Making America Antitrust Again
BROOKE GLADSTONE: Since Amazon's founding in 1994, it's taken over industry after industry– what we buy and how we buy. Stacy Mitchell is director of the Institute for Local Self-Reliance. Earlier this year she wrote an article for The Nation called “Amazon Doesn't Just Want to Dominate the Market, it Wants to Become the Market.” To explain where we now stand in the arc of antitrust, she begins America's relationship with monopolies with the rise of the railroads and how the industrialist that owned the tracks, the cars, the wheels of commerce extorted money from small businesses and farmers and blocked competitors from accessing the market.
STACY MITCHELL: And so it was the railroads, this very disruptive new technology of its time that really led to the first movement for antitrust laws. And in 1890, we got the passage of the Sherman Act but the Sherman Act wasn't really enforced. And so the problem of concentration continue to grow in the 1910s under the Woodrow Wilson administration. Louis Brandeis, who later served on the US Supreme Court, was active as an architect of the Federal Trade Commission Act, the Clayton Act, other monumental antitrust laws. But again those laws weren't really activated. It wasn't really until the Great Depression, particularly in Roosevelt's second term in 1936, he ran on this platform where he said, you know, the problem is that too much power has been concentrated in the hands of too few.
FRANKLIN D. ROOSEVELT: They had begun to consider the government of the United States, as a mere appendage to their own affairs. And we know now that government organized by money, is just as dangerous as by organized mob. [END CLIP]
STACY MITCHELL: Yeah there's this small town lawyer and Mayor from Wyoming, Thurman Arnold, to run the antitrust division of the Department of Justice. Congress and Franklin Roosevelt had created something called the Temporary National Economic Commission but it was popularly known as the Monopoly Commission. The monopoly commission met for two years and took testimony from over 500 people. And was documenting all of the ways in which concentration had increased across various industries. Thurman Arnold decided to open field offices across the country to be kind of the eyes and ears on the ground. Arnold made monopoly front page news.
BROOKE GLADSTONE: And a lot of this public engagement resulted in legislation.
STACY MITCHELL: Congress passed in 1936, the Robinson-Patman Act which is a very important piece of antitrust legislation. It was designed to prevent large retail companies, primarily like A&P the big grocery chain, from being able to use their power over suppliers to disadvantage their smaller competitors. Today we no longer enforce Robinson-Patman Act and we haven't for decades.
BROOKE GLADSTONE: It seemed like the steam had sort of gone out of the antitrust movement.
STACY MITCHELL: In the 1960s and 70s, antitrust enforcement continues to be strong but monopoly begins to fade from the public discussion. It's no longer in the newspapers, it's no longer in state of the Union addresses. And that really sets the stage for what I think it's fair to call the coup that happens in the 1980s.
BROOKE GLADSTONE: Robert Bork wrote something called The Antitrust Paradox which became something of a Bible or a blueprint or a manifesto.
STACY MITCHELL: Bork was a leader of this group of legal and economics scholars who came along with a radically different view of how we should approach antitrust. All those previous decades, antitrust had very much embodied this idea that the core purpose was to protect democracy. That concentrated economic power was a threat to us as citizens and that it was about protecting us as producers of value, as workers, as entrepreneurs, as innovators. Bork came along and he said this is not what antitrust should be about. Antitrust should be entirely pointed towards maximizing efficiency and maximizing the output of the economy. He had this notion that bigger companies were naturally more efficient and therefore antitrust should actually look favorably upon mergers and combinations. He really inverted antitrust. He turned it on its head.
BROOKE GLADSTONE: When you were talking at the beginning of all of this about the railroads, I was thinking of the article you wrote that was headlined Amazon Doesn't Just Want to Dominate the Market, it Wants to Become the Market.
STACY MITCHELL: To think of Amazon as a retailer is really to misunderstand the nature of this company. Amazon's goal is to control the underlying infrastructure of the economy. More than half of all products searches now begin on Amazon. And what that means, is for every other company in the economy that wants to sell consumers something, they have to become sellers on Amazon's platform in order to reach the market.
BROOKE GLADSTONE: And because they have to go on Amazon's platform, Amazon can, you might say, extort all sorts of promises and confessions from them.
STACY MITCHELL: Birkenstock has complained to Amazon for years that there are lots of counterfeit Birkenstocks on its site. And so they've said clean up these counterfeit shoes. And Amazon said we can police those counterfeits but you're going to have to agree to our terms. Birkenstock. like a lot of retailers reserves it's very new and special products for brick and mortar retailers to help those stores be competitive. Well, Amazon wants to go after the business of those brick and mortar stores. And so it's said to Birkenstock, yeah we'll be happy to clean up the counterfeits but you have to sell all of your shoes to us, your full line. The only way we know that this happened is that Birkenstock actually went public and said we are not doing this we're gonna withdraw from doing any business with Amazon. But it looks like a lot of other companies including Nike have faced a very similar kind of strong arm tactics where Amazon has used counterfeits to get suppliers to do what it wants and has succeeded.
BROOKE GLADSTONE: And what does Amazon's effect on politics and on civic engagement?
STACY MITCHELL: I mean from the very beginning, Amazon has benefited from tax breaks that are not available to its competitors. Its warehouses have been financed with over $1.2 billion in public subsidies. last year its supporters in Congress put an amendment into the defense authorization bill that was known around the Hill as the Amazon amendment because it directed the federal government to contract with an online e-commerce portal for the purchase of all of the supplies and commercial goods that it uses. And as Amazon has grown, we've seen a sharp decline in the number of small businesses and we've seen a collapse in new business formation. We're also losing an economy that's built on relationships and the notion of face to face interaction. What sociologists have found is that places that have this vibrant locally based economy are actually healthier on a variety of measures of social and civic health. People actually know their neighbors more than people who live in communities without a lot of local businesses. They belong to community organizations in greater numbers and they also actually vote in greater numbers. All else being equal then people who live in places where the local economy has really been hollowed out.
BROOKE GLADSTONE: This recent poll by the Knight Foundation and Georgetown University found that Amazon is ranked the most trusted institution among Democrats and the third most trusted among Republicans.
STACY MITCHELL: It's an indication partly of how well Amazon has managed its public image. Amazon very much fears on the left the potential that a Democratic Congress and administration might actually exercise antitrust authority to break up Amazon. And, you know, this fall when they were facing all of this pressure from Bernie Sanders around their low wages in their warehouse--
SEN. BERNIE SANDERS: Thousands of Amazon employees are forced to rely on food stamps, Medicaid and public housing because their wages are just too low. [END CLIP]
STACY MITCHELL: And also facing a very tight labor market where they knew they were going to have to bring on a lot of people for the holiday shopping season. I think Jeff Bezos looked at that moment and very astutely said I can solve my need to hire for the holidays and perhaps stave off growing concerns about Amazon's power By setting this fifteen dollar an hour minimum wage. It was an announcement that produced fairly glowing headlines. I think the thing that is so striking to me about that poll, is it's really an illustration of how much government feels to most people, like it just doesn't work for them anymore. Increasingly, when they think about who's going to solve their problems, they're sort of looking to corporations. One of the other things that it made me think about was the response that I got to that article in The Nation. The article addresses readers entirely as citizens and yet virtually every message that I got from someone they responded from a consumer framework. The response was, 'we should organize a boycott. I'm going to tear up my Prime membership.' These responses get to the crux of the very thing that I was raising in the article, which is that 40 some years ago we began to adopt this consumer framework and we've internalized it so much that when we think of questions like the power of corporations, we take the standpoint of the consumer. And of course as a consumer Amazon is incredibly convenient. There are a lot of great things about it but it's not coincidental that this rise of the consumer identity and this loss of our citizen identity coincides with a period in which we've had rising inequality where we felt like we've really seen this sort of weakening of government as it's been increasingly co-opted by corporate interests.
BROOKE GLADSTONE: What do you propose?
STACY MITCHELL:Separate Amazon as a platform for commerce from Amazon as a retailer and a manufacturer. And the only way to do it is to break Amazon up into at least two pieces. Amazon as infrastructure that other companies rely on, we need to treat that as a kind of common carrier. That is that if you're going to run the infrastructure that other companies need in order to reach the market, that there is a set of standards that you have to comply with.
BROOKE GLADSTONE: So what do you think? Are you seeing a real resurgence in public awareness of the impact of monopoly and corporate concentration or are you just wishing it were so?
STACY MITCHELL: Monopoly is being talked about again. There are a growing number of economists who are finding in their research that rising levels of income inequality seem to be quite directly connected to rising levels of corporate concentration. These consolidated companies are really effectively able to hold down wages. We've also seen this collapse in new business formation. You know, we're creating new businesses at only about one third the rate that we were in the 1980s. You know, we think we're a nation of startups but we really aren't anymore. Senator Elizabeth Warren has talked about the importance of resurrecting our antitrust laws.
SEN. ELIZABETH WARREN: It is time for us to do what Teddy Roosevelt did. Pick up the antitrust stick again. And sure the stick has collected some dust but the laws are still on the books. [END CLIP]
STACY MITCHELL: And we're seeing it not just on the left but also on the right.
SEN. ORRIN HATCH: I want to implore my fellow conservatives, keep investing in antitrust. Embrace it as an area of the law in which with respect to the power of the markets by speaking to the importance of sound regulation. [END CLIP]
STACY MITCHELL: You have farmers across the Midwest who are railing against the power of big meat packers and Monsanto.
BROOKE GLADSTONE: And don't forget the antiquarian booksellers. As we talk to, 250 of them from two dozen countries are protesting an Amazon site called Abe Books for banning their businesses on the platform because of quote increasing costs and complexities.
STACY MITCHELL: That's right. Independent businesses of all kinds are beginning to speak out. You know, booksellers, toy retailers, hardware dealers. I do think that there is a growing anti-monopoly movement and the fact that we're using that word again is incredibly encouraging.
BROOKE GLADSTONE: Stacey, thank you very much.
STACY MITCHELL: Thank you, Brooke. It was great to be with you.
BROOKE GLADSTONE: Stacy Mitchell is the co-director of the Institute for Local Self-Reliance.
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BROOKE GLADSTONE: This is On the Media.