David Dayen’s New Book Exposes the Dirty Hands of Wall Street Driving Monopoly Power in U.S.

By Pam Martens and Russ Martens: July 27, 2020 ~

MONOPOLIZED Book CoverAs Americans wake up each day to the new dystopian normal and reports of another corporate or Wall Street bailout (no doubt at the urging of the corporate lobbyists that have embedded themselves in the Trump administration), there is widespread agreement that big corporations have too much power and control in America.

America was founded on blowback to the tyrannical restraints on average Americans’ lives by King George III. Now we have multinational corporations pushing us around while bleeding the U.S. Treasury, mushrooming the national debt, and thus creating an even greater dystopian threat to our children’s generation who will inherit that crippling debt pile.

Against this backdrop comes a very welcome new book from David Dayen: Monopolized: Life in the Age of Corporate Power. Dayen is Executive Editor of American Prospect and one of the most admired and prolific financial writers in America.

If you think the book title sounds like a dry treatise on anti-trust law, think again. Dayen has brilliantly humanized this book by allowing the reader to step inside the personal lives of everyday Americans who are attempting to navigate and financially survive the corporatization of their country.

A sampling of a few of the book’s chapter titles offers a window into the author’s use of personal narrative to crystallize for the reader just how far we have devolved from a real democracy:

David Dayen, Author of Monopolized: Life in the Age of Corporate Power

David Dayen, Author of Monopolized: Life in the Age of Corporate Power

“Monopolies Are Why a Farmer’s Daughter Is Crying Behind the Desk of a Best Western.” Dayen explains how the independent, multi-generational family farmer has been squeezed out by giant corporate farms and the emotional and financial toll it has taken on farm families in the Midwest. Dayen writes that 70 percent of farmers raising hogs have gone out of business since the mid-1990s; JBS, Tyson Foods, Cargill, and National Beef control about 85 percent of the beef industry in the U.S.; chicken farming is currently dominated by Perdue, Pilgrim’s, Sanderson Farms, and Tyson Foods.

Dayen notes that the United States had 1.6 million independent chicken farms in the 1950s; today the U.S. has just 25,000. The book’s revelations about what is happening to farmers in the way corporations are controlling their seeds and tractors reads like something straight out of Orwell.

“Monopolies Are Why Hundreds of Journalists Became Filmmakers, then Back to Writers, then Unemployed.” Dayen walks the reader through what has happened to news reporters as a result of internet giants Google and Facebook dominating media advertising dollars in America. It has left news deserts in large swaths of America and crippled the ability of thousands of journalists to earn a decent living.

“Monopolies Are Why Students Sit in Starbucks Parking Lots at Night to Do Their Homework.” As a result of monopolistic telecom practices, the U.S. has digital deserts across rural America preventing access to the internet. Dayen takes the reader through one family’s expensive ordeal in dealing with this reality and one community’s innovative response. One of the key reasons for these digital deserts is that Big Telecom lobbyists have succeeded, says Dayen, in getting 25 states to either ban municipal broadband, place restrictions on it, or limit it to a specific area.

In short, concentrated corporate power is choking off individual liberty and job opportunity, strangling business innovation and U.S. competitiveness, stunting economic growth, and killing the American dream that each successive generation will live a more prosperous and fulfilling life than the previous generation. To put it bluntly, we’re going backwards in America.

The most important chapter in the book is Chapter 6, which explains in stark detail how the acceleration of monopoly power can be traced directly to the doorsteps of Wall Street. Dayen shows how the evolution (read devolution) in the structure of Wall Street has incentivized the making of monopolies and why it’s getting worse.

The incentive for the investment bankers on Wall Street to use their M&A departments (mergers and acquisitions) to create ever larger corporate conglomerates is based on one thing and one thing only: money that flows directly to their own compensation and bonuses. It’s all about getting rich for the structurers of giant conglomerates: the investment bankers, the lawyers, and the CEOs, who have golden parachutes that pay massive sums when there is a change in control. (That last gimmick is actually embedded in CEO compensation agreements as a means of incentivizing the desire to merge and acquire.)

Dayen writes that there were 11,470 merger deals in 2016 and another 13,024 in 2017. How much money is involved as an incentive to do these deals? Dayen reveals that General Electric has paid out $6 billion in M&A fees since 2000. (Not to put too fine a point on it, but GE’s stock price closed on Friday at $6.86 – 4 pennies from its all-time low. GE was a $50 stock in 2000. On top of the $6 billion that investment bankers extracted from the company, its former CEO Jack Welsh extracted $417 million in a golden parachute when he retired in 2001 while former CEO Jeff Immelt received $211 million in 2017.)

Dayen also walks us through Bayer’s purchase of Monsanto in 2018, noting that it produced $700 million in fees for Morgan Stanley, Goldman Sachs, Credit Suisse, HSBC and JPMorgan, and even more for the law firms representing each side. Dayen suggests that getting the deal done was all that mattered to the bankers and lawyers, never mind that people across the country were suing Monsanto alleging that its Roundup weed killer caused cancer – an allegation with which multiple juries have agreed, awarding a stunning $2 billion to the plaintiffs in a recent court case.

Bayer’s stock closed at $17.57 on Friday – down 42 percent since the deal was completed in June 2018. Bayer, which has dropped the name Monsanto, has a current stock market value of $69 billion, just $6 billion more than it paid for Monsanto.

The Wall Street bankers that are doing these M&A deals, sometimes coming up with the idea themselves, have merged their own banks into monster behemoths, that serially plunder and pillage the nation with impunity. Dayen writes that “In 1984 there were 14,400 commercial banks; today there are around 4,600,” noting that “The Federal Reserve didn’t reject a single bank merger application between 2006 and 2017.”

As we’ve written in the past, Wall Street bank concentration is now so extreme that the health of the entire Financial System of U.S. Rests on Health of Just Five Mega Banks. That analysis came directly from the U.S. Treasury’s Office of Financial Research (before it was gutted of funding and staff by corporate lobbyists), a federal agency created under the Dodd-Frank financial reform legislation of 2010 to warn against systemic risks to the U.S. financial system.

Assisting the Wall Street banks in building unaccountable corporate power structures are the three credit rating agencies that control their own industry as an oligopoly. Dayen notes that the three credit rating leaders, Moody’s, Standard and Poor’s, and Fitch, control “around 95 percent of the market.”

The Wall Street banks are, insanely, allowed to pay the credit rating agencies directly to buy a AAA, or other investment grade rating, for the dubious corporate debt pools they are packaging into securities and selling off to investors. You might remember how that played out in 2008. Despite tens of billions of dollars of those AAA-rated securitizations back then rapidly evaporating into worthless paper, the Securities and Exchange Commission has left the same pay-to-rate system in place.

Then there is the concentrated power of the accounting firms that missed all of those squirrely accounting tricks that led to the unprecedented financial crash in 2008, the bankruptcy of Lehman Brothers, the off-balance sheet debts at Citigroup that blew it up, the government’s takeover of Fannie Mae, Freddie Mac and temporary nationalization of the giant insurer AIG. The Big Four accounting firms (PricewaterhouseCoopers, Deloitte, Ernst & Young and KPMG) are still as concentrated as ever, and, Dayen notes, “they have not been dismantled by overlapping scandals.”

As we read the final paragraph in this extraordinary work that does a Herculean job of advancing the public’s understanding of how we got here, a famous quote from former Supreme Court Justice Louis Brandeis came to mind: “We must make our choice. We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.”

If you’re finding all of this rather depressing, Dayen ends his book on a high note. He finds lots of green shoots for optimism, including the fact that “The Democratic primary featured more discussion of monopoly than any since 1912.” Then there is the first House Judiciary investigation in decades on the impact of Big Tech concentration as well as states moving forward with their own investigations of tech concentration.

Dayen produces these and a litany of other reasons to be hopeful but cautions that momentum in this area will only continue “if public indignation grows, and people realize who has taken their power, so they can take it back.”

If you care about your country’s future, if you care about throwing off the yoke of corporate oppression, this book is a must read this summer.

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