You're Probably Getting Screwed...
We Need Small Businesses!
We are living in the 2nd Gilded Age where economic concentration works for a few but leaves the majority of us behind. This newsletter is intended to highlight the stories of how regular Americans are getting screwed in this economy. Where I am from, every community has a gas station with a donation box, a pancake breakfast or a GoFundMe to help pay for someone’s medical costs and a lot of the communities haven’t bounced back from the 2008 economic crisis. This newsletter is for those who feel economically left behind.
Welcome to You’re Probably Getting Screwed, a weekly newsletter and video series from J.D. Scholten and Justin Stofferahn about how and why bad actors are working to put politics and profits over working people.
Hi everyone - As J.D. mentioned last week I am excited to be joining You’re Probably Getting Screwed. I’m not the video whiz J.D. is, so I will be focused on providing some written takes on how you are getting screwed. Today that begins with Main Street.
Last week Democrats on the U.S. House Committee on Small Business released a report detailing the ways corporate monopolies are screwing America’s small businesses and undermining local economies. There are more than economic implications at play though as small businesses can serve as a bulwark against concentrated political power. This was a concept that bound labor leaders and entrepreneurs together in antimonopoly movements of the past. Small businesses have also created sources of power for leaders in social movements.
Despite these various benefits, small businesses are on the ropes. In sectors as diverse as retail, manufacturing and warehousing, the number of small and medium-sized businesses has dropped anywhere from 14 to 43 percent in recent decades. This has left the economy with 225 industries where over half the market is controlled by four firms. Some are much worse, such as Home Depot and Lowes control of 81 percent of the home improvement store market!
The report also found that the creation of new businesses has been on the decline with the share of businesses less than a year old declining from 10 percent in 1982 to 8 percent in 2018. Over that same period, the share of firms less than five years old slid from 37.6 percent to 29.8 percent. As a Brookings paper once put it, the economy is becoming old and fat and the fat cats are not using their growing power to lower prices or invest in innovation. The report said companies are on pace to break last year’s record of $1.22 trillion record in stock buybacks! Something to consider the next time you look at your grocery store receipt.
Walmart provides a perfect example of how monopolies hollow out communities and screw basically everyone. The report highlights a recent analysis comparing counties with a Walmart Supercenter to those that blocked one. The research found that counties with a Walmart experienced layoffs, lower wages and the closure of businesses. The rapid consolidation of a little-known middleman called pharmacy benefit managers (PBMs) provides another clear example of this dynamic. Not only are PBMs squeezing the life out of local pharmacies - over 1,200 independent rural pharmacies have closed since 2003 - but those PBMs also raise the price of prescription drugs we all pay as patients while steering folks to chain pharmacies.
This is just a snapshot of what is included in the report, everything from Amazon’s chokehold on third-party sellers to meatpacking giants control of our food system is covered so go check out the full report!
This destruction of small businesses is not inevitable or some necessity of a modern economy. To remedy the situation the report calls for increasing antitrust enforcement and reforming our existing antitrust laws to make them easier to administer. The report also proposes changes to the Small Business Administration (SBA), which was created to serve as an antimonopoly tool. This includes expanding the role of the SBA Office of Advocacy to include a focus on fair competition and antitrust, which is at the heart of the Main Street Competes Act that has been proposed in Congress.
In short, the report demonstrates that while small businesses are critical to creating an economy that works for all of us, new tools are needed to keep them from getting screwed.
- Justin Stofferahn
YOU’RE PROBABLY (ALSO) GETTING SCREWED BY:
INEQUALITY
America, where the wealthiest ones are the richest in the developed world and poorest are the most likely to be hungry!
BULLIES
One of the hottest trends this holiday season is the Robinson-Patman Act (“RPA”), the federal law that was enacted in 1936. Open Markets came out with two papers on it and there’s the “Enforce the Robinson-Patman Act for a Fairer Economy” which can be found in the American Conservative.
AG MONOPOLIES
This headline says it all “U.S. Ag Trade Model Didn’t Boost Exports but Did Foster Agribusiness Monopolization.”
SPOTIFY
After releasing their annual Spotify Wrap to subscribers, Spotify said Happy Holidays by cutting 17% of their staff… And..
CORPORATE GREED
BIG PHARMA
By using their monopoly power, Big Pharma is putting the bill on us!
MERGERS
If you’ve been following the Krogers-Albertsons mega merger (a deal that’s pending approval from the Federal Trade Commission), most of the talk has been about the impact of consumer costs. This article talks about the impact to the suppliers of these stores, including growers, shippers, manufacturers, distributors, and wholesalers.
MORE MERGERS
If you like sandwiches, puns and learning about market shares of the sandwich/deli sector, this article is for you!
BEFORE YOU GO
Before you go, I need two things from you: 1) if you like something, please share it on social media or the next time you have coffee with a friend. 2) Ideas, if you have any ideas for future newsletter content please comment below. Thank you.
Standing Tall for All,
J.D. Scholten
Our perception of the problem is local, but the problem is global in scale. I wish I could be more optimistic, but I feel that too many of our political “leaders” and their respective constituents have neglected, denied and/or ignored the growing climate crises that is already obliterating our life support systems.
Today's article in NY Times "The Debt Problem Is Enormous. Experts Say the System for Fixing It Is Broken" (https://www.nytimes.com/2023/12/16/business/economy/imf-world-bank-sovereign-debt.html) acknowledges "the trillions of dollars that developing countries will need to mitigate the ravages of climate change."
The article is summarized as "Economists offer alternatives to financial safeguards created when the U.S. was the pre-eminent superpower and climate change wasn’t on the agenda."
Life as we know it and our survival will be jeopardized when summer temps become too hot to allow pollination, when the pollinators and soil microbiome die, and when droughts and flooding whipsaw our seasons of chores, favorable weather and harvests. The availability of cash may be a moot problem when sustainable, safe food production, safe drinking water and fresh air no longer exist.
What, as consumers, can we do end corporate takeover of the medical system, local newspapers, local businesses, health insurance and big pharma. I've lived overseas for 36 years and I returned to the US last year. I am shocked and extremely frustrated by the lack of services, and the lack of responsiveness by these businesses. If I have a problem I'm put on hold for up to 45 minutes to simply speak with a human being all the while having to listen to a recorded message that my call is important to this company. Overseas, the wait time to see a doctor is a maximum of two days, here it is up to three months. And trying to negotiate the health insurance system is impossible.
So what, as consumers, can we do to break up these monopolies, and have medical care system that actually puts the patient first and not corporate profits. I know we are getting screwed, but I need answers on what we can do to change this.