Democrats' trust-busting hypocrisy
Democrats are gunning for corporate monopolies. Why are they ignoring Silicon Valley?
Some progressives are disappointed that the Democratic Party's "Better Deal" agenda for the 2018 midterms doesn't go the Full Bernie. Sure, the Democrats are proposing a minimum wage hike and anti-trust reforms. But there's no single-payer health care or free college tuition to be found.
Still, "Better Deal" suggests that centrist, pro-business Clintonites are in full retreat. The party now seems to take seriously the idea that unadulterated corporate power is badly hurting the U.S. economy and American workers. "We will crack down on monopolies and the concentration of economic power that has led to higher prices for consumers, workers, and small business — and make sure Wall Street never endangers Main Street again," the party promised in its new policy proposal.
Democrats even named names! Among the sectors the party sees as lacking competitiveness and accountability — and thus perhaps ripe for anti-trust or other regulatory action — are the airlines, cable and telecommunications, the beer industry, agriculture, and eyeglasses.
But rather curiously, there was no mention of Silicon Valley.
There was not a word about the giant platform companies such as Amazon, Facebook, and Google-parent Alphabet, each of which dominate various market segments, such as e-commerce, cloud hosting, search, and mobile traffic. Those three companies, along with Microsoft and Apple, have a total stock market capitalization approaching $3 trillion — versus roughly $150 billion for all the brewing companies combined. Indeed, the four largest American companies by market capitalization are all tech companies: Apple, Alphabet, Microsoft, and Amazon. If Democrats want to protect Americans from companies with a "concentration of economic power," shouldn't they start in Silicon Valley?
After all, "Better Deal" is supposed to be a relevant, forward-looking agenda that tackles modern economic challenges in a substantial and serious manner. Look at it this way: The Economist recently ran a long analysis arguing that just as oil was key to 20th-century economies, data is the critical "natural resource" in the 21st century. Companies that have a strong grip on data merit close government scrutiny, no?
If Democrats are arguing that corporate concentration is a core economic issue, don't they have to start in the tech sector? And if they're not going to go there, don't they have to explain why not?
What's more, the Democratic Party is conveniently ignoring the tech sector at the same time that many on the left are raising warning flags. Last year, progressive Sen. Elizabeth Warren (D-Mass.) compared Amazon, Apple, and Google to Wall Street's "too big to fail" megabanks. And just this week, Sen. Cory Booker (D-N.J.) — like Warren, a possible 2020 presidential candidate — said the U.S. government should more closely monitor the growing size of Amazon, Google, and other tech giants. And those are just the politicians. Activist types are more than ready to regulate or dismantle these "digital monopolies."
Given all that, the agenda's only real mention of the tech sector seems weirdly minimalist: "In an increasingly data-driven society, merger standards must explicitly consider the ways in which control of consumer data can be used to stifle competition or jeopardize consumer privacy." Pretty technocratic. At worst, it's a gentle nudge to the sector that it needs to think hard about the political ramifications of its size and influence.
For now, though this a problem for Democrats. They look like hypocrites going after the airlines and telecoms but not big tech companies. And to understand why, you just have to follow the money.
The tech sector is a major supporter of the Democratic Party, both financially and through technical support. According to CrowdPac, 99 percent of Silicon Valley campaign donations went to Hillary Clinton last year. The Democratic presidential nominee also received the public support of many top tech execs. It's one thing for this or that politician to play populist in front of the cameras, but quite another for the Democratic Party to make anti-tech populism part of its official agenda.
But it's hard to take the Democrats' anti-monopoly agenda seriously if they're going after Big Beer but not Big Tech. And if Democrats aren't going to break up the big banks — something that would probably be popular with voters — what is the chance they would really go after companies that are actually popular with Americans?
Democrats are surely smart enough to realize that it's premature, at best, to bring Washington regulators and trust busters down on a sector that has been the only bright spot in the U.S. economy for more than a decade. Despite its size and success, Big Tech remains a tremendous source of innovation-driven productivity for an economy that could use even more "creative disruption."'
Sure, they're massive companies — but mostly because that's how economics interacts with technology. The nature of the internet economy, argues a new Goldman Sachs report, has allowed "a small number of' 'superstar' firms to widen their productivity advantage, tap into network effects, and gain disproportionately large market shares."'
Oh, and they also provide huge value to consumers who treat these digital services as irreplaceable parts of their lives. Let's see if the politicians can provide a better deal than that.