Jul
01

Fighting A Command Economy With Monopoly

By

I have long been wary of the fetish among the business and political classes for efficiency. It’s a frequent rationale for bureaucratic decisions that seem to come at the expense of living, breathing people.

A Good Read

Thomas Frank (“What’s the Matter with Kansas?”) speaks with Barry Lynn at Salon on the reemergence of monopolies in America. Lynn describes how, rather than overturning laws on the books for decades, the Reagan administration changed the way the laws regulating monopolies were enforced.

Yes, that was what was so brilliant about what they did. The Department of Justice establishes guidelines that detail how regulators plan to interpret certain types of laws. So the Reagan people did not aim to change the antimonopoly laws themselves, because that would have sparked a real uproar. Instead they said they planned merely to change the guidelines that determine how the regulators and judiciary are supposed to interpret the law.

The Justice Dept. went from raising its eyebrows in the 1960s at mergers that concentrated a few percent of a market to waving though deals involving 80-90% of it.

Neither writer addresses this aspect directly, but Reagan’s Cold Warriors feared a concentrated command economy where decisions were made from the top down as in Russia. Communist authorities would decide how much grain was planted, that only two models of boxy utilitarian cars would be made, etc. This was the Soviet concept of efficiency. Rows of grey, bleak apartment complexes. The drab, dispiriting architecture of Soviet cities. Stores with empty shelves. In practice, this was how Soviet theories of economic efficiency expressed themselves in the real world.

In counterpoint, Reagan’s capitalist efficiency would supplant the Sherman Antitrust Act’s concept of “industrial liberty,” an individual’s freedom “to engage in whatever industry they wanted, whatever business, whatever job, and they didn’t want anyone stopping them,” says Lynn. Instead, Reagan-style efficiency would be greater consumer choice and lower prices by allowing ever greater corporate consolidation. Government monopolies: bad. Private monopolies: better.

This kind of efficiency, argues Lynn, has been the focus of the leadership in both political parties in this country since the Reagan administration. And in the name of consumer choice and lower prices, Guilded Age 2.0 monopolies have very efficiently concentrated economic and political power in fewer and fewer hands. The first antimonopoly laws were designed to prevent concentrated capital from wiping out competition and small, family businesses and farms. Now doing so is celebrated for lowering prices as it efficiently lowers pay scales and reduces workers’ job prospects.

Where the TV Walton family celebrated small-town values. The Bentonville, AR Waltons command as much wealth as 130 million Americans combined. And such wealth now controls not only our economy but national policy goals at the highest levels of both parties. Well, it works for the top 0.01%.

Barry Lynn observes,

Well, part of the reason that liberals have such a hard time is that we still share a party with real corporatists, people whose basic thinking about economics traces back to Teddy Roosevelt Progressivism rather than Brandeisian or Jeffersonian democracy. We’ve got a lot of old-fashioned “small d” democrats, “small r” republicans in our party, people who believe in community based democracy and industrial liberty. That’s probably the great bulk of us, probably 90% of the members of the Democratic party believe in a Jeffersonian, Wilsonian, Brandeisian political economics. And that’s probably true for the majority of Republicans too. But then in our party you have this overlay of the old-fashioned Progressives, of people who still really believe that the main thing we should aim at is efficiency, and these people wield real power in the party. And then in the Republican Party you’ve got a leadership controlled by a weird amalgam of straight up feudalists and insane libertarians, who live entirely in a realm of theory and myth, and who also say that the main thing we should aim at is efficiency.

Feudalists especially must find the whole notion of government of, by, and for the people very, very inefficient.

At the end of the Revolutionary War, there were an estimated half million Tories in this country. Royalists by temperament, loyal to the King and England, predisposed to government by hereditary royalty and landed nobility, men dedicated to the proposition that all men are not created equal.

After the Treaty of Paris, you know where they went? Nowhere. A few moved back to England, or to Florida or to Canada. But most stayed right here.

Take a look around. Their progeny are still with us among the one percent and their vassals. Spouting adolescent tripe from Ayn Rand, kissing up, kicking down, chasing their masters’ carriages or haughtily looking down their noses at people they consider inferiors.

In every economic argument these days, notice the unstated assumption, how among both top Republicans and Democrats that the concerns of the employer, the entrepreneur — his needs, his convenience, his profitability, his confidence, his incentives — are always front and center, the primary topic of debate and of legislation. And the needs and concerns of workers without whom nothing gets done are a secondary, even tertiary concern. Because all Americans are equal, but some are more equal than others. Once you tune your ear to listen for it, you hear it everywhere.

Welcome to Orwell’s Farm.

Comments

  1. andrewdahm says:

    Good reading, Tom. It’s interesting how we’ve managed to screw the pooch so thoroughly, deregulating properly and improperly at the same time.

    http://www.freeenterprise.com/regulations/flight-plan-1978-airline-deregulation-offers-reform-lessons-policymakers

    David Frum is a conservative with more common sense than any ten elected Republicans combined, and makes a good case for the kind of deregulation that really and truly does reduce costs for private business while at the same time bringing goods and services within the reach of many more people.

    The problem is, our solutions have been half-baked: If you’re going to deregulate the banks or the airlines, you’d better enforce anti-trust provisions of the law all the more energetically, or something bad will happen. Namely, monopoly.

    The ten largest banks in the US have assets totaling over 60% of GDP. In 1980, the total was half that, about 28%. We’re in Shock Doctrine territory these days, where every financial hiccup presto-changeo results in greater concentrations of wealth and fewer working alternatives for consumers.

    It’s a toxic mix, and Elizabeth Warren’s really the only Democrat on the national stage who seems to grasp the importance of economic democracy: equating the national interest with opportunity for all. The President, as well as our state and local governments, give advantages to large businesses over smaller businesses and consumers all too often.

    Our last Democratic Governor signed legislation prohibiting municipalities from owning and operating cable systems, by the way.

    I think part of the problem is neo-liberalism’s ‘help the needy’ approach to tax-and-appropriate questions; the implicit classism of this view of reality, along with the ‘makers and takers’ corollary it invites from the right, make real progress impossible.

    It would be better, I think, to try to build a more resilient, diversified economy, with more, not fewer, stakeholders, more, not fewer business models. At the federal, state, and city level.

  2. Tom Sullivan says:

    Today, by contrast, corporate chieftains have little to fear, other than mildly higher taxes and the complaints of people who have read Thomas Piketty. Moguls complain about their feelings because that’s all anyone can really threaten.

    Moaning Moguls – James Surowiecki