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Monopolies and Humiliation

In America today, we have a monopoly crisis. Over the last twenty years, 75 percent of industries have gotten more concentrated. There is concentrated power in every part of American commerce, in big markets like cable and search and pharmaceuticals, and in small markets like tabletop games, and missiles and munitions. Monopolies generate wage inequality, they undermine innovation and entrepreneurship, they generate regional inequality, and they damage democracy. But more than that, they generate fear, frustration, and alienation.

Last month, the Wall Street Journal published an article titled “Need to Call an Airline? Your Hold Time Will Be Approximately One Zillion Hours.” The article was about how airlines, who received tens of billions of dollars from the taxpayer in return for keeping people employed, still laid off their customer service teams. And now the wait times are insane.

Cam’Ron Wells, a twenty-two-year-old reality TV producer who needed help changing a flight from Los Angeles to Miami after the website kept crashing, used what he was told would be a 280-minute wait time with JetBlue Airways to get through his to-do list.

Mr. Wells began, then finished, an episode of the WE TV reality series Love After Lockup, keeping the volume on his AirPods low in case an agent picked up early. He did two full cycles of laundry. He cooked some waffles and bacon. He washed the dishes. He packed for an unrelated trip for the next day. He also set a timer for an hour and forty-five minutes and went to sleep. “When I woke up from my nap, I was still on hold,” he said.

During twenty-three-year-old Nienah Saijas’s nearly eight-hour wait in July to reschedule a Delta flight, she made lunch, did a post office run—linking her phone to her car’s Bluetooth during the drive—and played house and techno music to cover up the repetitive tunes. Ms. Saijas, a personal assistant, said that the experience has deepened her patience: “If I have to wait forty-five minutes or something on the phone, that’s nothing now.”

We’ve all experienced this kind of nonsense as consumers. It happens when your phone company attaches a small administrative charge to your bill that’s not worth fighting, or when a hotel tacks on a “resort fee” or “facilities fee” to pilfer a few extra dollars from your wallet. Big tech has taken over the sinews of our information commons and controls our habits as information consumers. A story just came out on how Facebook knew that Instagram was leading teenage girls to eating disorders, but hid the research. I imagine we’ll get another insincere apology from Mark Zuckerberg.

Economists have no measurement for insults and petty indignities in our culture, or at least none that I’m aware of. They don’t have a way of measuring fear, or dignity. But Americans are unhappy. According to Gallup, in 2021, just a quarter of Americans were satisfied with the size and influence of major corporations, and just 18 percent of Americans were satisfied with the moral and ethical climate of the country. These are substantial drops from last year, and much lower than the scores of twenty years ago. Three quarters of Americans want crackdowns on big tech, and almost nine out of ten think those firms have too much political power.

It’s not just a consumer problem. We are also increasingly unhappy at work, whether white collar or blue collar.

In 2015, the New York Times did an exposé of the white-collar working environment at Amazon, a sweatshop where employees are emailed after midnight and then texted to find out why they haven’t responded. Sobbing at the office is routine. “You walk out of a conference room and you’ll see a grown man covering his face,” said one man. “Nearly every person I worked with, I saw cry at their desk.”

The blue-collar world experienced this indignity for much longer than white-collar workers. In 2016, there was a viral video of executives firing workers at a Carrier plant so that Carrier could offshore production to Mexico. The video became a factor in the presidential race. If you haven’t seen the video, I urge you to watch it, even five years later, because it hasn’t stopped. In it, a management consultant figure announces to the crowd of working-class Americans that the factory will be closed: “The best way to stay competitive is to move production from our facility in Indianapolis to Monterey, Mexico.”

What happened next was remarkable. A chorus of boos reigned down, which one would expect. But instead of expressing sympathy, the consultant chided the crowd. “I’ve got important information about the transition to share. If you don’t want to hear it, other people do.” It’s not just that you’re fired, or that the firm you work for thinks of you as a mere cog in a machine, it’s also that you have to be insulted as you are laid off.

One response to these kinds of routine indignities is to just take it and build up resentment. Donald Trump campaigned on saving these jobs. Obama mocked him. White non-college-educated voters went for Trump overwhelmingly.

Another natural response to anger or frustration is to speak out, to organize, to build institutions through which one can project voice. In the workplace, one traditional model since the Great Depression has been to form industrial unions. And yet workers, especially in low wage physical labor, are generally too scared to do so.

In terms of big unionization campaigns, in 2019, the United Autoworkers lost a devastating unionization campaign in Tennessee to organize a Volkswagen plant. No foreign automaker in the U.S. has ever been unionized. In 2021, Amazon crushed a unionization campaign at one of its warehouses in Alabama. Unions continue to weaken. Last year, the number of union members in the United States dropped by 300,000.

Our legal system is so tilted in favor of capital that we’ve gone far beyond breaking unions, towards constraining workers by contract. Roughly thirty million Americans have signed non-compete agreements preventing them from working for a rival employer, many of them at fast food restaurants or other low wage occupations. Employer power over labor is so extreme that one set of economists calculated it cuts overall output and employment by 13 percent and labor’s share of national output by 22 percent.

And finally, a third reaction to these indignities is to quit. And that’s what’s happening in force. Over 40 precent of American workers are looking for another job, or planning to, according to the Society for Human Resource Management. The ‘turnover tsunami’ is concentrated among younger workers, black workers, and Hispanic workers. The quit rate this year, according to the Bureau of Labor Statistics, will apparently be at a record high.

But this data is incomplete, because we don’t measure in any credible way whether people think they are free, and I don’t think it’s possible to do so. When discussing concepts like freedom, dignity, resentment, I turn to the arts. Office Space is the greatest piece of political satire of the late twentieth century, a Twain-esque send-up of the still-dominant forms of political economy, which essentially amount to rule by McKinsey management consultants.

In that movie, a demoralized computer programmer who works at a software firm called Initech never really does any work. The main villains are two management consultants, both named Bob. The “Bobs” are at Initech on behalf of a cowardly boss who is both conflict-averse and mean. The consultants are there to conduct mass layoffs that the boss is too afraid to do himself, all in order to make the stock price go up. Several scenes take place in a conference room as the “Bobs” are conducting interviews to find out who to fire.  In one scene, they are interviewing an employee and ask his name.

“Michael Bolton” he responds.

The “Bobs” get excited.

“Any relationship with the pop singer?”

“No it’s just a coincidence.”

“I just love his songs, I admire his whole catalogue. Of course, you must love him even more, given that you have the same name.”

And the employee has to sit there, uncomfortably, pretending that he too likes Michael Bolton. At the end of the scene, he says, “Actually, you can call me Mike.”

And both of the “Bobs” get a brief dark look on their face. And in that moment, they decide to fire him.

Office Space lampoons the inevitable abuses of unaccountable power. Three and a half centuries prior, during the English Civil War, the poet John Milton railed against a far deadlier version of the same problem. Milton thought that placing concentrated power in the hands of an individual puts human beings in a state of bondage, which at that point was represented by the monarchy. “All men naturally were born free, being the image of God,” he wrote. Kings, especially absolutist kings, distorted this natural state, inducing “the perpetual bowings and cringings of an abject people,” and forcing them to become sinful, to shape “their noble words and actions, heretofore so becoming the majesty of a free people, into the base necessity of court flatteries and prostrations.”

We don’t have kings today, but if we did, a king might, for example, force a subject to pretend to like Michael Bolton’s music to save his job. And then fire him anyway.

Office Space still resonates because it touches on two now pervasive elements of our commercial society. The first is alienation, and the second is fear. Both come from the main problem we have in our political economy, which is the concentration of economic power in the hands of a few through the domination of markets.

Let’s start with alienation. One employee at consumer product giant Proctor and Gamble echoed David Graeber’s theory of “bullshit jobs” when he wrote me, “very few white-collar workers at P&G really do anything. All I saw was a lot of bureaucratic box-ticking and people patting themselves on the back for work that they hired consultants to do for them.” P&G has dominant market power due in part to its merger in 2005 with Gillette and its control over shelf space. It is so large that this guy’s manager actually told him that he shouldn’t stress about his projects being successful, because nothing that any of them did would really impact the firm.

This employee got disillusioned and later went on to work in the tech industry, and told me that the firm he worked for was growing and meeting customer needs with a superior product, but was pushed by venture capitalists to get higher returns, or what he said in business-speak, to “pivot.”

We are now exclusively focused on getting acquired by a big tech firm. Meetings with low-level product managers at a few of the world’s largest companies dictate every decision about which projects we pursue. We’re no longer building a company. We’re not even building a product. We’re building a feature that we hope will end up getting included in an app owned by a mega-corporation. When I talk to my friends and peers at other tech startups, they tell me that it’s pretty much the same story at their companies. Everyone is building to the specifications set by Google or Amazon or Apple.

So that’s alienation.

And then after alienation there is fear. Here’s a quote from Congressman David Cicilline in 2019 about the power of large technology firms: “It is far too common to hear horror stories from startups and other small businesses about how a dominant platform’s abrupt algorithm changes have destroyed their business.”

That was at a hearing on Big Tech, part of a broad investigation in Congress in the Antitrust Subcommittee on the power of these monopolies. Cicilline was talking about companies like Amazon, who have under their control the fate of hundreds of thousands of independent businesses. But I hear this kind of sentiment all the time, from businesspeople in every walk of life, who are afraid to speak out for what is right, for fear of retribution from the powerful entities on who they depend. Franchising, private equity, construction, business software, office supplies, cheerleading uniform sales, syringes, beer distribution—the fear is pervasive.

In fact, when I was doing reporting on a cheerleading monopoly—and yes, there is one, a firm called Varsity Brands, owned by Bain Capital—that controls most of the major cheer competitions and camps, almost everyone asked to speak to me without me using their name. They were afraid. One person said in ominous tones, “You have no idea how deep this goes.” And I’m like, it’s cheerleading, not the CIA. But that’s how everyone in business feels these days, unable to speak. We are seeing, as Milton noted, “the perpetual bowings and cringings of an abject people.”

It wasn’t always so. Milton, among others, handed down a tradition that formed the ideals of liberty behind America, the idea that men would be able to live free from domination by aristocracy, and secure the fruits of their own labor. “America is a land of labor,” wrote Benjamin Franklin in 1784, explaining to European migrants what they could expect in the United States. “Labor is superior to capital, and deserves much the higher consideration,” argued Abraham Lincoln in 1861; Lincoln’s words were quoted fifty years later by Teddy Roosevelt in launching his presidential campaign. Woodrow Wilson, in facing down the robber barons, said, “America was created to break every kind of monopoly, and to set men free, upon a footing of equality, upon a footing of opportunity, to match their brains and their energies.”

In his nomination speech for the 1936 Democratic convention, Franklin Delano Roosevelt, going at those same “princes of property,” as he put it, that Wilson faced, framed the point even more clearly, “We stand committed to the proposition that freedom is no half-and-half affair,” he said. “If the average citizen is guaranteed equal opportunity in the polling place, he must have equal opportunity in the marketplace.”

There are two main bodies of law designed to protect the American businessperson, consumer, and worker from fear and coercion in commerce. The first is labor law, which has been amply covered. The second is competition law, of which antitrust is a part. This body of laws are tools meant to deal with monopolies and unfair competition. In 1950, Emanuel Celler, a congressman who ran the same anti-monopoly committee that investigated big tech, said the following: “Under our ancient common law your neighbor must not point a gun at you, even though he has never shot anyone. Similarly, our antitrust laws were intended to protect businessmen not only from violence but from fear of violence.”

Celler was reflecting the consensus of the time, which was that policymakers should seek a union-dense, high-wage, high productivity economy with significant new business entrants. Americans understood that without economic liberty, which means freedom from arbitrary and coercive power in commerce, there can be no political liberty. Americans fought the Civil War to free us from the slave power, passed antitrust laws and built a regulatory state to attack the concentrated power of the J. P. Morgans of the world, and created a world-class industrial society that expanded lifespans by decades.

So what happened to bring us to the low point we’re at today?

In the 1970s, there was a revolution, a confusing one because it happened on both the right and the left. Two different groups of intellectuals redefined America as a land not of citizens, but of consumers. Part of this shift was about dealing with the inflation of that era and making the case that policymakers should focus only on efficiency and low consumer prices. But it was also an ideological revolution.

Conservatives like Milton Friedman and Robert Bork argued that big firms were big because they were efficient, and that policymakers should never interfere in any of their business practices. Meanwhile, leftists like John Kenneth Galbraith argued that America never really had an anti-monopoly tradition, and that big corporations could be the route to a better governed, more progressive society. In fact, Galbraith argued that democracy was something of an illusion, and that the Soviet Union and America had similar economic systems. “It is part of the vanity of modern man that he can decide the character of his economic system.” Man’s “area of decision, in fact, is vanishingly small.”

Before these movements emerged, policymakers sought to prevent corporate conflicts of interest, end coercive practices, and stop significant mergers that would reduce competition. But such notions were tossed out as outdated and inefficient. Big corporations, according to this new way of thinking, would never abuse their power, because that wouldn’t be rational. As one Congressman put it in 1976, “The populism of the 1930s doesn’t really apply to the 1970s.”

These two groups took over both parties and began influencing Congress and antitrust enforcers. Naïve new consumer rights groups and political leaders were persuaded by the legal establishment that laws to support workers and small business, while disfavoring big business were simply protectionist rackets designed to help special interests. Distinguishing between big and small became foolish, as concentrations of market power descended into the realm of myth.

“These are the people that wouldn’t think of committing discrimination in a sociological context and that would horrify them,” said a small business advocate, “but in an economic context, it becomes the thing to do.”

In academia, in the halls of power, in the board room, in labor unions, and in the trade association world, the pro-monopoly side won. By the late 1970s, the intellectual debate was over. One scholar pronounced antitrust a “totally non-ideological field.” Antitrust became technical, a law to be used only by economists and experts, not people who work for a living. It was perceived of as a science.

And that science had a particular pro-monopoly bent. George Stigler, whose Nobel Prize in 1982 would be celebrated at the Reagan White House, noted that “by 1980 there remained scarcely a trace” of the old antimonopoly framework in the economic literature. Reagan relaxed merger law and restructured the FTC, firing a bunch of the small-business-focused lawyers and hiring economists in their place.

From the 1980s onward, corporations consolidated in nearly every area of commerce, in manufacturing, agriculture, media, banks, chain stores, technology, telecommunications, and defense. The consolidation trend started under Reagan, but Bill Clinton continued and expanded it. He finally removed anti-monopoly from the Democratic Platform, in 1992. It was under his tenure that Walmart finally had a store in every state, and overtook GM as the top employer in the United States. And this pro-monopoly policy architecture has continued to this day.

In short, the reason we feel this fear, and alienation, and resentment is due to policy. Starting four decades ago, policymakers and Americans forget about the threat of monopolies to our liberty, and forgot how to use antitrust laws. As a result, we lost our freedom. Wealth and power has flowed into the hands of monopolists in every industry, whether pharmacy benefits managers, meatpackers, group purchasing organizations, app store monopolists, airlines, or firms like Google. We are ruled by human resources divisions, or customer service hold time algorithms, or arbitrary hospital billing departments, or distant far-away bosses who hire management consultants to give us bad news. Or we are part of that managerial elite of ass-kissers, bowing and cringing and pretending we love Michael Bolton.

Slowly, however, we are waking from this monstrous experiment in illiberalism. The reality of our capital-heavy economic order keeps intruding into our politics, whether it be financial crises, bad behavior by tech firms or monopolistic industries like semiconductors, railroads or ocean shipping causing supply chain shortages.

Antitrust has become an increasing part of politics, with both members on the left and right trying to figure out how to slot it into a political agenda, not just in product markets but in how employers dominate workers. The Trump administration challenged Google, and the Biden administration has gone further, issuing a government-wide edict to promote competition and protect the power of workers from coercive employer practices and placing aggressive anti-monopolists in certain key parts of government.

Even though the current moment is grim, we do not have to remain alienated and afraid. A lot is now possible, if we can recapture our anti-monopoly tradition.

This article is an American Affairs online exclusive, published December 20, 2021.

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