Originally published at: Pluralistic: 02 Feb 2022 – Pluralistic: Daily links from Cory Doctorow
- To fight inflation, fight monopolies: Cartels raise prices using supply chain and "generous" benefits as cover for price-gouging.
- How noncompetes shackle workers to dead-end jobs: "You can't work for anyone who competes with Amazon for the next 18 months."
- Agricultural right to repair law is a no-brainer: Farmer-tinkerer solidarity.
- This day in history: 2002, 2007, 2012, 2017, 2021
- Colophon: Recent publications, upcoming/recent appearances, current writing projects, current reading
To fight inflation, fight monopolies (permalink)
The majority of the public blames inflation on price-gouging. That's not surprising, because the CEOs of monopolistic companies keep boasting about their record profits even as they raise prices. If a company raises prices and margins, then we don't have an "inflation" problem, we have a price-fixing problem.
And yet, the majority of economists insist that this is impossible. They hew to the Reagan-era doctrine that says that inflation is always the result of giving poor people too much money, which leads to the "wage-price spiral." The answer is to hike interest rates, cut "generous" benefits and take away labor rights.
Writing for The American Prospect, Georgetown University economist Hal Singer identifies and dissects the brain-worms that infect neoliberal economists, and the way their dying orthodoxy punishes working people and lets monopolists off the hook.
In particular, he demolishes the argument that since market concentration hasn't increased much over the past two years (a dubious assertion!), it can't be to blame for inflation. Singer points out that cartels and monopolists can (and do) use things like supply chain shocks and expanded unemployment benefits as cover for price-gouging.
Price-fixing requires either explicit or tacit collusion, and collusion is easier when industries grow more concentrated. If all the execs that control an industry can fit around a single table, eventually they will sit down at a table and start rigging prices. If an industry is so diverse that the execs who control it barely fit in a large conference center, they won't be able to agree on the lunch catering, much less a conspiracy to rig prices.
This obvious fact has been systematically denied by orthodox economists since the Reagan era. Frank Easterbrook's 1984 "Limits of Antitrust" – one of the bibles of the pro-monopoly movement – holds that monopolies are usually efficient, and that the consequences of breaking up a "good" monopoly are much worse than the consequences of tolerating a "bad" monopoly (which probably doesn't exist, and if it does, will likely be addressed by "market forces" if left alone).
This is a doctrine that counsels leaving monopolists alone, lest a hasty regulator get rid of an "efficient" monopoly that is doing nothing but good in the world. And so it is that 40 years later, nearly every industry is monopolized, with control in the hands of five or fewer firms, a tractable number for engaging in conspiracy.
Today, antitrust orthodoxy is crumbling and new proposals are competing to replace it. Singer proposes a fascinating one: there should be automatic antitrust investigations into any industry that 1) is highly concentrated; 2) has rising margins; and 3) raises prices by more than 10% each year.
That would trigger a hell of a lot of automatic investigations! The WSJ reports that two-thirds of US companies have increased their margins during the pandemic.
Singer says that the main impact of this rule would be to discourage collusion, and that there is no such thing as "efficient collusion" that benefits society, so even if you buy Easterbrook's idea that monopolies are mostly efficient, this rule will only target "bad monopolies" not "good ones."
Singer also points out that presidents can do a lot to discourage price rigging. JFK railed against the steel industry's profiteering and they slashed their margins rather than risk an investigation. Biden did the same for beef, with the same result.
Now, Trump also did this, but his approach had significant differences. Trump practiced "gangster antitrust," asking agencies to target his political enemies.
Antitrust will always be political, but it needn't be partisan. The Chicago School of Economics' war on antitrust enforcement was a political movement, and so is the fight to restore it. The criticism that FTC Chair Lina Khan is political when she promotes small businesses requires that we pretend that promoting monopolies wasn't political.
Politics and economics can't be separated. The Sam Vimes Boots Index, lately launched by Jack Monroe, tracks the price-hikes in the cheapest goods, finding that they are far steeper than in goods targeted at wealthier people.
And of course they are. Poor peoples' complaints are less damaging to cartels than rich peoples' complaints. Companies gouge when they can get away with it. Supply-chain shocks let them get away with it. Expanded covid benefits let them get away with it. A powerless customer-base lets them get away with it.
Inflation scare-talk is a whip used to scourge working people by accusing them of endangering the economy because they have too much money. It is a political project. There is no "politicizing" these issues – they were political from the start.
How noncompetes shackle workers to dead-end jobs (permalink)
You've heard about the Great Resignation, the legions of American workers who have reached a breaking point with their abusive, underpaid jobs and jumped ship. It's a remarkable, spontaneous, uncoordinated uprising that sees Alice quitting her job and Bob quitting his, and then Alice getting Bob's old job at a better wage, and Bob getting Alice's old job at a better wage, too. After 40 years of wage stagnation, workers are finally starting to claim back some of the share of the profits that had been diverted from people who do things to people who own things.
But as great as the Great Resignation is, it could be greater. Many workers who would like to switch jobs can't, because they are bound by "non-compete agreements" that ban them from working for rival companies. Noncompete agreements are a way to make sure that bad companies can retain good workers. Wherever we find noncompetes, we find sluggish economies dominated by incompetent and malicious firms. California's tech sector only exists today because the state constitution bans noncompetes. Without that ban, the industry would have died in its cradle, strangled by the founder of the first microchip company, a brooding paranoiac who devoted his life to eugenics.
It's ironic, because people think of noncompetes as being necessary to creating a thriving innovation sector, and the most innovative sector of the past 40 years is legally enjoined from using them.
The reality of noncompetes is that they are mostly used in low-waged sectors, primarily fast food, to prevent cashiers and cooks from moving between franchises.
Writing in Newsweek, Open Markets Institute legal director Sandeep Vaheesan explains how noncompetes have chained these workers to dead-end jobs and deprived them of the bargaining power revolution of the Great Resignation.
One angle Vaheesan delves into is Amazon's use of noncompetes for its low-waged warehouse workers, including seasonal temps. These workers have to promise not to take a competing job for 18 months after their employment:
"Engag[ing] in or support[ing] the development, manufacture, marketing, or sale of any product or service that competes or is intended to compete with any product or service sold, offered, or otherwise provided by Amazon (or intended to be sold, offered, or otherwise provided by Amazon in the future) that Employee worked on or supported" for 18 months after leaving Amazon."
Think about that for a second. What product or service does not compete with something Amazon is currently doing or might do in the future? Amazon is essentially saying that if you work for the company for six weeks over Christmas, it reserves the right to block you from working for anyone else for the next year and a half.
Many states prohibit noncompetes and more are coming on board, but companies are doing end-runs around these bans. For example, many companies actually charge you to quit your job (it's called "Liquidated Damages"):
Others bill you for "training repayment" – they subject you to sham trainings with artificially inflated price-tags, then insist that you repay these costs when you quit.
And even where noncompetes aren't enforceable, employees often don't know it. Employers intimidate these employees into staying in dead-end jobs and not fighting for higher wages and better conditions.
Last July, the Biden admin dropped a sweeping, powerful executive order on antitrust that takes aim at noncompetes in all their guises. In December, the FTC published a "statement of regulatory priorities" promising to take action:
The Great Resignation is pretty great indeed, but it could be a lot greater.
Agricultural right to repair law is a no-brainer (permalink)
John Deere is the poster-child for the horrors of finance capitalism. The company was once a great American success story, beloved by the workers who enjoyed good wages and job security, and by farmers, who co-innovated all kinds of new agricultural techniques and technologies.
Today, the company is rotten to the core. Despite skyrocketing profits, the company has continued to grind down its workers, sparking a strike by all 10,000 of its workers. That's just the tangible manifestation of a hollow company plagued by runaway "just in time" manufacturing, and technologically micromanaged workers who are expected to produce on farcically short timetables even as staffing is reduced:
The company has also become synonymous with the war on repair. They told the US Copyright Office that the tractors its sells to farmers for six figures are not actually the farmers' property – rather, they are mere licensors of the software that animates those tractors.
So much for "If you're not paying for the product, you're the product." John Deere uses its lock on tractor software to force farmers who fix their own tractors to pay for a service technician to come to their farms and type an unlock code into the tractor's console.
Deere insists this is necessary to maintain the information security of tractors and suggests that if it isn't allowed to extract vast sums from farmers through this scam, their tractors will be hijacked by foreign spies, threatening American food sovereignty. That would be a lot more credible if the tractors themselves weren't such infosec dumpster-fires:
All this and more has put Deere on the receiving end of multiple antitrust suits:
The idea that farmers should be able to fix their own stuff is a total no-brainer. There's a reason every farm has had a forge since Roman times: when you're at the end of a lonely road and the storm is coming, you need to get the crops in, and you can't wait for a service call.
Unsurprisingly, there is broad bipartisan support for agricultural right to repair. Nevertheless, previous attempts to pass agricultural R2R laws have been scuttled after the farmers' own lobbyists switched sides and sold out to Deere.
Now, there's new federal agricultural Right to Repair bill, courtesy of Montana Senator Jon Tester, which will require Big Ag to supply manuals, spare parts and software access codes:
The legislation is very similar to the Massachusetts automotive Right to Repair ballot initiative that passed with a huge margin in 2020:
Both initiatives try to break the otherwise indomitable coalition of anti-repair companies, led by Apple, which destroyed dozens of R2R initiatives at the state level in 2018:
It's a bet that there is more solidarity among tinkerers, fixers, makers and users of gadgets than there is among the different industries who depend on repair price-gouging. That is, it's a bet that drivers will back farmers' right to repair and vice-versa, but that Big Car won't defend Big Ag.
The opposing side in the repair wars is on the ropes. Their position is getting harder and harder to maintain with a straight face. It helps that the Biden administration is incredibly hostile to that position:
It's no coincidence that this legislation dropped the same week as Aaron Perzanowski's outstanding book "The Right to Repair" – R2R is an idea whose time has come to pass.
This day in history (permalink)
#20yrsago Michael Moore on Enron https://web.archive.org/web/20020602204314/https://www.michaelmoore.com/2002_0129.html
#15yrsag How to Cheat at Everything https://memex.craphound.com/2007/02/02/how-to-cheat-at-everything/
#15yrsago RPM: media hackers vs the War on Terror https://web.archive.org/web/20070205042716/http://futurismic.com/2007/02/new_fiction_from_chris_nakashi.html
#5yrsago Australia’s Goldman-Sachs Prime Minister quietly donated $1.75M to himself to secure his narrow win https://www.bbc.com/news/world-australia-38822273
#5yrsago These four oil-fattened Democratic Senators helped the GOP confirm Exxon’s Rex Tillerson for Secretary of State https://theintercept.com/2017/02/01/four-democratic-defectors-join-gop-to-confirm-exxon-ceo-as-secretary-of-state/
#5yrsago New York Attorney General’s lawsuit lays out years of Time-Warner “fraud” against their customers https://www.vice.com/en/article/nzd39x/heres-how-time-warner-cable-was-ripping-you-off-all-those-years
#5yrsago Billionaire charter-school advocate and political donor calls Betsy DeVos “unprepared and unqualified” https://www.cnn.com/2017/02/02/politics/eli-broad-letter-betsy-devos/index.html
#1yrago The free market and rent-seeking https://pluralistic.net/2021/02/02/euthanize-rentiers/#poor-doors
#1yrago Criti-Hype https://pluralistic.net/2021/02/02/euthanize-rentiers/#dont-believe-the-hype
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- Chokepoint Capitalism: How to Beat Big Tech, Tame Big Content, and Get Artists Paid, with Rebecca Giblin, nonfiction/business/politics, Beacon Press, September 2022
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