Corporate concentration threatens American democracy

[Commentary] Corporate concentration in the United States is not only increasing inequality but also undermining competition and consumers’ standard of living. Politically, the commensurate lobbying influence of big tech, big finance and other large conglomerates has created what political scientist Francis Fukuyama calls a “vetocracy” — where vested concerns have amassed the clout to choke off legislative reforms that would diminish their spoils. Why the opposite is happening in the European Union is an unfamiliar tale of how governance one step removed from electoral democracy has been able to resist the lobbying of organized special interests to make policy that benefits the average person.

Active antitrust policies in the second half of the 20th century fairly leveled the playing field of American commerce. “But starting around 2000, U.S. markets began to lose their competitive edge,” Germán Gutiérrez and Thomas Philippon write, based on a new study of theirs. “Now, Internet access and monthly cellphone plans are much cheaper in Europe than in America, as are flights. Even in Mexico, mobile data plans are better priced than in the United States. … Meanwhile in the United States, deregulation and antitrust efforts have nearly ground to a halt. The United States has not completed a major reform to the goods and services market since 1996, and as a result, its industries have grown increasingly concentrated.”

While big tech lobbyists have so far frustrated privacy legislation at the national level in the United States, California has been able to pass curbs on abuses of personal data. Ironically, this was due not to technocratic insulation from politics but its opposite: the citizens’ ballot initiative. The experiences with antitrust and privacy regulation examined in The WorldPost this week suggest that a mixed system that combines disinterested technocrats, elected representatives and direct democracy — each as a check and balance on the other — would be the most intelligent form of governance.

[Nathan Gardels is the editor-in-chief of The WorldPost and a senior adviser to the Berggruen Institute]