Moe Tkacik has a piece at In These Times that is ostensibly about the tech sector and antitrust. I don’t want to pollute the beautifully curated garden of the People’s Policy Project website with a response so slapped-together as this one, which is why I’ve put it here.
At the outset, let me just say that, personally speaking, I’ve liked Tkacik’s writing for a long time. Her recent turn towards promoting “economic liberty” through competition is a bit of an odd departure from her anti-capitalism of old, but my residual admiration of the old work remains and so I don’t want to be too vicious in my assessment here.
Tkacik mercifully begins her piece with a very clear thesis statement:
The Left has yet to properly absorb two major revelations of 2020: 1) The ruling class, for all its platitudes, decisively does not care about small business, and 2) We are all small businesses now.
We Are Not All Small Businesses
For her second claim, which is the most clearly wrong of the two, she does not offer any evidence, just this speculation:
We can expect the collapse of the service sector to lead millions of displaced sous chefs and bartenders and fisherpersons to open Etsy and LawnStarter accounts, live on couches while renting out their apartments on Airbnb, sign up to drive for DoorDash, cook for a CloudKitchen, or sign up to be a third party seller on Amazon
People have been making this speculation for at least a decade now (Uber debuted in 2009) and it simply has not materialized. The Census periodically includes a supplement to its monthly Current Population Survey that collects data on the prevalence of different kinds of contingent workers. The numbers are basically identical across all six surveys (1995, 1997, 1999, 2001, 2005, 2017), with contingent workers making up about 10 percent of all workers.
Is this time different? It seems hard to believe that it is. Let’s look at the payroll employment figures for the service sector during the coronavirus recession.
Employment in the sector fell by 18.6 million people from the February high. Eleven million of those jobs have already come back and we only just now started dispensing the vaccines. Even if you assumed, implausibly, that we’ve topped out the service sector recovery and that all of the remaining 7.5 million workers will become gig workers in the near future, that is only equal to 5 percent of overall payroll employment in February of this year.
The largest chunk (3.5 million) of the 7.5 million service sector jobs that have not yet returned are in the leisure and hospitality sector. To believe that these jobs will never come back is to believe that the coronavirus recession will permanently reduce the demand for bars, restaurants, and hotels. Does that seem plausible?
Does The Government Care About Small Business?
The Tkacik claim that the government does not care about small business is much harder to argue about definitively. In my own experience as a labor lawyer, it was hard not to notice how much the government had done to exempt small businesses from the nation’s labor code.
Firms with less than 15 employees are free to discriminate on the basis of race, gender, religion or disability. Firms with less than 20 employees are free to discriminate on the basis of age. Firms with less than 50 employees are free to fire employees that try to take unpaid leave to care for a newborn or an ailing relative. Bigger firms are not as lucky.
Tkacik’s main support for this claim comes from this very misleading factoid:
A court-ordered Small Business Administration data dump in December confirmed that more than half of the $521 billion doled out in April’s CARES Act small business rescue program were snagged by just 5% of well-heeled recipients, including sectors like construction and law that were merely inconvenienced — certainly not decimated — by Covid-19 shutdowns.
Tkacik is referring to the Paycheck Protection Program (PPP) that provided over half a trillion dollars of free money to over 5 million firms with fewer than 500 employees. The exclusion of firms with more than 500 employees as well as the $10 million cap for any particular PPP grant would seem to pretty clearly indicate a heavy bias towards small business in this relief program.
Tkacik tries to argue the opposite is true by pointing out that among the small companies that received the money, the top 5 percent of companies received over 50 percent of the funds. But in pointing this out, she fails to note that this is because the loan amounts were based on the size of a company’s payroll as the primary purpose of the money was to allow these small companies to maintain their payroll. A company with 400 employees will receive 40 times more than a company with 10 employees, all else equal. But this does not seem to reflect any particular preference for the 400-employee firm over the 10-employee firm.
Tkacik’s objection to this implies that the proper way to distribute a half trillion dollar pot of free cash for small businesses is to just provide them all the same amount of money, so that a 1-employee company receives the same amount as a 10-employee company and a 100-employee company. Is that really what she believes? I doubt it, hence the misleading nature of that statistic.
We Can’t Win Until We Win?
Aside from these two main claims, Tkacik’s piece offers a weird and contradictory political analysis, which is common among those in this political camp.
She’s mad, for instance, that California’s recent effort to reclassify certain independent contractors as employees was defeated by a ballot proposition promoted by Uber, Lyft, and DoorDash. I am mad at this too, but what’s this got to do with antitrust or small business? If you want to change these labor arrangements, clearly that should be done by changing the labor code. It’s unfortunate that when California did that, it was overturned by a ballot proposition, but it had the right idea. Elsewhere in the world, this has been accomplished to some degree, such as in the EU where the highest court ruled that Uber is a transportation company that is regulated by taxi laws.
Her apparent response to the idea that we should solve the problems directly is the hand-waving point that “there is simply no way to win against Amazon or Uber without making them less powerful first [and] antitrust at least gives us some tools to do so.” Tkacik appears to believe it is impossible for the government to win against these companies without the government first … winning against these companies. The companies are simply too powerful to impose labor regulations on but apparently not too powerful to impose antitrust regulations on. That seems confused to me.
The other obvious problem with this analysis is that it assumes that it is impossible for separate companies to work together to achieve a political goal. But this is in fact what happened in California. Uber, Lyft, Doordash, and the other companies that financed and promoted proposition 22 are actually separate businesses, but this did not stop them from joining forces to promote the interest of all the employers in that sector. Business lobbying associations in DC work the same way. Capitalists are solidaristic even across firms.
What Does Breaking Them Up Do?
The last thing I want to address about Tkacik’s piece is her point about breaking up companies. She writes:
Unfortunately, I think mostly because the “break ‘em up” movement is identified with Elizabeth Warren, antitrust has few allies on the Bernie Left (and I am wearing a Bernie 2020 T‑shirt as I write).
Tkacik provides a theory of why some prominent Bernie supporters are not that intrigued by politics oriented around making large companies spinoff their subsidiaries into separate companies. But outside of hand waving about how this is a prerequisite to achieving actually-important policy, she does not really provide much of an affirmative case for what it will achieve.
Take the example of the recent break-them-up actions brought against Facebook, an example she mentions in the piece. This sort of thing provides for a nice cinematic sense of “fighting the big guys,” but if you peel that away, what actually are people proposing here? They are proposing to make WhatsApp and Instagram their own companies rather than having them be departments inside of Facebook. Seriously, who cares?
This sort of political action is even stranger once you bring the capitalist class into your analysis (antitrusters are obsessed with firms, rarely speaking of their owners). Right now, the capitalist class owns about 2.4 billion shares of Facebook Inc. Since WhatsApp and Instagram sit inside of Facebook, Inc., they also therefore own those services.
After Facebook is broken up, there will be three companies: Facebook, Inc., WhatsApp, Inc., and Instagram, Inc. Facebook’s existing shareholders will also own the stock of these new companies. What changes for the ownership class is whether they own WhatsApp and Instagram through their ownership of Facebook stock or whether they own them through WhatsApp stock and Instagram stock. This would stick it to Zuckerberg in the sense that he’ll no doubt be sad when the company he is the CEO of gets smaller, but for the capitalist class, it’s just reshuffling some paper around in their portfolios.