2020 Election: Policies that Can Tackle Corporate Concentration (Episode 72)

So she’s put out at least three big pieces that I’ve caught. One is around big tech. She’s also got a big piece around agriculture and what’s happening to farmers and the whole food system. Then lastly, she has a corporate tax reform proposal that I think you could safely read as being about rolling back corporate power.

The other component of it is that she’s calling for a rollback of recent mergers, so essentially saying that there has been this period where these companies have been allowed to, say, Facebook buy Instagram and that those acquisitions were a mistake and we actually need to reverse those. I think what’s interesting as part of this proposal and I think is a way that Elizabeth Warren stands out not only in terms of having put a lot of meat on the bones of ideas. I mean you’ve got other people running out there who are saying “Oh, yeah. Big tech is a problem or I’m concerned about concentration,” but mostly with some exceptions, they’re not going any further than that into specifics. She’s put real specifics out there.

She’s also, I think interestingly, talked a lot about the role of agencies, like federal agencies in carrying this out. So I think has a sense of the fac that the presidency is not just about proposing legislation, but there’s a lot of power within the administration and how do you use that in order to tackle the question of big tech.

So it is telling that this has become a big issue, that there are several candidates who are picking up that this is one, but when you contrast that with this issue of electability that a lot of people are focused on, you have the candidate that most people are thinking of when they think of the word electability squarely in opposition to good policy around mergers and concentration.

And it doesn’t seem to me that there’s as much focus on that, really, across the whole discussion about this race. I mean, Bernie Sanders is another person who’s been talking about concentration, particular in the agricultural section lately. He just gave a huge speech in Iowa all around breaking up farm monopolies and really talking about how to restore rural America and I think coming from Vermont has a very strong sense of what that means, like what’s going on with dairy farmers right now and kind of being on the losing end of things. So, there is this part of the race that is policy focused and people who are out there, I think, articulating a certain vision that was really absent for the Democratic Party for a long time and so that’s kind of good news.

But I do worry about someone like Biden who comes in and says, “Well, it’s not really about any of these things. I’m just electable and everything was fine before and Trump’s an anomaly,” and all of that and I just think that that’s just not true.

Like, right now, you have to go through John Deere, it’s a whole racket and she’s also got some reforms to something called The Check off Program, which is something that a lot of growers and people who raise meat have to pay into these funds that are ostensibly for marketing but are really used by large processors for their own ends. And so, she’s calling for reform to that. So I think there again, you see some mix of anti-trust things but also kind of recognizing that there are other tools at play that can be useful. And that’s also evident in her corporate tax reform proposal and what struck me about that is kind of interesting is that she talks explicitly about part of the purpose of it is to level the playing field. So, she is pointing to data that shows that the very largest companies pay lower affective federal tax rates than small businesses do.

And a lot of it is because of loopholes. We have examples like Amazon last year earned $10 billion in profits and paid zero federal taxes. I mean, you can go out and walk down your main street and I challenge you to find a single retailer who didn’t pay something substantially higher than that. So, her tax reform proposal is kind of build around that idea of how do we have actually a level playing field?

But in fact, if you’ve dealt with wealth rather than income, that argument can be flipped.

And that was a political movement in and of itself so the idea that we don’t have a wealth tax shouldn’t stop us from thinking about, its possibilities and its potential.

So, it was what opened the door to really a technological development that today is challenging the very centralized model, as John Farell has pointed out innumerable times.

We’re going to jump right back into it and David, you had mentioned something about one of the candidates who is not getting a lot of attention that you thought was important and this is something that actually Hilary Clinton decided not to run after giving it very seriously consideration in 2016, the idea of guaranteed income and I’m curious how you can tie that into local self reliance.

At the same time, allowing that people will have jobs and that labor income is extremely important. So, universal basic income concept is now being adopted and it’s being adopted by a lot of different sides and it’s a complex subject, because one side essential wants to say, “Let’s take all the welfare programs, consolidate them and then give them equally to people around the country.” But the more I think, a sophisticated and well constructed argument is that much of the wealth that’s generated in a society is generated because of what the public sector has done, what government has done, et cetera. And this idea goes back to the very beginning of the United States and the Republic and to Thomas Paine and Thomas Paine wrote a book, extremely popular book called Agrarian Justice and he put forth the concept of a citizen’s dividend.

And the argument was that the value of land, the increase in the value of land, comes from two different things. One is the labor that people put into the land and that should be yours, that’s your income, that’s your genius, that’s your sweat. But the other is because of what the public sector does and at that time it was rural. So, roads for example, regulations related to delivery systems and today we’re talking about parks, we’re talking about piping systems, broad band extension. And so, the argument is then a part of that and this is what Thomas Paine said,

10% of that should actually be taken from, because that’s essentially rent and should, it’s unjust acquisition of wealth that should go to the public and then to be distributed in dividends to every man, woman, and child in the United States. And the amount of money that he was going to distribute is almost exactly the same amount of money in current dollars as the amount of money that Andrew Wang, who is a democratic presidential candidate, wants to distribute. Now there’s a problem with with Wang in that what he wants to do is raise the money from a 10% value added tax, and we can talk about a 10% sales tax at some other time, but many other people are saying what we should do is have a financial transactions tax. We should tax the increased value that comes from copyrights, from patents. That is the things that we did as a society as a whole that increased the value to an individual. A portion of that should go to the community as a whole.

But I don’t believe that we’re going to have a shortage of work if we actually have the kind of economy that we should have. I think we’ve always had technological change and there have been these periods in time where technologies have come along and wiped out entire sectors. I think what is different right now is that you have a handful of companies that really have a stranglehold. Because what happened in the past is that there was a sort of flush of new innovation, new ideas that led to new industries and new kinds of jobs, and we’ve really seen a collapse in that pipeline.

And what worries me about the whole UBI discussion is it becomes sort of a way of letting, big tech in particular, but large companies kind of off the hook and not recognizing that problem. And I also think as a matter of policy, deciding that a large share of the population is essentially useless is a really … I think that’s an incredibly dysfunctional idea. And I also don’t think it’s true. I think there’s an incredible amount of work that needs to be done. I mean we had Sarita Gupta on this podcast back I think last year sometime, I can’t remember. Talking about the care economy and sort of the whole tremendous amount of need there is for people as they get older and for kids, childcare and the like, which is going unaddressed. So I think there’s a lot of work and I think the idea of saying there is no work and that people are useless is a problematic idea.

And now we can see in the retail sector and in the personal care sector, the beginning the substitution in that sector. So I do think that one can talk about the dynamics of history in a different way, but the important point is that no one that I’ve read, actually is talking about a universal basic income as your only income. But with the studies that have been done, the pilot studies that have been done in Canada and in Finland and the like, indicates that even if you get a $10,000 a year, $8,000 a year, that amount of money changes the way you work, the way you think of yourself, and the options. Not only if you happen to be very low income, but also if you happen to be above that age and income levels. And that’s what they think is mostly important on this.

A few other episodes then addressed a concentration in the agricultural sector, which has been mentioned by a few of the candidates, including Warren. John Ikerd, episode 32, Joe Maxwell and episode 33, and then in episode 65 Leah Douglas. All three of those podcasts for Building Local Power we talk about the way in which concentration the agricultural sector is making it difficult to make a living as a family farmer.