Living in a New Gilded Age

Robert Reich

Robert Reich Former U.S. Secretary of Labor, Professor at Berkeley

The Trump Justice Department has approved a $69 billion merger between CVS, the nation’s largest drugstore chain, and insurance giant Aetna. It’s the largest health insurance deal in history.

Executives say the combination will make their companies more efficient, allowing them to gain economies of scale and squeeze waste out of the system.

Rubbish. This is what big companies always say when they merge.

The real purpose is to give Aetna and CVS more bargaining power over their consumers and employees, as well as pharmaceutical companies and healthcare providers (which have also been consolidating).

The result: Higher prices. Americans already spend far more on healthcare and medications per person than do citizens in any other developed country – and our health is among the worst.

America used to have antitrust laws that permanently stopped corporations from monopolizing markets, and often broke up the biggest culprits. 

But now, especially with Trump as president and lobbyists and CEOs running much of the government, giant corporations like Aetna and CVS are busily weakening antitrust enforcement and taking over the economy.

They’re also keeping down wages. Workers with less choice of whom to work for have a harder time getting a raise. So when local labor markets are dominated by a major drug chain like CVS or a big box retailer like Walmart, these firms essentially set wage rates for the area. 

These massive corporations also have a lot of political clout – another reason they’re consolidating.

We see the same pattern across the economy. Wall Street’s five largest banks now account for 44 percent of America’s banking assets – up from about 10 percent thirty years ago. That means higher interest rates on loans, higher late fees, and a greater risk of another “too-big-to-fail” bailout.

But politicians don’t dare bust them up because Wall Street pays part of their campaign expenses. 

Oh, and why does the United States have the highest broadband prices among advanced nations and the slowest speeds?

Because more than 80 percent of Americans have no choice but to rely on their local cable company for high capacity wired data connections to the Internet – usually Comcast, AT&T, or Verizon. And these corporations are among the most politically powerful in America. (In a rare exception to Trump’s corporate sycophancy, the Justice Department is appealing a district court’s approval of AT&T’s merger with Time Warner.) 

Have you wondered why your airline ticket prices have remained so high even though the cost of jet fuel has plummeted?

Because U.S. airlines have consolidated into a handful of giant carriers that divide up routes and collude on fares. As recently as 2005 the U.S. had nine major airlines. Now we have just four. And all are politically well-connected. 

Why does food cost so much? Because the four largest food companies control 82 percent of beef packing, 85 percent of soybean processing, 63 percent of pork packing, and 53 percent of chicken processing. 

Monsanto alone owns the key genetic traits to more than 90 percent of the soybeans planted by farmers in the United States, and 80 percent of the corn. Big Agribusiness wants to keep it this way. 

Google’s search engine is so dominant “google” has become a verb. A few years ago the staff of the Federal Trade Commission recommended suing Google for “conduct [that] has resulted – and will result – in real harm to consumers and to innovation.” But the commissioners decided against the lawsuit, perhaps because Google is also the biggest lobbyist in Washington.

The list goes on, industry after industry, across the economy. Antitrust has been ambushed by the giant companies it was designed to contain.

Under Trump and the Republicans, Congress has further squeezed the budgets of the antitrust division of the Justice Department and the Bureau of Competition of the Federal Trade Commission. Politically-powerful interests have squelched major investigations and lawsuits. Right-wing judges have stopped or shrunk the few cases that get through. 

Trump and his Republican enablers rhapsodize about the “free market,” yet have no qualms about allowing big corporations to rig it to boost profits at the expense of average people. As the late Robert Pitofsky, former chairman of the Federal Trade Commission, once noted, “antitrust is a deregulatory philosophy. If you’re going to let the free market work, you’d better protect the free market.”

We’re now in a new Gilded Age of wealth and power similar to the first Gilded Age of the late nineteenth century when the nation’s antitrust laws were enacted. But unlike then, today’s biggest corporations have enough political clout to neuter antitrust. 

Unless government un-rigs the market through bold antitrust action to restore competition, the hidden upward distributions from consumers and workers to corporate chieftains and major investors will grow even larger.

If Democrats ever get back in power, one of the first things they need to do is revive antitrust.

***

Reposted from Robert Reich

Robert Reich served as the nation’s 22nd Secretary of Labor and now is a professor of public policy at the University of California at Berkeley. His latest book, Aftershock: The Next Economy and America’s Future, is now in bookstores. His earlier book, “Supercapitalism,” is out in paperback. For copies of his articles, books, and public radio commentaries, go to www.RobertReich.org.

Posted In: Allied Approaches, From Robert Reich

Union Matters

Uber Drivers Deserve Legal Rights and Protections

By Kathleen Mackey
USW Intern

In an advisory memo released May 14, the U.S. labor board general counsel’s office stated that Uber drivers are not employees for the purposes of federal labor laws.

Their stance holds that workers for companies like Uber are not included in federal protections for workplace organizing activities, which means the labor board is effectively denying Uber drivers the benefits of forming or joining unions.

Simply stating that Uber drivers are just gig workers does not suddenly undo the unjust working conditions that all workers potentially face, such as wage theft, dangerous working conditions and  job insecurity. These challenges are ever-present, only now Uber drivers are facing them without the protection or resources they deserve. 

The labor board’s May statement even seems to contradict an Obama-era National Labor Relations Board (NLRB) ruling that couriers for Postmates, a job very similar to Uber drivers’, are legal employees.

However, the Department of Labor has now stated that such gig workers are simply independent contractors, meaning that they are not entitled to minimum wages or overtime pay.

While being unable to unionize limits these workers’ ability to fight for improved pay and working conditions, independent contractors can still make strides forward by organizing, explained executive director of New York Taxi Workers Alliance Bhairavi Desai.

“We can’t depend solely on the law or the courts to stop worker exploitation. We can only rely on the steadfast militancy of workers who are rising up everywhere,” Desai said in a statement. 

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Make Father's Day Union Made!

Make Father's Day Union Made!