Visible Hands: Who’s Afraid of the Big, Bad Corporation? 💰
We spoke to author and former policy advisor Matt Stoller about monopolies and democracy.
Yesterday, Congress held an antitrust hearing with the CEOs of Amazon, Apple, Facebook and Google. How should we think about these “emperors of the online economy”?
We interviewed Matt Stoller about the politics behind monopoly power. Matt is the author of Goliath: The 100-Year War Between Monopoly Power and Democracy and BIG, his weekly newsletter. Previously, he was a Senior Policy Advisor and Budget Analyst to the Senate Budget Committee and worked in the House of Representatives on policy related to Dodd-Frank, the Fed, and the foreclosure crisis. We’ve condensed and edited the interview for concision and clarity.
VH: How has monopoly power destabilized American democracy and what should we be most worried about?
MS: It's destabilized democracy in many ways but here are three. First, there’s now a voting machine oligopoly. This market consolidation is a function of a private equity roll-up, so this is not inherent to the industry. Our voting machines and their security standards are not as good as they should be, and that's partially because of market power and aggressive lobbying.
Second, monopolies are undermining the ability to have political discourse: the death of local news, the spread of misinformation, and the centralization of discourse on two platforms, Google and Facebook. These advertising monopolies make their money by selling advertising against content that they didn't create. This destroys the business models that publish content and also incentivizes fraud because tech companies don't necessarily care if that content is truthful or high quality. (VH Note: Check out what just happened with Taboola and Outbrain...)
The third problem is more philosophical. The root of our monopoly problem is policy, and there was a flip towards deferring to corporate power in the late ‘70s and early ‘80s. We leave questions around corporations to economists and the companies themselves. This effectively means that the part of our lives in which we are commercial actors--every time we try to create a business, work in a corporation, buy or sell something--is not really part of politics or voting. It is making people lose faith in liberal democracy because people seem to have little say in commerce, the structure of commerce, or resource allocation.
VH: Tackling 21st century monopolies seems daunting. What can we do? (VH Note: the problem goes beyond Big Tech, check out “America’s Monopoly Problem Goes Way Beyond the Tech Giants”)
MS: It's not that monopoly is unbeatable. It’s that you have to replace it with something. And that something has to be run by people and that's scary. It's what I saw during the financial crisis, the Liberals on the Left were whiny about what Tim Geithner and Ben Bernanke were doing, but at the end of the day, they were too afraid to say, “We'll take over Citibank and break it up and govern.”
I don't see Mark Zuckerberg being afraid to make mistakes, and really bad mistakes that are really harmful, but he does it because he wants to govern. I don't think he should govern, but I think it's our fault that he's governing. He stepped into a public policy vacuum. If we want to govern as a society, that means we have to be willing to make mistakes and to not be intimidated.
VH: With all this power concentrated in corporations, we hear a lot from Millennials and Gen Z about socialism being a more attractive economic model. How do you think about reforming the economic system?
MS: I don't really see a lot of coherence in these debates. What's going on is that people don't like “this”, whatever “this” is. And they've been told, “This is capitalism” so they think, “Well, I don't want capitalism. The other thing I've been told is socialism.”
In this debate, I like thinking about much more tangible things: How do you make something? How do you sell something? We need fair commerce, and generally speaking, what people want is just fairness in commerce. They want constraints on capital and to make sure that the people who do the work get the reward.
Thanks Matt for these ideas and suggestions!
As a consumer:
“Boycotts by themselves almost never work. Boycotts should be a complement to labor actions or as a way of trying to change policy.” Think about what policy changes are needed as you challenge your own consumption habits.
There was a flip in the 1970s where Americans flipped from viewing themselves primarily as citizens to primarily as consumers. Instead, there should be a balance, Matt says. Otherwise, you end up with issues where it doesn’t matter if Amazon’s undermining local institutions, for instance, so long as it benefits the consumer.
As an employee:
Consider advocacy and policy options as you push for “fair commerce” in your jobs. One of the problems that Matt identified is the “ideological shift to people avoiding politics and policy as a place to go to address problems. People think the government isn't going to be relevant.”
As an investor:
According to Matt: “There's not a lot of places to invest money because markets are so monopolized. Most of the market is already existing monopolies whose gains have already been capitalized. Investors need to wrestle with whether it is time to try to break up these ossified structures and thereby produce more investing opportunities. I think if you were to break up Google, just to take that as an example, we would see incredible opportunities in a lot of these markets.”
As a citizen:
We need to pay attention to politics! “Politics is the act of coming together and structuring society. As long as we the people ignore that because it just seems impossible, we'll just move closer to an overt dictatorship.”
Not all monopolies are bad -- Matt mentioned public utilities that have economies of scale while being regulated to stop exploitation of power. So it’s not that all monopolies must be broken up. But “the idea of public control over corporations is pretty foundational to how we ran America until the late 1970s,” Matt says.
What about the election? “For Goliath, I wrote a lot about the 1932 election. Back in February, I was talking about how Trump was going to look like Herbert Hoover because he wasn't governing in the face of an obvious pandemic. Hoover refused to do anything in the face of a crisis [the Great Depression] and then he got just blown out of the water.” Make sure to vote!
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