The Return of Monopoly →

On July 15, 2015, Amazon marked the twentieth anniversary of its founding with a “global shopping event” called Prime Day...
Prime Day is now an annual event; last year it marked the largest sales day in Amazon’s history. The sale has become a secular holiday, akin in its economic wallop and social ubiquity to Super Bowl Sunday or the Fourth of July. Today, nearly half of the nation’s households are enrolled in Prime. That’s more Americans than go to church every month. More than own a gun. And more than voted for either Donald Trump or Hillary Clinton last November.
The rise of Amazon, and its overwhelming market dominance, has accelerated the collapse of traditional retail outlets. Amazon’s stock has risen by 300 percent since 2012, and Wall Street analysts have compiled a “Death by Amazon” index to track the retail companies most likely to be killed off by the online giant. This year alone, three retail stalwarts—Walmart, JCPenney, and Rite Aid—plan to shutter or sell off nearly 1,200 stores, and nearly 90,000 Americans have been thrown out of work since October. One of every eleven jobs is tied to shopping centers, which generate $151 billion in sales taxes each year. All of which is rapidly being lost to a single company. In June, Amazon announced its largest-ever acquisition, paying $13.4 billion to buy the Whole Foods grocery chain. Such is the power of the “everything store” and its “one-click ordering.”
Amazon did not come to dominate the way we shop because of its technology. It did so because we let it. Over the past three decades, the U.S. government has permitted corporate giants to take over an ever-increasing share of the economy. Monopoly—the ultimate enemy of free-market competition—now pervades every corner of American life: every transaction we make, every product we consume, every news story we read, every piece of data we download. Eighty percent of seats on airplanes are sold by just four airlines. CVS and Walgreens have a virtual lock on the drugstore and pharmacy business. A private equity firm in Brazil controls roughly half of the U.S. beer market. The chemical giant Monsanto is able to dictate when and how farmers plant its seeds. Google and Facebook control nearly 75 percent of the $73 billion market in digital advertising. Most communities have one cable company to choose from, one provider of electricity, one gas company. Economic power, in fact, is more concentrated than ever: According to a study published earlier this year, half of all publicly traded companies have disappeared over the past four decades.
...
Increasing concentration of ownership has also led to unprecedented levels of corporate crime. In case after case, courts in Europe and the United States have ruled that giant companies are operating as “cartels,” engaging in illegal conspiracies among themselves to divide up their turf. As a result, they have been able to fix the price of almost everything in the economy: antibiotics and other life-saving medication, fees on credit card transactions, essential commodities like cell-phone batteries and electric cables and auto parts, the rates companies pay to exchange foreign currency, even the interest rates on the municipal bonds that cities and towns rely on to build schools and libraries and nursing homes. A single price-fixing scandal by the world’s largest banks—fixing the global interest rates known as LIBOR—involved more than $500 trillion in financial instruments.
But the price we pay for increasing monopolization goes far beyond such corporate rip-offs. Monopoly increases income inequality by concentrating wealth in major cities: St. Louis, for example, has lost a long roster of hometown companies to mergers and acquisitions, including Anheuser-Busch, TWA, Ralston Purina, May Department Stores, A.G. Edwards, and Panera Bread. Rural America has been especially hard hit, as local stores and family farms have been “disrupted” by giant supermarket chains, seed companies, fertilizer giants, meat processors, and grain traders. And don’t blame automation: Corporate America’s investments in workplace technology have plunged by 30 percent over the past 30 years. Even robots are subject to the power of monopoly.
...
To succeed at breaking up today’s economic overlords, Democrats must pursue three related approaches to antitrust. First, they must stop monopoly before it happens. That means using the antitrust authority of the federal government to crack down on mergers. “Monopoly is made by acquisition,” notes Jonathan Taplin, the author of Move Fast and Break Things: How Facebook, Google, and Amazon Cornered Culture and Undermined Democracy. “Google buying AdMob and DoubleClick, Facebook buying Instagram and WhatsApp, Amazon buying, to name just a few, Audible, Twitch, Zappos, and Alexa. At a minimum, these companies should not be allowed to acquire other major firms, like Spotify or Snapchat.” When it comes to stopping mergers and acquisitions, Democrats should become far more aggressive.
Second, Democrats should work to rebuild structural barriers to monopoly in a wide range of industries, as they did in the 1930s with Glass-Steagall in banking. A content distributor like AT&T should not be allowed to buy a content provider like Time Warner. Online ad companies should be barred from owning browsers and ad blockers. And Amazon should not operate as both a marketplace and a competitor within that marketplace. It’s one thing, say, to run a big trucking company—but if you’re allowed to own the highway itself, other truckers won’t stand a chance.
Third, Democrats should move to split up or neutralize the power of corporations that have the ability to dominate and control entire realms of commerce. Amazon has forced publishers to offer it steep discounts on books, Monsanto is organizing the genetics behind much of our food supply, and the Cleveland Clinic exerts power over doctors throughout northeast Ohio. Such monopolies must either be regulated aggressively or broken up.

Bubbles: Are They Back? →

First, an economy-threatening bubble does not just sneak up on us. Often the discussion of bubbles implies that we need some complex measuring tools to uncover an economy-threatening bubble that’s lurking in some far corner of the data.

This is absurd on its face. If a bubble is large enough to threaten the economy, it is hard to miss. This was true of both the stock bubble in the 1990s and the housing bubble in the last decade.

...

In the case of the housing bubble, inflation-adjusted house prices had risen by more than 70 percent above their long-term trend. This unprecedented run-up in house prices occurred at a time when rents were essentially moving in step with the overall rate of inflation, suggesting that there was no major shift in the fundamentals of the housing market. Furthermore, vacancy rates were already at record highs even before the bubble burst, providing clear evidence that house prices were not being driven by a shortage of housing.

...

Should we be concerned about a bubble now? Stock prices and housing prices are both high by historical standards. The ratio of stock prices-to-trend corporate earnings is more than 27-to-1; this compares to a long-term average of 15-to-1.

House prices are also high by historic standards. Inflation-adjusted house prices are still well below their bubble peaks, but are about 40 percent above their long-term average.

In both cases, these markets are high, although in ways that are at least partly explained by the fundamentals of the market. In the case of stock prices, the profit share of GDP is almost 30 percent above its trend level. If this persists, then the ratio of prices-to-earnings is much closer to the long-term average. Of course, a big cut in the corporate tax rate increases the likelihood that a high-profit share in GDP will continue.

...

The run-up in house prices also seems less disconcerting when we consider there has been a parallel run up in rents. While rents have not increased as much as house prices, they have been substantially outpacing the overall rate of inflation for the last five years. Low-interest rates would also help to explain house prices being above long-term trends, as they justify a higher ratio of sales prices-to-rents.

Here also, there is a risk that higher rates could send prices tumbling. This could be an especially bad story for moderate-income homeowners, since the bottom tier of the housing market has seen the largest price increases over the last five years.

But even in a bad story, where for example higher interest rates send both stock and house prices back towards their trend levels, we don’t have to fear an economic collapse and probably not even a recession. The high stock market is not driving investment, which remains very modest despite near record-high after-tax profits. Housing construction has come back from its post-crash lows, but is roughly in line with its long-term average share of GDP.

Why American doctors keep doing expensive procedures that don’t work →

Some reasons we have one of the least efficient healthcare systems among the richest countries:

The stent controversy serves as a reminder that the United States struggles when it comes to winnowing evidence-based treatments from the ineffective chaff. As surgeon and health care researcher Atul Gawande observes, “Millions of people are receiving drugs that aren’t helping them, operations that aren’t going to make them better, and scans and tests that do nothing beneficial for them, and often cause harm.”
Of course, many Americans receive too little medicine, not too much. But the delivery of useless or low-value services should concern anyone who cares about improving the quality, safety and cost-effectiveness of medical care. Estimates vary about what fraction of the treatments provided to patients is supported by adequate evidence, but some reviews place the figure at under half.
Naturally that carries a heavy cost: One study found that overtreatment — one type of wasteful spending — added between $158 billion and $226 billion to US health care spending in 2011.
...
While virtually all doctors support evidence-based medicine in the abstract, clinicians and medical societies seek to maintain their professional and clinical autonomy. Physicians are sensitive to being second-guessed, even when their beliefs about how well treatments work are based on their own experiences and intuitions, not rigorous studies.
Politicians, who recognize that the public holds them in much lower regard than physicians, are hesitant to challenge the belief of many Americans that “doctor always knows best.” The American faith in markets leads to a cultural discomfort with government-imposed limits on the supply or consumption of medical technology...
...
Every health care system has to wrestle with tradeoffs among access, innovation, cost control, quality and the efficiency of resource allocation. Other countries, including the UK, may require a favorable cost effectiveness ratio before a treatment is placed on the national formulary — meaning that some treatments, such as some cancer drugs, won’t be recommended for routine funding if they are too expensive relative to their clinical benefits.
Many Americans would bridle at that kind of explicit rationing. Despite concerns about the rising cost of health care, for instance, Medicare routinely covers treatments that produce small benefits at significant social cost. In contrast to the British approach, Medicare generally covers treatments deemed “reasonable and necessary” — a definition that doesn’t include analysis of comparative effectiveness or cost in relation to other treatments...

Damage Bigly →

... The sweeping tax bill gives a huge tax cut to corporations and to wealthy individuals, and will add roughly $1 trillion over the next ten years to the federal deficit. It will widen further the already enormous gulf between the very wealthy and the rest of America. And it sets the stage for an attempt by Republicans in Congress in 2018 to shrink the federal deficit by cutting benefits to a large number of Americans through reductions in Social Security, Medicare, and other social programs.
...
However, the harm to the judicial branch and Trump’s personal imprint on it are considerably greater when one considers the lower courts. By mid- December, Trump had appointed twelve judges to the US Court of Appeals, one level down from the Supreme Court, the most this early in any presidency since Richard Nixon’s. Virtually all of them are from the right. At the level of district or trial courts, Trump’s nominations have included figures like thirty-six-year-old Brett J. Talley, who has never tried a case and was unanimously rated “not qualified” by the American Bar Association. This proved too much even for Chuck Grassley, the Republican chairman of the Senate Judiciary Committee, who refused to confirm him.
Meanwhile, a new proposal is being circulated by a right-wing legal scholar to expand the number of appellate judgeships (now 179) by two- or threefold, and to increase the number of district judges as well, with the avowed purpose of “undoing the judicial legacy of President Barack Obama.”2 In short, while the courts have served as an occasional constraint upon Trump during his first year in office, he is moving quickly to reshape the judiciary so that, in the long run, it may prove to be less independent and less constraining than it has been.

Conflict in the Dem. Rep. of Congo Leads to World's Worst Refugee Crisis →

... Last week a joint Ugandan and Congolese military operation killed more than 100 militants of a supposedly Islamic group. It is said that the group was responsible for killing 14 UN Peacekeepers in early December. The attack on the UN Peacekeepers was one of the worst such ever attacks in the history of the UN and it briefly called attention to this part of Central Africa.
Unknown to most, the Democratic Republic of Congo is currently also experiencing one of the world's worst refugee crisis. According to Internal Displacement Monitoring organization 1.7 million people have been forced to flee their homes in 2017 because of the conflict in the Congo. This makes the Congo's internal displacement greater than those in Yemen, Syria or Iraq.

You shouldn't have to give up your right to sue to get a job →

Arbitration can be an effective tool to resolve contract disputes without going to court. But employers shouldn’t be able to force workers into arbitration in contravention of worker protections established in federal laws and regulations, and they certainly shouldn’t make getting a job contingent on giving up the right to seek redress in the courts. Unfortunately, both have become regular occurrences, but a case now being briefed before the Supreme Court can — and should — fix that.
...
People or companies entering into an agreement on equal footing, and in circumstances in which they have other options, have a perfect right to decide that they would rather settle potential disputes through arbitration instead of the courts. But people desperate for work, especially in an economy as weak as it was when Hobson was hired in 2008, are not on equal footing with the company offering jobs. And if employers routinely require applicants to sign away legal rights to be considered for a job, then the employees have no other real option even in a robust economy. That is an egregious practice. People should not have to forgo their fundamental right to seek redress through the courts in order to work for a living.

World Bank to cease financing upstream oil and gas after 2019 →

I have no idea how important the World Bank was for financing oil and gas projects, so this may be mostly symbolic. But I think it's likely that this is a sign of change.

The World Bank will no longer finance upstream oil and gas projects after 2019, apart from certain gas projects in the poorest countries in exceptional circumstances,...