Elon Musk: “Time to break up Amazon. Monopolies are wrong!” Musk’s Twitter outburst yesterday was prompted by Amazon’s banning of a book taking issue with the party line on the Wuhan coronavirus and COVID-19. Only hours later, Amazon reinstated the book, calling its ouster an error. But what if a high-profile celebrity like Elon Musk hadn’t called Amazon out on it?
This episode might be dismissed as a fluke, but it’s hardly the only recent example of corporate censorship. Only days earlier, Twitter labeled a President Trump tweet with a “fact check” notice, ensuring that no reader would have access to the president’s opinion without seeing it challenged. As if other Twitter users were incapable of expressing contrary views. This particular incident is noteworthy not because Twitter expressed an editorial view, but because it is among the companies that has benefitted from a special legal safe harbor afforded to communications only media. In other words, it has been exempt from being held liable for user content on the basis that it doesn’t exercise editorial control over content, users do. Does Twitter now assert that it is entitled to safe harbor from editorial responsibility even as it exercises editorial control?
This is dangerous stuff, folks. A handful of wealthy and powerful institutions keep getting more wealthy and powerful. The US government has a Constitution that forbids it to censor your speech. Twitter doesn’t.
And neither does Amazon. Or Google or Apple or Facebook or Microsoft.
One of the most remarked on features of the stock market in recent years is the disproportionate growth of a small number of names … household names like Apple, Amazon, Facebook, Alphabet (Google), and Microsoft. Another is the high sustained level of corporate profitability, which even the likes of Warren Buffett has said shouldn’t happen. High profitability should attract competition and therefore be self regulating. This calls into question whether competition is what it should be; whether there are anticompetitive forces at work.
Elon Musk seems to think so.
Control over the flow of information isn’t the only consequence of corporatocracy gone wild. Just yesterday a friend remarked on how difficult it has become to deal with businesses. If you need to talk to someone, you have to navigate a maze of computer options, and even then are put on indefinite hold or are told to wait for a call back that may or may not come. Yet you are bombarded with survey after survey asking that you affirm your loyalty or provide a detailed explanation of your disappointment with their last excuse for service. The message is clear: Speak only when spoken to. True capitalistic competition would not allow this to happen. You would provide good service or a competitor would step in and do it for you.
The contrast with a locally owned business couldn’t be clearer. The business owner is often personally on the premises to make sure customers are happy. Want something from Amazon or Google you’re not finding? Not going to happen.
It’s ironic that Americans have spoken disdainfully of Russian oligarchs even as it cultivates a crop of its own.
A fundamental distinction between private business and government is that you have no choice in the latter. You are a “customer” of the government merely by virtue of where you are. In contrast, competition is a hallmark of business; If you don’t like the way a company does business you can choose not to do business with it. But in today’s world it’s getting increasingly hard not to do business with Google, Microsoft, Apple, or Amazon. If you’re reading this, you’re almost certainly subject to the rules they make. To choose not to pretty much means you’re a Montana Survivalist or Pennsylvania Dutch.
What happened to consumer choice? These corporations have become so powerful government has simply lost the appetite for antitrust enforcement. And each growth increment feeds on itself, as monopoly profits are put to work buying up smaller competitors. Amazon for instance is not only a retailer, but also dominates the cloud business. Recently it bid to enter the driverless car business. Apple recently acquired DarkSky weather. You can no longer buy Microsoft software any more, you can only rent it. Its dominance in computer operating systems and business software has allowed it to force users to “upgrade” to the latest versions of its products whether they benefit or not. Charges and fees you pay for their services are becoming less like voluntary consumer purchases and more like taxes you must pay to participate in the new economy.
Not only has antitrust enforcement become a relic of a bygone era, but economic policy actively fosters its growth. Collective corporate power has enabled the corporatocracy to successfully lobby for lower tax rates than ordinary citizens. And unlike individuals, corporations don’t have a progressive tax structure whereby the richer they get, the higher their rates … the corporate tax code effectively does an end run around the progressivity built into the individual tax code. The corporatocracy also agitates for low interest rates and high asset prices that benefit its insider class, and the Federal Reserve does its bidding. Low interest rates and high asset prices are not coincidentally the main driver of the explosion in wealth of the upper 1% as living standards of the rest stagnate or decline. The wealthy by definition own most of the assets, and it has been overt policy of the Federal Reserve to cut rates and kite asset prices in order to create a “wealth effect” that in effect acts as a transfer mechanism to transfer wealth to the owners of assets at the expense of everyone else. So it’s not simple free market capitalism at work here, it’s a rich get richer policy on the part of the government. The lines between our formal government and our shadow government have become less clear with each passing year, and will continue to do so until a concerted effort is made to draw the line.
So without a vote, without a revolution, and without a Constitutional amendment, we are effectively growing a new government.