It’s been 15 years since the 2008 financial meltdown plunged America into the Great Recession. Our economy has bounced back, but the populist fury the crisis ignited has yet to burn itself out.
It manifests itself on the far left and right as general hostility to big business and, more recently, to Big Tech in particular. Fortunately, the populists’ reckless drive to break up America’s most innovative and globally competitive enterprises seems to be sputtering.
That could prove liberating for Democrats, who will never outcompete rightwing demagogues when it comes to stoking economic grievances. Instead, Democrats need a post-populist economics that inspires hope in America’s ability to innovate rapidly, generate abundant growth and opportunity and outpace China in the race to master frontier technologies.
Bipartisan antitrust bills in the previous Congress failed to get floor votes in either the House or Senate. Rep. David Cicilline (D-R.I.), who spearheaded the House thrust, is quitting Congress later this year.
Prospects in the new Congress also look dim, despite President Biden’s ill-advised endorsement last month of a blunderbuss Senate antitrust bill sponsored by Sens. Amy Klobuchar (D-Minn) and Chuck Grassley (R-Iowa).
The bill’s defenders naturally blame their failure to get political traction on Big Tech’s formidable lobbying power. No doubt that’s a factor, but the fundamental cause is the flimsiness of their case.
Unable to show how U.S. consumers are harmed financially by the services they’re eagerly snapping up from tech companies, Washington’s populists have cooked up a new antitrust theory: The digital giants are using their market power to suffocate or absorb smaller competitors.
But the marketplace for digital devices and services seems hotly competitive. In less than a decade, for example, Tik Tok, a Chinese company, has zoomed past Meta’s Instagram as the most popular social media platform for young people.
Prices are another telltale sign. In highly concentrated markets, they tend to rise as monopolists extract “rents” from consumers who can’t find what they want elsewhere. Yet prices in the digital sector have stayed low, acting as a moderating force on the inflation that’s otherwise plaguing U.S. households.
Although the antitrust bills raise alarms about market concentration, they are carefully tailored to hit just four U.S. tech companies: Google, Amazon, Apple and Meta. Amazon’s main rival is Walmart, an enormous company that isn’t on the antitrusters’ radar.
Many rightwing populists have jumped on the anti-tech bandwagon for parochial political reasons. They complain that Big Tech platforms censure conservatives by banning Donald Trump’s election lies and alt-right websites trafficking in hatred and conspiracy theories.
This is the worst possible moment to dismantle or handcuff our major tech firms, for three reasons. First, we stand on the brink of a fateful race to develop commercial applications for two transformative technologies: generative AI and quantum computing. Here the big four are followers, not leaders: ChatGPT was developed by a small laboratory, OpenAI, which is bankrolled by Microsoft and other investors.
Second, the supposedly omnipotent Big Tech firms are shrinking rather than spreading their tentacles around the U.S. economy. They are laying off tens of thousands of workers (Meta is set to reduce its workforce by 13 percent), and their market capitalizations have tumbled.
Third and most important, the United States is locked in a momentous competition with China for mastery of AI and other technologies that are crucial to U.S. prosperity and national security. To prevail in this global contest for “innovation power,” we’ll need some big competitors and the vibrant innovative ecosystem that surrounds them.
Tech’s critics raise some legitimate issues, especially around privacy, data security and mergers. But today’s techlash also reflects the lingering outrage and pessimism from the 2008-9 economic crisis, which shook public faith in the stability and fairness of America’s free enterprise system.
On the left, Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.) and the House “squad” of democratic socialists rail incessantly against corporate profits and capitalism’s “rigged game.” The Biden administration unwisely gave key policymaking posts to academic theorists such as Lina Khan and Tim Wu, whose antitech animus made them leftwing celebrities.
On the right, former President Trump jettisoned the Republicans’ habitual deference to Big Business and lambasted U.S. companies for betraying working Americans by moving production abroad and backing free trade.
However justified the populist backlash may have been, it offers few answers to the new economic puzzles we must solve: inflation’s return; cascading public debt; public underinvestment in the skills and career prospects of non-college youth; slow productivity and wage growth, especially in former industrial centers; and outdated regulations that strangle entrepreneurs and slow to a snail’s pace the building of new economic and clean energy infrastructure.
Although these challenges aren’t trivial, Americans have overcome worse in the past.
But we badly need leaders who inspire economic confidence, not despair and defeatism. Democrats should leave populist doom and gloom to Trump and his minions, and instead channel the forward-looking, optimistic and radically pragmatic spirit of Presidents Clinton, Kennedy and FDR.
After 15 years of telling Americans how bad they have it, it’s time to offer them an exciting picture of how today’s economic changes and technological advances can make our lives better. That starts by celebrating U.S. ingenuity and entrepreneurial verve, not punishing successful companies simply for getting big.
Will Marshall is president and founder of the Progressive Policy Institute (PPI).
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