Busted Trust Buster Back?!

Busted Trust Buster Back?!

The Ossification of Pro-Big Business America

Over the last 75 years, Americans’ generational belief, that they would do “better” than their parents, slipped particularly in the last 40 years, from 70% of the population to about third today. Income inequality in this country has never been more pronounced, the worst in the developed world. Yet the metrics of economic success show the United States as doing better than it ever has, a true testament to how unreflective of general economic health and well-being such measurements are. Stock prices? Most Americans do not own many, if any, stocks.

Gross Domestic Product? But the wild growth of mega-m(b)illionaires throws their wealth into the aggregate numbers, sending the average statistic that GDP represents soaring… Even as housing affordability, consumer and student debt and the general cost of living have pushed our misery indices soaring even more. Unemployment statistics show how many folks do not have a job, but they do not reflect those who are woefully underemployed (e.g., the environmental engineer working as a Starbucks barista) or those who have just given up looking.

The vast horde of homeless Americans, worse than any era since the Great Depression, most certainly is not a positive reflection of a healthy economy. While there is a traditional component, the mentally ill now relegated to the streets or prisons ever since the Reagan era’s shutting down mental care institutions plus drug users unable to support themselves, there are many who have jobs or are looking for work who simply cannot afford housing.

Remember the “too big to fail” era in the economic fall in the first decade of the new century? It wasn’t the middle and lower classes who got “bailed out.” It was two of the largest American automakers (GM and Chrysler) and whole host of financial institutions (even the legendary Goldman Sacks) with hundreds (thousands?) of “partners” who pulled down a million or more every year. And while the pandemic saw stimulus checks reaching more people, big business had no problem slorping at the government trough as well

While financial regulations have made it virtually impossible for all but the best endowed businesses to access the general equity markets, those investment banks, private equity funds, and mega-trading financial institutions got so much richer without creating genuine value. What can be said about a nation where mega-billionaires control 99% of the nation’s wealth? We do not tax most wealth (except on death or transfer… except real estate property tax), allowing individuals to accumulate obscene levels of wealth while sidestepping massive tax obligations.

Corporate CEOs earned 50 times the earnings of average workers in the 1950s, rising to over 300 to one in today’s world. Average big company CEOs made $16.7 million a year in 2023, according to Fortune Magazine (June 7th), but Elon Musk is trying to justify an annual compensation package of $15 Billion today. And still, the biggest of the big demand lower taxes, less economic-impacting regulation, with an openly stated quid pro quo that Donald Trump purportedly capitalized on at a May 11th dinner for the oil company elite at Mar-a-Lago: make a $1 billion aggregate contribution to my campaign, and I will lead another mega-tax cut and stop alternative energy initiatives dead in their tracks. BIG OIL is even enlisting the Trump-configured Supreme Court in its efforts to derail the inevitable switch to alternative energy. See my June 7th America is Getting Hosed and Lubricated by BIG OIL… Again blog.

You also may have noticed that those antitrust statutes (e.g., the Sherman Antitrust Act) passed at the end of the 19th century, used effectively thereafter to break up rail, petroleum, entertainment industry, banking, telecom, etc. monopolies until the 1980s seemed to fall into a period of non-enforcement. Clearly anticompetitive mergers and acquisition and predatory “exclusivity” and pricing restrictions were practiced with wonton abandon. The SEC, DOJ and FTC seemed quite content to allow these practices with minimal conditions at best.

In 2021, Biden administration appointed an aggressive FTC Chair, Lina Khan, and restaffed the Department of Justice with a stronger antitrust division. Yet, the Trump campaign – under the guise of killing the deep state, particularly that federal agency that targeted his election interference (as well as Hunter Biden’s tax and gun purchase issues), and cutting taxes under the disproving myth of “incenting the job-creator” – was set to reward his fellow mega-rich cronies with… well… everything they wanted if they played ball with him.

Biden’s trustbusters got to work, for example, in the DOJ’s late May efforts to break up Ticketmaster’s alleged ‘stranglehold’ on the concert venue industry. But how exactly did those big tech and social media companies evade the government’s application to rather obvious antitrust violations for so long. The June 6th Wall Street Journal (Brody Mullins) took a hard look at America’s primary corporate antitrust fixer and major shield. “The law firm of Wilson, Sonsini, Goodrich & Rosati, based in Silicon Valley, had long defended Google, Qualcomm and other corporate giants from unwanted regulation. [Joshua] Wright was the firm’s secret weapon.

“He was a law professor who became one of the most influential yet little-known figures of the tech era, leveraging positions in academia and government to shield deep-pocket clients. For more than a decade, Wright kept antitrust regulators at bay while America’s top technology companies amassed economic power not seen since Standard Oil, AT&T and other behemoths dominated their industries in the 20th century.

“Along the way, Wright spent two years as a regulator himself, serving on the Federal Trade Commission. Google, Facebook and Qualcomm benefited from his work at the FTC and through his consulting firm. The companies made hefty donations to fund his academic perch at George Mason University, money that kept flowing while he was in and out of government… Wright’s skills earned him more than $2 million a year from Google, Facebook, Walmart and others. Amazon paid Wright $600,000 a year, more than any of its lobbyists. His university pay topped $440,000 a year.

“For years, his business-friendly antitrust view carried weight among Washington officials. Yet he often didn’t reveal funding from Google, Amazon, Qualcomm and other clients in academic papers, blogs, open letters or congressional testimony favorable to the companies, the Journal found, disclosures that might have raised doubts about the objectivity of his research and opinions… [For example, the] FTC launched an investigation of consumer-product company Church & Dwight in June 2009. The government accused the company of leveraging the popularity of its products, including Arm & Hammer detergent, to get prime shelf space at retailer stores for its Trojan-brand condoms. The practice hurt consumers and rivals, the FTC said.

“Wright, working for a Boston-based consulting firm, produced economic reports and statistics-based studies. His research armed lawyers for Church & Dwight with evidence that the company’s actions didn’t harm consumers, either by increasing prices or limiting choice... The FTC lost in court, and Wright found his silver bullet: the claim of irrefutable data and analysis. Few judges or officials had the wherewithal or inclination to try to debunk his work. Antitrust consulting occupied a specialized niche at the intersection of law and commerce, and Wright established himself as a leading expert.”

Indeed, but for an alleged affair between Wright and a former student (later an associate at Wilson Sonsini), Write would have continued his undisclosed conflicted efforts to undermine antitrust prosecutions. “The lie began to crack open the hidden life of a prolific philanderer and exposed how Wright skirted conflict-of-interest standards to serve his amorous and financial pursuits, The Wall Street Journal found.” WSJ. But Wright’s efforts are simply a reflection of how rich and powerful incumbent wealth has generated policies that have killed upward mobility, severely amplified income and wealth inequality and tilted the playing field severely in their favor… just by agreeing to populist demands for conservative social policies that do not take a dime out of the pockets of the richest of the rich… who just want more.

I’m Peter Dekom, and as much as the mega-wealthy complain about “too much government and too many taxes,” that’s only for those programs that impact their pockets; otherwise, big government has been their closest ally.