Open Markets Institute Experts Featured in Washington Monthly
January 14, 2019
WASHINGTON, DC. — Today, the Washington Monthly ran two features offering hard-hitting commentary from Open Markets Institute’s reporter and researcher Claire Kelloway and Open Markets’ Legal Director Sandeep Vaheesan. Kelloway’s piece, entitled ‘How to Close the Democrats’ Rural Gap’ reveals the role of monopoly power in creating a new farm crisis and explores its political implications, including for control of the U.S. Senate. Vaheesan’s piece, entitled ‘The FTC Might Just Be Progressives’ Secret Weapon,’ demonstrates how the Federal Trade Commission (FTC) has the power to revive antitrust and to rein in monopolies in America.
THE STORIES IN BRIEF
‘How to Close the Democrats’ Rural Gap’: Kelloway describes the political opportunity that exists in challenging monopoly power in rural America. Supporting Kelloway’s story, in a survey underwritten by Open Markets and conducted by Public Policy Polling, when asked whether big corporations have too much power over politicians: a stunning 88 percent of respondents were at least somewhat concerned, with 71 percent very concerned.
Read Kelloway’s latest feature in full HERE.
‘The FTC Might Just Be Progressives’ Secret Weapon’: Vaheesan describes how federal courts and regulators over the last generation largely abandoned antitrust enforcement and notes the emerging consensus that the resulting vast increase in corporate monopoly power has raised prices, lowered wages, and fueled inequality. He then shows how Progressives can use existing laws to reinvigorate the FTC and roll back the trend toward ever greater corporate concentration and abuse of monopoly power.
Read Vaheesan’s latest feature in full HERE.
Key points from Kelloway’s story include:
- America is on the verge of a farm crisis more dangerous than the one that ripped rural America apart in the 1980s. Wisconsin alone has lost 1,100 dairy farms over the past two years. One large dairy co-op in the Northeast sent its members a list of suicide and mental-health hotlines along with their dairy checks.
- President Trump’s tariffs are hurting farm income, but most farmers view them as a temporary and comparatively minor factor.
- The central cause of the crisis are changes in public policy that allow predatory monopolies to strip wealth away from farmers and rural communities.
Kelloway shows how monopolization by giant agribusinesses now squeezes farmers from both sides. Farmers must pay ever higher prices to the giant corporations that dominate the market for the supplies they need, like seed and fertilizer. At the same time, they must accept ever lower prices from the giant agribusinesses that buy the stuff they sell, like crops and livestock.
If there’s a single statistic that captures the plight of rural America, it is this: In the 1980s, when American consumers spent a dollar on food, 37 cents out of that dollar went back to the farmer. Today, farmers receive less than 15 cents on every dollar. The difference is increasingly flowing to powerful and concentrated agribusinesses, middlemen, and retailers.
In 2016, the big meat-packer Smithfield openly bragged about how its record profits were due to a fourteen-year low in the prices paid to hog farmers and simultaneously higher consumer prices for packaged pork products.
As Big Ag cuts farmers’ margins, often the only way farmers can see to stay in business is to try making it up on volume, which leads to spread of “confined animal feeding operations,” in which thousands of animals are crammed together in inhumane conditions.
Kelloway shows how both political parties ignore the role of monopoly in agriculture at their peril, particularly given the outsized role rural states play in determining control of the U.S. Senate. Big Ag would oppose any Democratic effort to win in rural America with an anti-monopoly playbook. But policy levers, large and small, are available at every level of government to politicians who want to show their solidarity with ordinary voters in rural communities including busting up ag monopolies, and reforming giant food co-ops.
Advocating for such policies appeal to a far broader set of Americans than just farmers, Kelloway shows. Monopolization in agriculture not only drives down prices for farmers but raises costs for consumers. It also affects urban and suburban Americans by forcing farmers into a system of industrial-scale monoculture that lacks resiliency in the face of climate change, poses substantial human health and environmental threats, and produces a level of cruelty to animals by which more and more Americans can no longer abide.
Key points from Vaheesan’s story include:
- In creating the FTC in 1914, Congress gave it extraordinary powers to combat monopoly. These include the explicit authority not merely to prohibit “unfair methods of competition,” but also to define what counts as “unfair.”
- Starting in the 1960s and ’70s, conservative economists and jurists succeeded in persuading policy makers in both parties to back away from vigorous anti-monopoly enforcement.
- As a result, FTC began accommodating corporate power and trained its guns instead on prosecuting alleged collusion among small-scale players, such as church organists and ice skiing instructors.
Yet today’s progressives should remember that, thanks to the progressives of yesteryear, the FTC still has extraordinary power to make antitrust policy thanks to its statutory authority to identify and prosecute “unfair methods of competition.”
Vaheesan describes how the Democratic-controlled House alone can credibly threaten the agency’s funding if it doesn’t live up to its mission. The House, for instance, can use both appropriations and public hearings to pressure the FTC; if the FTC still doesn’t get the message, Congress can redirect its budget to state attorneys general, many of whom—such as newly elected Keith Ellison of Minnesota—might be eager to take on abusive corporate power if they had the necessary resources.
You can read more about monopoly power on Open Markets’ America’s Concentration Crisis report here: https://concentrationcrisis.openmarketsinstitute.org/