Washington Post columnist Eduardo Porter, in his recent piece, “Corporations are not destroying America,” seems to be taking cues on economic policy from his colleague Catherine Rampell. To Porter’s credit, he, contra Rampell, seems to actually read the materials he’s writing about. Yet the entire piece is emblematic of columns favored by the Post: ones that casually brush aside progressive policy ideas by dispatching with a straw man and infantilizing anyone to their left rather than engaging head on.
Porter takes issue with the “idea that American markets have become monopolized across the board, with dominant companies raising prices at will,” which he calls “ludicrous.” But that’s really not the point that progressives—or the Harris campaign, who Porter’s “memo” is addressed to—have been arguing. Could you find someone who thinks that every market in the country is overly concentrated with greedy fatcats leeching off the public? Absolutely. But it’s not the argument that progressives in the policy community and Harris have articulated.
The actual argument is not that every industry is overly concentrated, but that a number of key industries are, which enables opportunistic price gouging to ripple through key sectors of the economy and cause acute harms because of how critical those industries are. These are industries like meatpacking, airlines, credit-card issuing and processing, railroads, Internet search, ocean shipping, and baby formula. Porter can cite all the studies he wants that say overall concentration levels are not soaring or concerningly high and still not get to the substance of the argument. That said, there are numerous methodological and theoretical questions about measuring market concentration. But that’s hardly necessary here; the examples above are so obviously oligopolistic that there’s really no need for formal measurement.
Similarly, Porter simply misrepresents what opponents of corporate power claim big firms with pricing power are doing. He frames it as a matter of “dominant companies raising prices at will,” but the throughline in nearly all versions of progressives’ arguments is about companies leveraging particular disruptions, like inflation, as a smokescreen to exploit customers by raising prices in excess of the increased costs they’re incurring. Harris’s grocery price-gouging restriction has been much maligned by Rampell and other neoliberal pundits who usually either paper over that it only applies in emergencies (and only in the food industry) or elide it with a slippery slope “but what is an emergency?” distraction, preferring to hyper obsess over fringe cases when most of the time it will be pretty clear if we’re in an emergency; Harris’s plan specifically is inspired by the real-world exploitation of large groceries, as found by the FTC and revealed in the Kroger-Albertsons merger trial, during the last disaster.
Porter’s column also pointedly veers into an argument that narratives about “the monopolization of America often rests on evidence about corporate concentration at the national level. But the market relevant to consumers is, in many cases, local.” And that’s true to an extent, but Porter’s own example of hardware stores (directly following this) is a good demonstration of why this elides the harms to which progressives are trying to draw attention. Porter discusses “mom and pop” hardware stores vis-à-vis national chains Home Depot and Lowe’s (apparently he’s not a fan of ACE). But there are no mom-and-pop airlines or baby formula manufacturers or oil firms.
As far as the corporate big tech “Godzillas,” as Porter terms them, apparently they aren’t “squashing competition to reduce wages, keeping new rivals from entering their markets, and sticking it to consumers.” (Let’s ignore for a moment the very serious allegations that Uber and Amazon have suppressed the wages of their drivers. Or the recent verdict by a jury in Epic v. Google that Google overcharged app developers for transacting on the Play Store. Or the recent finding of a judge in U.S. v. Google that Google monopolized the search industry and the associated market for text advertising.) Rather, Big Tech’s fearsome power has come, per Porter, “first and foremost from deploying new technology and offering better value to customers.”
Presumably then, Facebook didn’t go buy out a bunch of other social media and networking websites and softwares. But it did. It bought ConnectU in June 2008, FriendFeed in August 2009, sharegrove in May 2010, Hot Potato in August 2010, Beluga in March 2011, Friend.ly in October 2011, and Instagram in April of 2012. Definitely not buying out competitors to sit on a huge pile of market share, just good old innovation!
And Amazon definitely got to where it is by besting its rivals through good old market competition! Except when it bought dozens of other online retailers and web service companies. Oh and when it artificially skewed its marketplace to disadvantage third party retailers in favor of Amazon’s own products, many of which were reproductions of other companies’ products.
Porter also seems to have overlooked the fact that Google acquired its way to power in the ad stack, gobbling up, among others, DoubleClick, Invite Media, and AdMeld.
The entire piece is vapid left-punching; Porter even actively agrees with the substance of the critiques against monopolists. For instance, this paragraph:
For sure, corporate consolidation has reduced competition in some markets. It was probably a bad idea to allow Whirlpool to take over Maytag in 2006, or to allow Miller to merge with Coors two years later. Hospital mergers deserve a much more skeptical view than they have received in the past. Let’s be careful about drug manufacturers buying out competitors for the purpose of killing a potential competing drug.
Yes, there is discourse about the American economy becoming more consolidated writ large, but the core of the debate is about intra-industry dynamics where market power creates unique opportunities for profit at the expense of consumers. Like when pharmaceutical companies buy out a firm working on a competing treatment. In sum, we have yet another piece to file away in the classic genre of “WaPo doesn’t have anything substantive to add, but feels the need to put down uppity leftists.” (It’s only gotten worse after new data revisions showed an even sharper uptick in corporate profits than earlier data had indicated.)
The last thought Porter offers is that “taking a wrecking ball to big business in the service of a rickety theory of harm will do everyday Americans no good.” What is the wrecking ball? Who is proposing to destroy major corporations?
The entire case laid out in this “memo” is that Harris, at progressives’ behest, is calling for leveling all large corporations. But Porter would do well to remember that the story of Rampell’s he links to in order to outline the consequences of this “wrecking ball” literally lies about what Harris’s pricing gouging law narrowly targeted at suppliers in the food industry (as opposed to all large companies) would look like. There are no “price controls” in the proposal, contrary to Rampell’s suggestion; food suppliers could justify price hikes during the next crisis so long as they were cost-justified. Rampell says Harris’s plan is likely to be modeled after a bill from Senator Warren (D-MA) that would give the FTC power to punish firms for price gouging.
As a justification for why such a law would be disastrous, Rampell says that “the legislation would ban companies from offering lower prices to a big customer such as Costco than to Joe’s Corner Store, which means quantity discounts are in trouble.” No, it doesn’t. There is absolutely no prohibition against quantity discounts. Rampell is, at best, warping this line stating that one standard that would give a firm “unfair leverage,” which would make it presumptively in violation of the statute, is when it “discriminates between otherwise equal trading partners in the same market by applying differential prices or conditions.”
If two firms are buying vastly different quantities of something, they are not “otherwise equal trading partners” of that supplier. What that line actually means is that if Joe’s Corner Store and Bob’s Corner Store both order identical shipments of widgets but Widgets Incorporated charges a much higher rate to Joe than Bob, then that is unfair pricing.
This is not the first time that Rampell has grossly misrepresented what Warren’s legislation says. Back in March, she said that it, and a similar bill from Senator Casey (D-PA), would be “[f]orbidding companies from changing the prices and sizes of everyday products without government say-so.” Neither bill said anything remotely like that. The fact of the matter is that Catherine Rampell is so committed to lashing out at the left that she either doesn’t bother to read the things she’s complaining about or is happy to just outright lie. Whatever the case may be, Porter should look elsewhere for insights about the economy.
Dylan Gyauch-Lewis is a Senior Researcher at the Revolving Door Project. She leads RDP’s Economic Media Project.