When Taking the Gloves Off Just Makes It Worse

Passing the decisions to commanders in the field, eschewing trust in a deeply-understaffed Department of State, usually generates the laws of unintended consequences. The Trump way. In fairness to Donald Trump – not so easy to do – Barack Obama’s failure to follow-up on his 2012 redline threat – should the Assad regime again resort to chemical weapons against his own people, which of course they did – only emboldened Assad to keep up the genocide, making matters so much worse. But that was Obama’s mistake. Trump has already begun to create his own litany of serious missteps in the Middle East and the surrounding area, mostly born of a rather dramatic failure to understand the realities he is actually facing.

When you take to the military equivalent of bare knuckle fighting, you can win, you can lose or you can deepen and lengthen the threat. Unless your opponents lay down their arms and surrender, which seems a stupid tact against a big bully that has not been able to win a major war since WWII despite its massive military superiority, you probably will just stiffen resistance, forcing you enemy to alter their tactics. If their holding hard territory is a failing strategy, you can expect new asymmetrical attacks – terrorism and cyberattacks – back on your home turf. It’s not about land right now.

We seem to have this habit of declaring victory – “mission accomplished!” – when we liberate real estate – cities, towns and often entire regions. But the enemy has a bad habit of withdrawing, biding their time, and returning when our forces inevitably withdraw and head home. Like when we shoved the Taliban out of power in Afghanistan for their complicity in the 9/11/01 attacks. Seventeen years later, the Taliban hold the most Afghan territory they have held since we “threw them out.”

In 2003, we shoved Saddam Hussein’s Sunni minority government out of Iraq, allowing a strongly anti-Sunni Shiite government (with revenge on their minds) to take power instead. That government quickly began arresting Sunni leaders, allowing Sunni towns and farms to deteriorate without any assistance from Baghdad, and seeming to declare war on that 20% Iraqi Sunni minority itself. That gave Sunni terrorist groups – from ISIS to al Qaeda – a foothold in those abandoned Sunni communities, which erupted into the conflicts that dominate the entire area today… and will for the foreseeable future. Our destruction of the Hussein regime also moved Shiite Iraq into becoming Shiite Iran’s closest regional ally and a supporter of the brutal minority Shiite Assad regime in Syria. Mission accomplished!

But here is the reality of so many of these vicious struggles: These are not traditional battles or wars where conquering and taking real estate constitutes a victory. This is not like taking down Adolph Hitler and “freeing Germany and its allied peoples.” This is as much a religious and cultural war as anything else. So if a religious and cultural physical stronghold falls, the underlying concepts don’t vaporize. These ideas and ideologies float way above land and population centers, reinforce each other through social media, and pop up elsewhere. Scattered as well as concentrated. Like metastasized cancer. The ideological torch might be carried by the same players or by the next generation – always waiting in the wings – ready to reignite passions and doctrinaire fervor. Whack-a-mole is a “light” version of this reality. But there are almost 1.7 billion Muslims on this plant, and even if a tiny minority have hatred and killing on their minds, it is a terrible problem. We just do not seem to know how to embrace that community instead of pushing it into the hands of extremists.

Where we are really failing, where we are actually helping to recruit and build forces against our own best interests or transfer alignment to our competing nations, is through a litany of policy missteps, some less obvious than others. In the Middle East, Central Asia and Africa. For example, when we cut foreign aid to a nation under our profoundly misguided “America First” antagonist mantra, literally baiting the rest of the world to defend themselves against us, China happily steps in the next day with even more aid… extracting political and economic concessions from the recipient nation. These beneficiaries of China’s newfound largesse no longer have any stake in protecting American interests and will instead accommodate Beijing’s priorities.

Or when we instituted a “travel ban” – enhanced with vicious rhetoric from our President – it has almost universally been viewed (even our allies) as a “Muslim ban” as part of a larger purported American “war on Islam.” These statements – fully available online – along with our history of “enhanced interrogation” (torture under international treaties) make for extremely powerful recruitment materials to engage terrorists worldwide. “Defend the faith,” they scream. Remember, as violent as the effects truly are, this is a war of religious fervor and not primarily about taking and holding land. Given the concentration of traditional military forces in the Middle East, these terrorists are currently less interested in recruiting soldiers for these regional wars and more committed to finding locally-sympathetic residents in Western nations to foment terrorism there.

And when the Commander-in-Chief issues a “gloves-off” directive to his generals in the field, when the concerns about “collateral damage” are officially lessened, another nasty unintended consequence comes into play. Here is an interesting take from a July 26^th The Cipher Brief’s interview of Stephen Biddle, a professor at the George Washington University’s Elliott School of International Affairs, who recently co-authored a paper on U.S. security force assistance, “Small footprint, small payoff: The military effectiveness of security force assistance.”

“[All] sorts of contradictory statements come out of this Administration, so saying the Trump Administration believes x and not y is already a problem; different people in this Administration think and mean different things, and the president apparently means different things on Tuesday than he means on Wednesday, so one has to be wary when making the following claim. But the Administration appears to believe that U.S. interests would be better served in these places by taking the gloves off and being more forceful and constraining the U.S. military less. They seem to think it was political correctness for the Obama Administration to have worried so much about civilian casualties, and unlike Obama they’re not politically correct; therefore, they’re not going to be as constrained. My guess is that’s what’s going on with the reduction in constraints on airstrikes. I happen to think they’re wrong about that assessment of U.S. interests. Loosening collateral damage constraints will inevitably increase collateral damage, and to worry about this isn’t just liberal hand-wringing – there are good national security reasons to think that increased civilian fatalities at U.S. hands can increase local resistance to U.S. forces.”

In addition to making new “collateral damage” enemies, with all this negativity, imposing our populist slogans on distant lands where there is little or no concern about American politics, we are literally placing the entire burden of protecting what we hold dear on our own, isolated shoulders. Americans are just not happy with continuing to send hundreds of troops into harm’s way… over there. We think we can win with aerial assaults and the prudent use of well-placed U.S. Special Forces “connecting with leaders and people.” Really? But what’s really in it for the locals? What does Professor Biddle think about that?

“The U.S. Special Operations Command believes that a big benefit of [trying to create regional stability] is to build relationships, not necessarily to improve military effectiveness per se, but to make people more inclined to work with the United States. But there’s very little evidence that it actually works that way. At the end of the day, on issues of national security and internal balancing that are important to the recipient country, having a friendly relationship with a group of 20- to 40-year-old American soldiers is a lot less important than what they think their own national interests are.

“Other things being equal, it’s always better to have some pre-existing relationship with any other human being. Human connections are a good thing. But if the issue is that we would like country x to crack down on a terrorist movement within its borders, and country x doesn’t want to because they think it’ll cause internal violence in their country, and so they’d rather tolerate the threat – will they crack down because they have a good relationship with the 12 American special forces commandos who were there last year, whereas they otherwise wouldn’t? Of course I’m presenting a complicated issue in a telegraphic way, but on balance I think that’s a lot less likely than some may hope.”

The naiveté of these American efforts never ceases to amaze me. We have bumbled and blundered into creating the greatest instability this region has ever seen, mostly since our most inane military strategies from 2001 onwards. I remember living in the heart of the Middle East (Lebanon) as the son of an American diplomate decades ago. Man, did they love America and Americans! I was in the friendliest place I have ever lived. But that was then…

            I’m Peter Dekom, and the notion of purging educated Middle Eastern/African specialists from the ranks of our responsible leadership and replacing them with under-informed sloganeers just cannot be in our best interest.

Row, Row Your Bot Gently Down the Farm

One of the harshest realities emanating from my July 17^th blog,  The New American Values: Denyin’, Lyin’, Blamin’, Bullyin’ and Puttin’ Off, at least from an immigration perspective, is that the most difficult physical labor performed by undocumented Latin American workers is simply not work that Americans are willing to perform… at any price. Stoop labor. The worst jobs in slaughter houses. Hard and heavy construction work in horrible places under bad conditions. Immigration policies focused on these workers will not create new jobs and, as too many farmers are discovering, will result in rotting, unharvested crops and ultimately soaring food prices for all Americans.

Even the Trump administration sort of acknowledged that reality. On July 17^th the Departments of Homeland Security and Labor combined to authorize 15,000 seasonal worker permits, a microscopic drop in the bucket compared to the volume of undocumented workers American farms actually need to feed America.

So let’s assume that the Trump vacuum cleaner sucks all or most of those lower-level undocumented workers and spits them out below our border. Take the morality out of the mix. Just look on the impact on “the rest of us.” Some cities will face serious economic immediate consequences. Los Angeles, for example, has 35% of its urban economy wrapped up in a complex nexus with undocumented Latinos. Lots of work – from farms to construction – just won’t get done, although some of the most skilled work might slide to a few Americans willing to do the work… if they are given substantial raises and lots of fringe benefits, above the pretty reasonable compensation already paid to those skilled and undocumented workers. Consumer prices will obviously rise substantially in those targeted businesses.

But the handwriting is on the wall. Technology is going to have to embrace solutions to replace manual labor that is simply not going to be available in the near term. Xenophobic Japan, strongly unwilling to embrace any form of mass importation of foreign labor to replace a rapidly dwindling indigenous work force, standing strong on resisting a path to citizenship – even permanent residence – has faced this labor reality before us. Robots for everything from geriatric care to hard manufacturing, embracing artificial intelligence-driven automation, are at the center of the new Japanese economy.

Get ready America. That field of endeavor – increasing reliance on increasingly-sophisticated robots – just got a massive boost from our new immigration policies. Companies are tripping all over themselves to design robots for functions up and down the entire lines of American industry. But the industry that is fomenting some of the biggest research efforts in robotic development is the $47 billion dollar-a-year agricultural sector. But please don’t assume that the advances in robotics applicable to agriculture will stay on the farm.

The hyper-stimulation of near-term agricultural needs to replace manual labor will spread robotics into corners of our economy, particularly in manufacturing and construction, that will replace all but the most skilled workers on the line. Technological blowback. The toll on the job market – at a time when higher education is increasingly viewed as negative – will be devastating. We’re not creating new and well-paying “jobs, jobs, jobs.” We are instead working to reward the folks that own the machines at the expense of the workers who used to perform those tasks. Instead of leveling the playing field, we are accelerating income inequality with almost no realistic programs to stem that ugly tide.

Look at what’s being developed, often introduced first in the fruit and vegetable fields in California. Elaborate machines, able to determine whether or not an individual apple or orange is ready to be picked, spread their sophisticated mechanical tentacles in and among branches as part of a computer-driven rolling harvester that simply rolls down the rows of trees, picking without shaking the trees and causing indiscriminate numbers of fruits to fall into nets… the last generation of robotic tree harvesters. The analytics and grasping techniques (see picture above left) of such harvesting machinery are getting truly amazing. Not all the early stage robots are that sophisticated, however... yet.

The world’s largest berry-grower, Driscoll’s Inc., is rolling out a new system of growing berries on platforms and, in conjunction with a reduced labor force, uses a strawberry picker that delicately selects and harvests the ripe fruit. “Driscoll’s is so secretive about its robotic strawberry picker it won’t let photographers within telephoto range of it… But if you do get a peek, you won’t see anything humanoid or space-aged. AgroBot is still more John Deere than C-3PO — a boxy contraption moving in fits and starts, with its computer-driven sensors, graspers and cutters missing 1 in 3 berries.

“Such has been the progress of ag-tech in California, where despite the adoption of drones, iPhone apps and satellite-driven sensors, the hand and knife still harvest the bulk of more than 200 crops.” Los Angeles Times, July 25^th.  California has been dealing with a dwindling work agricultural work force – mostly undocumented – that is simply getting older… labor opportunities that even at $100/day are no longer attracting younger undocumented workers. An over 13% wage increase for such labor from 2010 to 2015 has not remotely solved this crisis.

“‘We don’t see — no matter what happens — that the labor problem will be solved,’ said Soren Bjorn, president of Driscoll’s of the Americas… That’s because immigrant farmworkers in California’s agricultural heartlands are getting older and not being replaced. After decades of crackdowns, the net flow across the U.S.-Mexico border reversed in 2005, a trend that accelerated through 2014, according to a Pew Research Center study. And native-born Americans aren’t interested in the job, even at wages that have soared at higher than average rates.

“‘We’ve been masking this problem all these years with a system that basically allowed you to accept fraudulent documents as legal, and that’s what has been keeping this workforce going,’ said Steve Scaroni, whose Fresh Harvest company is among the biggest recruiters of farm labor. ‘And now we find out we don’t have much of a labor force up here, at least a legal one.’

“Stated bluntly, there aren’t enough new immigrants for the state’s nearly half-million farm labor jobs — especially as Mexico creates competing manufacturing jobs in its own cities, Taylor said. He has calculated that the pool of potential immigrants from rural Mexico shrinks every year by about 150,000 people.” Los Angeles Times.

It’s not as if the transition to a world of robots will either be smooth or simple. Here’s one example of how tough this process has been. “An early generation of robotic machine uses a band saw to mow whole rows of baby lettuce and other greens. But when produce giant Taylor Farms tried it on romaine heads, a slight height variation in the beds put the saw right across the heart of the heads, leaving nothing but shredded leaves, Frank Maconachy [whose company, Ramsay Highlander, has been a pioneer in developing mechanical harvesters] said…” Los Angeles Times.

But combining a process of reconfiguring the planting of lettuce with new machines is slowly knocking these problems down: “Rick Antle, chief executive of Tanimura & Antle, is whittling away at the labor on the planting side. He showed off his own robotic bet, called PlantTape. The machine — equally homely as AgroBot — raced down a lettuce field outside Salinas, laying down a long strand of seedlings strung together on a biodegradable tape, like 9-volt batteries in a 50-caliber machine gun belt.

“That was twice the speed of its 35-year-old predecessor, and it required less than a tenth of the labor. To prove his point, Antle ran the old machine, which required three times the workers, on a nearby celery field. ‘That was it, for 35 years,’ Antle said.

“Lettuce growers usually plant seed, which can be unreliable, every few inches, then thin the field to fit the maximum number of heads at the optimal spacing. That means scores of workers in the spring have to walk row after row, moving inch by inch to pull seedlings over with a hoe — one of the oldest tools of agriculture.

“The computer-guided LettuceBot developed by Silicon Valley start-up Blue River Technology, can do the work of 20 of those laborers before noon. It is one of five robotic thinners deployed on thousands of acres of summer lettuce in the Salinas Valley.

“Diego Alctantar, 25, operated the tractor pulling the LettuceBot across a recently planted lettuce field near Gilroy. A computer guided jets of fertilizer-infused water to desiccate seedlings according to a kill-or-skip pattern that left nine-inch gaps between heads.” LA Times. Here’s the bottom line: every one of these problems will be solved. Agricultural fields will become increasingly automated. Just like so many manufacturing processes, such as automotive manufacturing (pictured above right) with which we are most familiar.

But artificial intelligence with hard robotics has already produced a surgical robot (DaVinci, pictured above center), investment analytics are frequently entirely completed and reported with no human intervention, and even legal filings are becoming automated. So when do you think your job will be replaced by a robot? Hmmmm… and don’t assume that you will escape this cycle at least at some level.

Oh, and one last thing. The impact on the role of men in society. You know, that notion of a man’s man, proud of strength… able to lift, build, and make… with their hand-eye coordination. Jobs requiring raw strength, with or without extreme accuracy and skill, are where robotics will slash and burn first… and the deepest. Like in construction. “A recent Oxford study predicted that 70% of US construction jobs will disappear in the coming decades; 97 percent of those jobs are held by men, and so are 95% of the 3.5 million transport and trucking jobs that robot are presently eying…. [This will become] a cultural problem, an identity problem, and – critically – a gender problem.” Laurie Penny writing for the August 2017 Wired. Think we have an issue with unemployed coal miners? There are under 100,000 of those still working. You ain’t seen nuffin’ yet! Opioid and video game addiction among unemployed blue collar men over 30 are just the early symptoms.

I’m Peter Dekom, and I do not see a shred of tangible planning at any significant governmental level to deal with the obviously and rapidly approaching massive displacement of the American work force with robotic substitutes.

Sabotaging the Affordable Care Act (Obamacare) – Revisited

“From the beginning, I have believed that Obamacare should be repealed and replaced with a solution that increases competition, lowers costs, and improves care for the American people… The so-called 'skinny repeal' amendment the Senate voted on today would not accomplish those goals.”  

Senator John McCain (R- AZ) after casting the deciding vote defeating the ACA “Skinny Repeal” on July 28^th.

“3 Republicans and 48 Democrats let the American people down. As I said from the beginning, let ObamaCare implode, then deal. Watch!”  

Donald Trump’s July 28^th continuing tweet/pledge to sabotage the ACA after Senate defeat ACA “Skinny Repeal.”

The early morning Senate vote on July 28^th had three brave Republicans refuse to follow a highly pressurized effort from the GOP leadership to force a bill they absolutely acknowledged was a “bad bill.” 49 other Republican Senators believed that had the “Skinny Repeal” passed, it would simply return to the House without a genuine chance of passage until there were a conference committee review to implement a significant rewriting of an obvious inadequate and “bad bill.”

Of course, there were no guarantees that the House might not have passed the “bad bill” intact or that the conference committee might just fail to do much of anything. The 'skinny repeal' bill would have repealed individual mandates, and according to the non-partisan Congressional Budget Office raise premiums by 20% by 2018, and leave 16 million more Americans uninsured by 2026. John McCain cast the deciding vote sending the Skinny Bill to the pre-dug grave it richly deserved.

The following is an edited version of my June 10^th blog (of the same name) and my July 19^th “Let Obamacare Fail” blog. When the Affordable Care Act (ACA or Obamacare) passed in 2010 through a Democratic Congress and was signed by a Democratic President, there was no exception. The “just expand Medicare and offer it to the people” faction was shot down by the big insurance carriers who did not want to face additional competition from a government-provided alternative. That universal insurance “mandate” was both (i) a necessary part of creating a sufficiently large risk pool and (ii) to placate insurance carriers that they would grow their business as a result. The big pharmaceutical special interests were terrified that large new health insurance exchanges would have the effective bargaining power to force those behemoths to drop their prescription drug prices. So the ACA exchanges were barred from challenging those hyper-expensive drug prices; they had to pay full price.

Is this the end of the story about the GOP’s seven year effort to destroy Obamacare, literally forcing passage of their obviously inadequate AHCA (the GOP-proposed “replacement” American Health Care Act that is deeply punitive for anyone with expensive medical issues from preexisting conditions) and lower-income Americans, even with the various (failed) Senate reconciliation efforts (e.g., the Better Care Reconciliation Act, the “Skinny Repeal” and various proposed add-ons)?

Their goal – and the clearly-announced current goal of the Trump administration – was/is to subvert the ACA by not enforcing its provisions – particularly funding from both user and government sources – literally forcing the system to fail. By sending mixed messages to insurers, the second vector is to destabilize the overall insurance marketplace, pretty much eliminating the ability of big medical insurance carriers to plan and sustain viable operations within the existing networks of healthcare exchanges.

GOP ACA repeal-advocates faced trending reports that Obamacare was stabilizing, that those massive premium increases in states with limited operating healthcare providers in that exchange network were fading from the headlines. But rather than accepting this as good news, Republican ACA repeal-advocates, with massive assistance from the Trump administration, simply redoubled their efforts to push insurance carriers out of the system. They turned the solid ground of a working healthcare system into a quicksand of unpredictability.

Insurance companies, doctors, hospitals, and healthcare organizations at every level joined millions of constituents to decry the each of these GOP proposals. Town hall meetings became intolerable venues for Republican member of Congress visiting their home base. Many GOP governors raised their voices in protest, literally making it impossible to pass the GOP “repeal and replace” or even a naked “repeal” bills; the necessary GOP Senate majority would never materialize.

But the Donald Trump administration has been anything but subtle in their commitment to make sure that the ACA fails. The President’s sabotaging tools include refusing to reimburse insurance companies for reducing low-income customers’ out-of-pocket costs to making sure that the Department of Health and Human Services fails to enforce the mandate that most Americans have health coverage, thus decimating the basis for insurance companies to remain in the system. By constantly trashing the ACA and threatening its extinction, Mr. Trump creates (still active) an atmosphere where insurance companies can no longer plan their own futures, an intolerable situation for them.

“The Trump administration already cancelled $5 million in HealthCare.gov ads that advertised the upcoming enrollment season, and the president is now threatening to withhold federal payments that help reduce insurance premiums — particularly for low-income people — and keep companies in the market…

“‘If the President refuses to make the cost sharing reduction payments, every expert agrees that premiums will go up and health care will be more expensive for millions of Americans,’ [Senate Minority Leader, NY Democrat Charles] Schumer said in a statement. ‘The president ought to stop playing politics with people's lives and health care, start leading and finally begin acting Presidential.’” AOL.com, July 29^th.  On July 29^th, Trump tweeted: “If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!” With the Skinny Repeal down in flames, the chances of such a plan materializing anytime soon are between slim and none, and the President knows that. By ignoring the legal requirements of the ACA, however, the President believes he can force that healthcare plan to fail.

Simply, Trump believes that no matter why the ACA might fail (even if it is through his overt sabotage), (a) he can blame the Democrats and (b) therefore, Americans will eventually beg for the inferior healthcare package that was so soundly rejected by the Senate in recent days. So he is simply going to make sure it fails… and is hardly shy in saying so. Senate Majority Leader Mitch McConnell, a savvy politician, seems to have accepted that repeal of the ACA and that it is time simply to “Move on.” However, it is increasingly likely that if Trump does force that sabotage by not adhering to the ACA, he and the GOP will “own” the chaos that would follow, as much as he believes he can shift the blame to the Dems.

The healthcare reality in this country is pretty nasty. Even with the ACA, a dramatic improvement from what preceded passage of that statute, here’s what we still face today, even with more people covered under the ACA: “In 2015, the United States spent almost three times on healthcare as the average of other countries with comparable incomes, according to data from the Organization for Economic Cooperation and Development, also known as OECD, a group of 35 countries, the majority of which have advanced economies, that works to promote economic development.

“And despite spending more, the U.S. results don’t necessarily yield better health. Both Italy and Britain, for example, spent at least $5,000 less per person than the United States on healthcare, and yet the population of each of those countries has a higher life expectancy at birth than the United States…

“[The] the United States spends more on healthcare than any other country, including those belonging to the OECD… ‘[But] we definitely have worse health outcomes,’ said David Squires, president of the Commonwealth Fund, a private foundation based in New York that carries out independent research on healthcare issues.

“‘It doesn’t appear that people in the U.S. use more healthcare in general. We go to the doctor less often than people in other countries and get hospitalized less, so it’s not like we are making greater use, but we are paying more for the things we do use,’ he said…. Despite investing heavily in healthcare, Americans live shorter lives than people in 30 other countries, data from the World Health Organization showed.” Los Angeles Times, July 19^th. We spend a whole lots more for the same treatments and prescriptions. Without greater access to controlled healthcare, we will continue to fall in those comparisons. Let the ACA fail and those negative statistics will overwhelm us. But that Trump’s plan: make sure the ACA fails, with more than a push and a shove from his administration. The President has repeatedly tweeted and stated openly and publicly that his administration will not support many of the provisions of the ACA

The Chicago Tribune (June 7^th) explains, starting with the latest carriers to throw their hands up in frustration: “A major shoe dropped in the battle to preserve the Affordable Care Act on Tuesday [6/6], as Anthem, the nation’s second-largest health insurer, announced it is withdrawing entirely from the individual market in Ohio.

“The move will leave 18 counties without an insurer in the ACA exchanges, leaving an estimated 10,500 Anthem customers high and dry — most of them in Appalachia, among the poorest parts of the state.

“Anthem said in its announcement that the principal causes of its withdrawal are ‘the shrinking individual market as well as continual changes in federal operations, rules and guidance.’… That’s a reference to the uncertainty surrounding President Trump’s vagueness about whether he will approve subsidies for deductibles and co-pays for the poorest Obamacare enrollees and whether his administration will continue enforcing the ACA’s individual mandate in 2018.

“The ‘increasing lack of overall predictability,’ Anthem said, ‘simply does not provide a sustainable path forward to provide affordable plan choices for consumers.’… Anthem’s action in Ohio is its first withdrawal from a state thus far, but bodes ill for customers in the 13 other states where it offers ACA plans, including California.” Other carriers either followed suit or threatened to withdraw based on this Trump-effort to destabilize the insurance market.

Senate Minority Leader, Chuck Schumer (D-NY) and Majority Leader Mitch McConnell (R-KY) may now be willing to sit down and hash out a workable solution to this healthcare debacle, the path John McCain so eloquently argued in his July 25^th Senate speech, appearing after significant surgery addressing his advanced cancer treatment: “Why don’t we try the old way of legislating in the Senate, the way our rules and customs encourage us to act. If this process ends in failure, which seem likely, then let’s return to regular order.”

What can be done? Republicans want more market competition? That makes particular sense in states where there only one healthcare exchange (or less) is available. Allow states with two or fewer exchange carriers to combine with other such less-populated states to create cross-border coverage. How about allowing healthcare exchanges use their bargaining power to reduce pharmaceutical prices… and let Americans purchase their prescriptions from certified nations where quality control is not an issue: European Union, UK (when it leaves the EU), Switzerland, Canada, Australia, New Zealand and Japan. If the GOP wants to eliminate the individual mandate, then they have to maintain Congressional funding of insurance shortfalls and perhaps increase deductibles on people who drop out of coverage or just wait until they are sick or injured to buy a policy.

Do we need reasonable access to healthcare after decades where over 45 million American were not covered? Look at the above mortality rates that we faced at the beginning of the implementation of Obamacare. We had the highest in the developed world. This would suggest that any body of government officials trying to reduce healthcare coverage in the United States are effectively a new incarnation of a death panel. Will bi-partisan cooperation save the day? Will that joint cooperation really happen? Is Donald Trump simply on the wrong side of history?

I’m Peter Dekom, and we should all hope that a bi-partisan effort to solve our healthcare crisis happens… and that it is just the beginning of an end to Congressional gridlock… or it will get a whole lot worse for all of us.

Big

Have you ever wondered whether the massive “new start-ups” in the digital tech field are actually good for the U.S. economy, creating and sustaining good jobs or that they just might somehow create some powerful overall negative consequences? After all, Facebook allows a seller to market to a highly targeted and infinitely available audience. Amazon enables smaller retailers and manufacturers to access a potentially “uuuge” marketplace. And Google opens the door for companies to be “found” in ways that never existed before. All good? Depends on your perspective.

The European Union has come down hard on Google, recently levying a $2.7 billion fine for violating its antitrust laws, while the United States – facing the same kinds of market restraints that angered the EU – has done nothing. The United States, recently pretty lax in addressing antitrust issues at any level, has mostly applied its laws in this space to address market distortions resulting from mergers and acquisition or situations where collusion results in price-fixing. Today mere “bigness” – which is more than enough to ignite EU antitrust violations – doesn’t seem to be much of a consideration to U.S. federal antitrust regulators at either the Federal Trade Commission or the Department of Justice. If companies merge and acquire to get too big: bad. If they just grow to be big: not bad. But it wasn’t always this way. The U.S. has not always allowed organic-growth bigness to pass without serious antitrust consequences.

Back in 1956, the Justice Department began a long and hard look over the monopolistic hold the organically-big Bell System held over virtually all of America’s telephone operations. Bell literally controlled all of what today are known as its fractured descendants, RBOCs (Regional Bell Operating Companies), which have since fractured even further with Internet, wireless, etc. spin-offs and now face competition from cable, Internet and satellite carriers as well. That break-up of the Bell System was hardly voluntary. But the actual break-up (“divestiture”) began in 1974 when the DOJ sued Bell under antitrust laws. In 1982, under a consent decree, that Bell monopoly was broken into little pieces.

But today’s tech biggies are pretty close to the same levels of that monopolistic market domination, and although they are heavily in the acquisition business (mostly smaller tech companies that have technology they want – see below), mostly they got really big simply by growing. Former investment banker and author (Move Fast and Break Things: How Facebook, Google and Amazon Cornered Culture and Undermined Democracy – Little, Brown & Company, April 2017) Jonathan Taplin tells us that these three corporations aren’t too far from the bigness that led to the divestiture of the Bell System.

He reminds us that Google controls 77% of the US ad-search business, and together with Facebook, about 56% of the mobile ad market. Amazon is the eBook giant (70% market share) and accounts for almost a third of all U.S. e-commerce. If you aggregate Facebook and its operating subsidiaries (Instagram, WhatsApp and Messenger), they account for about 75% of US social media traffic. That’s big, but what are the impacts on “the rest of us”?

Writing for the July 24^th Bloomberg Businessweek, Paula Dwyer explains: “Economists have noticed these monopoly-size numbers and drawn even bigger conclusions: They see market concentration as the culprit behind some of the U.S. economy’s most persistent ailments—the decline of workers’ share of national income, the rise of inequality, the decrease in business startups, the dearth of job creation, and the fall in research and development spending.

“Can Big Tech really be behind all that? Economists are starting to provide the evidence. David Autor, the MIT economics professor who famously showed the pernicious effects of free-trade deals on Midwestern communities, is one. A recent paper he co-wrote argues that prestigious technology brands, using the internet’s global reach, are able to push out rivals and become winner-take-all ‘superstar’ companies. They’re highly profitable, and their lucky employees generally earn higher salaries to boot.

“They don’t engage in the predatory behavior of yore, such as selling goods below the cost of production to steal market share and cripple competitors. After all, the services that Facebook and Google offer are free (if you don’t consider giving up your personal data and privacy rights to be a cost). However, academics have documented how these companies employ far fewer people than the largest companies of decades past while taking a disproportionate share of national profits. As they grow and occupy a bigger part of the economy, median wages stagnate and labor’s share of gross domestic product declines. Labor’s shrinking share of output is widely implicated in the broader economic growth slowdown.

“Still others have shown that, as markets become more concentrated and established companies more powerful, the ability of startups to succeed declines. Since half of all new jobs spring from successful startups, this dampens job creation… Peter Orszag [Bloomberg View] He Jason Furman, chairman of President Barack Obama’s Council of Economic Advisers, point out that higher returns on capital [inherent in some of these behemoths] haven’t resulted in increases in business investment—yet another manifestation of monopoly power.

“Some members of the Chicago School, the wellspring of modern antitrust theory, agree. In the 1970s and ’80s, a group of University of Chicago scholars upended antitrust law by arguing that the benefits of economic efficiency created by mergers outweighed any concerns over company size. The test was one of consumer welfare: Does a merger give the combined company the power to raise consumer prices, and are barriers to entry so high that new players can’t easily jump in? U.S. antitrust enforcers were swayed. From 1970 to 1999, the U.S. brought an average of 15.7 monopoly cases a year. That number has since fallen—to fewer than three a year from 2000 to 2014.” Time to revisit these assumptions? Yup! 0ld theories don’t always hold water in changed times.

“There is little debate that this cramped [Chicago School] view of antitrust law has resulted in an economy where two-thirds of all industries are more concentrated than they were 20 years ago, according to a study by President Barack Obama’s Council of Economic Advisers, and many are dominated by three or four firms. What’s now at issue is whether the outcome has benefited society.

“Research by John Kwoka of Northeastern University, for example, has found that three-quarters of mergers have resulted in price increases without any offsetting benefits. Kwoka cited industries such as airlines, hotels, car rentals, cable television and eyeglasses.

“And even former antitrust officials acknowledge that their approval of Google’s purchase of YouTube and ITA Software and Facebook’s acquisition of Instagram and WhatsApp look naive in hindsight, eliminating the kinds of companies that might have someday challenged the tech sector’s most dominant firms.” Steven Pearlstein writing for the July 28^th Washington Post. But there are so many other ways to look at the world, where current US antitrust statutes simply no longer apply.

The elements that the EU has uses to justify its prosecution of these tech giants often include variables other than direct pricing costs imposed on consumers, issues that have not reached a parallel level of concern here in the United States. “Instead of applying conventional antitrust theory, such as the effect of a merger on consumer prices, enforcers may need to consider alternative tools. One is to equate antitrust with privacy, not a traditional concern of the competition police. Germany’s Federal Cartel Office, for example, is examining charges that Facebook bullies users into agreeing to terms and conditions that allow the company to gather data on their web-surfing activities in ways they might not understand. Users who don’t agree are locked out of Facebook’s 2 billion-strong social media network.

“Another avenue is to examine control over big data. Google collects web-surfing and online-purchasing data from more than a billion people. It uses that to send personalized ads, video recommendations, and search results. The monopoly control of consumer data by Facebook and Google on such a scale has raised antitrust questions in South Korea and Japan.

“[It’s not always a matter of simple dollar-analysis] For example, because what Facebook offers is free, regulators weren’t concerned that its $22 billion acquisition of WhatsApp in 2014 might result in higher consumer prices. In fact, because WhatsApp is in a different industry, it didn’t even increase Facebook’s market share in social media.

“The tech superstars insist they compete fiercely with each other and have lowered prices in many cases. They argue that their dominance is transitory because barriers to entry for would-be rivals are low. Google often says competition is ‘one click away.’ And since consumers prefer their platforms over others’, why punish success? But when a cool innovation pops up, the superstars either acquire it or clone it. According to data compiled by Bloomberg, Alphabet, Amazon, Apple, Facebook, and Microsoft made 436 acquisitions worth $131 billion over the last decade. Antitrust cops made nary a peep.” Dwyer.  

And it’s equally clear, these biggies use their power to impair nascent competition. Modern technology – particularly “reverse engineering” (reaching the same technological result with a different patent path) – has empowered the biggest to kill-off threats before they can really be competitive. “Snap Inc.’s experience with Facebook is instructive. Since Snap rebuffed Facebook’s $3 billion offer in 2013, Facebook has knocked off one Snapchat innovation after another. That includes Snapchat Stories, which lets users upload images and video for viewing by friends for 24 hours before self-destructing. Facebook added the feature—even calling it Stories—to its Instagram, WhatsApp, and Messenger services, and most recently to the regular Facebook product. Snap’s shares now trade at around $15, below the $17 initial offering price in March. By offering advertisers the same features but with 100 times the audience, ‘Facebook basically killed Snapchat,’ Taplin says.” Dwyer.

Earlier this year, the Yale Law Journal published a 24,000-word ‘note’ by [a 28-year-old law student named Lina Khan] titled ‘Amazon’s Antitrust Paradox.’ The article laid out with remarkable clarity and sophistication why American antitrust law has evolved to the point that it is no longer equipped to deal with tech giants such as Amazon.com, which has made itself as essential to commerce in the 21st century as the railroads, telephone systems and computer hardware makers were in the 20th.” Steven Pearlstein.  “Too big to regulate”? We seem to be living in a new evolving “winner-take-all” economy where smaller competitors just do not stand a chance against the biggest baddest boyz in those huge market silos.

While we have used existing required statutes to stop simple “bigness” – as the Bell System divestiture suggests – upgrades (statutory and regulatory) to our antitrust laws are needed to focus beyond simple consumer pricing variables. Think that’s going to happen within the Trump administration or with a Republican Congress? Yeah, right… even if some of the leaders of these companies aren’t exactly the President’s best friends. Weird to think that the American public has to rely on EU antitrust enforcement of big US companies “over there,” which leaks into the United States bit by bit, because its own government has little or no interest in helping the little guy. Maybe that’s why the Dems have just turned to look in this direction. But can they really stand to lose those big contributors? “Jobs, jobs, jobs”? Tired of winning yet?

I’m Peter Dekom, and progress and change requires statutes and regulations to adjust to modern realities… or just wither away into irrelevance like so many other political directives of the past.