HORIST: Is Warren right about big tech?

On first blush, Senator Elizabeth Warren sounded like a typical left-wing Democrat in her attack on corporate America – specifically the big tech companies.  But does she have a point?

Ironically, Warren has been the only Democrat 2020 contender to say that she is a capitalist.  All the others queried on that issue fudged.  She said that she believes in free enterprise and wants businesses to start up, grow and be profitable.

Least we free market conservatives get too excited by Warren’s seeming pledge of allegiance to economics of Adam Smith, Ludwig von Mises and Milton Friedman, her definition of capitalism is more than a little nuanced.  Not only does she favor extensive job-killing government regulations but says that capitalism does not work at all when it comes to education and healthcare.

Her programs call for large corporations to have to be certified and live under a broad range of socialist objectives, including providing 40 percent of the board seats to employee members, and restricting campaign contributions and giving employees more authority than stockholders (owners).  It would impose a liberal social agenda on corporate America.

She says that her proposals simply make the government a referee in areas where capitalism is – in her judgment – abusive.  Of course, despite her claim to be a capitalist, she seems to have a LOT of areas where she sees the free market as being abusive.  She does not propose government seizure of corporations but would essentially make them quasi-public sector entities through regulation.  In that, she may be more of a fascist than a socialist – but no capitalist.

So, what about her plan to break up the big tech companies.  Like everything else she proposes, it may sound good to the uninformed, but it is as nuanced as all her other radical proposals.  Still, it may be worth taking a closer look at the “what,” “why” and “how” to see if there is any wheat among her economic chaff.

Put simply, she believes that the big tech platforms, such as Amazon, Facebook and Google, should be separated from the enterprises that feed into them.  Should Amazon be allowed to compete with its platform customers by owning such companies as Whole Foods?  Should Facebook be allowed to buy up competitors as they did with Instagram?

In the first instance, does Amazon going into the retail food business as a provider – not just a platform for a range of providers – stifle competition?   Since they can position their brand to advantage on the platform and can use their immense financial resources to advertise and even finance loss leaders (charging below cost for its products until the competition is driven out).

In terms of Facebook, does purchasing Instagram create an incrementally more monopolistic social media?  More?  Maybe, but not yet a monopoly.  The forces of monopoly do not require a single provider, just one that so dominates the market to the extent that it can stifle completion.

eBay is a good example.  There are many auction platforms on the Internet, but in America it is virtually all eBay, eBay, eBay.  There is no empirical measure of when a monopoly exists, so they must be judged on an individual basis.  Amazon, Facebook and eBay are totally different operations.

Amazon creates competitors in-house, Facebook buys them out, and eBay is simply the biggest.  None of this is new to American enterprise.

The Publix and Safeway food chain stores can be viewed as a platform for selling retail food from a wide variety of sources – much like Amazon.  If you roam the aisles of these mega-chain stores, you will find that they have their own house-brand products on the shelf competing alongside all the others.  They do comparative advertising and shelf promotion comparing their lower prices to those of the big brands.  The in-house products have the best shelf space alongside their own name-brand customers.  Would the Warren proposal then be applicable to Publix, Safeway and many others that could be viewed as platforms?

In terms of buying up the competition, that has been an issue most notably in the communications industry.  One telecom company buying up another – or one news media buying another – has been an evergreen issue for the Security and Exchange Commission.  (It is too much for a brief commentary, but if you want to get some sense of the buying and selling of media enterprises, check out “Tribune Publishing” on Wikipedia.)

Where Warren and conservatives may differ is that size does not necessarily mean lack of competition.  We might agree across the aisle regarding the problems posed by monopolies in a free-market society, but Warren seems to think that big is bad in and of itself.

Then there is the consumer.  If the social media platforms are to be considered a free-standing utility – as Warren proposes – who is going to pay for it.  We consumers get all those services – searches, maps, chats, etc. etc. etc. – for free because the companies are making their profit for data, advertising and other profit centers (businesses).

From a conservative standpoint, the problem with big tech is the collection and use of acquired information (data) – and the arbitrary acceptance or denial of access to the platform based on political viewpoint.  Warren hates them from the left because … well … they are just big and earn lots of money in the private sector market place.

Warren claims to embrace capitalism, but she seems to have a left-wing disdain for capitalists – especially successful ones.

At the beginning of this commentary, I posed the question, does Warren have a point? Not really.  More like a lot of attention-grabbing campaign smoke signals.

So, there ‘tis.

POSTSCRIPT:  It suddenly struck me why I find Warren to be rather unpleasant to listen to.  It is because of her patronizing style.  She talks to we the people like she is a schoolmarm and we are a bunch of second graders.  Check it out and see what YOU think.