David Dayen

The Illusion of Choice in America

Americans think they live in a land of unbelievable choice, the rich fruit of capitalism. The truth is they are totally manipulated and trapped. For example, with all the choices of beer the consumer has, the truth is they are all owned by just two companies now. The same is true of consumer packaged goods, medicines, air travel, ship travel – just about anything. The monopolists have bought up every product from every viable brand, often lowering the quality and raising the price, notably in drugs. The only real choice is to buy or not to buy. Tech startups have become pointless, because monopolies like Google, Cisco or Facebook just buy them out before they get too far along. Innovation is actually down as a result. Once bought out, progress screeches to a halt. And if the monopolies can’t buy the company, they kill it with unfair competition, keeping it hidden from consumers and/or undercutting it until it caves, as Amazon likes to do.

Americans don't understand how much they're being hurt by monopolies in virtually every sector of the economy. David Dayen attempts to fill that knowledge gap with Monopolized. He does it far too well. On the other hand, the data is endless.

Dayen says there are already laws on the books to stop all of these diseases and all the others he examines in Monopolized. But the federal government doesn't investigate, prosecute or forbid anything any more. For one thing, corporate chieftains and their lobbyists now sit on regulating bodies and commissions, even at the UN. Donations to candidates and parties speak far louder than mere laws. And monopolist billionaires head government departments throughout the Trump administration.

The creep of monopolies is insidious. They attack local community efforts as well as any legal attempt to rein them in. Towns started providing internet service when the big four monopolists refused to service less populated areas in their exclusive jurisdictions. To fight off popular efforts like this, the big four lobby the states to forbid towns from doing that, or burden the towns with outsized regulations, or limit them to the town line so they aren’t economical. In addition, in the 25 years since internet service has been offered by towns, companies have spent $25 million harassing the towns with frivolous lawsuits.

This is standard procedure, happening all over the country in all kinds of sectors. Monopolists have the power and the cash, so they buy their way into oppressive legislation that benefits only them, at the expense of everyone else. Lawmakers go along, ignoring who they supposedly represent. And if all else fails, lawsuits can tie up anyone foolish enough to compete with the powerful. Whether they win or lose the case means nothing. It’s the delay and the cash burn that count.

One name crops up far more than any other in this book, that of Warren Buffet. Buffet is all about "pricing power" and by close extension, monopoly. He is cited as a shareholder in numerous examples of aggressive monopoly. When asked about the dubious corporate actions of these firms, he replies that he is merely an investor, and not the decisionmaker. But he clearly loves and seeks monopoly situations. He told the Crisis Inquiry Commission 2010 "If you've got a good enough business, if you have monopoly newspaper, or you have a network television station, your idiot nephew could run it." The avuncular billionaire next door is a dead-serious monopolist.

Every chapter of the book takes on a different sector of the economy. The ugliness is plentiful, but let me note some topline examples from some of the topics Dayen covers:
-The USA threatened Ecuador with economic sanctions if it proposed a motion at the UN recommending breastfeeding over infant formula (to help save 800,000 lives lost to malnutrition from infant formula).
-Suicide among farmers is twice the rate of veterans.
-Farm equipment, despite being sold at huge debt expense to the farmer, forbids repairs by the owner. They now say they only "license" the use of their equipment. Farmers have to wait (sometimes weeks) for and pay the rates of official company technicians.
-Farmers who finance their equipment through the food monopolists soon find their produce prices being lowered, with no choice but to accept or be bankrupted by their loans.
-The FAA outsources inspections to the manufacturers it is supposed to regulate. This saves money, and costs lives, as seen in the crashes of the Boeing 737 Max, self-approved in advance by Boeing itself. This was not the FAA's idea. It was a breakthrough for monopolists.
-The entire state of Ohio has not one airline hub, forcing some to drive to Pittsburgh to take a direct flight.
-Airline hubs also limit competition as one airline dominates the gate slots, and provides limited choice of destination because there is essentially no other choice available.
-Drug makers sue generics makers. Doesn't matter if they lose; they tie up production for years. Or they bribe generics not to produce for several more years while they milk the consumer.
-"Defense contractor gouging of the government has been a dedicated American tradition for at least a century. Today it is the only thing the industry has the capacity to pull off," Dayen says.
-Amazon, unlike any normal firm, sells CRAP (Can’t Realize A Profit) products, driving small manufacturers and distributors out of business.
-Drugs are in short supply because the monopoly buying groups demand high payments to play, and older and more ordinary drugs like saline solution in IV drip bags, don’t provide enough profit. The result is massive shortages throughout the country, and imports from overseas at far higher prices. The same story occurs in vaccines.
-If the drug sector were actually operating in a capitalist system, there would be no shortages. Monopolies create shortages for their own benefit.
-There are stunningly many ways the two prison monopolists extort money from prisoners’ families. Dayen says “In America, the best way to get away with stealing is to run a prison.”

For all the angst this book generates in the reader, it ends totally unexpectedly on a remarkably high note. There are observable stirrings in the antitrust/antimonopoly community. Dayen says the Democratic presidential candidates are actually talking about it publicly. Recent court decisions have finally begun going against the monoliths. Employees, such as Google’s, are suddenly demanding their employer be respectful. Protest movements are taking shape. States are suing to overturn federal decisions to allow obviously monopolistic mergers.

There is new hope. All it needs is momentum, which means everyone pushing in the same direction, vocally, loudly, and consistently. It is more than time for the pendulum to swing back. As Dayen points out right off the top, sufficiently powerful laws have been on the books for over a hundred years. If Americans can stop electing billionaire monopolists, maybe the laws can be enforced once again.

David Wineberg… (mere)