Democrats Must Become the Party of Freedom

Re-embracing anti-monopoly will reinvigorate American liberty and beat back Trumpism.
 
By Barry C. Lynn | Moyers and Company
 
Democrats - party of Freedom
Monopoly is a main driver of inequality, as super-fat profits concentrate more wealth in the hands of the few, writes Barry Lynn. Monopoly provides much of the funds the wealthy use to distort American politics.(Photo by Kena Betancur/Getty Images)

This post originally appeared at Washington Monthly.

There are many competing interpretations for why Hillary Clinton lost last fall’s election, but most observers do agree that one — economics — played a big role. Clinton simply didn’t articulate a vision compelling enough to compete with Donald Trump’s rousing, if dubious, message that bad trade deals and illegal immigration explain the downward mobility of so many Americans.

As it happens, Clinton did have the germ of exactly such an idea — if you knew where to look. In an October 2015 op-ed, she wrote that “large corporations are concentrating control over markets” and “using their power to raise prices, limit choices for consumers, lower wages for workers and hold back competition from startups and small businesses. It’s no wonder Americans feel the deck is stacked for those at the top.” In a speech in Toledo this past October, Clinton assailed “old-fashioned monopolies” and vowed to appoint “tough” enforcers “so the big don’t keep getting bigger and bigger.”

Clinton’s words were in keeping with Bernie Sanders’ attacks on big banks, but went further, tracing how concentration is a problem throughout the economy. It was a message seemingly tailor-made for the wrathful electorate of 2016. Yet after the Ohio speech Clinton rarely touched again on the issue. Few other Democrats even mentioned the word monopoly.

The pity is that Clinton’s stance wasn’t simple campaign rhetoric. It was based on a substantial and growing body of research — much of it first presented in the pages of this magazine and since validated by the Obama administration’s own economists — that confirms that consolidation is at the root of many of America’s most pressing economic and political problems.

These include the declining fortunes of rural America as farmers struggle against Big Ag. It includes the fading of heartland cities like Memphis and Minneapolis as corporate giants in coastal cities buy out local banks and businesses. It includes plunging rates of entrepreneurship and innovation as concentrated markets choke off independent businesses and new start-ups. It includes falling real wages, as decades of merger mania have reduced the need for employers to compete to attract and retain workers.

Monopoly is a main driver of inequality, as super-fat profits concentrate more wealth in the hands of the few. The effects of monopoly enrage voters in their day-to-day lives, as they face the sky-high prices set by drug company cartels and the abuses of cable providers, health insurers and airlines. Monopoly provides much of the funds the wealthy use to distort American politics.

For these and other reasons, the Clinton campaign, along with the White House and the Democratic Party, made a huge mistake by failing to flesh out their anti-monopoly message. Yet the full dimensions of the missed opportunity are greater yet. Properly understood, the anti-monopoly frame doesn’t just offer a way to talk to Americans about their material needs; it’s also a way to connect to deeply and broadly held American ideals, like the freedom to be one’s own boss and the liberty to choose one’s own course.

For most of the 20th century these values were hallmarks of the Democratic Party. This tradition, which dates to the time of Thomas Jefferson, found expression in anti-monopoly policies designed to protect Americans not just as consumers, but also as citizens and producers, from domination by the powerful. Yet today most Americans associate terms like “freedom” and “liberty” with Republicans, even as that party appears to be preparing to deliver something more like autocracy.

This is a tragedy. Going forward, Democrats should make anti-monopoly — in the name of liberty, democracy, community, family and innovation — the foundation of their economic thinking and the leading idea of their economic messaging. If they do, Democrats will be attacking what’s actually wrong with America. They will also swiftly begin to split the Trump vote and to rebuild their own shattered party.

The idea that America has a monopoly problem is now beyond dispute. Since 2008 there have been more than $10 trillion in mergers, and the pace of deal making continues to accelerate, with 2015 setting a record for the most mergers in a year and October 2016 setting the record for the most mergers in a month.

In 2016, London’s Economist magazine published three front-page stories on America’s monopoly problem. The magazine reported that two-thirds of all corporate sectors have become more concentrated since the 1990s, that corporations are far more profitable now than at any time since the 1920s and that an inordinate amount of profit goes to a very few immense investment funds, such as BlackRock and State Street. In April, the White House Council of Economic Advisers came to much the same conclusion, and called for a “robust reaction to market power abuses.”

Ordinary Americans didn’t need experts to explain the danger of monopoly. Populist movements like the tea party, Occupy and the Sanders campaign have all focused to varying degrees on the threats posed by concentration. Polls show that a majority of Americans now believe big corporations are too powerful. Yet through 2016, mainstream Democrats failed to admit that this growing fear of monopoly power might affect how citizens vote.

Consider some of the mainstays of Democratic confidence going into the fall, and how these collided with the real world.

Party leaders were, for instance, right that millions of Americans today are grateful for Obamacare. But the travails of Obamacare also reinforced for millions of other Americans that hospital, insurance and pharmaceutical monopolists are driving up costs and cutting back on care, and that the administration had no plan to stop them.

Party leaders were also right that the US economy is on sounder footing than when Barack Obama took power. But while most citizens are in less-dire straits than they were eight years ago, they also have more time to consider the rest of their lives. They see corporations like Comcast blocking them from better internet and charging too much for their entertainment. They see giant enterprises like Dean Foods and Tyson’s driving down the quality of their milk and chicken, and Monsanto driving up the cost of seeds and pesticides. They see a few huge corporations dominating the sale of home mortgages, groceries, office supplies and restaurant meals, and gouging consumers when they buy everything from eyeglasses to cowboy boots.

Party leaders were also right that the rate of joblessness has fallen sharply from 2009. But those figures do nothing to address the fact that many of those jobs feel very different from the ones that were destroyed in the crash of 2008. For millions of working Americans, the wonder technologies of the last decade are fast turning into oppressive systems of direct control. Consider the truck drivers, warehouse workers, receptionists, nurses and cabbies who find their actions and even their speech monitored and directed in ever-increasing detail. Or consider the white-collar workers in the Seattle headquarters of Amazon, where, according to a recent New York Times feature, executives run a “continual performance improvement algorithm on its staff.” Such forms of control, especially when wielded by giant corporations, tend only to amplify the sense of powerlessness.

Mainstream Democrats are also right, in their post-election assessments, of the need to rethink the challenge of reaching voters in the era of Facebook and Reddit. But taking on fake news is just a piece of the whole. Party leaders must also address the fact that Facebook actively manipulates the flow of real news between journalist and citizen. And that Amazon actively manipulates the flow of books between America’s authors and readers. And that by creaming off more than 80 percent of all online advertising revenues, Facebook and Google are helping to drive traditional news publishers and even online news startups out of business.

Here, too, party leaders ignore monopoly at their political peril. Not only do the monopolists directly threaten Democrats’ ability to communicate with one another, and with the rest of Americans, but a failure to deal with the dangers posed by Facebook and Google soon will enrage the millions of Americans who actually care about the integrity of the nation’s journalism, most of whom vote.

The election of a man like Donald Trump is precisely what the Democratic Party was first built, and then rebuilt, to prevent.

When Thomas Jefferson and James Madison founded the party in 1792, their goal was to oppose Alexander Hamilton’s plan to centralize power in a financial aristocracy tied to the state. In place of Hamilton’s vision of an America in which a few capitalists managed most business, leaders of the new party envisioned a political economy in which fighting monopoly and the concentration of power would foster the creation of independent, self-governing citizens.
The election of a man like Donald Trump is precisely what the Democratic Party was first built, and then rebuilt, to prevent.

As any casual reader of history knows, this experiment in radical economic democracy did not last. In the 1840s, Southern planters seized the party and used it to protect their slave estates. After the Civil War, a new Southern elite wielded the party as a shield against Northern capital and the will of the free farmer, white and black. For a short while the new Republican Party took up the flag of liberty. But the GOP was soon captured by the emerging class of Wall Street tycoons and Gilded Age monopolists.

Only in 1896, during William Jennings Bryan’s run for president, did a group of white, male citizens dedicated to anti-monopolism recapture the levers of control within the Democratic Party. This time they held on, and for most of the next 100 years, through the administrations of Woodrow Wilson, FDR, Harry Truman and beyond, a prime purpose of the Democratic Party was to protect the worker, farmer, shopkeeper and other independent citizens and innovators from concentrated power.

During these decades, Democrats understood that in making markets and regulating competition they were also establishing a set of political economic checks and balances that helped citizens maintain control over their own destinies and those of the communities in which they lived. In defending this vision, leaders like President Wilson used much the same language as had Jefferson and Madison. “There is no salvation for men in the pitiful condescensions of industrial masters,” Wilson said during the 1912 campaign. “Guardians have no place in a land of free men.”

In the years between the election of Wilson and the beginning of World War II, Americans built the world’s first modern political economy designed to preserve both liberty and democracy, and also to enable economic growth and innovation. Guided largely by the thinking of Supreme Court Justice Louis Brandeis, they did so by devising three distinct but coordinated approaches to competition policy.

In the case of network industries like electricity, railroads and other “natural monopolies,” they held that the public must directly own the corporation or regulate its actions. In the case of industrial activities like manufacturing cars or chemicals, citizens accepted high degrees of vertical integration and concentration of capital, but they also insisted that all such corporations compete with at least three or four other large corporations making the same products. In all other sectors of the economy — such as retail, farming and banking — the aim was to promote as wide a distribution of power and opportunity as possible by preventing concentration almost everywhere. Across the political economy, but especially in sectors where capital and power were highly concentrated, they promoted unions to protect the worker.

The result was a revolutionary success. For years, conventional wisdom among mainstream Democrats has held that the New Deal was mainly an experiment in concentration and socialization. Yet with a few exceptions, the main thrust of both the Roosevelt administration and Congress was to promote, in the frustrated words of one of the main advocates of centralization under FDR, the “atomization” of American business. Indeed, the US economy, as we reported in the last issue, became steadily less consolidated year after year from the mid-1930s until the early 1980s.

Besides delivering to citizens much of the “industrial liberty” they had demanded, this anti-monopolism also laid the basis for a period of rapid technological advance, material prosperity and financial stability that helped make possible the broad expansion of American democracy in the great mid-century battles for civil rights. It was a vision that bridged the racial divide; one of the greatest advocates of the Brandeisian vision was Supreme Court Justice Thurgood Marshall. It was a vision that even bridged the two parties: Presidents Dwight Eisenhower and Richard Nixon both maintained strong antitrust operations during their administrations.

In 1792, Madison wrote that it was the “independent” citizen who served as “the best basis of public liberty, and the strongest bulwark of public safety.” Thus it proved in the 20th century. For decades, the Democratic Party’s overwhelming electoral success was due in no small part precisely to the fact that it delivered an important form of political economic freedom to the businessperson, worker, shopkeeper and farmer. These free citizens then returned the party to power.

The end came after the election of Ronald Reagan in 1980. Reagan brought to power a group of lawyers and economists — loosely affiliated with the University of Chicago — dedicated to overturning the anti-monopoly philosophy of the Democrats. Key leaders of the group included the economist Milton Friedman and the lawyers Richard Posner and Robert Bork. The Reagan radicals argued that instead of using competition to protect liberty and democracy, the laws should instead promote only efficiency, theoretically in the interest of the “consumer.” Even straight-up monopoly was fine, they said, as long as the monopolist promised to lower prices.

In previous decades, Democrats would have moved swiftly to smash Reagan’s new pro-monopoly policies. But in the late 1970s a new generation of party leaders had begun to embrace aspects of the libertarianism of the Chicago Schoolers (or, as the Democrats would later call it, neoliberalism). Unlike traditional Democratic ideology, which holds that all economics is political, libertarian ideology holds that markets are self-regulating and inherently competitive and that monopolies are naturally efficient in ways that are good for “consumers.”

Most damaging, the Democratic Party almost entirely failed to live up to its traditional promise to protect the independent farmer, shopkeeper and businessperson. Instead, party leaders sat by quietly as Wall Street financiers armed with giant corporations expropriated the livelihoods of millions of American families. Many among this new breed of Democrats also embraced the corporate monopolists themselves, along with their partners on Wall Street, and competed with Republicans for campaign contributions from the biggest of the big. In the 1990s, this way of thinking and acting lay behind Bill Clinton’s decisions to unleash concentration in the banking, media, energy and defense sectors, and to embrace a new approach to trade policy that largely opened the US border to foreign monopolists, such as the Brazilian bankers who in recent years have taken over Anheuser-Busch, MillerCoors, Kraft, Heinz and Burger King. (Late in his administration, Clinton partially corrected course by bringing a tough antitrust suit against Microsoft. The Obama White House followed a similar trajectory: early indifference followed in the last year by vigorous, if insufficient, attempts to take on power.)

This generation of Democrats also adopted a new party hero in place of Jefferson and Madison. That new hero, blazoned in the name of the Brookings Institution unit that supplied many of the top-shelf financial and banking experts of the Obama administration, was that father of Wall Street and preacher of monopolism, Alexander Hamilton.

Some in the Democratic Party have finally awakened to America’s monopoly problem. Last June, Sen. Elizabeth Warren (D-MA) delivered what was the most important anti-monopoly speech in America by a major figure since Franklin Roosevelt. “Concentration,” Warren said, “threatens our markets, threatens our economy and threatens our democracy.”

In July, reformers succeeded in writing strong anti-monopoly language into the Democratic Party platform, the first time since 1988. In September, Renata Hesse, Obama’s acting assistant attorney general for antitrust, delivered a speech that went a long way toward overturning the Chicago School approach to antitrust.

But with the exception of Warren, most of today’s Democrats, to the extent that they even understand the threat posed by monopoly, still treat competition policy as one of many potential solutions to the problems we face, an arrow of roughly equal importance with all the other arrows in the quiver, rather than as a philosophy able to guide how we see and think and act in all corners of the political economy.

Donald Trump has proved that economic populism is smart politics. If Trump perfected a version of dangerous populism, based on resentment, xenophobia and paranoia, then anti-monopolism is smart populism. Americans — all of them — have every right to be angry. A main job for Democrats now is to explain that they should direct that anger not at immigrants or China, but at monopolists and the policies that empowered them.

Anti-monopolism will also provide Democrats with many other political benefits. It will, for instance, help provide a fix for the party’s Electoral College problem, which has bitten Democrats hard twice in the last 16 years

One of the by-products of monopolization is that business is becoming concentrated in a few cities, mainly along the coast. Consider St. Louis. In 1980, 22 Fortune 500 companies called the city home; today only nine are left. In 1979, per capita income in the metro area was 89 percent as high as in New York; since then it has fallen to 77 percent. Even when St. Louisans launch smart companies — like Twitter and Square — these swiftly flee to the new metropoles.

This, in turn, leads to a concentration of certain kinds of people who tend to think and vote in certain ways, in fewer places. (Washington Monthly has documented this phenomenon in depth in recent years: see “Terminal Sickness,” March/April 2012; “Bloom and Bust,” November/December 2015; and “The Real Reason Middle America Should Be Angry,” April/May/June 2016.)

It is no coincidence that this pattern of growing regional inequality looks remarkably like the 2016 electoral map, with coastal states blue and a giant “red wall” running down the center of the country. Donald Trump’s success was partly due to the fact that he spoke to the fears of voters in this increasingly stripped-out red zone.

In the short term, anti-monopolism will give the Democrats a believable pro-business, pro-liberty message that will play in almost every section of every state and indeed can be wielded immediately by state AGs and state legislators. Take on Big Ag, and Democrats could start painting red counties blue by 2018. Longer term, a true anti-monopoly program will help to distribute opportunity, commerce and people more evenly across the nation, exactly as the framers of the Constitution intended.

Anti-monopoly is also a way to get ahead of the story. The vision that Donald Trump pedaled was strikingly anachronistic. The offshoring of jobs peaked a decade ago, and since the crash of 2008 America has registered zero net illegal immigration. Monopoly, by contrast, is today’s problem. Thanks to the rise of immense platform monopolists like Amazon and Google, the fight against monopolization will continue to drive politics for years to come. Indeed, a focus on anti-monopolism will provide Democrats with a constant flow of opportunities to educate and rally voters, and to attract new classes of funders, as new takeover deals are announced.

Anti-monopolist principles will also help Democrats define their stances against much of the rest of the Trump/GOP agenda. Paul Ryan, for instance, contends that the phaseout of Medicare is necessary to control costs. Democrats will be able to counter that not only will such a move merely shift costs onto enrollees, but it also ignores the biggest driver of health costs, which is monopoly. The giant hospital groups that control regional health care markets have enormous power to jack up prices. So, too, pharmaceutical giants with drug prices. How will Ryan’s plan address that?

Perhaps best of all, anti-monopoly is a simple philosophy that can be understood by every American. Just as the Republicans have distilled their anti-government philosophy down to “Starve the beast,” Democrats can distill a fight against corporate concentration down to “Break the power.” It is also a philosophy that provides Democrats a way to reveal the true nature of the libertarianism the Republicans preach with such effect, namely that the only liberty promoted by these friends of monopoly is for the powerful few to rule the rest of us.

Anti-monopolism may give Democrats something else as well — a way to bring two big wings of the party into harmony. In the weeks that followed the election, the combination of Clinton’s big victory in the popular vote and a fresh attack by Sanders on “identity politics” had most Democrats once again arguing over whether to organize the party foremost around identity politics or economic populism.

Re-embrace anti-monopolism, and this breach will yawn less wide. After all, what folks call identity politics is in many respects just another way of saying “Don’t tell me what to do” and “Don’t tell me how to live.” At its core lies much the same desire for personal liberty that has so shaped American anti-monopolism over the last two centuries.

Almost all Americans want freedom from bosses, economic and cultural and racial. Almost everyone wants the freedom to make their own families and communities, and their own careers and characters. That’s the American way. It should again be the way of the Democratic Party as a whole.

Donald Trump rumbled about monopolists a few times during his campaign. And in the realm of “Anything is possible” he may yet deliver on his promises to block AT&T’s takeover of Time Warner and to bring an antitrust case against Amazon. But given Trump’s lusty embrace of such Wall Street monopoly makers and milkers as Wilbur Ross and Paul Singer, it’s much easier to imagine that under his administration, concentration in America will get only worse.

Our single most pressing task is to be honest about the magnitude of the crisis we face. To one side lies the threat of a democracy rebuilt as carefully stage-directed mobocracy. To the other is the danger of an America dominated by a few increasingly authoritarian command-and-control corporations.

The last time we faced such threats, after the rise of the plutocrats in the early decades of the twentieth century, it was the Democrats who spoke directly to the fears of the citizenry. Consider Franklin Roosevelt’s words in 1938. “The liberty of a democracy is not safe,” he said, “if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is Fascism — ownership of Government by an individual, by a group, or by any other controlling private power. . . .Among us today a concentration of private power without equal in history is growing.”

The flag of true American liberty — in which it is the people who rule both the government and the economy — lies in the muck. Dare the Democratic Party pick it up again? Dare the Democratic Party lead people down a third path, away from mobocracy and command-and-control corporatism toward a new democratic republic?

Of one thing we should be certain: do so, and the American people will follow.

 
 
 
 
 
 
 
 
 
 
 
 
 
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