Huff Post: Meet The Man Who Is Changing Washingtons Ideas About Corporate Power
Meet The Man Who Is Changing Washingtons Ideas About Corporate Power
Former business journalist Barry Lynn is reviving a forgotten tradition.
09/02/2016 08:13 am ET | Updated 23 hours ago
Zach Carter Senior Political Economy Reporter, The Huffington Post
Visions Of Our Land via Getty Images
The 2016 Republican Party platform is best known for embarrassments. Retrograde views on LGBT rights and a bold stand against pornography became punch lines for late-night talk show hosts. But for a few minutes on July 12, GOP convention delegates assembled in Cleveland battled over an issue that their party hadnt worried about for decades: corporate power.
Hawaii delegate Adrienne King told the crowd of mild-mannered professionals at Huntington Convention Center that big companies were abusing their market dominance to freeze out smaller competitors and limit consumer choice. Breaking them up, she argued, would protect the free market from manipulation. The partys official statement of principles needed to express support for action against underhanded bigwigs that rig prices and intimidate small firms. Republicans, after all, used to go after these guys all the time.
Id like to remind my fellow delegates that the original trust-buster was Republican President Theodore Roosevelt, King said.
This caused a bit of a stir. For decades, Republican leaders in Washington had preached to the party faithful that government was their primary economic enemy. King was complicating the doctrine.
Many things that Teddy Roosevelt supported are not things that we stand for as a party, retorted one delegate bitterly. He was actually a progressive president, not a conservative free-enterprise one.
Another insisted that Roosevelt had only broken up government monopolies, while someone else supported King, accusing big airlines and hotels of colluding to raise prices. Still another suggested their effort would trick Republicans into endorsing nefarious new government regulations.
Kings proposal was eventually voted down. But not before she revealed that many of her Republican peers including well-to-do attendees of political conventions believe the free market has as much to fear from Big Business as it does from Big Government.
The fact that this debate took place at all shows an important and generally overlooked shift in GOP thinking that has been underway for months. In a March hearing, three Republican senators questioned whether Federal Trade Commission Chair Edith Ramirez was being tough enough on everything from Googles control over search engine results to corporate consolidation in the market for agricultural seeds. House Financial Services Committee Chairman Jeb Hensarling (R-Texas) issued a report this summer upbraiding the Department of Justice for treating high-level bankers who broke the law as too big to jail. Just this month, three Republicans, including Sen. Ted Cruz (R-Texas), cried foul over Verisigns monopolization of the market for .com internet domain names.
None of these actions would have been conceivable 10, five or even two years ago. Businesses, according to the old conservative orthodoxy, were good. And the bigger, the better. Targeting a big company was tantamount to punishing success. How, after all, could a company get to be big if it werent very good at what it did?
EpiPen Price Rage And Lousy Cable Service
But the GOP is slowly rediscovering antitrust policy one of the most powerful economic weapons the federal government can deploy against corporate abuse. Antitrust laws give government the power to block mergers between big companies, break up companies that are too big to fail, or force megafirms to offer lower prices when they dont face serious competition. A century ago, antitrust was the most fiercely debated issue in American public life, championed by both Teddy Roosevelt and his Democratic rival, Woodrow Wilson. But antitrust enforcement began a long period of atrophy under Ronald Reagan that lasted into the Barack Obama years. A year ago, the field remained a Washington backwater, where government lawyers would float along before hoisting themselves to a more lucrative safe harbor in the private sector.
That seems to be changing. Antitrust isnt careening around cable news yet, but in the nations capital, the migration of the policy wonk herd has been unmistakeable. Its not just a Republican thing. In April, Obama issued an executive order calling for federal agencies to combat anti-competitive behavior. This summer, two liberal think tanks published reports taking aim at corporate monopoly powers. Sen. Elizabeth Warren (D-Mass.) gave a no-holds-barred speech in June calling out not only big banks, but Google, Apple, Amazon and Walmart by name. In July, antitrust language landed in the Democratic Partys 2016 platform for the first time since 1988.
And the public is paying attention. When pharmaceutical giant Mylan hiked the price on its lifesaving EpiPen simply because there was no other game in town, it generated fury from just about everyone who didnt own stock in the company.
Theres a solid economic rationale behind Washingtons new big thing. Monopolies and oligopolies are distorting the markets for everything from pet food to cable service. Theres a reason why cable companies have such persistently lousy customer-service ratings. They know you have few (if any) alternatives. Today, two-thirds of the 900 industries tracked by The Economist feature heavier concentration at the top than they did in 1997. The global economy is in the middle of a merger wave big enough to make 2015 the biggest year in history for corporate consolidation.
But Washington often looks the other way when the economy impales itself (see: mortgages, subprime). Somebody has to make the gore impossible to ignore.
An Earthquake, A Revelation
Most political junkies have never heard of the man chiefly responsible for the current Beltway antitrust revival: Barry C. Lynn. A former business journalist, Lynn has spent more than a decade carving out his own fiefdom at a calm, centrist Washington think tank called the New America Foundation. In the process, he has changed the way D.C. elites think about corporate power.
Barry is the hub, says Zephyr Teachout, a fiery progressive who recently clinched the Democratic nomination for a competitive House seat in New York. He is at the center of a growing new I hesitate to call it a movement but a group of people who recognize that we have a problem with monopolies not only in our economy, but in our democracy.
Many Southerners who relocate to the nations capital try to temper their accents for the elite crowd that dominates the Districts social scene. Lynn, a South Florida native, never shed his drawl. He pronounces sonofabitch as a single word, which he uses to describe both corrupt politicians and big corporations. He is a blunt man in a town that rewards caginess and flexibility. But like King, Lynns critique of monopolies does not reflect a disdain for business itself.
After spending the first leg of his career in Latin America as a reporter for The Associated Press and Agence France Presse, Lynn landed a job in D.C. as executive editor of Global Business a magazine that catered to C-suite corporate society. It was a great gig for a 33-year-old. In 1994, the North American Free Trade Agreement and the World Trade Organization treaties had unleashed a brave new corporate world, and companies were hungry for information about how to exploit the international legal terrain. Lynn enjoyed the work. In the early years, his interest in globalization was tactical how would firms solve these new puzzles created by international law?
His sanguine outlook was shaken by a 7.3-magnitude earthquake that devastated Jiji, Taiwan, on Sept. 21, 1999. The disaster claimed 2,505 lives. Its aftermath served as an economic revelation for Lynn.
All these factories in the United States shut down, Lynn says. And they shut down because the earthquake messed up the airport for the city where all of their semiconductors were made.
A Warning Ahead Of Its Time
Globalization had allowed firms to travel anywhere for labor, resources or tax savings. But these new capabilities didnt just help companies cut costs. Instead, Lynn observed, critical manufacturing activities were now heavily concentrated in specific, often unstable, locales. An earthquake in Taiwan could mean sudden layoffs for Dell and Hewlett-Packard employees in the United States whose jobs depended on semiconductor shipments from a single city half a world away.
This wasnt simply a problem of globalization. It was globalization combined with excessive concentration. If there had been many different factories producing these semiconductors all over the world, the earthquake, of course, would have remained a human tragedy. But it would not have forced layoffs on the other side of the globe.
Lynn left Global Business for The New America Foundation in 2001 and began work on his first book, End of the Line: The Rise and Coming Fall of the Global Corporation, which argues that globalization and merger mania had injected a new fragility into international politics. Disruptive events earthquakes, coups, famines, or at worst, war could now wreak havoc on U.S. products that had once been safely manufactured domestically. Production of anything from light bulbs to computers all could shut down without warning.
It was a frightening vision with implications for economic policy and national security alike. It was also ideologically inconvenient for the techno-utopian zeitgeist of its day. Lynns book landed on shelves about the same time as Thomas Friedmans better-known tome, The World Is Flat, which declared globalization a triumph of innovation and hard work for anyone willing to do the hard work of innovating.
Today, Lynns predictions of market disruption and political unrest appear to have been ahead of their time. Early globalization champions, including Martin Wolf and Lawrence Summers, are rethinking their judgments of a decade ago. But Lynn turned several influential heads when his book was published. Thomas Frank, bestselling author of Whats The Matter With Kansas?, became a Lynn enthusiast. So did food writer Michael Pollan.
He was writing about an issue that nobody was paying attention to, and he was doing it with a very strong sense of history, Pollan says. Barry understood antitrust going back to the trust-busters a century ago, and how our understanding of the issue shrank during the Reagan administration The food movement is not very sophisticated on those issues.
The Big Problem With Big Business
Lynns history nerd-dom is eccentric in a town that hyperventilates over every hour of the cable news cycle. Ask about Donald Trump or Hillary Clinton, and Lynn will oblige you a polite sentence or two. Ask him about former Supreme Court Justices Louis Brandeis or William Howard Taft, and youll need to reschedule your dinner plans.
He once asked me to read about Roman law for a piece on common carriage, says Lina Khan, referencing a plank of net neutrality policy not typically associated with the Code of Justinian.
After he published his second book in 2010, Lynn began bringing on his own staff within New America. Khan was one of his first hires. Teachout, a Fordham University Law School professor, was another. Teachout eventually ran for office and published a book of her own on the history of corruption in America. Another of Lynns associates, Christopher Leonard, published a book on meat industry monopolies around the same time. These works shared a common theme: Monopolistic businesses create social problems beyond consumer price-gouging, from buying off politicians to degrading the quality of our food.
Analyzing the political power of companies with overwhelming market positions used to be a normal part of antitrust thinking. But over the decades, a narrower conception focused on consumer prices has taken hold in Washington. Even if anti-competitive behavior can be proved, according to this thinking, its not a problem unless it raises prices for consumers. Under this view, its not necessarily an antitrust problem, if, say, Amazon used its market position to force publishers into charging lower prices for books. If the result is lower prices, everything is fine. It would only become a problem if Amazon used its market power to raise prices.
Thats not how Lynn sees it. When the Authors Guild, the American Booksellers Association, the Association of Authors Representatives and Authors United went after Amazon in 2015 for requiring publishers to accept lower e-book prices, Lynn penned a 24-page position paper to the Department of Justice on their behalf. It wasnt just a question of immediate consumer impact. Amazons market position was so dominant, he argued, that the company could restrict or cut off access to books from publishers it wanted to punish for rejecting its pricing requirements. It could exercise control over the marketplace of ideas in ways that threaten not merely open markets but free speech.
Monopolies, according to Lynn, are fundamentally political enterprises not just players in a market.
The episode was part of the furor surrounding Amazons high-profile entente with book publisher Hachette, in which the online retailer made no bones about its position.
We want lower e-book prices, Amazon wrote in a public letter. Hachette does not.
Amazon eventually settled with Hachette under a deal that both parties declared acceptable. But before Lynn became interested in the antitrust problems surrounding publishing, Khan had been looking into broader problems for small businesses. In 2012, Khan discovered that new business formation in the United States had been declining for decades. Her finding ran counter to conventional wisdom, which had held that aside from a few hiccups like the financial crisis bustling Silicon Valley startups were feeding a small business renaissance.
As the Amazon conflict demonstrates, some of Lynns chief targets are tech giants. That makes him an odd fit for New America, which was founded in 1999 as Silicon Valleys think tank in search of a radical center, as The New York Times put it. Google Executive Chairman Eric Schmidt is still on New Americas board of directors, yet Lynn consistently puts the company under the microscope.
When Warren blasted tech monopolies this summer, she was speaking at a conference that Lynn had organized. When Sen. Al Franken (D-Minn.) asked about platform monopolies at a Senate hearing in March, he was echoing Lynns objections to digital kingpins, including Amazon, Apple and Google.
But Lynns apostasy gets results. The Obama administration conferred with him on an anti-monopoly executive order this spring, and he helped work antitrust language into the 2016 Democratic Party platform. He cant claim the same kind of direct credit for the Republican Partys partial conversion to the antitrust cause. But his work is changing the way Washington thinks about corporate power, and that shift is having bipartisan repercussions.
None of this means that the next president will be signing radical new antitrust laws into place. But thats exactly why Lynns work matters. As King noted at the GOP convention, powerful antitrust laws are already on the books. The Department of Justice and the Federal Trade Commission have broad leeway to take action against big companies. They just rarely pursue it to the full extent of their authority. If the next president listens to Lynn, the FTC chair could become one of the most powerful positions in American government.