Sometimes I feel that I have no answers, and as a teacher my
role is to question my students’ answers. When unrestricted growth and
concentrated power is amassed at the hands of a few players, then the economy may
end up stagnating, inequalities may start exploding, productivity may suffer,
democratic institutions could become weaker, paideia may deteriorate, and
extremism could start thriving. Could it be that the new road to serfdom is
painted with the bright colors of the FAANG? Is it possible to repeat the
historical mistakes of the past where uncontrolled business concentration advanced
along a fascist path?
Is it proper to be thinking in terms of business concentration (in areas such as tech, media, telecoms, and finance) as a get-out-of jail card for megacorps to treat their clients with contempt and impunity? If that were to be the case, then could such business concentration undermine the essence of capitalism and free markets, lead us to bubbles, deteriorate the ethics of doing business, while also being a force of radicalizing our politics?
How proper is it to be thinking in terms of a rising group (FAANG)
that coincides with the shrinking of the middle class? Is it possible that the
shrinking of the middle class correlates with its tuning to the conspiracy
theories, in order to explain its declining status? How many of us would
disagree that near-monopolies in tech, as well as in other sectors mentioned
above, but also in pharma, insurance, and other industries, are dominated by
insensitive behemoths and the result is that those giant megacorps are able to
influence not only our spending but also our politics, the news, and become
owners of our private information?
How realistic is the fear that we may be facing once again
what Louis Brandeis called the “Curse of Bigness”? If that was happening, could
it also represent a profound existential threat to our way of life and to our
democracy? In our limited understanding of things, when an industry has more
influence on elections than the citizens themselves, then the price tags are
being switched, and what the Supreme Court once called a “comprehensive charter
of economic liberty aimed at preserving free and unfettered competition”, could
become a weapon in the hands of powerful enterprises such as FAANG to dominate
our lives and metamorphosize the society into Kafka’s cockroach.
The US election of 1912 was about a monopolized economy that
worked for few and marginalized the many. Could it be that antitrust laws are
in great need of enhancement and strengthening in order to preserve Louis
Brandeis vision of an industrious America that is free, competitive, and fair? Have
we overindulged in theoretical abstracts that have led us astray, implying misconceived
perceptions of free markets? More than 40 years ago Robert Pitofsky warned us
that it is “bad history, bad policy, and bad law to exclude certain political values
in interpreting the antitrust laws.”
Is it time that those giant megacorps need to experience the
humble power of the law that breaks them into smaller, competitive pieces? Is
there any doubt that when a national leader partners with those behemoths, then
liberties are imprisoned, fascism prevails, and nations die? When democratic
institutions, paideia, and liberties are in danger, do we need to increase the
number of ambulances at the crossroads or simply put in place a functional
traffic light?
Do we question whether the triumph of democratic capitalism
over communism and fascism has its foundation in truly competitive markets and in
an ethos that values virtue over vulture myopic business power which suppress
liberties and treat citizens as subjects of its mega-operations? Is it possible
that the self-enriching business policies of those behemoths are seeking
political coverage, like the keiretsu/zeibatsu were doing in fascist Japan and
the detestable German megacorps were doing with the Nazis?
Are we trapped in streaming a bad movie sequel in the midst
of Covid-19? Do we really celebrate market gains in the midst of the health
crisis, knowing – as we showed last
week – that only the big 10 in the S&P 500 have made gains? How can we
be so myopic, and on top of this ignore the fact that the shareholders of the
rest 490 companies have been suffering losses? Have we taken a close look at
the Herfindahl-Hirschman index which shows that since the year 2000, market
concentration has increased in over 75% of US industries? How can we explain
the fact that the stock markets have shrunk, as public markets have lost almost
50% of publicly traded companies?
Most certainly the FAANG do not represent the only megacorps
that may require a breakup. A good friend reminded me that in other industries
(cement, food supplies, mining, etc.), the same thing is happening. He also
remined me that some of those behemoths may self-destruct or end up doing the
right thing, so we may just allow the natural order of things to correct the
situation. There are plenty of historical examples when groups with good
intentions made market decisions, and those arbitrary actions cost the
societies dearly. We could certainly opt
for the natural order to limit any corporate power abuse, but I am wondering if
the DNA of industrial renewal and innovation can be better served in fertilizing
opportunities where smaller enterprises are incentivized and uplifted in an
environment where might does not make it right. Tim Wu in his outstanding book
titled “The Curse of Bigness” articulates the thesis like few contemporary
scholars.
Could it be that by breaking up those megacorps and, at the
same time, prohibiting them from doing business in China (especially at a time
when they bow down to Chinese demands and are integrating their operations and
systems with the dictatorial powers of the Chinese regime), will also advance
US national security issues, as the recent piece in Foreign
Affairs pointed out? Could it be that if those measures coincide with a
strategic partnership with the EU in the field of technology as well as in the
energy and financial sectors – for the purpose of limiting China’s appetite to
subjugate us under its power and metamorphosize us in its authoritarian image –
the DNA of renewal will energize industrial and technological innovations?
Why are
we enjoying our drinks using our Apple phones and wasting our time on Facebook,
while googling into intellectual oblivion over what stuff – that we don’t need
– to buy on Amazon, while also watching a show on Netflix? Is that better than
reading Aristotle, Cicero, Ibn Rushd, Maimonides, or Adam Smith?
Is it
proper to think of FAANG power like “a kingly prerogative inconsistent with our
form of government” as Senator John Sherman proclaimed in the 20th
century (for whom the Sherman Antitrust Act is named)?
The politics of conspiracy theories need to stop. The theatrics of blaming others lead nowhere. Is it time to be looking at the mirror of the likes of FAANG, to break them apart, to implement a strong hawkish strategy against China and restore decency and competition in a free market that can offer us so much?
Is it time to rediscover some of the Jeffersonian principles, and be re-inspired by Montesquieu?
If FAANG is the Answer, then what are the Questions?
Author : John E. Charalambakis
Date : August 4, 2020
Sometimes I feel that I have no answers, and as a teacher my role is to question my students’ answers. When unrestricted growth and concentrated power is amassed at the hands of a few players, then the economy may end up stagnating, inequalities may start exploding, productivity may suffer, democratic institutions could become weaker, paideia may deteriorate, and extremism could start thriving. Could it be that the new road to serfdom is painted with the bright colors of the FAANG? Is it possible to repeat the historical mistakes of the past where uncontrolled business concentration advanced along a fascist path?
Is it proper to be thinking in terms of business concentration (in areas such as tech, media, telecoms, and finance) as a get-out-of jail card for megacorps to treat their clients with contempt and impunity? If that were to be the case, then could such business concentration undermine the essence of capitalism and free markets, lead us to bubbles, deteriorate the ethics of doing business, while also being a force of radicalizing our politics?
How proper is it to be thinking in terms of a rising group (FAANG) that coincides with the shrinking of the middle class? Is it possible that the shrinking of the middle class correlates with its tuning to the conspiracy theories, in order to explain its declining status? How many of us would disagree that near-monopolies in tech, as well as in other sectors mentioned above, but also in pharma, insurance, and other industries, are dominated by insensitive behemoths and the result is that those giant megacorps are able to influence not only our spending but also our politics, the news, and become owners of our private information?
How realistic is the fear that we may be facing once again what Louis Brandeis called the “Curse of Bigness”? If that was happening, could it also represent a profound existential threat to our way of life and to our democracy? In our limited understanding of things, when an industry has more influence on elections than the citizens themselves, then the price tags are being switched, and what the Supreme Court once called a “comprehensive charter of economic liberty aimed at preserving free and unfettered competition”, could become a weapon in the hands of powerful enterprises such as FAANG to dominate our lives and metamorphosize the society into Kafka’s cockroach.
The US election of 1912 was about a monopolized economy that worked for few and marginalized the many. Could it be that antitrust laws are in great need of enhancement and strengthening in order to preserve Louis Brandeis vision of an industrious America that is free, competitive, and fair? Have we overindulged in theoretical abstracts that have led us astray, implying misconceived perceptions of free markets? More than 40 years ago Robert Pitofsky warned us that it is “bad history, bad policy, and bad law to exclude certain political values in interpreting the antitrust laws.”
Is it time that those giant megacorps need to experience the humble power of the law that breaks them into smaller, competitive pieces? Is there any doubt that when a national leader partners with those behemoths, then liberties are imprisoned, fascism prevails, and nations die? When democratic institutions, paideia, and liberties are in danger, do we need to increase the number of ambulances at the crossroads or simply put in place a functional traffic light?
Do we question whether the triumph of democratic capitalism over communism and fascism has its foundation in truly competitive markets and in an ethos that values virtue over vulture myopic business power which suppress liberties and treat citizens as subjects of its mega-operations? Is it possible that the self-enriching business policies of those behemoths are seeking political coverage, like the keiretsu/zeibatsu were doing in fascist Japan and the detestable German megacorps were doing with the Nazis?
Are we trapped in streaming a bad movie sequel in the midst of Covid-19? Do we really celebrate market gains in the midst of the health crisis, knowing – as we showed last week – that only the big 10 in the S&P 500 have made gains? How can we be so myopic, and on top of this ignore the fact that the shareholders of the rest 490 companies have been suffering losses? Have we taken a close look at the Herfindahl-Hirschman index which shows that since the year 2000, market concentration has increased in over 75% of US industries? How can we explain the fact that the stock markets have shrunk, as public markets have lost almost 50% of publicly traded companies?
Most certainly the FAANG do not represent the only megacorps that may require a breakup. A good friend reminded me that in other industries (cement, food supplies, mining, etc.), the same thing is happening. He also remined me that some of those behemoths may self-destruct or end up doing the right thing, so we may just allow the natural order of things to correct the situation. There are plenty of historical examples when groups with good intentions made market decisions, and those arbitrary actions cost the societies dearly. We could certainly opt for the natural order to limit any corporate power abuse, but I am wondering if the DNA of industrial renewal and innovation can be better served in fertilizing opportunities where smaller enterprises are incentivized and uplifted in an environment where might does not make it right. Tim Wu in his outstanding book titled “The Curse of Bigness” articulates the thesis like few contemporary scholars.
Could it be that by breaking up those megacorps and, at the same time, prohibiting them from doing business in China (especially at a time when they bow down to Chinese demands and are integrating their operations and systems with the dictatorial powers of the Chinese regime), will also advance US national security issues, as the recent piece in Foreign Affairs pointed out? Could it be that if those measures coincide with a strategic partnership with the EU in the field of technology as well as in the energy and financial sectors – for the purpose of limiting China’s appetite to subjugate us under its power and metamorphosize us in its authoritarian image – the DNA of renewal will energize industrial and technological innovations?
Why are we enjoying our drinks using our Apple phones and wasting our time on Facebook, while googling into intellectual oblivion over what stuff – that we don’t need – to buy on Amazon, while also watching a show on Netflix? Is that better than reading Aristotle, Cicero, Ibn Rushd, Maimonides, or Adam Smith?
Is it proper to think of FAANG power like “a kingly prerogative inconsistent with our form of government” as Senator John Sherman proclaimed in the 20th century (for whom the Sherman Antitrust Act is named)?
The politics of conspiracy theories need to stop. The theatrics of blaming others lead nowhere. Is it time to be looking at the mirror of the likes of FAANG, to break them apart, to implement a strong hawkish strategy against China and restore decency and competition in a free market that can offer us so much?
Is it time to rediscover some of the Jeffersonian principles, and be re-inspired by Montesquieu?