs coming from employers of 100 employees or less. Less than 1000 companies in America, the largest economy in the world, employ 10.000 people or more. Out of 26 million companies, approximately 6 million employ one person or more”.
So how can a clever person as Peter Thiel surely is can argue in good faith that monopolies are good for our society? Maybe it’s just that he is now part of that restricted circle of power who wants to make us believe that monopolies are good for the majority of us and not only for the few that are using them to their benefit and to keep controlling us while reducing our freedom.
Monopolies are not abusing their powers incidentally, abusing their powers is part of their strategy to preserve their dominant position. Those abuses, that are also preventing innovations — contrarily to what Peter Thiel argues — can only be limited if the political powers are willing to do it. Microsoft wanted to fully control our access to the Internet when it crushed Netscape by imposing Explorer as a default browser on Windows (the monopolist software). Microsoft’s defense in court sounds pretty much similar to Peter Thiel’s arguments and to the arguments that all monopolists are claiming when someone is questioning their abusive practices: “Microsoft stated that the merging of Microsoft Windows and internet Explorer was the result of innovation and competition (!), that the two were now the same product and were inextricably linked together and that consumers were now getting all the benefits of Internet Explorer for free”. Fortunately for us a federal judge ruled: “The Microsoft Corporation violated the nation’s antitrust law through predatory and anti competitive behavior and kept an oppressive thumb on the scale of competitive fortune”. It took 21 years for Microsoft, after being repeatedly hit by antitrust laws, to publicly admit: “Our experience (The Netscape antitrust saga) has changed us and shaped how we view our responsibility to the industry”. But, as I warned you, monopolies are never to be trusted and voilà, as Microsoft recently released its new Windows 10 operating system, its monopolistic instinct came out again exactly as it did two decades ago, exactly on the same product, its web browser: “Mozilla CEO Chris Beard today wrote an open letter to Microsoft CEO Satya Nadella to complain that the new Microsoft operating system, Windows 10, makes Edge the default browser even when you’re updating from a system that previously used Chrome or Firefox as the default”. The leopard cannot change its spots. Still, Peter Thiel would argue that those practices are benefiting us all and not only Microsoft.
Unfortunately for us tech behemoths have learned the lesson, hence they are now fully aware that to preserve their dominant position they have to collude with the political powers, even better if they manage to control them or, at least, serve them in a way they — the monopolists — can always ask them to close an eye or two on their abusive practices. Often it’s just a matter of give and take. Connecting the NSA (national Surveillance Agency) Prism program that taps in to user data of Google with the Wild Card that has been granted to Google over copyright infringement issues with its flagship Youtube platform (Google asked to remove 18 pirate links every second) is pure fantasy, isn’t it? On copyright issues, Google has been treated exactly the same way as the “intruder” — in the restricted new tech lords exclusive gentleman’s club — German born entrepreneur Kim Dotcom, isn’t it? (Kim Dotcom Raid: footage shows armed police enter New Zealand Mansion). I must have lost in the way the breaking news about Eric Schmidt and Larry Page and and Sergey Brin’s mansions raided …. sorry … can’t find them. You know, Eric Schmidt, Google’s executive chairman, sits on each and every place where he should’t be sitting as these places are supposed to be the champions of anti Googolism: he is on the publication board of the Economist, he is also the Chairman of the foundation’s board of directors of the New America Foundation, a nonpartisan think thank. So our advice to Mr Dotcom is to take advice from Mr Schmidt before starting his new venture, if he doesn’t want to be crushed once more by the American Government.
So it’s no surprise that all the recent antitrust cases against U.S. tech companies were dismissed, at least in the United States. Sometimes the motivations sound like they were making fun of us. If on one hand: “Officials at the Federal Trade Commission concluded in 2012 that Google Inc. used anticompetitive tactics and abused its monopoly power in ways that harmed Internet users and rivals”, on the other hand the FTC commissioners: “voted unanimously in early 2013 to end the investigation” as “the competition staff recommended against a lawsuit, although it said Google’s actions resulted in “significant harm” to rivals”. How is this possible? Yes, they said, Google’s anticompetitive practices harmed consumers and rivals but, you know, who cares?
You should care, dear reader. Because the more monopolies will have their tentacles suffocating our economy, the less opportunities you will have to earn a decent income over your whole working life. The monopolies have been green lighted in the U.S. since the Ronald Reagan presidency back in the 80ies, then their power was allowed to grow exponentially under Bill Clinton’s presidency and all the following presidents have followed this path. So it’s no surprise, as Isabelle Roughol point out here on Linkedin, that US workers’ inflation-adjusted wages have been virtually stagnant for decades, especially for non-management roles, while executive compensation has ballooned. Since when the executive compensation has ballooned? Since the end of the 80 ies exactly, when, as a result of the reaganomics, antitrust laws as the Sherman Act stopped to be widely enforced and the most important goal of U.S. political economy became consumer’s protection instead of its citizens economic freedom. The few controlling the big corporations, the top management and the financiers/shareholders immediately took advantage of this U turn and started to increase exponentially their paychecks at the expenses of the average employee.
Now the Silicon Valley is depicted as the new entrepreneurship mecca, but wait, it is already strictly controlled by a few, the powerful few, the monopolists and their financiers peers. See who’s backing the new celebrated paper Unicorns: The most valuable, on paper, is Uber, and the list of its backers includes the tech monopolists: Microsoft, Google and the restricted financial elite acting as the puppet masters behind the celebrated tech Unicorns. Despite the propaganda celebrating it as a place where the most talented ones have big chances to succeed, in fact success for the Silicon Valley Entrepreneurs is only possible if the few financiers breeding the Valley start-ups, and already controlling the monopolists Internet Companies, would bet billions of thumbs up on your company. If they don’t, even if you’re a modern Leonardo Da Vinci, you would be quickly classified in the losers section
Techcrunch writes: “Startups run on an alchemy of ignorance and amnesia that is incredibly important to experimentation. Most startups fail. The vast, vast majority of startup employees will never exercise their options, let alone become millionaires while doing it. Mathematically, talented individuals are certainly better off financially going into a profession or working at a large tech company, where pay is higher and more secure”. More: “… building one of these companies (Unicorns) is still ridiculously difficult and rare. If 60,000 software and Internet companies were funded in the past decade, that means only 0.14% have become unicorns– or one in every 714. The odds of building, working for or backing one are worse than catching a ball at a major league game; but, better than the chance of dying by shark attack– so we’ve got that going for us, which is nice”.
To conclude, it would be time for us to explain to Bill Gates and his peers that charity is good, but real economic freedom is much better, even if we know that chances are that those arguments will fall into deaf ears. Men living on charity are still enslaved; men who have their small businesses under constant threat of being crushed by big corporations are serfs; underpaid employees of those same monopolistic companies with increasingly less opportunities to have career advancements are exploited. A widespread economic liberty where an increasing number of men have the opportunity to live independently on the fruits of their labor is needed. Yet, the trend is the opposite: the opportunities to be a free man in the Western World are decreasing.
Originally posted here on Linkedin.