[Plura-list] The one weird monopoly trick that gave us Walmart and Amazon and killed Main Street
Cory Doctorow
doctorow at craphound.com
Wed Aug 14 08:42:13 EDT 2024
Read today's issue online at: https://pluralistic.net/2024/08/14/the-price-is-wright/
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I'm coming to BURNING MAN! On TUESDAY (Aug 27) at 1PM, I'm giving a talk called "DISENSHITTIFY OR DIE!" at PALENQUE NORTE (7&E). On WEDNESDAY (Aug 28) at NOON, I'm doing a "Talking Caterpillar" Q&A at LIMINAL LABS (830&C).
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Today's links
* The one weird monopoly trick that gave us Walmart and Amazon and killed Main Street: The Robinson-Patman Act is how we make sure companies aren't too big to jail nor too big to care.
* Hey look at this: Delights to delectate.
* This day in history: 2004, 2009, 2014, 2019, 2023
* Upcoming appearances: Where to find me.
* Recent appearances: Where I've been.
* Latest books: You keep readin' em, I'll keep writin' 'em.
* Upcoming books: Like I said, I'll keep writin' 'em.
* Colophon: All the rest.
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🫅🏻 The one weird monopoly trick that gave us Walmart and Amazon and killed Main Street
Walmart didn't just *happen*. The rise of Walmart - and Amazon, its online successor - was the result of a specific policy choice, the decision by the Reagan administration not to enforce a key antitrust law. Walmart may have been founded by Sam Walton, but its success (and the demise of the American Main Street) are down to Reaganomics.
The law that Reagan neutered? The Robinson-Patman Act, a very boring-sounding law that makes it illegal for powerful companies (like Walmart) to demand preferential pricing from their suppliers (farmers, packaged goods makers, meat producers, etc). The idea here is straightforward. A company like Walmart is a powerful buyer (a "monopsonist" - compare with "monopolist," a powerful seller). That means that they can demand deep discounts from suppliers. Smaller stores - the mom and pop store on your Main Street - don't have the clout to demand those discounts. Worse, because those buyers are weak, the sellers - packaged goods companies, agribusiness cartels, Big Meat - can actually charge them *more* to make up for the losses they're taking in selling below cost to Walmart.
Reagan ordered his antitrust cops to stop enforcing Robinson-Patman, which was a huge giveaway to big business. Of course, that's not how Reagan framed it: He called Robinson-Patman a declaration of "war on low prices," because it prevented big companies from using their buying power to squeeze huge discounts. Reagan's court sorcerers/economists asserted that if Walmart could get goods at lower prices, they would *sell* goods at lower prices.
Which was true...up to a point. Because preferential discounting (offering better discounts to bigger customers) creates a *structural advantage* over smaller businesses, it meant that big box stores would eventually eliminate virtually all of their smaller competitors. That's exactly what happened: downtowns withered, suburban big boxes grew. Spending that would have formerly stayed in the community was whisked away to corporate headquarters. These corporate HQs were inevitably located in "onshore-offshore" tax haven states, meaning they were barely taxed at the state level. That left plenty of money in these big companies' coffers to spend on funny accountants who'd help them avoid federal taxes, too. That's another structural advantage the big box stores had over the mom-and-pops: not only did they get their inventory at below-cost discounts, they didn't have to pay tax on the profits, either.
MBA programs actually teach this as a strategy to pursue: they usually refer to Amazon's "flywheel" where lower prices bring in more customers which allows them to demand even lower prices:
https://www.youtube.com/watch?v=BaSwWYemLek
You might have heard about rural and inner-city "food deserts," where all the independent grocery stores have shuttered, leaving behind nothing but dollar stores? These are the direct product of the decision not to enforce Robinson-Patman. Dollar stores target working class neighborhoods with functional, beloved local grocers. They open multiple dollar stores nearby (nearly all the dollar stores you see are owned by one of two conglomerates, no matter what the sign over the door says). They price goods below cost and pay for high levels of staffing, draining business off the community grocery store until it collapses. Then, all the dollar stores except one close and the remaining store fires most of its staff (working at a dollar store is incredibly dangerous, thanks to low staffing levels that make them easy targets for armed robbers). Then, they jack up prices, selling goods in "cheater" sizes that are smaller than the normal retail packaging, and which are only made available to large dollar store conglomerates:
https://pluralistic.net/2023/03/27/walmarts-jackals/#cheater-sizes
Writing in *The American Prospect*, Max M Miller and Bryce Tuttle1 - a current and a former staffer for FTC Commissioner Alvaro Bedoya - write about the long shadow cast by Reagan's decision to put Robinson-Patman in mothballs:
https://prospect.org/economy/2024-08-13-stopping-excessive-market-power-monopoly/
They tell the story of Robinson-Patman's origins in 1936, when A&P was using preferential discounts to destroy the independent grocery sector *and* endanger the American food system. A&P didn't just demand preferential discounts from its suppliers; it also charged them a fortune to be displayed on its shelves, an early version of Amazon's $38b/year payola system:
https://pluralistic.net/2022/11/28/enshittification/#relentless-payola
They point out that Robinson-Patman didn't really need to be enacted; America already had an antitrust law that banned this conduct: section 2 of the the Clayton Act, which was passed in 1914. But for decades, the US courts refused to interpret the Clayton Act according to its plain meaning, with judges tying themselves in knots to insist that the law couldn't possibly mean what it said. Robinson-Patman was one of a *series* of antitrust laws that Congress passed in a bid to explain in words so small even federal judges could understand them that the purpose of American antitrust law was to keep corporations weak:
https://pluralistic.net/2023/04/14/aiming-at-dollars/#not-men
Both the Clayton Act and Robinson-Patman reject the argument that it's OK to let monopolies form and come to dominate critical sectors of the American economy based on the theoretical possibility that this will lead to lower prices. They reject this idea first as a legal matter. We don't let giant corporations victimize small businesses and their suppliers just because that might help someone else.
Beyond this, there's the realpolitik of monopoly. Yes, companies *could* pass lower costs on to customers, but *will they*? Look at Amazon: the company takes $0.45-$0.51 out of every dollar that its sellers earn, and requires them to offer their lowest price on Amazon. No one has a 45-51% margin, so every seller jacks up their prices on Amazon, but you don't notice it, because Amazon forces them to jack up prices *everywhere else*:
https://pluralistic.net/2024/03/01/managerial-discretion/#junk-fees
The Robinson-Patman Act did important work, and its absence led to many of the horribles we're living through today. This week on his Peoples & Things podcast, Lee Vinsel talked with Benjamin Waterhouse about his new book, *One Day I’ll Work for Myself: The Dream and Delusion That Conquered America*:
https://athenaeum.vt.domains/peoplesandthings/2024/08/12/78-benjamin-c-waterhouse-on-one-day-ill-work-for-myself-the-dream-and-delusion-that-conquered-america/
Towards the end of the discussion, Vinsel and Waterhouse turn to Robinson-Patman, its author, Wright Patman, and the politics of small business in America. They point out - correctly - that Wright Patman was something of a creep, a "Dixiecrat" (southern Democrat) who was either an ideological segregationist or someone who didn't mind supporting segregation irrespective of his beliefs.
That's a valid critique of Wright Patman, but it's got little bearing on the substance and history of the law that bears his name, the Robinson-Patman Act. Vinsel and Waterhouse get into that as well, and while they made some good points that I wholeheartedly agreed with, I fiercely disagree with the conclusion they drew from these points.
Vinsel and Waterhouse point out (again, correctly) that small businesses have a long history of supporting reactionary causes and attacking workers' rights - associations of small businesses, small women-owned business, and small minority-owned businesses were all in on opposition to minimum wages and other key labor causes.
But while this is all true, that doesn't make Robinson-Patman a reactionary law, or bad for workers. The point of protecting small businesses from the predatory practices of large firms is to maintain an American economy where business can't trump workers or government. Large companies are literally ungovernable: they have gigantic war-chests they can spend lobbying governments and corrupting the political process, and concentrated sectors find it comparatively easy to come together to decide on a single lobbying position and then make it reality.
As Vinsel and Waterhouse discuss, US big business has traditionally *hated* small business. They recount a notorious and telling anaecdote about the editor of the Chamber of Commerce magazine asking his boss if he could include coverage of small businesses, given the many small business owners who belonged to the Chamber, only to be told, "Over my dead body." Why did - why does - big business hate small business so much? Because small businesses wreck the game. If they are included in hearings, notices of inquiry, or just given a vote on what the Chamber of Commerce will lobby for with their membership dollars, they will ask for things that break with the big business lobbying consensus.
That's why *we* should like small business. Not because small business owners are incapable of being petty tyrants, but because whatever else, they will be *petty*. They won't be able to hire million-dollar-a-month union-busting law-firms, they won't be able to bribe Congress to pass favorable laws, they can't capture their regulators with juicy offers of sweet jobs after their government service ends.
Vinsel and Waterhouse point out that many large firms emerged during the era in which Robinson-Patman was in force, but that misunderstands the purpose of Robinson-Patman: it wasn't designed to prevent *any* large businesses from emerging. There are some capital-intensive sectors (say, chip fabrication) where the minimum size for doing *anything* is pretty damned big.
As Miller and Tuttle write:
> The goal of RPA was not to create a permanent Jeffersonian agrarian republic of exclusively small businesses. It was to preserve a diverse economy of big and small businesses. Congress recognized that the needs of communities and people—whether in their role as consumers, business owners, or workers—are varied and diverse. A handful of large chains would never be able to meet all those needs in every community, especially if they are granted pricing power.
The fight against monopoly is only secondarily a fight between small businesses and giant ones. It's foundationally a fight about whether corporations should have so much power that they are too big to fail, too big to jail, *and* too big to care.
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🫅🏻 Hey look at this
* Let Them Eat Invoices https://prospect.org/health/2024-08-13-let-them-eat-invoices/
* Digital Apartheid in Gaza: Big Tech Must Reveal Their Roles in Tech Used in Human Rights Abuses https://www.eff.org/deeplinks/2024/08/digital-apartheid-gaza-big-tech-must-reveal-their-roles-tech-used-human-rights-0
* Vyvanse Synthesis Demo - DEF CON 2024 follow-up https://www.youtube.com/watch?v=qtreuRmSDrU (h/t Mixæl Laufer)3
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🫅🏻 This day in history
#20yrsago European copyright extension: protecting Elvis to the detriment of everyone else https://web.archive.org/web/20040906201355/http://www.indexonline.org/news/20040812_unitedstates.shtml
#15yrsago Photos of science fiction writers’ nests http://www.whereiwrite.org/index.php
#15yrsago Guerilla gardens in newspaper boxes https://web.archive.org/web/20090806033424/http://www.bladediary.com/flyerplanterboxes-5/
#15yrsago Lethem and EFF on why Google Book Search needs privacy guarantees https://www.npr.org/2009/08/12/111797207/google-deal-with-publishers-raises-privacy-concerns
#15yrsago Movie industry wants the right to take your house off the net without full judicial review https://torrentfreak.com/movie-studios-want-own-version-of-justice-for-3-strikes-090812/
#10yrsago Biology student in Colombia faces jail for reposting scholarly article https://www.eff.org/deeplinks/2014/07/colombian-student-faces-prison-charges-sharing-academic-article-online
#10yrsago Former NSA spook resigns from Naval War College in dick-pic scandal https://arstechnica.com/tech-policy/2014/08/snowden-critic-resigns-naval-war-college-over-online-penis-photo-flap/
#10yrsago Profile of Flickr and Slack founder Stewart Butterfield https://www.wired.com/2014/08/the-most-fascinating-profile-youll-ever-read-about-a-guy-and-his-boring-startup/
#10yrsago DOJ slams Riker’s Island for horrific violence against young inmates https://www.techdirt.com/2014/08/11/doj-report-details-massive-amount-violence-committed-rikers-island-staff-against-adolescent-inmates/
#10yrsago Profiles of brutalized laborers building Abu Dhabi’s Louvre and Guggenheim https://web.archive.org/web/20140806033053/https://www.vice.com/read/slaves-of-happiness-island-0000412-v21n8
#10yrsago NZ TV won’t air ads for geo-unblocking ISP https://www.nzherald.co.nz/business/mediaworks-joins-sky-tvnz-in-banning-slingshot-ads/QI7UJYTMZBALFI6E7W32WYYMTU/?c_id=3&objectid=11304231
#10yrsago Weaseling about surveillance, Australian Attorney General attains bullshit Singularity https://www.youtube.com/watch?v=Hw1ryLGs2ws
#5yrsago WordPress is buying Tumblr https://www.axios.com/2019/08/12/verizon-tumblr-wordpress-automattic
#5yrsago Your phone is a crimewave in your pocket, and it’s all the fault of greedy carriers and complicit regulators https://krebsonsecurity.com/2019/08/who-owns-your-wireless-service-crooks-do/
#5yrsago The real meaning of plantation tours: American Downton Abbey vs American Horror Story https://afroculinaria.com/2019/08/09/dear-disgruntled-white-plantation-visitors-sit-down/
#5yrsago New York City raised minimum wage to $15, and its restaurants outperformed the nation https://gallery.mailchimp.com/a6170fa466dd7c8eed0aab6be/files/b2f3acd5-3884-42a7-a0bf-fa410b2b6544/Final_CNYCA_NELP_NYC_Min_Wage_Restaurants.pdf?mc_cid=5ce3fba121
#5yrsago Prior to Amazon acquisition, Ring offered “swag” to customers who snitched on their neighbors https://www.vice.com/en/article/ring-told-people-to-snitch-on-their-neighbors-in-exchange-for-free-stuff/
#5yrsago Stephen Wolfram recounts the entire history of mathematics in 90 minutes https://soundcloud.com/stephenwolfram/a-very-brief-history-of-mathematics
#5yrsago All flights in and out of Hong Kong canceled as protesters flood the airport https://twitter.com/erinhale/status/1160786319804493827
#5yrsago Rule of Capture: Inside the martial law tribunals that will come when climate deniers become climate looters and start rendering environmentalists for offshore torture https://memex.craphound.com/2019/08/12/rule-of-capture-inside-the-martial-law-tribunals-that-will-come-when-climate-deniers-become-climate-looters-and-start-rendering-environmentalists-for-offshore-torture/
#1yrago Paying consumer debts is basically optional in the United States https://pluralistic.net/2023/08/12/do-not-pay/#fair-debt-collection-practices-act
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🫅🏻 Upcoming appearances
* Launch for Madeline Ashby's *Glass Houses* at Chevalier's Books (LA), Aug 16
https://www.eventbrite.com/e/book-talk-madeline-ashbys-glass-houses-tickets-965286486867
* Disenshittify or die! (Burning Man, Palenque Norte, 7&E), Aug 27, 13h
* Talking caterpillar Q&A (Burning Man, Liminal Labs, 830&C), Aug 28, 12h
* Albacon (Albany/remote), Sep 13-15
https://albacon.org/2024/
* TusCon (Tucson), Nov 8-10
https://tusconscificon.com/
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🫅🏻 Recent appearances
* Enzittification with Ed Zitron & Brian Merchant
https://omny.fm/shows/better-offline/enzittification-with-cory-doctorow-brian-merchant
* The Paradigm Shift
https://paradigm-shift-on-4zzz.pinecast.co/episode/dbf12eaf/tech-criticism-with-cory-doctorow
* How To Fix The Internet (EFF)
https://www.eff.org/deeplinks/2024/06/podcast-episode-fighting-enshittification
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🫅🏻 Latest books
* The Bezzle: a sequel to "Red Team Blues," about prison-tech and other grifts, Tor Books (US), Head of Zeus (UK), February 2024 (the-bezzle.org). Signed, personalized copies at Dark Delicacies (https://www.darkdel.com/store/p3062/Available_Feb_20th%3A_The_Bezzle_HB.html#/).
* "The Lost Cause:" a solarpunk novel of hope in the climate emergency, Tor Books (US), Head of Zeus (UK), November 2023 (http://lost-cause.org). Signed, personalized copies at Dark Delicacies (https://www.darkdel.com/store/p3007/Pre-Order_Signed_Copies%3A_The_Lost_Cause_HB.html#/)
* "The Internet Con": A nonfiction book about interoperability and Big Tech (Verso) September 2023 (http://seizethemeansofcomputation.org). Signed copies at Book Soup (https://www.booksoup.com/book/9781804291245).
* "Red Team Blues": "A grabby, compulsive thriller that will leave you knowing more about how the world works than you did before." Tor Books http://redteamblues.com. Signed copies at Dark Delicacies (US): and Forbidden Planet (UK): https://forbiddenplanet.com/385004-red-team-blues-signed-edition-hardcover/.
* "Chokepoint Capitalism: How to Beat Big Tech, Tame Big Content, and Get Artists Paid, with Rebecca Giblin", on how to unrig the markets for creative labor, Beacon Press/Scribe 2022 https://chokepointcapitalism.com
* "Attack Surface": The third Little Brother novel, a standalone technothriller for adults. The *Washington Post* called it "a political cyberthriller, vigorous, bold and savvy about the limits of revolution and resistance." Order signed, personalized copies from Dark Delicacies https://www.darkdel.com/store/p1840/Available_Now%3A_Attack_Surface.html
* "How to Destroy Surveillance Capitalism": an anti-monopoly pamphlet analyzing the true harms of surveillance capitalism and proposing a solution. https://onezero.medium.com/how-to-destroy-surveillance-capitalism-8135e6744d59?sk=f6cd10e54e20a07d4c6d0f3ac011af6b) (signed copies: https://www.darkdel.com/store/p2024/Available_Now%3A__How_to_Destroy_Surveillance_Capitalism.html)
* "Little Brother/Homeland": A reissue omnibus edition with a new introduction by Edward Snowden: https://us.macmillan.com/books/9781250774583; personalized/signed copies here: https://www.darkdel.com/store/p1750/July%3A__Little_Brother_%26_Homeland.html
* "Poesy the Monster Slayer" a picture book about monsters, bedtime, gender, and kicking ass. Order here: https://us.macmillan.com/books/9781626723627. Get a personalized, signed copy here: https://www.darkdel.com/store/p2682/Corey_Doctorow%3A_Poesy_the_Monster_Slayer_HB.html#/.
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🫅🏻 Upcoming books
* Picks and Shovels: a sequel to "Red Team Blues," about the heroic era of the PC, Tor Books, February 2025
* Unauthorized Bread: a middle-grades graphic novel adapted from my novella about refugees, toasters and DRM, FirstSecond, 2025
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🫅🏻 Colophon
Today's top sources:
Currently writing:
* Enshittification: a nonfiction book about platform decay. Today's progress: 789 words (37782 words total).
* A Little Brother short story about DIY insulin PLANNING
* Picks and Shovels, a Martin Hench noir thriller about the heroic era of the PC. FORTHCOMING TOR BOOKS JAN 2025
* Vigilant, Little Brother short story about remote invigilation. FORTHCOMING ON TOR.COM
* Spill, a Little Brother short story about pipeline protests. FORTHCOMING ON TOR.COM
Latest podcast:
AI's productivity theater https://craphound.com/news/2024/08/04/ais-productivity-theater/
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