Preserving U.S. Democracy Means Breaking Up Monopolies Like Facebook And Amazon

The threat to freedom isn't big government; it's big business.
"No society prospers, politically or spiritually, when most of its people do not."
"No society prospers, politically or spiritually, when most of its people do not."
Emanuele Cremaschi via Getty Images

For decades, Americans have feared that an oppressive federal government would strangle political and economic freedom. Instead, massive private institutions increasingly direct public policy, distort political discourse and dominate our daily lives.

The problem is not capitalism per se ― as with the worries about government, it’s size. Allowing business enterprises to accumulate unchecked dominance over key sectors of our economy corrodes competition, constrains opportunity and, ultimately, corrupts representative governance. True democracy, it transpires, can flourish only when economic power and prosperity are more equitably distributed.

The end of the Cold War bred a comfortable delusion: that democracy and economic freedom were inextricably linked and inexorably triumphant. But the nature of that freedom impacts democracy itself.

For years after World War II, the prevailing corporate creed included an implicit communal compact: fair wages, a secure retirement, proportionate executive compensation, equitable taxation, hard bargaining between businesses and unions, and curbs on corporate power and size. The result was rising opportunity and diminishing income inequality.

Beginning in the 1970s, communitarianism curdled. Faced with growing global competition, corporate executives prioritized deregulation, reducing taxes, hamstringing unions, depressing wages, cutting benefits and overpaying themselves for maximizing shareholder values at the cost of shared prosperity. Ayn Rand’s unfettered corporate ubermensch, as repackaged by Milton Friedman, symbolized the superior wisdom of “free markets” liberated from sloppy social sentiment to grow the GDP.

Concurrently, a changing economy gutted industrial and clerical work, increased automation, replaced mature corporations with startups, confined its benefits to the technologically skilled and introduced the “gig economy.” Employment grew quickest in low-wage jobs: Mass employers like Walmart paid a tiny fraction of what General Motors had paid 50 years before ― because they could.

Little wonder that more Americans, including millennials, question whether our democracy improves their daily lives. Far from oppressing them, government can’t ― or won’t ― protect them from giant corporations dedicated to making themselves and their shareholders richer and more powerful.

Inevitably, corporate size became both an economic and political problem. As private power swelled, so did economic concentration ― in finance, the media, airlines, telecommunications and information platforms.

“For the free market to work, it must, in fact, be free.”

Corporations became “people” with the right to spend unlimited money to influence public policy. Far from promoting democracy, monopolies want government to protect them from the consequences of democracy. As Supreme Court Justice Louis Brandeis said, “We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.”

At those corporations’ behest, government stopped enforcing antitrust laws, which prevented private enterprises from becoming so large that they slipped beyond control. In addition to stifling competition, limiting innovation and retarding new businesses, large corporations began dictating the terms of existence for millions of Americans ― depressed wages, vanishing benefits, longer hours, rising insecurity, diminished privacy, strains on family life and a pervasive sense of political and personal impotence.

These days, Big Brother owns a Learjet ― and a congressman. At a time when drugs are becoming unaffordable, the pharmaceutical industry spent $100 million lobbying to keep Medicare from negotiating lower drug prices. The windfall is like corporate Viagra ― $15 billion extracted annually from consumers.

Some of our more pernicious entities seemed superficially benign. Take Facebook, that monopoly of the mind that enveloped us in narcotizing narcissism while shaping our opinions and replacing friendship with “friends.” Only later did we learn that Facebook enabled Russia to spread disinformation and exploit our social divisions; that Facebook’s executives viewed this with indifference; that they had hired an opposition research firm to sully critics like George Soros and traded our data in exchange for advertising revenue and user data from others, privacy be damned.

Like other quasi-monopolies, Facebook has leveraged its political power to forestall effective investigation and regulation. Mark Zuckerberg is not our “friend” ― though, cosseted, he apparently contemplates becoming our president.

"Like other quasi-monopolies, Facebook has leveraged its political power to forestall effective investigation and regulation."
"Like other quasi-monopolies, Facebook has leveraged its political power to forestall effective investigation and regulation."
Chip Somodevilla via Getty Images

Or take Amazon. Its ability to deliver goods cheaply and conveniently has monopolized consumers ― while throttling competition and killing off brick-and-mortar stores that paid a living wage. Its success has made Jeff Bezos the world’s richest man, the savior of The Washington Post and an aspiring philanthropist.

But working conditions for many Amazon employees are Dickensian: low wages, dependency on food stamps, skimpy vacations, bathroom breaks at warp speed, pressure to work through injuries ― all facilitated by ruthless efforts to suppress unionization.

Recently, Amazon auctioned off the placement of its second corporate headquarters, pitting localities against each other in a race to assemble the most attractive package of tax breaks and corporate welfare. That New York contributed an estimated $3 billion captures the power differential between state and local government and a corporate anaconda.

The corporate obsession with satiating shareholders deepens economic, political and societal dysfunction. By breeding a myopic focus on short-term quarterly results, it stints research and development, incentivizes splashy acquisitions, suffocates corporate responsibility and reduces employees to disposable items of expense while licensing CEOs to gorge themselves on stock options.

This monomania for profit feeds the “swamp” that Donald Trump denounced ― and deepens it. Its toxicity combines the unlimited flow of cash licensed by Citizens United, a corrupt tax code laden with breaks for the rich, including hedge fund managers and real estate developers like Trump and Jared Kushner, and misappropriating public policy to propitiate wealthy donors. A salient example is Trump’s fiscally calamitous corporate tax cut: Instead of funding jobs, the windfall went into stock buybacks and the purchase of yet more political power by overstuffed plutocrats.

One leading Trump supporter, casino magnate Sheldon Adelson, rewarded Republicans for his $700 million in tax savings with a $30 million rebate to a GOP super PAC. Faced with trillion-dollar deficits without an end in sight, our children will pay for Adelson’s enrichment and the GOP’s self-aggrandizement.

Millions of Americans have already paid for the de facto immunity granted white-collar criminals and predatory financial institutions. Most conspicuous was the bacchanalia of wrongdoing by banks allowed to become “too big to fail,” which rewarded years of deregulation by producing the Great Recession ― and, in turn, entitled banks to a government bailout.

Likely, that was merely a down payment. Already, lobbyists are chipping away at laws passed to prevent another such disaster.

Republican donor Sheldon Adelson attends a ceremony at the White House where President Donald Trump presented Adelson's wife with the Presidential Medal of Freedom.
Republican donor Sheldon Adelson attends a ceremony at the White House where President Donald Trump presented Adelson's wife with the Presidential Medal of Freedom.

A further potential crisis stems from the orgy of cheap borrowing that financed mergers and acquisitions ― often ill-conceived ― by creating massive corporate debt. As interest rates rise, the danger looms of debt defaults that could depress the economy by bankrupting one conglomerate upon another.

Worse, powerful corporations have claimed the right to accelerate climate change. Sixty-five percent of Americans consider this to be a serious problem. Yet corporate interests like the Koch brothers have fought the development of renewable energy, gutted efforts to slow climate change, spread bogus science and made denialism the all-but-stated policy of the GOP.

One might compare this to the venality of cigarette companies that concealed that they were peddling death. Yet, in the long run, these predators are more abysmal; they are willing to risk dooming the planet later in exchange for profiteering now.

Given all this, it is imperative for government to resurrect genuine democracy by curbing corporate power, restoring competition, broadening prosperity and redressing the imbalance between workers and employees. But how?

The answer is not socialism, even in some aspirant form: That would universalize the sclerosis of monolithic power ― stifling creativity, institutionalizing human error and perpetuating the brain-dead insularity of centralized bureaucracy. Rather, we must reanimate the hope and opportunity without which “freedom” and “democracy” become slogans.

That means a sustained governmental effort to raise wages, combat income inequality, revivify unions, strengthen and diversify public schools at every level, reform our system of taxation, and provide education and retraining for the new economy. It means attacking the power of money to corrupt our electoral system. It means barring public officials from trading in financial instruments, mandating disclosure of their tax returns, and curbing lobbying once they leave office.

Critically, it means reforming corporate behavior to benefit society writ large. Financial institutions must be regulated to prevent predation and forestall ruinous speculation. Corporate boards must include employee representatives, account for the social and environmental impact of their decisions and constrain excessive executive compensation, which incentivizes short-term thinking.

Finally, it means breaking the stranglehold of large corporations on our economy by vigorously enforcing updated antitrust laws and scrutinizing mergers and acquisitions. In given cases, that means breaking up corporate behemoths, including Facebook. For the free market to work, it must, in fact, be free.

Here, one must acknowledge that every political and economic agenda has flaws and inefficiencies ― some apparent, some not. The conceit of Friedmanesque free-marketeers that their construct functioned like a Swiss watch required a willful obliviousness to its malignancies. So critics must admit, for example, that Amazon delivers efficiency and reduces costs ― at least until it otherwise decides.

In the end, the choice of paths involves a subjective balancing of values. But one lesson of history endures: No society prospers, politically or spiritually, when most of its people do not.

Richard North Patterson is a New York Times best-selling author of 22 novels, a former chairman of Common Cause and a member of the Council on Foreign Relations.

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