State legislatures are central to our political ecosystem. Supreme Court Justice Louis Brandeis, a champion for local economies and against monopoly power, first coined them as “laboratories of democracy” for their ability to take up innovative solutions to society’s problems. Given that hope, it is unfortunate the level to which our state legislatures have been captured by massive, corporate interests.
In this episode of the Building Local Power podcast Stacy Mitchell sits down with John Farrell and Christopher Mitchell to discuss this trend in broadband access, electric utilities, and Facebook’s data dominance.
“It can be pretty easy these days to get completely distracted by the national news. But there’s a lot happening at the state level, including a lot of fights that really go directly to this question of who makes decisions… Do we govern companies? Or do they govern us?” says Stacy Mitchell. “We have this power locally and at that state level that could be the pathway to actually begin solving some of these issues.”
Throughout our conversation, our staff members mentioned external and internal resources that will help you explore the issue of corporate power in state legislatures:
- Power Failure: How utilities across the U.S. changed the rules to make big bets with your money — In this investigative piece for the Charleston Post and Courier, Tony Bartelme detailed a disturbing trend that we’ve noted elsewhere: that utilities fund a vicious cycle or larger returns that buy greater political power in state legislatures that fund larger returns.
- The Rising Anti-Monopoly Movement (Episode 36) — This roundtable discussion between ILSR’s Stacy Mitchell, John Farrell, and Christopher Mitchell delves into the growing movement against monopoly power in the political economy.
- Colorado Chooses to Subsidize DSL Rather than Fiber, Community Broadband Bits Podcast 256 — In this episode for our Community Broadband Bits podcast, Christopher Mitchell sits down with a broadband access leader from Ridgway, Colorado to detail how, due to a dubious state policy funded by giant ISPs, the state is granting money to inadequate satellite broadband rather than a local solutions.
- Beating the Monopolies: Barry Lynn Explains How We Will Win (Episode 30) — In this episode of the Building Local Power podcast, ILSR co-director Stacy Mitchell sits down with Barry Lynn, head of the Open Markets Institute, to talk about how we fight concentrated corporate power and its impact on our liberty and democracy.
- The Senate is Afraid to Govern. That’s Great News for Facebook. — In this piece for The Intercept, David Dayen gives a rundown of the first day of congressional testimony between the Senate and Facebook CEO Mark Zuckerberg. Dayen argues that by continually asking for input on the kinds of regulations favored by Facebook, the Senate is deferring to existing monopoly power to write the rules.
- The Monopolist’s Playbook: Strategies To Retain Overwhelming Economic Power (Episode 21) — Guest host Nick Stumo-Langer discusses how these corporations fight against local communities with a number of ILSR’s experts. As our experts argue during the podcast, corporations use flawed, assumption-ridden academic studies; public fear and ignorance of technical economic issues; and products and policies that attempt to masquerade as “local” when they are actually created by large companies.
|Stacy Mitchell:||Hello and welcome to Building Local Power. I’m Stacy Mitchell, co-director of the Institute for Local Self-Reliance.
If you’re like me, it can be pretty these days to get completely distracted by the national news. There’s a lot happening at the state level, including a lot of fights that really go directly to this question of who makes decisions. Who’s in charge? What’s the nature of democracy in the context of really powerful corporations? Do we govern companies? Or do they govern us? Those are some of the themes that we’re gonna talk about on this episode of Building Local Power.
I’m joined today by two of my colleagues, here at the institute. John Farrell is director of our Energy Democracy Program. Hey, John.
|Stacy Mitchell:||John is joining us from Cancun, Mexico because, oh poor thing, his flight was canceled on the way home from vacation. So, his internet connection may be a little wonky, but we’ll see how it goes.
And we’re also joined by Christopher Mitchell in our Minneapolis office. I always like to introduce Chris by first saying he’s no relation of mine, and he also directs the Institute’s Community Broadband Program. Welcome, Chris.
|Christopher Mitchell:||Hi. It’s a pleasure to be talking to you from my snow cave in the lovely Minneapolis near where John is avoiding doing his own shoveling, I’m sure.|
|John Farrell:||To clarify too that I am also no relationship of Chris Mitchell.|
|Stacy Mitchell:||Yes. Well, John, let me start with you. There are a lot of fights going on in a number of states around nuclear power. And we have some big incumbent utilities that are really pushing this agenda to continue using their nuclear power plants and to be able to foist a really high cost for that onto rate payers. Can you tell us a little bit about what’s going on?|
|John Farrell:||I think what’s really important as background to understand in our electricity system is in a lot of states, this is not a competitive market. In fact, it’s deliberately not one. We have 30, where the utility company that serves a particular city is the only utility company allowed to serve that city. So, we’ve given them a monopoly. And in exchange for that, they’ve agreed to fall under public oversight. And what’s happened, unfortunately, is that utility companies, in many cases, are private corporations. So, they have their own interest for their shareholders, and that’s the tension sometimes with the public interests. It means that they sometimes like to go around that public oversight. So, there are these state commissions, these state regulators, overseeing these nuclear power plants that were built at great expense many years ago but have been operating for a very long time. There’s a lot of new competition from the market from solar and wind energy and other cheaper sources of electricity, as well as from natural gas. And these power plants are increasingly expensive to run, but they’re owned by utilities that don’t generally have competition but are now starting to feel that from other power producers, where there is some competition up at the wholesale level.
And so, what’s happened is in a number of states, they have utilities going to the legislature, where they have a lot of power through their lobbyist, where they can spend a significant amount money whether that’s through campaign contributions or in terms of the lobbyist that they have or in terms of the literature that they can produce and send to lawmakers. They’ll draft legislation. They’ll get lawmakers who often have a weaker understanding of energy policy than the state regulators to push bills for them. What that has meant in a number of states is operating subsidies to keep nuclear afloat. What’s frustrating about it in particular is that there is a tension, I think, among a lot of folks in the energy space around this because of course, nuclear power plants, when they generate electricity, don’t generate any carbon. And there are a lot of folks that are obviously very concerned about producing carbon dioxide emissions and I think some willingness to talk about how do we find a way to get to the lowest carbon in our electricity system. But our renewable energy is really, really cheap right now. And so the danger that we’re in is that we throw a bunch of money at these aging legacy, nuclear power plants. We may not be successful at finding the lowest and cheapest cost way to reduce carbon emissions.
|Stacy Mitchell:||How is this actually playing out in some states? You’ve written some about Minnesota and what you’ve described as blank check that the big power utility there is looking for. Can you tell us what that is?|
|John Farrell:||So there’s a bill in the Minnesota legislature. It’s already passed at senate committee. It’s got a House hearing the week of April 16th. It’s essentially is a blank check. What it does is it gives advanced approval for the costs to keep their nuclear power plants operating for about another 10 years. Normally, there would be a process where the public regulators would get to review how much the utility has spent after the fact, and say, number one, is it prudent? Did you spend appropriately. Number two, is that cost then allowed to be passed on to customers? The last time this happened …
The last time Xcel Energy in Minnesota, the biggest investor shareholder on company, did this process for a nuclear power plant, they went horribly over budget. About $750 million was spent on a $300 million budget. The public regulators determined that much of that spending was not prudent … That the retrofit process have been mismanaged. They did not allow the utility company to make a profit on the money that it recovered from customers. So customers still had to [inaudible 00:05:30] the bill. We still suffered from that mismanagement, but the utility company didn’t get rewarded for mismanaging that process.
This bill throws all that out the window. It essentially says whatever we just spent on a nuclear power plant is prudent simply because the bill says it’s prudent. It means that they’ll be able recover all the costs there are no matter what they are, and that they’ll make sure that the shareholders are kept whole and make a profit. And so, it’s a terrible bill from the standpoint of holding utility accountable for costs. And it’s a terrible for consumers because it essentially says shareholders first, customers last.
|Stacy Mitchell:||It’s really striking because it seems like … It’s in the weeds. And so, how much people are really paying attention to this? And then, the fact that it also seems on its face somewhat logical that will come to you before we spend the money, as opposed to after we’ve spent the money. And yet, it really does something different. It really puts the utility in charge of deciding if those investments are right. Is that the way to understand it?|
|John Farrell:||Yeah, exactly. I think even more than that, there’s two problems. One is that the legislators simply don’t even understand the process well enough to understand what the utility is doing. I mean, they look at the bill, and the bill says, “Hey, a nuclear power plant is getting a fancy name called a carbon reduction facility,” which the utility simply made up on whole cloth. It says, “Oh, the public utilities commission is listed in the bill in a number of places,” as though it will have a real role in the process even though it’s after the fact. It will be able to say, “Yes, you can recover all the costs that you said were going to incur. And we have no way to stop you from doing that.”
It doesn’t seem like it’s doing anything significant and ask why it’s then a challenge to be clear with legislators in particular about what this means. That’s why that term, blank check, is so important is because it really helps give visual to lawmakers about what the bill does, given that it gets into these technical weeds that are … They’re challenging to understand for anybody. But a legislator, whose juggling a lot of different policy areas, it’s very difficult for them to wrap their heads around what’s happening.
|Christopher Mitchell:||I actually think the term, blank check, doesn’t nearly go far enough. It’s more like a blank checkbook. They don’t have the ability just to write one check to themselves. They can just come up with any number of systems that they want to gold plate or screw up and come back and redo over and over and over again it sounds like. I mean, it seems like an unlimited number of blank checks over the next several years.|
|John Farrell:||I know. It’s true. We really have no idea how much money it’s gonna be. They’ve hinted at something like $1.5 billion as their upfront estimate. If it’s as off as their last estimate was, then it means, of course, that we got bill [inaudible 00:08:06] that’s $3 billion coming to customers of Xcel Energy in Minnesota. It’s a very dangerous precedent, not only in terms of undermining the regulatory process, where the experts of the public utilities commission already have a way to check the utility and make sure that these costs are done prudently. But the utility already has a way to make sure that these power plants can keep running. I mean, they’re still a monopoly. It can still run these power plants if they need to. They simply have to make sure they spend the money appropriately.
And so, it’s I think very, very ballsy, for lack of a better term, that the utility company is coming … And essentially, they’re saying “We can already do what we want to do as far as the power plants are concerned. We can keep them running. We can keep them operating. We can retrofit them as necessary. But what we really need to change about the process is make sure that are shareholders can make money off of every dime we spend, regardless of whether or not we manage the process well.
|Stacy Mitchell:||This isn’t the only bill that Xcel is pushing in the legislature. They’ve also … As I understand, it got another bill that’s even in some ways, the language is much more subtle and yet could potentially have really far-reaching implications on their competition from community-owned solar. Talk about what’s in that bill and what it would mean if it were to go through.|
|John Farrell:||It’s draft in the legislation. I want to be clear, that one has not been introduced. It was circulated by their lobbyist to a number of advocacy organizations and would number of things but primarily undermine the most successful community solar program in the country. So, community solar is a way that people can … If they don’t have a sunny rooftop or they wanna just own a little bit of solar but not a lot because they don’t have a lot of money, that you can put a solar panel on a local cooperative grocery store … You can put it on a church, and folks can own a couple of panels that could help offset their electricity use.
Minnesota’s program has over 300 megawatts. It’s enough to power something like 60,000 homes. The bill that Xcel lobbyists wrote and were preparing to introduce I think if they had the opportunity would have essentially undermined the entire program by removing the authority of the public regulators to ensure that the program’s structure and the payments to customers were sufficient to allow projects to be developed. It was really the core piece of the program, the core element of the intent of the law, when the legislators wrote it was we want to make sure this stuff happens and that these opportunities are presented to customers across the entire service territory of the company. It’s kind of a one-two punch. Both of are in favor of shareholders. One is gut punch to customers in a way that Xcel spends the money on the power plants they operate and then, the other one is saying we’re gonna reduce the kind of choices that you have to reduce your energy consumption or to produce your own energy at the same time.
|Stacy Mitchell:||Now, Xcel really seems like a company that has gotten the habit of thinking that it writes the rules, that it’s in-charge, that it governs us. This isn’t just playing out in Minnesota. My understanding is that this is happening in other states too where we’ve got other electric utility monopolies that are at the precipice here of this world, where we might have more competition or we might have people being able to produce their own power, where we might have renewables. They’re really stepping in and acting as though it’s their decision and power to sort of say what the future should hold and one, of course, in which they continue to be central. What’s happening on this front in some of the other states?|
|John Farrell:||So you’ve got legislation in Ohio. That one is still under debate. You have deals that have been cut in Illinois and in New York to keep nuclear plants operating and some of which lacks some of those fiscal safeguards that we think are important for customers.
Probably the most insidious other example though is down in South Carolina. This is one of a handful of states that they opposed in courier newspaper called out the utilities for … What I love to directly quote, “a bonfire of risky spending” on nuclear power plants and other large-scale power plants that have since failed. And so, there’s been a lot of scrutiny of the utility there in South Carolina. A lot of effort made on behalf of customers there to try to recover some of those costs. Right now, every customer on average every month is paying $27 for a failed power plant that will never produce a single kilowatt hour.
So, there was a bill being pushed through in order to increase access to solar energy to give customers more choices about how they could cut their energy cost since the utility had made this horrible bet with their customers’ money. The bill is going through. It had a majority and a very conservative legislature to support solar energy. It was very exciting. But one of the legislators, who has received almost $70,000 in campaign contributions from electric utilities in the last decade, successfully threw in a technicality that made the legislation require a two-thirds majority to pass. And so, the bill failed. And again, this is in a state where there has been a lot of scrutiny of utilities for doing horrible things, horribly mismanaging customer money, costing customers enormous amount of money, and yet, they still wield this outside influence when it comes to the way that customers can have choices over where their energy comes from and controlling their energy costs.
|Stacy Mitchell:||You’re listening to Building Local Power. I’m Stacy Mitchell with the Institute for Local Self-Reliance. We’ll be right back after a short break.
This is the part of most Podcasts when you’d hear an ad for say, a home meal delivery service or maybe an online mattress company. We don’t take ads here at the Institute for Local Self-Reliance, but we do ask that you please consider supporting our work. Your financial support not only underwrites this Podcast, keeping it ad free, but it also helps us produce all of the research and resources that we make available on our website, and all of the ways that we actually help local citizens and policy makers build local power in their communities. Please take a minute and go to ilsr.org and click on the donate button. That’s islr.org. Scroll down about halfway down the page and click on the donate button.
And if making a donation isn’t something you can do, please consider helping us in other ways. One great thing you can do is to rate and review this Podcast on iTunes, Stitcher, or wherever you get your Podcast. Rating helps us reach a wider audience, so it’s hugely helpful when you do that. Thanks.
Chris, this is sort of similar to what I know we’ve been seeing with internet service providers. These incumbent ISPs have really been for years guiding what states do and using that influence that they have at the state level to make sure the game is rigged in their favor. But you say that this is beginning to loosen up. That in fact, some states are starting to get wiser to this and to push back a little bit. What’s happening?
|Christopher Mitchell:||Well, there is, definitely, hope. Yeah. I definitely welcome John to correct me if he thinks I’m wrong. But to set the stage, it’s worth noting that in broadband and telecommunications, we face a similar landscape in some ways but different in other ways in that every state has big cable, an incumbent telephone companies that are very powerful at the legislature in part because they operate in every single district. They have a lot of money and influence with the legislators. But whereas John typically is working in coordination with other groups, some conservative, many more on the left. There’s green power groups. There’s environmental groups in every state. Most states don’t have anyone really working on telecom issues except for maybe New York and California, where they are still significantly outgunned.
And so, the big cable and telephone companies have had success after success in state legislatures of shaping legislation. But like you said, it’s starting to change. We’re seeing states resisting that siren call of the monopolies in important ways. One of them is just the net neutrality. Seeing after the Federal Communications Commission repealed net neutrality last December, we saw a lot of states considering it. We’ve already seen three states take executive action to try to recover net neutrality protections in their states to at least a limited extent. We saw the states of Oregon and Washington actually moving bills through the normal process, signed by the governors to formally reinstate net neutrality protections, and again, in one way or another. In California, there’s a very strong movement to do a similar thing that’s not yet finished on net neutrality.
|Stacy Mitchell:||On the question of net neutrality, do states have the full authority to restore net neutrality? If all 50 states did this, would we be okay without the federal government doing so?|
|Christopher Mitchell:||It’s a really good question that nobody can answer, but lawyers are making a lot of money trying to predict. Because this is an interstate commerce issue, it doesn’t automatically mean states cannot regulate it, but it does mean that the courts get to decide where and when and how and those sorts of things.
We do think that the states are tying net neutrality protections to procurement. That will succeed. I don’t think many of us think that would be rolled back. That’s the situation where if you’re in New York, New Jersey, Montana, or Oregon now … If you’re a company that does business with the state … If you’re getting state contracts, you have to run your network in adherence with the rules that the Wheeler FCC had instituted in 2015, the rules that were repealed in 2017 by the Trump administration. We think those will stand. In Washington and what California is contemplating, those will also be challenged very strongly by the FCC and probably the ISPs to the extent you can distinguish the big monopolies from the FCC in the current administration. Many of us think that will also be found to be okay. But it’s hard to say with the courts in the shape that they are, given just how pro-corporate they are from the district level to the supreme court.
|Stacy Mitchell:||It seems like this push by states around net neutrality is part of them kind of finding their sea legs when it comes to not just rolling over and doing whatever the ISPs want them to do. There’s some other examples, as I understand, that are starting to happen, where states are also insisting that ISPs don’t have that kind of power to completely control outcomes in the market. What else are you seeing?|
|Christopher Mitchell:||It is worth saying that many of us were skeptical as to how far the states would go and how quickly. In part, that’s because from our reaction from the privacy situation, which was that one of the first things that the current congress did, when the republicans fully took over with Trump as president, was to trample on our privacy rights. Again, the Wheeler Federal Communications Commission under Obama protected our privacy so our ISPs couldn’t just go and sell our information. At the very least, they have to get our permission first. But we have lost that once again. When that happens, states actually very commonly, and Minnesota is one of them, rushed in 2017 to pass their own privacy regulations. The ISPs stopped all that. And so, many of thought states would make a lot of noise about net neutrality. But maybe the companies, the big monopolies would stop them from doing anything. But they haven’t.
One of the things that shocked us was when West Virginia, a state that had long been, I would say, controlled by the incumbent telephone company … I believe it was last year, they passed a bill that Frontier, which is the big telephone company there, opposed. Our jaw dropped because we hadn’t really seen that happen before. Now, more recently, Colorado basically told Centurylink, “Hey, we don’t work for you. We work for the people of the state.” Specifically, what with Colorado has done was weaken what we call the right of first refusal.
The right of first refusal is one of these monopoly protection tactics that the incumbents write into broadband subsidy bills to make sure that the government cannot encourage competition anywhere. God forbid that a government in the United States would somehow try to encourage the federal policy of competition in Colorado specifically. Now, if an incumbent wants to exercise the right of first refusal, they actually have to build the network as good as the proposed network that they’re stopping. So if Colorado was gonna subsidize a new network, and say, Ridgway, Colorado, which is in the mountains and where Centurylink stopped a gigabit network from being deployed and is rolling out a much slower network. If they were to try to do that today, Centurylink would have to deploy a network that was offering high quality gigabit speeds at a similar cost to what the new provider was proposing. That’s some pretty good teeth and that’s the right of first refusal we can live with. Although, it’s still really annoying.
|Stacy Mitchell:||Tell us more about this case in Ridgway, Colorado. We’ve got an article up in our website now about this. It was really shocking for me to read because you had this … Was it a local company or a local organization that was gonna come into a community that really had been left behind. I mean, Centurylink kind of brushed past and didn’t really seem to want to service. And so, someone else came along that wanted to do high quality fiber network in this region. What happened?|
|Christopher Mitchell:||Yeah. It’s exactly as you describe it, an ISP that had experience in nearby areas wanted to expand its connections. The local folks were really thrilled. That a very high-cost area, so the state has this subsidy program. Like you said, Centurylink wasn’t providing very much at all in that community. They’d had, I don’t know, 20 years to make investments and they hadn’t done it. So, anyone who might think it’s unfair that a state would subsidize a new entrant into an area, where an incumbent totally ignoring its customers. I don’t find much persuasion there. But they went for it/ They applied for this grant program, and Centurylink challenged it.
Unfortunately, the lack of technical sophistication among the people that were making these decisions led them to give the money to Centurylink instead. I don’t believe Centurylink got all of the money. But Centurylink got a chunk of money then from the state to do a network that was inferior to what the company that was gonna serve the community of Ridgway was going to build. That led to a Podcast, actually, that we did on the Community Broadband Bits Podcast last year I believe, with a guy named Doug Seacat, who was running that process. For people who would like more information, I definitely recommend checking that interview or transcript.
|Stacy Mitchell:||Yeah. We’ll put a link to that up on the show page for this episode so people can find out more about that.
I’m sort of struck with both of you and what’s happening in both of these sectors by the fact that we tend to assume that markets are somewhat competitive. The ways in which these monopolies or these incumbent providers exercise their powers is often subtle. It’s often sort of in the weeds, but it has these really profound effects on what comes to play.
|Christopher Mitchell:||I’m trying not to dial my outrage meter too much, but let’s remember that in both the electricity infrastructure and the telecommunications infrastructure, we’re talking about public infrastructure. We paid for it, right? This is not a situation in which a company … For whatever reason, I always come to Apple with this … Developed this cutting edge new product. They took risks. They borrowed money from shareholders to be able to do it. To some extent, the companies that we’re dealing with borrowed money. But they did it in a monopoly environment. The cable companies have monopoly franchises for decades in most areas. The telephone companies have monopoly service territories in which they built this infrastructure with our money and they made a profit on it, right? The electricity infrastructure, much the same.
This is all our money. And now, we’re fighting over these different issues as though these companies somehow would be unfair because of all of the risks they took, all the incredible decisions that they made to win in the market. We’re trying to establish a market, and we’re being stopped from doing so by incumbents that desperately want to preserve their lack of competition, their monopoly power. It’s worth remembering, we built all this infrastructure with our money.
|Stacy Mitchell:||I think that’s a great point. John, do you want to jump in?|
|John Farrell:||I think that is really the crux of the issue in the electricity sector as well … Is that we’re not talking about a situation in which the financial risk is actually being born by the incumbent because of the monopoly protection that they enjoy. Whereas, for example, with the solar bill in South Carolina, the people who are gonna put solar on their roof and the solar companies that are gonna install it are taking all the risk. It may not work out for them. It may end up that it’s not gonna save them as much money as they expect. There might be a fault with the solar array. They’re taking a risk in order to have some choice and some freedom.
What the utility is essentially saying is you have no choice. You simply have to go with us. You have to take advantage of the electricity that we provide with your money based on the philosophy that we have. So I think it is a crucially important understanding of how our system works and that that’s the importance of providing more choices and opportunities and making sure that the risks are born fairly.
|Stacy Mitchell:||It’s a good point. It’s also true that this whole issue really sort of speaks to kind of our core goals around reclaiming democracy and the power of people. I guess it’s hard for me … Thinking about this issue of the relationship of companies to government not to also turn back to the national front and reflect a little bit on the hearings with Facebook this past week. Mark Zuckerberg, CEO of the company, in front of committees in both the house and the senate … What was striking to me especially the first day in front of the senate was how much lawmakers would just ask Zuckerberg like, “Would you support regulation? What kinds of regulation do you think there should be?” I just felt like sort of jumping up and down and saying who cares what Mark Zuckerberg thinks about regulation and whether he should be regulated–|
|Stacy Mitchell:||Or not. Why is he deciding? Why does he have any authority over this or any influence compared to anyone else? I don’t know. I’m curious what other kind of takeaways you guys had from those hearings.|
|Christopher Mitchell:||My overwhelming takeaway first of all is that it was an embarrassment I thought in that many conflicting feelings … One of them was that when you had congress berating Zuckerberg in part for taking advantage of the lack of rules that we had set up. I mean, it’s been obvious that privacy would be an issue for a long time. There are groups in DC that do really good work on how to thread the needle between protecting privacy and not stifling innovation. So, there’s ideas out there and congress has utterly refused to engage with them. To some extent, it’s not like Facebook got into this position without a failure at congress.
But the observation I wanted to just throw out there is that Marsha Blackburn, representative from Tennessee, got a lot of credit for being really tough on Facebook and apparently being very well prepared. That didn’t surprise some of us because right now, the big telephone companies like AT&T are working very hard to try to punish Facebook and try to lock Facebook and Google away because they are threatened by Facebook and Google. Marsha Blackburn has basically been a representative from AT&T, long neglecting her residence and constituents in Tennessee. I have no doubt that AT&T prepared her very well to be able to go up against Zuckerberg. I haven’t seen … Even the tech writers, for the most part getting that. Although I think some of the folk like Karl Bode at DSL Reports and others that actually aren’t as well read. They’re not in the New York Times. But they’re the other ones you should be reading on these matters because they pick up on that.
|Stacy Mitchell:||That’s interesting. It’s so easy to miss those behind the scenes corporations up against one another. Ultimately, not necessarily working out to serve our interest. John, what did you think about the hearings?|
|John Farrell:||I mean, I think it is an unfortunate amount of feeder as you highlighted, Stacey. When lawmakers are asking for the next step from the company that caused the problem, then the whole situation is backwards. You just have to ask yourself what is it that causes this problem. And it is the fact that one company has such a valuable store of data because they have such a concentration of power over the social media market and all of this data from customers that is accessible and worth mining into.
I mean, it’s like the same reason why people don’t dive through garbage cans and recycling bins for your information anymore. I mean, shredding your data and your checks or something like that is pointless because people are gonna steal your data online. It’s easier. People are gonna do it from the places that have registrations in the millions because they’re gonna get more for their dollar by doing it.
We talk about this issue of economy of scale a lot in our work, in particular, around the elements of production in our society. So whether that’s in energy, the size and scale of energy production, or in the authority over the system, whether it should be controlled in a local or a national level. And to me, that just highlights this issue that when you allow any kind of company, but especially a company that is essentially an information and advertising company that has a face as a social media company have this economy of scale so that they control so much of the nation’s conversation as was an issue back in the election but also some of the nation’s information about its people, of course you’re gonna have this problem. And of course, they’re gonna be a target because they’re such a juicy target.
And so, the idea that A, lawmakers are asking for assistance from Facebook in figuring out what do is crazy, but also ignores the whole problem, which is Facebook being big is the problem.
|Stacy Mitchell:||I think that’s right. You know, I didn’t get to watch all the hearings by any means, I think it was for 10 hours total. But there was both like this sort of theater of the whole thing that can create this sense that something is happening, something is being done, when in fact, nothing has happened and it’s not clear that anything is gonna be done. And so, it creates this kind of false sense that this company is under scrutiny, and there’s stuff happening with legislation when in fact, there isn’t anything at this point happening with legislation.
I didn’t see it all … But I didn’t hear anything about really structural solutions like what about the idea of Facebook having to spin off Instagram and WhatsApp. They were allowed to acquire those companies and probably shouldn’t have been.
So what about the idea of making them spend those companies off, breaking them up, and also prohibiting Facebook from any new acquisitions for the coming years. Those kinds of structural issues. Ways in which we could make their algorithms accountable and sort of much more transparent. The idea of you being able to port your data to other places. There are things that are being discussed that are much more fundamental. The idea of actually making Facebook spinoff it’s ad network, and so it is a media platform and it is an ad company become two separate things. Now that’s a structural solution, and it seems to me starts to really get at the problem, at the heart of their power and the heart of their business model. And yet, my sense is that with AT&T whispering in one ear and Mark Zuckerberg and Google whispering in the other that lawmakers are maybe gonna land on some modest reforms around privacy but not really get to the heart of any of those things, which is a little depressing. But then, I guess, we did have the hearings. I found myself at a dead end with this comment.
|John Farrell:||I think you’ve hit the nail on the head though, Stacy, which is that action will be shown through either a regulatory process that’s taken up … If there was an FCC process that could intervene or if there was a piece of legislation in the same way that you see stuff happening. Like what Chris was mentioning about states taking action on broadband … If there’s not actual bill language out there, then what’s happening is just theater.
It might be important theater for raising people’s consciousness about what’s going on, but I find it frustrating when you have lawmakers who have such a limited understanding of the issues. They want their 5 minutes of fame on television asking a tough question of Mark Zuckerberg that they can use at a campaigning add is what I feel like rather than them taking seriously about what’s the solution to this problem that really is a serious issue for not only the security of the data of my constituents but also national security as what’s so prominently highlighted with the spread of fake news on Facebook’s platform back in 2016.
|Christopher Mitchell:||I would act with that, John. I would say that one thing we should do about it would be to go back to having states take strong action in this. And there are some states that are moving forward with trying to protect privacy and set some good rules. Facebook is fighting them very hard in the state legislatures. We’ll, undoubtedly, have to deal with this question of whether it’s okay to have patchwork of regulations, as though a company like Facebook that hires thousands of just to do one task like filtering out certain kinds of content or looking for hate speech as though somehow complying with 50 different rules would be that difficult for them to set up automated systems to do. But it is probably gonna be more effective in the shorter term than waiting for congress to do something while they’re waiting for Mark to give them approval for it.|
|Stacy Mitchell:||Well, it’s a good lesson about the importance of paying attention to states and being active at the state level, right? Because as I said at the top of the show, it’s so easy especially now to get completely distracted by all the things that are going on at the federal level. And yet, we have this power locally and at that state level that could be the pathway that we actually begin solve some of these issues.
So thank you both so much for joining me today for this conversation. And thank you all for tuning into this episode of Building Local Power. You can find links to what we discussed today by going to our website, ilsr.org, clicking on the show page for this episode. That’s ilsr.org. While you’re there, you can sign up for one of our newsletters and connect with us on Facebook and twitter. And once again, please help us out by rating this Podcast and sharing it your friends. The show is produced Lisa Gonzalez and Nick Stumo-Langer. The theme music is Funk Interlude by Dysfunction_AL. For the Institute for Local Self-Reliance, I’m Stacy Mitchell. I hope you join us again in two weeks for the next episode of Building Local Power.
Like this episode? Please help us reach a wider audience by rating Building Local Power on iTunes or wherever you find your podcasts. And please become a subscriber! If you missed our previous episodes make sure to bookmark our Building Local Power Podcast Homepage.
Photo Credit: Jim Bowen via Flickr.