Editors’ Briefing: This Week in Political Economy (June 23–30)

The Supreme Court’s Ohio v. American Express has few admirersthe financial disclosure of the new director of the FTC’s Bureau of Consumer Protection reveals a long list of previous corporate clients; Amazon is getting into US health care; and can Netflix avoid the techlash?

 

 

Photo by Marcus Quigmire [CC BY-SA 2.0], via Flickr

 

  • The Supreme Court made several high-profile rulings this week, among them two that have serious repercussions for the US economy and for American workers: Ohio v. American Express and Janus v. American Federation of State, County, and Municipal Employees. Ohio v. American Express, in which SCOTUS ruled that AmEx did not violate antitrust laws when it told merchants not to encourage their customers to use other credit cards, is particularly consequential for US antitrust enforcement. “The Supreme Court delivered a big blow to antitrust law and its traditional mission of helping consumers and fostering economic competition,” writes Tim Wu in the New York Times. In the Financial Times, Open Markets Institute’s Barry Lynn argues that the ruling “cements the domination of big companies” over the American economy and that the decision will make it more difficult “to bring even basic antitrust complaints.” Brookings’ Aaron Klein also criticizes the Ohio v. AmEx decision, arguing that it “further ensconced our current payment system, which rewards the wealthy while penalizing the poor.”

 

Also, don’t miss our own op-ed series on Ohio v. AmEx with contributions from Chris Sagers and Randy Picker (and more to come).

 

  • On Janus, which revolved around unions’ ability to receive “fair share” fees from non-members and received a lot of attention from conservative donor networks, Duke Law professor Jedediah Purdy charges in the New York Times, “When it comes to economic inequality, today’s Supreme Court is not only failing to help but is also aggressively making itself part of the problem in a time when inequality and insecurity are damaging the country and endangering our democracy.” In the Washington Post, Barry Eidlin and Charles W. Smith rely on Canadian legal history to argue the decision’s flaws.

 

  • On a related note, Philadelphia Inquirer columnist Will Bunch uses the Justice Anthony Kennedy’s impending retirement to remind readers how Kennedy won his seat in 1987 instead of President Reagan’s first choice: Robert Bork.   

 

  • As battle lines are being drawn over who will replace Kennedy, the political arm of the Koch brothers, Americans for Prosperity, has reportedly been asked by Trump administration officials to join a coalition of political organizations that will support President Trump’s nominee. Americans for Prosperity has “already publicly committed to spending up to seven figures in support of a Supreme Court nominee, provided the choice is of the same mold as Justice Neil Gorsuch,” reports CNBC.

 

  • One week ago, US District Judge Richard Leon approved AT&T’s acquisition of Time Warner. This week, CNBC reported that AT&T “quietly bumped customers’ fees by about $1.23 each since April.” The change is reportedly going to impact about 85 percent of AT&T’s 64.5 million non-prepaid wireless customers, could mean $800 million in additional annual revenues for the company. Sprint, reports the Wall Street Journal, also raised its monthly administrative fee.

 

  • On Thursday, the Federal Reserve ordered Goldman Sachs and Morgan Stanley to freeze dividends and share buybacks, following the Federal Reserve’s annual “stress tests,” and failed the US unit of Deutsche Bank for the third time in four years. The Wall Street Journal reports.

 

  • Techlash news: California passed the toughest online privacy law in the US this week, giving consumers much more control over their personal data, including the right to know what information companies are collection and who they are sharing it to. The new law also grants consumers the ability to request that the collection and selling of their personal data be stopped. Meanwhile, Google is encouraging new publishers that take part in its Digital News Initiative to lobby against the EU’s contentious Copyright Directive, according to the Financial Times. Twitter and Facebook are “scrambling to assuage conservative leaders” who accuse the tech giants of censoring right-wing content, meeting for dinners with the Republican National Committee and Trump aides, reports the Washington Post. Nobel prize-winning economist Jean Tirole has a few suggestions on how to tame tech monopolies (he elaborated on some of them at length during the Stigler Center’s annual antitrust conference in April; video here). Amazon is getting into health care in a big way, purchasing the online pharmacy PillPack for $1 Billion. And can Netflix escape the techlash? The Economist investigates.

 

  • The AT&T-Time Warner merger approval, the Ohio v. AmEx decision and the FCC’s abandonment of net neutrality rules, argues Matt Stoller (also of Open Markets) in BuzzFeed, all ensure that control of the Internet is going to become even more centralized in the hands of a few giant corporations. “A few goliath corporations in America may soon govern what we can see, say, do, and hear,” he writes. “All information production and distribution will increasingly be created for the profit of the web giants, or it will not be created and distributed at all.”

 

  • The Department of Justice approved Disney’s $71 billion acquisition of 21st Century Fox’s TV and film studios.

 

  • In The Intercept, David Dayen writes about the new director of the FTC’s Bureau of Consumer Protection, Andrew Smith, a former Covington & Burling lawyer who previously represented Facebook, Uber, Equifax, and many more. Smith’s financial disclosure forms reveal that he worked for dozens of major corporations, and thus would likely have to to recuse himself from investigations related to them, including a few that are currently ongoing, reports Dayen.

 

  • Earlier this month, Mick Mulvaney, acting director of the Consumer Financial Protection Bureau, fired the entire 25-member advisory board of the agency. This week, reports Reuters, he cut in half a $5 million fine that the Obama-era CFPB imposed on a South Carolina-based payday lender called Security Finance for “harassing borrowers when collecting debt and mishandling credit report data.”

 

  • In trade news, President Trump’s trade tariffs continue to rankle American businesses. In addition to the president’s escalating war of words against Harley Davidson, General Motors also warned another wave of tariffs could lead to job cuts and lower wages for its employees.

 

  • “US antitrust laws were originally passed to prevent business monopolies,” writes Sandeep Vaheesan in The Guardian, “but they’ve been weaponized as an anti-worker tool – ironically strengthening the grip of the same corporate interests the laws were created to weaken.”

 

  • From The Economist: A new study suggests the costs of battling China’s air pollution may be larger than previously thought.

 

Stigler Center Goings-On

 

  • Should a kidney be sold to the highest bidder? In the latest episode of Capitalisn’t, Luigi Zingales and Kate Waldock debate Nobel-winning economist Al Roth whose algorithm for kidney transplants has saved more than 6000 lives. Roth says matching markets could be used for everything from online dating to the global refugee crisis.

 

  • The deadline for applications for the 2018–19 Stigler Center PhD Dissertation Awards, Visiting Researchers Program, and Research Funding is TODAY. Apply here.

 

Disclaimer: The ProMarket blog is dedicated to discussing how competition tends to be subverted by special interests. The posts represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty. For more information, please visit ProMarket Blog Policy.