Economics: Antitrust - The Ghost Of Lenin

 

(Drivebycuriosity) - "Trust is good, but control is better", said Vladimir Lenin. The late leader of the defunct Soviet Union initiated a mixed economy policy with a free market and capitalism, "both subject to state control" ( newworldencyclopedia ).

The Biden administration follows Lenin. Biden`s powerful bureaucrats don´t trust the CEOs of Americas biggest corporations, instead they want to control them and try to gain authority over their corporations. Biden uses a powerful tool: Antitrust. For a long time antitrust enforcement stood for the interests of the consumers   and tried to punish corporations for bad services, low quality & variety and too high prices (consumer welfare). 

Soon after Biden became President he changed the concept of antitrust and the leadership of the agencies that enforce antitrust in the US: The Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice (DOJ).

Biden announced anti-monopoly researcher Lina Khan Chair of the mighty FTC and antitrust attorney Jonathan Kanter became head of the more than 800-person antitrust division of the Department of Justice (driveby ). Khan & Kanter belong to the Neo Brandeisian movement (named after Supreme Court Justice Louis Brandeis, 1916-1939 wikipedia). The Neo-Brandeisians declare consumer welfare as irrelevant and want to expand the government’s role in the U.S. economy significantly ( pbwt.com dailyjournal promarket reason). 

 

              Ignoring Growing Competition 

In September 2023 Khan`s FTC filed a massive law suit against Amazon (172 pages ). The authority claims that Amazon is a monopoly and stifles emerging competition ( ftc.gov vox.com). The claim ignores Walmart`s fast growing online business (plus 24% YoY), the rise of e-commerce sites like Shopify, Wayfair, Etsy & Ebay and doesn`t take notice of innovative newcomers who are aggressively entering the highly competitive market, like TikTok`s online shop, the Chinese shopping app Temu and online shopping platform Shein ( driveby Temu nymag). The rapid growth of Amazon`s challengers indicates a healthy competition.

The real purpose of the law suit is to gain control over one of America´s largest corporations and to be in charge of Amazon`s business. FTC Chair Khan wants to tell Amazon what it can do and what not, how much the corporation charges their customers and how they deal with the business partners (nationalreview ).

Amazon became a behemoth because the corporation is very efficient and obsessed with cost cutting and delivering goods cheap, fast & reliably (consumer welfare). They have been constructing a network of huge fulfillment centers which are very efficient and save a lot of costs. None of these counts for the FTC. The Khan denounces efficiency for irrelevant and declared in an interview: “The word efficiency doesn’t appear anywhere in the antitrust statutes....  It’s not that any business practice that increases welfare or increases efficiency is fine" (promarket). FTC Commissioner Bedoya, a Khan supporter, claims that efficiency is unfair because efficient companies hurt inefficient competitors (ftc.gov ). 

In November 2023 Jonathan Kanter`s DOJ hit Google with a law suit, claiming that Google is monopolizing the market for online advertising (reuters searchengineland). Kanter ignores that users prefer Google`s search engine because their American competitors Bing (owned by Microsoft), DuckDuckGo and others are inferior. Kanter also does not care that Google competes against Meta (owner of Facebook & Instagram), Amazon and others and only has 29% of the market for online advertising (yalejreg ). Like his ally Khan, DOJ enforcer Kanter treats efficiency & consumer interests (consumer welfare) as irrelevant. He wants to gain power over Google.

There is more to come. Kanter & Khan aim to reign into Artificial Intelligence (AI).  Reuters reports: "The U.S. Justice Department and the Federal Trade Commission are in discussions over which agency can probe OpenAI on antitrust grounds, including the AI firm's partnership with Microsoft" ( reuters). The New York Times also knows that Kanter`s DOJ prepares a sweeping antitrust case against Apple ( nytimes).  

That`s not enough: Since Twitter is owned by Elon Musk, Khan`s FTC is orchestrating an aggressive campaign against Twitter because the entrepreneur is not popular with the Democrats and the Biden Administration. "The agency sent more than a dozen letters to Twitter in a span of 10 weeks that contained more than 350 specific demands, thus creating a "substantial burden on the company's operations." ( npr.org wsj  judiciary  nytimes).

The aggressive law suits are not surprising. The Khan and her ally Jonathan Kanter have pushed their agencies away from settling cases and toward an aggressive strategy of taking companies all the way to court (Politico). Kanter intends to stop mergers even if they would raise efficiency and reduce costs (truthonthemarket ). The mighty bureaucrats are supported by Elizabeth Warren and allied with a "progressive" new strain in antitrust thinking, reports Politico. They intend to stop mergers even if they would raise efficiency and reduce costs (truthonthemarket ). 

 

 

                  Redistribution Of Power

FTC Chair Khan tries to expand her already extensive might and argued - in an article for a Marxist paper - that antitrust must be reconfigured toward the redistribution of economic and political power and away from concerns regarding price (lpeproject  realclearpolicy). The Khan claims that she has the "Rule Making Authority" and that she can decide what is & isn't "unfair competitive conduct" ( ftc.gov    twitter  uschamber ).  FTC commissioner Rebecca Slaughter, another Khan supporter, demands that “antitrust should be used to accomplish political and social goals including racial equity” ( thecentersquare  crowell). According to former FTC-Commissioner Christine S. Wilson the Brandeisian FTC represents a Marxist ideology and tries to replace the market process of supply and demand by a continuously regulated environment (ftc.gov ).

The Khan follows Lenin and declared: "Market structure is deeply political. One reason is that all markets are governed by law. The structure of a market at any given time is the product of political decisions—made and not made—about how players in that market will be allowed to use their power" ( law.duke).

 

( ftc.gov)

 

Although neither Khan nor Kanter are democratically elected, both have the power to throw a lot sand into the gears of successful companies, which are the engines of the US economy. Their regulations and inquiries reduce Big Tech`s  abilities to further innovate because they are occupying management capacities and are slowing decision processes - making business more complicated and costly. Innovators and startups are getting discouraged when they know that strong growth will get punished.

 

Conclusion: Biden`s new trust busters are aiming for a leadership of unelected bureaucrats and they are using their growing power to punish merits, diligence, risk taking etc (calling merits "unfair"). They are not only burning more and more money of the tax payers for ridiculous law suits. The sued companies suffer enormous costs as well. Mergers get many months delayed, causing additional costs, and the defendants have to employ armies of expensive lawyers. The consumers are the losers. They have to bear these costs by paying higher prices and are getting reduced selection and quality of goods & services. Winners are bureaucrats, law firms and foreign competitors like Sony and Alibaba.

 

 

 

 

 

 

Books: The Gravedigger´s Bread By Fredéric Dard

 (Drivebycuriosity) -  Fredéric Dard belonged to the most popular & prolific French authors of the 20th century (theguardian ). I enjoyed his crime mysteries "Bird in a Cage" & ""The Executioner Weeps" ( my reviews here    here). His novel "The Gravedigger´s Bread", another crime noir, is not as strong as the mentioned books, but I enjoyed it anyway ( amazon).

Like "Bird" and "Executioner" the story is told in first person. Again the protagonist meets a woman, this time the wife of a grave digger, which leads to serious consequences (this is still a spoiler free blog). I did not like the opportunistic & pathetic protagonist, but Dard`s style made me to care about him anyway. The plot is macabre - as the title suggest - and comes with the twists, which are typical for Dard´s book I read so far.

I plan to read more by him.

Photography: Manhattan`s Billboards Redux

 (Drivebycuriosity) - I am fascinated by New York City, where I live since 2012. The metropolis is full of life. I am impressed by the sheer size of the city and her buildings. Part of the fascination are the huge billboards you can spot all over Manhattan. In the past I posted some image collections ( here  here  here).

I display here some pics I took in the recent months.

 

To be continued

 

Books: Lessons By Ian McEwan

 (Drivebycuriosity) - I like British literature and Ian McEwan belongs to my favorite authors. I enjoyed his novel "Machines like me", about AI, his kinky family tale "Cement Garden" and the spy story "Sweet Tooth" (my reviews here here here). I also like the movie adaptions of "Atonement" & "The Comfort of Strangers".

Unfortunately, "Lessons", his newest opus, doesn`t really work for me (amazon). The novel follows the whole live of a man in the second half of the 20th century, with a splash of alternate history. I still enjoy McEwan`s eloquent style and his frequent setting of commas.  

But inspite of all of the literary mastership, I couldn`t care less about the protagonist. I find him pathetic and his professional development - if there was any - chaotic; his relationships & complex family affairs are dysfunctional & confusing. It didn`t help that the plot jumps back and forth in history. And the sex scenes are timid.

The plot is spiced with historical events that happened during the protagonist`s live time like Suez Conflict, Cuba Crises or Chernobyl. But this events, so important they were, did not really influence the protagonist`s live and where just filling material.

There are still some strong scenes and one chapter is immense gripping (but I don´t tell which and why). McEwan`s description of the bleak live in Eastern Germany, the Communist part, before the fall of the wall, deserves a large readership. The author also shows his strength when he writes about sciences (page 294 ff) .

If a talented editor would have cut the novel down to 200 pages from about 400, "Lessons" could have been a strong novel. McEwan could do much better.

PS:  The descriptions of calculus, quantum mechanics and entropy are very clear and instructive. I quote some here that I don`t need to read the book again:

Spoiler alarm:

Schrödinger`s "cat`s state is unknown until the chamber is opened. In Schrödinger´s account it is both alive and dead until that moment. In the good outcome, at the reveal, a wave function collapses, while its other version continues as dead in a universe inaccessible to the owner of the cat. By extension, the world divides at every conceivable moment into an infinitude of invisible possibilities. 

The Multiple Worlds theory seemed to the protagonist no less impossible than Adam and Eve in the garden of Eden.

About entropy and thermodynamics: "In the Second Law, which was the third because they started with zero, he was reminded of a truth obvious to all householders. Just as heat bled out into cold and not the reverse, so order bled out into chaos and never in reverse... The dead never sprang into life, never became the living.....Everything, especially life, fell apart. Order was a boulder to be rolled uphill. The kitchen would not tidy itself".

Well said, Ian McEwan. Why don`t you write a science novel?

Contemporary Art: Collective Body @ Thierry Goldberg Gallery, New York

 

(Drivebycuriosity) - Thierry Goldberg Gallery on 103 Norfolk Street belongs to the stalwarts of New York´s Lower East Side. There you can see works of less known and ascending artists. Recently I spotted another interesting group show, called "Collective Body" (thierrygoldberg ).

 

This post begins with Lorenzo Amos`"Girl Untitled" (2023) followed by some images by Ray Terran.

 

And another work by Lorenzo Amos, called "Wolo, I love you" (2023 ).

 

To be continued

Movies: Killers Of The Flower Moon

(Drivebycuriosity) - Martin Scorsese reached the age of 81. It´s time for the great opus, his "Alterswerk", to crown his impressive oeuvre (imdb ). 

With "Killers of the Flower Moon", a non-fictional book by David Grann, he chose the right topic: In the 1920s American natives in Oklahoma, the Osage people, are murdered one by one, because they owned land were recently oil was found. The killing of the "savages" did get not much attention by the law and the public. While Americans are obsessed with all the evil which is happening beyond the ocean, they are still blind to crimes on the natives, who once owned America.  

I was captured by the plot and the performances (you can find a synopsis here ). Leonardo DiCaprio impressed as a slow-witted guy, who could easy be manipulated. The audience could read his face when some half-baked insights were wandering through his mind, but not really arrived. Robert De Niro convinced as the shrewd puppet master in the evil games. I also liked the performance of Lily Gladstone, who has native (Blackfeet and Nez Perce) & European ancestors.

Thanks to Grann, Scorsese & Apple, who created and produced the movie, for throwing some light on an almost forgotten part of American history.

 

Economics: About DEI And Boeing

(Drivebycuriosity) -   Two issues appear on my radar these days: DEI and Boeing. DEI is they acronym for Diversity, Equity, and Inclusion. It means that employees are not (at least not primarily) hired, payed and promoted by their merits. High work ethic, diligence and the will to work continuously and thoroughly are less important. Instead employees are chosen and treated by criteria like diversity (meaning race), equity and inclusion.  

This brings me to Boeing. The airplane producer has a lot problems. The most recent: "The Federal Aviation Administration has temporarily grounded some Boeing 737 Max 9 jets pending safety inspections, after a “door plug” panel blew off the body of Alaska Airlines Flight 1282 in midair on Friday, Jan. 5, forcing an emergency landing in Portland (pbs.org ). Shortly before this incident the company had admitted that their 737 Max  might "loose bolts in the rudder control system" (abcnews ). In 2018 & 2019 already 2 Boeing 737 Max 8 crashed, killing hundreds of people (reuters ).

Elon Musk claimed that Boeing´s safety problems are caused by DEI: "Do you want to fly in an airplane where they prioritized DEI hiring over your safety? That is actually happening" (twitter).

Musk is right. Boeing follows DEI and displays that proudly on their website (image above  boeing.com ). Boeing`s DEI policy implies that the corporation cares less about work ethic & diligence. At Boeing the will to work continuously and thoroughly does not have priority anymore. More important are diversity, equity and inclusion.

 

 ( source)

Boeing´s DEI politics explain their safety problems. Imagine a worker notices that others are preferred even if they work less thoroughly because they fit into Boeing´s DEI concept. A diligent worker loses the initiative to work with the highest accurateness when this counts less. Why should he/she care anymore? Boeing`s woke policy discourages diligence & accurateness and opens the door for sloppiness and carelessness. No wonder that Boeing`s planes have a safety issue.

Boeing´s quality problems are also the consequence of Biden`s pro-labor and pro-union politics, which encourage preference for "underserved communities" and make it more difficult to enforce diligence and to discipline workers who are sloppy and careless. 

If Boeing would just be a bread factory then their DEI commitment would not do much harm. If their pastries would become inferior, they would go out of business. But when Boeing`s air planes are inferior and parts of them fall from the sky, it is a huge problem. Who wants to risk his live in a Boeing machine?

I would be not surprised if airlines in Europe, Asia, Latin America & Africa, who are not responsible to the Biden government, will purchase fewer Boeing planes and chose Europe`s Airbus or Chinese machines instead. Who needs woke Boeing anymore?

 

P.S. And it is even getting worse

 (source  source)