The Progressive Ensign

insights and analytics to build an economy that works for all

Category: Corporate Nation State (Page 1 of 3)

Workers Facing High Prices, Stagnant Wages Are Taking On Debt

 

Image: guardiandebtrelief.com

Worker pay continues to stagnant. Yet, companies are raising prices.  The price increases are due to tariff based supplier cost increases and government tax credits juicing the economy.  The Federal Reserve survey for July in the Philadelphia area showed that manufacturers plan on raising prices by 3 % versus 2 % last year.

Source: HIS Markit, Bloomberg – 8/28/18

How did companies get this pricing power?  Corporations have received a $1 trillion tax cut,  reduced regulations by the Trump administration, less oversight by the EPA, and less scrutiny on mergers.  Companies are at the zenith of their power allowing them to raise prices, keep wages low – below inflation, while increasing profits and executive compensation.

Source Bureau of Labor Statistics, Bloomberg – 8/24/18

Worker economic power continues to wane, as real wages actually turned negative this past month. Worker share of income as a percentage of non-farm business income is at a 70-year low even in a strong economy.

Source: Bureau of Labor Statistics, Bloomberg Businessweek, The Wall Street Journal, The Daily Shot – 8/27/18

How are consumers handling the budget shortfall?  By borrowing, the debt as a percentage of income of the bottom 80 %  is 4 times the debt of the top 20 %.

Most of this debt is in the form of credit card, auto loans and home equity lines of credit.  Home owners have done a better job keeping their first mortgages in line with incomes this year versus the housing bubble of 2008.

Next Steps:

Caught between high prices and flat real wages, consumers are filling the budget gap by piling on debt. Companies are getting even richer from both sides of making a profit – increasing income by raising prices and reduced costs by keeping worker wages low.

Why is this vise tightening on worker budgets?  Corporations are accumulating power every day at an ever increasing rate; buying other companies, issuing stock backs to hype stock price, increasing lobbying budgets to get the federal government to make rules that tip their way, consolidating supply channels, distributing manufacturing world-wide and automating every job they can conceive be done by a robot.  Prices are rising due to tariffs in many industries, the wide spread use of tariffs on some consumer goods, contagion of one product category to another (tit for tat) and shrinking channels of distribution reducing price competition.

Meantime, workers continue to lose power at even faster rate than corporations gain power.  Wages have been stagnant for 20 years for the bottom 80 % in income.  We have outlined in previous posts why wages have actually declined – rise of corporate power, fewer unions, automation, mergers in the same industry reduce the overall number of jobs, increased availability of candidates over the Internet, outsourcing, and the gig economy.  Workers are getting some relief in the gig economy with lawsuits to recognize Uber drivers as employees, but it is a tough long slog through the courts.  Overall, most court decisions are favoring companies in reducing union power, allowing companies to give millions to campaigns unchecked (Citizens United case) and overtime pay.

Eventually prices will rise too high for declining incomes causing consumer spending to fall. Consumer spending has been falling this year, with the most recent decline announced today, as a revised downward revision to 3.8 % in 2nd quarter.

Sources: BEA, Factset – 6/1/18

Remember, corporate executives are compensated handsomely for what?  Making more profit by increasing income and reducing costs.  Workers, after all the PR from executives are viewed as a cost when managers get into salary and compensation review meetings. Workers are being squeezed between low wages and increasing prices nationally to feed the ever increasing profit making systems of corporations. Until, we as a society start to see that workers need to be an equal partner in corporate management, sharing in profits and benefits things will not change.  Without workers receiving a fair share of the economic pie, the common good will suffer and will lead to civil unrest and a contracting economy when consumer spending evaporates. The economic reality is that the U.S. economy is not working for the bottom 80 % and until it does we are faced with major disruptions in our economic life.

Verizon Shows Its More Interested In Revenue Than Firefighters

 

Image: theverge.com

During the Mendocino fire in California last month, firefighters using the Verizon service went over their data plan limit.  So, instead of helping to alleviate the problem, Verizon made it worse by throttling down their data rate to 1/200th until they switched to a new higher cost plan.  Plus, they made the firefighters do the work to switch plans – doesn’t Verizon get the fact that the firefighters are a little busy saving lives and property?

Santa Clara County Fire Chief, Anthony Bowden explained, “Verizon representatives confirmed the throttling, but rather than restoring us to an essential data transfer speed, they indicated that County Fire would have to switch to a new data plan at more than twice the cost, and they would only remove throttling after we contacted the department that handles billing and switched to the new data plan,”   Bowden wrote up the incident to support a law suit filed by 22 state attorney generals to stop the net-neutrality policy from being implemented by the FCC for the major carriers.  Bowden noted that Verizon had throttled firefighter data rates in the past when fighting fires.  A company spokesman said the throttling was a ‘customer service mistake’, and they would try to respond without throttling in future firefighting crisis situations.

Version is a huge wireless company with over 30 % of the wireless market:

Source: Statista – 2018

By size alone they command significant market power over users.  With this market power comes community and public interest responsibility. When Verizon, Comcast, AT&T and others lobbied for a waiver of net neutrality provisions they said they could be trusted to protect the needs of the public and small internet users.  Clearly, Verizon can’t be trusted to be a part of the community and put the Common Good over profits.

Next Steps: 

First, Verizon needs to make restitution to the Santa Clara County firefighters and any other group involved in fighting the fire, by giving a credit for any increased costs and to make sure there is a hot line in place to an executive who can cut through all the bureaucracy and do the right thing.  Verizon has demonstrated they are using people, even at the cost of lives and property to make a profit.  Last year, the communications giant announced a $5.4 billion stock buyback program until 2020 to goose their stock price resulting in soaring executive compensation and shareholder returns.  They could use some of this stock buyback money and help out all first responders!

Second, net neutrality provisions need to be restored so that common service providers are required by law to treat all users fairly no matter their size and not use predatory tactics like throttling to force users into upgrading plans. Verizon and and other common carries did not build the Internet, taxpayers did with DARPA (Defense Advanced Research Projects Agency) funds in the 1970s.  DARPA built a breakthrough set of communication and HTML linking technologies with a number of universities to establish the Internet channel backbone in the United States. The government built it, it is a public service and we should not be turning control over to private companies that are not serving the public interest.

It is about time huge corporations started solving the major problems we face in protecting the security of people and build the Common Good rather than being a major obstacle when the community is facing a crisis.

Update: August 24, 2018 – Verizon announced that it would not throttle first responders to wildfires on the West Coast including Hawaii.  The backlash was so strong from the Mendocino fire the firm had to respond. Too bad management did not take the opportunity to be proactive about supporting the Common Good.  We appreciate the late data rate support move by the company.

EPA Relaxes Coal Burning Regulations Endangering People and Economies

 

Image: agriland.ie

The day after that EPA announces relaxation of coal burning regulations scientists announced the first time in all recorded history the ‘last ice sea’ north of Greenland has thawed twice!  ­This assumption that ‘last ice sea’ would not thaw due to climate warming is no longer proving to be true. One scientist described the iconic ice thawing discovery as ‘scary’.

Sources: The Polar Science Center, The Guardian – 8/21/18

At the same time, global warming is causing the seas to rise by 8 inches since 1900 of which 3 inches was since 1993.  Scientists predict the sea level will rise another 3 to 7 inches by 2030. Today, rising sea levels are sending property values in low tidal areas spiraling down. University of Colorado and Penn State University researchers found that homes within just one foot of being flooded from a sea level rise were selling at a 14.7 % discount compared to homes on higher ground. Analysts have totaled property price losses since 2005 for Charleston at $265 million and Miami- Dade County at $465 million. Of course this is just the tip of the iceberg when considering all the coastal properties in the U.S. – losses are in the billions of dollars.

California has experienced the highest number and most acreage of wildfires in its history. Japan sweltered under hot July summer temperatures making new records. During the summer large areas of heat pressure or heat domes scattered around the hemisphere led to the sweltering temperatures. The Canadian Broadcasting Corporation notes the heat is to blame for at least 54 deaths in southern Quebec, near Montreal, which sweated under record high temperatures. The worldwide list of new high temperatures goes on and on.  The chart below shows extremely hot temperatures worldwide in a model at 2 meters above ground.

Sources: University of Maine, The Washington Post – 7/5/18

The relaxation of Obama administration clean air restrictions would possibly kill from 470 to 1,400 people per year the EPA admits.  The policy shift would move enforcement responsibility to the states, and allow them to relax regulations on coal burning plants even when installing new equipment.  Utilities would be allowed to use old standards when installing new equipment without having to meet higher air quality regulations.  The Obama era policies were never enforced because the Supreme Court found in favor of the states who sued to overturn the tighter regulations.

Next Steps: 

Enough is enough, the federal government is here to protect American lives not kill more people as a result of policy.  The government’s position makes no sense, it’s time we as citizens take a stand.

As we have said in a previous post:

“we may need to look to how to make duty more of a core value in our culture and in particular business culture.  As we have observed our country is essentially run by Corporate Nation States, they must change their attitude, behavior and operating practices focused on their duty to all the people not just their executives and customers. Everything a corporation does in some way impacts the Common Good. We are the people these corporations serve, and we should expect nothing less than socially responsible behavior from the executives running these huge Corporate Nation States.”

We would like the executives of these coal companies to think about the people that will get ill or die because they wanted to make more money and be ‘efficient and affordable’.  What if their daughter died?  How would they feel.  It seems that we are back to the point we made in last week’s Common Good post we ‘use people, and love things (money)’. This policy is dead wrong, and should never be implemented.  Instead, these corporations should be coming to us with proposals on how to save people’s lives and speed up the process of reducing climate warming. Maybe, these executives need to look themselves in the mirror and ask ‘who am I serving?’.  Time is running out, people are being killed in the heat, economies are being destroyed.  All these forces will cause civil conflict unless we act now to reverse the course of climate warming, before it is too late. 

US Steel and Nucor Use Tariffs To Monopolize Markets

 

Image: vice.com

Two major steel companies, US Steel and Nucor, last March lobbied the Trump Administration to post tariffs on imported steel at 25 %. They are now pressuring the Administration to deny any requests for waivers from the tariffs.  Over 1,600 applications have been filed for exclusion from the tariff provisions which blanketed the world including the European Union, Mexico, Canada, Japan and China.  The two steel giants are in fact creating a monopoly for their steel products in the U.S.

In order to protect about 33,000 steel worker jobs, several million jobs in steel using industries are jeopardized by the tariffs:

Sources: U.S. Bureau of Labor Statistics, Bloomberg – 3/2/18

Nucor paid for a film by presidential advisor Peter Navarro, when he was a professor at UC Irvine on the threat of China imported steel being dumped onto U.S. markets.  Certainly, there are issues related to China trade practices but is using 25 % tariffs on all imported steel even from allies going to force China to change their export practices?

Next Steps:

Companies that use steel in their products are reeling from soaring price increases in steel and sourcing issues because U.S. steel producers do not make the products they need.  Elite corporate CEOs are running their companies via the U.S. government to pick winners (themselves) and losers over 1,600 companies being denied exemptions to run their businesses successfully and keep jobs here in the U.S. Now, many firms are planning on moving operations to countries closer to their customers to avoid the tariffs all together – thus moving jobs out of the U.S. It seems already the tariff plan has backfired, moving jobs out of the U.S. and jeopardizing millions of jobs.  We should not be tolerating this state of oligarchy, where two major companies setup tariffs to their exclusive benefit in while damaging thousands of other companies businesses and threatening millions of U.S. jobs.  It is the job of our federal government to not pick winners and losers but to establish fair markets for innovation and entrepreneurship to triumph. The tariffs need to be lifted and an intelligent trade strategy in collaboriation with our allies to end China steel dumping practices be implemented.

Make America A Democracy Again

 

Image: civicsacademy.co.za

Memo

To: Oli Garchy, CEO, The Elite

Subject: Meeting – Make America a Democracy Again

Time: Lunch

Place: The Lawn in Front of the Lincoln Memorial, Washington DC (It helps to have Honest Abe watching over the mixed group)

Date: Soon…before it’s too late.

Oli,

Ok, we recognize you and your team since Ronald Reagan have built an Oligarchy that stands out (not outstanding for the 90 %) as a model for the history books, based on government statistics:

1. President is a billionaire (first one) – and holds title to all his properties while in office, making money while in office (first time)
2. Cabinet of largest number of billionaires in history of U.S.
3. Corporate tax rate lowest in 50 years
4. Corporations have the most cash ever sitting in banks and offshore shelters at over $1 trillion
5. Top 1 % taxes are the lowest in 50 years
6. Top 1 % received 90 % of income gained since the Great Recession
7. The 80 % working class real wages have declined in the last 30 years – while CEO pay is 300 times the average worker’s
8. Home ownership is at lowest level in 40 yrs – renting at the highest level in 15 yrs (you’ll own more residential real estate than ever)
9. Student debt highest ever at $1.5 trillion – because:
10. Spending by state and federal government on public education secondary thru higher education is the lowest ever as per cent of GDP
12. Healthcare services costs more per person in US than anywhere in the world with life expectancy lowest of all developed countries – due to all the built in middle profit layers of insurance, drug price gauging and stock buybacks                              13. Stock buy backs were at the highest level ever last quarter $431 billion, not one dime to employees or workers directly in wage increases
14. Last year had the highest average global temperature, yet the administration wants to end car emissions standards by California, drill for more oil on the coasts – fossil fuel executives are getting what they want and more                                           15. Tax receipts from U.S. corporations hit a 75 year low                                      16. The Top 1 % have 40 % of all U.S. wealth, the highest concentration since 1929

You’ve wrapped Congress around your little finger with the Tax Cut bill where 70 % of the tax cut proceeds went to executive salaries, stock buybacks, and dividends, very little into research and development, increasing productivity or job training.  You promised to raise wages and very few companies did.

The American people care more about the environment and its stewardship then you’re team, 60 % in a recent Pew Research poll say that preserving the environment is more important, even if there is an economic cost.  Oli, think about it, your profits won’t last long if your customers are unhealthy or dying due to pollution of the water, air or land.

Professors Gilens and Page at Princeton and Northwestern reviewed opinion polls versus legislation passed over the past 30 years and found of 1779 laws passed 90 % did not support popular opinion, seems you own Congress.

Your 30 year old oligarchy has come at great cost, look at the debt increased by a magnitude from the Tax Cut you wanted and the public did not:

Sources: The Congressional Budget Office, The Wall Street Journal, The Daily Shot – 7/23/18

You’ve just mortgaged your children and our children’s future for good jobs, owning a home and good health care just to give you and your friends a huge tax cut.  You and your team have the lowest corporate tax cut on record, but at great cost!

Oli, here is the issue for your team; without a thriving Working Class the value of your assets will go down.  Consumer spending will spiral down unless the Working Class get a fair piece of the economic pie.  When consumer spending goes down, your businesses begin losing money, their value drops and if the spiral keeps going like it did after 1929, you could lose everything.

The way to build a Working Class that you need is via a democracy – remember that from your textbooks.  It looks like this: a government ‘by the people, for the people and of the people’ – Lincoln had it right.

Think about it Oli, meet with us before it is too late.   In the future, there maybe hostility with the wealthy elite, but there is still time.

Next steps:

How about lunch?  How about our people meeting with your people? Our folks; Senators – Warren, Sanders, Booker and Harris, Representative Pramila Jayapal, Nick Hanauer, and Robert Reich.

Let me know who on your team you would like to invite, maybe the Koch Brothers, The Devos – as couple, Steve Mnuchin, Wilbur Ross, and five more would be a good size group.

Our luncheon wrap up takes place in the Jefferson Memorial where on the south east portico Jefferson observed we must make progress together:

“I am not an advocate for frequent changes in laws and constitutions, but laws and institutions must go hand in hand with the progress of the human mind.”

Please read our posts on the Common Good in a Democracy as a refresher on what it is and how we all need to build it again. Frankly, Oli, the Common Good seems lost right now, yet it provides the beacon to keep the ship of state on course for all the people. We need to work together to build the Common Good. Let’s – Make America A Democracy Again.

We Have A Duty to Provide, Protect and Promote the Common Good

 

Image: Your Little Planet

Today’s discussion of the Common Good is focused on a point that arose this week from a court case where the parents of children in Detroit sued the city school district for better teachers, classroom conditions and funding.  The basis of the suit was that it was a ‘constitutional right’ that all children should have a fair and equal education regardless of income.

Unfortunately, as much as we would like to see education as a ‘right’ it is not mentioned in the U.S. Constitution or the Bill of Rights. The judge held that there was no ‘right’ to a quality education. The 14th Amendment does require states when they provide public education to offer equal access to all students – equal quality is not specifically defined.  We see education as Madison and Jefferson did as a key pillar of the government where a well-informed citizenry will make wise choices about who would lead their government.  We have outlined in an earlier post that we see Education as the Fifth Estate, after the Fourth Estate, The Press and the three main branches of federal government – The Executive, Congress and The Supreme Court.  Then, it follows that as a country we have a duty and responsibility to ensure that all children have a equal opportunity for a high quality education and access to learning institutions.

We do not really talk much in our society anymore about duty to country – or duty at all.  We are indoctrinated constantly about ‘my right’ to this and that.  While it is important that we have key rights ensured by our Constitution and courts, duties need to be in balance and in many ways ensure that rights can be sustained.

What do we ask of our young people graduating from high school in regard to supporting the freedoms and rights they enjoy?  Universal service for every 18 year old as they do in Switzerland, or universal military service as Israel requires?  What sacrifices do we expect our people to take on at any age?

In WWII, the Korean War, Vietnam War, and Middle East Wars, American men and women fought alongside each other to ensure the freedoms we enjoy and to protect the freedom and welfare of others.  The wealthy fought along with the poor as a team, to survive in a hostile environment against a common enemy. They shared this life changing experience, learned how to depend on each other to survive and discovered what they had in common. Today, young people serving in the armed forces are making sacrifices and sometimes putting their lives on the line, yet the vast majority of our forces are comprised of poor or working class men and women from rural regions of the country.  We are not all sharing the duty of defense across classes.

Everyday there are citizens across classes serving our country, as many people do volunteer work in all types of ‘duty’ based work at churches, non- profits and relief groups.  Some sacrifice themselves and time in environmental protection efforts that support good stewardship of the earth that we all live in and enjoy.

So, when we look to ‘get our rights’ in court, we may need to look to how to make duty more of a core value in our culture and in particular business culture.  As we have observed our country is essentially run by Corporate Nation States, they must change their attitude, behavior and operating practices focused on their duty to all the people not just their executives and customers. Everything a corporation does in some way impacts the Common Good. We are the people these corporations serve, and we should expect nothing less than socially responsible behavior from the executives running these huge Corporate Nation States.

Corporations Are Taking Worker Wages To Increase Profits

 

Image: csmonitor.com

Eight-three percent of all workers are ‘non-supervisory’ workers in the Federal Reserve classification of types of workers, yet they have not seen a fair cut of the profits since 2000.  Corporations have used financial engineering techniques like stock buybacks where funds are used to buy corporate stock and goose the price up. J.P. Morgan estimates that with dollars repatriated from the tax cut bill, that stock buybacks will hit a new record of $800 billion for 2018.  This $800 billion is absolutely wasted on driving stock prices up while not investing in employee wages, capital expenditures, research and development, instead stock buy backs increase executive compensation tied to stock price.

Source; Real Investment Advice – 6/29/18

Since before the Great Recession wages have been stagnant for working class people, the 80 % of the workforce that make corporations prosper.  The wages to profits ratio arc shows a continuing decline since the 1980s – interestingly when the GOP was telling us that ‘trickle down’ economics would bring economic prosperity to all.  Instead working class families are having to take two or three jobs and borrow on their credit cards just to keep their household finances afloat.

Next Steps:

The country is run by Corporate Nation States who make the contributions, fund the campaigns and essentially buy off the legislative influence that counts in the U.S.  Each year corporations spend hundreds of millions of dollars in Washington DC lobbying alone, i.e. Amazon has 94 lobbyists keeping DOJ anti-trust lawyers distracted, the FCC at bay on drones and lobby other interests to keep its juggernaut growing.

It is time we wake up to what is happening from Supreme Court decisions that favor American Express over merchants, to the GOP tax cut bill, to relaxing the Dodd-Frank rules on banking Corporate Nation States are running this country.  The basic economic trends in America are not going to change unless we have corporate reform.  Will this reform come in the form of legislation like Sen. Booker’s Dividend Reform Act or letters from investment banks to corporate CEOs like Blackrock CEO Larry Fink sent recently.  We are not sure, but we need to take a path that takes on the dominant power of Corporate Nation States or we are going to see the middle class wiped out and our economy with it. After all, as we pointed out in a recent post on the Common Good, when the working class has little money to spend the rich will lose too.  The working class has earned a fair share of the profits. Fair share means when profits go up by 5 % wages go up by at least 5 % otherwise the economy deteriorates like it is today deeply in public and corporate debt.

in the end the rich will need to see that it is in their interest to build the Common Good, by contributing to our institutions of government and common people or they will lose what they already have and probably a lot more.”

Building An Economy for the Common Good

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab.)

Image: Your Little Planet

In the past week, American Express won a gag order over merchants when the Supreme Court handed down a decision that allowed the huge financial services company to require all their merchants not to tell their consumers other cards had cheaper swipe fees.  Amazon announced the acquisition of Pill Pack a mail order pharmacy company, which sent financial shock waves through the drug store industry. So, it goes on, a Corporate Nation State (CNS) like American Express  or Amazon have their way limiting consumers choices to reduce costs and to take over the drug marketplace with no fair market rules in place.

Are these two companies focused on building the common good, fair play rules in the marketplace, doing what is right for consumers and taking social responsibility for the impact of their decisions?  No.  There is no countervailing power when Congress, The Supreme Court and the Executive branch are all doing the bidding of CNS organizations.

Corporations run our federal government by donating hundreds of millions of dollars (they have no campaign donation limits) each year to congressional campaigns through super PACs. Some CNS entities have large lobbying offices in Washington, like Amazon with 94 lobbyists knocking on Representative and Senator doors every day!  Do we have an army of lobbyists twisting arms for our interests?  No.

Where can we look for corporate reform to build the common good?  Larry Fink, the CEO of Blackrock, a $6.3 trillion institutional investment corporation, sent a letter to 1000 CEOs of companies they invest in telling them that beyond profits they would be evaluated on how well they are taking care of the environment, responding to climate change, having a diverse workforce, and fairness with their employees. We applaud Mr. Fink’s move, and look to more investors to call upon corporate management to be held accountable for their social responsibilities.

There are corporate accountability frameworks that have been receiving widespread acceptance and government support. In the European Union a group called the Economy for the Common Good (ECG), has over 2400 corporate endorsers and almost 10,000 individuals support their effort to require corporations report on a Common Good Balance Sheet their social responsibility activities. The EU has adopted a non-binding directive requiring companies of 500 employees and ‘public interest’ to report on human rights, diversity, labor rights, the environment, health and anti-corruption measures. The report is not included with the corporate annual report and is therefore not audited.

The Common Good Balance Sheet is divided into four key accountability areas: human dignity, solidarity and social justice, environmental sustainability, and transparency and co-determination:

Source: Economy for the Common Good – 6/29/18

The ECG is now working to make actual changes in corporate behavior by focusing on gaining support for these eight issues:

  • universal (all values and relevant issues)
  • legally binding
  • measurable and comparable (e. g. using points)
  • externally audited
  • generally understandable (for the public)
  • public (on all products, websites, shop doors)
  • developed in a participatory process
  • linked to legal incentives (taxes, tariffs, …)

The first phase has been completed of their initiative to gain EU nonbinding support next they look for a binding EU directive by 2020 followed by integration financial reporting.

We need to find corporate leaders in the US that see the vision of an Economy for the Common Good, embrace it and implement its ideas in their day to day operations – while measuring the results to show it is a better way to run a business.  A business can build an economy that works for all and still be a thriving profitable enterprise.

Supreme Court Empowers American Express To Gag Merchants

Photo: consumerist.com

Supreme Court Justice, Clarence Thomas, wrote in the majority opinion released yesterday, “two-sided platforms, differ from traditional markets in important ways. Since card companies deal with both merchants and consumers.” He continued “people challenging actions as anticompetitive must take account of the effect on both sets of market participants.”  The majority did not see the restraint in trade by American Express requiring merchants to only offer their card, and not tell customers that Visa and Mastercard had cheaper swipe fees.

The majority was by only one vote 5-4,  with Justice Stephen J. Breyer reading his minority opinion summary, an unusual step, when he said, “I particularly fear the interpretive impact of the majority’s discussion of what it calls ‘two-sided platforms,’ in an era when that term might be thought to apply to many internet-related goods and services that are becoming ever more important.”

The bottom line is this: American Express can gag its merchants legally from telling their customers that American Express fees are higher than other cards and they will have to raise prices as a result.  Plus, the implication is that other cards are not available for customers to pay for their purchases.

American Express has a huge market share in credit card networks:

Source: valuepenguin.com – 2017

Yes, that’s right Amex did .695 trillion dollars in transactions in 2016! While Visa does have a larger share, American Express is essentially gaging its merchants about the costs of transactions and restraining trade.

Next Steps:

We are frustrated and disappointed that SCOTUS has sided with a Corporate Nation State, American Express, to support continuing to build their financial empire at the cost of retailers optimally running their businesses. Think of retailer’s position – caught in an Amazon competitive whirl wind, Internet global access to products and constantly trying to gain the attention of shoppers to come into their store.

The American Express ‘steering clause’ is clearly a restraint of trade, we need court decisions focused on creating a level playing field for all companies to do business.  Congress needs to pass a law making it clear that these ‘two sided’ platforms are just another form of distribution so a product or services provider cannot restrain the distributor from exercising his business rights and doing what is right for their customer.

Amazon’s Growing Corporate Power In Washington – Threat to Capitalist Democracy

Source: e-brand.biz

An oligarchy is defined by Wikipedia as, “a form of power structure in which power rests with a small number of people”.  One of the Elite is corporate tycoon Jeff Bezos, Amazon founder, who is thought to be the wealthiest person in the world with net worth estimated at $141 billion.  He wields great corporate power leading an innovative company, pioneering e-retailing when many said it couldn’t be done building a $177 billion empire in e-Commerce, web services, grocery, and just about everything you can buy in a store you can get from Amazon.  Amazon owns 43 % of the e-Commerce market, and has been responsible for a complete transformation of brick-n-mortar retailing causing the loss  of thousands of jobs.  The company name is synonymous with going out of business as some store owners declare they have been ‘Amazoned’.

Amazon has one of the largest lobbying forces in Washington, 94 strong:

Sources: The Center for Responsible Politics, The Wall Street Journal, 6/20/18

Amazon spent $13 million on lobbying and is one of the top spenders on lobbying along with Google, AT & T and Oracle.

The Amazon corporate power juggernaut keeps rolling.  The e-Commerce giant owns 50 % of the book print sales market for publishers, with Barnes and Noble in the teens and independent book sellers about 6 – 8 percent. Ten years ago, independent book stores held a 30 % share of the book print sales market until Amazon drove them out of business, with convenience and not being required to pay sales taxes to states (though the Supreme Court just ruled last week that e-Commerce firms must pay sales taxes). Now, in an ironic twist the firm has 3 brick- n-mortar stores and is opening 5 more in 2017- so Amazon drives the competition out of business, with low cost prices and no taxes then starts opening brick n-mortar-stores.  Is that fair? In audio books Amazon owns Audible the No. 1 provider of audio books where last year listener – readers heard over 2 billion hours of programming.  The Kindle subscription business holds 14 % of the e-reader market and is the fastest growing segment increasing 4 % in 2016

Amazon is humongous compared to its competitors with brick-n-mortar stores:

Source: visualcapitalist.com – 12/30/16

Amazon is larger than the next 8 competitors and it is killing their businesses by amortizing its cut rate prices with profits from its Business to Business cloud enterprise – Amazon Web Services (AWS).

Source: Geekwire – 10/1/16

Without AWS Amazon would not be able to take profit from the B to B side of the business and fund the cut rate prices driving other stores out of business. While it may seem like this is capitalism ‘creative destruction’ at its best, this condition strikes us as unfair competition. Add a tax cut giveaway to corporations like Amazon, and the juggernaut keeps picking up speed at the expense of workers and democracy.

Next steps:

  1. One Lobbyist Limit – The Company is a citizen according to the Supreme Court in Citizens United, then good it has one lobbyist representative to Congress.
  2. Sunshine Contractor Monitoring – Amazon and the top 100 government contractors would have to contribute to a web site noting their business with the Federal Government, revenue from the contracts, agencies working with, number of government staff working with Amazon, Amazon staff size working on projects, where they are located, and all contacts with Congress, Executive branch staff – date, time, attends, discussion top, money involved, follow up. All these details would be available to the public on a web site 24/7.  These disclosure are a ‘annual report’ to the people of the US about what the top 100 contracts are doing for our federal government, and us and how they are contributing to our government and society goals.
  3. Campaign Contribution limits – $2700 per corporation if they are a person, that is all a citizen is allowed to contribute, and the Supreme Court found corporations were citizens, so Amazon has the same limit as a citizen.
  4. Corporate Reform – top 2 corporations in an industry sector must have a minority number of outside board members elected by all the shareholders. Employees can form ‘councils’ along the line of the German worker council models.  Salaries for executives would be limited to 50 times the average worker in the firm (consumer discretionary sector the average for CEOs is 350 times, Bloomberg, Feb 1 2018)., Stock buy backs need to end, or be phased out as they are artificially raising the price of stock on major exchanges by 20 – 15 % experts estimate just to line the pockets of executives and major shareholders, the funds are not going to wage increases, productivity investments or job training.
  5. Anti – trust – Amazon needs to be broken up into a corporate web business – Amazon Web Services, and grocery business (Whole Foods never should have been approved) spun off. The e-Commerce business needs to stand on its own, plus we need to look for other ways to create fair- play markets possibly separating services from distribution,

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