On the evening of October 24, 1978, President Jimmy Carter sat up straight behind the Resolute desk in the Oval Office, interlocked his hands, and began reading from the prepared remarks laid out in front of him. “I want to have a frank talk with you tonight about our most serious domestic problem,” Carter told the camera. “That problem is inflation.”

Since the summer, the cost of living had been increasing at a rate not seen since the Ford administration. Worse, the new burst of inflation was accompanied by stubbornly high unemployment, creating a return of dreaded “stagflation.” According to one of his key advisers, Stuart Eizenstat, Carter worried that if they didn’t come up with something new and substantive to say that night, “we’ll be laughed at.”

The largest single cause of accelerating inflation during Carter’s term was monopolistic control over the flow of oil, but the president saw no palatable options for breaking up the OPEC cartel anytime soon. Nor, thanks to political opposition from both Big Business and Big Labor, could he put in the kind of mandatory wage and price controls Richard Nixon had once ordered up. 

Also off the table was giving in to Republican demands for dramatic cuts in government spending and higher interest rates. Carter was not yet desperate enough to sign on to that agenda because it risked a wholesale revolt from Democrats to his left like U.S. Senator Ted Kennedy and would quite likely induce a recession.

So Carter played another card: Blame inflation on government bureaucrats.

Carter told the nation that his administration was “cutting away the regulatory thicket that has grown up around us and giving our competitive free enterprise system a chance to grow up in its place.” As evidence, he pointed to a bill he had just signed that stripped the Civil Aeronautics Board of its power to regulate airline fares and routes. “For the first time in decades, we have actually deregulated a major industry,” Carter bragged. “Of all our weapons against inflation, competition is the most powerful,” he explained. “Without real competition, prices and wages go up, even when demand is going down.”

Carter tapped a high-energy Cornell economist turned policy entrepreneur named Alfred Kahn to oversee the dismantling of the CAB, and was so pleased with the result that he elevated Kahn to the new position of “inflation czar.” Later, Carter would double down on the idea that the most powerful tool for fighting inflation was depriving the government of its ability to regulate prices, signing bills that deregulated railroads and trucks, and passing the Depository Institutions Deregulation and Monetary Control Act, which set in motion deregulation of the financial sector. The overarching theory was that if the government would just get out of the way, market competition would lead to greater efficiency and therefore to lower prices for consumers. 

Most Republicans applauded these moves, for obvious reasons, but Carter also got support from important Democrats. Ted Kennedy was a key supporter of the airline deregulation bill Carter signed that day. Influenced heavily by Kahn and by Ralph Nader’s Center for Study of Responsive Law, many had come to believe that federal regulatory agencies like the Interstate Commerce Commission and the CAB had been captured by the industries they were supposed to regulate. Stephen Breyer, the future U.S. Supreme Court justice, successfully teamed up with another Kennedy staffer, Phil Bakes, in helping the senator to become a champion of the new liberal cause of getting better deals for consumers through deregulation. The “New Deal faith in the science of the regulatory art,” Kennedy said at one point, was “a delusion.” 

Today, we are paying a big price for that false lesson. Democrats and Republicans cooperated over the next four decades in dismantling much of the regulatory apparatus and antitrust enforcement that since the New Deal (and even before) had governed America’s financial, transportation, and telecommunication markets, foreign trade, and corporate mergers. As they did so, the underlying assumption was always that less government intervention in markets meant more competition, and that more competition would in turn bless the world’s consumers with more and cheaper stuff. But over the long term, the primary effect of this radical change in the country’s political economy was to foster an enormous growth in corporate power that set us up for today’s inflation. 

As merger frenzies concentrated markets in sector after sector, corporate giants used their increasing power at first mostly to suppress wages. Over time, they also maximized profits through downsizing plants and equipment, shrinking workforces and inventories, and relying on brittle, sole-source supply chains to reach outsourced production facilities in low-cost, mostly Asian countries. As a result, when shocks like the coronavirus pandemic and the war in Ukraine came along, the industrial system had no spare capacity and became riddled with choke points, setting off a prolonged frenzy of price gouging that doesn’t self-correct. 

Call it “choke-flation.” With perverse irony, it now threatens Joe Biden with the same political fate as Jimmy Carter, only this time the stakes are much higher, given the authoritarian drift of the Republican Party since Ronald Reagan’s time. To avoid that fate, we must counter the false narratives peddled not only by Fox News but also by out-of-touch establishment economists who would have Americans believe that too much liberal government is to blame for inflation, and not the predations of unregulated monopolies. 

Just as Carter and Kennedy had hoped, a first-order effect of deregulating airlines was to spawn a round of price cutting. Scores of discount start-up airlines surged into the market (remember People Express, ValuJet, and Air Florida?), and incumbent carriers responded by extracting steep cuts in wages and benefits from their workers, which they initially shared with their customers. But as airlines began engaging in price wars, most of the new starts went broke within a few years, and the surviving incumbents began combining into increasingly dominant mega-carriers that no longer had any legal requirement to serve the public interest. 

By the mid-1980s, many Democrats who had voted for deregulation were already regretting it. One reason was that because the CAB no longer existed, hundreds of medium-sized cities lost air service or found themselves forced to pay much higher fares. In 1986, Senator Robert Byrd of West Virginia was unequivocal: 

This is one Senator who regrets that he voted for airline deregulation. It has penalized States like West Virginia, where many of the airlines pulled out quickly following deregulation and the prices zoomed into the stratosphere—doubled, tripled and, in some instances, quadrupled. So we have poorer air service and much more costly air service than we in West Virginia had prior to deregulation. I admit my error; I confess my unwisdom, and I am truly sorry for having voted for deregulation. 

Ted Kennedy also came to deeply regret his vote, because of the way deregulation injured another key constituency once firmly in the Democratic coalition: organized labor. At a 1988 event in Washington, D.C., Kennedy buttonholed Phil Bakes, the former staffer who, along with Stephen Breyer, had been his point person on airlines 10 years before. “This goddamn dereg … you know, Phil, you double-crossed me. You lied to me. You said the unions were going to support deregulation.” According to one account, people at the event gawked as Kennedy continued to shout at Bakes about deregulation. Bakes was then the president of Eastern Airlines, where the financier Frank Lorenzo had put him charge of driving down labor costs through union busting.

By this time, the Reagan administration, while furthering Carter’s moves to deregulate the financial sector, was also embarking on a wholesale retreat from antitrust enforcement. Under the influence of the conservative jurist Robert Bork and market fundamentalists concentrated at the University of Chicago, the Department of Justice in 1982 adopted new prosecutorial guidelines—subsequently followed by every administration until Biden—that ignored the clear statutory language of the Sherman Antitrust Act and the Clayton Act and thereby set off a frenzy of anticompetitive mergers. Meanwhile, a new generation of federal judges, many of them products of the Federalist Society and a vast, lavishly financed, conservative “law and economics” movement ensconced in the nation’s law schools, began further eroding traditional anti-monopoly policies by striking down cases against dominant firms engaged in predatory behavior, such as price gouging, loss leading, and price discrimination. 

This meant that the flying public just had to take it when consolidating airlines increasingly under the control of financiers like Lorenzo and Carl Icahn began using their unregulated market power to push through more and more reductions in the quality of the product. These include smaller and smaller seats, nonrefundable tickets, overbooked planes, fewer direct flights, and more changing planes at “fortress hubs” controlled by a single airline. The nominal cost of flying declined on high-volume routes where some competition remained, but after adjusting for the changes in the cost of energy, overall fares declined at a lower rate in the 10 years after deregulation than they had during the 20 years before when the government set prices and routes. (See “Terminal Sickness,” in the March/April 2012 issue of this magazine.)

By 1998, air service was so wracked by bankruptcies, layoffs, regional inequality in service, and increasing concentration of ownership that Alfred Kahn complained that the promise of deregulation had been undone by the failure to enforce antitrust laws. “I’ve been saying for these 20 years when you deregulate an industry, the antitrust laws become more important rather than less,” the disillusioned Kahn told a reporter for the Houston Chronicle. “That’s because now customers are dependent not on regulators to protect them but on competition.” 

Yet it is not clear that Kahn should have blamed lack of antitrust enforcement alone for the debacle; other policy shifts were also at work in making his reforms even more destructive. Early in his first term, Bill Clinton signed legislation, for example, that removed any regulatory barriers to compensating CEOs largely through stock options, thus inadvertently accelerating the trend toward “shareholder” control over corporations and the financialization of the economy. Kahn would be doing barrel rolls in his grave if he learned that all four remaining major airline carriers share common ownership by the same three gigantic investment pools. This interlocking financial control means that the major airlines don’t compete with each other any longer except over who can maximize returns to their owners by cutting costs the most and raising fares the fastest. In the first three months of 2022, average domestic airfares rose by a staggering 40 percent, with only a small portion of this attributable to rising energy costs. And that was, as we’ll see, only the beginning. 

The same pattern now recurs in sector after sector. Start with the evidence from surging profit margins. 

In April, the Economic Policy Institute issued a report that broke down the three main factors contributing to the price hikes charged by nonfinancial corporations. Since the bottom of the COVID-19 recession through December 2021, inflation in this sector, which constitutes three-quarters of the private economy, ran at an annualized rate of 6.1 percent. The rising cost of labor accounted for a small part of this, and the cost of raw material contributed substantially more. The overwhelmingly largest factor, however, was surging corporate profits, which accounted for more than half (53.9 percent) of the rise in prices.

These statistics undermine the idea, championed by the economist Larry Summers and many others, that today’s inflation is primarily caused by excessive government spending and monetary policies that have given ordinary Americans too much money. Both factors helped millions of Americans to make up for the income they lost when their jobs disappeared during the pandemic. Meanwhile, even at a time of spreading labor shortages, nominal wage growth still lags or is barely keeping up with overall inflation, signaling, as the EPI report puts it, that “labor costs are still dampening, not amplifying, inflationary pressures.” By contrast, according to an analysis published by The Guardian, between the first quarter of 2020 and the first quarter of 2022 the median profits of the top 100 publicly traded companies surged by 49 percent. 

Abundant examples illustrate the business practices behind these statistics. Last fall, the Groundwork Collaborative, a progressive think tank, listened in on the earnings calls of hundreds of publicly traded companies, in which CEOs provide investors with projections of future profits. A consistent theme: CEOs bragging that inflation was giving them cover to raise prices above costs. The CEO of Hostess told shareholders, “When all prices go up, it helps.” A survey by Digital.com of retail businesses found that 56 percent said inflation has given them the ability to raise prices beyond what’s required to offset higher costs.

Why are corporations able to get away with this profiteering? After all, every economics textbook teaches that in a competition economy, any company that jacks up prices far above costs will soon find other firms stealing away its customers with better deals. It’s why many economists oppose laws against profiteering; their models tell them that market forces will automatically correct any abuse. It may also be why even some economists who work for the Biden administration drastically underestimated how long inflation would endure. They failed to focus on the fact that we don’t have anything like a competitive economy anymore; in sector after sector, we have an economy increasingly dominated by just a few, often colluding firms that have stripped out almost all slack capacity and that don’t need to worry about competitors under selling them because they no longer really have any competitors. 

This is particularly true in sectors where we have seen the steepest price rises. In the meat-packing industry, just four large conglomerates control 55 to 85 percent of the supply chains for beef, pork, and chicken while enjoying near-total local monopolies. During the worst of the pandemic, the Big Four posted record profits by hiking up their prices by far more than their costs. According to a White House report, fully half of the rise in food costs since December 2020 is attributable to monopoly pricing by the meat-packing industry. Meat-packers give the excuse that they are just passing along higher costs—but then what explains their soaring profits? Tyson’s earnings per share have increased by 71 percent over the past year. 

Rental car companies provide another good example of how consolidation amplifies inflation. The falloff in travel following the outbreak of COVID initially hit the industry hard. Rental companies dropped their prices by more than a fifth and began selling off cars. Hertz, which also controls its former competitors Dollar and Thrifty, declared bankruptcy. But the industry was soon able to more than recoup its early losses and go on to post record profits through ongoing price gouging. 

That’s because it operates as an effective oligopoly. The Hertz group, which emerged from bankruptcy after attracting $5.9 billion in new hedge fund money, shares the market with only two remaining major players: Avis (which controls Budget and Zipcar) and Enterprise (which controls Alamo and National Car Rental). Because there was so little competition left in the industry, it didn’t have to worry about the worldwide shortage of new cars that occurred during the pandemic. It learned instead that it could pull in record profits just by selling off one-third of its inventory into a red-hot used car market while jacking up the price of renting the remaining cars in its diminished fleet. According to the Bureau of Labor Statistics, the average price of renting a car or truck is now 47 percent higher than it was in 2019 before the pandemic struck. 

To keep this sweet deal going, the Big Three rental companies don’t have to engage in illegal price fixing. With so few players, it is easy to coordinate prices and output just by sending signals to one another in public. Hertz’s CFO announced on an earnings call this April, “We don’t view inflation as necessarily a bad thing for us, as this creates more discipline across the industry in terms of pricing and asset allocation, which you can see currently.” Just to make sure investors and other members of the oligopoly got the message, he let it be known that Hertz is committed to keeping its prices high by keeping fewer cars in its fleet than is necessary to meet demand. And what is the company doing with the money it saves with this strategy? It’s redeploying its assets to engage in a $2 billion stock buyback program. 

It should come as no surprise that other members of the oligopoly are engaged in the same pricing and allocation “discipline.” Rather than build its fleet size back up to meet surging demand, the Avis Budget Group holding company, for example, bought back 20 percent of its outstanding stock in just four months late last year. According to its CFO, this represents “over $1 billion of value created for shareholders.” In May, Avis reported record first-quarter profits, further swelling its stock price by double digits. Meanwhile, anyone needing to rent a car paid more for it—if they could find one. 

Variations on this pattern prevail in many other sectors, including central industries on which the whole economy depends. Coming into the pandemic, a highly consolidated freight rail industry, now largely controlled by private equity funds focused on maximizing short-term returns, learned that it could earn record profits by laying off tens of thousands of workers and stripping out physical assets like rail yards and locomotives. Service standards deteriorated, but with the industry dominated by just six remaining major carriers that enjoy near-total local monopolies, captive shippers had nowhere else to go. (See “Amtrak Joe vs. the Robber Barons,” November/December 2021.) The consequences for inflation became clear last year when an improving economy created an increase in demand for freight transportation that overwhelmed the railroads’ remaining capacity, causing supply chain bottlenecks that continue to drive up prices for everything from energy and food to consumer electronics. 

Union Pacific, for example, having laid off thousands of workers before the pandemic and shut down a major terminal outside of Chicago as cost savings measures, had to turn away container traffic from West Coast ports for a week last year when undelivered containers started stacking up. Perversely, such bottlenecks give Union Pacific and the other five members of today’s railroad trust even more opportunities to profit through price gouging. On an earnings call in January, Union Pacific promised that due to “our disciplined pricing approach, we expect to yield pricing dollars in excess of inflation dollars”—in other words, we promise to deliver still-higher profits by further jacking up prices beyond what it costs to run the railroad. Currently, Union Pacific and other major railroads have such fat profit margins that they only spend 60 cents in operating expenses for every dollar of revenue they rake in. 

Or consider ocean shipping. Once it was a source of falling prices in the U.S., as the use of containers and super-efficient mega-ships made it economical to outsource production to distant places like Japan, China, or wherever labor and other costs were lowest. But today, thanks to a huge increase in concentrated ownership over the past 10 years, roughly 80 percent of all global shipping capacity—and 95 percent of East-West trade—is controlled by just three cartels that allow freight carrier firms to coordinate rates. This they do with gusto, raising the rates for shipping between the United States and Asia by more than 1,000 percent since the beginning of the pandemic and taking home profit margins as high as 56 percent. Studies by the Kansas City Federal Reserve and the European Central Bank suggest that such profiteering could be responsible for as much as one-sixth of the ongoing rise in inflation. 

Some observers insist that increasing corporate concentration cannot be a major cause of today’s inflation since the trend has been building since the 1980s while inflation has only surged more recently. But that is hardly a paradox. The combination of deregulation, financialization, and monopolization has been causing inflation in many sectors for decades; what’s different now is that in the aftermath of the disruptions caused by the pandemic and by the effects of decades of corporate outsourcing and downsizing, the same three forces are amplifying inflation throughout the whole economy. 

For two generations we’ve endured rampant inflation in health care, for example. The reason is not that Americans consume more health care than people in other advanced nations; it is that we pay ever-higher prices for the same pills and procedures with no better results. And that’s largely because of a surge of hospital and insurance company mergers, cartelization of medical supply chains, patent monopolies on drugs and medical devices, and, most recently, moves by private equity firms to wrest more “shareholder value” out of nursing homes, dialysis centers, and other key parts of the health care delivery system. 

Now, the same forces are causing inflation to spill out of sectors where competition is also disappearing, which had to happen eventually. Even in cases where monopolists might have at first lowered prices in the past, the effect over time has been the opposite, as per plan. As students of business history well know, John D. Rockefeller built the Standard Oil monopoly by colluding with railroads to sell kerosene for far less than any of his competitors could until he no longer had competitors and could charge whatever he liked. Later chain stores sold at below cost or forced their suppliers to do so in order to drive mom-and-pop stores out of business and gain monopoly pricing power. The abuse of such predatory pricing and price discrimination to build monopolies became so bad that Congress passed the Robinson-Patman Act in 1936 to make that business model explicitly illegal. 

But Robinson-Patman and similar fair trade laws have not been enforced since the 1980s, while enforcement of antitrust statutes has also lapsed, allowing for the return of the same monopoly play. Using gobs of Wall Street capital, Jeff Bezos sold books, Kindles, and later almost everything else on Amazon at a loss for more than a decade until he built up a retail platform with such gigantic market share that merchants must now pay monopoly prices for access to it. Google and Facebook literally give away products to consumers for free in order to build up the monopoly power they now use to charge advertisers monopoly prices—a corner that destroys competition and drives up prices across the whole economy.

Even when predatory pricing fails to build an enduring monopoly, the effect is often ultimately inflationary. Classic examples include Uber, WeWork, DoorDash, and other so-called unicorns that built gigantic market shares over the past decade by using Wall Street money to sell their services at far below cost. Because this practice drives other producers, like traditional taxi drivers and small restaurants, out of business, consumers pay more in the long run. 

A variation of this pattern occurs when deregulation brings an initial surge of competition but later an increase in corporate consolidation. In airlines, as we’ve seen, deregulation set off ruinous competition that, after a shakeout, has allowed today’s unregulated airline oligopoly to engage in fantastic price inflation combined with further cuts in quality. In April, airfares rose by another 18.6 percent, the largest one-month increase since the Bureau of Labor Statistics began tracking airline prices in 1963. Rising fuel costs account for some of this, but as Delta Air Lines President Glen Hauenstein recently told an investor conference, Delta only needs to collect an extra $30 or $40 per the average $400 roundtrip ticket to cover rising fuel costs, which it is more than getting through fare hikes. As a result, Delta is telling investors to expect a profit margin this year of 12 to 14 percent or more.

Meanwhile, Delta and the three other remaining major carriers have announced that they will be cutting the numbers of flights they offer this summer, blaming the fact that large numbers of employees are quitting. But rather than improve working conditions, airlines cut capacity. The effect on their bottom line will be to further boost their pricing power and profit margins as travelers compete for a dwindling number of airline seats. 

The effect of this monopoly behavior is not only inflationary but also likely to end in recession. In a normal competitive market, these firms would be investing in new plants and capacity—buying more cars to rent, for instance, or ordering more airplanes—which might keep the economy humming along without inflation. Instead, by merely raising prices, they are driving up inflation and all but forcing the Federal Reserve to raise interest rates, which more and more market analysts fear will lead to a recession as early as this year. 

Which brings us all the way back to Jimmy Carter and the false idea that the best way to fight inflation is by taking away the government’s ability to manage competition. It is true that excessive and poorly conceived regulation can itself become a source of monopoly by creating high barriers to entry for new businesses. One example is Carter’s deregulation of energy markets, which led to a boom in natural gas production that helped break the back of the energy crisis that was driving 1970s inflation in the first place. 

Nor were Carter-era deregulators wrong that regulatory agencies can sometimes be “captured” by the powerful industries they are supposed to be regulating. Much of today’s health care cost inflation, for instance, is due to the iron control that the American Medical Association has over reimbursement rates for Medicare and Medicaid. (See Merrill Goozner, “The AMA’s Dark Secret“.) Indeed, the deregulation movement that Carter-era liberals began has itself been captured by corporations and laissez-faire conservatives, whose well-funded think tanks, lobbyists, and allies in Congress and the courts have bollixed up the federal rulemaking system considerably. With a new conservative super-majority on the Supreme Court, they may shut it down altogether. (See Marcia Brown, “Limitations of Statute“.)

Taken together, the competition policies we have been following for the past 40 years have gone so far in the wrong direction that what we have today is not a deregulated, market-driven economy, but one regulated by financiers who have cornered different markets large and small and who are now using their monopoly power to jack up prices and profits. The Biden administration, by its words and actions—including sweeping antitrust executive orders and the hiring of tough enforcers—clearly understands this. So does the public. A recent poll showed that a strong majority of Americans blames large corporations for today’s inflation and wants the federal government to crack down. About the only people who don’t get it are a handful of economists, like Larry Summers, who are nevertheless influential in elite media and Democratic circles. If Biden is to escape the same fate as Carter, he and his allies need to avoid being led astray by economists in thrall to their own models and do a better job of showing the American people that they have a plan that addresses inflation’s root cause: abusive corporate power.

The post It’s the Monopoly, Stupid appeared first on Washington Monthly.

On January 26, Maryland’s Department of Transportation (MDOT) announced some good news—and some bad news. The good news was that the Purple Line, a 16-mile light rail project to connect working-class Black and Latino suburbs immediately northeast of Washington, D.C., to job centers in the more affluent northwestern suburbs, was back on track. During the previous year and a half, most construction halted because the private companies that Governor Larry Hogan’s administration had originally hired to build the line walked away from the job. But a new consortium of contractors had now been approved, MDOT proclaimed. Construction would soon resume, and the Purple Line would open, an official said, “as soon as possible.”

The bad news? The new contract will cost taxpayers $1.4 billion more than the original deal would have and won’t be completed until late 2026, more than four and a half years behind schedule. 

The ballooning costs, MDOT explained, were the result of “supply chain issues, rising material costs, labor shortages and insurance increases” that “could not have been foreseen prior to the pandemic.” It seems like a reasonable explanation—who hasn’t felt the effects of COVID-driven inflation? The Maryland and D.C. press corps dutifully reported the assertion without question. But it turns out not to be true.

There certainly were events outside the governor’s control that contributed mightily to the project’s delays and cost overruns. Among these were a nuisance lawsuit by wealthy homeowners, a dispute with a freight rail monopoly over right-of-way, and changing environmental regulations—the kinds of factors that dog infrastructure projects all over the country.

In the case of the Purple Line, however, a series of decisions by the Hogan administration compounded the problem. Early in his tenure as governor, Hogan, a Republican who had opposed the Purple Line as a candidate in 2014, demanded that the project be redesigned and its costs cut to free up money for road construction. Some of that road building would benefit real estate ventures in which Hogan, a developer, had invested, as the Washington Monthly has previously reported. The redesign delayed the start of the light rail line’s construction by almost two years. 

Hogan’s administration also negotiated a contract with a group of private construction firms that contained an unusual provision: In the case of delays lasting more than a year, the companies could abandon the work, no questions asked. When the inevitable delays ensued and the contractors threatened to walk, Hogan’s hand-picked transportation secretary negotiated a new arrangement in which the companies agreed to stay and finish the project for less than $175 million. Then, on the eve of signing the deal, the administration backed away. 

Had it gone through with the transportation secretary’s deal, the contractors, not Maryland taxpayers, would have had to absorb the pandemic-related cost increases. And the Purple Line, according to MDOT projections in the spring of 2020, with COVID-19 already raging, would have been up and running, partially by 2022 and fully by the early summer of 2023—giving commuters, hit by high gas prices, more mass transit options. 

“We are very excited to begin a new chapter for the Purple Line to deliver a world-class transit system to the people of Maryland,” MDOT spokesperson David Abrams wrote in an email in early June in response to questions from the Washington Monthly. (The agency largely did not answer the Monthly’s queries.) Meanwhile, Hogan, whose second term as governor ends next January, is eyeing a 2024 presidential run. The exorbitant cost overruns won’t be his problem. His successor will inherit his mess.

Though mass transit projects are notoriously difficult to complete on time and within budget, the Purple Line should have been relatively easy. Much of the land needed to build it had been purchased by farsighted elected officials back in the 1980s. Because the whole line would lie within Maryland, it would not be subject to the multi-jurisdictional disputes over funding and governance that have long hobbled the Washington Metro, the D.C.-Maryland-Virginia mass transit system to which the Purple Line will connect. All the basic planning for the line had been completed, and the needed state and federal financing had been secured by Hogan’s predecessor, Democrat Martin O’Malley, whose two terms as governor ended in 2015.

Hogan won the race to succeed O’Malley in part by vowing to kill the Purple Line and another mass transit project, the Red Line in Baltimore, and to spend the freed-up funds on more road building. That position was popular with Republican voters in rural and small-town Maryland. Once in office, however, Hogan took six months before announcing his decision on the two projects: He would keep his campaign promise to kill the Red Line but allow the Purple Line to go forward so long as the counties and the contractors paid more of the costs and reduced the budget overall. His stated reason for the flip-flop was that the project would create construction jobs. But according to Annapolis insiders, Hogan also understood that the Purple Line was further along in the process and trying to stop it would put him crosswise with developers in the Greater Washington area whose political support and campaign contributions he would need. 

The Hogan administration then began to whittle away at the Purple Line’s expected costs. This included cutting some items that would have been good to have but weren’t strictly necessary, like using environmentally friendly materials for track beds. It also meant axing features that would have made the rail line more functional. For instance, the Silver Spring connection from the Purple Line to the Red Line—one of the D.C. Metro’s highest-volume lines—would no longer be on the same platform. Instead, riders would have to cross a long walkway to transfer from the Purple Line to the Red and vice versa. Hogan’s team also lengthened the times commuters would have to wait between trains from six minutes to seven and a half minutes during peak hours. 

These changes preserved funds that Hogan could route elsewhere—mainly to highway, road, and bridge projects. The Washington Monthly has learned through FOIA requests that from 2015 to 2017, MDOT spent $196 million less on the Purple Line than what was budgeted under the O’Malley administration. 

Changing the Purple Line’s procurement halted the project for almost two years. During that time, many of the road projects Hogan advanced in his transportation budget were near or adjacent to properties owned by his real estate firm—from which he did not divest. (After the Washington Monthly revealed these connections, the state legislature unanimously passed a law tightening up conflict of interest requirements for future governors and other officeholders. Hogan let the law go into effect without his signature.) 

It wasn’t until March 2016 that Hogan chose a team of private companies, Purple Line Transit Partners (PLTP), to build, operate, and maintain the project. As part of the contract, the consortium included Purple Line Transit Constructors (PLTC), led by the construction behemoth Fluor Corporation, to design and construct the rail line. A month later, the Maryland Board of Public Works unanimously approved the contract for $5.6 billion. But the contract had an odd provision that allowed either party to walk away from the deal if there were more than 365 days of extended delays. “That doesn’t make sense,” says Joseph Schofer, a professor at Northwestern University’s McCormick School of Engineering and an expert on public transportation projects. Sources familiar with the matter say the highly unusual stipulation was demanded by PLTP, and was included because of the possibility of a lawsuit that had been looming over the project for years. 

Sure enough, in August 2016, a U.S. District Court judge halted construction of the project—the first of several outside events that would delay the line’s construction and swell its cost. Judge Richard Leon claimed that the state did not conduct an adequate survey of the environmental impacts of the line. Almost immediately, the Purple Line’s advocates, as well as Hogan himself, noted a potential conflict of interest for Leon, who lived in Chevy Chase, not far from the proposed transit line. His wife was a member of advocacy organizations that had been trying to kill the line for years. That ruling set the project back almost a year and a half, until a U.S. Court of Appeals judge overruled Leon in December 2017 in favor of the Purple Line. 

The existence of the lawsuit also made it harder for the state during that year and a half to close deals with landowners to acquire the final 600 parcels of land needed to build the line. That caused further delays to the project even after the case was dismissed. A technical dispute with CSX Transportation, which would be sharing a portion of its freight rail right-of-way with the Purple Line, added an additional five months and $187.7 million in cost.

Then came the largest and most substantial delay. The Maryland Department of the Environment (MDE) changed regulations for transit projects based on a law that had been passed before Hogan was governor. The new rules classified embankments and associated culverts as “unintentional dams.” That forced the contractor to institute a series of redesigns, many of which Hogan’s MDE shot down. These back-and-forths over compliance with the new rules delayed the project by 976 calendar days, worth $519,112,360 in costs, according to the PLTC contractor consortium. 

By mid-2019, the consortium had had enough. It informed the state that it would exercise its right to leave the deal because far more than 365 days of delay had occurred, unless the state provided additional compensation to make up for some of the cost overruns associated with those delays. Maryland Transportation Secretary Pete Rahn, a Hogan appointee, then quietly scrambled to strike a deal with the contractors to stay on, Rahn told the Washington Monthly. “It was the very last thing I did,” said Rahn, who shortly thereafter left the administration. The consortium also thought it had a deal. “In December 2019, after six months of intense negotiations, all parties came to an agreement in principle on a settlement,” the consortium wrote in documents it later filed with the Maryland Circuit Court. 

But soon after Rahn resigned from the department, the Hogan administration rejected the deal its own transportation secretary had negotiated. (When asked by the Washington Monthly why the administration made this decision, MDOT did not reply.) The administration then made new demands, which the consortium rejected. 

On May 1, 2020, the consortium informed the state that it was exercising its right to walk away from the contract. Instead of continuing to negotiate, the Hogan administration took PLTC to court. But it didn’t take long for Maryland Circuit Court Judge Jeffrey Geller to determine it an open-and-shut case. On September 10, 2020, Geller ruled that the “clear, direct, and absolute” language of the contract gave PLTC the right to walk away from the project—which it proceeded to do. By the end of the year, the Hogan administration reached a settlement to pay the former design-build team $250 million after they left the project. 

With the original contractor consortium out of the picture, the Hogan administration had to find another design-build team to complete the project, and then negotiate a new contract with it. The process took a year and a half—an enormous additional delay. When, on January 26, the administration finally announced that it had selected a new construction consortium, led by the American subsidiaries of the Spanish firms Dragados and OHL, it blamed the delay on the pandemic—ignoring the fact that in the spring of 2020, with the pandemic fully under way and PLTC still on the job, MDOT was publicly predicting that the Purple Line would partially open in 2022 and fully in 2023. 

MDOT also blamed much of the $1.4 billion higher price tag on the pandemic, a charge it repeated in its emailed response to the Monthly, writing that “certain other claims [by the contractors], including those related to Covid-19, would have remained open, potentially exposing the State to further delay and costs.” According to the language of the original contract with PLTP, however, the contractors, not the state, would have been obliged to assume the higher material and other costs associated with the pandemic, since the concessionaire would have been responsible for any additional expenses under a force majeure event.  

In its response to the Monthly, MDOT also pointed to news articles reporting that the lead contractor, Fluor, had other business-related reasons for seeking to get out of the risky government contracting business. But when the lawyer for the state brought up that exact argument before the Maryland Circuit Court, Geller ruled it irrelevant to the case. Indeed, whatever Fluor’s larger business strategy may have been, it agreed to Rahn’s December 2019 negotiated offer to stay on the job.

The bottom line is that what was once one of the most promising mass transit projects in the country will now deliver less than what its planners originally envisioned, at far more cost to taxpayers, and years later than was promised. And instead of paying less than $175 million for the old contractors to finish the job, Maryland will cough up $1.4 billion (plus the $250 million settlement with PLTC) to finish the project. 

But it won’t be Hogan’s problem. After the term-limited governor leaves office next January, dealing with the extra costs, delays, and disruptions of the Purple Line fiasco will be left to his successor.

The post No Way to Build a Railroad appeared first on Washington Monthly.

When Amazon founder Jeff Bezos bought The Washington Post in 2013, he quickly became aware of a longtime problem hobbling the entire news industry: The technology that news organizations employed to publish and make money from their content online was wildly inefficient and inadequate. 

Bezos also found a chief information officer at the Post, Shailesh Prakash, with ambitions larger than his budget. Bezos solved Prakash’s budget problems, and the Post built what has over time become a best-in-class platform, conveniently hosted on Amazon’s own cloud computing servers. The Post started licensing its technology to other news organizations in 2016, and its digital publishing division, Arc XP, is now a booming business employing a staff of 300 that is continuously rolling out new functionalities. It powers more than 2,000 sites for media organizations and non-media brands that can afford its hefty price tag. 

Together with its affiliated ad buying and ad rendering platform, Zeus Technology, Arc addresses the entire range of technology needs for digital publishers, from production to monetization. It is precisely the kind of infrastructure the industry needs to get back on its feet after two decades of losing every conceivable battle—and a staggering 80 percent of its advertising revenue—to Big Tech companies like Google, Facebook, and, yes, Amazon. 

News organizations today have a wide variety of options when it comes to technology, and other companies—including Brightspot, Contentful, and RebelMouse—also offer cutting-edge solutions. The New York Times, The Wall Street Journal, and the biggest chains have built their own.

But nobody is devoting the resources that Bezos is to Arc, making it a dominant player particularly for legacy print publications transforming to digital first. “We looked at others,” says Tom Shaw, vice president of Shaw Media, whose print and online publications in Illinois and Iowa switched to Arc in 2020. “We were seeing the companies we looked up to getting in on this,” he told me. “Arc was the one that everyone was jumping in on. It seems like it’s the one that’s growing.” Of the 20 largest American newspapers (by print publication), eight use Arc. 

According to a recent article in Axios, Bezos has rejected offers to buy Arc that valued the operation at north of $100 million—because he’s thinking bigger than that. “We are not a capital-constrained company,” Prakash told Axios. “It’s never a question of funding, it’s always a question of, is it the right thing to do?” And the right thing to do, ArcXP President Miki King said, is “creating more of a velocity in revenue growth.”

Bezos’s control of Arc and Zeus give him significant power over the news industry. They both allow him to harvest vast amounts of cash from competitors, even as he makes them increasingly dependent on his technology. We know, based on past experience with Amazon and its Amazon Web Services (AWS) cloud computing subsidiary, that being dependent on Bezos’s technology comes with serious consequences—often including manipulation, predatory surveillance, and unfair practices. What initially appears to be a benign solution becomes exploitation of a trapped client base. 

Bezos’s outsized investment means that he could soon control the backbone of most of the large newspaper markets in America. Meanwhile, Arc’s high cost creates a barrier to entry for new news organizations that can’t afford it. It further accelerates the cleavage of the industry into haves and have-nots. The have-nots—including most small local and ethnic publishers—often struggle with inferior technology that stifles both editorial and revenue ambitions, at a time when local news is increasingly recognized as an essential and endangered public good. 

Conversely, if Bezos were to suddenly drop the price of Arc XP and Zeus Prime, he could potentially drive other platform providers out of business, allowing him to take a cut of the entire industry’s revenues right off the top.

“You look at Jeff Bezos and his history and his behavior and how he’s gone about building total domination of e-commerce, and you realize: He could do the same thing to media as he’s done to retail,” says Daniel Williams, the CEO of BlueLena, a company that helps develop revenue models for news organizations. “And I think media is likely to become another instrument of the Amazon empire.”

There is an alternative scenario. Rather than continuing his every-person-for-themselves path to dominance, Bezos should make Arc XP his gift to the news community. Bezos says he bought The Washington Post because of his “support of American democracy.” Having stepped down as Amazon CEO, he says he is now devoting himself to “improving civilization.” He could live up to those words by turning Arc XP over to a mission-driven nonprofit entity that could make it open-source, accessible, and affordable to all qualifying news organizations.

Just as the 19th-century industrialist Andrew Carnegie made a seminal contribution to the free exchange of information by building more than 1,600 public libraries across the United States, Bezos could turn Arc into public infrastructure for a public good. 

For a news organization to thrive online these days, it needs to overcome massive technological barriers. Reporting, writing, editing, and then publishing to many platforms in an attractive, engaging, and efficient way is an enormous challenge. And that’s just for starters. Sustainability also requires the ability to convert readers into subscribers, sell and serve targeted ads, optimize for search, market on social media, and create must-read email newsletters.

American newspapers mostly started publishing online in the late 1990s, often by cutting and pasting copy from their print production systems. For the next decade and a half, news organizations largely remained technological backwaters. Even the biggest publishers suffered from inflexible and unreliable content management and publishing systems. The corporate culture of print newsrooms had prioritized stability—in particular, avoiding a system crash on deadline—over new features. Publishers were slow to realize the need to invest in new technology, even as hot programmers at start-ups came up with ways to steal their readers and revenue with commodity news, free classified ads, search functions, and social networking. 

News technology has improved dramatically over the past 10 years—particularly for the major players. But many small newsrooms still depend on wheezing, legacy production systems that are a major drain on resources even while producing terrible user experiences on the web and mobile apps—with poor visibility on search engines, and only token revenue from online subscriptions. Plummeting returns on web ads have forced some smaller publications to junk up their sites with so many ads, many of them intrusive and slow to load, that they are virtually unreadable. “I think the most messed-up part of the system, especially for the local publishers, is the user experience,” Jim Friedlich, CEO of the Lenfest Institute, a nonprofit trying to help save local news, told me. “That last foot is often pretty horrible. And that’s an area where a lot of people could use a lot of help.” 

It’s a constant source of frustration for the industry. “All the pieces should be there, but they’re not there yet. They’re too expensive or too complicated, or both,” says Chris Krewson, executive director of the nonprofit Local Independent Online News Publishers (LION). “CMS is destiny,” is how the University of Missouri journalism professor Damon Kiesow put it in an interview with Poynter.org, using the common abbreviation for “content management systems.” “Pretty much everything you do in your entire organization, be it newsroom, advertising, subscriptions, video, AR [augmented reality]—whatever the new thing is or the old thing is—that’s all constrained by the capacity or lack thereof of your content creation and publishing systems.”

Arc XP offers vastly more complexity than a small or even medium-sized news organization needs. And integrating it currently requires a fairly high level of in-house technical expertise. But one can easily imagine stripped-down, open-source versions of Arc that still offer small organizations a standard, basic editing suite, reliable web hosting, improved ad serving—and the benefits of updates and new ideas from an ever-growing community of users.

Starting around 2010, large news publishers finally began to put more effort into creating efficient, reliable systems that reflected the new workflows and demands of digital publishing. One trailblazer was Shailesh Prakash, the chief information officer for The Washington Post. And in 2013, he had the good fortune to get his newspaper bought by one of the world’s richest men. Bezos liked Prakash’s vision. So Bezos did what Bezos does: He supported the building of the best-in-class system for himself, then found other people to pay for it.

From the very beginning, Bezos focused his attention not on the Post’s content, but on its technology. In Amazon Unbound: Jeff Bezos and the Invention of a Global Empire, the author Brad Stone recounted that Bezos “obsessed over shaving milliseconds from the time it took web pages and complex graphics to load. He also asked for customized metrics that could measure the reader’s true interest in stories, and whether an article was truly ‘riveting.’ ” Bezos showered Prakash with money. Soon there were some 200 engineers, designers, and project managers at the Post, building what is now called Arc XP.

“The original driving force was to solve technological and newsroom problems that we faced at The Washington Post,” Matthew Monahan, one of Arc’s creators and now its vice president for product, told a media trade group in 2018. “The whole reason we built Arc was that so many of the vendor-provided solutions we found on the market had serious constraints and were often tied to non-digital workflows,” he said. “More modern solutions didn’t necessarily scale to the needs of large newsrooms. And many of the solutions out there didn’t take digital speed as seriously as we did.”

Although Arc wasn’t Bezos’s idea, his money and the cultural shift that came in the wake of his purchase of the Post were major factors in its success. “I think it made a huge difference when Jeff bought the Post because it allowed the people at the Post to view the technology a bit differently,” says Jeremy Gilbert, who was director of strategic initiatives at the Post before joining the faculty at Northwestern’s Medill School of Journalism. “You can’t be owned by a billionaire who made his fortune in technology and not realize that technology has to be part of your job.”

Word of mouth about the Post’s new technology spread, and other news publishers decided they wanted in. “Bezos loved the idea of supplying that technology to other papers and encouraged Prakash to license it to broadcasters and any company that needed publishing software,” Brad Stone wrote in his book. 

The Globe and Mail in Toronto was an early adopter, in 2016. Jason Chiu, a former senior manager at The Globe and Mail, told me it was clear by then that “the biggest challenge for us was the CMS. It was holding us back.” The newsroom was still following its age-old print workflow, and articles were still being cut and pasted into the digital publishing system.

Arc was transformative, Chiu said. Where before, people had to struggle to produce a page that “looked remotely interesting,” Arc made it easy to customize and preview pages on the web and the mobile app. Editors could plan, track, and edit seamlessly. “It eliminated a lot of extraneous work,” he said. “Arc can consolidate tons of systems and workflows like no other CMS before it. Social. Publishing. Editing and copyediting. Video. Photos. Alert notification. Home page management. Arc did it all. There was no system that could do that before it.”

The Dallas Morning News started using Arc in 2019, after abandoning its own CMS. “We invested several millions of dollars in that, and then The Washington Post went out and invested hundreds of millions of dollars, and you could see the difference and we were in the wrong business,” Mike Orren, the Dallas Morning News chief product officer, told me. Prior to Arc, the newsroom was using “wonky” home-grown technology, Orren said. “We were managing our own DevOps [development and operations], and our own servers, so if we got a traffic spike of like 20 percent the whole thing would come down.” The newsroom had a huge list of unfulfilled requests. Arc changed all that. “Generally, at this point, if we’re down, the internet is down,” according to Orren. The bandwidth and content delivery network alone make it worth the investment, he said.

Today’s Arc XP consists of a suite of products for every step of the digital news process. The Post expects that it will soon be taking in $100 million a year. The company plans to add another 100 staffers in the next year. And Bezos is now making a big push beyond news, into the hugely lucrative space of selling the CMS to major brands and corporations. BP was Arc’s first corporate client.

Arc’s major U.S. newspaper clients include The Boston Globe, The Philadelphia Inquirer, and Tribune Publishing—including the Chicago Tribune, the South Florida Sun-Sentinel and The Baltimore Sun. The broadcasting giants Gray Television and Cox Media Group use Arc, as do several major international news organizations, including Infobae in Argentina and El País in Spain. 

It does not come cheap. Arc XP does not make its fee structure public—in fact, it insists on nondisclosure from the organizations that use it—but a recent Forrester Consulting report commissioned by Arc indicated that a regional media company with 500 employees—which is quite large—would pay a one-time implementation fee of $500,000, and almost that amount again as an annual subscription fee. Among the four organizations Forrester examined, the report said up-front fees ranged from $50,000 to $3 million.

But Forrester also concluded that based on increased revenues and efficiencies—including a 50 percent “improvement to the editorial team’s productivity”—and cost savings from decommissioning legacy systems, the four organizations on average found that Arc XP paid for itself in 14 months. 

Many smaller news organizations have historically used WordPress or Drupal, two hugely popular open-source publishing platforms. But trying to keep sites on those platforms state of the art requires serious technical expertise. And with Google search results now favoring good “page experiences,” slow and jerky downloads can mean a stark drop in traffic.

In an attempt to make news publishing on WordPress more efficient and effective, Kinsey Wilson, a digital publishing veteran and president of WordPress.com, founded Newspack in 2019. “There is absolutely no economic value in everyone repeating the same technological exercise over and over again,” he told me. Newspack, which is open-source, is for smaller publications (the Washington Monthly’s website utilizes Newspack). It gets support from the Lenfest Institute, the Knight Foundation, and the Google News Initiative, and is still considered a work in progress. 

And just like Arc is now marketing its platform outside the news industry, companies in the broader market like Brightspot and Contentful are contenders for news publishers. The New York Times, a leader in news technology, uses a proprietary system called Scoop that is not available for licensing. A Times spokesperson told me the investment and effort necessary would “detract from our strategy of investing in our journalism.” 

The dilemma we face is that one of the best answers to the news industry’s technology woes is in the hands of a man who has repeatedly proved that he cannot be trusted to have anyone’s best interests at heart other than his own, and whose MO includes ravaging the competition. 

Jeff Bezos has a history of monetizing surveillance and exploiting workers and partners. As PBS Frontline reported, from the very first days of Amazon Bezos has “treated the site as a laboratory where customer behavior could be studied, predicted, and potentially influenced.” A 2021 Open Markets Institute report revealed that Amazon has routinely engaged in a “vast range of unfair, predatory, and exclusionary practices.” The report’s author, Daniel Hanley, explained: “Amazon is a surveillance company, first and foremost. Surveillance of all parties—from workers to competitors to consumers—is a fundamental aspect of the corporation’s operations. It uses invasive surveillance tactics to enable and facilitate its predatory conduct and fortify its monopoly power.”

Amazon’s hugely successful AWS subsidiary is in some ways the model for Arc. AWS came about because Bezos built a huge and resilient cloud network for Amazon’s use, then started charging others to use it as well. Now it’s the most profitable part of Amazon’s business, indispensable to many modern internet companies. AWS also serves Amazon in other ways, notably by boosting the corporation’s already-unparalleled view of commercial flows on the internet to outcompete rivals and to manipulate and exploit the companies that depend on Amazon’s platform to get to market. In a seminal Yale Law Journal article about “Amazon’s Antitrust Paradox” in 2017, then Yale Law student Lina Khan warned, “Amazon enjoys receiving business from its rivals, even as it competes with them. Moreover, Amazon gleans information from these competitors as a service provider that it may use to gain a further advantage over them as rivals—enabling it to further entrench its dominant position.”

And as The New York Times reported in 2019, Amazon indeed turned out to be using AWS “to copy and integrate software that other tech companies pioneered.” Even some Amazon competitors have ended up being dependent on AWS. Netflix is entirely based on AWS, despite the fact that AWS, as the Harvard Business Review reported, “developed the knowledge to read and analyze content consumption data and in 2016, Amazon launched its own streaming service, Amazon Prime.”

Arc has plenty of competition for now—especially in the corporate CMS market, where it remains a relatively small player. Nevertheless, it raises all sorts of anticompetitive concerns. 

Arc, just like AWS, is designed to make it hard for clients to leave. “Once we have a customer, and it’s taken a while to get it all sorted out and integrated, the switching costs are also high,” Post CIO Prakash said in a 2021 talk with project managers. “You don’t rip out a fundamental publishing system and e-commerce system overnight.”

Arc also brings clients to AWS, which Reuters called “a double win for Bezos”—while AWS clients are encouraged to use Arc, which is an “advanced partner within the AWS Partner Network.” “This is classic antitrust,” Sascha Meinrath, a Penn State professor and digital rights activist, told me. “The Washington Post locking another newspaper into AWS via this platform? What ridiculousness is this?” 

“Bezos builds tight, vertically integrated businesses, then rents out capacity in every part of his stack,” the digital consultant Austin Smith wrote in a 2018 report for the Lenfest Institute about the future of local news. Arc, he predicted, “will not outcompete other news products simply because its technology is superior or because [the Post’s] reporters are better. It will outcompete other news products because its integration is tighter—and many of its competitors will subsidize its operating costs by leasing its technology.”

Meanwhile, Arc XP already effectively drove its chief competitor out of the news platform business: Vox Media is no longer licensing its full-service CMS, which had attracted news clients including the Minneapolis Star Tribune. Vox simply didn’t have the resources to keep up with Arc, and made what a spokesperson called a “strategic decision” last year to focus instead on moving forward with Concert, its ad stack, and its Coral commenting component. Chase Davis, the deputy managing editor of the Star Tribune, told me that with all the resources Bezos has put into Arc, “it’d be tough, I think, for other people to come in and compete with them in that space.”

People advocating for affordable and sustainable technology solutions for the entire news industry are deeply uneasy about Bezos and Arc, even in the short run. Daniel Williams, the CEO of BlueLena, told me he worries about Bezos’s ability to sustain losses in order to drive out competition. Williams said Bezos could potentially decide to offer Arc free of charge—as long as subscription revenue passed through Amazon or Bezos retained the rights to some data. Bezos could then leverage the data for his algorithms. “Hopefully I’ll be able to retire before Bezos comes along and takes it all away,” Williams said. “But they could do it instantly—and very well may.”

On the all-important revenue side of the equation, Bezos’s Post has taken aggressive steps to erode Google and Facebook’s domination of the online advertising market. The Post led the movement away from Google’s accelerated mobile pages framework, which has been accused of discriminating against non-Google-served ads. And the Zeus Prime platform, which can be used with or without Arc, is specifically intended to challenge Google and Facebook by creating an alternative market of publishers where ads are easier to buy and target, and render more quickly.

But Amazon itself has become a major player in the ad market, taking in $31 billion in 2021 for placing ads in its own product listings and search results. That was more than a quarter of Facebook’s ad revenue that year and fully 15 percent of Google’s. Their business models are different: Facebook and Google divert advertisers away from traditional publishers; Amazon leverages the fact that so many sellers depend on it to get to market—basically extorting them to pay for advertising in order to be seen. But turning a duopoly into a triopoly, one of which is an extortionist, is hardly doing the news industry a favor.

With 2,000 sites globally, Arc is already taking advantage of network effects—enjoying benefits that would, ideally, redound to the entire industry, and making it that much more powerful. “The bigger the platform gets, the more useful feedback we get from our customers and the better the platform becomes,” Arc’s Matthew Monahan told a trade group.

Thus far, at least, there’s no evidence that Arc XP developers sift through their clients’ data to get a leg up. In fact, news customers who were apprehensive were assured that this would never happen. “That was a concern when we negotiated the deal,” The Dallas Morning News’s Orren said. “But it is very clear in our agreement with them that neither Arc nor Amazon have any access to our data for tracking or monetization; it’s expressly forbidden. They are not allowed to use that data for any purpose other than keeping us online.”

And yet, Bezos wouldn’t be who he is today without his exploitation of customer data, cutthroat approach to competition, and ruthless attitude toward suppliers and employees. “Look, he’s not abusing this power right now,” Meinrath, the Penn State professor, said. “But historically, you give away the software, you do something real nice for a while, everyone jumps on this platform. And then you start doing evil shit and everyone’s like, ‘Well, crap, we can’t leave it?’ That’s the business model. It’s not screwing you from day one. It’s getting you fully bought in and unable to escape and then screwing you. And that could be via pricing models, that can be via data extraction—any huge array of different things.”

From 2004 to 2020, the U.S. lost 2,100 newspapers—about one in four—often leaving communities without access to reliable local news. Those that still exist are often ghosts of their former selves, and the decline appears to be accelerating. One statistic tells most of the story: In the past two decades, advertising revenue for the newspaper industry plummeted, from $49 billion a year to less than $10 billion a year, with those dollars effectively shifting from news publishers to the targeted, surveillance-fueled high-tech digital advertising machines of Google and Facebook.

America’s Founding Founders recognized the crucial role of journalism in a democracy, and came up with several ways to strengthen what was then a nascent journalism industry. As the historian and journalist Rick Perlstein emphatically explained on Twitter, “the Founders of the U.S. ALREADY [F******] FIGURED OUT THIS PROBLEM. They financially subsidized newspapers with cheap postage and by giving printers lucrative government contracts. They made it nearly impossible for them to fail as businesses.”

The idea that journalism is a public good that we as a society should find some way to support and protect seems, at this point, like a no-brainer. And the future—if there is a future—is online. As Nic Newman wrote in a major report for the Reuters Institute for the Study of Journalism, “Less digitally advanced parts of the news media may struggle in the years ahead.” Scholars like Ethan Zuckerman envision public digital infrastructure that includes “public service digital spaces, tools and resources.” For any news organization that wants it, Arc could be that kind of public (or nonprofit) digital infrastructure. 

“It would be nice to be able to have a cheap or free or even revenue-generating tech stack that newsrooms could use,” Chris Krewson, the director of the LION publishers’ group, told me. “Because if technology becomes like water in this field, it’s going to irrigate the field. We’ll be able to plant more seeds and have more things grow.”

The nonprofit expert Steve Waldman, president of Report for America and a Washington Monthly contributing editor and board member, told me he believes that the best path forward would be for Bezos to turn Arc over to a new, independent nonprofit with public service–minded journalists on the board of directors and a clear mission to help local news through technology. One model could be the Mozilla Foundation, an independent nonprofit that manages the free, open-source Firefox and Thunderbird software while, through its for-profit arm the Mozilla Corporation, also charging for its premium products.

One essential part of this transition would be to make Arc open-source. That means literally making the code public, so anyone can inspect, modify, enhance, and share it. After making sure that no back doors or other security issues are exposed, that can be as simple as putting it on the internet host and software provider GitHub. “Having a process of opening up source code is a standard procedure within this realm,” Meinrath said. “And there are best practices that one can follow that make that a very graceful glide path.”

Making software open-source promotes collaboration and means that every improvement benefits the public. One particularly welcome modification, for instance, would be to create a vastly simplified version for small publishers. Being open-source does not, however, mean that you can’t charge money to clients. Red Hat Enterprise Linux, which is now owned by IBM, has a mostly open code base, but makes several billion dollars a year. If a nonprofit acquired Arc, it could support its mission by continuing to charge non-news clients top dollar. Storage and traffic fees could be on a sliding scale. 

Meinrath also noted that transferring Arc to a nonprofit would significantly minimize the current risk for publishers. “They’re all relying upon the goodwill of Jeff Bezos—they’re relying on one guy to continue this project,” he said. “But billionaires aren’t exactly known for their long-term commitment to pretty much anything. And who’s to say that when Jeff Bezos dies, whoever’s next in line is going to want to keep maintaining this? And you can imagine this disruption to a realm that’s utterly reliant upon this singular code base. So why not make a transition to a sustainable, nondependent business model gracefully and over time, rather than wait for what I would declare to be the inevitable crisis point?”

Jim Friedlich, the Lenfest CEO, said his advice to Bezos would be to “define news as a public good and Arc as a public service and use your technology and your engineering capability as a gift to the rest of the news industry.”

Even competitors like Kinsey Wilson, the CEO of WordPress.com, say Bezos turning over Arc to a nonprofit would be good for the industry—although Wilson cautioned that he’d want to see Arc guarantee data portability and ownership. “You don’t want to put publishers in a position where their entire business is dependent on a proprietary system,” he said. 

And the nonprofit would need to offer extensive customer support. “Simply throwing tech at something in journalism has proven over and over again not to be the solution,” Mary Walter-Brown, CEO of the News Revenue Hub, a nonprofit organization that helps digital news outlets develop stronger business models, warns. “Don’t just give the tool,” says Erika Owens, the  director of OpenNews, a nonprofit that encourages collaboration between technologists and journalists. “Give the tool and … three years of developer support and training support, of developers working with journalists to tell stories in ways that are only possible with the Arc platform.”

Much like postal subsidies, a subsidized Arc would have to be available on a content-neutral basis—to all news organizations that meet certain structural requirements, whether or not what they publish is objectionable to some. “My honest answer is that we’re going to have to tolerate some bad guys using this,” Steve Waldman said. But, as he pointed out, “scurrilous Federalist newspapers printing lies got postal subsidies too.”

Some observers are skeptical that Bezos would entertain any such idea. “That would be fantastic,” Williams of BlueLena said. “But we’re talking about appealing to the altruism of a guy who has a $400 million yacht and managed to get a government to tear down a bridge so he could get his yacht out of the port.”

Yet Bezos has spoken in heroic terms about his personal ambitions. He told a reporter back in 2018, “I’m not going to work on something that I don’t think is improving civilization. Why would I?” When he stepped down as Amazon CEO, Bezos wrote to the company’s employees that he would now “have the time and energy I need to focus on the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post, and my other passions.” That presumably means fighting climate change, alleviating poverty, colonizing space—and helping the news industry. He did save the Post, which had been sloughing off staff and drifting toward irrelevance. In a Medium post in 2019, Bezos wrote about his purchase: “The Post is a critical institution with a critical mission. My stewardship of The Post and my support of its mission, which will remain unswerving, is something I will be most proud of when I’m 90 and reviewing my life, if I’m lucky enough to live that long.”

Waldman sees Bezos in a position to create a lasting legacy “akin to Carnegie building a thousand libraries … If he basically made Arc an open platform, that could be an incredible gift.”

And if Bezos doesn’t feel so charitably inclined? He shouldn’t forget that Lina Khan, who laid out a legal battle plan for breaking up the whole of Amazon in The Yale Law Journal, is now the head of the Federal Trade Commission. Donating Arc to the American people might be just what Bezos needs to repair his plutocratic image while we are still asking nicely.

(Editor’s note: After this story was published, a Washington Post spokesperson emailed that Jeff Bezos “is not involved in Arc’s day-to-day operations and strategy.”)

This article was produced in association with the Open Markets Institute’s Center for Journalism & Liberty.

The post Jeff Bezos’s Next Monopoly: The Press appeared first on Washington Monthly.

When the Supreme Court’s draft decision overturning Roe v. Wade leaked to the press in early May, liberal Americans reeled—then vaulted into action. Thousands of grassroots activists rallied, protested, and funneled tens of millions of dollars to nonprofits fighting back. In state capitals around the country, Democratic legislators and governors denounced the decision and, in Washington, congressional Democrats forced an ill-fated vote to codify Roe.

Yet just a few months earlier, the Court took an ax to a protection that is at least as vital to the health, safety, and freedom of ordinary Americans, and most liberals hardly even noticed. In National Federation of Independent Business v. Occupational Safety and Health Administration (OSHA), six conservative justices overruled the Biden administration’s emergency OSHA mandate that large employers must require their employees to be either vaccinated against COVID-19 or tested weekly for the virus. The majority reasoned that even though Congress, when it created OSHA 52 years ago, gave the agency the power to impose emergency measures to protect employees from the “grave danger” of exposure to “substances or agents determined to be toxic or physically harmful,” the statute specifies “workplace” hazards, not broad public health threats like a virus. Therefore, the majority concluded, OSHA had exceeded its authority. 

The ruling did more than halt a specific administration effort to stop the spread of the pandemic. More significantly, observed Linda Greenhouse in The New York Times, it was a “functional overturning” of a bedrock court decision that has long protected the power of federal agencies to issue regulations. 

In 1984, the Supreme Court, in Chevron U.S.A. v. Natural Resources Defense Council, established that when a statute is ambiguous, judges should defer to an agency’s reasonable interpretation of its authority. “Judges are not experts in the field, and are not part of either political branch of the Government,” Justice John Paul Stevens wrote in the opinion. 

While agencies are not directly accountable to the people, the Chief Executive is, and it is entirely appropriate for this political branch of the Government to make such policy choices—resolving the competing interests which Congress itself either inadvertently did not resolve, or intentionally left to be resolved by the agency charged with the administration of the statute in light of everyday realities.

Stevens’s opinion, signed by a unanimous Supreme Court, defined a standard, known as “Chevron deference,” that both liberal and conservative judges hewed to for decades to resolve cases involving regulatory agency interpretations of unclear statutes. (Even before the Stevens decision, courts generally—if not uniformly—deferred to agencies on many policy questions in order to make government function, argue scholars like the University of Michigan’s Bill Novak and Columbia Law School’s Gillian Metzger.) In recent years, however, conservatives gained control of federal courts and began wielding that power to advance their ideological agenda. Although Chevron cuts both ways, depending on which party is in power, it has become a target for conservatives eager to chip away at regulations. 

Though the January OSHA decision doesn’t mention Chevron, the Court’s liberals understood the stakes. In their dissent, Justices Stephen Breyer, Sonia Sotomayor, and Elena Kagan ridiculed the majority’s contention that threats both in and out of the workplace are beyond OSHA’s purview, by noting that the agency already regulates against many such hazards—like fire, faulty wiring, and unsafe drinking water. Then, echoing Stevens in Chevron, they wrote: 

Underlying everything else in this dispute is a single, simple question: Who decides how much protection, and of what kind, American workers need from COVID–19? An agency with expertise in workplace health and safety, acting as Congress and the President authorized? Or a court, lacking any knowledge of how to safeguard workplaces, and insulated from responsibility for any damage it causes?

Despite significant media attention, the OSHA decision met with little outcry from progressive groups or voters. But like Roe, eviscerating Chevron will touch every American’s life. Allowing judges to overturn the actions of regulatory agencies as they see fit will make it harder to enforce laws protecting clean air and potable water; it will limit agencies’ ability to study drugs’ efficacy and promulgate food safety rules; it will hamper consumer protections from predatory lenders and fraudulent marketing. And, as Stevens wrote in Chevron and the current liberal minority highlighted in its OSHA dissent, it is ultimately undemocratic because, unlike Congress or the president, federal judges serve for life, insulated from the pressures of elections.

“Every corner of the federal government is going to be exposed to a broader shift to how courts treat decisions of administrative agencies,” Daniel Walters, assistant professor at Penn State Law, says. “There’s not really any issue that doesn’t at some point go through agency decision-making that’s then subject to review in courts.”

The OSHA decision wasn’t the first conservative court attack on Chevron, nor will it be the last. In the summer of 2021, the Supreme Court, by a similar 6–3 majority, overturned a Centers for Disease Control and Prevention eviction moratorium on the grounds that Congress had not given the CDC that specific authority. This spring, the Fifth Circuit ruled against the Securities and Exchange Commission’s authority to issue civil financial penalties via administrative enforcement, a decision that threatens the similar enforcement authorities of OSHA and the EPA.

These attacks on Chevron represent the culmination of a decades-long effort by conservatives—with the help, alas, of some liberals—to achieve, in the words of Trump strategist Steve Bannon, the “deconstruction of the administrative state.” Since at least the Reagan years, conservatives have executed a strategy to delegitimize and derail the system by which federal agencies produce rules and regulations. They have built an archipelago of industry-funded think tanks and university-affiliated institutes to cast doubt on individual regulations and the rulemaking apparatus in general. When in power, they have slashed funding and staff to agencies and wielded cost-benefit analysis in ways that emphasize the supposed costs of regulations and minimize the possible benefits. And Republicans have, for decades, prioritized supplying a steady stream of anti-regulatory judges to the federal bench. 

Liberals have fought back, but mostly tactically, in issue-specific ways—environmental groups mobilizing to defend threatened air quality regulations, or unions to preserve workplace safety standards. They’ve done little to counter the conservatives’ broader anti-regulatory rhetoric and strategy, and, not coincidently, progressive foundations and big-money individual donors have almost completely ignored the issue. “The left has basically ceded the whole debate on regulatory process, and into the vacuum have swept conservatives,” James Goodwin, senior policy analyst at the Center for Progressive Reform, says.

Cumulatively, the ongoing conservative attacks on federal regulation have succeeded in making the regulatory process slower and more onerous. Overturning Chevron deference, however, has the potential to shut down the process for whole realms of regulation. 

Reversing these anti-regulatory gains will require years of sustained focus and a multipronged strategy. Fortunately, that effort now has a champion in Congress: Washington Democratic Representative Pramila Jayapal. She is the author of a bill, the Stop Corporate Capture Act, cosponsored by Rhode Island Democratic Representative David Cicilline, that would shore up the agency rulemaking process and codify Chevron deference. The bill is scheduled for debate this summer and has a reasonable chance of passing in the House. But while its chances in the Senate are slim, it provides an opportunity for liberals and progressives—and perhaps some sympathetic Republicans—to recognize the challenge for what it is: a war over the future of our government and democracy.

Jayapal’s bill would improve federal regulatory procedures by making them more democratic and strengthening their integrity. It offers a counterweight to the decades of conservatives’ successful efforts entrenching the influence of corporations and their lobbyists.

First, it would require more policing of the studies submitted during the “public comment” period, when agencies invite outside groups and individuals to weigh in on proposed regulations. These studies, often presented as independent scientific assessments, are relied on by agency personnel as they craft regulatory language, and by the White House Office of Information and Regulatory Affairs (OIRA), which scrutinizes that language before it is finalized. In many cases, however, the research has been secretly commissioned and paid for by the industries the regulation would impact. Jayapal’s bill would require disclosure of those financial connections and fine companies found to have submitted “materially false, fictitious, or fraudulent” information.

Second, the legislation would bring more balance to cost-benefit analysis. Rule writers at the agencies and OIRA would have to give more weight to the potential benefits of a
regulation—like mitigating climate change or encouraging innovative new industries—that may be harder to quantify than the costs but are no less real. 

Third, it would impose deadlines on a regulatory process that over the decades has become slower and slower. For instance, the average time it took OIRA to review a proposed regulation grew from 50 to 140 days from 1994 to 2013. Under Jayapal’s bill, OIRA would have 90 days to render its judgment or step out of the way.

Fourth, it would empower citizens to exercise oversight of the process and its enforcement through a new agency, the Office of the Public Advocate. The agency (proposed years ago by Ralph Nader) would be able to join “citizen suits” to hasten rulemaking, demand accountability when there’s lax enforcement of existing rules, urge agencies to make new rules, and take affirmative steps to include groups underrepresented in the regulatory process. 

Finally, and perhaps most importantly, Jayapal’s bill would make Chevron the law of the land. Doing so won’t address all the ways the courts are attempting to wrest power from the agencies, explains Jonathan Adler, a law professor at Case Western Reserve University. But it would reflect, he says, “this kind of general intuition about what Congress would have wanted” in any given case. But as a practical matter, argues Amit Narang, regulatory policy advocate for Public Citizen, the OSHA case would have turned out differently had Jayapal’s bill been law. “All of this goes back to the degree to which the Court gets to police in any kind of rigorous way how much or how little Congress can ask agencies to do,” adds Peter Shane, law professor at Ohio State University. “Congress would always be better off in telling the Court, particularly with regard to these separation of powers things, ‘You’re not the boss of us.’ ”

New polling from Data for Progress shows that the bill’s concepts are popular. For example, the majority of Republicans and Democrats favored laws requiring conflict of interest disclosures and preventing corporations from knowingly submitting false information during the rulemaking process.

Despite the bill’s promise, however, the politics surrounding it are discouraging. It may pass in the House, but it’s unlikely to survive the Senate. There, it would have to win over the chair of the Senate Subcommittee on Government Operations and Border Management, Arizona Senator Kyrsten Sinema, who is cosponsoring a bill that would put additional burdens on agencies to defend their regulations. The two pieces of legislation, however, do have some areas of overlap, such as encouraging more public participation in the rulemaking process. Moreover, Sally Katzen, a New York University law professor and veteran regulator in the Clinton administration who has many practical concerns about Jayapal’s bill, nevertheless thinks that its conflict of interest provisions could possibly win bipartisan support. Still, even if Jayapal and Sinema could find common ground on a decent compromise measure, the chance of getting the votes of the 10 or more Republican senators that would be needed to overcome a filibuster would be vanishingly small.

But if the bill’s short-term prospects are slim, a fight over it could play a key role in the long-term effort that is needed to reverse the conservative war on the administrative state. If that prospect seems unlikely, consider what is happening in the related area of antitrust policy. 

As readers of this magazine know, 40 years ago the Reagan administration, under the sway of conservative thinkers like Robert Bork, effectively stopped enforcing the nation’s anti-monopoly laws. The next five administrations mostly followed suit. But in just the past half decade, as the deleterious effects of increased corporate concentration on jobs, wages, entrepreneurship, and, now, inflation (see Phillip Longman, “It’s the Monopoly, Stupid,”) became impossible to ignore, conventional wisdom in Washington has swung almost 180 degrees in the other direction. The shift began on the left among policy intellectuals (many of them writing in the Washington Monthly), was elevated by a few progressive lawmakers like Elizabeth Warren, and has been most vigorously championed by the Biden administration in the form of a sweeping set of executive orders. Plenty of Republicans, however, have also gotten religion, and several bipartisan anti-monopoly bills are moving in Congress.  

It is not hard to imagine something similar happening in the battle over regulation. As with anti-monopoly, the movement would almost certainly need to begin on the left. Perhaps Jayapal’s bill is evidence that in some small way it already has. But for anything more to happen, rank-and-file liberals broadly must be made to understand the immediate danger that the conservative assault on the administrative state means for all they hold dear. Without well-funded agencies, competent civil servants, and the authority to enforce the law free of sabotage by nihilistically conservative courts, progressives won’t even be able to defend existing programs, much less implement future ones like universal health care.

Liberals also need to reexamine their own ideas about the purpose and nature of regulations—and the way those ideas give credibility to false conservative narratives. For instance, in debates over regulation, conservatives inevitably stress the costs to jobs and growth. Liberals lean in to the need to protect against harms—to workers, to consumers, and the environment. In so doing, liberals implicitly—and sometimes explicitly—concede that regulations hurt the economy. But as this magazine has repeatedly reported, that is false. Studies have failed to find evidence that federal regulations overall have any measurable negative effect on jobs, growth, or economic dynamism. To the contrary, plenty of evidence demonstrates that regulations are critical to supporting new industries and that mandated standards contribute to lower costs and more innovative products. 

Critically, Democrats fail to counter the simplistic narrative that more regulation—or any at all—is a loss of freedom. The truth, however, is usually the opposite. “When the state sets minimum standards of safety and transparency for the manufacture and sale of consumer products,” Harvard’s Daniel Carpenter wrote in these pages, “it affords me the freedom to buy a toaster oven without first hiring a lawyer to read the fine print and an electrician to look over the specs to make sure it won’t catch on fire.” 

Getting the left to think straight about regulations and to make strengthening the regulatory system a progressive priority will be tough enough. Bringing the right on board may seem impossible, given how central deregulation has been for decades to the conservative movement. 

Yet a lot of what we thought were bedrock conservative economic views are crumbling before our eyes. Attitudes toward monopoly is one. Free trade is another. The Republican Party’s white working-class base turns out to be far less enamored of large corporations than the GOP establishment. Which explains why that establishment has suddenly started attacking “woke” corporations like Disney and why House Minority Leader Kevin McCarthy downgraded the status of the U.S. Chamber of Commerce, once a pillar of GOP power in Washington. “I didn’t even know the Chamber was around anymore,” he said.

With the right this much in flux, it is possible that some entrepreneurial conservatives may break ranks with the GOP’s deregulatory traditions and get rewarded with cheers on the stump and invitations to appear on Tucker Carlson Tonight. By the time that happens, let’s hope liberals have gotten around to embracing some of Jayapal’s reforms.

The post Limitations of Statute appeared first on Washington Monthly.

On October 28 of last year, after months of tense negotiations with progressive and moderate lawmakers in his own party, President Joe Biden walked into the East Room of the White House to announce a “framework” for his stalled Build Back Better bill. Among the policies that would be funded by the $1.75 trillion initiative was a $400 billion commitment to lower the cost of child care and expand access to pre-kindergarten. If enacted, the plan would “finally take us from 12 years to 14 years of universal education in America,” Biden said. 

For advocates of universal preschool, it seemed like a watershed moment. With Democrats in control of the Senate, supporters of expanded pre-K access were optimistic that, whatever details might be changed in the legislative process, the president would soon sign a bill that ushered in a new era of federal support for early education of the country’s young children. Finally, after decades of slow but steady growth in pre-K access at the state level, the federal government was going to dedicate billions of dollars to improve the patchwork of state, local, and private pre-K programs that left millions of families without high-quality early childhood education. 

Given the Senate’s 50-50 split, pundits figured that the odds of Biden being able to pass sweeping social policy were slim. But it still came as a shock to pre-K advocates when the bill was wholly shattered on December 19, in a familiar graveyard for Democratic dream—Fox News Sunday. To the surprise of many in Washington (including the Biden administration, which was given only 30 minutes of advance notice), Senator Joe Manchin delivered a bombshell, stating, “I cannot vote to continue with this piece of legislation.” Just like that, the 50 votes needed to pass Build Back Better disappeared, along with the hopes of many who had believed that the country was finally going to make a national commitment to educating its youngest people. 

Despite several months of reassurances since Manchin’s announcement that the senator and the White House are still engaged in closed-door pre-K negotiations, it now seems clear that the window of opportunity has all but closed for Democrats, on their own, to pass transformational federal legislation to provide the 14 years of education that Biden envisioned in his October speech. Senate Republicans have countered with a far more modest bill to broaden eligibility for receiving child care assistance, but those funds would not be available for pre-K programs.

What this means is that, once again, any hopes of expanding pre-K probably rest on efforts at the state and local levels. The irony is that when you ask advocates which state has the most effective pre-K program in the country, many will say, without hesitation, Oklahoma. The same ruby-red state that recently passed a near-total abortion ban and last supported a Democrat for president in 1964 has operated a no-cost pre-K program open to all four-year-olds regardless of income since 1998. How that came to be, and what it teaches about the best way forward for pre-K, is worth a deeper look.

The question of whether public pre-K is beneficial for children has largely been answered: The majority of rigorous evaluations of large-scale, public pre-K programs have found that children who attend these programs are better prepared for kindergarten compared to their peers who do not. Many of the studies find that the benefits of pre-K extend well past kindergarten into middle and high school, and sometimes all the way into adulthood. The question facing policy makers today is not so much “Should there be a public pre-K program?” but, rather, how exactly a public pre-K program should be designed to ensure that it reaches as many young children as possible and provides them with a developmentally appropriate education that will prepare them for the years ahead.

The story of how Oklahoma established its widely praised statewide pre-K program is not exactly a lesson in legislative best practice. A Democratic state legislator slipped the pre-K provisions into an existing bill meant to close a loophole in the state school funding formula that allowed school districts to enroll four-year-olds in kindergarten in order to receive extra funding. “It was not a stand-alone bill, which meant it got less attention,” says Steven Dow, a longtime early childhood education advocate in Oklahoma who helped get the law passed. “You want to talk about stuff that really nobody understands, start mucking with the state aid funding formula.” Were most of the state’s legislators aware that they were essentially voting to fund a new grade level for four-year-olds? “Almost nobody knew,” Dow says. As a result of the vote, not only did the state establish a public pre-K program, it funded that program through the state school funding formula, making it resistant to the whims of the annual appropriations process.

In the 2019–20 school year, about 70 percent of Oklahoma’s four-year-olds were enrolled in the state’s voluntary public pre-K program, which is funded at about $4,600 per child. Students attend pre-K in public schools, Head Start centers, child care centers, and community-based programs. Most of the programs operate for a full day, providing flexibility to parents who are unable to leave work early to pick up their children from school. Lead teachers are required to have a college degree as well as specialized training in early childhood education, and they receive the same wage as the state’s K–12 educators. That specialized training is key, because three- and four-year-olds—as you might expect—learn much differently than older children. Rather than consuming information largely through teacher-led instruction, young children build knowledge through conversation, play, and exploration.

Oklahoma’s preschool class sizes are capped at 20 students, and the student-teacher ratio cannot exceed 10 to 1. While participation by both school districts and students is voluntary, every district in the Sooner State has opted into the program, and it remains quite popular among parents, judging by how many of them choose to enroll their children in it. “All indications are that the program is enormously popular with Oklahoma residents, and that they would protest bitterly and loudly if anyone tried to eliminate or dilute the program,” says William Gormley, a Georgetown University researcher who has conducted extensive research into the state’s program. 

While a growing number of states and cities have followed Oklahoma’s lead and established pre-K programs, the programs vary considerably in terms of funding, length of the school day, teacher education requirements, and average class size. Florida, for example, also operates a pre-K program that is open to all of the state’s four-year-olds, regardless of family income level. But that’s about where the similarities with Oklahoma’s program end. Florida only provides about $2,500 in funding per child, and most districts charge tuition for parents who need to enroll their child for a full day of instruction rather than the three hours per day typically provided free of charge. Lead teachers in Florida’s pre-K program have lower education requirements than Oklahoma’s—their minimum requirement is a child development associate credential, which can generally be obtained in less than a year. 

Oklahoma’s higher standards show up in the results the state sees from children who have attended their pre-K program. Gormley and his colleagues at Georgetown’s Center for Research on Children in the United States have spent two decades studying the effects of universal pre-K in Tulsa. They observed almost all of the city’s pre-K classrooms operating as part of the state program during the 2005–06 school year and concluded that those classrooms’ teachers were offering stronger instructional support compared with pre-K classrooms in other states. The researchers also examined the effects of attending the program on children’s cognitive skills, such as the ability to identify letters and numbers. They found that, at kindergarten entry, pre-K participants were nine months ahead of their peers in pre-reading skills, seven months ahead in pre-writing skills, and five months ahead in pre-math skills. The single best predictor of a child’s verbal test scores at kindergarten entry was whether the child participated in pre-K. And while all children benefited from attending the pre-K program, English language learners and students from low-income families gained the most. 

More recently, Gormley and his colleagues have investigated whether the benefits of attending Oklahoma’s pre-K program persist all the way into high school or fade out as the children move through their academic career. While preschool attendance was not associated with higher grades or test scores in high school, Tulsa high school students who attended pre-K missed less school, were less likely to fail courses and be held back, and were more likely to take an Advanced Placement or International Baccalaureate course. 

Assuming that Joe Manchin and the White House are unable to hammer out an unexpected, last-minute compromise that saves Biden’s early education agenda, what can states and cities looking to expand and improve their pre-K programs learn from a state like Oklahoma? The state’s legislative trickery aside, recent election results in Colorado and Portland, Oregon—where voters recently approved the establishment of universal pre-K—give reason for confidence that programs can become a reality by directly appealing to voters rather than relying on sneaky tactics, at least and especially in blue states and municipalities.

First, at a time when many states have the enviable challenge of figuring out what to do with record surpluses thanks to federal relief funds and strong consumer spending, it would be wise to invest in universal pre-K programs that serve all children regardless of family income. Though these relief funds are finite, advocates could make the political argument that they should be set aside to pre-fund universal preschool for a given number of years, with additional funding mechanisms identified and ultimately phased in. Serving more children comes at a higher financial cost, of course, but it also means that more children reap the benefits, more parents have firsthand knowledge of the program’s impact, and, potentially, popular support for the program overall increases. Well-resourced pre-K programs end up serving as their own PR. 

Rather than offering preschool to all children regardless of income, most states with pre-K programs choose to limit eligibility to children who meet certain risk factors—most commonly, this is based on family income, but can also include children who are dual-language learners, involved in the foster care system, or living in unstable housing. This can make sense given limited financial resources, since research suggests that while all children benefit from pre-K, it’s children from low-income families who stand to gain the most. But the same studies of preschool programs make clear that middle-class children also make substantial gains in school readiness by participating in a high-quality pre-K program.

And research suggests that children from low-income families actually benefit more from attending a universal program than one targeted at children experiencing poverty. Recently, Elizabeth Cascio, a Dartmouth economist, used a large, nationally representative data set to compare about 5,000 four-year-olds from 33 states who attended either universal pre-K, targeted pre-K, or no pre-K. She found that kids who are eligible for free or reduced-price lunch (a common indicator of lower-income students) had significantly higher test scores when they went to a universal pre-K program, rather than a targeted one. “The programs that aren’t explicitly targeting low-income children seem to do a better job at elevating their preparedness for kindergarten,” Cascio says. There are a few theories as to why this is the case. It could be that disadvantaged children benefit from the presence of more affluent peers in the same classroom (a theory supported by studies of K–12 education). Another possibility is that universal programs tend to attract higher-quality teachers, who set higher academic expectations for a classroom full of mixed-income children.

States would also do well to follow Oklahoma’s example of funding pre-K through their school funding formula, if not the state’s surreptitious way of passing it. While these formulas, which generally allocate money based on a per-student funding amount, are widely used for K–12 funding, they are relatively rare for pre-K. But funding preschool through the state’s funding formula generally results in more robust, stable funding that does not rely on annual legislative appropriations and is less susceptible to economic downturns or the political whims of state legislators. During the Great Recession, for example, pre-K programs that were funded via state formula weathered the downturn much better than those that relied on legislators forced to choose how to slice up a much smaller economic pie. Specifically, a comparison of pre-K per-pupil funding levels from 2005–06 to 2015–16 found that formula states saw an average of 3.6 percent annualized growth in per-pupil funding over the 10-year period compared to a rate of only 1.1 percent for non-formula states.

Finally, Oklahoma’s policy of paying pre-K teachers the same wage and benefits as the state’s K–12 educators is relatively rare among states, but worthy of emulation (even if the wages the state traditionally paid all its teachers, penurious until a successful teachers’ strike in 2018, are not). Many educators of the nation’s youngest children earn poverty-level wages. At the same time, research suggests that the quality and warmth of the daily interactions between teacher and student are perhaps the most important factors for supporting young children’s learning and ensuring their healthy development. Paying educators of young children a middle-class salary can help reduce staff turnover and provide students with the stability throughout the school year that they need to build a trusting relationship with the adults in the classroom.

Passing new legislation like universal preschool is never easy, be it at the state or federal level. Oklahoma’s pre-K legislation became a reality because it was passed via a legislative back door without much fanfare or public attention. But Oklahoma’s story shows that, regardless of political ideology or what people might say in a poll when asked about their policy preferences, universal pre-K has durable, bipartisan appeal once it is implemented. It’s easy to see why—it’s just good policy. Universal pre-K programs benefit everyone involved, from children making early strides to parents who don’t have to worry about child care to companies whose employees can stay in the workforce because the program has absorbed a significant portion of their child care needs. And given the gains that pre-K students have shown later in their academic career, a universal program could improve outcomes for states’ existing K–12 systems down the road. 

Democrats should broker whatever compromise is necessary to push the federal pre-K plan across the finish line, but state lawmakers should be prepared to act if Congress falls short. Oklahoma shows that it will be worth it.

The post Sooner the Better appeared first on Washington Monthly.

One of the great unheralded pleasures of being a former presidential speechwriter is being inducted into the Judson Welliver Society, named after the first presidential speechwriter—the man who wrote the immortal words of Warren Harding and Calvin Coolidge. Comprised of selected former White House speechwriters, the society includes scribes for every president since Harry Truman. 

I attended my first Judson Welliver Society dinner in December 2002, after my stint in the Clinton White House. It was held in the stately dining room of the Motion Picture Association’s headquarters in Washington, D.C., courtesy of the society member, Lyndon Johnson speechwriter, and MPAA president Jack Valenti. The evening was capped by an after-dinner round robin of White House memories from the men and women who had written some of the most memorable and forgettable words in presidential history. 

At that meeting, the society president, the late William Safire, a speechwriter for Richard Nixon and subsequently a New York Times columnist, called the roll, as was his custom, reading the names of speechwriters in attendance from their respective administrations, starting from the earliest, and asking them to stand. There was Ted Sorensen, famed speechwriter for John F. Kennedy; Richard Goodwin from the Johnson White House; Nixon’s acid penman Pat Buchanan; Jimmy Carter wordsmith James Fallows; and so on. 

Finally, Safire got to the Clinton writers. It was a long list, owing to Clinton being the first Democrat since Franklin D. Roosevelt to win reelection. It took a lot of writers to keep up with Clinton’s eight-year love affair with the podium. 

I waited expectantly while Safire called the Clinton roll: “Don Baer, Michael Waldman, David Kusnet, Bob Boorstin, Paul Glastris, Carolyn Curiel, Jeff Shesol, Jonathan Prince, Jordan Tamagni …” I was more than a little puzzled as I raised my hand to get Safire’s attention while slowly rising to my feet. “Excuse me, my name is Terry Edmonds. I was President Clinton’s chief speechwriter, and, I might add, the first African American presidential speechwriter in the history of this country.”

Perhaps there really was some innocent snafu that left my name off the list. After all, no one who looked like me had ever sat at this table. But as I took my seat, I wondered how many other times African Americans and other people of color have been written out of the pages of history. How many more generations of young African American boys and girls would be privy only to the dust and not the shine of their ancestors? 

Invisibility is the natural habitat of a ghostwriter, and even more so for a speechwriter, who is paid to be the faceless voice of a public figure. While I have held a succession of executive speechwriting roles since leaving the White House more than 20 years ago, I have often been the only person of color in the room. Workplace racial tensions are a persistent reality, and I have felt both the sharp and subtle pains of the color line. 

Beyond the workplace slights, there is a bigger reason why the relative dearth of speechwriters of color is a problem. To be effective, leaders need advisers who, through their life experiences, understand the world around them. And the world is changing. The 2020 census revealed that the non-Hispanic white population in the United States declined from 64 percent in 2010 to 58 percent in 2020. As demographics shift, we see a widening gap between the haves and the have-nots, a polarized argument about global climate change, and a hardening of attitudes about race. Public figures are unlikely to speak effectively on these issues to a diversifying country without more speechwriters of color. But, according to recent data, 72.5 percent of speechwriters in America are white, with speechwriters of color—Hispanic, Asian, Native American, and African American—making up only 24.9 percent. 

Since retiring from my last job as speechwriter, for New York State Attorney General Letitia James, I have joined a burgeoning movement to ensure that more speechwriters of color are afforded the opportunities and professional recognition they deserve. Progress, once slow, is gathering steam. In April 2021, Shaan Heng-Devan, who describes himself as “a proud biracial first-generation immigrant,” was hired as speechwriter for Transportation Secretary Pete Buttigieg. In November, a young African American woman, Alexandra Robinson, became deputy speechwriter for Labor Secretary Marty Walsh. 

The hidden hand behind these and other breakthrough opportunities is a new organization called Speechwriters of Color. Celebrating its first year, SOC is committed to increasing the number of speechwriters of color who are developing messaging and serving as “ghostwriters” for leaders in business, politics, nonprofits, and government. Through mentoring, networking, and outreach to historically Black colleges and universities (HBCUs) and other minority-serving institutions, SOC hopes to inspire more young writers of color to pursue careers in speechwriting. It also wants to encourage more thought leaders from every sector to hire a diverse cadre of talented speechwriters. 

SOC was founded by two young speechwriters whose career paths illustrate why the organization is needed. Growing up in Kansas City, Michael Franklin took buses to compete in high school speech and debate tournaments. When he arrived at Howard University in 2017, he joined that school’s speech and debate team. As a sophomore, Franklin was invited to a mentoring mixer at a conference of professional speechwriters at Georgetown University. It was a revelation to him. “I didn’t even know there was such a profession as speechwriting,” Franklin recalls. He was also struck that few of the speechwriters were Black like him. “I’ve been in the competitive speech and debate space since middle school and competed with tons of Black and brown folks who would write speeches for fun and compete on the weekend,” he says. “There’s no reason professional speechwriting should have been lacking so much diversity when competitive speech and debate had so many successful, diverse competitors.” The next year, he organized the first Black Speechwriters Symposium at Howard. He was also invited to a luncheon series with speechwriters on Capitol Hill. Not many people of color there, either.

One of the few was Mintaro Oba, who also noticed the lack of diversity at the Capitol Hill luncheons. The child of Japanese immigrant parents, Oba became fascinated by famous speeches as a child, breaking them down to see how their rhetoric worked. Like Franklin, he had no idea that there was such a thing as a career in speechwriting until he got to college, when his classmates at American University introduced him to The West Wing and the character Sam Seaborn, the presidential speechwriter played by Rob Lowe. The NBC drama inspired him to take a class in speechwriting, co-taught by Jeff Nussbaum, previously a speechwriter for Vice President Al Gore (and currently writing for Joe Biden). After graduating and working on Korea policy at the State Department, Oba joined a speechwriting firm where Nussbaum was a partner, West Wing Writers. He was working there when he and Franklin crossed paths at the Capitol Hill luncheons. 

The following summer, at the height of the Black Lives Matter protests, Oba send a note to a group of speechwriters suggesting that they create an organization to harness the country’s racial reckoning to bring long-term change to the speechwriting profession. Responding immediately, Franklin jumped at the chance to cofound the organization. Other writers of color agreed to sign the founding document. I am proud to be one of them. 

While other speechwriting organizations are beginning to highlight the need for greater diversity in the industry, SOC is the nation’s only group specifically building a pipeline of writers of color to join the speechwriting profession and rise in its ranks. Franklin (who now works as a communications associate at the nonprofit Black Futures Lab) and Oba (speechwriter to the managing director of the International Monetary Fund), along with others at SOC, have spent countless hours without compensation, organizing public events, reaching out to HBCUs, and combing through LinkedIn profiles to create a list of hundreds of job openings, interested applicants, and current or retired speechwriters willing to provide career advice and connections. 

The group’s theory of change is simple: If it can encourage more writers of color to pursue speechwriting and support them with mentoring, master class training, and job placement help, it can increase their opportunities while providing added value for their employers. 

This would be a real advance over the career system I experienced back in the day, which was really no system at all. Like most speechwriters my age, I stumbled into the profession. After college at Morgan State University and a series of PR jobs, I volunteered on Kweisi Mfume’s 1986 congressional campaign in my native Maryland. When Mfume won, he made me his press secretary. When someone was needed to write his floor speeches, the job fell to me. Though I had zero training in speechwriting, I turned out to be good at it. A few years later, I was hired to be a speechwriter for Bill Clinton’s health and human services secretary, Donna Shalala. From there I went to the White House and a series of rewarding speechwriting jobs for the next 30 years. 

These days, there is more of a career infrastructure for writers starting out, including speechwriting associations, firms, and even courses at a few colleges. Still, getting a job in the profession today—whether in government, nonprofits, or business—largely depends on going to the right schools and making the right connections. That puts many people of color at a disadvantage. 

SOC aims to narrow that disadvantage, and in its first 12 months it can point to several notable accomplishments. More than 300 speechwriters of color and over 100 allies have become members. To date, with help from SOC, nine of its members have been hired or offered jobs at cabinet-level departments and agencies in the Biden-Harris administration. Several are working in corporate and nonprofit jobs. 

It’s a start, and an important one. In the 21st century, success in business, politics, and other sectors depends on crafting messages and policies that speak to our increasingly diverse population, and that honor the dignity of everyone.

Speechwriters of Color is central to achieving that goal.

To find out more, visit https://twitter.com/SpeechwritersC.

The post Why We Need Speechwriters Who Look Like America appeared first on Washington Monthly.

The request seemed innocuous enough. Last week, I asked the American Medical Association if I could attend a meeting of the committee that largely determines the relative pay of various medical specialties.

The Relative Value Scale Update Committee (RUC) meets three times a year to consider changes and additions to the “relative value” of more than 10,000 billing codes in the Medicare physician fee schedule. Each year, in a textbook example of what economists call agency capture, the Centers for Medicare and Medicaid Services sets physician service prices based almost entirely on the RUC’s recommendations, which systematically overweight technical skills like surgery and underweight the cognitive skills used in primary care. The RUC’s 32-person roster includes one voting member for each of the 27 medical specialties recognized by the AMA.

The results are one of the primary roadblocks to achieving better health at lower costs from America’s wildly overpriced health care system – the dearth of primary care physicians. Orthopedic surgeons and invasive cardiologists wind up earning, on average, over $600,000 a year. In comparison, family physicians and pediatricians earn around $250,000, according to the latest Modern Healthcare survey of physician compensation consulting firms (subscription required). The spread between the highest and lowest paid doctors has gone up by nearly $75,000 over the past decade — despite the AMA’s insistence that it is taking steps to redress an imbalance that discourages more young doctors from entering primary care.

The AMA’s public relations official, someone I’ve known for a long time, said he’d check if I could attend. A few hours later, he informed me via email that registrations for the meeting had closed two weeks earlier, and I needed to apply for media credentials at least a month in advance. Moreover, I would have to sign a non-disclosure agreement to prevent me or any other reporter from writing about “proprietary information” discussed at the meeting. 

Since votes placing values on individual services are based on detailed surveys conducted by the various medical specialty societies of their memberships, virtually everything discussed at the meetings is proprietary. It’s no wonder not a single reporter attended last week’s meeting, the first to discuss the 2024 physician fee schedule. 

Well, what about the recommendations for the 2023 physician fee schedule, whose first draft will be issued by CMS this summer? Could I at least get access to the minutes of the January meeting when those recommendations were made?

No dice. The website RUC’s recommendations won’t be released until the proposed 2023 rule comes out this summer, the spokesperson said.

Books have been written about how the AMA’s RUC distorts the Medicare fee schedule, which serves as the baseline for physician payments made by commercial insurers and their insured patients. Those rates range from 10% to 230% higher than Medicare’s rates, according to a recent Urban Institute study, and reflect the rigged nature of the system. Commercial rates for cognitive specialties like family medicine and psychiatry are barely above the CMS-set rates. In contrast, high-priced specialties like radiology, neurosurgery, and anesthesiology can be more than three times as high.

High-priced specialties’ control over physician prices contributes to America having the highest prices for medical care in the world and undermines value-based care. “We should be concerned about the accuracy of payments that Medicare makes for … services, both in terms of paying too little for some services and overestimating the work associated with others,” wrote Miriam Laugesen, author of “Fixing Medical Prices: How Physicians Are Paid.” Progressive think tanks have taken aim at their distortions. For over a decade, journalists have written exposes, including in this magazine.

Even the staid Government Accountability Office has called into question the paucity of data behind the RUC’s recommendations and the inherent conflicts of interests in letting specialty societies set their own pay scales. “Given the process and data-related weaknesses associated with the RUC’s recommendations, such heavy reliance on the RUC could result in inaccurate Medicare payment rates,” the government’s auditors concluded in 2015.

Yet every effort at reform has foundered. People like to talk about the waning influence of the AMA, especially among younger physicians. But few of those young docs, who often emerge from medical school with substantial debts, understand that the politically influential physician guilds, which have a stranglehold over the process for determining how much each specialty gets paid, are deterring them from entering the more rewarding and in many ways more difficult primary care fields.

While preparing to become a surgeon or other high-priced specialties requires additional years of training, their day-to-day activities, once in practice, are relatively narrow in scope and can be perfected to a high degree of predictability using treatment algorithms, checklists, and high-technology tools like surgical robots. Primary care physicians, on the other hand, are confronted every day by complex patients with symptoms of unknown origins requiring in-depth knowledge of a broad range of specialties to make a proper diagnosis.

On top of that, primary care docs are being asked today to coordinate care among those multiple specialties for the growing number of people with multiple chronic conditions, especially among the nation’s elderly. Studies have shown that the better care coordination that allows for earlier treatments leads to better outcomes and lower overall costs, especially for people of low-to-moderate income. 

“Everyone’s complaining we have a shortage of primary care physicians. We only have 6,000 geriatricians for a country with 65 million seniors. That’s absurd,” said Dr. Robert Berenson of the Urban Institute. “What the solution? Change payment so people want to become primary care physicians and geriatricians. Yet that’s not allowed. You can’t change a fee to accomplish a policy objective,” according to CMS rules, he said.

Berenson knows from whereof he speaks. He was one of the original architects of the relative value-based system when it was adopted in 1989, seen at the time as a cure for the widely varying prices that Medicare paid for the same service around the country. While the new system evened out prices geographically, the methodology gave extraordinary power to colluding specialist physicians to set their own pay scales. 

How do they accomplish that? Politically, the RUC operates more like the U.S. Senate than the House of Representatives. Each specialty gets one vote. That means the nation’s 39,000 physicians belonging to the American Academy of Orthopaedic Surgeons have the same voting power as the 97,000 physicians belonging to the American Board of Family Medicine. While specialties considered part of primary care (including family medicine, pediatricians, and geriatricians) make up about a third of all practicing physicians, such specialties hold just five of 32 votes on the RUC.

Columbia University’s Laugesen, who attended two years of RUC meetings and interviewed numerous participants before writing her book, reports the committee’s deliberations often break down into factions pitting interventionist specialties against cognitive specialties. The smaller but more numerous interventionist societies invariably outvote the fewer but larger cognitive specialties.

What would it take to change the system? CMS is woefully understaffed to set pay scales and would probably produce the same conclusions if it relied on the same survey methodology, which allows the doctors inside each specialty to estimate how much time and skill it takes to perform their tasks. 

There’s almost no interest in changing the compensation system on Capitol Hill. “The shiny new object gets all the attention,” Berenson said. “It never gets included in the discussion of moving to value-based payment, even though the incentives in the fee schedule are what doctors respond to.”

But a legislative agenda exists, one that has the potential to rally health care reformers across the political spectrum. Last year’s report on primary care by the National Academies of Sciences, Engineering and Medicine outlined a comprehensive approach for reinvigorating the U.S.’s faltering primary care system. 

At the federal level, it called for giving primary care physicians a partially fixed payment for every patient, sufficient to pay for the team-based care required to meet their needs. The report, “Implementing High-Quality Primary Care: Rebuilding the Foundation of Health Care,” also called for accurately measuring the level of funding flowing into primary care – currently estimated at around 5% — so policymakers can set a higher target, ideally around twice that amount. Finally, the report suggested CMS downgrade the RUC’s role in setting payment policy by bringing in outside experts to advise Medicare.

“Without access to high-quality primary care,” the report warned, “minor health problems can spiral into chronic disease, chronic disease management becomes difficult and uncoordinated, visits to emergency departments increase, preventive care lags, and health care spending soars to unsustainable levels.”

The post The AMA’s Dark Secret appeared first on Washington Monthly.

Twenty-five years ago, in U.S. News & World Report, I wrote this:

The mildly dangerous tradition of setting off firecrackers on the Fourth of July thrives across America, despite well-meaning efforts to stamp it out. This week, local news outlets will no doubt feature horrifying stories of children who have lost fingers and eyes in accidents with cherry bombs, roman candles, and the like. But these cautionary tales are no match for the powerful childhood memories of parents, particularly fathers.

Ask a wide cut of American males about their boyhood exploits with firecrackers, and they will enthusiastically spin tales of controlled mayhem. Blowing up anthills. Tossing M-80s into storm sewers. Engaging in wars of bottle rockets. In a manic regard for safety, the typical dad will deny his child any number of pleasures he knew as a kid, like riding a bike without a helmet or sitting in a car’s front seat. This caution evaporates around the Fourth, when millions of fathers bring home boxes of firecrackers and initiate their children into the pyrotechnic militia.

Firecrackers have a subversive appeal. Even the way they get purchased, in garish tents by the side of the highway on the exurban fringe, feels somehow illicit. Yet it is lawbreaking with popular support. In the states and municipalities where firecrackers are illegal, they are widely used anyway, with little interference from police. This spirit of communally sanctioned lawbreaking squares with the history of Independence Day festivities.

It was veterans of the Revolutionary War, covert fighters all, who began the tradition by firing their muskets during Fourth of July celebrations. Firing small arms remained a favorite form of revelry into the mid-19th century … [That] gave way to the less hazardous practice of shooting off firecrackers when, after the Civil War, cheap Chinese firecrackers made it to America. They were noisy but relatively harmless. But in the early 20th century, American innovators developed varieties that were almost as lethal as dynamite. The ensuing carnage (even modest burns could result in untreatable infections) led the press to agitate for the abolition of firecrackers. Localities started outlawing them in 1908; statewide bans followed during the Depression. By the early 1950s, 28 states forbade the sale and use of consumer fireworks and, by the mid-’70s, the federal Consumer Product Safety Commission was considering a nationwide prohibition.

That effort met stiff resistance, however, from the fireworks industry and from Chinese-Americans, who insisted on the right to use fireworks in their cultural celebrations. A compromise was reached. Instead of banning firecrackers altogether, Washington would regulate them—heavily. The mightiest legal firecracker today can have no more than one-thirtieth as much flash powder as the now illegal cherry bomb.

These federal rules, plus better quality control by an industry fearful of litigation, have dramatically improved the safety of firecrackers.

The annual toll of firecracker-related injuries has hardly changed since 1990, yet annual sales of consumer fireworks have nearly doubled this decade. They have quadrupled since 1976, when Bicentennial celebrations repopularized pyrotechnics. As firecrackers have become safer, most states have dropped the bans against them. Thus did the federal government, so often portrayed recently as the enemy of freedom, help preserve an explosive pleasure that is itself a symbol of this country’s liberty.

In the quarter century since I wrote those words, consumer fireworks sales in the United States have risen every year, while annual firework-related accidents have stayed about the same—meaning that the rate of accidents has actually gone down. And the broader argument I tried to make, that federal regulations are not hindrances to personal freedom and economic prosperity but bulwarks of both, is one that the Washington Monthly has continued to advance in story after story. 

Alas, our crusade has not made much headway, to put it mildly, and the consequences are now dire. As Phillip Longman explains in this issue’s cover story, a decades-long political attack on federal regulations by both parties, made worse by a related pullback in antitrust enforcement, has led to highly concentrated markets and, ultimately, to today’s inflation. “When shocks like the coronavirus pandemic and the war in Ukraine came along,” Longman writes, “the industrial system had no spare capacity and became riddled with choke points, setting off a prolonged frenzy of price gouging that doesn’t self-correct. Call it ‘choke-flation.’ ”

Meanwhile, Marcia Brown reports, recent decisions by the Supreme Court’s conservative supermajority threaten to paralyze the ability of federal agencies to regulate much of anything. Yet rank-and-file liberals have barely even noticed. Fortunately, Brown notes, a bill by Washington Democratic Representative Pramila Jayapal that has a decent chance of passing in the House would go a long way toward neutralizing the Court’s assault on regulatory agencies. Though unlikely to make it through the Senate, the measure provides an opportunity for Democrats, and possibly some Republicans, to rethink the dangerous path we are on. Indeed, as Brian Kettenring writes, the whole market fundamentalist “neoliberal” political order is showing unmistakable signs of collapsing, even if no one knows what will take its place.

I strongly suspect, however, that the next political order will involve rediscovering the old American wisdom about setting sensible rules for the marketplace—the kind that allows this father to set off firecrackers with his kids on the Fourth of July. 

The post Regulations Make Us Free appeared first on Washington Monthly.

At “dinner” time—in the middle of the afternoon—the dairy farmer, his wife, a brother-in-law, and a couple of friends gathered around the big kitchen table. There was a ham, and a turkey, and gigantic bowls of potatoes and vegetables, and two pies on the kitchen counter. 

Two of the men were missing one finger each. “Caught it in a grain screw,” one explained. I was there to report a magazine story. The guests had come to work on the farm for a day, and the big meal was one of the perks. 

The farmer needed the help. This was 1997. A wave of farm consolidation had been building across the country, and, as the farmer said to me, “We had to get big or get out.” That became a mantra across farm country, and especially on dairy farms. 

Free market economics demanded it. As old New Deal supply-demand price management gave way, and as every link in the supply chain all the way to the retail shelf consolidated—think Walmart and Kroger behemoths—the price of milk and dairy products dove lower, cutting margins for farmers. They had to scale up to force per-unit prices down. Herds of 100 cows became herds of 300, then 1,000, then 2,000. So even as farms disappeared—in 1987, there were 146,685 farms with dairy cows in the United States; by 2017, there were 54,599—the industry produced more milk than ever. 

You could celebrate this as “efficiency,” without considering the cost in the destruction of communities and the price paid by farmers, who now die by suicide at one of the highest rates of any occupation. Or you could read Milked, Ruth Conniff’s illuminating, distressing, yet oddly optimistic exploration of America’s Dairy Land. 

Back in 1997, the farmer outside La Crosse, Wisconsin, had not hired any Mexican labor. He wasn’t sure what he was going to do—but he knew he had to do something. He could start his 14-hour day at 4:30 a.m., work as farmer, vet, mechanic, biologist. His wife could be accountant and business manager. But they could not run the place alone.

Their son had just started high school. The farmer hoped the boy would take over one day. The boy, having worked on the farm, and seen his father’s brutal schedule, didn’t want to take over, though he hadn’t told his father yet. He wanted to get as far away from a dairy farm as he could possibly go.

Conniff, a Wisconsin native and the editor in chief of the Wisconsin Examiner, writes a vivid tale. She writes about quinceañeras—the celebration of a Hispanic girl’s 15th birthday—in a land of Trump-voting farmers; about illegal immigration and economic necessity; about the gumption of both farmers and laborers. These are sources of optimism in what is sometimes a perverse story. Farmers respect hard work, family, devotion. With few exceptions, the Mexicans they hire share these qualities. 

Mexican fathers milk cows while trying to parent misbehaving sons living 2,000 miles away with their mothers. Immigrant hands send wages home to build houses they hope to move into one day when they can return to their country. They work six- and seven-day weeks for years on end, doing jobs no American will do for the low wages the farmers pay. They navigate life in small-town America with limited English, occasional harassment, and fear of deportation.

Conniff’s farmers marvel at all this. Some come not only to respect the immigrant laborers, but also to love them. The farmer John Rosenow employs two Mexicans named Fermin and Roberto. Conniff writes, 

Maybe the two men will want to take part ownership in the farm. John hopes so. He doesn’t have any children of his own, and he wants this to be his legacy: helping the next generation of immigrants take their place in the history of the valley.

But Conniff also makes the perversity clear, both explicitly and by implication. Farm owners twist in the convoluted political gymnastics that enable them to vote for Trump in 2020 while also supporting their workers’ ability to live in the United States despite being here illegally. 

Bill Traun, for example, employs Lupe and Blanca, who give names to all of Bill’s cows. He loves that—and them. According to Conniff,

Bill didn’t like it when Donald Trump started saying bad things about immigrants. “It scared them, and it scared me,” he says. But over time, he felt that Trump’s anti-

immigrant rhetoric kind of faded out. And the border wall didn’t stop Mexican workers from coming to the farms in the area. During the pandemic, he notes, Trump sent a lot of aid to farmers. 

Indeed, the farmers seem to admire the guts it takes to trek from rural Mexico to rural Wisconsin; that moxie contributes to their admiration of their Mexican employees. 

This past March, a teenage girl fell from the new, higher border wall near San Diego and fractured her skull, neck, and back. On April 11, a woman died after becoming entangled in climbing gear while trying to scale the border wall near Douglas, Arizona. And on May 6, a man died while trying to scale the wall near San Diego. Two women, one in her 30s and one in her 50s, were seriously injured. 

The San Diego Union-Tribune reported on April 29: 

In 2016 … UC San Diego Health admitted border-wall injury patients at a rate of about 49 people per 100,000 local Border Patrol apprehensions. By 2021, that rate grew to about 449 people per 100,000 apprehensions.

The border wall does not stop people from coming to the United States. It never has. It only makes it more dangerous for immigrants to provide labor for Wisconsin farmers. 

Some of Conniff’s farmworkers are robbed by gangs or abused by smugglers on their way to America. Some are raped. Some die in the desert. The suffering their laborers endure seems not to trouble some of the farmers. But they are in a bad spot, too. Millions of dollars might flow through their mega farms, but their profits are often low, after accounting for loan payments, seed, feed, equipment, and other expenses. And they can’t find American labor to muck out pens and assist in a calf delivery at three in the morning. 

The problems Conniff explores require systemic reform. She suggests changing the current H-2A visa program, which covers agricultural workers. Now, these workers have to return to their home countries within a year. This doesn’t work for dairy farms, which operate around the clock, every day of the year. No farmer can afford to have workers leave for extended periods. Democrats offered legislation to put H-2A workers on a path to citizenship, but the bill failed. 

Congress, the Federal Trade Commission, and the Department of Justice could crack down on the ever-increasing consolidation that has put farmers in this position in the first place. There are signs that this is beginning to happen. 

But there’s much more involved than immigration law and antitrust policy. Conniff touches on the effect of International Monetary Fund austerity demands on Mexican agriculture, NAFTA, and other big-picture forces that could generally be grouped under the label of economic neoliberalism. These forces have conspired to create the situation in which farmers and workers now find themselves. Those of us who are subject to America’s increasingly bizarre food system are, of course, affected as well.

I would have enjoyed seeing more of this kind of context in Milked. Even so, Conniff’s great gift is in placing individual people and their lives at the center of what could otherwise come across as a big, complicated snoozer of a story.

The residents of rural America used to vote for Democrats. And one farmer told me recently, “I don’t see how anybody who farms couldn’t vote Democratic.” The voices Conniff brings to life evoke the days of New Deal programs like the Agricultural Adjustment Act, rural electrification, and antitrust enforcement, all of which were boons to rural America. 

There are still rural votes to be had, and in a cockamamie electoral system that overweights land area, no political party can afford to ignore them. It’s vital to listen to what people in those areas are saying, thinking, and doing, and to learn how they’re coping and fighting small-scale battles of their own—not only for Democratic electoral success, but also for the health of the nation.

John Rosenow, one of Conniff’s main subjects, views the land with near-religious reverence. He’s also something of a liberal, which makes him a minority among his fellow farmers. But other, more conservative farmers join him on trips to Mexican villages. These trips are organized by a local woman, Shaun Duvall, a Spanish speaker who acts as translator and cultural interpreter between the farmers and the laborers. Once in Mexico, the American farmers meet the families of the people who work for them. They see the houses that are paid for by the wages workers send home. In the process, any Fox News–stoked fear dissolves and the farmers see parallel images of themselves. They reflect on how immigrants, many of them undocumented, have transformed small American towns—in some cases saving them from oblivion—by opening grocery stores, restaurants, and barbershops. 

Most tellingly, the Americans find themselves admiring the farms and communities their current and former employees enjoy in Mexico: some fruit trees, a few animals, lots of family, and many celebrations. The Mexicans, in turn, seem to feel a little sorry for the Americans: They may be richer, but they’re not happier.

The post Cognitive Dissonance in America’s Dairy Land appeared first on Washington Monthly.

I met Ira Shapiro in 1976, when I joined a Senate committee as staff designee for Wisconsin Senator Gaylord Nelson; Ira was working for Nelson at the time, and we became friends. (We still are.) Ira worked in the Senate over decades, crafting the body’s code of ethics and serving as chief of staff to West Virginia Senator Jay Rockefeller; he moved on to distinguished service as general counsel to America’s trade representative and to law practice, but he never lost his love for the Senate and its people. His first book, The Last Great Senate, reflected on the way the body functioned in its halcyon days, when we both worked there, with norms dedicated to solving national problems even as its structure and rules made it difficult and at times impossible (see, for example, civil rights). A large number of great statesmen—and an occasional stateswoman—elevated the discourse and when necessary rose above partisanship and pettiness. 

By Shapiro’s second book, his view of the Senate had changed; the title, Broken, made that clear. It wasn’t that the Senate was bereft of quality individuals who might have been considered giants in a different era—it was the overall political dynamic, including political polarization and the decline of the center, the rise of tribal media and social media, and the willingness especially of Republicans, from their first majority in decades during Reagan’s presidency up to Donald Trump’s first year in the White House, to shred norms that had characterized the Senate of the 1960s and ’70s, making a focus on the essential problems of the nation more and more difficult to resolve. Shapiro also put a spotlight on the role of Mitch McConnell.

If Broken at least had a modestly hopeful side—the wish and belief that somehow the Senate could find its way back to some semblance of its former self—his third book, The Betrayal: How Mitch McConnell and the Senate Republicans Abandoned America, has none of that, and the spotlight on McConnell gets brighter and sharper and bleaker. Shapiro defines his thesis this way: “The story of the Senate’s rot is first and foremost the story of Mitch McConnell.” Toward the end, he describes McConnell with some admiration for his considerable skills, but with a damning summation: 

McConnell was no “political hack”; he was a superb political strategist and tactician who had never lost an election. He successfully surfed the madness that had engulfed the Republican Party since the rise of Newt Gingrich thirty years earlier to become the most powerful Senate leader in history. More than any other person, he had diminished Obama’s presidency and had helped Trump defeat Hillary Clinton in 2016. With Trump in the White House, McConnell engineered the radical transformation of the Supreme Court and stacked the lower federal courts with right-wing judges; his legacy was secure. Very few people, including presidents, have ever put more of a stamp on our country. What McConnell lacked was a moral compass that would cause him to rise above political calculation.

McConnell’s early years in the Senate did not presage his amoral and ruthless behavior. His role model and mentor, John Sherman Cooper, was a moderate and highly ethical Republican, who would undoubtedly be appalled by the actions of his protégé. The transformation over his Senate career is best described in Alec MacGillis’s superb book The Cynic: The Political Education of Mitch McConnell. But Shapiro takes that portrait and applies it to the McConnell of the past five-plus years. If there is no new reporting here, the cumulative impact of the analysis is damning. In The Betrayal, Shapiro sets out to chronicle key events of the Barack Obama and Trump presidencies, through the beginning of Joe Biden’s term. Much of the book details those key events, starting with the financial collapse that defined the end of George W. Bush’s term and the beginning of Obama’s presidency. House Republicans first rejected the urgent, bipartisan call for an emergency bailout just before the 2008 election and then caved, a plan supported by McConnell. But when Obama became president, McConnell pivoted, with the support of most of his GOP colleagues, into obdurate opposition—even in the face of a dire threat to the U.S. and global economies. As Shapiro puts it, McConnell for the first time was “the opposition leader. He began immediately to transform a Senate struggling unsuccessfully to rise above the polarization of American politics into a bitterly partisan, paralyzed Senate where no effort would be made to overcome the divisions.”

Shapiro guides the reader through the highlights—or lowlights—of the Trump presidency through the prism of the Senate, including the massive tax cuts and attempted repeal of Obamacare, the rush to jam through judges and justices, and, of course, the impeachment. Along the way, a man with no charisma and a visage that reminds many of a turtle was almost Svengali-like in keeping his members in line. The striking element of the tax cuts and the attempted repeal of the health law was the degree to which McConnell threw out the “regular order” to accomplish his ends. Instead of having the bills go through the Senate committees, with hearings, markups, and amendments, he convened a rump group of Republican senators behind closed doors to write the bills, leaving out key members of his own party in addition to shutting out Democrats. But despite sidelining most of them, McConnell did not lose any of his own on the tax cuts, although he did lose the key vote of John McCain on the repeal of Obamacare.

While much of the ground Shapiro treads in the book is familiar, he manages to pull it together in a way that resonates. So much has happened of consequence in the past several years that it is easy to forget each element and how they are tied together. And it is clear that the Senate was pivotal—using and misusing the rules to stymie Obama, including his nominees for executive positions and especially judges; filibustering every initiative big and small; and then protecting and coddling Trump and his corrupt nominees from any significant consequence.

While McConnell’s pledge to make Obama a one-term president failed, the process of disruption and division worked well enough to give the Republicans the Senate majority in the midterms in 2014. That victory meant that McConnell could shatter even more Senate norms when Antonin Scalia died almost a year before the end of Obama’s term. The failure to give even a hearing to Obama’s nominee, Merrick Garland, was a shocking sign of how the Senate had changed, giving McConnell the ability to fill the post when Trump prevailed in 2016. If Senate Republicans were uneasy about the flagrant breach of norms, they stayed silent—and then voted in lockstep when the long-delayed vacancy was filled by Neil Gorsuch.

Then came the first impeachment, built on the shocking, traitorous behavior of a president who blackmailed the president of Ukraine, in dire need of help in the face of Russian aggression, to get dirt on Joe Biden and his son Hunter. The evidence of perfidy was clear, and shown in full relief in the House impeachment hearings, but Senate Republicans made sure the consequences would not fall either on Trump or themselves. The acquittal was foreordained, but the reaction of so-called moderate Republicans in the aftermath was embarrassing. Maine’s Susan Collins famously said, “I believe that the president has learned from this case,” while then Tennessee Senator Lamar Alexander said, “Enduring an impeachment is something nobody would like … I would think you would think twice before doing it again.” 

McConnell’s Senate was not just a body of “Hear no evil, see no evil, speak no evil” when it came to Trump; it was also a body where truth no longer meant anything and hypocrisy was the norm. During the 2016 campaign, Lindsey Graham of South Carolina promised that if an opening occurred in the Supreme Court in Trump’s last year in office, Republicans would wait until after the next election. In 2018, Graham told attendees of the Atlantic Festival, “If an opening comes in the last year of President Trump’s term and the primary process is started, we will wait until the next election. And I’ve got a pretty good chance of being the Judiciary chairman.” Of course, the opening came, with the death of Ruth Bader Ginsburg, and Graham, along with many other Republicans who had made the same promise, jammed through the confirmation of the radical right-winger Amy Coney Barrett barely a week before the 2020 election. Every Republican save Collins voted to confirm her, one of the most shocking, in-your-face violations of norms in the history of the Senate. We are just beginning to see the dire consequences of this in radical Supreme Court decisions disrupting the fabric of American life.

Shapiro takes us through the debacle of Trump and the pandemic—with no pushback or oversight from Senate Republicans as Trump downplayed the virus, and failed to take any of the steps that could have limited it or prevented massive deaths and incapacitation—and then, of course, the road that led to the January 6 insurrection, the second impeachment of Trump, and his second acquittal. At the impeachment trial in the Senate, McConnell gave a blistering attack on the president, but, predictably, voted for his acquittal. That did not stop Trump from calling McConnell “a dour, sullen, unsmiling political hack.” Trump showed no appreciation for the reality that his presidency, with all its outrages, scandals, traitorous behavior, and widespread corruption, had been saved over and over by McConnell.

Of course, larger trends in society and the political system are largely responsible for the current cancer in the American polity, a cancer that has metastasized from Washington to the states to the public as a whole. The Republican Party was on its way to becoming a radical cult before Donald Trump came along, and before Mitch McConnell became his party’s Senate leader. But individuals can matter in shaping the environment and determining the course of events. And McConnell has mattered—in a way that ensures he will be in the top list of villains when the history of this sorry period is written. The evidence to bolster that judgment will include Ira Shapiro’s The Betrayal.

The post How Mitch McConnell Made the Senate Even Worse appeared first on Washington Monthly.