Warren broadens her attack
by Tom Sullivan
Last Saturday's post addressed ways to disrupt commercial the forces undermining our democracy. Ways to restore balance to the Force, if you will. Today, please look at Sen. Elizabeth Warren's speech to New America’s Open Markets meeting. Warren attacks consolidation itself, not just in finance but across industries including the tech sector, as an anti-competitive trend that must be stopped by more hard-headed regulation.
Earlier this week I mentioned Warren's roll as principled antagonist for all the right corporate lapdogs in Congress. Yves Smith at Naked Capitalism echoes those thoughts in response to Warren's Open Markets speech:
Warren is continuing to be a thorn in the side of powerful interests. And even though bona fide progressives are disappointed on her support of our misadventures in the Middle East, and her general fealty to feckless Team Dem positions outside her particularly interests, the concentration of economic power and the resulting high corporate profit share of GDP is a big part of why capitalists are partying while workers struggle. Warren is taking on a central topic that is starting to mainstream traction. Even if Warren falls well short of being the Great Progressive Hope, it’s a mistake to disregard how she uses her bully pulpit to undermine a key justification for the rise of inequality in our society: that the operation of markets is always and ever virtuous and therefore outsized pay and profits are justly earned. The more monopolist wannabes are seen as parasites, the better off we will be.Paul Glastris writes at Washington Monthly:
Warren is, of course, famous for her attacks on too-big-to-fail banks. But in her address yesterday, entitled “Reigniting Competition in the American Economy,” she extended her critique to the entire economy, noting that, as a result of three decades of weakened federal antitrust regulation, virtually every industrial sector today—from airlines to telecom to agriculture to retail to social media—is under the control of a handful of oligopolistic corporations. This widespread consolidation is “hiding in plain sight all across the American economy,” she said, and “threatens our markets, threatens our economy, and threatens our democracy.”That should be obvious, and it drives the widespread feeling that democracy itself is slipping through our fingers. But that feeling among workers needs the validation of spokespersons of Warren's stature. By repeating validating their concerns, Warren amplifies them. After citing the market reasons industry consolidation is harmful, she gets the to the democratic reasons:
Finally, concentration has contributed to the decline of what was once a strong, robust middle class in this country. As corporations get bigger, and bigger, and bigger, a handful of managers get richer, and richer, and richer. And god-bless—in America, we celebrate success. But what about everybody else? What about small business owners and community bankers – people who used to be able to hold their own with big guys but now find it harder and harder to keep up with the armies of corporate lawyers and lobbyists determined to rig the economy against them? What about the employees at Wal-Mart who scrape by on help from the food pantry and Medicaid, but who never have enough money to build any security? What about them? They are stuck.As a model of what might be done about that, Warren references the trust-busting efforts of a century ago that built the strong middle class that many Americans now see themselves falling out of. She calls for a new team of Executive branch regulators who will "stand tall and say no" to consolidation and for "revival of the movement that created the antitrust laws in the first place."
Concentration is not the only reason for rising economic insecurity, but it is one of them. Concentrated industries result in concentrated profits. It’s the ultimate price squeeze. When markets are not competitive, big businesses are able to extract monopoly profits by setting prices that are higher and higher above the cost of making an item or providing a service. In 2014, the top 500 largest firms pocketed 45 percent of the global profits of ALL American businesses. And the vast majority of those profits went to the wealthiest of the wealthy. As of 2013, the wealthiest 1 percent of Americans held nearly half of all the stock and mutual fund assets held by all Americans.
And who gets a shot at their own dream? When big business can shut out competition, entrepreneurs and small businesses are denied their shot at building something new and exciting.