Newsletters

The Corner Newsletter, April 4, 2019: Open Markets Action’s Heartland Forum Tackles Regional Inequality

Welcome to The Corner. In this issue, we report on a forum, co-sponsored by Open Markets Action in Storm Lake, Iowa, in which five leading Democratic presidential candidates addressed the link between economic concentration and the declining fortunes of rural America.

April 4, 2019  |  by Open Markets

Democratic Presidential Candidates Take Aim at Soaring Regional Inequality in America

Last Saturday, five Democratic Party presidential hopefuls gathered at an event in Storm Lake, Iowa to present their platforms for revitalizing America’s farms and rural communities. Co-sponsored by the HuffPost, Iowa Farmers Union, Open Markets Action, and The Storm Lake Times, the Heartland Forum received wide coverage in the press, most of it focused on how all the candidates called for much stronger enforcement of antitrust laws against the corporations that dominate agricultural and food systems.

(See coverage of the forum in The Washington PostThe Wall Street JournalNPRAssociated Press, and Politico’s Morning Ag.).

Another takeaway that received less press attention, however, was the candidates’ rejection of the widely held idea that regional inequality–declining rural populations, the extraction of wealth in Heartland communities, and growing concentration of wealth and power in a few coastal cities–simply reflects inalterable market or technological forces. Rather, speaker after speaker stressed the role of a wide range of public policies in depressing opportunities in rural America.

In doing so, they brought themselves into alignment with a pioneering body of work by Open Markets on the subject, including recent articles by Phil Longman and Claire Kelloway.

Massachusetts Sen. Elizabeth Warren emphasized the role federal policies can have in exacerbating or ameliorating regional inequality. Responding to a question on making farming accessible for young people, Warren explained, “We need to reduce the student loan debt burden so that people don’t have to move to big cities where the wages are higher to pay them off.” Shortly before the forum, Warren released an agriculture policy platform that detailed how as president she would break up giant agribusinesses.

Amy Klobuchar, the ranking member on the Senate antitrust subcommittee, pointed out that because of lax antitrust enforcement, two seed companies control most of the market and four railroads control nearly all rail shipping (“The same number,” Klobuchar quipped, “as on the Monopoly board”). The Minnesota senator said that corporate consolidation also harms rural America as seen by media conglomerates and platform monopolies displacing local news sources, as well as pharmaceutical monopolies making it even harder for people to get access to insulin and other medical treatment they need.

Former Housing and Urban Development Secretary Julián Castro said part of the fix must be a new philosophy of antitrust enforcement that focuses on harms along a supply chain, to producers as well as to consumers. “We need to make sure that no matter where you live in this country, there are good job opportunities,” he said.

Former Maryland Rep. John Delaney, in the day before the Forum, released a position paper he called the Heartland Fair Deal. In that document, he wrote, “We have to put policies in place so a kid doesn’t have to move to a big city in order to have a chance for a good job.” At the event, Delaney buttressed that goal with a call for supporting community banks “to make the kind of loans in local communities that businesses need,” strengthening rural health care, and encouraging investment through changes in the tax code and opportunity zone programs.

Delaney strongly condemned the present situation, in which almost all new investment in America goes to a tiny fraction of the nation’s communities. “That’s not a country of opportunity,” he said, “that’s a country of birthright.”

Rep. Tim Ryan, whose Ohio district includes Youngstown and other once heavily industrialized communities, said that America’s Heartland cities and towns are “tied together politically” with rural areas. “We’re all suffering from the same thing,” he said.

Ryan said, “I’m looking at what’s happening in rural America with regard to the concentration of power and rural monopolies and you know what we call this in Youngstown? It’s a scam. It’s an absolute scam.”

In Advance of Heartland Forum, Presidential Candidates Release Plans to Help Rural Communities

The Heartland Forum encouraged many Democratic presidential candidates to unveil plans to reinvigorate rural communities. Last Wednesday, Elizabeth Warren called for breaking up big agribusinesses and other measures to empower individual farmers, including a right to repair their own equipment.

On Thursday, three other candidates came out with plans to address rural issues. Sen. Bernie Sanders, I-V.T., wrote an op-ed for the Des Moines Register saying that a Sanders administration would “strengthen antitrust laws that defend farmers from the corporate middlemen that stand between the food grower and the consumer.” Sanders also promised to reverse the Trump administration’s dissolving the Agriculture Department agency responsible for enforcing antitrust laws against meatpackers.

Sen. Cory Booker, D-N.J., reintroduced his Opportunity for Fairness in Farming Act, which would prevent agribusiness lobbyists from receiving federal checkoff funds.

Amy Klobuchar introduced a plan to invest more than $1 trillion in the country’s infrastructure. She said, “Building bridges is not just a metaphor – this is what I’ve done and what I will continue to do as President.”

Finally, just before the Heartland Forum last Friday, former congressman John Delaney put forth his “Heartland Fair Deal” to reinvigorate rural communities.

🔊 ANTI-MONOPOLY RISING:

  • Sen. John Kennedy, R-La., told “CBS This Morning” that Facebook CEO Mark Zuckerberg should sit down with Congress and disclose what he knew about the improper harvesting of user data. He said, “I’m not looking to regulate him to death, but I can tell you this, the issue isn’t going away.”
  • House antitrust subcommittee chair David Cicilline, D-R.I., and House Judiciary Committee Ranking Member Doug Collins, R-Ga., proposed legislation yesterday that would allow news publishers to bargain collectively while negotiating with platforms like Google and Facebook. “Through our bipartisan legislation,” Collins said, “we are opening the door for community newspapers to more fairly negotiate with large tech platforms that are operating in an increasingly anti-competitive space.”
  • The Australian Competition & Consumer Commission, Australia’s top antitrust enforcer, has proposed allowing businesses with less than $10 million in annual revenue to bargain collectively with customers or suppliers.
  • On Tuesday, two corporations that provide phone services to prisons abandoned their attempt to merge after the Federal Communications Commission recommended blocking the deal. The merger would have led to a market where most inmates would make calls through two companies and contributed to even higher prices. FCC Commissioner Jessica Rosenworcel said that “now that two of the largest prison payphone companies have called off their merger, it is time for the FCC to once and for all fix the sky-high rates inmates and their families pay for phone calls.” (Read the Washington Monthly’s Grace Gedye article about the merger from July 2018).
  • FCC Commissioner Geoffrey Starks wrote an op-ed in The New York Times on Tuesday explaining “Why It’s So Easy for a Bounty Hunter to Find You.” The FCC, Starks charged, has allowed entities to sell and resell individuals’ precise location data illegally. Starks said the agency “must use its authority to protect consumers and promote public safety, and act swiftly and decisively to stop illegal and dangerous pay-to-track practices once and for all.”
  • The attorneys general of New York and California are leading a coalition of more than a dozen states that indicated last week that they may sue to block T-Mobile’s pending acquisition of Sprint even if the Justice Department allows it, according to Bloomberg.
  • On Monday, the U.K. House of Commons’ Business, Energy and Industrial Strategy Committee recommended breaking up the country’s Big Four accounting firms, KPMG, EY, Deloitte, and PWC. The chair of the committee, Labour MP Rachel Reeves said, “The ‘Big Four’s dominance has fostered a precarious market which shuts out challengers and delivers audits which investors and the public cannot rely on.”

📝 WHAT WE’VE BEEN UP TO:

  • Sally Hubbard, in an interview with Bloomberg Technology, called Facebook CEO Mark Zuckerberg’s attempt to steer how to regulate Facebook “silly.” Hubbard also spoke to The Hill, saying that “regulators need to get involved but they don’t need to be taking advice from Mark Zuckerberg.” Facebook, she said, is “trying to avoid what we really need, which is to stop the massive collection of data and to stop these algorithms that prioritize engagement and elevate the [harmful] content.”
  • Sally Hubbard spoke at “gnoviCon 2019 – Big Tech, Data, and Democracy” sponsored by Georgetown University’s Communication, Culture & Technology Program last Thursday. Hubbard talked about Facebook’s business model, saying, “The engagement algorithms are a business choice that Facebook is making. It’s not the inevitable way that social media needs to be. It is the most profitable mechanism for Facebook to serve its targeted surveillance digital advertising model.” She added that competition and regulation should check companies “from pursuing profits without regards at all for the consequences,” but “Facebook has neither of these things.”
  • Barry Lynn and Sally Hubbard spoke on the “Reasons to be Cheerful” podcast with UK MP Ed Miliband and Geoff Lloyd about proposals to break up platform monopolists. Talking about past networks like railroads, telephones, and electricity, Lynn said “Every single previous network, what we did was apply simple rules to make them neutral, to ensure that they served us. And with Google, Facebook, and Amazon these are the first middlemen monopoly networks that we have not imposed simple neutrality or common carriage rules…We’ve allowed them to have a license to exploit that power, to manipulate us.”
  • Sandeep Vaheesan spoke on the Working Life podcast about the Open Markets Institute’s call for the Federal Trade Commission to ban non-compete clauses in employment contracts. Vaheesan explained, “As anyone who’s held a job can understand, the employee-employer relationship is one defined by radical inequality. You typically don’t have any power to negotiate over wages, benefits, or other terms of employment.”
  • Sally Hubbard told The Hill that Apple’s recent announcement to move into credit cards, entertainment, and news subscriptions means that “enforcers need to be very vigilant to make sure that Apple is not tipping the scales in its favor” since Apple would be “controlling the game and playing the game too.” She added to The Washington Post that European regulators are investigating Amazon over analogous concerns.
  • Sarah Miller called the Federal Trade Commission’s plan to conduct a study of platform monopolists’ data practices “a step in the right direction” in Politico’s Morning Tech newsletter, which noted that some of Freedom From Facebook’s “complaints remain unanswered.”
  • Sandeep Vaheesan talked to CNBC about Apple’s monopoly over its App Store, saying, “It’s a real concern because Apple has told both iOS users and developers if you want to sell or purchase you have to go through the App Store, and there’s no other way for the two sides to connect with each other.”
  • Jonathan Tepper supported the Open Markets Institute’s non-compete petition in The American Conservative. Tepper writes, “Indeed, non-competes only help firms that want tight control over employees. They are disastrous for workers’ wages.”
  • William Janeaway of MarketWatch credits OMI advisory board member Roger McNamee and Barry Lynn with “add[ing] an imaginative dimension to the discussion of antitrust” by pointing out that exchanging user data for services that are arguably stagnating in quality “may well qualify as customer abuse.” Janeaway made the comment in a review of Shoshana Zuboff’s The Age of Surveillance Capitalism and McNamee’s Zucked.
  • Washington Monthly article about the rise of anti-monopoly politics in the 2020 presidential campaign writes about how Barry Lynn and Lina Khan helped inform Sen. Elizabeth Warren about the rise of corporate concentration in 2016. The article also pointed to a 2018 speech Sen. Cory Booker gave at an Open Markets event where he talked about monopolies throughout the country’s food system: “The farmer’s share of every retail dollar has plummeted . . . and small family farmers are being driven to bankruptcy.”

📈 VITAL STAT:

$927,000,000,000

Total value of global mergers and acquisitions agreed to in the first quarter of 2019, the second-highest first quarter sum this century, according to the Financial Times.

📚 WHAT WE’RE READING:

  • “A Watchful Eye on Facebook’s Advertising Practices” (The New York Times, Olivier Sylvain): What Facebook’s recent settlement with civil rights groups over charges of housing discrimination says about how policymakers can and should regulate the social media giant.
  • “A Revolution Sweeping Railroads Upends How America Moves Its Stuff” (The Wall Street Journal, Paul Ziobro): How America’s Class I railroads are using their oligopoly power to cut costs, and service and boost profits. (Read Matt Buck’s article on the trend in the Washington Monthly in November.)
  • “How to Think About Breaking Up Big Tech” (The Intercept, David Dayen): Why Elizabeth Warren’s plan to break up platform monopolists set strong terms of debate about how to check the power of Facebook, Google, Amazon, and others, and what her critics don’t understand.
  • “Lina Khan: ‘This Isn’t Just About Antitrust. It’s About Values” (Financial Times, Rana Foroohar): Foroohar profiles Lina Khan and how “law – along with the economy and society at large – may be about to reach another dramatic turning point.”

 

 

 

 

 

Join the Movement


In America today, wealth and political power are more concentrated than at any point in our country’s history.

The Open Markets Institute, formerly the Open Markets program at New America, was founded to protect liberty and democracy from these extreme -- and growing -- concentrations of private power.

Stay updated


Sign up to stay informed.