Tag: Gilded Age

The Curse of Bigness

 

TIMEMagazine19Oct1925
A portrait of Louis Brandeis on the cover of Time magazine on October 19, 1925.

Before he was an associate justice on the Supreme Court of the United States from 1916 to 1939, Louis Brandeis was a progressive lawyer fighting the big monopolies, or trusts, of Gilded Age America. He termed the corrosive effect on democracy of unrestrained business practices “The Curse of Bigness”, and after he joined the Supreme Court he maintained his interest in restraining business interests from trampling the rights of ordinary citizens.

Now President Biden has appointed Lina Khan to the chair of the Federal Trade Commission, and her appointment signals a return to the principles of Louis Brandeis. Lina Khan is an antitrust lawyer and legal scholar who, as a student at Yale Law School in 2017, wrote an article called Amazon’s Antitrust Paradox. The article drew widespread attention for her ideas about how the conventional wisdom of the past 50 or so years regarding regulation of the marketplace based on consumer prices no longer applied in the age of Amazon, a company willing to engage in predatory pricing and use vertical integration in order to stifle competition and monopolize the marketplace.

A profile of Lina Khan in Time from October 17, 2019.

 

Prior to Ms. Khan’s appointment, another antitrust lawyer and legal scholar, Tim Wu, joined the Biden administration as a Special Assistant to the President for Technology and Competition Policy on the National Economic Council. Mr. Wu is known for helping to write the first network neutrality rules in work for the Federal Communications Commission in 2006. In 2018, he wrote The Curse of Bigness: Antitrust in the New Gilded Age, a book which paid homage to Louis Brandeis and his antitrust work of the Progressive Era.

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A Climate Strike protester with an anti Bezos sign in London on February 14, 2020. Photo by Flickr user Socialist Appeal.

With these two people now in key positions in the federal government, perhaps efforts to rein in, or even bust up, big technology companies such as Amazon, Google, Apple, Facebook, and Microsoft, will finally be undertaken seriously and with persistence. In the past, these Big Five technology companies have largely escaped with slaps on the wrist after fitful investigations into their practices.


Supreme Court Justice Ruth Bader Ginsburg answered questions from Brandeis University students at an event in January 2016 commemorating the 100th anniversary of Louis Brandeis being nominated to the Supreme Court by President Woodrow Wilson.

 

As Louis Brandeis understood, and as is apparent from the writings of both Lina Khan and Tim Wu, setting regulatory boundaries for these behemoth businesses not only ensures they act fairly in the marketplace, but protects democracy from their tendency to squash individual liberties when they conflict with their self-interest. And the bigger and less competitive these companies become, the more their self-interest consumes everything in their vicinity, like a beast that can’t stop growing and must swallow anything in its way.
— Techly


An unofficial remix of the 2021 songs “Bezos I” and “Bezos II”, written and performed by Bo Burnham for his album and Netflix special, Bo Burnham:Inside. Warning: foul language.

 

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Buy Low, Rent High

 

“Only one in four households that is income-eligible for federal housing assistance receives any. The annual cost to taxpayers of the federal income tax deductions for home mortgage interest and property taxes, which mainly benefit relatively affluent households, is double what the government spends on all lower-income housing programs combined.”
— Stockton Williams, executive director of the Terwilliger Center for Housing at the Urban Land Institute.

On February 28, Oregon Governor Kate Brown signed into law a statewide rent control bill, the first of its kind in the nation. The provisions of the bill put a cap on yearly rent price increases at a percentage above inflation, and do not apply to all rental units. Tenants’ rights groups believe the bill is better than nothing and puts an end to price gouging in a tight housing market, and they will continue to push for a more comprehensive bill in the future.


The Condition of Laboring Man at Pullman 1894
Political cartoon from the Chicago Labor newspaper from July 7, 1894, showing the condition of the laboring man at the Pullman Company. The 1894 Pullman Strike was a pivotal event in redressing the imbalance between labor and capital during the first Gilded Age. In the current second Gilded Age, weakened labor unions have had difficulty increasing wages for members, and the ad hoc affiliation Fight for $15 has achieved piecemeal success.

 

Arguments over whether rent control laws really work in favor of tenants go back and forth between the usual advocates for the free market on one side and advocates for at least limited government intervention on the other. “Supply and demand” is the linchpin for argument. Points less noted are low wages and income inequality, as in too many people have too little money while the rich continue accumulating more for themselves. And with more money comes more power in equal measure.

Free market arguments ignore how over time the rich, with help from their friends in government, put their thumbs on the scales of capitalism, creating an ever more favorable environment for themselves. To conceal from the lower classes how they are being preyed upon, the rich and their enablers in academia and government concoct formulas such as “a rising tide lifts all boats”, and “trickle down economics”. The Earth is not an infinite place with infinite resources, however, and even if it were, the rich in their greed would still grab for themselves with one hand while swatting the lower orders with the other hand. In their pathology, it’s just as important that others haven’t enough as it is that they have too much.

 

The same Wall Street financiers and speculators who created the housing bubble and consequent financial crisis in 2008 are responsible for skyrocketing rental prices around the country. None of them went to jail or were even indicted and prosecuted, and they were free to take advantage of the mess they had created by using their wealth to buy up property at rock bottom prices, helping themselves to favorable government regulations they themselves had largely written. That is more than just putting a thumb on the scale, it is sitting on it like a fat cat. It’s not unusual for the rich to profit off an economic downturn because they have the money to buy when everyone else needs to sell to have any money at all. This latest example of the rich getting richer has simply been more blatant and egregious than in previous financial crises.


A World War II era sign declaring rent control rules in some localities, a program administered nationwide by the Office for Emergency Management during the war and for several years afterward to prevent price gouging.

Conservative pundits are likely to denigrate rent control laws as socialism, while praising the free market ideal of supply and demand in the housing market for setting rental prices. The problem they choose to ignore, or are possibly even ignorant of, is that the free market ideal has been a dead letter for a long time in America, if it ever actually existed outside of economics text books in the first place. What we have now is a crony capitalist system run by corporate and financial oligarchs who bend government regulations in their favor. They write the rules to benefit themselves. They ran the housing market into the ground, and then scooped up everything at bargain prices and started charging sky high rents. If renters balked at the high prices, it didn’t matter, because they had no other options. Meanwhile, the building industry limped along, maintaining the housing shortage that keeps rents high. Supply and demand economics of, by, and for the fat cats.
— Ed.

 

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Consumer or Citizen

 

The Keynesian economic model which held sway in Western capitalist societies in the middle of the twentieth century has long since given way to neoliberalism, a policy and a philosophy which is a reworking of the laissez faire economies of the early industrial revolution. No wonder that we live in a new Gilded Age, the culmination of increasing economic inequality and degradation of publicly subsidized social services for everyone but the rich. Neoliberalism, a term which has meant many things in theory over the last one hundred years, has come to mean in fact laissez faire economics for the poor and middle class, and corporate welfare for the wealthy.

 

The result has been the takeover of the economy by short-sighted financial interests among the largest banks, and the takeover of politics and public policy making by those same banks and international corporations which owe allegiance to their executives and their shareholders instead of to any one national or local community. Consumers bear a great deal of the responsibility for this state of affairs, while citizens can change it.

American corporate flag
A protester at the second presidential inauguration of George W. Bush in Washington, D.C., in January 2005 holds up Adbusters’ Corporate American Flag. Photo by Jonathan McIntosh.

Consumers are passive; citizens are active. Consumers are inattentive to politics; citizens pay attention to what’s going on in government. Consumers struggle to get by and blame themselves when they cannot; citizens understand larger forces are arrayed against their interests and demand an equal place at the table. Consumers look at the wealthy and see people who helped themselves; citizens know how wealth creates wealth and privilege looks out for its own. Consumers feel helpless to change the course of society; citizens band together because they realize their power is in their numbers.

2018 Women's March in Missoula, Montana 179
A sign at the January 2018 Women’s March in Missoula, Montana. Photo by Montanasuffragettes.

 

The neoliberal philosophy of the past forty years has stripped people of their view of themselves as citizens with rights, duties, and responsibilities in society and replaced it with the lumpish, passive recognition of themselves as consumers, replaceable parts in the economic machine. Meanwhile, neoliberals have sold the consuming masses on the idea that unions and publicly funded healthcare and education are bad policies, but tax cuts for the wealthy and for corporations are good because of some nebulous trickling down that’s supposed to happen. Mission accomplished!

Taking action to change neoliberal policies on the environment, on economic inequality, and on the accountability of corporations, banks, and politicians is going to have start with a change in attitude among the populace from consumers to citizens. It starts with getting the money out of politics, and that starts with overturning the Supreme Court’s 2010 Citizens United decision, which equated money with speech. What greater symbol for the neoliberal outlook can there be than “money talks”? The second most important step toward change would diminish the power of the big banks by reinstating the Depression era Glass-Steagall Act, separating commercial and investment banking. The third step would end government subsidies for the fossil fuel industry and divest from it entirely. All easier said than done, of course, and only the first few of many steps to curtail the undue influence of the rich and powerful over society, but once consumers get up off their couches and walk down as citizens to their voting places they will be taking the steps necessary to change a system that works only for a privileged few, and not for them.
— Vita

 

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The Artist’s Rendering

 

“Render therefore unto Caesar the things which are Caesar’s; and unto God the things that are God’s.”
— Words of Jesus Christ quoted in Matthew 22:21, King James Version of the Bible.

Mona Lisa moustache
Leonardo da Vinci’s (1452-1519) Mona Lisa, with digitally added mustache. Derivative work by Perhelion.

 

This past Friday evening at a Sotheby’s art auction in London, the English graffiti artist Banksy remotely activated a shredder hidden within the frame of his painting Girl With Balloon moments after it had sold for one million British pounds. The lower half of the painting shredded, and there is some question now about the status of the sale and whether Banksy’s vandalizing of his own painting will render an even greater value for it.

Discussion of an artwork’s value outside of its aesthetic appeal is a reminder that for the rich who can afford to pay tremendous prices for art the value lies more in other, equally idiosyncratic, considerations than in its aesthetics. For the rich, art is an investment and a step on the ladder of social climbing. They may not find a particular piece they buy aesthetically appealing whatsoever. The essential thing is that enough other important people find an artwork appealing so that its value is driven up, checking off the boxes for high return on investment and an increase in high society credentials for its new owner. The artwork itself may languish in a warehouse after sale rather than go on private or public display.

 

The investment value of an artwork is, like money itself, largely artificial and sustained by the beliefs of the people who hold it or wish to hold it. No one can eat art, any more than they can eat money, nor can they grow food on it like they could on land, nor withdraw food from it as they might withdraw fish from the sea. It has no monetary value unless enough people believe it does. Aesthetic value, on the other hand, is almost entirely in the eye of the beholder, though some people may in their appreciation of art be too dependent on the opinions of “experts”. For an extreme case of wishful thinking brought on by peer pressure, look to the Hans Christian Andersen tale “The Emperor’s New Clothes”.

Titian - The Tribute Money - Google Art Project
The Tribute Money, a painting by Titian (1490-1576).

Before the Renaissance, art was for decoration of public spaces and the homes of the rich, and for religious instruction in places of worship since most people were illiterate and did not receive their education from books. The names of very few medieval and ancient artists have come down to us along with their works. That changed with the Renaissance, when artists such as Leonardo, Michelangelo, and Raphael acquired reputations beyond their immediate patrons among the rich and powerful. Note how we have come to know all three by single names, as if they were modern day celebrities. And it was the widening of cultural influence beyond the insularity of any one city-state’s walls during the Renaissance that allowed artists to break out of anonymity.

The international renown of a few popular artists such as Rembrandt was slow to build at first, and their artworks commanded modest prices by today’s standards. It is the international culture of today and the concentration of great wealth among an ever smaller percentage of the population that has enabled the explosion in high prices for the artworks of a relatively small number of well known artists. The last great jump in prices was roughly during the Gilded Age around the turn of the twentieth century, when a great concentration of wealth created a new aristocracy of capitalists.

In the 1941 film Citizen Kane, wealthy newspaper publisher and art collector Charles Foster Kane, modeled on tycoon William Randolph Hearst and played by Orson Welles, discusses his changing economic circumstances with his banker Mr. Thatcher, played by George Coulouris, and his longtime assistant Mr. Bernstein, played by Everett Sloane.

Now there is another concentration of wealth occurring, this time on a worldwide scale rather than limited to Europe and North America. Nothing has changed, of course: as always, the rich get richer. It’s the scale of wealth accumulation that has changed, and when artworks are selling for hundreds of millions of British pounds or American dollars, a mere million for a painting by anti-establishment artist Banksy is entry level stuff. The rich people sitting on mountains of the wealth of the world would not flinch at shredding a million pounds, and the irony of one artist’s rendering matters not at all to them as long as the artist’s growing fame increases their return on investment.
— Vita

10/8/2018 Update: Since last Friday, when Banksy’s Girl With Balloon partially shredded after being sold at auction for about £1,000,000, its value has increased by at least 50%, and may have doubled.

 

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