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Throw the Bums Out Politics
Three stories this week point to a common theme. The old guard is fighting back hard.
Welcome to BIG, a newsletter on the politics of monopoly power. If you’d like to sign up to receive issues over email, you can do so here.
This week I’ve written three different stories, each of which has a common theme. The old guard is fighting back against anti-monopolists, and this dynamic is slowing down a necessary change in our politics. The result of this stagnation, for the last fifteen years, has been voter rage at the party in power.
I’ll do a quick summary of each story, and then link to them in case you want more info. As a logistical note, I don’t want to email you more than once a week, so I often publish stories on the BIG home page without sending them over email. Paid subscribers get more email, so if that’s what you want, you can sign up to become one here.
In 2006, 2008, 2010, 2014, 2016, 2018, 2020, and likely 2022, voters chose to vote the incumbent party out of office. American politics these days is a series of elections in which the winner is usually ‘throw the bums out.’ As the Biden administration falls apart in the face of voter rage - like every other administration since that of George W. Bush - it’s worth considering the basic bureaucratic dynamic at work.
Let’s start with the realignment that wasn’t. My political education came from working in Congress during the financial crisis, and watching Barack Obama, clothed with authority granted by the public in the election of 2008, use that authority to destroy the lives of tens of millions of people with policy decisions around housing and financial power. More surprising than the underlying policy choices was that Democrats mostly didn’t notice what their party did. Even today, you can ask most Democrats about their responsibility for the foreclosure crisis, and they will act puzzled, as if people losing their homes to banks had anything to do with the Democratic leaders who made the choice to cause them to lose those homes to banks. It’s a bizarre thing, this failure to notice that there is a government and they are in charge of it.
This dynamic isn’t isolated to the Democrats. The very first hearing I attended as a Hill staffer in 2009 was a grilling of Bush SEC officials over why they missed the Bernie Madoff scam. The officials uniformly refused to answer questions, saying they could not comment on an ongoing investigation. It was astonishing, because there was no investigation - the hearing took place the day after Madoff confessed. There’s just little awareness that the party elected to govern is supposed to, you know, govern. Politics, in both parties, excludes governing institutions and corporate power, which are the main source of social dysfunction. And so ‘throw the bums’ out keeps winning.
The anti-monopoly movement on both sides of the aisle arose out of the financial crisis, and its proponents do not share this older conception of politics. Anti-monopolists believe that using the state to structure markets is what politics means, whereas the old guard sees markets as untouchable, subject to titanic forces beyond human control, such as, depending on your chosen lifestyle brand, globalization, technology, capitalism, et al.
The tension between those who see structuring commerce as the point of politics and those who see politics in West Wing-style cultural or consumer oriented terms is the point of my first story. I profiled how anti-monopoly enforcers Rohit Chopra and Jonathan Kanter are trying to use real penalties and a detailed knowledge of the law to structure markets, contrasting that with the adherents to the old guard, in particular Pete Buttigieg. Buttigieg refuses to regulate airlines, despite being in charge of the Department of Transportation, and yet he is immensely successful as a political figure.
You can read that story here:
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In the second story, I went over a weird bureaucratic tussle in which the U.S. government is fighting against… the U.S. government. In this episode, a senior economist named Barbara Fesco testified on behalf of would-be sugar monopolists in an antitrust case brought by Department of Justice’s Antitrust Division. Fesco manages the Department of Agriculture’s sugar policy, which is to say she has massive influence over the price of sugar. This story received no notice at all, but it is the innumerable choices like this across government and corporate America that foster a feeling that distant masters, a collusive deep state, are controlling our lives.
You can read that story here:
And in the third story, I profiled a venture capital firm that is explicitly seeding firms who focus on becoming middlemen with market power. I went into the history of middlemen monopolists, going over powerful examples such as Google and Standard Oil. The investment firm is named, amusingly enough, Equal Ventures. That investors are openly claiming they want to finance firms who engage in ‘monopolization,’ which is by statute illegal, is a pretty stark reminder of how far we have to go.
What I’m Reading
It's Time to Ask Patients to Quit Social Media, Emergency Medicine News BIG reader Dr. Jacob Lentz wrote this important piece on why social media is bad for us, and likely fueling a suicide epidemic. As a Twitter addict, I can attest to the negative effects of these services. When I am off Twitter, even for a short time, my mental state improves dramatically. As Lentz put it, “Physicians need to start saying that these products are literally killing people.”
'There’s a Recession Coming': The Rich Rush To Offload Luxury Properties, Vice. The Cantillon effect and Miami Real Estate…
FTC turns up the heat on Trump-era defense merger, Politico. Whoa. Lina Khan is considering breaking up Lockheed Martin by forcing a spinoff of its Orbital-ATK rocket engine subsidiary, which it used to monopolize the nuclear missile arsenal. I wrote about Lockheed’s market power in 2019.
Deteriorating container flow shows disconnect with signs of ‘normalization, Journal of Commerce
US formula shortage persists and will 'take a while to fix', CNN. Turns out that all the grandiose claims of military aircraft full of baby formula were overstated, and stores are still having a really tough time stocking up. I also learned that group purchasing organizations in hospitals are big buyers of baby formula, and that GPOs might be adding to the shortage problem.
Amazon Faces Fierce Competition in Health Ambitions After One Medical Deal, Wall Street Journal. I did a Twitter thread on why Amazon buying doctor clinic network One Medical is dangerous. There are any number of ways the ecommerce giant could exploit this purchase. That said, I suspect the real reason that Amazon bought One Medical isn’t due to some well-thought out strategic plan, but because they thought ‘we’ll buy it now and figure out our strategy later.’ It’s a lot like Whole Foods or PillPack, both of which were not particularly successful mergers. Amazon has a history of throwing tons of money around at every venture it can, and a lot of that ends up wasted. A few times, though, they are able to get a $100B+ monopoly out of the attempt.
Senators Warren, Markey and Representative Seth Moulton Fight to Save the North Shore Birth Center, Senator Elizabeth Warren. I hate it when doctors and hospitals try to shut down birthing centers run by midwives. It happens a lot, and it’s such a clear move to eliminate rivals that offer a healthy and cheaper alternative to standard birthing services.
Market review of card scheme and processing fees, Payment System Regulator. Great U.K. report on credit card swipe fees. Swipe fees shouldn’t exist, but more than that, all the rebates and rewards you get from your credit cards are, like frequent flyer mileage, fundamentally a scam to raise prices in ways you won’t notice or on people who have no other choice but to pay.
And finally, BookShop.org looks neat.
Thanks for reading. Send me tips on weird monopolies, stories I’ve missed, or comments by clicking on the title of this newsletter. And if you liked this issue of BIG, you can sign up here for more issues of BIG, a newsletter on how to restore fair commerce, innovation and democracy. If you really liked it, read my book, Goliath: The 100-Year War Between Monopoly Power and Democracy.