Discover more from Letters from an American
September 26, 2023
Today, on the anniversary of the creation of the Federal Trade Commission (FTC) in 1914, the FTC and 17 state attorneys general sued Amazon for using “a set of interlocking anticompetitive and unfair strategies to maintain its monopoly power.” The FTC and the suing states say “Amazon’s actions allow it to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation, and prevent rivals from fairly competing against Amazon.”
The states suing are Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, and Wisconsin. The lawsuit was filed in U.S. District Court for the Western District of Washington.
While estimates of Amazon’s control of the online commerce market vary, they center around about 40%, and Amazon charges third-party merchants for using the company’s services to store and ship items. Last quarter, Amazon reported more than $32 billion in revenues from these services. The suit claims that Amazon illegally overcharges third-party sellers and inflates prices.
This lawsuit is about more than Amazon: it marks a return to traditional forms of government antitrust action that were abandoned in the 1980s. Traditionally, officials interpreted antitrust laws to mean the government should prevent large entities from swallowing up markets and consolidating their power in order to raise prices and undercut workers’ rights. They wanted to protect economic competition, believing that such competition would promote innovation, protect workers, and keep consumer prices down.
In the 1980s, government officials replaced that understanding with an idea advanced by former solicitor general of the United States Robert Bork—the man whom the Senate later rejected for a seat on the Supreme Court because of his extremism—who claimed that traditional antimonopoly enforcement was economically inefficient because it restricted the ways businesses could operate. Instead, he said, consolidation of industries was fine so long as it promoted economic efficiencies that, at least in the short term, cut costs for consumers. While antitrust legislation remained on the books, the understanding of what it meant changed dramatically.
Reagan and his people advanced Bork’s position, abandoning the idea that capitalism fundamentally depends on competition. Industries consolidated, and by the time Biden took office, his people estimated the lack of competition was costing a median U.S. household as much as $5,000 a year.
On July 9, 2021, Biden called the turn toward Bork’s ideas “the wrong path” and vowed to restore competition in an increasingly consolidated marketplace. In an executive order, he established a White House Competition Council to direct a whole-of-government approach to promoting competition in the economy.
“[C]ompetition keeps the economy moving and keeps it growing,” Biden said. “Fair competition is why capitalism has been the world’s greatest force for prosperity and growth…. But what we’ve seen over the past few decades is less competition and more concentration that holds our economy back.”
In that speech, Biden deliberately positioned himself in our country’s long history of opposing economic consolidation. Calling out both Roosevelt presidents—Republican Theodore Roosevelt, who oversaw part of the Progressive Era, and Democrat Franklin Delano Roosevelt, who oversaw the New Deal—Biden celebrated their attempt to rein in the power of big business, first by focusing on the abuses of those businesses, and then by championing competition.
While still a student at Yale Law School, FTC chair Lina Khan published an essay examining the anticompetitive nature of modern businesses like Amazon, arguing that focusing on consumer prices alone does not address the problems of consolidation and monopoly. With today’s action, the FTC is restoring the traditional vision of antitrust action.
President Biden demonstrated his support for ordinary Americans in another historic way today when he became the first sitting president to join a picket line of striking workers. In Wayne County, Michigan, he joined a UAW strike, telling the striking autoworkers, “Wall Street didn’t build the country, the middle class built the country. Unions built the middle class. That’s a fact. Let’s keep going, you deserve what you’ve earned. And you’ve earned a hell of a lot more than you’re getting paid now."
Even as Biden was standing on the picket line, House speaker Kevin McCarthy (R-CA) released a new budget plan that moves even farther to the right. Yesterday, former president Trump backed the far-right extremists threatening to shut down the government, insisting that holding the government hostage is the best way to get everything they want, including, he wrote, an end to the criminal cases against him.
“The Republicans lost big on Debt Ceiling, got NOTHING, and now are worried that they will be BLAMED for the Budget Shutdown. Wrong!!! Whoever is President will be blamed,” Trump wrote on social media. “UNLESS YOU GET EVERYTHING, SHUT IT DOWN! Close the Border, stop the Weaponization of ‘Justice,’ and End Election Interference.”
McCarthy is reneging on the agreement he made with Biden in the spring as conditions for raising the debt ceiling, and instead is calling for dramatic cuts to the nation’s social safety net, as well as restarting construction of a border wall between the U.S. and Mexico, as starting points for funding the government. Cuts of more than $150 billion in his new proposal would mean cutting housing subsidies for the poor by 33%, fuel subsidies for low-income families by more than 70%, and funding for low-income schools by nearly 80% and would force more than 1 million women and children off of nutritional assistance.
The “bottom line is we’re singularly focused right now on achieving our conservative objectives,” Representative Garret Graves (R-LA) told Jeff Stein, Marianna Sotomayor, and Moriah Balingit of the Washington Post. The Republicans plan to preserve the tax cuts of the Trump years, which primarily benefited the wealthy and corporations.
At any point, McCarthy could return to the deal he cut with Biden, pass the appropriations bills with Democratic support, and fund the government. But if he does that, he is almost certain to face a challenge to his speakership from the extremists who currently are holding the country hostage.
This evening, the Senate reached a bipartisan deal to fund the government through November 17 and to provide additional funding for Ukraine (although less than the White House wants), passing it by a vote of 77–19. Senate minority leader Mitch McConnell (R-KY) urged the House Republicans to agree to the measure, warning them that shutdowns “don’t work as bargaining chips.” Nevertheless, McCarthy would not say he would take up the bill, and appears to feel the need to give in to the extremists’ demands. Moreover, he has suddenly said he thinks a meeting with Biden could avert the crisis, suggesting he is desperate for someone else to find a solution.
Former president Trump has his own problems this evening stemming from the civil case against him, his older sons, and other officers and parts of the Trump Organization in New York, where Attorney General Letitia James has charged him with committing fraud by inflating the value of his assets. Today New York judge Arthur Engoron ruled that Trump and his company deceived banks and insurers by massively overvaluing his real estate holdings in order to obtain loans and better terms for deals. The Palm Beach County assessor valued Mar-a-Lago, for example, at $18 million, while Trump valued it at between $426 million and $612 million, an overvaluation of 2,300% (not a typo).
Engoron canceled the organization’s New York business licenses, arranged for an independent receiver to dissolve those businesses, and placed a retired judge into the position of independent monitor to oversee the Trump Organization.
This decision will crush the heart of Trump’s businesses, and he issued a long statement attacking it, using all the usual words: “witch hunt,” “Communist,” “Political Lawfare” (ok, I don’t get that one), and “If they can do this to me, they can do this to YOU!” Law professor Jen Taub commented, “It reads better in the original ketchup.” Trump’s lawyers say they are considering an appeal. The rest of the case is due to go to trial early next month.
Finally, today, the Supreme Court rejected Alabama’s request to let it ignore the court’s order that it redraw its congressional district maps to create a second majority-Black district. Alabama will have to comply with the court’s order.