You're Probably Getting Screwed
DeepSeek shows our vulnerability
Welcome to You’re Probably Getting Screwed, a weekly newsletter and video series from J.D. Scholten and Justin Stofferahn about the Second Gilded Age and the ways economic concentration is putting politics and profits over working people.
There’s a saying in baseball that “Momentum is the next day's starting pitcher.” There’s a similar thing with innovation. DeepSeek, the Chinese AI firm, shows why U.S. monopolies are dangerous for America.
Lina Khan warned us. She said “We are starting to hear the argument that America must protect its domestic monopolies to ensure we stay ahead on the global stage. Rather than double down on promoting free and fair competition, this “national champions” argument holds that coddling our dominant firms is the path to maintaining global dominance.”
Using Boeing as an example, which it eliminated its domestic competition and became the only commercial aerospace maker in the late 1990s, she describes these three things that happened:
Slow innovation and reduce product quality.
Executives began to start viewing their knowledgeable workforce as a cost, not an asset.
Not only did it create supply chain weakness and taxpayer liabilities, but it also created geopolitical vulnerabilities that can be exploited both by global partners and rivals.
While U.S. companies are on track to invest a total of roughly $1 trillion in AI over the coming years, DeepSeek comes in showing an on par or better than industry-leading models that only cost about $6 million to develop.
This shocked not only the technology sector but also Wall Street.
DeepSeek success shows us three things:
Lina Khan was right.
The elite tech bros seem to be more interested in power than innovation.
America needs to get back to a competitive tech sector.
Otherwise, we’re probably going to get screwed.
YOU’RE PROBABLY (ALSO) GETTING SCREWED BY:
Seed Monopolists
“Large powerful seed companies make your food more expensive by holding farmers hostage.”
Private Equity
Why, in the midst of devastating fires, were nearly half of the Los Angeles Fire Department’s fire trucks out of service? In this week’s edition of BIG, attorney Basel Musharbash details the private equity firm (American Industrial Partners) that has consolidated the fire truck industry and jacked up prices for local taxpayers.
“AIP bought multiple fire-truck manufacturers and rolled them up into a conglomerate called the REV Group. Although AIP initially made a show of allowing these manufacturers and their distributors to continue operating independently, under the surface it quickly moved to operate them as a single firm, like a food conglomerate selling a bunch of different brands that all appear to be different companies.”
The FTC
Under former chair Lina Khan the Federal Trade Commission worked hard to make the agency accessible to the public. The new chair, Andrew Ferguson, is moving in the opposite direction, shutting down requests for public comment on several pending matters before the agency.
Amazon
The e-commerce giant is closing warehouses in Quebec, eliminating 1,700 jobs. The move is in clear retaliation for union organizing efforts happening there. As labor analyst Adam Donald King also notes in the report below, the Canadian province has some of the strongest labor protections in Canada, which means this is also an example of how monopolists like Amazon try to bully and intimidate policymakers.
Privatization
The US spends four times more on private sector contractors than it does on its own workers! In separate pieces Cory Doctorow and David Dayen look at efforts to root out bloat in the federal budget and find that if broligarch Elon Musk really wants to make good on his promise, he needs to target the corporations getting fat off government largesse, not programs for poor people and federal workers, who by the way represent just 1.4% of all US workers, compared to 4.3% in 1960.
Utilities
According to a new report by the American Economic Liberties Project, investor-owned utilities have increased rates 49% more than inflation in the last three years! A key reason for these obscene price hikes is unreasonably high rates of return, the profits regulators allow utilities to capture from investments. State legislators can crack down on utility profiteering as can utility regulators, including the 10 states where those regulators are elected officials.
SOME GOOD NEWS
Rohit Chopra is still working
Former President Biden’s pick to head the Consumer Financial Protection Bureau (CFPB) is still on the job! And he’s not just hanging around waiting to be fired. In recent days the CFPB announced a settlement with a TransUnion subsidiary for being a serial violator of financial and data privacy laws. The agency then released a report showing growing instances of auto repossessions and Chopra just announced a new request for information seeking information from credit card customers about terms, conditions, and interest rates.
State antimonopoly policy
Several Democrats in the Colorado legislature have introduced a package of bills that would crack down on price gouging, junk fees and algorithmic price fixing.
More state antimonopoly policy
New York legislators have introduced a sweeping antitrust bill that would “attack rising corporate consolidation and expand enforcement to help workers and small retailers.” The bill would offer more opportunities to bring antitrust claims in New York given that lawsuits today are often confined to carefully defined markets and would also establish the most comprehensive merger notification program of any state.
Even more state antimonopoly policy (and bipartisan)
A bipartisan group of legislators in Ohio has introduced legislation to ban noncompete agreements, the restrictive contracts that prevent workers from switching jobs and starting new businesses.
Toolkit
American Economic Liberties Project came out with a new “Tools For Reining in Monopoly Utilities: A Guide for State Lawmakers.”
BEFORE YOU GO
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Standing Tall for All,
J.D. Scholten