Transcript: Community Broadband Bits Episode 83

Thanks Jeff Hoel for providing the transcript for the Episode 83 of the Community Broadband Bits podcast with Barry Lynn on the real threats from monopoly. Listen to this episode here.

00:09:

Barry Lynn:  It is only in the modern America of the last twenty years that we've seen such a radical degradation of these principles.

00:19:

Lisa Gonzalez:  Hello.  You are listening to the Community Broadband Bits Podcast, from the Institute for Local Self-Reliance.  I'm Lisa Gonzalez.

This week, Chris interviews Barry Lynn, Senior Fellow at the New America Foundation.  Lynn has written extensively on political and economic results of concentration of power in the U.S.  He's presented his work to world leaders in the U.S., Europe, and Asia.  In this discussion, Lynn delves into how policy in the U.S. has evolved to favor the concentration of power.  Every industry has endured extreme consolidation, including telecommunications.  As more communities attempt to invest in publicly-owned networks, they often find themselves as targets of deep-pocketed and distant incumbent providers.  Chris and his guest discuss how the foundation of our system drives this destructive behavior, and how looking back may actually help us move forward.  Here are Chris and Barry Lynn.

01:11:

Chris Mitchell:  Welcome to another episode of the Community Broadband Bits Podcast.  I'm Christopher Mitchell.  Today, I'm talking with anti-monopoly expert Barry Lynn, Senior Fellow at the New America Foundation, and author of the book, "Cornered: The New Monopoly Capitalism and the Economics of Destruction."  Welcome to the show.

01:29:

Barry Lynn:  Thanks for having me on today.

01:31:

Chris:  Absolutely.  So you're an anti-trust, anti-monopoly expert.  I wanted to start by asking you, why is there a need for anti-monopoly law?

01:41:

Barry:  There's a need for anti-monopoly law mainly so that we can protect ourselves against the concentration of political power.  I mean, this is something that goes back to the beginning of this country.  It really goes back to the real tea party.  And it's the idea that, in order to protect our most basic liberties, we have to ensure that no one is concentrating a huge amount of power in the political economy.  You know, back then, it was a trading company, the British East India Company, that we were worried about.  Nowadays, it might be a company like Walmart, or Google, or Comcast.

02:18:

Chris:  And let me just actually reflect on that for a second, because it reminds me of what I thought was one of the most scary passage of Susan Crawford's book on Comcast, in which she notes that during the discussion about whether Comcast would merge with NBCU, Comcast hired the services of just about every lobbying firm in DC, to make sure that, although the lawyers would not be available to competing interests, that might disapprove of the merger.  Is that the kind of power that you're worried about?

02:49:

Barry:  That's kind of a marginal example, but it's actually a very good example of a company that has pretty much unlimited pocketbooks.  You know, they can just bring millions and tens of millions of dollars to the table.  They have the ability to, for instance, as Susan Crawford reported, essentially buy up the law by buying up the lawyers.  Buying up the lobbyists.  Conflicting out all the people they want to conflict out of the room.  And, you know, that's a strategy that more and more companies use nowadays.  But the real issue -- what we have to be thinking about in this country -- and I know there have been some discussions about this.  This is actually at the heart of what the Tea Party was talking about in its origins.  It's certainly what the folks in Occupy were talking about.  But we need to focus on the fact that we see power in this county concentrated in more awesome ways than it has been in more than a hundred years -- since the era of the plutocrats.  And the big difference today is that our plutocrats are armed with technologies that J. P. Morgan, that John D. Rockefeller, they could never imagine having powers like these.

04:07:

Chris:  So, John D. Rockefeller had the power to call out the militia, and, famously, in the Ludlow Massacre, about a hundred years ago in Colorado.  What powers do they have today, specifically, that rival that kind of power?

04:19:

Barry:  Well, they have the power to know what we're thinking.  They have the power to manipulate the information that flows into our minds.  You know, the combination of monopoly and big data -- monopoly-concentrated information and communications institutions -- is something that did not exist back then.  You know, it's -- I mean, the fact is that if there is a strike today, any -- you know, a powerful company -- a set of powerful people -- can still get the militia called out, they could still get the police called out.  That's no different today than it was then.  The difference is that what we have today is these technologies that allow this incredible knowledge about us, from one side, and we have almost no knowledge, going the other way.

05:09:

Chris:  I want to raise a different question, which is whether it's correct, in terms of the messaging, to talk about "monopolies."  Occasionally, I hear from people who say, you know, you call Time Warner Cable or Comcast a monopoly, but they're not really a monopoly.  They face some competition.  It's really an oligopoly.  And I'm really -- I'm curious -- what sort of language should we be using?  What is appropriate to use here?

05:32:

Barry:  Since the beginning of the country, people have just called monopoly any time that someone has too much power in the marketplace.  And, you know, just to go to an expert on this issue, who -- to find this -- Milton Friedman.  Back in the 1960s, you know, when he was asked to define what a monopoly was, he said it was any company that had sufficient power to set the terms in negotiations.  And, basically, every sector now, of the economy in the United States of America, we see one or two companies that really have the ability to set the terms along which negotiations take place.  In that sense, these are monopolies.  They have the ability to push their desires onto the public.  I use the word monopoly because it's just a simple way of communicating a connexus to the way and to the discussions that we've had in the country going back to 1773, to the original tea party.  We don't get into all this technical conversation about, you know, what concentration is good, what concentration is bad.  Extreme concentration of political-economic power is a bad thing.

06:43:

Chris:  So, with this concentration of power, I started thinking, as I was reading book, which I highly recommend -- I was wondering, how much we could actually blame a single company like -- let's just pick on Time Warner Cable.  If Time Warner Cable didn't act the way it does, in terms of keeping prices high, experimenting with bandwidth caps, and otherwise doing things that kind of hurt consumers and local businesses -- If Time Warner Cable wasn't doing those things, then I'm guessing Time Warner Cable would be slated for extinction by Wall Street.

07:16:

Barry:  I rarely if ever vilify individuals -- individual business people.  Because the individual business people in this country -- you know, I know a lot of these folks.  I came out of business journalism.  And so the great majority of business executives, who work at these corporations, they want to do the right thing.  So, you know, people don't come to work -- they don't go through life seeking to do ill to the public.  Not most people.  I mean, let's not be naïve.  There are some who do.  But they are stuck.  They are trapped within a system of law that requires them to do exactly what they are doing.  And that is to seek to -- to run these companies in ways that subvert the well-being of the public, that subvert our economic well-being and subvert our political well-being.  And what we need to be focusing on it not chastising the bad company.  What we need to be focusing on is fixing the rule of law so that we get out of our political economy what want.  And what we want is liberty.  We want a functioning democracy.  We want rough equality -- certainly of opportunity.  And we can get it.  It's a matter of getting the principles right -- it's a matter of getting the rule of law right.

08:34:

Chris:  And then, in terms of getting the rule of law right, I think, among some of the people that I'm familiar with, they might immediately turn and say, well, the real problem is the political parties.  You've got the Republicans, that want to defend this sort of oligopoly; and the Democrats would like to do something, but they really just -- they can't get it done.  One of the things that you come back to, time and again, in your book is that this is really -- these sort of pro-concentration policies that we see at the federal level -- they really come from both parties.  Can you speak to that a little bit?

09:04:

Barry:  The way I see political economics in the United States, going back over 200 years, is that you have different political regimes -- they get put into place -- in which both parties operate within that regime, within the rules of that regime.  Right now, the Republican Party, the Democratic Party -- they're essentially both parties of capital.  They're both answerable to Wall Street.  You know, there are people within the -- individuals within the Democratic Party who are fighting that.  There are individuals within the Republican Party who are fighting that.  But the idea of saying that one party is good and one party is bad -- I find to be naïve in the extreme.  Going back to, say the '30s and '40s, '50s, '60s, back then, you saw a situation in which both parties essentially accepted that anti-monopoly law was good.  That competition was a good thing.  If you look at, you know, one of the great reformers, when it comes to political economics of the 20th century was Eisenhower.  You know, he took things that were put into place by Roosevelt, that were expanded under Truman, and he kept pushing for them.  That -- you know, so, that regime, both of the parties essentially were designed to serve the overall interests of the public.  Now, obviously, there were exceptions then, and there are exceptions today.  But what we saw back then is, both the parties operating within a regime that was designed to distribute power.  And today, both parties are operating within a regime that is designed to concentrate power.

10:47:

Chris:  It's interesting when you get beyond the left-right perspective, and you look at, in terms of the concentration of power.  And I recently saw this in a discussion I was having with some other very smart folks on an e-mail listserve, about a new idea from AT&T, where companies can pay to exempt their data from the caps that a user would have.  And the main argument for those who were defending AT&T's new program was that it would lower prices for consumers.  And that "proved" that this was a good idea, and that no one would really be hurt by this program.  What sorts of things should we be considering, aside from just the price to people who are buying services?

11:28:

Barry:  You know, when we look at competition policy -- and competition policy includes things like trade policy.  And when we look at competition policy writ large, from the beginning -- for 200 years -- in this country, we focus foremost on protecting the liberties of the individual -- making sure that the individual is not enslaved by people using corporate estates to capture control over certain economic activities that people engage in.  Second, people used our anti-monopoly laws, competition policy to distribute power in ways that would protect our democracy.  Third, they used a competition policy to ensure that we did not end up dependent on any single foreign country, be it Britain, be it France -- the way we are now dependent on China, for instance.  These were things that people watched out for.  And it was only then that they would get into issues of, like, is the system structured in such a way that delivers certain efficiencies that would benefit the consumer.  Today, by contrast, the main thing -- the only thing -- the only measure that we use to decide how to structure our political economy, how to structure competition within our political economy -- is the supposed well-being of the consumer, which we define as, how do we deliver them bigger quantities of stuff, or the same quantity at a lower price?  The shift from like a citizen-focused competition policy to a consumer-focused competition policy -- that took place in the 1970s and early 1980s.  That was a revolutionary act.  That was an act -- that was a revolution that was perpetrated in the United States of America by a little, tiny elite of folks, working for, mainly, the Reagan administration.

13:32:

Chris:  And then later embraced by the Clinton administration, I think you would say.

13:35:

Barry:  Later embraced by the Clinton administration.  Certainly embraced by the Obama administration.  And, you know -- and it's like, are the people -- were the people in the Clinton administration, and Bush -- in W's administration, and Obama's administration -- are they fully cognizant of what they're doing?  No.  I mean, that's one of the fantastic things about having ideologies -- about having idea structures.  Is that if you get the idea structure to be accepted, people just follow those ideas without really understanding what the implications of those ideas are.  So the fact that we have an entire political economy designed to promote efficiency -- a certain kind of efficiency, as measurable by price -- and that that actually subverts all of the checks and balances the we put into place every 200 years -- um, people don't see it.  People don't see it, because at this point, the idea is so widely accepted.  I mean, gosh, who would be against establishing a market structure that would help out the consumer?

14:38:

Chris:  Well, that brings me to an example that I was hoping I'd have a chance to bring up, which is, in nearby Monticello, Minnesota, where they had a situation where local businesses were literally sending employees home in the afternoons, because the Internet access in the offices was so bad that they could be more productive from home.  And, in response, the city built its own network.  And faced a number of hurdles along the way, but the most damaging one thus far has probably been -- the big national cable company, Charter, slashed its prices, from $145 a month, for one of its bundles, to $60 a month, guaranteed price for two years.  Now, talking to a lot of experts, it's hard to get a sense of exactly what the cost to Charter is to deliver those services.  But there's a consensus that it's probably between $80 and $100.  So every month, Charter is LOSING at least $20, let's say, to any subscriber who takes this service.  Now, that's lowered the price for consumers, temporarily, for this period of two years, while they run their competition out of business.  But the long-term effect is undoubtedly going to be much worse, when the city is again left without having any real choice in providers.  Now, you've gone over sort of a lot of the -- why this is a problem, from a lot of different angles.  But what I'm curious about is if there's a remedy.  What can the city do in that case, and -- is one question.  And the second question is, what should the federal government policy be, when something like that happens?

16:16:

Barry:  Well, you know, we used to have laws.  And these laws went back to the days of railroads, when you couldn't get from point to point unless you were on the railroad.  And it went actually back, also, to laws that were established for the telegraph system, so that --  Or, even beyond that, it goes back to the days of paddlewheel steamboats.  And it was this idea of common carriage.  It meant that anybody who showed up and wanted to ride on that steamboat, who wanted to send a message on that telegraph system, who wanted to ride on that railroad, they would get a seat, they would get their message taken.  And they would get it taken at the exact same conditions as the next person in line.  And the person after that.  The idea was that there would be posted rates.  And that everyone would pay the exact same rate.  And that everyone could see.  If you didn't like the rate -- if everyone thought the rate was too high, you could go complain.  And you could go to the government, to see if you could knock that rate down.  But the fact was, there was no discrimination.  You mentioned, you know, AT&T earlier.  And then Comcast.  You know, Comcast now owns NBC.  We could imagine -- actually, I -- we could probably imagine it happening today -- a situation in which they use their pipes to promote the distribution of NBC products and to discriminate against the distribution of products that are put out by CBS, by Fox.  The principles have been known for hundreds of years.  Common carriage actually goes back to Roman times.  It is only in the modern America of the last twenty years that we've seen such a radical degradation of these principles.  We haven't seen that in Asia.  We haven't seen it in Japan.  We haven't seen it in Europe.  Only in America have we seen it.  So the point is that the laws -- we know what the laws should look like.  We got it right for hundreds of years.  And we know how to get it right again.

18:26:

Chris:  That's terrific.  And, actually, this whole discussion of common carriage is very topical, as --  The idea of common carriage has played a major part in the Circuit Court's recent opinion about network neutrality.  Thank you so much for coming on this show, and teaching us a bit about anti-monopoly.  I look forward to everything that you do, and so I look forward to reading your next article.

18:49:

Barry:  Hey, thanks for having me on.  It's great to talk to you.

18:52:

Lisa:  For more on Lynn's work, go to newamerica.org and find his bio on the "about" and "staff" pages.  In addition to his published work, you can learn about his appearances.  We encourage you to purchase Lynn's book at your local bookseller, or check it out at the local library.  The title is, "Cornered: The New Monopoly Capitalism and the Economics of Destruction."  And it's offered by Wiley Publishing; the year is 2010.

We want you to e-mail us with questions or ideas for the show.  Write to podcast@muninetworks.org .  Follow us on Twitter.  We are @communitynets .  This show was released on January 28th, 2014.  Thank you to the group Haggard Beat for their song, "Lazlo," licensed using Creative Commons.  And thank you for tuning in.