Ross Chainey picks through Li Keqiang's recent speech.
The basic principles of free trade should be maintained and unilateral trade actions will not solve any problems, Chinese Premier Li Keqiang said in a speech at the World Economic Forum's Annual Meeting of the New Champions in Tianjin.
Hot on the heels of news that China had been plunged deeper into a trade war with the US, Premier Li also said that, though flawed, the trend of globalization is unstoppable and China's process of opening up will only quicken in the years to come.
The premier also said that maintaining a rate of steady growth in the world's second-largest economy is getting more difficult, that intellectual property breaches and other business malpractice would be swiftly punished, and that the country would not engage in competitive currency devaluation to weaken the yuan to boost exports.
Here are some top quotes from the Premier's speech:
On globalization
"We are now standing at a crossroads, a crossroads facing a choice between globalization or de-globalization. We are encouraged to see the trend of globalization continue to forge ahead at its own pace. At the same time, we recognize there are areas for further improvement in the course of globalization. In this process, we believe we need to uphold the basic international rules, and at the same time, make improvements to those that need to keep pace with the times."
"China's reform and opening up in the past four decades is also in keeping with the trend of globalization ... China will further open itself at a faster pace. Globalization has presented China, and all countries around the world, with tremendous development opportunities. In the age of globalization a new round of Industrial Revolution has come into being."
On economic growth
"We believe that new drivers of growth are being shaped in today's world. These are in keeping with the trend of globalization, and they are critical for inclusive development and growth."
"Certain problems have arisen in the course of globalization. And certain groups of people feel they have not fully benefited from it. Yet, these new drivers of growth can be inclusive. They have helped to further integrate the global industrial supply and value chains, and they help present opportunities to each individual to develop and innovate ... The internet has provided almost everyone in any part of the country with equal access to information and business opportunity."
"People with specialized skills in any particular area can collaborate with those in other fields. This is like a symphony for a big chorus of development for all mankind. In such a broader environment, it is essential that we respect each other, embrace inclusiveness, and collaborate on an equal footing."
On multilateralism and trade
"It is essential that we uphold the basic principles of multilateralism and free trade ... We believe these rules have, first and foremost, benefited the progress of all mankind and for any existing problems, they need to be worked out through consultation. No unilateralism offers a viable solution."
"We are now seeing an encouraging shift from traditional drivers of growth to new ones. These new ones have been growing at a better-than-expected pace. In this process, new industries, new forms of business and new models have played a key role in keeping China's economic performance stable ... We have written out massive measures to cut taxes and fees, to streamline administration, so that the market will be able to play its bigger role in boosting these new drivers of growth."
"We have seen the emergence of a large number of new market energies in China ... In promoting these new drivers of growth, we have adopted a regulatory approach that has facilitated the boom of new industries, emerging industries. It often happens that we only have limited knowledge of these new things."
"Our principle is that, as long as these new forms of business do not breach laws or regulations, and do not harm public interests, we will continue to encourage their innovation and leave more space for their development. Eventually, the customers will make the ultimate choice, who will survive and thrive. Otherwise, their passion for innovation may be dampened at the very start. In the meantime, it is essential for the government to ensure a level playing field on the market. For the new drivers of growth, for the new forms of industry, the government works to ensure that no bottom-line of laws or regulations will be crossed and all these malpractices of seeking illegal gains, putting lives and property in danger, or cheating and swindling, will be seriously dealt with in accordance with law."
On jobs
"China has a workforce of nearly 900 million, of which over 100 million have received higher education or training in professional skills ... We are providing opportunities to not only university graduates, migrant workers and people from all walks of life to take part in innovation and entrepreneurship, so that they will all have more job opportunities, generate wealth, and realize their potential."
"New forms of consumption, such as information consumption, are also expanding much faster than GDP growth. Consumption is now contributing over 60% to China's economic growth. It is fair to say a major shift has taken place in China's economic structure and growth pattern."
On the Chinese economy
"In the first half of this year, China's economy expanded by 6.8%, staying within the medium high-growth range of 6.7 to 6.9% for 12 quarters in a row."
"In the first eight months of this year, over 10 million urban jobs were created and the urban unemployment rate was kept at a relatively low level of around 5%. Corporate profits of large industrial companies have maintained double-digit growth. On the whole, the Chinese economy has stayed on a track of steady progress ... Having said that, China is confronted with a host of difficulties and challenges in economic development ... The Chinese economy is inevitably affected by notable changes in the global economic and trade context."
"We are aware that China remains a developing country. We still rank at the lower end of the world in terms of per capita GDP. But there is huge space for development in China's urban and rural areas ... There is huge potential for boosting consumption and industrial upgrading. China's human resources are in abundant supply and becoming more and more competent."
"Going forward, we will keep to the fundamental goals of our macro-policies. While giving more attention to pre-emptive measures and fine-tuning. We will make greater efforts to pursue the policy of putting employment first ... We will more proactively leverage fiscal policy by further cutting taxes and fees in order to reduce the burden on companies and stimulate the market."
"We will also create a better business environment and expand market access to foreign-owned companies that by streamlining processes so they can compete on a level playing field in the Chinese market."
"We will work even harder to make financing more accessible and affordable for the real economy. We will stick to prudent monetary policy and continue to keep macro-rates stable and liquidity reasonably ample ... not just to meet the needs of the Chinese economy, but also to respond to the changes in the international environment."
On currency manipulation
"The recent fluctuations in the exchange rate have been seen by some as an intentional measure on the part of China. This is simply not true. Persistent appreciation will only do more harm than good to our country."
"Instead of engaging in competitive devaluation, we will stick to market-oriented foreign exchange rate reform."
On investment
"Efforts will be made to clear the obstacles to private investment. The Chinese government has taken a host of measures to deliver equal services involving tax and fee cuts for all sizes of businesses, in particular, providing easier access to capital for micro- and small-businesses. Most of them are privately owned and they are the biggest provider of jobs in China."
"We have lowered the tariffs on consumer goods and we will introduce further measures to lower the import tariffs on some goods into China. The average tariff level will be further lowered and all these undue and unwarranted charges in the import processes will be further sorted out and cleared. This is a decision made in China for further opening up."
On innovation
"China will work even harder to stimulate innovation and new drivers of growth in the new industrial revolution ... We need to ensure that we can fully unlock the passion for innovation. In this process we need to make it easier for institutions of higher learning and research institutes to innovate, encourage businesses to increase R&D spending."
"We will work to promote upward social mobility and social equity and justice."
On Chinese debt
"China's macro-leverage ratio is not low, and in the global context but it's not the highest either. It's much lower than other east Asian countries and about the same level as some European countries. One important reason is the high savings rate in China, and because there are not many direct financing channels here in China."
"In the past few years the leverage ratio might have increased at a relatively fast pace ... For sustainable development in the long-run we have implemented policies to achieve stability in the leverage ratio ... We have seen that in some sectors there have been the decrease of the ratio and we will continue to uphold the policy of stability in leverage ratio for our future development."
"In this process some micro- and small-sized enterprises may find it difficult to access affordable financing. In theory this may not be directly related to the government's policies ... but the fact is China is such a big country ... We are promoting the development of the real economy to address these issues and we will help micro- and small-businesses to access affordable financing in an easier environment. We will also work hard to expand direct financing channels."
This week's special edition of Economic Update deals with Keynesian economics as a theory that clashes with both the mainstream economics ("neoclassical") that celebrates private capitalism and with critical theories such as Marxian economics that are opposed to capitalism.
ileen Appelbaum
The Hill, September 7, 2018
Sen. Bernie Sanders (I-Vt.) has once again demonstrated that he understands the struggle facing millions of low-paid workers.
On Wednesday, Sanders introduced legislation targeted at Amazon that illuminates the contradiction at the heart of America's long economic expansion — workers paid too little to put food on their tables are building successful, cutting-edge companies that are making their owners rich.
Recent tax cuts only add insult to injury, making clear the role of public policy in redistributing income upward.
If Amazon were to pay its lowest-paid workers a living wage — enough to get by on without turning to food stamps to feed their families — it would be a game changer. The effects on the public dialogue, the behavior of other big companies and the lives of workers, Sanders argues, would be profound.
Amazon's response was swift. The company maintains that it has created good jobs. In a statement, Amazon said, "In the U.S., the average hourly wage for a full-time associate in our fulfillment centers, including cash, stock, and incentive bonuses, is over $15/hour before overtime. That's in addition to our full benefits package."
But bonuses wouldn't be an incentive if everyone got them, and stock goes to employees who last long enough to qualify for them. The reality for most Amazon warehouse workers is very different.
The company recently placed an ad at Glass Door for a direct-hire Warehouse Associate in Aurora, Ill. Glass Door estimates the jobs will pay $9 to $12 an hour. Amazon offers benefits to "qualified" workers on its payroll, but the high stress of long hours standing on your feet and frequent bending means that many workers don't last long enough to qualify for them.
Many warehouse workers are in temporary jobs. When Amazon opened a new distribution center in Joliet, Ill., Integrity Staffing Solutions set up shop in town to handle hiring. The jobs were temporary and paid up to $13.50 an hour. Joliet city councilors were frustrated that they couldn't learn whether the jobs would be full- or part-time.
Low wages mean large numbers of workers employed in Amazon warehouses must turn to the Supplemental Nutrition Assistance Program (SNAP), the food stamp program, to feed their families. In Arizona, public data suggests that one-in-three workers on Amazon's payroll rely on SNAP for food. In Pennsylvania and Ohio, it's one-in-10.
The jobs are dangerous as well. Amazon's fulfillment center in Robbinsville, N.J. was cited by the Department of Labor's Occupational Safety and Health Administration for failing to report 26 work-related injuries and illnesses and for exposing employees to risk factors "including stress from repeated bending at the waist and repeated exertions, and standing during entire shifts up to 10 hours, four days a week and sometimes including mandatory overtime shifts."
The National Council for Occupational Safety and Health, a nonprofit organization, put Amazon on its 2018 list of "dirty dozen" companies for what the organization said was a "disturbing pattern of preventable deaths" — seven workers died between 2013 and 2017.
Sen. Sanders has identified real problems low-paid workers face. But his proposal to tax Amazon and other large low-wage employers to recoup what the government spends on food stamps is seriously misguided. It buys into the false notion that America can't afford programs that benefit its people without raising taxes to pay for them.
Republicans know that a government with its own sovereign currency can pursue the policies its constituents want without worrying that it will run out of money.
The current administration has delivered huge tax cuts to its wealthy backers and promised the military more than $1 trillion to upgrade nuclear weapons over the next 30 years, with no worry that America can't afford to spend the money.
Democrats have said they are ready from "Day 1" to fight for the people. They want to expand access to affordable health care and spend $1 trillion on infrastructure. Sanders himself has proposed a "Medicare for All" solution to the nation's health-care crisis that many Democrats now support.
None of this will be possible if Democrats paint themselves into the austerity corner and insist Congress must raise taxes if it wants to put in place policies America's working families elected them to enact.
"Pay-go" rules — rules that say new programs need to be paid for with tax hikes or cuts in other programs — prevented Democrats the last time they were the majority party in Congress from implementing policies to help workers and communities devastated by the offshoring of manufacturing or the collapse of the housing bubble regain their economic footing.
They should not once again buy into the false narrative that taxes need to be raised before government can spend. There are limits to spending on programs, of course, but these are not set by tax revenue. They are set instead by available resources — workers, equipment, natural resources that can be put to work.
When resources are fully employed, further attempts by companies to expand production or government to expand programs will translate into inflation rather than higher GDP.
At that point, tax increases to reduce demand and bring spending in line with resource capabilities are in order. Rolling back Trump administration tax cuts that benefit the wealthiest would be a good place to start.
Eileen Appelbaum is co-director of the Center for Economic and Policy Research and the co-author of "Unfinished Business: Paid Family Leave in California and the Future of U.S. Work-Family Policy."
Via the Real News Network; Pt. 1 of a series, "US Policy Toward Global Internet Governance Is Misguided Says Richard Hill."
Richard Hill is long time expert on the Internet and governance standards.
Transcript:
LYNN FRIES: It's The Real News. I'm Lynn Fries.
The U.S. and the private companies it backs have far more say regarding the global internet than anybody else, and they use this power for political ends, mass surveillance; and for economic ends, the very high profits reaped by companies such as Google. The U.S. and its allies have systematically blocked discussion on Internet governance as it pertains to public policy at any United Nations forum that might not conform to U.S. expectations. The U.S. largely denies that certain internet services should be public services, or public goods, and rejects any intergovernmental role in supervising, much less regulating, the Internet.
These are all points related to internet governance raised by Richard Hill. Here to talk to us about all this is Richard Hill. Richard Hill is president of the Association for Proper Internet Governance, and a former senior official at ITU, the International Telecommunications Union. Dr. Hill holds a Ph.D. in statistics from Harvard, and is author of The New International Telecommunication Regulations and the Internet. Welcome, Richard.
RICHARD HILL: Thank you.
LYNN FRIES: What do you make of this call by Microsoft for governmental regulation of face recognition software?
RICHARD HILL: Yes. It's very interesting. This is now the second time that Microsoft has called for some kind of intergovernmental agreement. What you just mentioned, about regulating facial recognition. Prior to that they had called for what they called the Geneva Digital Convention, under which States would agree not to develop malware, not to purchase malware, not to stockpile malware. And they would agree to notify manufacturers as soon as they discovered malware. As you know, some very nasty incidents have come from the fact that the NSA or the CIA had a stockpile of malware. And somehow it leaked and it got used by cybercriminals. So Microsoft is, I think, rightly worried about that. They're trying to get the rest of the industry to understand that it can't go on like this because it's just too dangerous to be left out there in the open. It's worse than nuclear weapons. It's like having cruise missiles that anybody could grab and program and shoot anywhere. The same for facial recognition, it's going to be a race to the bottom and pervasive surveillance and so on.
Now, it's true what you said earlier, that the U.S. government is opposing intergovernmental influence on the Internet. But they've never been shy about imposing their own rules on the internet. In fact, the whole way the internet is managed is basically a U.S. creation. Because it's a U.S. private company which in the end is still subject to U.S. court decisions and U.S. executive orders, if they should actually issue an executive order, for example, with respect to terrorist activities, or as in fact taking down poker sites.
So what's happening now I think is that industry is beginning to see this asymmetry is unsustainable. Because other powerful nations, in particular China, but also India and to a lesser extent Russia and Europe with the Global Data Protection Regulation, are coming in and saying, wait a minute, for what concerns our citizens we have our own views of what should be done, and we're going to try to impose that nationally, even though we cannot impose that internationally. That's going to complicate life for the major corporations. And so they're now abandoning this model of saying we don't want governments at all, because they understand that that's not going to work. And so they're saying, well, you know, maybe we have to have governments in some areas. Let's focus them, channel them, and get them to do what we want.
LYNN FRIES: And that means the U.S. and its allies are blocking discussions taking place in the more transparent and inclusive forums within the UN system. And it also means they're pushing this multi-stakeholder model. Explain that.
RICHARD HILL: The multi-stakeholder model today is used as a mantra to justify a certain particular type of internet governance in which basically corporations dominate. The theory of the multi-stakeholder model is not particularly controversial. It's the idea that you want to consult all the interested parties before making a decision. In fact, if all the players benefit from a common decision and can get something out of a common decision, then it's logical to consult everybody and wait until you have consensus, and everybody agrees and it suits everybody. When it's not win-win, it doesn't work. Let's just take net neutrality, for example. If you consult the industry on net neutrality, you get very divergent views. The telecom carriers don't want it, and what we call "Over the Top", Google and those guys, they want it. So there's no way you're going to get consensus out of a multi-stakeholder consultation in that area, so in the end somebody has to make a decision. Now, in democratic societies, we decided or have the custom in those kind of situations, yes, you consult everybody, you listen to everybody but then the elected representatives of the people make the decision, either through a law in Parliament or through delegation of authority to some regulatory body that is still responsible in the end to the people. In the case of net neutrality in the USA, that would be the Federal Communications Commission. We have a well-established model that's worked for most walks of life for a very long time, certainly since the post-war period where we have had at, least in Western Europe and in the U.S., something that at least many people, or most people, or some people, think approaches a democracy, even if it's not perfect. It's not ideal and we're backsliding in some areas but still, it's better than dictatorship, authoritarians, et cetera. And to my mind it's better than dictatorship of corporations, which takes us back to something that happened before the Second War, where in some political systems corporations had excessive influence and were dictating things. But that's what we're seeing now, I think, in the Internet, this multi-stakeholder model is really being put forward as a Trojan horse, an excuse to justify total corporate domination in key decisions that actually affect all of us as citizens.
LYNN FRIES: At the international level, what about the failures of the existing traditional model of governance?
RICHARD HILL: Let's recognize that there's a thing called the nation-state, where people hopefully elect their rulers so they're representative of the people; we call that democracy. And then those entities would agree on how to cooperate internationally. We have national things and we have international things. In the international things we try to set a framework called international law. That's worked very, very well in a number of areas. It's always easier for us to see the areas where it has not worked. For example, it has not worked to solve the conflict in Syria, etcetera. But what people forget is that it works great for lots of other areas. Airline traffic, for example, why do all these airlines manage to fly all over around the world with no problems? Well, there is an international system, an intergovernmental organization, not very well known. There is also a private sector organization at the international level, so they cooperate. It's the same with the banking system; the same with telecommunications, the telephone system. It's the same for commercial law. Some of the viewers are probably familiar with the Vienna Convention on the International Sale of Goods which is widely used. Another great example is the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. These are all things that have worked very well to facilitate international trade and the modern world. And they've come out of this traditional intergovernmental system where States get together and negotiate things and then they go through a democratic ratification process at home, depending on the country and depending on the treaty. In not all countries do all treaties go to the Parliament. But in many countries, at least some or most of the treaties actually are subject to democratic control.
LYNN FRIES: Give an example of a situation where the U.S. and its allies blocked a major UN forum on internet governance and the modus operandi. What was the MO?
RICHARD HILL: Yes, I can think of many examples where the U.S. and its allies have blocked discussions taking place in various United Nations forums. And they kind of always use the same tactics. It's, well, that's an issue, but we should not discuss it here. But then when you go somewhere else, they also say we should not discuss it here. So in the end, there is no 'here'. So it never gets discussed. The other tactic is to say, oh well, we can't do that because that would threaten some fundamental value, some human right like freedom of speech or paradoxically, privacy. The U.S., as we know from its mass surveillance initiative, is not very keen on protecting personal privacy. Nevertheless, they'll trot that out as an argument. Or, more often, they'll actually get one of their proxies or their allies to trot that out. Now not surprisingly, it's kind of the same ones that you see in other political contexts. So it will be the UK. It will be Canada, It will be Japan. It will be Australia, the Netherlands, some of the former Eastern Bloc countries such as the Czech Republic, and so on. Now, that might be changing a little bit, because the current President seems to be antagonizing some of the traditional allies. But at least in the internet sphere we haven't seen a shift yet but it might be coming.
Now, one particularly interesting case that I'd like to talk about in a little bit more detail is what happened in 2012 at a conference in Dubai, which really was supposed to be quite innocuous, and simply modernize an existing framework which is called a regulation; but it's not actually a binding regulation. It doesn't have any particular binding language in it. And anyway there's no enforcement mechanism. So although it is a treaty, it is really more of an invitation to States as to how they should act and not act, and doesn't have any binding component. And one of the things that everybody agreed on is let's say something about States should cooperate on combatting spam. Now, you think that's a totally innocuous thing that everybody could agree on, particularly because it didn't give any specific measures. It wasn't binding. It didn't say thou shalt combat spam. It said they should endeavor to cooperate to combat spam. And that was turned into an attack on freedom of speech on the grounds that somehow nasty authoritarian states- and they were named, by the way. They were always called Russia and China- would use that treaty provision to justify domestic censorship.
Now, I think anybody who knows what's going on knows that that's completely ridiculous. States that wish to practice censorship do it anyway. They're not waiting for an international treaty to authorize them to do that. And how could that language saying cooperate to combat spam be construed to justify some domestic censorship? So when you unpack this and see what's behind it, that was actually used as a Trojan horse or as a red herring, if you prefer; or to use today's terminology, we didn't have it back then, fake news in order to discredit the entire conference and the ITU, because they might have actually done something on the economic side of things.
LYNN FRIES: Tell us more about that. First, I should let viewers know you were a senior official at the International Telecommunications Union, and actually the ITU Secretary to the conference. And in a review of your book, The New International Telecommunication Regulations and the Internet, which you wrote after the conference, published as an account of what happened, Shawn Powers, the author of The Real Cyber War: The Political Economy of Internet Freedom wrote, and I quote: Rarely are researchers able to access such clear and comprehensive details of closed-door diplomacy, particularly on a topic of such significance.
Very briefly, comment on the economic side of that conference.
RICHARD HILL: One of the issues that was supposed to be discussed in the conference, but never really got discussed because of all this controversy about human rights, was the whole question of who pays for the use of the internet. It's back kind of to the net neutrality debate. Should "Over the Top" players like Google, Skype, WhatsApp or whatever, actually pay for the use of the network infrastructure, like you do when you make a telephone call? Well, as consumers, of course, we like to think that everything is free. But unfortunately, as we know, there ain't no such thing as a free lunch. So somebody, somewhere, is paying. And today how are we paying for that? Well, we pay through the monthly subscription fee for the basic internet service, and then of course by giving all of our personal data to these folks who then monetize it and use that to sell targeted advertising. And they have very, very large profits, and make a great deal of money from that.
So the question was, well, do we continue with sort of that model? Or do we try to be more rational, and look at things? Maybe some things could be public services, and then they should be billed in a certain way that's fair for everybody, and not just allowing a few large dominant corporate players to make very, very large profits while nobody else makes any money. So in order to avoid any kind of rational discussion on that issue, they dragged out these various red herrings, of which the main one was freedom of speech.
LYNN FRIES: I noted in Q&A with the press, after your book on the Dubai conference was published, you were asked why freedom of speech became such an issue at a technical conference. And you answered, and I quote: Of course, it's easier to generate support for a 'stop censorship' campaign than for a 'save my profits' or 'let me keep invading privacy' campaign, so that's what happened.
RICHARD HILL: What was particularly fascinating about Dubai was that it was quite clear that actually Google was financing a lot of this. And Google actually opened the attack on the ITU not just because of this specific issue but as an institution. They were basically saying the ITU has no reason to exist, it's obsolete, get rid of them, it's an evil beast and we should just completely stop it. And I don't know of any other example in history where a corporation has attacked an intergovernmental institution, per se. Of course they attack the results if they don't like the results of certain type of regulation. And I think in a democratic society that's perfectly normal. Corporations should be allowed to express their point of view.
LYNN FRIES: In parenthesis, to clarify what ITU does, we should mention it's the world's oldest intergovernmental organization in managing the exchange of information between nation states; and since 1947, the UN specialized agency for telecommunications.
RICHARD HILL: Most people don't realize that most of what we're using actually depends on the ITU. The compression standards, MPEG, like we're using for this video conference, are actually standardized in ITU and ISO. It's a joint effort. Many people are using DSL. And that's all based on ITU standards. And so is much of the broadband connectivity that the operators use among themselves. And then there's the Wi-Fi frequency. Why does Wi-Fi work everywhere in the world without any problems? Whereas you have to struggle to find the right adapter plug for your electrical connection. Well, it's because in the ITU Radio Sector they've standardized a certain band of frequencies which are license-free, unlike most frequencies everywhere around the world. And there are many other things that the ITU does which are extremely useful. So I thought it was just particularly, I have to use the word, evil to pick out this imagined threat and discard all of the very useful things that ITU has done since 1865. Basically, modern telecommunications is based on the ITU.
Now, I'm not saying the ITU is perfect. But it's only as good as its Members, which are the people who contribute to it. And it's not government bureaucrats – a lot of industry people go into the ITU. So if the ITU were used correctly, it could do everything that we really need. Unfortunately, again for political reasons, in what I think is a misguided effort to continue to push U.S. hegemony in certain specific areas, corporate hegemony in this case, they're trying to prevent these institutions from doing useful things.
LYNN FRIES: So within the UN system, where do proponents of U.S. corporate hegemony want to take discussions?
RICHARD HILL: They're trying to move discussions into the World Trade Organization, which I think corporations rightly view as a more friendly forum for them. And where they're more likely to get what they want than by going into the more open, inclusive and transparent forums that are in the UN. WTO is the least open and least participative and most secretive of any of the intergovernmental organizations. And it's the most dominated by corporations, as most people know.
LYNN FRIES: As an example of how this is going on today, talk about the working group you were recently involved in at the United Nations here in Geneva. We don't have much time, so briefly explain the objectives of that working group, and then what happened.
RICHARD HILL: Yes, that was trying to find ways and means to improve various things, such as affordable access, security, freedom of speech, these kinds of things. Discussions were completely blocked. Once again by the United States and its allies, again saying, well, you know, maybe there are things that should be discussed, but they should not be discussed here. Maybe they should be discussed at some other UN agency. But then when you go to that other UN agency, they say no it shouldn't be discussed there. And then there should be no new mechanism. And there's no need for any additional coordination. The message from that camp was, well, basically, all we need is more multi-stakeholder models. Now, about halfway through that group, the U.S. and again its allies started promoting the idea that most of these issues should actually be discussed at the World Trade Organization. So then in the group I kind of had fun and made friends, as a sarcastic term – anything but friends – by pointing out that there's some incoherence and hypocrisy here. How can you be in the UN forum and say all we need to do is more multi-stakeholder model, and then go to the WTO, which is completely closed, opaque, not multi-stakeholder and say well, let's make decisions, like about free flow of data in the WTO? So there's a clear incoherence there. And I think a lot of people saw that. And that's kind of led to this current let's say effervescence or movement in this whole area, where even some of the big private companies like Microsoft are beginning to say no, wait a minute, we need some intergovernmental discussion. Because you know, you can't on the one hand say, let's do it all in the private sector when you're in the UN and then go into the WTO and say, no let's all negotiate this behind closed doors with no parliamentary supervision, no input from civil society and binding treaties. And the WTO, as many viewers know, is one of the very few, in fact the only intergovernmental organization that has a tribunal, dispute settlement resolution tribunal, which can actually make binding decisions, which then have economic consequences. That's not true for most of the other treaties.
LYNN FRIES: So what's being proposed at the World Trade Organization by the U.S. and its allies?
RICHARD HILL: What's being proposed in the WTO is basically not no restrictions on the flow of data because they know the Europeans are not going to accept that, but limited restrictions on the flow of data. And the reason to have that is twofold. On the one hand, it serves the interests of the current Internet giants whose business model is based on amassing as much data as possible in order then to sell targeted advertising. Or now in order to build artificial intelligence programs, which then in turn collect more data and provide more services. And this would be highly concentrated and so those a few players would own all the value added. So that's one aspect.
The other aspect, of course, is as the data flows more freely around the world, it makes it easier for various intelligence agencies like the National Security Administration to get into that and tap those data flows. And then do whatever they want to do with it. The business model of the NSA and of a company like say a Google or Facebook is about the same. Collect as much data as you can, try to create some clever algorithms to analyse it in order to pick out things of interest, and then exploit those. So in the case of the NSA, it's let's see if we can figure out who's a terrorist in some country, and then send a cruise missile over there and try to kill that person. And in the case of a commercial player like Facebook, it's let's see if we can figure out who's more likely to buy this and this type of product. And then we're going to sell the advertising to the manufacturer of that product on the grounds that hey, this is very effective, because we can target people specifically who are looking for your product.
LYNN FRIES: And what's your response to that?
RICHARD HILL: There should be no discussions of free flow of data in WTO or any other trade forum until some preconditions are met. And what are those preconditions? Well, first of all, we should have a global regime on data privacy. How can you start negotiating commercial aspects of free flow data if you haven't yet agreed at a global level how much control I as a citizen or I as a collectivity of citizens have over that data? It just makes no sense. Putting the cart before the horse. The other precondition is to have some sort of effective global worldwide antitrust protection. Already the antitrust mechanisms that we have at the national level don't work very well in the Internet era because of too much concentration due to network externalities and economies of scale. And at the international level we have absolutely nothing. There's no agreed global norm on antitrust, no enforcement agencies. There's no nothing. And so how can you control these big players? Like for example, just recently, it was announced that the European Union just fined Google, I think it was 3 billion euros, or something like that. Sounds like a gigantic amount but actually it's nothing compared to Google's profits and turnover. So Google can merrily pay that and continue along on its way. So you cannot have national or even regional effective antitrust enforcement against these gigantic global corporations. You really have to look at it globally. So until we have global antitrust and global agreements on data protection, how can you negotiate free flow of data? It doesn't make any sense.
LYNN FRIES: We're going to break and be back with our guest for the second half of this discussion. Richard Hill, thank you.
RICHARD HILL: Thank you. It's a pleasure.
LYNN FRIES: And thank you for joining us on The Real News Network.
On several occasions in the last two years, Donald Trump has made blunt threats against The Washington Post and its billionaire owner, Jeff Bezos.
Since buying the Post from the Graham family in 2013, Bezos has reinvested handsomely in the newsroom, while keeping his hands off editorial matters. As the Post has done its job, becoming a thorn in Trump's side, the president has issued dark warnings against the source of Bezos's spare billions, Amazon. But curiously, Trump's administration has not acted on these threats. And therein hangs a tale.
Bezos made his massive fortune the old fashioned way, as a monopolist. Amazon has nasty, predatory habits of bullying sellers that don't meet its terms, vacuuming up potential competitors, and of course keeping massive information on customers that give it an unfair leg up on its rivals.
In the last few years, Amazon has decided that it wants to be the retailer of choice for virtually everything. When an innovator comes up with a clever idea, Amazon copies it, underprices it and then uses its immense market power to crowd it out.
There has never been a behemoth company more ripe for antitrust action than Amazon.
Take Wayfair.com, a leading home furnishings internet company. The Boston Business Journal recently noted that Wayfair's stock dropped seven percent after Amazon introduced a competing product and business model.
Or consider Whole Foods. It was bad enough when Whole Foods either acquired or drove out the leading independent organic small chains. Now, Amazon owns Whole Foods. Like a lot of shoppers, I have mixed feeling about the grocery chain. It's overpriced and pretentious, but it has a terrific selection of foods that I like, such as nice cheeses.
Or it did. Lately, the Amazon algorithms seem to have decided that the more exotic merchandise is not quite as profitable as more ordinary stuff, and have pared down the offerings.
Or take Stitchfix.com. You can send them information on your taste and budget and size in clothing, and periodically a box of stuff will arrive for you to choose from. Isn't that clever?
Amazon evidently thought so. That's why they launched Prime Wardrobe. And of course, Amazon has almost infinite data on the shopping habits of most Americans, so it can target its marketing more effectively and cheaply than rivals.
This is all predatory, anti-competitive behavior. It's neither economically efficient nor in the public interest for Amazon to own everything. The proof is the company's massive profit, known in economist-speak as monopoly rents.
The failure of Tump's antitrust authorities, at either the Justice Department or the Federal Trade Commission, to go after Amazon's predatory behavior ― which is hidden in plain view ― is emblematic of the core contradiction in the pseudo-populist Trump administration and its corporate and "mainstream" Republican allies.
There has never been a behemoth company more ripe for antitrust action than Amazon. But ever since Chicago economic theorist Robert Bork redefined antitrust out of existence in the 1970s and 1980s by claiming that predatory behavior can't exist (because markets in their genius would fix it), the antitrust police under Democratic and Republican administrations alike have gone to sleep.
Bork, as head of President Ronald Reagan's antitrust division of the Justice Department, did more than destroy antitrust investigation and litigation. His crackpot theories brainwashed an entire cohort of law and economics professors, whose views were most congenial to corporate America.
As a new generation of legal scholars has made clear, however, traditional antitrust laws and concepts could readily be applied to the anti-competitive behavior of Amazon (and other platform monopolies such as Google and Facebook). Take a look at this terrific piece by Lina Khan.
So why doesn't Trump act? Instructing his appointees at the FTC and the Justice Department to launch a major investigation of Amazon would be good and entirely legitimate public policy, and it would be a defensible attack against the source of Bezos's billions.
The answer is that, when push comes to shove, Trump and his ideological allies in the Republican Party and corporate America default more to predatory robber-baron than to populist. Bezos is their kind of guy. And if you took on Bezos, you might also have to take on the predatory behavior of the drug companies, the airlines, and on and on.
Trump is also too unfocused, impulsive and disorganized to pay attention for more than the duration of a tweet, or to do anything a bit complicated. And if Steve Bannon happens to be reading this column, there is one other problem. It's just not possible to break Bezos's rice bowl.
With an estimated net worth of $158 billion, Bezos is literally the world's wealthiest person. The man is now so utterly rich that even if the antitrust authorities kept Amazon from destroying competitors and taking over the world, a few billion of his existing fortune would be sufficient to endow the Washington Post in perpetuity. Oh well.
So back to golf and tweeting. This is why a real antitrust reform agenda, despite the possible allure of sheer vengeance for Trump, awaits the next progressive Democratic administration.
Robert Kuttner is co-editor of The American Prospect and a professor at Brandeis University's Heller School. His new book is Can Democracy Survive Global Capitalism? Follow him on Twitter at @rkuttnerwrites.
