Several weeks ago President Joe Biden signed a sweeping executive order that included 72 initiatives across the federal government aimed at combating America’s monopoly problem. Biden’s executive action is the first concerted effort to fight concentrated corporate power in decades. While anti-monopoly, particularly antitrust, is often seen as a job for the federal government, Biden’s order acknowledges the key role state government could and should play in reducing monopolists’ stranglehold.
Today, in an era of rampant economic concentration that is squeezing workers, destroying small businesses and distorting our political system, states like Minnesota can lead the way in standing up to corporate power. Minnesota has done this before. In 1871, as the Minnesota Grange movement was beginning to build momentum, the Legislature confronted that era’s most prominent monopolist by establishing maximum fares and rates for railroads and creating the office of railroad commissioner. The Grange went on to establish the Minnesota Anti-Monopoly Party in 1873 and with the help of Democrats, won legislative seats in 1874. These electoral victories lead to creation of a railroad commission as state legislators continued the work of curbing monopoly power.
Action in New York, Wyoming …
Looking to the present, states are again poised to lead the way. Last month the New York State Senate passed a groundbreaking overhaul of its antitrust laws. The 21st Century Antitrust Act would establish a broader standard for antitrust enforcement based on a firm’s ability to dominant markets, instead of the much narrower consumer welfare standard. Prior to that, Wyoming increased the fines companies will face for violating antitrust law, while state attorneys general have filed major suits against Google, Facebook and Amazon.
Beyond changes to antitrust law, state legislators across the country have been advancing anti-monopoly policies that take aim at today’s leading monopolist, Big Tech. This spring several states, including Minnesota, introduced legislation that would break up Google and Apple’s duopoly over the development of smartphone apps by allowing customers to use alternative app stores for app distribution and cap the predatory fees (as high as 30 percent) developers are charged.
Evaluating tax subsidies and exclusions
States are also taking a second look at tax policies that have aided large corporations’ economic takeover. Big Tech has grown fat off billions in state and local tax subsidies and exclusions, such as Minnesota’s sales tax exemption for data centers, which costs nearly $100 million annually! Research suggests these incentive programs are little more than a black hole of corporate largesse. Some policymakers are finally waking up to this corporate abuse and trying to end these programs, while others have joined the effort to establish an interstate tax compact that would limit the use of corporate giveaways. Minnesota would be well served to join these other states and examine the way in which taxpayer funds are used to pad the bottom lines of Fortune 500 companies.
Workers are also in the crosshairs of monopolists. Highly concentrated labor markets drag down wages, with Amazon warehouses serving as one particularly stark example of monopoly power putting the screws to working families. One tool used to accomplish this wage suppression are noncompete agreements, which are restrictive covenants prohibiting a worker from taking a job at a competing firm. The Economic Policy Institute has estimated 27.8% to 46.5% of workers are subject to noncompetes! States such as Illinois, Nevada and Oregon, have recently passed legislation limiting these coercive contracts.
Consumers are not spared the ills of monopoly power. For example, manufacturers such as Apple and John Deere make it impossible for consumers or independent repair technicians to fix items like smartphones and tractors. This forces consumers to either purchase a new product or send the device to the manufacturer itself, raising prices and destroying entrepreneurial opportunities for independent technicians. For the past several years legislators in Minnesota and across the country have introduced legislation that would break up this monopoly power and grant consumers the “Right to Repair” the things they own.
Apple, Google add lobbyists
While legislators, including some in Minnesota, are starting to understand the toolbox available to curb corporate power, the fate of many of these bills underscores the challenges ahead. Just days after Minnesota legislators introduced the app store legislation, Apple and Google each added three new lobbyists. The bills subsequently went nowhere. In North Dakota, Big Tech lobbyists persuaded the Senate to vote down similar legislation, and in Arizona, while app store legislation passed the House, it has gone nowhere in the Senate after Apple and Google “hired almost every lobbyist in town.”
The proposals outlined here are just some of the ways Minnesota can rebalance its economy. What is needed more than policy ideas are policymakers willing to challenge corporate power and think creatively about the role state government can play. That will require an electorate that presses candidates, at all levels, on their plans to confront corporate power and restore competition. Minnesota made anti-monopoly cool over a century ago; it can do so once more.
Justin Stofferahn lives in White Bear Township and is a public affairs professional who has worked on a variety of tax and economic development issues. He was a candidate for the Minnesota State Senate in 2020 and can be reached at www.justinstofferahn.com.
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